one resource, and that was, unless the interest of her debtors did of itself produce the effect by diminishing their loans, to call upon them to assist her in paying the amount. There was no other way open to her; and the degree to which she must call, in order to obtain assistance to a given extent, is a point in practical banking to which it is material for gentlemen to advert. The In explaining this operation, so as to make it intelligible to that portion of the House which may not be familiar with banking, I will state the argument against the Bank. It is said, sir, that whatever amount she requires her debtors to pay, or withholds from other borrowers after it is paid, is to be set down as an actual increase of her ability to meet the demand for the public deposites. This is a very specious but wholly unsound proposition. In the process of reduction of discounts, with a view to increase the ability of a bank, two and two do not always make four; they sometimes do not even make two. Bank not only has debtors, but she is herself a debtor to the Treasury for the public deposites, and to individuals for their private deposites; she is a debtor for her notes in circulation, and to other banks for any balances due to them. When, therefore, she calls upon her debtors to return a part of the debt they owe her, these very persons may be her creditors by deposite, or may borrow from such as are, and may call upon the Bank to pay what she owes to them. Thus, if a person who is required by the Bank to pay a note, has at the same time a deposite or credit in bank, the one may be made an offset against the other; and if the two are equal, it is manifest that the Bank has no more ability to pay its debt to others after this transaction than she had before. She has merely paid a debt that she owed an individual, by the extinguishment of a demand which the Bank had upon him. Sir, this effect is universally seen in the practical business of banking, that when a Bank calls in what is owing to her, a part of the demand is paid by drafts upon herself; and as her line of discounts goes down, so does her line of individual deposites. It will be easy to show, sir, the effect of this circumstance upon the resources of the Bank while the reductions of August and September last were being made. In August and September the Bank loans and purchases fell, according to the Secretary's letter, 4,066,147 dollars, as follows: The amount of notes and bills in August was $64,160,349 Making a reduction by payment of these deposites equal to 2,143,281 And leaving the Bank the better in ability to pay the public only 1,922,866 the difference having been paid away to her own depositors or crediThis result is familiar in the history of all banks. As a bank calls upon her debtors to pay, they call upon her in like manner; and she retains only the difference between her receipts and payments. tors. Sir, while the process of reduction was going on in August and September, 1833, the public deposites to be withdrawn in October were increasing against the Bank, having been in October the amount be $9,868,435 7,599,931 2,268,504 so that, regarding these elements alone, the increased ability of the Bank to meet the public deposites was not equal to the increased demand by reason of the deposites; and the process of reduction was of necessity to be continued. So very insufficient a method is it of ascertaining the effect of reductions either upon a bank or the community, to take the amount of reductions only. But, sir, let me carry this examination a little further. The amount of reductions from 1st August, 1833, to 1st January, 1834, was as follows: Notes and bills in August, 1833, were $64,160,149 in January, 1834, they were 54,911,461 Making a diminution or reduction in five months of $9,248,688 The individual deposites in August, being as before They are in January, 1834 $10,152,143 So that the Bank has paid those deposites to the extent of 3,417,277 And her ability so far as the reductions gave it, was increased by the difference only 5,831,411 But the public deposites in Oct. were as before $9,868,435 4,230,508 Showing a payment of the public deposites during this time of 5,637,927 And leaving an increased ability to pay the residue, as compared with the 1st Aug., 1833, only to the extent of the difference of $193,484 These statements, sir, show that, although reductions are necessary to meet the withdrawal of deposites, they do not produce an increase of ability to pay deposites in the direct ratio of their amount; and therefore that the amount alone is not a test of their having been carried to a sufficient extent. There is no doubt that the payments of debts to the Bank may have produced distress; but these payments have themselves been the effect of the removal of the deposites, and this effect has been infinitely aggravated by the stagnation of trade and the loss of confidence proceeding from the design of the removal, and from the manner of the removal. Sir, the Treasury might have pursued a course that would have mitigated the evil, by diminishing the cause of alarm. Having the control of this demand, they might have made known to the Bank the times, proportions, and places of the intended transfers, and have thus given assurance to the Bank that its reductions to meet the emergency need not exceed the proposed demand. But the Treasury took a different course; and, if any thing could raise the embarrassment of the Bank, and the community also, to the highest degree, it was the course which the Treasury pursued. Mr. Speaker, what was that course? Is any gentleman in this House ignorant of it? The honorable member from Tennessee [Mr. POLK] has read to the House a passage from a pamphlet, which he was pleased to call the manifesto of the Bank; I shall, therefore, regard that publication as authentic, and I will refer gentlemen, to the correspondence between the cashier of the Bank and the Treasurer of . the United States that is appended to it. They will there find what, by agreement with the Bank, had been the practice of the Treasury when there was no alarm in the community, when the Bank was admitted to be in a state of perfect security, and free from the apprehension of embarrassment. The Treasury practice was to send to the Bank a daily list, specifying every draft upon the Bank from the Treasury, showing the amount drawn for and the place of payment, but omitting the names of the persons to whom payable, to guard against fraud. Another list was sent weekly, with the dates, amounts, places of payment, and names of the payees. These were intended not only to guard the Bank against fraud and surprise, but to enable the Bank to regulate the accommodations to its customers, as they were thus apprized of the points at which their funds would be wanted. Nothing surely could be more natural than to continue a practice like this, when the deposites were to be permanently removed. It could not be doubted by any one that such a proceeding must cause. uneasiness in the public mind; and the very first precaution which prudence would have suggested to mitigate the alarm, was the continuance and increase of these safeguards of the Bank; certainly not that, at the very commencement of the alarm, they should be discontinued. But such was the fact. That they were discontinued, and that the Bank, misled and deceived, had to deal with the Treasury as with an enemy, is an event which belongs exclusively to the present day, and to the existence of personal feelings in the Department which directed the Treasurer, wholly unbecoming the official transactions