The Portland daily press., 1878-06-19
Mr.. Webster's Financial Opinion

Mr.. WebSterS Financial Opinion.
In 1916 Daniel Webster was Representative
in Congress for Massachusetts, aud vigorously
opposed bill to incorporate national bank.
Here is what he says of banks in general:
'T am sure, Sir, that the advantages which
would at present result from any bank are
greatly overrated. To look to hasirma1s. acsircm51s.-
source capable not only II tas sIso Of supply
inc the ways and means of carrying on the
war especially at time when the country Is
without commerce, is to expect much mole
revenue. They are useful to the state in their
proper place and sphere, but they are not
sources Of national income.
The streams of revenue must flow from deep
er fountains. The credis and circulation bank
proper are the effects rather than the causes OF
q profitable commerce and a well ordered sys-
tenn of finance. They are the props of national
wealth, not the foundations of them. Whoever
shall attompt to restore the fallen credit OF the
country by the establishment OF new banks,
merely that they may create new paper, and
that government may have chance of borrow
ing, where it has not borrowed before, will find
himself miserably deceived"
He denounced an excessive Issue of pspsr
money, and reprobated as transparent folly all
schemes of an irredeemable currency, and of
currency redeemable otherwise than in gold
and silver. In the speech against the bank
from which have already quoted be also said;
"It is sufficiently obvious that TO produce any
benefit this bank must be so constructed as
that its notes shall have credit with the public.
The first inquiry therefore should be whether
the bills of bank of this kind will nos be inn
mediately and greatly depreciated. think
they will. This effect will be produced oy taas
excessive issue of its paper which the oauk
meSs %ens Tns Mhs.aee is is isaes an of p paper are
excessive will depend not on the nomi-
nal amount of its caDital. bat on
its ability to redeem it, This Is the only
safe criterion. Very speca! cases may perhaps
furnish exceptions, but there IS in general no
security for the credit of paper but tue ability
in those who emit to redeem IL. Whenever
bank notes are not convertible to gold and
silver at the will of the holder, they become Of
less value than gold and silver. All expert
ments on this subject have come to the same
resnlt. It is SO clear. and has been so univer-
saly ad ,Nitted that IL would be waste OF time to
dwell upOu it. The depreciation may not be
perceived the first day, OF the nrss week u
takes place. 1t will be first discerned in what
is called the rise in specie; 1t will next be seen
in the increased price OF all commodities.
The circulating medium OF a commercial
community must be that whicn IS the clrculat-
ing medium OF other communities, oMr M aosr nusS Ds
capable OF being converted into thar "~eulun ~
without loss. 1t must be able not only T. pass
in payments and receipts among individuals X
the same society and nation, but to adjust and
discharge the balance of exchanges between
different nations 1t must be something which
has value abroad as well as at home, and by
which foreign as well as domestic debts can be
satisfied. The precious metals alone answer
these purposes. They alone therefore are
money, and ohdte0er else is to perform the
Offices of money must be their representa-
tiye, and capable Of being turned into them
at acM. So long as bank paper retains
this quality 1t is substitute for money;
diverted of this nothing can give it that
ahoro No oAIi1 - de soso
of assets, no confidence in the solvency of
banking institutions, has ever enabled them to
keep up their paper to the value of gold and
silver, any longer than they paid gold and sill
YER for it, on demand. This will continue to
be the case, so long as these metals shall contn-
ne to be the standard OF value, and the general
circulating medium among nations"
How imperative are these emphatic counsels
of the great statesman to make the paper circu-
lation of the United States real money, by re-
deeming in gold and silver all Of it that shall
be demanded. Dvssted of this quality Of con-
vertbility, nothing can give our treasury notes,
though made legal tender, nor our national
bank currency the character of money.
By fair implication Mr.. Webster must bs
considered to have favored the treasury note,
as an instrument Of currency and representa-
tive of money, and he gives decided express
sion of his own opinion that the issuing Of
promissory notes to ba used as NOR ey by banks
created by the States is in violation of the con-
stitution. On the Both of April, 1916, Mr.. Mad
ison approved resolutions, offered in the House
and advocated by Mr.. Webster, that all moneys
due the United States, should be paid in the
legal currency of tae United States or treasury
notes or notes of the Bank of the United States
or in bank notes paid on demand in legal cur
rency. In his speech he said;
ga bank of thirty-fve millions has been cre-
ated for the professed purpose Of correcting the
evils of our circulation, and facilitating the re-
ceipts and expenditures of the government. L
am not so sanguine in the hope Of great benefit
from this measure as others are. But the treas
ury is also authorized to issue twenty-five mill
lions of treasury notes, eighteen or twenty mil
lions of which are also allowed by law to be
received for taxes and duties"
Mr. Webster was not so sanguins as others,
| of the new bank, whose creation he had op-
posed, furnishing a satisfactory currency in
which taxes and duties could be collected.
His resource seemed to have beea a further
issue of treasury notes.
He saw the absurdity and Inconvenience OF
having system of State banks filing all the
channels Of circulation with their bills, SO that
the people had no other money to pay their
taxes and duties with, aad suspending specie
payrnents when the national goVernmen
whose financial operations wers crippled by it
had no power to coerce or control them. He
denounced this condition of things in the same
speech as most intolerable. He had voted to
take from the national bank the power to sus-
pend specie payments.
In perfect harmony With this preference for
hard money and national currency, as against
State bank currency, he said in the Senate in
1882, when in the maturity Of his powers and Of
his fame:
"We all know Sir, that the establishment OF
a sound and uniform c clrreDcy was one 0. tne
great ends contemplated in the adopuon OF the
present constitution. 1t cannot well oe ques-
toned that il was intended by that constitu-
ton to submit the whole subject of the curreE-
CIV of the conntry all that regards the actual
medium of payment aud exchange, Whatever
that should be, to the control and legislation OF
| Congress. Congress can alone coin money;
l ConSress can alone fix the value of foreign
4 coins; no State, (nor even Congress itself) can
4 make anything tender but gold and silver in
1 nayment of debts; no State can emit bills of
credit. The exclusive power of regulating the
metallic currency of the country would seem
necessarily to imply or more properly to include
as part of itself the power to decide, how far
that currency should be exclusive, how far
1t aud what this substitute should be.
| The generosity and extent of the power granted
l to Congress, and the clear and well-de6ned
or lhibtions on the states, leave little doubt OF
an intent to rescue the whole subject OF curren-
| cy from the hands of local legislation, and to
| confer it upon the general government. But
| notwithstanding the app .Ieut purpose IN the
1 Constitution. the truth is, that the currency of
| the country is now, to a certain extent, prsc.i-
cally and effectualy under the control Of the
several state governments; if 1t be not moro
correct to say that it is under the control of the
| banking institutions created by the states; for