State of the Finances.

est annually payable upon it about $4,500,000. gress is expressly vested with the power to coin At that time there was assigned to the Sinking Fund, out of the public revenue, $8,000,000, of which about $3,500,000 were annually applicable to the reduction of the principal of $86,000,000.

At the commencement of the year 1817 it is estimated that the principal of the funded debt will amount to $110,000,000, requiring the sum of $6,150,000 for the payment of its annual interest. If a sum applicable to the reduction of the principal of the debt were now to be assigned, bearing the same proportion to that principal which the sum assigned in 1804 then bore to the principal, it would amount to about $4,350,000. When it is added, therefore, to the sum of $6,150,000, which is necessary for the payment of the interest, there would be required for the amount now to be set apart, to constitute the Sinking Fund, the sum of $10,500,000 per annum. It is proposed, however, to carry the amount only to the sum of $10,000,000, which will allow about $3,850,000 as applicable to the reduction of the principal of the debt; a sum sufficient, if strictly and regularly applied without interruption, upon a compound principle, to pay off the whole of the funded debt in a period less than eighteen years.

Upon these grounds, then, the Secretary of the Treasury respectfully submits the following proposition:

money, to regulate the value of the domestic and foreign coins in circulation, and, as a necessary implication from positive provisions, to emit bills of credit; while it is declared by the same instrument, that "no State shall coin money, or emit bills of credit." Under this Constitutional authority the money of the United States has been established, by law, consisting of coins made with gold, silver, or copper. All foreign gold and silver coins, at specified rates, were placed, in the first instance, upon the same footing with the coins of the United States, but they ceased (with the exception of Spanish milled dollars, and parts of such dollars) to be a legal tender for the payment of debts and demands in the year 1809.

The Constitutional authority to emit bills of credit has also been exercised in a qualified and limited manner. During the existence of the Bank of the United States the bills or notes of the corporation were declared, by law, to be receivable in all payments to the United States; and the Treasury notes, which have been since issued for the services of the late war, have been endowed with the same quality. But Congress has never recognised, by law, the notes of any other corporation; nor has it ever authorized an issue of bills of credit to serve as a legal currency. The acceptance of the notes of banks, which are not established by the Federal authority, in payments to the United States, has been properly left to the vigilance and discretion of the Executive Department; while the circulation of the Treasury notes. employed either to borrow money, or to discharge debts, depends entirely (as it ought to depend) upon the option of the lenders and creditors to re

That, in the year 1817, and annually in every subsequent year, there be appropriated the sum of $2,000,000, in addition to the sum of $8,000,000 now annually appropriated for the payment of the interest and principal of the public debt; that the payment of this additional sum be made out of the proceeds of the revenue derived from the customs, the sales of the public lands, and the in-ceive them. ternal duties, or from either of them, available after the payment of the sums for which they are now respectively pledged or appropriated; and that the said additional sum of $2,000,000 annually be payable to the Commissioners of the Sinking Fund, to be applied by them in the same manner as the moneys which they are now entitled by law to receive; that is to say, 1st, to the payment of the interest on the public funded debt; 2ndly, to the reimbursement of the principal, from time to time, as the same, or any portion of it, shall become reimbursable, according to the terms of the contracts by which it has been created; and, 3dly, after having answered these purposes, if there shall remain a surplus at their disposal, to the purchase of such parts of the public funded debt as shall appear to them to be most for the advantage of the United States, in the manner prescribed by law, and at a rate not exceeding the par value.

3. Proposition relating to the National circulating medium.

The delicacy of this subject is only equalled by its importance. In presenting it, therefore, to the consideration of Congress, there is occasion for an implicit reliance upon the legislative indul

The Constitutional and legal foundation of the monetary system of the United States is thus distinctly seen, and the power of the Federal Government to institute and regulate it, whether the circulating medium consist of coin or of bills of credit, must, in its general policy, as well as in the terms of its investment, be deemed an exclasive power. It is true, that a system depending upon the agency of the precious metals will be affected by the various circumstances which diminish their quantity, or deteriorate their quality. The coin of a State sometimes vanishes under the influence of political alarms; sometimes in consequence of the explosion of mercantile speculations, and sometimes by the drain of an unfavorable course of trade. But whenever the emer gency occurs that demands a change of system, it seems necessarily to follow that the authority, which was alone competent to establish the na tional coin, is alone competent to create a national substitute. It has happened, however, that the coin of the United States has ceased to be the circulating medium of exchange, and that no substitute has hitherto been provided by the national authority. During the last year the principal banks, established south and west of New England, resolved that they would no longer issue coin in payment of their notes, or of the drafts of their customers, for money received upon deposite. In

State of the Finances.

this act the Government of the United States had no participation, and yet the immediate effect of the act was to supersede the only legal currency of the nation. By this act, although no State can constitutionally emit bills of credit, corporations, erected by the several States, have been enabled to circulate a paper medium, subject to many of the practical inconveniences of the prohibited bills of credit.

any former period) insufficient for the demand throughout the commercial and civilized world. The price may be higher in some countries than in others; and it may be different in the same country, at different times; but, generally, the European stock of gold and silver has been abundant, even during the protracted war which has afflicted the nations of Europe.

