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BANK OF THE UNITED STATES.*
On the 2d of January, 1815, the bill to incorporate a bank being under consideration, Mr. Webster moved that it be recommitted to a select committee, with instructions to make the following alterations, to wit:
1. To reduce the capital to twenty-five millions, with liberty to the government to subscribe on its own account five millions.
2. To strike out the thirteenth section.
3. To strike out so much of said bill as makes it obligatory on the bank to lend money to government.
4. To introduce a section providing, that if the bank do not commence its operations within the space of months, from the day of the passing of the act, the charter shall thereby be forfeited.
5. To insert a section allowing interest at the rate of on any bill or note of the bank, of which payment shall have been duly demanded, according to its tenor, and refused ; and to inflict penalties on any directors who shall issue any bills or notes during any suspension of specie payment at the bank.
6. To provide that the said twenty-five millions of capital stock shall be composed of five millions of specie, and twenty millions of any of the stocks of the United States bearing an interest of six per cent., or of treasury-notes.
7. To strike out of the bill that part of it which restrains the bank from selling its stock during the war.
In support of this motion the following speech was delivered. The motion did not prevail, but the bill itself was rejected the same day on the third reading. Some of the main principles of these instructions were incorporated into the charter of the late bank, when that charter was granted, the following year; especially those which were more
* A Speech delivered in the House of Representatives of the United States, on the 2d of January, 1815.
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