27th Congress, 2d Session. [SENATE.] [ 133 ] IN SENATE OF THE UNITED STATES. February 21, 1842. Ordered to be printed, to accompany Senate bill 176; and that 3,000 additional copies be furnished for the use of the Senate. Mr. Tallmadge submitted the following REPORT: c The Select Committee, to whom was referred the “ report from the Secre¬ tary of the Treasury , communicating a plan of a Fiscal Agent of the Governmentrespectfully report: That they have given the subject that consideration which its importance demands, and now present to the Senate some of the views which have brought them to the conclusion to which they have arrived. The committee do not intend to go into an elaborate argument, in favor of such a measure. The late period at which this subject was referred to them, and the anxiety of the public mind for speedy action on it, have left them but little time, amidst their other pressing engagements, to prepare an extended report. They, therefore, content themselves with reporting a bill to establish a fiscal agent of the Government, accompanied by such remarks upon its leading features and principles, as seem to be called for by the occasion. Since the adoption of the constitution of government under which we live, the country has experienced much financial and commercial embarrassment. But at no period has it been so suddenly precipitated from an apparently high state of prosperity, to the lowest point of depression, as at the present time. The committee will not attempt an enumeration of the causes which have led to this disastrous result. But they take leave to say that, among them, an inflated and deranged condition of the currency is the most prominent. There may be a difference of opinion, as to how this inflation and derange¬ ment have been produced. All, however, will agree that the excess in trade and business, consequent upon such a state of things, is, in some part, inci¬ dent to our system of credit—a system which is a characteristic feature of our free institutions. In an attempt to correct these excesses, the committee would wish to preserve and regulate, but not destroy, the system itself. The efforts which have, heretofore, been made to correct them, have always en¬ countered one grand obstacle, in the difference of opinion which has prevailed in the community, as to the kind of corrective, and the manner in which it should be applied. This has led, in some instances, to a reorganization, and a hostile array of political parties; and the great question of regulating the I currency of the country has formed the issue upon which, for some years past, the most violent political battles have been fought. Experience has shown that, in such contests, the business of the counfjy must always be de | ranged. And the greater the sincerity with which the war 13 waged, on the one side and the other, the fiercer will be the conflict, and the more disastrous the consequences, as long as the great matter in difference remains unsettled. I Tii»mas Allen, print. 2 [ 133 ] There can be no peace, no prosperity, until it be settled. 1 Other questions, upon which political parties divide, are, comparatively, harmless. No matter how violent the contest, the business of the country is not affected by it. Amidst the excitement of the public mind, the country pursues its onward march to prosperity and greatness. But the instant the question of currency becomes the issue, it is felt, like an electric shock, from one extremity of the Union to the other. It behooves, then, every good and patriotic citizen to lend his aid in the settlement of this question. His inquiry should be, not what ought to be done, but what can be done ? He should be prepared to surrender his in¬ dividual opinions, if necessary, in order that some system may be adopted, which shall promise stability and permanency in relation to this all-absorb¬ ing subject. The distresses of the country are beyond much further en¬ durance. The people throughout the extent of this broad land cry aloud for relief. Thousands and thousands of our fellow-citizens have been pros¬ trated by the calamities of the times which have overtaken them. They have been suddenly reduced from affluence to want. Their property, which, under ordinary circumstances, would have been ample to meet all engagements, and leave a competency to themselves and families, has been most cruelly sacrificed. Others, who have survived the fearful wreck of the hopes of thousands, are still suffering by a disordered currency and the unregulated exchanges between distant points. The one class looks to thfe settlement of this question as a means of once more engaging in a success¬ ful business ; the other looks to it as a means of profitably carrying on the business in which they are already engaged. All look to Congress for that relief, which Congress alone has the power to grant. By relief, it is not meant that Congress can furnish means to cancel the indebtedness into which the community has been plunged ; but, by aiding the currency and exchanges of the country, it may enable the people not already in hopeless despondency, to liquidate their own debts. With such aid, the productive industry of the country will, in due time, wipe out every trace of distress that was left by the desolating fury of the storm which has swept over the land ; and our great object should now be, to adopt such measures as will protect us from its ravages in future. The ruinous rates of exchange result essentially from a depreciated paper circulation. If the currency can be made sound and uniform, it will of itself go very far, and, with the facilities which the General Government can give, will effectually regulate the exchanges. The great evil under which the country now labors is the want of a uni¬ form currency and an equalization of the exchanges. Can the General Government remedy this evil? This Government must have some mode to collect, keep, and disburse, its revenue. This in¬ volves both the question of currency and exchange: 1. A sound currency to receive in payment of public dues. 2. Exchange to transmit to distant points the revenues of the Government, in payment of the public creditor. The committee propose then to adopt a system, on the part of this Gov¬ ernment, for the collection, safekeeping, and disbursement, of the public revenue, and thereby incidentally aid in furnishing a uniform currency and equalizing the exchanges. This is deemed the right and duty of the Government; and the only ques¬ tion which remains is. how shall it be done ? Different modes have been proposed and tried. They are : 1. A Bank of the United States; 2. The State bank deposite system; 3. The Sub-Treasury. 3 [ 133 ] Th .As,to selling: This may be 5 [ 133 ] done either by one agency drawing a bill on another, on payment of the amount and premium in specie, or by accepting the bill payable at the agency where drawn, as will best comport with the state of accounts between them, and best promote the interests of all parties. This will answer all the purposes of buying or discounting bills of ex¬ change. Buying or discounting bills on time is, in other words, a mode of anticipating funds. The legitimate object of a bill is not to anticipate, but to remit funds. These funds may be remitted without the hazard, on the part of the Government, of the purchase of the bill; and, at the same time, accommodate equally well the individual to whom they belong. For ex¬ ample, if a merchant in New York has funds in Cincinnati, for which he is entitled to draw at sixty days, he may direct his correspondent there, at the end of that time, to deposite the amount in the agency at that place and send him a bill at sight on the agency at New York, where he can receive the amount on presentation of the bill. In the meantime, if he wishes to anticipate his funds, he can get his note done at one of the local banks, whose business it is to discount, and rely upon the bill of his correspondent at Cincinnati to meet it at maturity. 