The purchase of bullion in foreign markets upon It is not intended, upon this occasion, to con- reasonable terms is then deemed practicable, nor demn, generally, the suspension of specie pay- can its importation into the United States fail evenments; for appearances indicated an approaching tually to be profitable. The actual price of gold crisis, which would, probably, have imposed it as and silver in the American market would in itself a measure of necessity, if it had not been adopted afford for some time an ample premium, although as a measure of precaution. But the danger which the fall in the price must of course be proportionoriginally induced, and perhaps justified, the con- ate to the increase of the quantity. But it is within duct of the banks, has passed away, and the con- the scope of a wise policy to create additional tinuance of the suspension of specie payments demands for coin, and in that way to multiply the must be ascribed to a new series of causes. The inducements to import and retain the metals of public credit and resources are no longer impaired which it is composed. For instance, the excesby the doubts and agitations excited during the sive issue of bank paper has usurped the place of war by the practices of an enemy, or by the in- the national money, and under such circumroads of an illicit commerce; yet the resumption stances gold and silver will always continue to of specie payments is still prevented, either by be treated as an article of merchandise; but it is the reduced state of the national stock of the pre- hoped that the issue of bank paper will be soon cious metals, or by the apprehension of a further reduced to its just share in the circulating medireduction to meet the balances of foreign trade, um of the country, and consequently that the or by the redundant issues of bank paper. The coin of the United States will resume its legitiprobable direction and duration of these latter mate capacity and character. Again, the Treascauses constitute, therefore, the existing subject ury, yielding from necessity to the general imfor consideration. While they continue to oper- pulse, has hitherto consented to receive bank paper ate, singly or combined, the authority of the States in the payment of duties and taxes; but the period individually, or the agency of the State institu- approaches when it will probably become a duty tions, cannot afford a remedy commensurate with to exact the payment either in Treasury notes, or the evil; and a recurrence to the national au- in gold and silver coin-the lawful money of the thority is indispensable for the restoration of a United States. Again, the institutions which national currency. shall be deemed proper, in order to remove existIn the selection of the means for the accom-ing inconveniences, and to restore the national plishment of this important object, it may be asked, currency, may be so organized as to engage the 1st. Whether it be practicable to renew the cir-interest and enterprise of individuals in providculation of the gold and silver coins? 2d. Whe-ing the means to establish them. And, finally, ther the State banks can be successfully employ-such regulations may be imposed upon the exported to furnish a uniform currency? 3uly. Whe-ation of gold and silver as will serve in future to ther a National Bank can be employed more ad- fix and retain the quantity required for domestic vantageously than the State banks for the same purpose? And, 4thly. Whether the Government can itself supply and maintain a paper medium of exchange, of permanent and uniform value throughout the United States?

uses.

But it is further believed that the national stock of the precious metals is not so reduced as to render the operation of reinstating their agency in the national currency either difficult or pro1. As the United States do not possess mines tracted. The quantity actually possessed by the of gold or silver, the supply of those metals must, country is considerable; and the resuscitation of in a time of scarcity, be derived from foreign com- the public confidence in bank paper, or in other merce. If the balance of foreign commerce be substitutes for coin, seems alone to be wanting to unfavorable, the supply will not be obtained in- render it equal to the accustomed contribution cidentally, as in the case of the returns for a sur- for a circulating medium. In other countries, as plus of American exports, but must be the subject well as in the United States, the effect of an of a direct purchase. The purchase of bullion is, excessive issue of paper money, to banish the prehowever, a common operation of commerce, and cious metals, has been seen; and, under circumdepends, like other operations, upon the induce-stances much more disadvantageous than the ments to import the article.

present, the effect of public confidence in national institutions, to call the precious metals to their uses in exchange, has also been experienced.

