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THE REMOVAL OF THE DEPOSITS.*

THE charter of the Bank of the United States provided that the public moneys should be deposited in the bank, subject to removal by the Secretary of the Treasury, on grounds to be submitted to Congress. In the session of 1832, Congress had passed a resolution, by a very large majority, that the public deposits were safe in the custody of the Bank of the United States. General Jackson, having applied his veto to the bill for renewing the charter of the bank, was determined, notwithstanding this expression of the opinion of Congress, that the public deposits should be transferred to an association of selected State banks. The Secretary of the Treasury (Mr. M'Lane), having declined to order the transfer, was appointed Secretary of State, in the expectation that his successor (Mr. Duane) would execute the President's will in that respect. On the 10th of September, 1833, an elaborate paper was read by General Jackson to the Cabinet, announcing his reasons for the removal of the deposits, and appointing the 1st of October as the day when it should take place. On the 21st of September, Mr. Duane made known to the President his intention not to order the removal. He was dismissed from office, and Mr. Taney, the present Chief Justice, appointed in his place, by whom the requisite order for the removal of the public moneys to the State banks was immediately given.

This measure produced a great derangement in the business of the country, and an almost total suspension of the accustomed action of the financial system. Universal distress ensued. Memorials on the subject were addressed to both houses of Congress from the principal cities, and very many of the public bodies, in the United States. These memorials formed the subject of prolonged and animated debate during the session of 1833-34.

On the 20th of January, Mr. Webster presented to the Senate a series

Remarks, on different occasions, on the Removal of the Deposits, and on the subject of a National Bank, delivered in the Senate of the United States, in the course of the session of 1833-34.

of resolutions adopted at a public meeting in Boston, of a remarkably temperate and argumentative character, in which the prevailing distress was traced mainly to the removal of the deposits, and the restoration of the friendly relations between the government and the Bank of the United States was mentioned as the only measure of relief likely to prove effectual. It was stated in one of the resolutions, that the meeting consisted of persons "of all classes and professions, entertaining various and opposite opinions upon the question of rechartering the existing national bank or of chartering a new one, and that few of them have any pecuniary interest involved in the fate of that institution."

The resolutions having been read, Mr. Webster addressed the Senate as follows:

MR. PRESIDENT,-I wish to bear unequivocal and decided testimony to the respectability, intelligence, and disinterestedness of the long list of gentlemen at whose instance this meeting was assembled. The meeting, Sir, was connected with no party purpose whatever. It had an object more sober, more cogent, more interesting to the whole community, than mere party questions. The Senate will perceive in the tone of these resolutions no intent to exaggerate or inflame; no disposition to get up excitement or to spread alarm. I hope the restrained and serious manner, the moderation of temper, and the exemplary candor of these resolutions, in connection with the plain truths which they contain, will give them just weight with the Senate. I assure you, Sir, the members composing this meeting were neither capitalists, nor speculators, nor alarmists. They are merchants, traders, mechanics, artisans, and others engaged in the active business of life. They are of the muscular portion of society; and they desire to lay before Congress an evil which they feel to press sorely on their occupations, their earnings, their labor, and their property; and to express their conscientious conviction of the causes of that evil. If intelligence, if pure intention, if deep and wide-spread connection. with business in its various branches, if thorough practical knowledge and experience, if inseparable union between their own prosperity and the prosperity of the whole country, authorize men to speak, and give them a right to be heard, the sentiments of this meeting ought to make an impression. For one, Sir, I entirely concur in all their opinions. I adopt their first fourteen resolutions, without alteration or qualifica

tion, as setting forth truly the present state of things, stating truly its causes, and pointing to the true remedy.

Mr. President, now that I am speaking, I will use the opportunity to say a few words which I intended to say in the course of the morning, on the coming up of the resolution which now lies on the table; but which are as applicable to this occasion as to that. An opportunity may perhaps hereafter be afforded me of discussing the reasons given by the Secretary for the very important measure adopted by him in removing the deposits. But as I know not how near that time may be, I desire, in the mean while, to make my opinions known without reserve on the present state of the country. Without intending to discuss any thing at present, I feel it my duty, nevertheless, to let my sentiments and my convictions be understood.

