"He had been all along opposed to this measure, and he saw nothing now to change that opinion. Mr. C. would have been glad to aid the wants of the Treasury, but thought it might have been done better by suspending the action of many appropriations not so indispensably necessary, rather than by resorting to a loan. Reduction, economy, retrenchment, had been re Macon, Randolph, and all the fathers of the $25, received a large support-some ninety republican church, concurred with him. These votes. The motion to reduce to $50 was carried sagacious statesmen were shy of this facile and by a majority of forty. Returning to the Senate seductive resource, so liable to abuse, and so certain of being abused.' They held it inadmis- with this amendment, Mr. Benton moved to sible to recur to it in time of peace, and that it restore the $100 limit, and intimated his intencould only be thought of amidst the exigencies tion, if it was not done, of withholding his supand perils of war, and that after exhausting the direct and responsible alternative of loans and port from the bill-declaring that nothing but taxes. Bred in the school of these great men, the immediate wants of the Treasury, and the I came here at this session to oppose, at all lack of time to raise the money by a direct loan risks, an issue of treasury notes. I preferred a as declared by the Secretary of the Treasury, direct loan, and that for many and cogent rea- could have brought him to vote for treasury sons. There is clear authority to borrow in the constitution; but, to find authority to issue notes in any shape. Mr. Clay opposed the whole these notes, we must enter the field of con- scheme as a government bank in disguise, but structive powers. To borrow, is to do a re- supported Mr. Benton's motion as being adverse sponsible act; it is to incur certain accounta- to that design. He said: bility to the constituent, and heavy censure if it cannot be justified; to issue these notes, is to do an act which few consider of, which takes but little hold of the public mind, which few condemn and some encourage, because it increases the quantum of what is vainly called money. Loans are limited by the capacity, at least, of one side to borrow, and of the other to lend the issue of these notes has no limit but the will of the makers, and the supply of lamp-commended by the President, and why not then black and rags. The continental bills of the Revolution, and the assignats of France, should furnish some instructive lessons on this head. Direct loans are always voluntary on the part of the lender; treasury note loans may be a forced borrowing from the government creditor -as much so as if the bayonet were put to his breast; for necessity has no law, and the necessitous claimant must take what is tendered, whether with or without interest-whether ten or fifty per cent. below par. I distrust, dislike, and would fain eschew, this treasury note resource. I prefer the direct loans of 1820-21. I could only bring myself to acquiesce in this measure when it was urged that there was not time to carry a loan through its forms; nor even then could I consent to it, until every feature of a currency character had been eradicated from the face of the bill." The bill passed the Senate by a general vote, only Messrs. Clay, Crittenden, Preston, Southard, and Spence of Maryland, voting against it. In the House of Representatives it encountered a more strenuous resistance, and was subjected to some trials which showed the dangerous proclivity of these notes to slide from the foundation of investment into the slippery path of currency. Several motions were made to reduce their size to make them as low as $25; and that failing, to reduce them to $50; which succeeded. The interest was struck at in a motion to reduce it to a nominal amount; and this motion, like that for reducing the minimum size to pursued? Mr. C.'s chief objection, however, was, that these notes were mere post notes, only differing from bank notes of that kind in giving the Secretary a power of fixing the interest as he pleases. It is, said Mr. C., a government bank, issuing government bank notes; an experiment to set up a government bank. It is, in point of fact, an incipient bank. Now, if government has the power to issue bank notes, and so to form indirectly and covertly a bank, how is it that it has not the power to establish a national bank? What difference is there between a great government bank, with Mr. Woodbury as the great cashier, and a bank composed of a corporation of private citizens? What difference is there, except that the latter is better and safer, and more stable, and more free from political influences, and more rational and more republican? An attack is made at Washington upon all the banks of the country, when we have at least one hundred millions of bank paper in circulation. At such a time, a time too of peace, instead of aid, we denounce them, decry them, seek to ruin them, and begin to issue paper in opposition to them! You resort to paper, which you profess to put down; you resort to a bank, which you pretend to decry