The inducements to import bullion arise, as in other cases, from its being cheap abroad, or from its being dear at home. Notwithstanding the Even, however, if it were practicable, it has commotions in South America, as well as in Eu-sometimes been questioned whether it would be rope, there is no reason to believe that the quantity of the precious metals is now (more than at

politic again to employ gold and silver for the purposes of a national currency. It was long and

State of the Finances.

universally supposed that, to maintain a paper medium without depreciation, the certainty of being able to convert it into coin was indispensable; nor can the experiment which has given rise to a contrary doctrine be deemed complete or conclusive. But, whatever may be the issue of that experiment elsewhere, a difference in the structure of the Government, in the physical as well as the political situation of the country, and in the various departments of industry, seem to deprive it of any important influence, as a precedent for the imitation of the United States.

In offering these general remarks to the consideration of Congress it is not intended to convey an opinion that the circulation of the gold and silver coins can at once be renewed. Upon motives of public convenience the gradual attainment of that object is alone contemplated; but a strong, though respectful, solicitude is felt that the measures adopted by the Legislature should invariably tend to its attainment.

Government from the present embarrassments. Authorized to issue notes, which will be received in all payments to the United States, the circulation of its issues will be co-extensive with the Union, and there will exist a constant demand, bearing a just proportion to the annual amount of the duties and taxes to be collected, independent of the general circulation for commercial and social purposes. A National Bank will, therefore, possess the means and the opportunity of supplying a circulating medium of equal use and value in every State, and in every district of every State. Established by the authority of the Government of the United States, accredited by the Government to the whole amount of its notes in circulation, and intrusted as the depository of the Government with all the accumulations of the public treasure, the National Bank, independent of its immediate capital, will enjoy every recommendation which can merit and secure the confidence of the public. Organized upon principles of responsibility, but of independence, the National Bank will be retained within its legitimate sphere of action, without just apprehension from the misconduct of its directors, or from the encroachments of the Government. Eminent in its resources, and in its example, the National Bank will conciliate, aid, and lead, the State banks in all that is necessary for the restoration of credit, public and private. And acting upon a compound capital, partly of stock, and partly of gold and silver, the National Bank will be the ready instrument to enhance the value of the public securities, and to restore the currency of the national coin.

2d. Of the services rendered to the Government by some of the State banks during the late war, and of the liberality by which some of them are actuated in their intercourse with the Treasury, justice requires an explicit acknowledgment. It is a fact, however, incontestably proved, that those institutions cannot, at this time, be successfully employed to furnish a uniform national currency. The failure of one attempt to associate them with that view has already been stated. Another attempt, by their agency in circulating Treasury notes, to overcome the inequalities of the exchange, has only been partially successful. And a plan recently proposed, with the design to curtail the issues of bank notes, to fix the public confidence in the administration of the affairs of the banks, and to give to each bank a legitimate share in the circulation, is not likely to receive the general sanction of the banks. The truth is, that the charter restrictions of some of the banks, the mutual relation and dependence of the banks of the same State, and even of the banks of different States, and the duty which the directors of each bank conceive they owe to their immediate constituents, upon points of security or emolument, interpose an insuperable obstacle to any voluntary arrangement, upon national considerations alone, It will not be deemed an adequate object for an for the establishment of a national medium issue of the paper of the Government, merely through the agency of the State banks. It is, that it may be exchanged for the paper of the nevertheless, with the State banks that the mea- banks, since the Treasury will be abundantly sures for restoring the national currency of gold supplied with bank paper by the collection of the and silver must originate; for, until their issues revenue; and the Government cannot be expected of paper be reduced, their specie capitals be re- to render itself a general debtor, in order to beinstated, and their specie operations be com-come the special creditor of the State banks. menced, there will be neither room, nor employ- The co-operation of the Government with the ment, nor safety, for the introduction of the pre-National Bank, in the introduction of a national cious metals. The policy and the interest of the State banks must, therefore, be engaged in the great fiscal work, by all the means which the Treasury can employ, or the legislative wisdom shall provide.

4th. The power of the Government to supply and maintain a paper medium of exchange will not be questioned; but, for the introduction of that medium, there must be an adequate motive. The sole motive for issuing Treasury notes bas, hitherto, been to raise money in anticipation of the revenue. The revenue, however, will probably become, in the course of the year 1816, and continue afterwards, sufficient to discharge all the debts, and to defray all the expenses of the GoFernment; and, consequently, there will exist no motive to issue the paper of the Government as an instrument of credit.

currency, may, however, be advantageously employed by issues of Treasury notes, so long as they shall be required for the public service.

