Abridgement of the Debates of Congress, from 1789 to 1856 (4 of 16 vol.)

I am aware, sir, that it may be stated in opposition to this claim, that these stockholders have enjoyed a boon for twenty years from which others of their fellow-citizens have been deprived, except on such terms as the sellers of shares chose to prescribe; that the charter expires by its own limitation, and that beyond this period they have no right to expect any thing which may not arise from the interest and convenience of the Government. I admit, sir, there is considerable strength in these objections. The exclusive right contained in the charter ever appeared to me as furnishing the most solid constitutional objection against the bank. The creation of monopolies; the granting of exclusive privileges, except so far as to secure to the authors of useful inventions the benefit of their discoveries; the tying up of the hands of the Legislature, and depriving itself of the power of according to a set of citizens, who may come into legal existence to-morrow, or ten years hence, what it had given to another; ever appeared to me hostile to the genius and spirit of the people of the United States, and of all their institutions. Highly then, sir, as I am induced to think of the conduct of this bank, from the best evidence I can obtain, still, from the considerations I have just mentioned, did the question now before us simply affect the stockholders, I should certainly not trouble the Senate with any remarks in reference to it, and should sit down in entire acquiescence, whether the prayer of their petition for the renewal of the charter of the bank were granted or rejected.

Sir, before quitting this idea of constitutional objection, permit me to make one or two brief remarks in regard to it. It is impossible for the ingenuity of man to devise any written system of government, which, after a lapse of time, extension of empire, or change of circumstances, shall be able to carry its own provisions into operation – hence, sir, the indispensable necessity of implied or resulting powers, and hence the provision in the constitution that the Government should exercise such additional powers as were necessary to carry those that had been delegated into effect. Sir, if this country goes on increasing and extending, in the ratio it has done, it is not impossible that hereafter, to provide for all the new cases that may rise under this new state of things, the defined powers may prove only a text, and the implied or resulting powers may furnish the sermon to it.

Permit me, sir, to put one question on this head, in addition to those so ably, and to my view, unanswerably put yesterday by the honorable gentleman from Georgia, (Mr. Crawford.) Whence, sir, do you get the right, whence do you derive the powers to erect custom-houses in the maritime districts of the United States? To attach to them ten, fifteen, or twenty custom-house officers; and clothe these men with authority to invade the domicile, to break into the dwelling-house of perhaps an innocent citizen? Whence do you get it, sir, except as an implied power resulting from the authority given in the constitution "to lay and collect taxes, duties, imposts, and excises?" If, under this authority, you can erect these custom-houses and create this municipal, fiscal, inquisitorial gens d'armerie, with liberty to violate the rights of the citizen, to break into his castle at midnight, without even a form of warrant, on a plausible appearance of probability, or probable cause of suspicion of his secreting smuggled goods, which the event may prove to be unfounded – and it will be recollected that a majority of Congress voted for the grant of this power in its most offensive form, when two years since they voted for the act enforcing the embargo – I say, sir, if under this general power to collect duties, you can erect the establishment and give the offensive power just mentioned, can you not, with the concurrence even of the citizens, adopt another more mild and useful mode, and create an establishment for the collection and safe-keeping of the revenue, and place it under the direction of ten or twelve directors, and christen it an office of discount and deposit, or of collection and payment, as you like best? And can you not, when you have thus created it, give to the directors a power, which perhaps they would have without your grant, to receive and keep the cash of those who choose to place it with them and to loan them money at the legal rate of interest, and in some places, as at New York, at nearly fifteen per cent. above the legal rate of interest? If you can do this, then you have your bank established, sir – and, most assuredly, if you can do one of these things you can do the other.

Sir, the constitutional objection to this bank, on the ground that Congress had not the power to grant an act of incorporation, has ever appeared to me the most unsound and untenable. Still gentlemen of intelligence and integrity, who have thought long and deeply on the subject, think differently from me: and I feel bound to respect their opinions, however opposed they may be to my own. Yet, sir, I will venture to predict, without feeling any anxiety for the fate of the prophecy, that should this bank be suffered to run down, such will be the state of things before this time twelve months, that there are other gentlemen, who at present have constitutional objections, but who have not thought so long and deeply upon them, who will, before that time, receive such a flood of intelligence, as on this head perfectly to dispel their doubts, and quiet their consciences.

