The daily Madisonian. [volume] (Washington City [i.e. Washington, D.C.]) 1841-1845, 1842-02-19
CURRENCY REPORT.


ulty of issuing paper to circulate as money,
should not be conceded TO persons engaged IN inc
business of trade for if II were issuing bis AZ us
erection, they might engross directly an inaehnile
amount of the property of the community Accoru-
ingly, the privilege has usually been granted only
to persons or companies engaged IN the business oi
lending money. But the persons consuming the
company or controlling Its affairs, may themselves be
borrowers. and then the restriction becomes a nu-
,yatorv one for in that they create currency
10 se il in trade themselves which is not the least
frequent cause OF excessive bank issues and has led
10 the opinion, entertained by many, that mas
much as the business of trading and issuing paper
currency should be separated for the reason that
of lending money, and of issuing paper currency
ought not TO be intrusted to the same hands
In case, however, the Government itself be bor-
rover and does not choose to issue apaper of its own
TO circulate money, il may and often does, attain
the same end by the establishment of bank OF issues
for the very purpose of arranging its debts or anuc
pating its revenues. Hence, the origin, in many
cases of the direct association between governments
and banks,
So that in all communities, and in every form IN
which currency exists whether coined money or
as paper representative of il, and whether TINS DC
issued by banks by public authority directly, the
question of the currency OF the country ana 'ha' Vi
its fiscal affairs are inseparable facts
And next to taxation itself, the question OF the ma
teria in which taxes shall be levied whether in kind
or an equivalent and if so, whether in coin or not is
the most important of all The question of the place
and agent of depose or transmission Is one OF con-
yenience security, use; that Of the standard and
material of payment is one of the substance OF the
thing.
These general results, applicable to all systems Of
finance, are derived from the common experience oil
Europe and America. In the United States the APP
plcation of them depends on the peculiar form and
organization of our Government
Our political institutions the work of compact
and consent To the Federal Government belongs
all such legislative and admin, tratiye power, and
such only, the Constitution defines; all functions
of Government not thereby granted to the Union,
remaining To the separate States or to- the People
thereof and the States themselves possessing many OF
the substantive powers of political sovereignty
Among the substantive powers of political soye-
regaty exercised (whether rghtfuly or not by each
of the States is that of authorizing and regulating,
by means of chartered instruments of their own the
issue of bank paper to circulate as currency.
The faculty of issuing paper to circulate as curren-
CIV is no more necessary incident of the faculty to
receive money in deposite and to loan 1t In the DIS
count of notes and purchase Of bills than IS neces-
sary incident of the faculty to buy and sell merchan-
disc. A bank having authority to issue bills after
purchasing bills with Chat is, loaning OUT the whole
of its ca ita proceeds to purchase other bills with
its own promises TO pay Thus it does more business
than if rgidly confined to its capital 1t could, and
makes an interest on its own credit promises, as
well as on its capital The real operation would be
the same if merchant had the same authority. Yet,
by the practice in the United States mot generally
in other countries, the two facultiesof oanng money
of the States.
1t may we'll be doubted whether the bills so issued
by the banks of the States, and constituting curren
cy, not bills of credit within the meaning of the
prohibition Of the Constitution.
Historically, ii is demonstIabe that the expression
bills of credit" applied in all the period anterior to
the adoption of the Constitution, to these bills of
banks There were two forms of bills OF credit re-
cognised in legislation, speech and writ ng namely,
government bills OF credit" and ''bank bills of
credit"
1t seems difficult to conceive how these two species
ofthe same generic thing came TO be considered SO far
different that should be constitutional and the
other not: To be legal tender is of the
of either; that is each had been issued extensively
without being declared legal tender and in all
other respects they are in effect and mschiethe same
r'-~S - --~.-yy, ri~ving the disorders the
currency, and having tho a4laterians influence
! over the relations OF labor and property.
And ii would seem to be strange anomaly of the
fundamental law, or, if not anomaly then oversight
toprovide that State shall issue bills of credit by
the lnstrumentaly of legal person called its trea
surer" but may by means of legal person called its
bank " in other words, that it cannot, and yet that
it cam be the devave source of the issue of bills Of
credit.
Nor does it vary the principle, that the bank
shall consist N part or in whole of incorporated pri.
waite stock. This appears by the practical fact of The
times. Most ofthe banks in the U nited States, south
of New York, have ceased to pay their bills in cash,
large part ofhem having failed to make any effective
redemption Tor the space of more than Tour years
Their bills ale an rredeemable paper currency And
their continued Tredeemability has been egaized by
State Legislatures, in many instances, as the means
of procuring to the use of the State Government
issue of bills of credit with which defray the charges
of the State instead of levying taxes the inhab
tants for that purpose The State cannot issue bills
of credit by its treasurer but it and does by its
banks; which is great cause of the existing dis
orders in the currency Of the United States.
Thus of the sovereign function to make, ISSUE and
for Is n
mens (whether by usurpation or constitutionally is
immaterial to the RESULT possess part in common
with the Federal Government.
And this is the radical difficulty in the whole mat
of the currency. For the States have the power
so issue bank bills of credit, then the Federal Co
vernment cannot (by any direct legisation) prevent
their issue, and Of course cannot (by any direct egis
laon) apply cure TO the inherent chronic disease OF
the paper circulation of the United States Whether
it may administer any indirect remedy will be seen
hereafter.
1t of the power and duty Of the Federal Govern
ment in the first place. to provide for itself safe and
suitable fiscal agent to receive keep and disburse the
public moneys This it does under the tax power and
other powers Of the Constitution.
The Federal Government has, in the second place
under more than one clause of the Constitution, GER
tain powers to exert and duties discharge
ing the currency of the United States.
In what way shall Congress exercise these powers
and discharge these duties2
If the duty of the Federal Government consisted
only in doing what is absolutely necessary for ise
in fiscal point of view and stopped there the ques-
ton might be more easily answered But, in the
opinion Of the Committee, the Federal Government
should consider, not only what is for the convent
Of itself but also incidentally what is for the
venience and welfare Of the people Of the United
States
In the first place, then, what cannot and what can
the Federal Government at this time do, to remedy
and relieve the currency difficulties Of the United
States?
1t cannot assume and pay that great mass of ndi-
vidual Indebtedness of the people Of the United
States, which now weighs them down, and is one
primary evil of their present condition; debts con-
lracted when the currency was excessive for things
having ctitiousy large wholly unreal value, and