Upon the whole, the state of the national currency, and other important considerations con3d. The establishment of a National Bank is nected with the operations of the Treasury, renregarded as the best, and, perhaps, the only ade-der it a duty respectfully to propose quate resource to relieve the country and the That a National Bank be established at the

Prohibition of the Importation of Coarse Cotton Fabrics.

city of Philadelphia, having power to erect branches elsewhere, and that the capital of the bank (being of a competent amount) consist of three-fourths of the public stock, and one-fourth of gold and silver.

All which is respectfully submitted.

A. J. DALLAS, Secretary of the Treasury. [The tabular statements accompanying the report being voluminous, are necessarily omitted.]

1646

ture to encroach upon the time of your honorable Your petitioners will not at this moment venbodies by entering into a minute and elaborate argument to substantiate their claims to the attention of Government, or to prove the proposed measure reconcilable with the permanent and solid interests of the community at large; but they facts and leading arguments bearing upon the beg leave, respectfully, to submit a few prominent question:

The establishments for the manufacturing of various articles of cotton, which have already been erected in the United States, are at this mo

PROHIBITION OF THE IMPORTATION OF ment extensive, and capable of affording a sup

COARSE COTTON FABRICS.

[Communicated to the Senate, December 13, 1815.] To the honorable the Senate and House of Representatives of the United States of America in Congress assembled:

ply nearly or quite commensurate with the demand for domestic consumption.

They have afforded the means of employment whom the ordinary business of agriculture supto thousands of poor women and children, for plies no opportunities for earning a livelihood, giving additional encouragement to labor and to educating them in habits of honest industry, and population.

the necessary demands of the country and the They have also supplied at moderate prices Government, during the recent interruption of our foreign trade.

rist by the consumption of some portion of that: They have assisted the Southern agricultusuperfluous produce which was deprived of its ordinary vent in the demands of foreign nations.

suggest may be subjected to large additional duThe articles which your petitioners humbly ties, or an absolute prohibition, are chiefly the production of countries lying beyond the Cape of Good Hope.

of cotton of foreign growth, and thus interfere They are manufactured in a large proportion with and discourage a primary object of our own agriculture.

The petition of the undersigned citizens of the United States, concerned in the manufacturing of cotton fabrics, in behalf of themselves and others interested in similar establishments, respectfully showeth: That, during the late season of domestic pressure, arising in a measure from the interruption of the foreign commerce of the country, your petitioners, together with numerous others, citizens of the United States, undertook, and after a considerable expenditure of money and of labor, have at length partially succeeded in the erecting and putting into operation extensive works employed in the manufacturing of cotton goods. That large sums of money have been expended by your petitioners and others upon these objects. That, by means of these exertions, and of the commodities furnished from these sources, the pressure of the late war upon the great body of the community was considerably alleviated. That, from the difficulties inseparable from the establishment of new branches of manufacture; production, but occasion a continual and wasteful They are not paid for with articles of domestic the scarcity of persons properly qualified to super-drain of specie of the country. intend their operation; the enormous compensation demanded by those whose skill and expe- are manufactured in a manner which make them They are made of a very inferior material, and rience were requisite, and the high price of labor a mere deception on the consumer. Nearly all throughout the country, your petitioners have Europe have legislated against them; several of not as yet been remunerated for the heavy ex- which nations have not a single spindle in their penses which they have incurred, while the pros- dominions, but on the grounds of their little real pect which is just opening of a free and unre-usefulness, and as sapping the industry of the stricted importation of the same articles of foreign manufacture, threaten to deprive them of every expectation of a reasonable profit, and, at one blow, to crush the establishments themselves, and to sink the capital which has been invested in them.

Your petitioners, under these circumstances of impending ruin, respectfully entreat the interposition of your honorable bodies, to preserve them and the country from these disastrous and fatal results; and more particularly is it the wish of your petitioners to suggest the propriety and expediency of effecting this desirable object by imposing an absolute or virtual prohibition upon the importation of foreign cotton fabrics of a

coarse texture.

country; and by thus prohibiting or restricting their introduction, urge the people to seek a better substitute.

small amount to the resources of the Treasury. They pay an ad valorem duty, and add but a

our shipping, and will, in all probability, be here They afford employment to but a few tons of after introduced in the ships, or through the me dium of a rival nation.*

ship Princess Charlotte, Turnbull, from Calcutta, June 24, 1815, arrived at New York the English Madras, the Cape of Good Hope, and fifty-five days from St. Helena, with nine hundred bags of sugar, indigo, spices, saltpetre, pepper, and nearly six hundred tons of piece goods, (selected for this market.)

Prohibition of the Importation of Coarse Cotton Fabrics.