Sir, I shall now proceed as briefly as may be in my power to state the situation of this bank on the expiration of its charter, and the effects on the community consequent on it. There is now due to the bank from individuals fifteen millions of dollars. These fifteen millions of dollars must be collected – the power of the bank to grant discounts will have ceased, and the duty of the directors must require them to make the collection. Sir, how is this to be done? Whence can the money be obtained? I shall demonstrate to you presently, that already, from an apprehension of a non-renewal of the charter of the bank, business is nearly at a stand – that navigation, real estate, and merchandise are unsalable; and that a man worth one hundred thousand dollars, at the recently rated value of property, and owing ten thousand dollars, must still be utterly unable to meet his engagements. Suppose, sir, this property consists in houses or shipping; suppose his warehouse is full of goods, and he has a large sum placed at his credit in England? If, sir, he can neither sell his ships nor his goods – if he cannot sell his real estate nor scarcely give away his exchange, which hitherto, to men who had money in England, has been a never-failing source of supply in case of need; I say under these circumstances, sir, whatever may be his property, he cannot meet his engagements. Sir, can men thus situated, solvent as they ought to be ten times over, find relief from the State banks? Certainly not, sir. These banks have already gone to the extreme length of their ability; they have always discounted to an amount in proportion to their capital exceeding that of the Bank of the United States, which is incontrovertibly proved by the dividends they have declared, which have at most universally equalled and frequently exceeded those of the Bank of the United States, notwithstanding the advantage enjoyed by the latter from the deposit of public moneys. Sir, so far from having it in their power, in the case of the dissolution of the Bank of the United States, to assist the debtors to that bank in meeting their engagements to it – I affirm the fact, on which I have myself a perfect reliance, that, take the State banks from Boston to Washington, and after paying their debts to the Bank of the United States, they have not, nor do I believe they have had, for six months back, specie enough to pay the debts due to their depositors, and the amount of their bills in circulation. And here I beg it to be observed, that bank bills and bank deposits, or credits, are precisely the same thing – with this difference, that the latter, from the residence in the neighborhood of the banks, and the vigilance of the proprietors, would be the first called for. How idle is it then to expect to obtain relief from banks which have already extended themselves beyond the bounds of prudence, and have not even at present the ability to meet their existing engagements? It might nearly as well be expected, that a man who was already a bankrupt should prop and support his failing neighbor.

Sir, much has been recently said of the amount of specie in the United States. Theoretical men have made many and vague conjectures about it, for after all it must rest upon conjecture; some have estimated it at ten millions of dollars – some twelve, some twenty, and some newspaper scribblers at forty millions of dollars. Sir, I do not believe that for the last ten years the United States have at any time been more bare of specie than at the present moment. A few years since, specie flowed in upon us in abundance. This resulted principally from an operation of a very singular and peculiar nature. The Spanish Government, as it was then understood, agreed to pay to France a very large sum of money – many millions of dollars, the precise number I am unable to state, from her possessions in South America. France contracted with a celebrated English banking house, as was said at the time, with either the concurrence or connivance of the English Government, that this money should be obtained through the United States. These bankers, by their agent, contracted with certain American houses, principally I believe in Baltimore, for the importation of this specie from La Vera Cruz into the United States, from whence it was not transmitted in coin to Europe, but invested in adventures in the shipments of produce, the proceeds of which ultimately go into the hands of these bankers in London, or of their friends on the continent, from whom it was finally realized by the French Government, either by drafts from Paris, or remittances to that city. This operation had a trebly favorable effect on the United States – it made fortunes for some of the merchants, it furnished the means of shipments to Europe, and it also provided the funds for adventures to the East Indies and to China. But this contract has now been finished some years; and since that time there has been a constant drain of specie from the country. Where it is in future to be procured from, I know not. Not from South America. Specie is, I believe, protected from exportation there, except to Spain. From Spain we cannot get it – to a great part of what was Spain we have now scarcely any trade. From France it cannot be obtained, for if we can get it there even by license, we are obliged to bring back her produce or manufactures. From England it cannot be imported – it is now made highly penal to attempt to send it out of the kingdom. With South America we have but little trade – hitherto we furnished them with smuggled or licensed European and India goods; but now the markets are flooded with these goods by importations direct from England, and which have been attended with great loss to the shippers. For these reasons, it is difficult to find a vessel sailing from the United States to the Spanish ports in South America. These are among the reasons why the amount of specie now in the country is small, and has for some time past been gradually lessening. Sir, without indulging in vague conjectures, what are the best data we have to form an estimate of the amount of specie in the country? The Bank of the United States has five millions of dollars in its vaults. In Boston there are three State banks – in New York I believe four, Philadelphia four, and Baltimore eight – call these nineteen twenty, and allow on an average one hundred and fifty thousand dollars specie, which probably is as much as they generally possess, and this will make three millions of dollars; this amount, united to the sum in the vaults of the Bank of the United States, gives eight millions of dollars – to which, if you allow two millions of dollars for a loose circulation of specie, you get an aggregate of ten millions of dollars. We are sometimes told of the large sums of money hoarded in our country by individuals – probably there may be some among the German farmers in Pennsylvania – perhaps more in that State than in any other, or all the others in the Union; but still of no great amount – the reputation of a little money possessed in this way easily swells into a large sum. At any rate, let the amount be what it may, in time of distress and mistrust, it would afford no addition to your circulating medium; for it is precisely in times like these, that men who hoard money will lock it up most securely.