2. As to collecting: The committee propose to authorize the Board of Ex¬ chequer and its agencies, under regulations to be prescribed by the board, to ■ receive and collect such drafts and bills of exchange as may be deposited with them for that purpose, drawn on any place where an office of the Ex¬ chequer may be established ; but that no advance or payment shall be made on such draft or bill until it shall have been actually collected and advice received of such collection, when the proceeds shall be paid over to the person entitled to receive them, after deducting reasonable charges and commission. The facilities afforded by this system for selling and collecting exchange will promote the interests of the whole country equally well with the power to purchase, and, at the same time, save the Government from the possi¬ bility of loss or hazard. 3. As to the issue of treasury-notes on the credit of the Government. From the view taken of this subject by the committee it is unnecessary to discuss the question as to how far the issue of treasury-notes on the credit of the Government, to circulate as currency, is obnoxious to the con¬ stitutional objection to bills of credit. The committee are of opinion that no paper should issue on the credit of the Government to circulate as currency. There can be but two motives for the issue of such paper. 1. To anticipate the revenue to meet the en¬ gagements of the Government. 2. To aid the currency of the country by this addition to the circulating medium. As to the first, the committee hold it wrong in principle for the Govern¬ ment to anticipate its revenues by this means. Its tendency would be to excessive issues, and to a reluctance on the part of the Government to levy adequate duties for revenue. Either result would be in the highest degree derogatory to our national character. The revenues of the country should always be adequate to the economical wants of the Government, and the Government should never have occasion to anticipate its revenues. But if an emergency should happen, when its means are not sufficient to meet its engagements, it may get the authority of Congress, as has often ‘been done before, to issue treasury-notes, not as a currency, but as a means ^of borrowing—treasury-notes, bearing an interest, to be taken, as an invest¬ ment by capitalists, and not as a circulating medium for the people. 6 [ 133 ] As to the second, the committee do not perceive how a currency issued on the credit of the Government, can make any permanent addition to the circulating medium beyond the business wants of the country. Such a currency, if it could be put in circulation beyond those wants, would, displace and send into retirement an equal amount of the local currency, so that the aggregate amount remaining would be the same as before. Any benefit to be derived by this better currency of the Government, if perchance a currency issued on its credit should eventually be better, would not compensate for the violation of what the committee deem a great and fundamental principle, namely, that no paper should issue on the credit of the Government to circulate as currency. The Secretary of the Treasury proposes to issue $15,000,000 of treas¬ ury-notes, founded on a specie basis of $5,000,000. In other words, to is¬ sue a paper currency, convertible into specie, in the ratio of three dollars of paper to one of specie. In ordinary banking operatiqns, this is deemed a perfectly safe ratio. In truth, the circulation of most banks is not regula¬ ted by the specie in their vaults. Their issues are sometimes in proportion to capital, and sometimes graduated by discounts. The ratio, however, of three to one has always been deemed safe in banking operations. But would it be a safe principle for the Government to adopt, in regard to any paper it may issue, to circulate as currency ? The committee think not. The officers of Government cannot provide for contingencies and emer¬ gencies, as individuals, or as banks controlled by individuals, can do. However faithful and honest they may be, and however conscientiously they may intend to discharge their duties, they have not the interest nor the means to provide for such occasions. Individuals interested in, and concerned in the management of banks, are always looking out and provi¬ ding, in advance, for any sudden demand upon them for specie ; and, with all their interest, sagacity, and vigilance, they are nut always able to pro¬ vide against a suspension of specie payments. Will the officers of Govern¬ ment be any better able to provide against it ? There might be a sudden and unexpected demand which would drain an agency, at once, of its spe¬ cie. There might be a systematic operation and combination, from politi¬ cal or other motives, to accumulate the notes of an agency, and to present them suddenly and unexpectedly for redemption, and for the express pur¬ pose of compelling it to suspend specie payments. The effect would be, not only to destroy the credit of the Government, but to disgrace it in the eyes of the world. The Government should not be so exposed. Its credit should always be beyond any possible contingency. The committee, therefore, propose that no paper shall be issued on the credit of the Government, to circulate as currency ; but that a paper may be issued for that purpose, based upon specie on hand, dollar for dollar , and that the amount of such paper in circulation shall not, in any case, nor un¬ der any circumstances, exceed the amount of specie holden for its redemp¬ tion. The paper thus issued is called specie-notes , as being a currency based on specie , and as contradistinguished from treasury-notes which are issued on the credit of the Government, not for currency, but as a means of bor¬ rowing. These specie-notes can, in no sense whatever, be obnoxious to an objec¬ tion, as bills of credit. They are not issued on the credit of the Govern¬ ment, but are issued on specie in deposite, of an equal amount, for their re- 7 [ 133 ] demption. They pass by delivery from hand to hand, as a currency; and the possessor of such a note holds it as evidence of ownership of the amount of specie which it represents, and to the possession of which he is entitled at any moment, on presentation of the note at the agency where issued. Until that time, the specie remains in the depository of the Government, is guarded by its authority, and the holder of the note has the responsibility of the Gov¬ ernment for its safe custody. These specie-notes, issued upon the public revenue to the public creditor in the disbursements of the Government, and upon the deposites of individu¬ als, would form a currency of the most perfect character—a currency com¬ bining all the conveniences of paper, with the value of coin. They would everywhere be preferred to coin. They would be preferred by the public creditor, as well as by the whole community, because every one would know that the specie was resting in the Government depository for their redemp¬ tion, and with it the guarantee of the Government for its safekeeping. The issue of such a paper, equal only in amount to the specie held for its redemption, will neither increase nor diminish the currency; consequently there will be no power on the part of the Government to expand or contract the currency—a power which the committee think should never be possessed or exercised by the Government. So far, therefore, as its action is concerned, it cannot cause a scarcity or abundance of money, and of course cannot inju¬ riously affect the business of the country. There will be no inflation of the currency, or any rise or fall in the prices of commodities through its instrumen¬ tality. The receipts and disbursements of the Government are so nearly equal, that any expansion or contraction will be regulated by the business from which revenue is derived, and will only be a healthy action of the system. Neither would these specie-notes of a low denomination be liable to the objection which is sometimes made to the small-note circulation of the banks, namely, that of driving specie out of the country. On the contrary, the spe¬ cie would remain under the safe custody of the Government for their redemp¬ tion ; and while these notes would form a more active and convenient circu¬ lating medium for the people than the specie they represent, the specie would remain at rest, and not be exposed to the casualties of circulation, by which it is often irrecoverably lost to the world. In this view of the matter, the com¬ mittee see no objection