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particularly designed to insure the payment of the notes of the bank in specie, at all times, on demand.
However the House may dispose of the motion before it, I do not regret that it has been made. One object intended by it, at least, is accomplished. It presents a choice, and it shows that the opposition which exists to the bill in its present state is not an undistinguishing hostility to whatever may be proposed as a national bank, but a hostility to an institution of such a useless and dangerous nature as it is believed the existing provisions of the bill would establish.
If the bill should be recommitted, and amended according to the instructions which I have moved, its principles would be materially changed. The capital of the proposed bank will be reduced from fifty to thirty millions, and will be composed of specie and stocks in nearly the same proportions as the capital of the former Bank of the United States. The obligation to lend thirty millions of dollars to government, an obligation which cannot be fulfilled without committing an act of bankruptcy, will be struck out. The power to suspend the payment of its notes and bills will be abolished, and the prompt and faithful execution of its contracts secured, as far as, from the nature of things, it can be secured. The restriction on the sale of its stocks will be removed, and as it is a monopoly, provision will be made that, if it should not commence its operations in a reasonable time, the grant shall be forfeited. Thus amended, the bill would establish an institution not unlike the last Bank of the United States in any particular which is deemed material, excepting only the legalized amount of capital.
To a bank of this nature I should at any time be willing to give my support, not as a measure of temporary policy or as an expedient for relief from the present poverty of the treasury, but as an institution of permanent interest and importance, useful to the government and country at all times, and most useful in times of commercial prosperity.
I am sure, Sir, that the advantages which would at present result from any bank are greatly overrated. To look to a bank, as a source capable, not only of affording a circulating medium to the country, but also of supplying the ways and means of carrying on the war, especially at a time when the country is
without commerce, is to expect much more than ever will be obtained. Such high-wrought hopes can end only in disappointment. The means of supporting an expensive war are not of quite so easy acquisition. Banks are not revenue. They cannot supply its place. They may afford facilities' to its collection and distribution. They may furnish with convenience temporary loans to government, in anticipation of its taxes, and render important assistance, in divers ways, to the general operation of finance. 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 deeper fountains. The credit and circulation of bank paper are the effects rather than the causes of a profitable commerce and a well-ordered system of finance. They are the props of national wealth and prosperity, not the foundations of them. Whoever shall attempt to restore the fallen credit of this country by the establishment of new banks, merely that they may create new paper, and that government may have a chance of borrowing where it has not borrowed before, will find himself miserably deceived. It is under the influence of no such vain hopes that I yield my assent to the establishment of a bank on sound and proper principles. The principal good I expect from it is rather future than present. I do not see, indeed, that it is likely to produce evil at any time. In times to come it will, I hope, be useful. If it were only to be harmless, there would be sufficient reason why it should be supported in preference to such a contrivance as is now in contemplation.
The bank which will be created by the bill, if it should pass in its present form, is of a most extraordinary, and, as I think, alarming nature. The capital is to be fifty millions of dollars; five millions in gold and silver, twenty millions in the public debt created since the war, ten millions in treasury-notes, and fifteen millions to be subscribed by government in stock to be issued for that purpose. The ten millions in treasury-notes, when received in payment of subscriptions to the bank, are to be funded also in United States stocks. The stock subscribed by government on its own account, and the stocks in which the treasury-notes are to be funded, are to be redeemable only at the pleasure of the government. The war stock will be redeemable
· according to the terms upon which the late loans have been negotiated.
The capital of the bank, then, will be five millions of specie and forty-five millions of government stocks. In other words, the bank will possess five millions of dollars and the government will owe it forty-five millions. The bank is restrained from selling this debt of government during the war, and government is excused from paying until it shall see fit. The bank is also to be under obligation to loan to government thirty millions of dollars on demand, to be repaid, not when the convenience or necessity of the bank may require, but when debts due to the bank from government are paid; that is, when it shall be the good pleasure of government. This sum of thirty millions is to supply the necessities of government, and to supersede the occasion of other loans. This loan will doubtless be made on the first day of the existence of the bank, because the public wants can admit of no delay. Its condition, then, will be, that it has five millions of specie, if it has been able to obtain so much, and a debt of seventy-five millions, no part of which it can either sell or call in, due to it from government.