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In the first place, then, Sir, I agree with those who think that there is a severe pressure in the money market, and very serious embarrassment felt in all branches of the national industry. think this is not local, but general; general, at least, over every part of the country where the cause has yet begun to operate, and sure to become not only general, but universal, as the operation of the cause shall spread. If evidence be wanted, in addition to all that is told us by those who know, the high rate of interest, now at twelve per cent. or higher where it was hardly six last September, the depression of all stocks, some ten, some twenty, some thirty per cent., and the low prices of commodities, are proofs abundantly sufficient to show the existence of the pressure. But, Sir, labor, that most extensive of all interests, American manual labor, feels, or will feel, the shock more sensibly, far more sensibly, than capital, or property of any kind. Public works have stopped, or must stop; great private undertakings, employing many hands, have ceased, and others must cease. A great lowering of the rates of wages, as well as a depreciation of property, is the inevitable consequence of causes now in full operation. Serious embarrassments in all branches of business do certainly exist.

I am of opinion, therefore, that there is undoubtedly a very severe pressure on the community, which Congress ought to relieve, if it can; and that this pressure is not an instance of the ordinary reaction, or the ebbing and flowing, of commercial affairs, but is an extraordinary case, produced by an extraordinary cause.

In the next place, Sir, I agree entirely with the eleventh Boston resolution, as to the causes of this embarrassment. We were in a state of high prosperity, commercial and agricultural. Every branch of business was pushed far, and the credit as well as the capital of the country employed nearly to its utmost limits. In this state of affairs, some degree of over-trading doubtless took place, which, however, if nothing else had occurred, would have been seasonably corrected by the ordinary and necessary operation of things. But on this palmy state of business the late measure of the Secretary fell, and has acted on it with powerful and lamentable effect. I am of opinion, that such a cause is entirely adequate to produce the effect, that it is wholly natural, and that it ought to have been foreseen that it would produce exactly such consequences. Those must have looked at the surface of things only, as it seems to me, who thought otherwise, and who expected that such an operation could be gone through with without producing a very serious shock.

The treasury in a very short time has withdrawn from the bank eight millions of dollars, within a fraction. This call, of course, the bank has been obliged to provide for, and could not provide for without more or less inconvenience to the public. The mere withdrawal of so large a sum from hands actually holding and using it, and the transfer of it, through the bank collecting, and through another bank loaning it, if it can loan it, into other hands, is itself an operation which, if conducted suddenly, must produce considerable inconvenience. And this is all that the Secretary seems to have anticipated. But this is but the smallest part of the whole evil. The great evil arises from the new attitude in which the government places itself towards the bank. Every thing is now in a false position. The government, the Bank of the United States, and the State banks, are all out of place. They are deranged, and separated, and jostling against each other. Instead of amity, reliance, and mutual succor, relations of jealousy, of distrust, of hostility even, are springing up between these parties. All act on the defensive; each looks out for itself; and the public interest is crushed between the upper and the nether millstone. All this should have been foreseen. It is idle to say that these evils might have been prevented by the bank, if it had exerted itself to prevent them. That is a mere matter of opinion: it may be true, or it

may not; but it was the business of those who proposed the removal of the deposits to ask themselves how it was probable the bank would act when they should attack it, assail its credit, and allege the violation by it of its charter; and thus compel it to take an attitude, at least, of stern defence. The community have certainly a right to hold those answerable who have unnecessarily got into this quarrel with the bank, and thereby occasioned the evil, let the conduct of the bank, in the course of the controversy, be what it may.

In my opinion, Sir, the great source of the evil is the shock which the measure has given to confidence in the commercial world. The credit of the whole system of the currency of the country seems shaken. The State banks have lost credit and lost confidence. They have suffered vastly more than the Bank of the United States itself, at which the blow was aimed.

The derangement of internal exchanges is one of the most lisastrous consequences of the measure. By the origin of its charter, by its unquestioned solidity, by the fact that it was at home everywhere and in perfect credit everywhere, the Bank of the United States accomplished the internal exchanges of the country with vast facility, and at a rate of unprecedented cheapness. The State banks can never perform this equally well; for the reason given in the Boston resolutions, they cannot act with the same concert, the same identity of purpose. Look at the prices current, and see the change in the value of the notes of distant banks in the great cities. Look at the depression of the stocks of the State banks, deposit banks, and all. Look at what must happen the moment the Bank of the United States, in its process of winding up, or to meet any other crisis, shall cease to buy domestic bills, especially in the Southern, Southwestern, and Western markets. Can any man doubt what will be the state of exchange when that takes place? Or can any one doubt its necessary effect upon the price of produce? The bank has purchased bills to the amount of sixty millions a year, as appears by documents heretofore laid before the Senate. A great portion of these, no doubt, were purchased in the South and West, against shipments of the great staples of thoso quarters of the country. Such is the course of trade. The produce of the Southwest and the South is shipped to the North and East for sale, and those who ship it draw bills on

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