to an issue of specie-notes of a denomination corre¬ sponding to the small-note circulation of the banks. Being free from all pos¬ sible risk, and in no way obnoxious to the objections which are made to those notes, they would be peculiarly acceptable and beneficial to that most useful and respectable class, to wit, the small dealers and day laborers through¬ out the country. They would feel, that while Government is providing a currency of undoubted credit and safety for the larger business interests of the community, it is not unmindful of those of smaller means, and of more humble occupation. Undei the proposed system, there is to be no power of discount in any shape whatever; that must be left to the local institutions. To them it more appropriately belongs. Those institutions would feel the salutary influence of the operations of the Exchequer in the frequent settlement of balances, and the consequent restraint upon over-issues and excessive circulation. Its tendency would be to confine their discounts to business instead of accom¬ modation paper—the only safe rule, in fact, for banking operations. Under such a rule, there would be no danger to the community from their contrac¬ tions and expansions; they would be regulated and controlled by the busi- 8 [ 133 ] ness of the country, and expand and contract with it; their circulation would be increased at that season of the year when the products of industry are go¬ ing forward to market, and would furnish the means of getting it there; and it would contract again when those operations have been performed, and the business consummated. This would be a sound and healthy action of the banking system, and would be much promoted by the practical operations of the Exchequer. Would this system furnish a uniform currency ? If by a uniform curren¬ cy it is meant, that the General Government shall undertake to furnish an amount of currency adequate to the wants of the whole country the committee answer, no. It neither has the *power nor the ability to do so. No measure which Congress can adopt, whether it be in the shape of a national bank or otherwise, can supply a hundred millions or more of currency to meet the existing or increasing wants of the community— wants, increasing by the rapid increase of population, and the consequent augmentation of the products of domestic industry. From the adoption of the constitution to the present time, the States have furnished by far the greater portion of this currency, and they will continue to furnish it. Their right to do so cannot be superseded by any action on the part of this Govern¬ ment. All that Congress can do, is to infuse into the great mass of the circulating medium of the country, a currency issued under its authority, and of such undoubted credit, that, with the local currency of the States, when restored to a sound condition, shall together form a uniform cur¬ rency throughout the country. The currency of the local specie-paying banks in sound condition is as good, for all practical purposes, within the sphere of its circulation, as any currency which this Government can issue. But such a circulation can¬ not extend beyond that sphere, and maintain itself alongside of such a cur¬ rency as is proposed to be issued on the part of this Government. The experience and observation of every one demonstrate that a local currency, however sound, cannot have that universal credit which would attach to a currency of the General Government, founded on a specie basis, and car¬ rying with it the responsibility of the Government for the safe custody of the specie which it represents. Neither would a local currency, though founded on a similar basis, possess that universal credit; and, perhaps, the most concise reason which can be given is, that one is local, and the other general. To the General Government the people of the whole country look ; to the State Government, the people of the State look. The credit of the one, so far as currency is concerned, is universal; the credit of the other is local. The currency of the New York banks, and the currency of the Ken¬ tucky banks, when paying specie, are as good for all practical purposes within their respective spheres of circulation, as a Government currency. The same may be said of any other distant points. All that is s wanting, then, to make a uniform currency over the whole Union is one of such un¬ doubted credit and so universally known, that it will be as good in New York as in Kentucky, and as good in Maine as in Arkansas—a currency which, for travel and remittance, will enable one to go or send from one of these spheres of local circulation to another. This the proposed Gov¬ ernment currency would do; and it would require but a moderate amount, compared with the whole circulation of the country. This amount would be furnished. 1. By the disbursement of the public revenues in specie- 9 [ 133 ] notes in payment to the public creditor, and which would be preferred by him to coin. 2. By the issue of such notes on the deposites of specie by individuals, for the purpose of entering into general circulation. The greater amount of these specie-notes would be issued from the agencies at the great commercial emporiums of the country, and would have a uni¬ versal credit throughout the Union. The receipt and disbursement of $25,000,000 of public revenue annually would keep up an active circula¬ tion of an amount adequate to the disbursement of so large a sum; and which amount, with that which would be issued on private deposites, and in connexion with the selling and collecting of exchange, would be fully adequate, with a sound local circulation, to furnish a uniform currency throughout the country. There would be no difficulty in keeping a sufficient amount in circula¬ tion to answer all the purposes for which they are intended. Although two thirds, or three fifths of the revenue from customs is collected in the city of New York, still there is but a comparatively small portion of it dis¬ bursed there. The large disbursements of the Government are made in the West, for Indian treaties, Indian annuities, for the army, for military roads, fortifications, and posts, for the improvement of lake harbors, and the channels of rivers, for the great variety of expenses for public build¬ ings, internal improvements, and the civil administration of the Territo¬ ries, with thousands of other disbursements which cannot be enumerated. All these would undoubtedly be paid in the specie-notes of the Exchequer, and, although they are receivable for public dues, and the natural tenden¬ cy would be, to follow the course of trade to the Atlantic cities, still there would be counteracting causes to retain them there. A large amount would be retained for land office money ; and the smaller denominations having entered into circulation among the people, would be retained in circulation, by reason of its convenience and undoubted credit. And even the amount which should find its way to the Atlantic cities in payment of public dues, would at once be thrown back upon the West, in payment of the public creditors. The West would also receive a very large amount of this circulation from the emigrants of New England, New York, Virginia, and other Atlantic States, as well as from the vast influx of foreigners from the continent of Europe. All would deposite their specie in the Atlantic agencies, and take, in lieu of it, the specie-notes of the Exchequer. On their arrival in the West, they would pay them into the land offices, in¬ stead of being subjected to the expense and risk of carrying specie, or any local currency on which they might be compelled to pay a large discount to procure specie. They would also use these specie-notes in all their dis¬ bursements for the purchase of stock, and for the improvement of their farms. Again : the eastern merchants would send these specie-notes to pay their purchases of the products of the West. It seems to the committee, that the West would have an abundant share of this Government curren¬ cy, and, in connexion with the benefits which it would derive from ex¬ changes, that its interests would be peculiarly promoted by the establish¬ ment of this system. This paper circulation, based upon specie, dollar for dollar, will not add to the circulating medium of the country. The committee have heretofore shown that it ought not to add to it; but it has many advantages over specie. Among those advantages are the following: 1. It will be the means of drawing forth from its hiding places specie that 10 [ 133 ] has been hoarded, to the estimated amount of several millions, and which, in its present condition, is of no use to its possessor nor to the country. Tha lack of confidence in individuals and banks as safe depositories, which caused this retirement of specie, will yield at once to the unbounded confidence in¬ spired by the Exchequer, where specie-notes are issued on a deposite of spe¬ cie, and the safe custody of the deposite is guarantied by the Government for the redemption of the notes. 