Sir, the circulation of our country is at present emphatically a paper circulation – very little specie passes in exchange between individuals – it is a circulation bottomed on bank paper and bank credits, amounting perhaps to fifty millions of dollars. And on what, sir, does this circulation rest? It rests upon the ten millions of dollars, if that be the amount of specie in the country, and upon public confidence.

The Bank of the United States has fifteen millions of dollars to collect – call it ten, sir – nobody will dispute this – no one will pretend that this bank is not solvent – the remnant of its surplus dividends, and the interest it will have earned, will be sufficient to cover its losses at New Orleans, at Washington, and perhaps elsewhere. In what are these ten millions of dollars to be collected? In bank bills, the credit of which is at least doubtful? No, sir, in specie; and when this is entirely withdrawn from the State banks, and the banks are unable to pay the money for their bills, who does not see that this confidence is instantly destroyed – that the bubble bursts – that floods of paper bills will be poured in upon them, which they will be unable to meet, and which will for a time be as worthless as oak leaves – that the banks themselves must, at least temporarily, become bankrupts, and that a prostration of credit, and all those habits of punctuality which for twenty years, we have been striving so successfully to establish, will inevitably ensue, and, with them, also, there must be suspended the commerce, the industry and manufactures of the country; and a scene of embarrassment and derangement be produced, which has been unexampled in our history.

I will now make a very few remarks on the effects which the dissolution of the bank will have on the revenue and fiscal concerns of the country. Can it be supposed, sir, that the source to which will be imputed the distress that will have flowed from this event, will be the first to be thought of to be guarded against a participation of the evils that will result from it, in preference to the claims of the most intimate friends and connections? No, sir, the bonds due to the United States will be collected only at the tail of an execution. But I mean not to press this consideration. Admit, for a moment, that they will all be equally well collected – that they will be paid as usual, although it is palpable that for a considerable time the merchants will be unable to find the means to pay them: yet, admit, sir, that the money is collected in the State banks, how is it to be transmitted? It must come to the centre of the seat of Government; very little of the public money is expended in the Northern section of the Union. Will it come from the Eastward, in bills of the State banks? Penobscot bank bills sometimes will not pass in Boston; Boston bills pass with difficulty in New York or Philadelphia; and the bills of New York State banks probably would not be readily current in Washington. You must, then, sir, if Boston gives you a revenue of two millions of dollars, transmit the greater part of it to the seat of Government, or wherever it may be wanted in specie. Can this be done? We have not two millions of dollars of specie in our town, and, I may almost venture to say, never had. Suppose you make this transmission once, can you do it a second time? No, sir, the thing is utterly impracticable. You must adopt some other mode. Exchange between the different cities will not reach the case; frequently it cannot be purchased even for an insignificant amount.

Sir, will your money, when collected, be safe in the State banks? Of this I am extremely doubtful. Solicitations will undoubtedly be made for it from all quarters. They have already been made. In one instance, I am told, sir, the agent of a bank, even during the few past weeks, has been here for the purpose – that suddenly the agent was gone, and in a few days it was discovered that, owing to the failure of one of the debtors to the bank which he represented, (a great broker,) the stock had fallen in one day near 20 per cent. What was this the evidence of, but that those who were most interested in this bank, the stockholders who were on the spot, and best acquainted with its solidity, were willing to wash their hands of their concern in it, at almost any rate of sacrifice? Sir, I only state this, as it was here reported. I have no personal knowledge on the subject. But will you trust your funds with an institution thus precarious, and whose solidity is distrusted even by its best friends?

Wednesday, February 13

The credentials of Nicholas Gilman, appointed a Senator by the Legislature of the State of New Hampshire, for the term of six years, commencing on the 4th day of March next, were read, and ordered to lie on file.

Thursday, February 14

Bank of the United States

The Senate resumed, as in Committee of the Whole, the bill to amend and continue in force an act, entitled "An act to incorporate the subscribers to the Bank of the United States," passed on the 25th of February, 1791.

The question being to strike out the first section —

Mr. Giles. – Mr. President: It is with great reluctance that I find myself compelled to enter into the discussion of the subject now under the consideration of the Senate, but the observations which fell from the honorable gentleman from Georgia (Mr. Crawford) were of such a character as to impose on me an irresistible obligation to present that view of the subject which has resulted from the best reflections I have been enabled to bestow on it. This obligation arises from the very high respect I entertain for the Legislature of the State I have the honor to represent, the great respect I feel for the gentleman who made the observations, as well as from the respect which is manifestly due to myself. In executing this unpleasant task, I labor under circumstances of peculiar embarrassment. This embarrassment arises from a conviction that the views of the subject now proposed to be exhibited will disappoint the expectations both of the opposers and the favorers of the bill, and that they will not be acceptable to either. I shall not, however, in this instance, depart from my invariable habit, when urged by duty to participate in debate before this honorable body, of disclosing in the most undisguised manner my real opinions upon the whole subject, free of any consideration of political difficulties or inconveniences which may consequently affect myself.

