Hard money

The distress of the country figured largely in the speeches of several members, but without finding much sympathy. That engine of operating upon the government and the people had been over-worked in the panic session of 1833-134, and was now a stale resource, and a crippled machine. The suspension appeared to the country to have been purposely contrived, and wantonly continued. There was now more gold and silver in the country than had ever been seen in it before

regulation of the currency required an under- paper)—in which the meanest and weakest is standing of the meaning of the term. As used always the conqueror. The baser currency by the friends of a National Bank, and referred always displaces the better. to its action, the paper currency alone was in- needs support against paper, and that support tended. The phrase had got into vogue since can be given by us, by excluding paper money the paper currency had become predominant, from all federal receipts and payments; and conand that is a currency not recognized by the fining paper money to its own local and inferior constitution, but repudiated by it; and one of orbit: and its regulation can be well accomits main objects was to prevent the future plished by subjecting delinquent banks to the existence of that currency-the evils of which process of bankruptcy, and their small notes to its framers had seen and felt. Gold and silver suppression under a federal stamp duty. was the only currency recognized by that instrument, and its regulation specially and exclusively given to Congress, which had lately discharged its duty in that particular, in regulating the relative value of the two metals. The gold act of 1834 had made that regulation, correcting the error of previous legislation, and had revived the circulation of gold, as an ordinary currency, after a total disappearance of it under an erroneous valuation, for an entire generation. It was in full circulation when the combined stoppage of the banks again suppressed it. That was the currency-gold and silver, with the regulation of which Congress was not only intrusted, but charged: and this regulation included preservation. It must be saved before it can be regulated; and to save it, it must be brought into the country-and kept in it. The demand of the federal treasury could alone accomplish these objects. The quantity of specie required for the use of that treasury-its large daily receipts and disbursements-all inexorably confined to hard money -would create the demand for the precious metals which would command their presence, and that in sufficient quantity for the wants of the people as well as of the government. For the government does not consume what it collects -does not melt up or hoard its revenue, or export it to foreign countries, but pays it out to the people; and thus becomes the distributor of gold and silver among them. It is the greatest paymaster in the country; and, while it pays in hard money, the people will be sure of a supply. We are taunted with the demand: "Where is the better currency?" We answer: "Suppressed by the conspiracy of the banks!" And this is the third time in the last twenty years in which paper money has suppressed specie, and now suppresses it: for this is a game-(the war between gold and

four times as much as in 1832, when the Bank of the United States was in its palmy state, and was vaunted to have done so much for the currency. Twenty millions of silver was then its own estimate of the amount of that metal in the United States, and not a particle of gold included in the estimate. Now the estimate of gold and silver was eighty millions; and with this supply of the precious metals, and the determination of all the sound banks to resume as soon as the Bank of the United States could be forced into resumption, or forced into open insolvency, so as to lose control over others, the suspension and embarrassment were obliged to be of brief continuance. Such were the arguments of the friends of hard money.

The divorce bill, as amended, passed the Senate, and though not acted upon in the House during this called session, yet received the impetus which soon carried it through, and gives it a right to be placed among the measures of that session.

CHAPTER XII.

ATTEMPTED RESUMPTION OF SPECIE PAYMENTS.

THE suspension of the banks commenced at New
York, and took place on the morning of the 10th

CHAPTER XIII.

BANKRUPT ACT AGAINST BANKS.

of May: those of Philadelphia, headed by the Bank | refusal, and it was-and was worthy of the of the United States, closed their doors two days party; namely, that it was not proper to do after, and merely in consequence, as they alleged, any thing in the business until after the adof the New York suspension; and the Bank of the journment of the extra session of Congress. United States especially declared its wish and That answer was a key to the movements in ability to have continued specie payments with- Congress to thwart the government plans, and out reserve, but felt it proper to follow the ex- to coerce a renewal of the United States Bank ample which had been set. All this was known charter. After the termination of the session it to be a fiction at the time; and the events were will be seen that another reason for refusal was soon to come, to prove it to be so. As early as found. the 15th of August ensuing-in less than one hundred days after the suspension-the banks of New York took the initiatory steps towards resuming. A general meeting of the officers of the banks of the city took place, and appointed a committee to correspond with other banks to procure the appointment of delegates to agree upon a time of general resumption. In this THIS was the stringent measure recommended meeting it was unanimously resolved: "That by the President to cure the evil of bank suspensions. Scattered through all the States of the Union, and only existing as local institutions, the federal government could exercise no direct power over them; and the impossibility of bringing the State legislatures to act in concert, left the institutions to do as they pleased; or rather, left even the insolvent ones to do as they pleased; for these, dominating over the others, and governed by their own necessities, or designs, compelled the solvent banks, through panic or self-defence, to follow their example. Three of these general suspensions had occurred in the last twenty years. The notes of these banks constituting the mass of the circulating medium, put the actual currency into the hands of these institutions; leaving the community helpless; for it was not in the power of individuals to contend with associated corporations It was a reproach to the federal government to be unable to correct this state of things-to see the currency of the constitution driven out of circulation, and out of the country; and substituted by depreciated paper; and the very evil produced which it was a main object of the constitution to prevent. The framers of that instrument were hard-money men. They had seen the evils of paper money, and intended to guard their posterity against what they themselves had suffered. They had done so, as they believed, in the prohibition upon the States to issue bills of credit; and in the prohibition upon the States to make any thing but gold and silver a tender in discharge of debts. The invention of banks,