2. In the ratio of the increased velocity and economy which paper affords over specie, and to which may be added the high credit of this paper, it will impart a great activity, and, consequently, effectiveness to the circulating me¬ dium. 3 . The local banks may be induced to a great extent to substitute this paper for their own. 4. It will prevent the depreciation of specie by abrasion, while in circula¬ tion. 5. It will prevent its total loss to the country and to the world by shipwreck and other casualties. 6 . It will afford the most convenient, safe, and valuable currency for travel. 7. It will be the best and safest remittance by mail, from one end of the Union to the other, for the payment of newspapers and periodicals, and other tilings requiring small sums, without the possibility or loss by depreciation to those who receive it. 8 . It will tend to regulate the banks, and by a frequent settling of bal¬ ances, to bring them up to a sound circulation. 9. It will do much toward regulating exchanges, by means of its favora¬ ble action on the local currency. In the view which the committee have thus far taken of the plan of a fiscal agent, submitted by the Secretary of the Treasury, they have suggested cer¬ tain important modifications; and in order to give the Senate a more concise and connected view of the system, as they propose to modify it, they submit the following PLAN. I. A board to be established in the Treasury Department, at the seat of Government, to be called the Exchequer of the United States. The board to be composed of three commissioners, to be appointed by the President, with the advice and consent of the Senate ; and to be removed from office only with the like concurrence of the Senate, and for physical inability, in¬ competency, neglect, or violation of duty. The President to communicate to the Senate the particular reasons of the proposed removal. For like- causes, the President may suspend a commissioner, and appoint a tempo¬ rary substitute, and, within the first week of the ensuing session of the Senate, lay before that body the reasons of such suspension; and, if the Senate concur, the commissioner to be removed ; if not. to be restored. II. The Board of Exchequer to establish agencies as it may deem neces¬ sary and expedient for the public service ; limiting the number to as few as the exigencies of the service will admit, and in no case to exceed two in any State or Territory. III. The Secretary of the Treasury to appoint the inferior officers of the board, and also the officers of the agencies, on the recommendation of the board ; and to remove them for physical inability, incompetency, neglect, or violation of duty, on like recommendation. 11 [ 133 ] IV. The Exchequer and its officers to be the general agents of the Gov¬ ernment for receiving, safekeeping, and disbursing, the public moneys^ The public money ftom all sources received to be paid into the Exchequer and its agencies. Y. The Exchequer and agencies to receive on deposite gold or silver coin, or bullion, and to issue specie-notes for the same, to be redeemed at the agency where issued—said notes to be prepared by the Secretary of the Treasury, signed by the Treasurer, and countersigned by the president of the Board of Exchequer, and made payable to the order of the principal agent, and endorsed by him when issued at such agency. YI. The Exchequer and agencies, on the deposite of gold or silver coin, or bullion, to draw and accept bills of exchange, and to receive a premium not exceeding two per centum. Also, to collect drafts or bills, but to make no advance or payment till advised of the collection, and to charge a reasonable commission for collection and exchange. VII. All specie-notes issued, either in payment of the public creditor, or on the deposites of individuals, never to exceed the actual amount of specie on hand for their redemplion, dollar for dollar. VIII. Dues to the United States to be paid in gold or silver coin, in specie- notes, or in the notes of banks immediately convertible into specie at the place where received. The Exchequer and agencies to settle weekly, or of- tener, balances with the banks. IX. The Exchequer and agencies to keep separate and distinct sets of books; to enter and record, in one set, all transactions respecting the collec¬ tion, keeping, and disbursing of the public revenue, and transmitting the pub¬ lic moneys from place to place, for the service of the Government; and, in another, all transactions and accounts arising from the operations in exchange, and other transactions not on Government account. X. The Exchequer may appoint, as agent, any specie-paying bank; but such bank is not authorized to receive private deposites, or to accept or self bills or drafts on account of the Exchequer. XL The Exchequer and agencies to act as commissioners of loans, and pension agents, and generally to render all facilities in transferring and dis¬ bursing the public funds. Full and exact accounts of the board and agencies to be furnished to the Secretary of the Treasury, and he to report to Congress. Necessary rooms and vaults to be provided, sureties to be taken, and penalties prescribed, and strict examinations made. The details of the above plan are fully carried out in the bill which ac¬ companies this report. The committee, then, propose a system free from all risk, and of perfect safety; a system in which there is not the possibility of hazard to the com¬ munity, and none to the Government, except in the keeping of the public money. This is a risk which must always be incurred on the part of the, Government. It is inseparable from any system which can be proposed or adopted. If it be supposed, as it has been by many, that the public money would be safer in a bank of the United States, or under the State bank de¬ posite system, the committee have already shown that both those modes of keeping it are utterly out of the question. They, therefore, adopt, at the principal agencies, the only one left, namely, the custody of individuals ap¬ pointed for the express purpose by the Government, with as ample sureties, and under such penalties, as the law is capable of providing. This system is designed for the collection, safekeeping, and disbursement,, 12 l 133 ] of the public revenues; and, through its operations, to furnish a uniform cur¬ rency, and to equalize exchanges. The committee have already shown in what way it would furnish a uniform currency, and they have no doubt that the specie-notes which would be put in circulation by it, would in amount exceed the circulation of the late Bank of the United States. The average circulation of that institution during the existence of its charter, was about $10,000,000, and its average amount of specie on hand, short of $6,000,000. Tn some years its specie equalled , in others exceeded, its circulation, and but for its expansions, commencing in 1829, and continuing to the expiration of its charter, its average circulation would not have much exceeded its average specie on hand. It cannot be doubted, then, that the circulation of the Exchequer will equal, if not ex¬ ceed, that of the Bank of the United States. And if the Bank of the United States furnished a uniform currency, then the Exchequer will be capable of doing the same ; and that too, without any risk to the community, or hazard to the credit of the Government. This, when accomplished, will do much toward equalizing exchanges. The ruinous rates of exchange between remote