The loan of thirty millions to government can only be made by an immediate issue of bills to that amount. If these bills should return, the bank will not be able to pay them. This is certain; and to remedy this inconvenience, power is given to the directors, by the act, to suspend, at their own discretion, the payment of their notes until the President of the United States shall otherwise order. The President will give no such order, because the necessities of government will compel it to draw on the bank till the bank becomes as necessitous as itself. Indeed, whatever orders may be given or withheld, it will be utterly impossible for the bank to pay its notes. No such thing is expected from it. The first note it issues will be dishonored on its return, and yet it will continue to pour out its paper so long as government can apply it in any degree to its purposes.
What sort of an institution, Sir, is this? It looks less like a bank than a department of government. It will be properly the paper-money department. Its capital is government debts; the amount of its issues will depend on government necessities; government, in effect, absolves itself from its own debts to the bank, and, by way of compensation, absolves the bank from its own contracts with others. This is, indeed, a wonderful scheme of finance. The government is to grow rich, because it is to borrow without the obligation of repaying, and is to borrow of a bank which issues paper without liability to redeem it. If this bank, like other institutions which dull and plodding common sense has erected, were to pay its debts, it must have some limits to its issues of paper, and therefore there would be a point beyond which it could not make loans to government. This would fall short of the wishes of the contrivers of this system. They provide for an unlimited issue of paper in an entire exemption from payment. They found their bank, in the first place, on the discredit of government, and then hope to enrich government out of the insolvency of their bank. With them, poverty itself is the main source of supply, and bankruptcy a mine of inexhaustible treasure. They trust not in the ability of the bank, but in its beggary; not in gold and silver collected in its vaults, to pay its debts, and fulfil its promises, but in its locks and bars, provided by statute, to fasten its doors against the solicitations and clamors of importunate creditors. Such an insti. tution, they Aatter themselves, will not only be able to sustain itself, but to buoy up the sinking credit of the government. A bank which does not pay is to guarantee the engagements of a government which does not pay! “ John Doe is to become security for Richard Roe.” Thus the empty vaults of the treasury are to be filled from the equally empty vaults of the bank, and the ingenious invention of a partnership between insolvents is to restore and reëstablish the credit of both.
Sir, I can view this only as a system of rank speculation and enormous mischief. Nothing in our condition is worse, in my opinion, than the inclination of government to throw itself upon such desperate courses. If we are to be saved, it is not to be by such means. If public credit is to be restored, this is not one of the measures that will help to restore it. If the treasury is exhausted, this bank will not fill it with any thing valuable. If a safe circulating medium be wanted for the community, it will not be found in the paper of such a corporation.
I wish, Sir, that those who imagine that these objects, or any of them, will be effected by such a bank as this, would describe the manner in which they expect it to be done. What is the process which is to produce these results ? If it is perceived, it can be described. The bank will not operate either by miracle or magic. Whoever expects any good from it ought to be able to tell us in what way that good is to be produced. As yet, we have had nothing but general ideas and vague and loose expres. sions. An indefinite and indistinct notion is entertained, nobody here seems to know on what ground, that this bank is to reanimate public credit, fill the treasury, and remove all the evils that have arisen from the depreciation of the paper of the existing banks.
Some gentlemen, who do not profess themselves to be in all respects pleased with the provisions of the bill, seem to content themselves with an idea that nothing better can be obtained, and that it is necessary to do something. A strong impression that something must be done is the origin of many bad measures. It is easy, Sir, to do something, but the object is to do something useful. It is better to do nothing than to do mischief. It is much better, in my opinion, to make no bank, than to pass the bill as it now is.
The interests to be affected by this measure, the finances, the public credit, and the circulating medium of the country, are too important to be hazarded in schemes like these. If we wish to restore the public credit and to reëstablish the finances, we have the beaten road before us. All true analogy, all experience, and all just knowledge of ourselves and our condition, point one way. A wise and systematic economy, and a settled and substantial revenue, are the means to be relied on; not excessive issues of bank-notes, a forced circulation, and all the miserable contrivances to which political folly can resort, with the idle expectation of giving to mere paper the quality of money. These are all the inventions of a short-sighted policy, vexed and goaded by the necessities of the moment, and thinking less of a permanent remedy than of shifts and expedients to avoid the present distress. They have been a thousand times adopted, and a thousand times exploded as delusive and ruinous, as destructive of all solid revenue, and incompatible with the security of private property.
It is, Sir, 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 a bank of this kind will not be immediately