In the first place, I find myself called upon to oppose a law, on constitutional grounds, which has been in existence for nearly twenty years, and during that period, I am compelled to admit, has been acquiesced in by the several State governments, as well as by the General Government, and its republican administrations. It is peculiarly irksome to me to question the constitutionality of a law which has been thus and so long acquiesced in, because it tends to give the character of instability to the laws generally, and in my judgment, tends also to impair the sacred character of the laws, and of course, to lessen their efficacy. In a Government like ours, where the laudable boast of every citizen is that he lives under a government of laws, and not of men, no subject should be touched with more caution and delicacy than one which questions the validity of the laws, lessens the confidence of the citizens in them, or impairs the obligation of obedience to them. Yet, sir, the course of observations I propose to make may have some of these tendencies, which I should extremely regret, and this apprehension, of course, produces embarrassment. Connected with this idea is another circumstance of embarrassment. I cannot help observing the inordinate zeal manifested by the opposers of this bill, evidently resulting from a belief that its rejection will lessen the powers of the Federal Government. Although it may be properly directed in the present instance, yet I think I have seen, and fear I may hereafter see the same spirit directed against some of the powers and proceedings of the Government which I have deemed indispensable to its own preservation, and its beneficial efficacy towards the people. It may, perhaps, be thought by some not becoming in me to say that I have not been an inattentive observer of the progress of this Government for twenty years, and more particularly, since the Republican party came into power. Some of the scenes through which I have passed, have produced an impressive influence on my mind. Such is the nature of the Government that its administration will vibrate from one principle to another, and it will always require great wisdom to keep its oscillations from wandering too far. Whilst those who preceded us in power endeavored to legislate into the constitution an unnecessary constructive energy, leading to what has been called consolidation, it appears to me that we have taken too much the opposite course, leading to disunion and dissolution, by depriving it constructively of its legitimate, necessary, and proper powers. If this course should be unfortunately persevered in, it requires no spirit of prophecy to foresee that the Government will fall to pieces from the want of due energy in the administration of its legitimate powers, or that some extraordinary means must be resorted to for its resuscitation.

The honorable gentleman from Georgia, (Mr. Crawford,) who reported this bill, as the chairman of the committee, to whom the subject was generally referred, excited not a little surprise in my mind by the prefatory remarks which fell from him in support of it. The gentleman prefaced his arguments by observing, "that it had latterly become the fashion to eulogize the Constitution of the United States; and that whenever he heard lavish encomiums applied to it, he could not help apprehending mischief." I acknowledge I could not comprehend the bearing of this remark upon the question under discussion. I, sir, have long been in the habit of venerating the constitution, and have often expressed my admiration at the wisdom of its provisions; and I really had hoped that I might have been indulged in these sentiments and prepossessions, and even the expression of them upon proper occasions, without exciting in the mind of any gentleman apprehensions of mischief; nor can I divine what species of mischief the gentleman apprehends from that cause. Mr. President, when we look over the whole world known to us; when we particularly cast our eyes over that part of it with which we have the most intimate relations; when we see the rapid strides which despotism is making over the whole human race; when we observe the various and powerful means now in use to rivet its immovable dominion upon mankind; when we reflect that the Constitution of the United States now affords the only practical experiment upon the republican principle, and the only and last hope for the preservation and extension of the liberties of man; is it wonderful or alarming, that we should feel and express some partiality and even veneration for an instrument of so peculiar a character? or should even endeavor to teach others to venerate, to cherish, to support it? An instrument, whose provisions at least exempt us from the general scene of despotism, and may eventually extend their blessings to the whole human race? Or if, in dwelling upon the wisdom and importance of its provisions, we might pass over some possible defects from scrutinizing them with an hypercritical eye, might not the omission be indulged without producing animadversion or censure? Sir, we all venerate the republican principle. I know the gentleman from Georgia (Mr. Crawford) does; nor do I pretend that my devotion to it is greater than his; but, sir, I have given the greatest attention to the observations of the gentleman upon the constitution; and I can now say that my veneration for the instrument, and admiration at the wisdom of its provisions, are not at all impaired nor diminished, notwithstanding the gentleman's criticisms, &c. I will now, Mr. President, endeavor to exhibit the general character of the constitution; to point out the mode for its correct interpretation, and apply it to the subject now under consideration. In doing so, I propose to follow the course of observations made by the honorable chairman of the committee who reported the bill.