of any Government. Sir, if I meant to deal with my enemy as is befitting the spirit of honorable contest, I would give him equality of position, of instruction, of knowledge, and let the issue be the result of skill and the better cause; but if I meant to deprive him of all chance of defence or escape, to murder him basely, what better course could I pursue, than to blindfold him, or rather to throw false lights into his eyes, that he could only know the approach of the poniard by feeling it in his heart? Sir, the former practice was made an instrument of imposition upon the Bank, by continuing to wear its usual appearances, while, in truth, drafts, to the extent of nearly three millions of dollars, were purposely withheld from the lists-drafts payable in unknown places, at unknown times, and to unknown parties. The lists themselves became instruments of deception, and gave false information to the Bank of the state of the Treasury demand, while rumors gave out the exist ence of the concealed drafts in precisely that way which was most likely to increase the deception. I call the attention of the House to that correspondence of which I have spoken. The Treasurer says that the drafts were of an unusual kind; that they depended on certain contingencies-contingencies still unknown to this House and nation. Was this a reason why the Bank should not have notice of them? Was it calculated to quiet the apprehensions of the Bank or of the community, that the presentation of these drafts, payable as it now appears at sight, was suspended upon unknown contingencies? Sir, every unprejudiced person who looks at this transaction, must agree that the course of the Treasury, in regard to drafts for nearly three millions of dollars, hovering between Philadelphia, New York, and Baltimore, without an intimation to the Bank of the time and place where they were to be presented, was of itself amply sufficient to justify even more alarm than the Bank felt, and greater reductions than the Bank required. This There is one other fact to which I will advert before I close these preliminary remarks; it is of great use in explaining the influence of the removal in producing the present distress. The honorable member from Tennessee [Mr. POLK] expressed great surprise that any difficulty should be apprehended from transferring deposites from one side of a street to another, inasmuch as the community would derive the same amount of accommodation from them in one place as in the other. Sir, the consequence did not follow. The same amount of accommodation was not derived, and it is for those who know the condition of the deposite banks to give the reason. House does not know what their circumstances were. Their capital may have been employed in furnishing capital to Western banks, or in discounting upon their own stock; or the amount of their private deposites may have been lessened by the apprehension of remaining in company with a public depositor and preferred creditor. There is one decisive reason why the deposite State banks can never so efficiently further the accommodation of the trading community as the Bank of the United States, and that is, that the circulation of the one extends over the whole Union, and never enters one of her banks in its course, but it issues again to repeat the circle. But the circulation of a State bank is at her own door. It cannot leave it to any material extent. Contrivances to extend it are abortive. It does not answer the purpose of exchange, and its excess as currency instantly returns upon the bank for something that is better than her bank notes. The discounts of the State banks, on the faith of the deposites placed in them, cannot have been equal to the reductions of the Bank of the United States to pay them. And, in addition to this, there is an immense mass of private capital usually loaned out on the security of stock, at moderate interest, which, at a moment of danger and alarm, retires from the scene. The days of exorbitant interest are not the days of the capitalist, but of men who desire to make exorbitant profit upon small investments. Still, sir, it is not easy to account for the height of the present distress by the mere change of the deposites, nor by the diminished use of them in the State banks, when compared with their use in the Bank of the United States, from which they were taken. These circumstances had an effect, but they do not stand alone. There is an intense apprehension for the future connected with this operation—an apprehension which springs from the Treasury determination that nearly the whole of the existing circulation of exchanges is to cease; and cease it must, to a great extent, if the Bank of the United States is not to collect the public revenue. The Bank of the United States, Mr. Speaker, has performed her great offices to this people by the concurrence of two peculiarities, which belong to her-her structure, and her employment in the collection of the public revenue. No State banks, by any combination, can effect the required exchanges to a considerable extent. No Bank of the United States, without the aid of the public revenue, can effect them to the extent which the necessities of trade require. Sir, the structure of the Bank of the United States contributes to this operation in a way which every one may comprehend. The whole circulation of the United States is employed in effecting the exchange of the crops with the merchandise of the country. It is employed in transporting the crops to market, and merchandise to the places of its consumption. Now, sir, a National Bank, with branches spread over the whole Union, knows, from experience, and by her means of observation, where the amount of demand will fall and rise, and at what time these changes will occur. She knows beforehand where she may with safety diminish her resources, and where she must enlarge them. Wherever her resources are placed for use, it is the same thing to the Bank. Her profit is the same every where; and this ability to give them the position which the trade of the country requires, is sustained by, and in a great degree dependent upon, her employment as the depository of the public revenue. In this character the Bank receives the revenue, and holds it until the time of disbursement; and the knowledge which her accomplished President and the Board of Directors obtain through their relations to the Treasury, and by intimate acquaintance with the fiscal operations of the Department, enables them to reconcile all the demands of the Treasury with the demands of trade, at the same time that they preserve the whole currency of the country in that due proportion to demand which makes it, and which alone makes it, sound and invariable. But now, sir, this revenue is to be collected against the Bank. She is to assist in paying, not in receiving it. Her situation is to be entirely reversed. The wants of the community are to become secondary to her own preservation; and, instead of placing her funds where trade will most require them, she must place them where, from the presence of rivals supported by the Government, she will require them herself for her own protection. Sir, this is to be the future operation of the measure taken by the Treasury Department. The theory of a National Bank with branches not collecting and disbursing the revenue, is an absurdity. It never was conceived of until the present day; and even now, though complaints are made against the Bank, as if her powers were not impaired, no one can seriously regard the measure of removal except as a measure of intended destruction. It |