the banks of the several States be respectfully
invited to appoint delegates to meet on the
27th day of November next, in the city of New
York, for the purpose of conferring on the
time when specie payments may be resumed
with safety; and on the measures necessary to
effect that purpose." Three citizens, eminently
respectable in themselves, and presidents of the
leading institutions-Messrs. Albert Gallatin,
George Newbold, and Cornelius W. Lawrence-
were appointed a committee to correspond with
other banks on the subject of the resolution.
They did so; and, leaving to each bank the
privilege of sending as many delegates as it
pleased, they warmly urged the importance of
the occasion, and that the banks from each
State should be represented in the proposed
convention. There was a general concurrence
in the invitation; but the convention did not
take place.
One powerful interest, strong
enough to paralyze the movement, refused to
come into it. That interest was the Philadel-
phia banks, headed by the Bank of the United
States! So soon were fallacious pretensions
exploded when put to the test. And the test
in this case was not resumption itself, but only
■ meeting to confer upon a time when it would
suit the general interest to resume. Even to
unite in that conference was refused by this ar-
rogant interest, affecting such a superiority over
all other banks; and pretending to have been
only dragged into their condition by their ex-
ample. But a reason had to be given for this

has made a recommendation to Congress which appears to me to be very remarkable, and it is of a measure which he thinks may prove a salutary remedy against a depreciated paper currency. This measure is neither more nor less than a bankrupt law against corporations and other bankers.

and their power over the community, had nullified this just and wise intention of the constitution; and certainly it would be a reproach to that instrument if it was incapable of protecting itself against such enemies, at such an important point. Thus far it had been found so incapable; but it was a question whether the fault was in "Now, Mr. President, it is certainly true that the constitution authorizes Congress to establish the instrument, or in its administrators. There uniform rules on the subject of bankruptcies; were many who believed it entirely to be the but it is equally true, and abundantly manifest, fault of the latter-who believed that the con- that this power was not granted with any referstitution had ample means of protection, within ence to currency questions. It is a general power-a power to make uniform rules on the itself, against insolvent, or delinquent banks-subject. How is it possible that such a power and that, all that was wanted was a will in the can be fairly exercised by seizing on corporafederal legislature to apply the remedy which tions and bankers, but excluding all the other the evil required. This remedy was the process such laws ordinarily extend to corporations at usual subjects of bankrupt laws! Besides, do of bankruptcy, under which a delinquent bank all? But suppose they might be so extended, might be instantly stopped in its operations- by a bankrupt law enacted for the usual purits circulation called in and paid off, as far as its poses contemplated by such laws; how can a assets would go—itself closed up, and all power bankers alone? I should like to hear what the law be defended, which embraces them and of further mischief immediately terminated. learned gentleman at the head of the Judiciary This remedy it was now proposed to apply. Committee, to whom the subject is referred, has President Van Buren recommended it: he was to say upon it. How does the President's sugthe first President who had had the merit of gestion conform to his notions of the constitution? The object of bankrupt laws, sir, has no doing so; and all that was now wanted was a relation to currency. It is simply to distribute Congress to back him: and that was a great the effects of insolvent debtors among their want! one hard to supply. A powerful array, creditors; and I must say, it strikes me that it strongly combined, was on the other side, both would be a great perversion of the power conferred on Congress to exercise it upon corporamoneyed and political. All the local banks tions and bankers, with the leading and primary were against it; and they counted a thousand object of remedying a depreciated paper cur-their stockholders myriads ;-and many of rency. their owners and debtors were in Congress: the (still so-called) Bank of the United States was against it: and its power and influence were still great: the whole political party opposed to the administration were against it, as well because opposition is always a necessity of the party out of power, as a means of getting in, as because in the actual circumstances of the present state of things opposition was essential to the success of the outside party. Mr. Webster was the first to oppose the measure, and did so, seeming to question the right of Congress to apply the remedy rather than to question the expediency of it. He said:

"We have seen the declaration of the President, in which he says that he refrains from suggesting any specific plan for the regulation of the exchanges of the country, and for relieving mercantile embarrassments, or for interfering with the ordinary operation of foreign or domestic commerce; and that he does this from a conviction that such measures are not within the constitutional province of the general government; and yet he

"And this appears the more extraordinary, inasmuch as the President is of opinion that the general subject of the currency is not within our province. Bankruptcy, in its common and just meaning, is within our province. Currency, says the message, is not. But we have a bankruptcy, power in the constitution, and we will use this power, not for bankruptcy, indeed, but for currency. This, I confess, sir, appears to me to be the short statement of the matter. I would not do the message, or its author, any intentional injustice, nor create any apparent, where there was not a real inconsistency; but I declare, in all sincerity, that I cannot reconcile the proposed use of the bankrupt power with those opinions of the message which respect the authority of Congress over the currency of the country."

The right to use this remedy against bankrupt corporations was of course well considered by the President before he recommended it, and also by the Secretary of the Treasury (Mr. Woodbury), bred to the bar, and since a justice of the Supreme Court of the United States, by whom it had been several times recommended. Doubtless the remedy was sanctioned by the

legal profession-those habits which, both in Great Britain and our America, have become a proverbial disqualification for the proper exercise of legislative duties. I know, Mr. President, that it is the fate of our lawyers and judges to have to run to British law books to find out the meaning of the phrases contained in our constitution; but it is the business of the legislator, and of the statesman, to take a larger

whole cabinet before it became a subject of executive recommendation. But the objections of Mr. Webster, though rather suggested than urged, and confined to the right without impeaching the expediency of the remedy, led to a full examination into the nature and objects of the laws of bankruptcy, in which the right to use them as proposed seemed to be fully vindicated. But the measure was not then pressed to a vote; and the occasion for the remedy hav-view-to consider the difference between the ing soon passed away, and not recurring since, the question has not been revived. But the importance of the remedy, and the possibility that it may be wanted at some future time, and the high purpose of showing that the constitution is not impotent at a point so vital, renders it proper to present, in this View of the working of the government, the line of argument which was then satisfactory to its advocates: and this is done in the ensuing chapter.

CHAPTER XIV.

BANKRUPT ACT FOR BANKS: MR. BENTON'S
SPEECH.

political institutions of the two countries-to ascend to first principles-to know the causes of events—and to judge how far what was suitable and beneficial to one might be prejudicial and inapplicable to the other. We stand here as legislators and statesmen, not as lawyers and judges; we have a grant of power to execute, not a statute to interpret; and our first duty is to look to that grant, and see what it is; and our next duty is to look over our country, and see whether there is any thing in it which requires the exercise of that grant of power. This is what our President has done, and what we ought to do. He has looked into the constitution, and seen there an unlimited grant of power to pass uniform laws on the subject of bankruptcies; and he has looked over the United States, and seen what he believes to be fit subjects for the exercise of that power, namely, about a thousand banks in a state of bankruptcy, and no State possessed of authority to act beyond its own limits in remedying the evils of a mischief so vast and so frightful. Seeing these two things-a power to act, and a subject matter requiring action-the President has recommended the action which the constitution permits, and which the subject requires; but the senator from Massachusetts has risen in his

THE power of Congress to pass bankrupt laws is expressly given in our constitution, and given without limitation or qualification. It is the fourth in the number of the enumerated powers, and runs thus: "Congress shall have power to establish a uniform rule of naturalization, and uniform laws on the subject of bankruptcies throughout the United States." This is a full and clear grant of power. Upon its face it admits of no question, and leaves Congress at full liberty to pass any kind of bankrupt laws they please, limited only by the condition, that what-place, and called upon us to shift our view; to ever laws are passed, they are to be uniform in their operation throughout the United States. Upon the face of our own constitution there is no question of our right to pass a bankrupt law, limited to banks and bankers; but the senator from Massachusetts [Mr. WEBSTER] and others who have spoken on the same side with him, must carry us to England, and conduct us through the labyrinth of English statute law, and through the chaos of English judicial decisions, to learn what this word bankruptcies, in our constitution, is intended to signify. In this he, and they, are true to the habits of the

transfer our contemplation-from the constitution of the United States to the British statute book-from actual bankruptcy among ourselves to historical bankruptcy in England; and to confine our legislation to the characteristics of the English model.

As a general proposition, I lay it down that Congress is not confined, like jurists and judges, to the English statutory definitions, or the Nisi Prius or King's Bench construction of the phrases known to English legislation, and used in our constitution. Such a limitation would not only narrow us down to a mere lawyer's