sections of the country re¬ sult, essentially, from the depreciation of the local currency. If the paper cir¬ culation of New York and New Orleans were both of the value of specie, and the balance of trade between the two places, by reason of the interchange of commodities, were merely nominal, exchange between those distant points would be at par. But if the balance of trade were in favor of New York, then a bill drawn at New Orleans on New York would command a premium equal to freight, insurance, interest, and other necessary charges for remitting specie. But while the paper circulation of New York, by reason of its convertibility, is of the value of specie, and that of New Orleans is depreciated because of the suspension of its banks, a bill drawn at the latter place on the former, and paid for in depreciated paper, would command a premium equal to the cost and charges of remitting specie, added to *he amount of the depreciation of the local paper below the value of specie. The reverse would be the case, under these circminstances, with a bill drawn in New York on New Orleans. No regular business, without great sacrifice, can sustain itself under such a ruin¬ ous rate of exchange. The uniform currency which will be furnished by the operations of the Exchequer will do much towards curing this great evil. But there is another feature in this system by which the exchanges will be perfectly accommodated, namely, the power to sell and collect exchange. The committee have heretofore adverted to this; and, on this whole subject, have consulted some of the ablest, most practical, and experienced men , and their own views are fully confirmed by the information derived from such high sources. They cannot in any way so well illustrate this branch of it, and its beneficial effects on the sound local banks, together with other advantages, as by briefly imbodying the following views which have thus been communicated to them : A bill drawn by one agency on another, in any remote part of the United ■States, will be as good as specie within the commercial sphere of the empo¬ rium where the agency is located at which payment is to be made, and may generally be negotiated above par by any holder within that sphere, and at •a rate in some measure proportioned to his distance from its commercial centre. If, for instance, a merchant in Cincinnati wishes to remit money to a manufacturer in Connecticut, a bill drawn by the agency in Cincinnati, 13 [ 133 1 where the deposite is made, on the agency in New York, would be worth a half per cent, more than specie to the payee. Exchanges through the agencies will meet all the exigencies of the mar¬ kets. It not unfrequently happens that New Orleans is indebted to Ohio, for agricultural products; Ohio to New York, for manufactured goods, do¬ mestic or imported ; and New York to New Orleans, for cotton. Every well- informed merchant in those several sections, will be advised of the state o£ the markets. A New Orleans merchant wishes to remit to Ohio; he de- posites his specie in the agency at New Orleans, and gets the same office to accept his own bill of exchange for $1,(300, payable to the order of his Ohio correspondent, and transmits it accordingly. This will be above par in the Ohio market, because it is a good remittance for New York, where bills on Mew Orleans command a premium. It is bought by an Ohio merchant, who remits it to New York in payment for goods; and from New York it is sent to New Orleans, to pay for cotton. Upon its arrival, it is presented to the agency where it was accepted, and the specie is ready for its redemption. The holder, however, not willing to be burdened with the specie, will gene- trally prefer the specie-notes of the agency. Thus this $1,000 in specie, after paying a small premium at the agency, will have paid more than its amount in two remote markets, sent a safe and convenient currency of $1,000 into the channels of commerce, and is still at rest sustaining this amount of cir¬ culation. The use of bills of exchange will not be superseded by the specie-notes of the Exchequer. The former have always been preferred, and were exten¬ sively used under the two national banks when their paper, in sound credit, had every advantage which this will possess, of being made such a substitute. This proof from experience is conclusive. One ground of preference, which has always been appreciated here and in Europe, is, that bills of exchange are more safe than bank-notes, as they offer no temptation to robbery or embezzlement; and as several may be sent of the same tenor and date by different conveyances (in which, case no loss will be sus¬ tained if any one arrives in safety), the risk may easily be reduced almost to an impossibility. The perfect character of these bills of exchange, from their undoubted credit, will generally give them a preference over others. They will never be protested for want of funds, at any office where they are payable. No embarrassment can result from the necessity of transmit¬ ting specie, from office to office. The occasions are very rare (and if this system were in operation would be still more rare) in which specie needs to be removed ; as for almost every purpose good paper is preferred. The paper of one office would generally be as good as specie in most others. If a deposite were made in New York to meet a draft on the office in New Orleans, this latter office would prefer the New York paper to coin, in the common state of exchanges. When the system has been some time in operation, specie will have found its proper places of repose, and move¬ ments of it would seldom be required. Should an apprehension be enter¬ tained that the retirement of specie into the agencies would embarrass the banks, it will be dissipated by a little reflection upon the operations already described. Those officers are bound to deliver, at the time of deposite, an amount in paper equal to the amount received in specie. That paper will take the place of the specie which it represents, and the same portion of it will be deposited by merchants and others who keep their accounts in bonking institutions, as of the specie for which it is a substitute. As it will 14 [ 133 ] •be a light and convenient circulation, it will mingle more with the paper of banks of sound credit, in common commercial operations, and conse¬ quently be more frequently used in making payments upon discounted notes and other indebtedness to moneyed institutions than specie now is. When possessed by a bank, it has all the value of specie. If means are wanted for a deposite in an agency, this paper will be received of a bank for that purpose as readily as specie. Should gold and silver be wanted for exportation, or any other extraordinary demand, the bank which possesses this paper has the certain means of converting it, at pleasure, into the arti¬ cle required. Every bill of exchange payable at these offices, will, at its maturity, restore to circulation, either in specie or this sound paper, the amount deposited for its procurement. Indeed, it is difficult to foster a doubt, that, in regard to the means of redeeming their own emissions, the banks will possess more ample resources than at present. It is true that the channels of commerce will be partially filled with a medium of sound and imperishable credit, which will stand the shock of every possible vi¬ cissitude, except the subversion of the Government. But this will promote the strength of the banking institutions no less than the stability of the currency. From the establishment of a national corporation with a large specie capi¬ tal, the banks were apprehensive of sustaining injury by the great and sudden withdrawment of the precious metals from their possession. But the agencies can produce no such embarrassment, for their progress will be too gradual to cause any convulsion; and the immediate restoration to the market of a me¬ dium of equal amount and value with that which is withdrawn, will enable those institutions at any time to command the specie which they require. As a just price is to be paid for exchanges, it is believed that all the expenses of conducting the business of the Exchequer and its agencies will be defrayal from that source, and probably a much larger sum may be