The Madisonian. [volume] (Washington City [i.e. Washington, D.C.]) 1837-1845, 1839-02-28

banks Justned oy the circumstances OF tho country,
they existed at the time Of the suspension in taking that
Important step sir,mhat were these cireumstancesi
tunities OF the Government had imprudently extended
their issues and loans beyond the proper bounds Our
foreign trade had leit the mercantile community
charged with heavy debt, the payment Of which
urgently pressed. Excessive and imprudent specala-
tons had been INDUCED in land produce and property,
and thereby produced much embarrassment, and the
Government made sudden and heavy draft; indeed
every thing seemed to have become inflated and
ready to burst In this crisis. American credit
abroad had been shaken to its very foundation
anu theh debts demanded in specie. What was ths
Swuy Of the banks upon trying an emergency -
mnhou the indulgence Of the banks IL was impossible
me merchants to the demands OF their foreign
I1eanors. 10 extend salutary indulgence and meet
s ePeseu and heavy runs for specie, by the banks "
was impossible. They wisely determined TO suspend,
Ior ey well knew that il the merchants were pressed
hey must m turn press the people whose produce would
have been locked up for the want Of means to purchase
nave pressed upon them under these circumstances
the collection OF than $500 900 900 would have
produced more ruin and desolaon than ever was wit
messed in this country The suspension was made
and the merchants INDUCED by which and most ener-
getic and unparalleled exertions they redeemed their
crcdit-ihe banks were saved-the merchants
saved and the people saved and the prosperity of
the country restored However much we may con-
denim the indiscreton either of the Government the
banks, the merchants, the people, which produced
the catastrophe yet existed, and was the dnty OF
the banks to adopt their action TO the crisis This very
act, which is relied upon here destroying all conf
dence IN the banks, restored waning confidence in
England, and induced the British merchants to extend
that indulgence to their debtors here which enabled
them IN short time to redeem their debt and restore
their credit
which would haye resulted to the whole community, if
the banks had taken different Il would have
produced an embarrassed and distressed community OF
home, and Frustrated credit abroad Who, under
these circumstances, does not in his heart justify the
suspension To prove that the banks not actuat-
ed, upon this occasion, by that spirit Of cupidy which
too often enters into their conduct refer to the fact
that Immediately upon the suspension, they commenced
and prosecuted gradual, but decided, system Of cur
aments Of their loans and circulation, which prepared
them for that resumption Of specie payments which
speedily, and much TO their credit, took place
The President himself in his last annual message, in
spirit Of candor which much admire, bears the most
favorable testimony 10 the conduct OF the banks under
these trying circumstances, he says BY the cuIta
ment Of paper issues; by cubing the sanguine and ad
venturous spirit of speculation and by the honorable
application Of all available to the fuhlment OF
obligations. confidence has been restored both at home
and abroad, and and facility secured 70 all the oPe-
Tatlons of trade"
Upon former OCCASION stated that the late admi-
nstraton was greatly instrumental ia producing that
excess Of loans and c,rclon by the banks, 70 which
the late suspension Of specis payments in part to be
sser6sd. and refenedio The cabns. paper o. sePem-
and Treasury circular of Mr. fancy TO prove the fact
To this testimony add that Of the present Secretary
Of the Treasury In letter addressed by thai officer
TO George Newbold, Esq, President Of the Bank OF
America, Of the 3lst Of December, 1885, he says.
"As the public money has much increased in your
CITY, and under my present course Of policy, will con-
tuue to increase still till Congress pass appro-
priaon bills, or give special direction for its in
vestment request the advice and aid OF the present
selected banks, the best mode Of making the surplus
USEFUL, without endangering its safety, until one Of
those events shall occur"
In another letter to the gentleman Of the 7th
Of January 1886, he says: (" While Congress refrain
from any action the subject Of the depostes and the
Depose Banks, is not proposed by this Department
increase the number Of the latter in your CITY, unless
the public money should accumulate therein so largely,
that any Of the present should be unable keep,
till wanted the amount they may have on hand with
temporary Advantage to the community, and permanent
safety to the Government and themselves ~
latter myself that have successfully proved that,
in relation to the State Bank Deposite Systematic
cep Of the public dues in the notes of paying banks,
and the suppression Of small notes, and the few friends
involved with me in the existing difference with the
administration have undergone no change of opinion,
and that the late suspension Of specie payments was no
just cause for abandoning that policy.
Mr.. CHAlRMAN-What is the policy in relation to the
public revenues which the administration proposes to
pudated, and denounced system. 1t is the Sub-Trea-
sury scheme, scheme by which the receipt, custody
and disbursement of the public to be conhded
to individual agency and the receipt Of the public
revenue restricted to gold and silver alone Yes SIR,
this is the system for the adoption of which this Co
vernment is to be divorced from all connection with
State Bankathose institutions created by the States,
fosered by the people, necessary to them as medium
Of trade and interviewer with all their business habits
and transactions Sir, look with great alarm upon
49, 80 tnn
the rights Of the States the prosperity Of the country,
and the liberties Of the people. may be mistaken,
sir, may be deuded, but from my very SOUL dread
it. The people whom the jurisdiction OF this Go
vernment PREVAILS are the very people over whom the
jurisdiction of the States extends and whatever affects
the institutions Of the States affects the interests Of the
people Of the States This Government is strictly fe-
dera it is the Government of the States, and OF the
people of the States and was only constituted TO effect
those general purposes which the States themselves
could not effect. Bot designed to impair,
check hinder, or control the legitimate exercise Of the
constitutional powers Of the States. Sir, will not this
scheme have that effect; may not this Government
under the power which this system would impar not
only impair the credit but finally overthrow and de-
stroy these State institutions themselves II has not
only been decided by the Supreme Court Of the United
States but it is, almost, an universally admitted prnci
ple that the States have the constitutional power to
create banking institutions. What will this power be
worth to the States, IL this Government adopt policy
which in its effects must necessarily impair the value OF
every institution which in its exercise they may create
General Jackson any other man, never expressed
sounder opinion than he did in his Cabinet paper OF
September, 1888, when he said ''n his opinion IRE
ferrng their power the action Of the General Go.
vernment this subject, ought not to extend beyond
the grant in the Constitution, which ONLY authorizes
Congress to coin money and regulate the value there
Of all else belong to the STATES and the PEOPLE, and
must be regulated by public opinion and the interests
OF trade" Yes, sir all else belongs TO the States and
the people, yet the executive branch OF this Govern
ment has frequently proposed, and now presses policy
which will cut it off-entirey separate it from those
institutions that circulating medium which the
policy Of the States and the interests Of the people,
prompted by the necessities Of trade, have Produced
With the power to gold and silver IN payment Of