foreign and domestic policy entirely under the control of a foreign moneyed interest? To do so is to impair the independence of our government, as the present credit system has already impaired the independence of our banks. It is to submit all its important operations, whether of peace or war, to be controlled or thwarted at first by our own banks, and then by a power abroad greater than themselves. I cannot bring myself to depict the humiliation to which this government and people might be sooner or later reduced, if the means for defending their rights are to be made dependent upon those who may have the most powerful of motives to impair them.

Nor is it only in reference to the effect of this state of things on the independence of our government or of our banks, that the subject presents itself for consideration it is to be viewed also in its relation to the general trade of our country. The time is not long past when a deficiency of foreign crops was thought to afford a profitable market for the surplus of our industry; but now we await with a feverish anxiety the news of the English harvest, not so much from motives of commendable sympathy, but fearful lest its anticipated failure should narrow the field of credit there. Does not this speak volumes to the patriot? Can a system be beneficent, wise, or just, which creates greater anxiety for interests dependent on foreign credit, than for the general prosperity of our own country, and the profitable exportation of the surplus produce of our labor?

The circumstances to which I have thus adverted appear to me to afford weighty reasons, developed by late events, to be added to those which I have on former occasions offered, when submitting to your better knowledge and discernment the propriety of separating the custody of the public money from banking institutions. Nor has anything occurred to lessen, in my opinion, the force of what has been heretofore urged. The only ground on which that custody can be desired by the banks is the profitable use which they may make of the money. Such use would be regarded in individuals as a breach of trust, or a crime of great magnitude; and yet it may be reasonably doubted whether, first and last, it is not attended with more mischievous consequences when permitted to the former than to the latter. The practice of permitting the public money to be used by its keepers, as here, is believed to be peculiar to this country, and to exist scarcely anywhere else. To procure it here, improper influences are appealed to; unwise connections are established between the government and vast numbers of powerful state institutions; other motives than the public good are brought to bear both on the executive and legislative departments, and selfish combinations, leading to special legislation, are formed. It is made the interest of banking institutions, and their stockholders throughout the Union, to use their exertions for the increase of taxation and the accumulation of a surplus revenue; and, while an excuse is afforded, the means are furnished for those excessive issues which lead to extravagant trade and speculation, and are forerunners of a vast debt abroad and the suspension of the banks at home.

Impressed, therefore, as I am, with the propriety of the funds of the government being withdrawn from the private use of either banks or individuals, and the public money kept by duly appointed public agents; and believing, as I do, that such also is the judgment which discussion, reflection and experience have produced on the public mind, I leave the subject with you. It is, at all events, essential to the interests of the community and the business of the government, that a decision should be made.

Most of the arguments that dissuade us from employing banks, in the custody and disbursement of the public money, apply with equal force to the receipts of their notes for public dues. The difference is only in form. In one instance, the government is a creditor for its deposites, and in the other, for the notes it holds. They afford the same opportunity for using the public moneys, and equally lead to all the evils attendant upon it, since a bank can as safely extend its discounts on a deposite of its notes in the hands of a public officer as on one made in its own vaults. On the other hand, it would give to the government no greater security; for, in case of failure, the claim of the note-holder would be no better than that of a depositor.

I am aware that the danger of inconvenience to the public, and unreasonable pressure upon sound banks, have been urged as objections to requiring the payment of the revenue in gold and silver. These objections have been greatly exaggerated. From the best estimates we may safely fix the amount of specie in the country at eighty-five millions of dollars, and the portion of that which would be employed at any one time in the receipts and disbursements of the government, even if the proposed change were made at once, would not, it is now, after fuller investigation, believed, exceed four or five millions. If the change were gradual, several years would elapse before that sum would be required, with annual opportunities in the mean time to alter the law, should experience prove it to be oppressive or inconvenient. The portions of the community on whose business the change would immediately operate are comparatively small, nor is it believed that its effect would be in the least unjust or injurious to them.