realized. The losses of the currency by fire, shipwreck, and other casualties, as shown in the experience of banks, would not be an inconsiderable item of gain. A small premium, say a half or quarter of one per cent., might reasonably be exacted of depositors, if hereafter deemed necessary, upon notes issued in exchange for specie. While this system will furnish the desired means for the collect¬ ing, safekeeping, and disbursement, of the public revenue, and all the requis¬ ite facilities for exchanges between different sections of the country, as well as create a sound and convenient currency, it is exempt from the objectiona¬ ble features of other modes of effecting, in part or in whole, the same objects, heretofore presented for consideration. It authorizes no banks or other cor¬ porations, no discounts, no lending on credit in any form whatever, no ex¬ pansion of the currency by public drafts or otherwise, no paper-money resting on the credit of the Government and depending on accruing revenues for re¬ demption. It confers no extent of Executive patronage or influence. No officer can be either appointed or removed by the President without the con¬ currence of the Senate, and only for certain specified causes. It confers no discretionary powers by which partialities may be indulged in behalf of a per¬ sonal or political favorite. Whoever presents his specie-notes or bills of ex¬ change at maturity is entitled to his specie, and whoever presents his specie is entitled to the paper which he selects. The rights of every applicant are defined by law, and his transactions at the agency are of the simplest charac¬ ter. The laws of trade, and not any superintending board or public agent, decide the amount of deposites, bills of exchange, and paper currency. The 15 [ 133 ] wants and means of individuals composing- the community will best regulate the proportions of paper and specie, in the absence of all artificial restraint and supervision of the Government. Another important consideration which the committee -would add to these views,is, that while the operations of the Exchequer would tend to promote the real interests of the sound banks, it would, at the same time, tend to drive into liquidation the unsound ones. Banking capital, which has so enor¬ mously increased within a few years past, wonld be reduced. There would, eventually, only enough remain to answer the commercial and other business wants of the country. The large surplus of capital which sought investment in banks for the exorbitant profits of those institutions, under an inflated and unnatural state of the currency, would retire, and perform the more legitimate office of permanent loans, on bond and mortgage, to the agricultural interest of the community. One great evil which the country has experienced, has been from the withdrawal of capital from the farming interest to invest it in banking operations. That interest, from the very nature of their business, ought not to be driven to bank accommodations; they should be able to com¬ mand permanent, instead of temporary loans. Any system, therefore, which should aid the retirement of the surplus banking capital would greatly benefit the substantial producing classes of the country. From what has been said, it will be seen that the Exchequer w r ill furnish a uniform currency, and effectually equalize exchanges, it has no discounting power, like that of the late Bank of the United States—a power which was the principal source of all the difficulties, and of the subsequent disasters of that institution. In order to make dividends, it was necessary to employ its enormous capital in the shape of discounts. The great portion of those dis¬ counts was not based upon legitimate business paper. They were long loans, stock loans, accommodation loans, permanent loans. And one reason for this was, that, wdthin the sphere of the operations of the bank, there was not enough of legitimate business paper to employ the capital. There was, there¬ fore, a kind of necessity of employing it otherwise; and that apparent neces¬ sity, in the otherwise disastrous state of the times, has led to its final over¬ throw. The Exchequer will possess all the benefits of a Bank of the United States, without its attendant evils. It is powerful to do good, but pow r erless to do harm. The immediate effect of the adoption of the measure will be once more to restore the confidence of the country. That confidence is every¬ where impaired. It is impaired in individuals; it is impaired in banks; it is impaired in our State Governments, and even shaken in the General Govern¬ ment. The people require some action on the part of Congress which shall restore it That can only be done by the adoption of a system like the one proposed: a system which, in its leading features, is perfectly unassailable. It will lay the foundation of public confidence so broad and so deep that it cannot be shaken. That confidence, once restored, will extend itself through¬ out the country, and peace and plenty will follow in its train. But, if any suppose this system will not accomplish ail that its friends anticipate, it will certainly accomplish much; and, inasmuch as we can do nothing else, and we know there is no possible danger in it, why should we hesitate to try it? We shall, at all events, have established one great and fundamental principle—a principle which lies at the bottom of this curren¬ cy question, namely, that it is the right and duty of this Government, in the collection, safekeeping, and disbursement, of the public revenue, to aid ia 16 [ 133 ] furnishing a uniform currency, and equalizing the exchanges of the coun¬ try. And if, in the judgment of any, the measure does not go far enough, we shall have a stock on which we can engraft hereafter such farther pro¬ visions as shall come within the constitutional power of Congress—within the great principles which have been laid down—and such as shall be deemed expedient, and justified by public sentiment. The system can be tried without risk, and during a period when there can be no hope of adopting another favorite measure. If, on trial, it shall be found to answer the purposes for which it is intended, then the necessity of a national bank will be superseded, and its friends will have no reason nor desire to urge it. If it should not answer those purposes, then even the opponents of a national bank may become satisfied that such an institution is the only remedy for the evils of a deranged and disordered currency. But until some such system be adopted, it may well be doubted whether, in the present aspect and past experience of our banking institutions, the peo¬ ple can be brought into the support of a national bank. Shall we, then, fold our arms, and deliberately resolve to do nothing ? Can the friends of a national bank, as well as the friends of the Sub-Treas- ury, justify themselves to their constituents or the country in such a course ? These are questions for grave consideration. Both these systems, in one shape and another, have been discredited: and with no present prospect of either of them being re-established. What, then, remains to be done ? The people expect and require action at our hands. The committee pre¬ sent the Exchequer plan, free from the objections which were urged against it on its original introduction—a plan which, in their judgment, unites the benefits, without the evils, of the others, and ask for it that con¬ sideration which it is so justly entitled to receive. In proposing the bill, which the committee now submit to the Senate, an attempt has been made, as far as possible, to consult the views and avoid the objections of all parties, as disclosed in the history and discussions of the several plans heretofore suggested for accomplishing the same objects, and it is submitted in the hope that the attempt will prove successful. A BILL amendatory of the several acts establishing the Treasury Department. Be it enacted by the Senate and House of Representatives of the United Skates of America in Congress assembled , That there shall be, and hereby is, created and established in the Treasury Department, at the seat of the Government of the United States, a board to be called the Exchequer of the United States, to be composed