and to denounce; you resort exclaimed against every currency except that of to a government paper currency, after having gold and silver! Mr. C. said he should vote for Mr. Benton's amendment, as far as it went to prevent the creation of a government bank and a government currency." Mr. Webster also supported the motion of Mr. Benton, saying: "He would not be unwilling to give his sup- event showed the delusion and the cheat of the port to the bill, as a loan, and that only a tem- bill under which a distribution had been made porary loan. He was, however, utterly opposed in the name of a deposit. The idea of restituto every modification of the measure which went to stamp npon it the character of a government tion entered no one's head! neither of the currency. All past experience showed that such government to demand it, nor of the States to a currency would depreciate; that it will and render back. What had been delivered, was must depreciate. He should vote for the amendment, inasmuch as $100 bills were less likely to gone! that was a clear case; and reclamation, get into common circulation than $50 bills. His or rendition, even of the smallest part, or at the objection was against the old continental money most remote period, was not dreamed of. But in any shape or in any disguise, and he would there was a portion behind-another instalment therefore vote for the amendment." of ten millions-deliverable out of the "sur The motion was lost by a vote of 16 to 25, plus" on the first day of October: but there the yeas and nays being: YEAS-Messrs. Allen, Benton, Clay, of Kentucky, Clayton, Kent, King, of Georgia, KcKean, Pierce, Rives, Robbins, Smith, of Connecticut, Southard, Spence, Tipton, Webster, White-16. NAYS-Messrs. Buchanan, Clay, of Alabama, Crittenden, Fulton, Grundy, Hubbard, King, of Alabama, Knight, Linn, Lyon, Morris, Nicholas, Niles, Norvell, Roane, Robinson, Smith, of Indiana, Strange, Swift, Talmadge, Walker, Williams, Wall, Wright, Young-25. CHAPTER X. RETENTION OF THE FOURTH DEPOSIT INSTAL- was no surplus: on the contrary a deficit: and the retention of this sum would seem to be a matter of course with the government, only requiring the form of an act to release the obligation for the delivery. It was recommended by the President, counted upon in the treasury estimates, and its retention the condition on which the amount of treasury notes was limited to ten millions of dollars. A bill was reported for the purpose, in the mildest form, not to repeal but to postpone the clause; and the reception which it met, though finally successful, should be an eternal admonition to the federal government never to have any money transaction with its members-a transaction in which the members become the masters, and the devourers of the head. The finance committee of the Senate had brought in a bill to repeal the obligation to deposit this fourth instalment; and from the beginning it encountered a serious resistance. Mr. Webster led the way, saying: THE deposit with the States had only reached its second instalment when the deposit banks, unable to stand a continued quarterly drain of near ten millions to the quarter, gave np the "We are to consider that this money, accordeffort and closed their doors. The first instal-ing to the provisions of the existing law, is to ment had been delivered the first of January, in specie, or its equivalent; the second in April, also in valid money; the third one demandable on the first of June, was accepted by the States in depreciated paper: and they were very willing to receive the fourth instalment in the same way. It had cost the States nothing, was not likely to be called back by the federal govern ment, and was all clear gains to those who took it as a deposit and held it as a donation. But the Federal Treasury needed it also; and like wise needed ten millions more of that amount which had already been “deposited" with the States; and which "deposit" was made and accepted under a statute which required it to be paid back whenever the wants of the Treasury required it. That want had now come, and the All go equally among all the States, and among all the people; and the wants of the Treasury must be supplied, if supplies be necessary, equally by all the people. It is not a question, therefore, whether some shall have money, and others shall make good the deficiency. partake in the distribution, and all will contrition of convenience, and, in my opinion, it is bute to the supply. So that it is a mere quesdecidedly most convenient, on all accounts, that this instalment should follow its present destination, and the necessities of the Treasury be provided for by other means.” Mr. Preston opposed the repealing bill, principally on the ground that many of the States had already appropriated this money; that is to say, had undertaken public works on the strength of it; and would suffer more injury from not receiving it than the Federal Treasury would suffer from otherwise supplying its place. Mr. Crittenden opposed the bill on the same ground. Kentucky, he said, had made provision for the expenditure