In the payment of duties, which constitute by far the greater portion of the revenue, a very large proportion is derived from foreign commission houses and agents of foreign manufacturers, who sell the goods consigned to them, generally, at auction, and, after paying the duties out of the avails, remit the rest abroad in specie or its equivalent. That the amount of duties should, in such cases, be also retained in specie, can hardly be a matter of complaint. Our own importing merchants, by whom the residue of the duties is paid, are not only peculiarly interested in maintaining a sound currency, which the measure in question will especially promote, but are, from the nature of their dealings, best able to know when specie will be needed, and to procure it with the least difficulty or sacrifice. Residing, too, almost universally in places where the revenue is received, and where the drafts used by the government for its disbursements must concentrate, they have every opportunity to obtain and use them in place of specie, should it be for their interest or convenience. Of the number of these drafts, and the facilities they may afford, as well as of the rapidity with which the public funds are drawn and disbursed, an idea may be formed from the fact that, of nearly twenty millions of dollars paid to collectors and receivers during the present year, the average amount in their hands at any one time has not exceeded a million and a half; and of the fifteen millions received by the collector of New York alone during the present year, the average amount held by him, subject to draft during each week, has been less than half a

million.

The ease and safety of the operations of the treasury in keeping the public money are promoted by the application of its own drafts for the public dues. The objection arising from having them too long outstanding might be obviated, and they yet made to afford to merchants and banks holding them an equivalent for specie, and in that way greatly lessen the amount

actually required. Still less inconvenience will attend the requirement of specie in purchases of public lands. Such purchases, except when made on speculation, are in general but single transactions, rarely repeated by the same person; and it is a fact that, for the last year and a half, during which the notes of sound banks have been received, more than a moiety of these payments has been voluntarily made in specie, being a larger proportion than would have been required in three years under the graduation proposed.

It is moreover a principle, than which none is better settled by experience, that the supply of the precious metals will always be found adequate to the uses for which they are required. They abound in countries where no other currency is allowed. In our own states, where small notes are excluded, gold and silver supply their place. When driven to their hiding places by bank suspensions, a little firmness in the community soon restores them in a sufficient quantity for ordinary purposes. Postage and other public dues have been collected in coin, without serious inconvenience, even in states where a depreciated paper currency has existed for years; and this, with the aid of treasury notes for a part of the time, was done without interruption during the suspension of 1837. At the present moment, the receipts and disbursements of the government are made in legal currency in the largest portion of the Union. No one suggests a departure from this rule; and if it can now be successfully carried out, it will be surely attended with even less difficulty when bank notes are again redeemed in specie.

Indeed I cannot think that a serious objection would anywhere be raised to the receipt and payment of gold and silver in all public transactions, were it not from an apprehension that a surplus in the treasury might withdraw a large portion of it from circulation, and lock it up unprofitably in the public vaults. It would not, in my opinion, be difficult to prevent such an inconvenience from occurring; but the authentic statements which I have already submitted to you in regard to the actual amount in the public treasury at any one time during the period embraced in them, and the little probability of a different state of the treasury, for at least some years to come, seem to render it unnecessary to dwell upon it. Congress, moreover, as I have before observed, will, in every year, have an opportunity to guard against it, should the occurrence of any circumstances lead us to apprehend injury from this source. Viewing the subject in all its aspects, I cannot believe that any period will be more auspicious than the present for the adoption of all measures necessary to maintain the sanctity of our own engagements, and to aid in securing to the community that abundant supply of the precious metals which adds so much to their prosperity, and gives such increased stability to all their dealings.

In a country so commercial as ours, banks in some form will probably always exist; but this serves only to render it the more incumbent on us, notwithstanding the discouragements of the past, to strive in our respective stations to mitigate the evils they produce: to take from them as rapidly as the obligations of public faith and a careful consideration of the immediate interests of the community will permit, the unjust character of monopolies; to check, so far as may be practicable by prudent legislation, those temptations of interest and those opportunities for their dangerous indulgence, which beset them on every side, and to confine them strictly to the performance of their paramount duty, that of aiding the operations of commerce,

rather than consulting their own exclusive advantage. These and other salutary reforms may, it is believed, be accomplished without the violation of any of the great principles of the social compact, the observance of which is indispensable to its existence, or interfering in any way with the useful and profitable employment of real capital.

Institutions so framed have existed and still exist elsewhere, giving to commercial intercourse all necessary facilities, without inflating or depreciating the currency, or stimulating speculation. Thus accomplishing their legitimate ends, they have gained the surest guarantee for their protection and encouragement in the good-will of the community. Among a people so just as ours, the same results could not fail to attend a similar course. The direct supervision of the banks belongs, from the nature of our government, to the states who authorize them. It is to their legislatures that the people must mainly look for action on that subject. But as the conduct of the fede ral government in the management of its revenue has also a powerful though less immediate influence upon them, it becomes our duty to see that a proper direction is given to it. While the keeping of the public revenue in a separate and independent treasury, and of collecting it in gold and silver, will have a salutary influence on the system of paper credit with which all banks are connected, and thus aid those that are sound and well managed, it will at the same time sensibly check such as are otherwise, by at once withholding the means of extravagance afforded by the public funds, and restraining them from excessive issues of notes which they would be constantly called upon to redeem,

