the system really contributes very little. Yet, whether this be so or not, it is certainly a little strange that gentlemen who have been the friends and sworn advocates of this system, early and late, who have supported it and been supported by it, should now profess to entertain doubts about the solvency of the banks, the Safety Fund to the contrary notwithstanding; that they should seriously object to restoring to the banks the right to issue small notes, on the ground of an avowed apprehension that they would never be able to redeem them! Let not gentlemen attribute their loss of confidence in the banks to the suspension of specie payments. The suspension is bad enough without aggravating, or adding to, the evils which properly belong to it. It is undoubtedly true that, in a commercial sense, a bank fails when it can no longer pay its notes in specie if demanded. But if an individual may, and often does, suspend payments entirely, and yet be perfectly solvent, the suspension of payments in specie by a bank, where it still goes on to meet all its engagements in the only currency that is left to the country, is not even evidence prima facie that it is insolvent. It is true, that a suspension necessarily throws every thing into confusion. Currency becomes de

ranged, and prices are unsteady, and property is of uncertain value. But in the circumstances of the country at the time it took place, suspension was not the greatest evil which could happen. If it had then been universally insisted on that nothing should be received in payment of debts, in any quarter, but gold and silver, universal bankruptcy of course must have succeeded. The banks would have been insolvent, because all their debtors would have been insolvent, a scene of unpa

ralleled suffering, perhaps of anarchy, would have ensued.

But my final answer to this objection of the probable want of soundness in the banks, is a broad one. It is an objection, which goes to their present issues, and to any they may make, in bills of five dollars and upwards, as well as to the issues for which this bill provides. And if gentlemen are sincere, they are bound to see that banks, which have not the ability to redeem their small notes, if they should put them out, shall not be allowed to issue or keep afloat their lage ones.

But, Mr. Chairman, I come now to consider another reason, which has been urged, why small bills ought not to be issued. Gentlemen begin with the position, that there can be no such thing as a safe bank-note circulation, which is not based on specie-and in this position I cordially concur. I suppose, if there be any one proposition in political economy, or in regard to currency, which is entirely settled, it is this. At any rate, I agree, as a general principle, that if you use paper for currency, it must be a paper, convertible into specie, at the will of the holder. In other words, I agree, that an issue of paper, on a property basis only, and with no other limit, or restraint, than what is imposed by the limited amount of such property, is utterly unsafe, and sooner or later, will always be depreciated. But I regard it as a very great error, though a very common one, into which gentlemen here have fallen, when they insist on having nothing but metal money in circulation, under the denomination of five dollars, or any other particular sum, under the idea that it serves as a basis for the paper circulation above that sum. The two things it seems to

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me, have no sort of connexion with each other. It is untrue in fact that you create a specie basis for paper in circulation, by establishing a distinct circulation of specie along side of it. The truth simply is, that you thus have two disconnected currencies instead of one. The streams come together indeed at the point of confluence, and flow on together in the same broad channel, but they never do, and they never can be made to, commingle and unite.

Sir, what is the object of a specie basis for a paper circulation? There are two ends to be answered by it. One is to have the means of payment, in that material, to meet any demands which may be made for it. For this purpose alone, the basis ordinarily need not be large; for experience shews that probably not one person in five, holding bills will demand the specie; frequently, in times of security and confidence, not one in twenty, or even one in a hundred. For this reason it is that banks may be safely conducted with paper out, greatly exceeding the actual amount of specie on hand. In this particular, the business of a bank is very much what the business of any fair trader is. Specie is the only legal tender; every creditor may demand it of every debtor; but it is not demanded except in comparatively rare instances; and in conducting a business, great or small, the principle of safety only requires, that full provisions should be made for the demand, whatever in practice it is likely to be. This then is one object of a bank specie basis. And now, in regard to this object, what is gained to the community by having a specie circulation established by the side of a paper circulation? It is the bank that is to redeem its paper, not the community. If you

present a five dollar bill at the counter of a bank for coin, you do little to facilitate the transaction by having five dollars of silver already in your pocket; and I conclude the only proper place for a specie basis, to meet the current demands of a paper circulation, is the vaults of the banks.

But it is said, that a mixed currency, consisting partly of paper and partly of specie, affords the best security against over issues; and this brings me to consider the other, and the more important, use of an ample specie basis. I desire it to be remembered all the while, that what is thus called a mixed currency, is in truth no such thing. It is always the case of two distinct, and, in some respects, opposing currencies, and in the nature of things they can not mingle and become one. The one is not a basis for the other; one may be above the other, but does not rest upon it; and the notion that any considerable check is thus given to expansions and the evils of redundancy to which paper always tends, is, in my judgment, entirely unsound. This check can only be given by a sufficient specie basis in vault, kept in some fixed and adequate ratio to the whole amount of paper in circulation. It is this office of a specie basis, on which I am prepared at all times to insist; and I avow my solemn conviction and belief, that as nothing else ever has been found, so nothing else ever will be found, which will operate effectually to repress undue and destructive expansions, in a currency consisting chiefly of paper, and keep it in a sound and healthy state.

Let us see now if any principle can be found in a so called, mixed currency, to check expansions. We will suppose that this whole country may require, for its

actual exchanges and the employment of its captal and industry, a currency of a hundred millions of dollars. Let us then be supplied with eighty-five millions of paper and fifteen millions of specie, the line of demarcation between the two currencies being drawn at the five dollar point, the specie of course moving in the lower plane, and the paper in the upper. Now comes a time of great activity in business. Men are stimulated, and they stimulate each other, to extraordinary action, Property advances in value. Speculation begins to make large promises, and excite high hopes. Money is in demand; the banks begin to be importuned; and as every thing looks prosperous and bright, they catch sympathetically the tone of feeling without, and they become liberal and generous even beyond their wont. Debtors are treated with great lenity, because securities seem abundant, and new issues of paper are freely made. In this way the sum of the circulation is greatly increased, while, it must be remembered, your specie remains stationary. But it will not remain stationary long. Let your circulation go up to one hundred and fifty millions -a hundred being still all that the actual business of the country requires-and before you get to this point your specie in circulation will begin to disappear. You have now a redundant currency, and of course a depreciated currency, always manifest in a general rise in prices, and the specie is depreciated in the same proportion as the paper. It is now worth more abroad than it is at home; a demand for it begins to be felt, and hoarding becomes the order of the day. So much of it as was in circulation, or a great part of it, disappears. The farmer, and the tradesman, and the thrifty laborer all