of the money, and relied upon it, and could not expect the law to be lightly rescinded, or broken, on the faith of which she had anticipated its use. Other senators treated the deposit act as a contract, which the United States was bound to comply with by delivering all the instalments. In the progress of the bill Mr. Buchanan proposed an amendment, the effect of which would be to change the essential character of the so called, deposit act, and convert it into a real distribution measure. By the terms of the act, it was the duty of the Secretary of the Treasury to call upon the States for a return of the deposit when needed by the Federal Treasury: Mr. Buchanan proposed to release the Secretary from this duty, and devolve it upon Congress, by enacting that the three instalments already delivered, should remain on deposit with the States until called for by Congress. Mr. Niles saw the evil of the proposition, and thus opposed it: "He must ask for the yeas and nays on the amendment, and was sorry it had been offered. If it was to be fully considered, it would renew the debate on the deposit act, as it went to change the essential principles and terms of that act. A majority of those who voted for that act, about which there had been so much said, and so much misrepresentation, had professed to regard it—and he could not doubt that at the time they did so regard it-as simply a deposit law; as merely changing the place of deposit from the banks to the States, so far as related to the surplus. The money was still to be in the Treasury, and liable to be drawn out, with certain limitations and restrictions, by the ordinary appropriation laws, without the direct action of Congress. The amendment, if adopted, will change the principles of the deposit act, and the condition of the money deposited with the States under it. It will no longer be a deposit; it will not be in the Treasury, even in point of legal effect or form: the deposit will be changed to a loan, or, perhaps more properly, a grant to the States. The rights of the United States will be changed to a mere claim, like that against the late Bank of the United States; and a claim without any means to enforce it. We were charged, at the time, of making a distribution of the public revenue to the States, in the disguise and form of a deposit; and this amendment, it appeared to him, would be a very bold step towards confirming the truth of that charge. He deemed the amendment an important one, and highly objectionable; but he saw that the Senate were prepared to adopt it, and he would with repeating his request for the ayes and not pursue the discussion, but content himself noes on the question." Mr. Buchanan expressed his belief that the substitution of Congress for the Secretary of the Treasury, would make no difference in the nature of the fund: and that remark of his, if understood as sarcasm, was undoubtedly true; for the deposit was intended as a distribution by its authors from the beginning, and this proposed substitution was only taking a step, and an effectual one, to make it so: for it was not to be expected that a Congress would ever be found to call for this money from the States, which they were so eager to give to the States. The proposition of Mr. Buchanan was carried by a large majority -33 to 12-all the opponents of the administration, and a division of its friends, voting for it. Thus, the whole principle, and the whole argument on which the deposit act had been passed, was reversed. It was passed to make the State treasuries the Treasury pro tanto of the United States-to substitute the States for the banks, for the keeping of this surplus until it was wanted-and it was placed within the call of a federal executive officer that it might be had for the public service when needed. All this was reversed. The recall of the money was taken from the federal executive, and referred to the federal legislative department-to the Congress, composed of members representing the States-that is to say, from the payee to the payor, and was a virtual relinquishment of the payment. And thus the deposit was made a mockery and a cheat; and that by those who passed it. In the House of Representatives the disposition to treat the deposit as a contract, and to compel the government to deliver the money (although it would be compelled to raise by extraordinary means what was denominated a surplus), was still stronger than in the Senate, and gave rise to a protracted struggle, long and doubtful in its issue. Mr. Cushing laid down the doctrine of contract, and thus argued it: "The clauses of the deposit act, which appertain to the present question, seem to me to possess all the features of a contract. It provides that the whole surplus revenue of the United States, beyond a certain sum, which may be in the Treasury on a certain day, shall be deposited not mark such conduct for reprobation, and invoke a public judgment upon it. with the several States; which deposit the States are to keep safely, and to pay back to the United States, whenever the same shall be After a prolonged contest the vote