I am aware it has been urged that this control may be best attained and exerted by means of a national bank. The constitutional objections, which I am well known to entertain, would prevent me in any event from proposing or assenting to that remedy; but in addition to this I cannot, after past experience, bring myself to think that it can any longer be extensively regarded as effective for such a purpose. The history of the late national bank through all its mutations shows that it was not so. On the contrary it may, after a careful consideration of the subject, be, I think, safely stated, that at every period of banking excess it took the lead; that in 1817, and 1818, in 1823, in 1831, and in 1834, its vast expansions, followed by distressing contractions, led to those of the state institutions. It swelled and maddened the tides of the banking system, but seldom allayed, or safely directed them. At a few periods only was a salutary control exercised, but an eager desire, on the contrary, exhibited for profit in the first place; and if, afterward, its measures were severe toward other institutions, it was because its own safety compelled it to adopt them. I did not differ from them in principle or in form; its measures emanated from the same spirit of gain; it felt the same temptation to over-issue; it suffered from, and was totally unable to avert, those inevitable laws of trade by which it was itself affected equally with them; and at least on one occasion, at an early day, it was saved only by extraordinary exertions from the same fate that attended the weakest institution it professed to supervise. In 1837 it failed, equally with others, in redeeming its notes, though the two years allowed by its charter for that purpose had not expired, a large amount of which remains to the present time outstanding. It is true, that having so vast a capital, and strengthened by the use of all the revenues of the government, it possessed more power; but while it was itself, by this circumstance, freed from the control which all banks require, its paramount object and inducement were

left the same to make the most for its stockholders; not to regulate the currency of the country. Nor has it, as far as we are advised, been found to be greally otherwise elsewhere. The national character given to the Bank of England, has not prevented excessive fluctuations in their currency, and it proved unable to keep off a suspension of specie payments, which lasted for nearly a quarter of a century. And why should we expect to be otherwise? A national institution, though deriving its charter from a different source than the state banks, is yet constituted upon the same principles; is conducted by men equally exposed to temptation; and is liable to the same disasters; with the additional disadvantage that its magnitude occasions an extent of confusion and distress which the mismanagement of smaller institutions could not produce. It can scarcely be doubted that the recent suspension of the United States Bank of Pennsylvania-of which the effects are felt not in that state alone, but over half the Union-had its origin in a course of business commenced while it was a national institution; and there is no good reason for supposing that the same consequences would not have followed, had it still derived its powers from the general government. It is in vain, when the influences and impulses are the same, to look for a dif ference in conduct or results. By such creations, we do therefore but jncrease the mass of paper credit and paper currency, without checking their attendant evils and fluctuations. The extent of power and the efficacy of organization which we give, so far from being beneficial, are in practice postively injurious. They strengthen the chain of dependence throughout the Union, subject all parts more certainly to common disaster, and bind every bank more effectually, in the first instance, to those of our commercial cities, and, in the end, to a foreign power. In a word, I cannot but believe that, with the full understanding of the operations of our banking system which experience has produced, public sentiment is not less opposed to the creation of a national bank for purposes connected with currency and commerce, than for those connected with the fiscal operations of the government. Yet the commerce and currency of the country are suffering evils from operations of the state banks which can not and ought not to be overlooked. By their means we have been flooded with a depreciated paper, which it was evidently the design of the framers of the constitution to prevent, when they required Congress to "coin money and regulate the value of foreign coins," and when they forbade the states to "coin money, emit bills of credit, make anything but gold and silver a tender in payment of debts," or "pass any law impairing the obligation of contracts." If they did not guard more explicitly against the present state of things, it was because they could not have anticipated that the few banks then existing were to swell to an extent which would expel to so great a degree the gold and silver for which they had provided, from the channels of circulation, and fill them with a currency that defeats the object they had in view. The remedy for this must chiefly rest with the state from whose legislation it has sprung. No good that might accrue in a particular case from the exercise of powers not obviously conferred on the general government would authorize its interference, or justify a course that might, in the slightest degree, increase, at the expense of the state, the power of the federal authorities; nor do I doubt that the states will apply the remedy. Within the last few years, events have appealed to them too strongly to be disregarded. They have seen that the constitution, though theoretically adhered to, is subverted in practice; that while on the statute books there is no legal tender but gold and