of three commissioners, to be appointed by the President, with the advice and consent of the Senate, and who shall be removed from office only with the like concurrence of the Senate, and for some one or more of the following causes, to wit, physical inability, incom¬ petency, or neglect, or violation of duty; and in every such case, it shall be the duty of the President to communicate to the Senate the particular rea¬ sons of the proposed removal; but during the recess of the Senate, the Presi¬ dent may, for any of the aforesaid causes, suspend any of the said commis¬ sioners, and appoint a temporary substitute, and within the first week of the ensuing session of the Senate, he shall lay before that body the reasons of such suspension, and if the Senate concur with him, the commissioner so 17 [ 133 ] suspended shall be removed; but if it do not concur with him, the said commissioner shall be restored. And on the first organization of the board, one of the three commissioners shall, the members thereof, be elected president, who shall hold his office for two years, when a new election shall be made; and in like manner a new election shall take place afterward, at the end of each successive period of two years. And the Secretary of the Treasury shall have authority to appoint, on the recommendation of the board, all such inferior officers as in the judgment of the board the transac¬ tions of its business may require, the amount of their respective compensa¬ tions, till fixed by law, to be determined by the board, who may take bonds for the faithful discharge of their duty for such sums and in such manner as the Secretary of the Treasury shall direct; and each of said commissioners shall receive an annual salary of dollars. Sec. 2. And be it further enacted , That the said Board of Exchequer shall have power to establish agencies, or offices, in such of the cities or towns of the United States as it may judge necessary and expedient for the public service; and also wherever Congress may bylaw require the same to be established, limiting the number to as few as the exigencies of the service will admit, and in no case exceeding two in any State or Territory; and such officers and agents as may, by the Board of Exchequer, be thought ne¬ cessary for the management of such agencies, and the transaction of their business, shall be appointed by the Secretary of the Treasury, on the recom¬ mendation of the Board of Exchequer; and the said Board shall have power to fix the amount of the respective compensations of such officers till the same shall be determined by law, and to provide regulations for the government of such agencies, the transaction of their business, and the rendering accounts of all their proceedings. And in such regulations they shall so assign and arrange the duties of the officers of the said agencies, as that one of those officers shall be a check and control upon the other; and, for that purpose, they shall require that the accounts and proceedings of each shall be entered in proper books. And any of the officers of the said agencies may be removed by the Secretary of the Treasury on the recommendation of said board, for physical inability, or incompetency, or neglect, or violation of duty; but it shall be his duty to state every removal of any principal officer of any agen¬ cy, with his reasons therefor, in his general annual report of the transactions of the Exchequer. Sec. 3. And be it further enacted , That the said Exchequer and its offi¬ cers shall be the general agents of the Government of the United States, for receiving, safekeeping, and disbursing the public moneys, and transferring and transmitting the same, under the direction of the Secretary of the Treas¬ ury; and all public moneys received, from whatever sources, shall, under the same directions, be paid into the said Exchequer, or its agencies; and the principal officers employed in such agencies, shall give bonds to the United States for such amounts, and in such form, as the Secretary of the Treasury shall prescribe, for the faithful performance of their duties. And the said Board of Exchequer, and its several agencies, shall pay all warrants, drafts, or orders, made thereon by the Treasurer of the United States, and by all disbursing officers and agents of the Government having authority to make such drafts or orders. And every such payment shall be made, at the option of the person entitled to receive it, in gold and silver coin, or in specie- notes, to be issued in such form as is hereinafter prescribed. But such notes shall never exceed the actual amount of specie holden for their redemption, 18 [ 133 ] Sec. 4. And be it further enacted , That the said Exchequer and its offi¬ cers shall perform the duties of commissioners of loans, in receiving subscrip¬ tions, transferring stock, and paying dividends and interest thereon, under the directions of the Secretary of the Treasury, and shall render to the Treasurer of the United States all necessary facilities for transferring and disbursing the public funds as shall be required by him, and shall perform all the duties of pension agents under the regulations prescribed by the Secretary of War, and shall render and perform all other duties and services in relation to the col¬ lecting, keeping, and disbursing of the public funds, as shall be prescribed by law or by the Secretary of the Treasury. Sec. 5. And be it further enacted , That it shall be lawful for the Exche¬ quer, at the seat of Government, and its several agencies, to receive on pri¬ vate deposite gold or silver coin or bullion, the property of individuals, to be held as in other cases of deposites made by individuals for convenience and security; and to issue specie-notes for the same in such form as the said board shall prescribe; which notes shall always be redeemed on presentation at the agency where issued; but the amount so deposited shall never exceed in the whole fifteen millions of dollars, to be distributed by the board among its several agencies according to the extent of their business, respectively; and for issuing such specie-notes, no higher premium shall be demanded than shall be sufficient to indemnify against the hazard of loss, and remunerate for the safekeeping the deposite, and in no instance to exceed the one half of one per cent. But specie-notes issued by the board, and its several agencies, shall be redeemable only at the place where issued, unless the board shall see cause to order otherwise. Sec. 6 . And be it further enacted , That the Secretary of the Treasury is hereby authorized and directed to cause to be prepared specie-notes of de¬ nominations not less than five dollars, nor exceeding one hundred dollars, which notes shall be signed by the Treasurer of the United States, and coun¬ tersigned by the president of the Board of Exchequer, and made payable to the order of the principal agent at each agency, and shall be by him endorsed when issued at such agency, and which notes shall be redeemable, and shall be redeemed, in gold and silver, on demand, at the agency where issued. And specie-notes intended to be issued hy the Board of Exchequer, at the seat of Government, shall be in like form, and shall be payable to the order of the commissioners, and shall be endorsed by some one of them when is¬ sued, and shall be redeemable and redeemed at said board, on demand, in gold and silver; and exact and perfect lists of all notes so signed shall be kept at the Treasury; and all specie-notes issued under the authority of this act may, when redeemed, be reissued by the board and its agencies respectively. Sec. 7. And be it further enacted , That it shall be lawful for the Ex¬ chequer, at the seat of Government, and its several agencies, on the deposite of gold or silver coin, or bullion, as a payment therefor to draw bills of ex¬ change made payable at said Exchequer, or any agency, where funds are provided on which to draw, and also to accept bills of exchange; the amount of which bills and acceptances shall, in no case, exceed the sum so deposited. And such bills of exchange and acceptances shall be signed and counter¬ signed in such manner as the said board shall prescribe. Sec. 8 . And be it further enacted , That, on each bill of exchange or ac¬ ceptance, the Exchequer or agency at which such bill or acceptance is made, shall be entitled to receive a just and reasonable premium not exceeding the 19 [ 133 ] fair cost of remitting specie to the place of payment, and in no case to ex¬ ceed two per centum on the amount of such bill or acceptance. Sec. 9. And be it further enacted , That it shall be lawful for the said Board of Exchequer and each of its agencies, under regulations to be pre¬ scribed by the board, to receive and take charge of, for collection, such drafts or bills of exchange as may be deposited with them for that purpose, drawn on any place where an office of the Exchequer may be established; but, in no case shall any advance or payment be made on account of such draft or bill until it shall have been actually collected and advice received of such collection, whereupon the proceeds shall be paid over to the person entitled to receive them at the office where the said draft or bill was originally depos¬ ited for transmission and collection, deducting therefrom such reasonable charges and commission as may have been agreed upon, which shall in no case exceed per centum on the amount collected. Sec. 10. And be it further enacted , That it shall be the duty of the said Board of Exchequer, within three months after its first organization, to estab¬ lish such by-laws and rules of proceeding as it may judge expedient and proper for the regulation of its concerns and the government of its agencies; and copies of all existing by-laws and regulations shall be laid before Con¬ gress every year at its annual session. Sec. 11. And be it further enacted , That the Secretary of the Treasury is authorized, from time to time, on the application of the Board of Exche¬ quer, to furnish for its own use, and that of its several agencies, a suitable amount of specie-notes, to be used in the transaction of its business ; but, the amount of such notes issued, either in payment to the public creditor, or on the deposites of individuals, shall never exceed the actual amount of specie on hand for their redemption. And all dues to the United States, or any officer or department thereof authorized to receive public dues, maybe paid in gold or silver coin, in specie-notes issued under this act, or in the notes of banks which shall be immediately convertible into specie at the place where received. Sec. 12. And be it further enacted , That the Board of Exchequer at the seat of Government, and each of its agencies, shall settle weekly, or oftener, with all banks in their neighborhood whose paper they may have received, and pay or collect, as the case may be, all balances between it and said banks ; and no individual shall be allowed, at any time, to stand as debtor to the Exchequer, or any of its agencies, in account. And it shall be the duty of the said board of Exchequer, and each of its several agencies, at all times, so to limit its issues that its gold and silver on hand shall be equal, dollar for dollar, to the amount of such issues outstanding. Sec. 13. And be it further enacted , That the Board of Exchequer, and its several agencies, shall keep separate and distinct sets of books, for the purpose of entering and recording in one set, all transactions respecting the collection, keeping, and disbursing of the publie revenue, and transmit¬ ting the public moneys from place to place, for the service of Government; and in another, all transactions and accounts arising from the operations in exchange hereinbefore authorized, and other transactions not on Govern¬ ment account; and all profits accruing from such operations in exchange on individual account, and from private deposites shall be applied, in the first place, to pay all salaries and compensations, and to defray all expenses, incurred under the authority of this act, and the residue thereof shall be placed semi-annually to the credit of the Treasurer of the United States. 20 [ 138 ] Sec. 14. And be it further enacted , That the necessary rooms and vaults 1 for the safekeeping of the public moneys, and for the transaction of the bu¬ siness of the Board of Exchequer, and its agencies, shall be provided by the Treasury Department at the city of Washington, and in the custom-houses,, mints, branch mints, and other public buildings belonging to the United States, so far as the same can be furnished without detriment to the public service; and where the same cannot be so furnished, the said board may provide others. Sec. 15. And he it further enacted , That it shall be lawful for the said Board of Exchequer to appoint, as agent for the board, any specie-paying bank in any State, in cases where it. may not be deemed expedient to es¬ tablish an office or agency of the said board as hereinbefore provided, but such bank shall not be authorized, in any event, to receive deposites, or to accept or sell bills or drafts on account of the Board of Exchequer. Sec. 16. And be it further enacted , That full and exact accounts of the proceedings of the board and its several agencies, shall be furnished to the Secretary of the Treasury as often as he may prescribe? and it shall be the duty of the said Secretary to lay abstracts of the same before Congress at the commencement of each annual session, and to furnish full and particular accounts and statements of the transactions of the board, and its agencies, when required; and the amount of specie-notes outstanding at the end of every quarter shall, so soon thereafter as the same may be ascertained, be published by the Secretary of the Treasury. Sec. 17. And be it further enacted , That if any member of the Ex¬ chequer Board, or any officer or clerk employed in its business, or any of its agencies, shall convert to his own use in any way, any money or security deposited with or belonging to the said board or any of its agencies, or be¬ longing to the United States, or any other person or persons dealing or de¬ positing with the said board or any agency, he shall be deemed guilty of felony, and on conviction thereof before any court of the United States, of competent jurisdiction, shall be sentenced to imprisonment fora term not less than nor more than years, and to a fine equal to twice the sum or value of the property embezzled. Sec. 18. And be it further enacted. That, if any officer or member of the Board of Exchequer, or any of its agencies established under the provisions of this act, shall issue any specie-note, or make, accept, or deliver any draft or bill of exchange, without having received the full value thereof in specie, and caused the receipt of the same to be duly entered in the books of the said agency, or shall be guilty of any other mal-practice, by which any responsi¬ bility of the said agency, or of the Board of Exchequer, or of the United States, shall be improperly created or increased, he shall be deemed guilty of a felony, and, on conviction thereof in any court of the United States of com¬ petent jurisdiction, shall be sentenced to imprisonment for a term not less than one year nor more than seven years, and to a fine equal to the amount of the specie-note so issued, or of the bill or draft so made, accepted, or delivered, or to the amount of the responsibility so created or increased. Sec. 19. And be it further enacted , That the Secretary of the Treasury shall have power, at his discretion, by himself or by an agent duly appointed by him, to examine the officers and clerks of the Exchequer and its agencies on oath or affirmation, touching all matters relating to the Exchequer or it agencies, or either of them; which said oath the said Secretary, or said agent 8 21 [ 133 J is hereby authorized to administer. And if any person so examined shall wilfully make any false statement, or wilfully refuse to disclose or declare the whole truth, such person shall be deemed guilty of wilful and corrupt per¬ jury, and shall suffer the pains and penalties thereof, on conviction before any court competent to try the same. And the said Exchequer and agencies shall, at all times, be open to examination by any committee appointed by Con¬ gress, or either House thereof. Sec. 20. And be it further enacted , That all acts and parts of acts incon¬ sistent with the provisions of this act, be, and the same are hereby, repealed. V