was taken, called for by the Secretary of the Treasury in a prescribed time and mode, and on the happening and the bill carried, but by the smallest majority of a given contingency. Here, it seems to me, -119 to 117;—a difference of two votes, which is a contract in honor; and, so far as there can was only a difference of one member. But be a contract between the United States and even that was a delusive victory. It was imthe several States, a contract in law; there being reciprocal engagements, for a valuable mediately seen that more than one had voted consideration, on both sides. It is, at any rate, with the majority, not for the purpose of passa quasi-contract. They who impugn this viewing the bill, but to gain the privilege of a majorof the question argue on the supposition that ity member to move for a reconsideration. Mr. the act, performed or to be performed by the United States, is an inchoate gift of money Pickens, of South Carolina, immediately made to the States. Not so. It is a contract of that motion, and it was carried by a majority of deposit ; and that contract is consummated, and 70! Mr. Pickens then proposed an amendmade perfect, on the formal reception of any in- ment, which was to substitute definite for instalment of the deposit by the States. Now, definite postponement-to postpone to a day certain instead of the pleasure of Congress: and the first day of January, 1839, was the day proposed; and that without reference to the condition of the Treasury (which might not then have any surplus), for the transfer of this fourth instalment of a deposit to the States. The vote being taken on this proposed amendment, it was carried by a majority of 40: and that amend entertaining this view of the transaction, I am asked by the administration to come forward and break this contract. True, a contract made by the government of the United States cannot be enforced in law. Does that make it either honest or honorable for the United States to take advantage of its power and violate its pledged faith? I refuse to participate in any such breach of faith. But further. The administration solicits Congress to step in between the United States and the States as a volunteer, and to violate a contract, as the means of help-ment being concurred in by the Senate, the bill ing the administration out of difficulties, into in that form became a law, and a virtual legaliwhich its own madness and folly have wilfully zation of the deposit into a donation of forty sunk it, and which press equally upon the gov-millions to the States. And this was done by ernment and the people. The object of the measure is to relieve the Secretary of the Treasury from the responsibility of acting in this matter as he has the power to do. Let him act. I will not go out of my way to interpose in this between the Executive and the several States, until the administration appeals to me in the right spirit. This it has not done. The Executive comes to us with a new doctrine, which is echoed by his friends in this House, namely, that the American government is not to exert itself for the relief of the American people. Very well. If this be your policy, I, as representing the people, will not exert myself for the relief of your administration." Such was the chicanery, unworthy of a piepoudre court-with which a statute of the federal Congress, stamped with every word, invested with every form, hung with every attribute, to define it a deposit-not even a loanwas to be pettifogged into a gift! and a contract for a gift! and the federal Treasury required to stand and deliver! and all that, not in a low law court, where attorneys congregate, but in the high national legislature, where candor and firmness alone should appear. History would be faithless to her mission if she did the votes of members who had voted for a deposit with the States; because a donation to the States was unconstitutional. The three instalments already delivered were not to be recalled until Congress should so order; and it was quite certain that it never would so order. At the same time the nominal discretion of Congress over the deposit of the remainder was denied, and the duty of the Secretary made peremptory to deliver it in the brief space of one year and a quarter from that time. But events frustrated that order. The Treasury was in no condition on the first day of January, 1839, to deliver that amount of money. It was penniless itself. The compromise act of 1833, making periodical reductions in the tariff, until the whole duty was reduced to an ad valorem of twenty per cent., had nearly run its course, and left the Treasury in the condition of a borrower, instead of that of a donor or lender of money. This fourth instalment could not be delivered at the time appointed, nor subsequently ;—and was finally relinquished, the States retaining the amount they had received: which was so much clear gain through the legislative fraud of making a distribution under the name of a deposit. This was the end of one of the distribution schemes which had so long afflicted and disturbed Congress and the country. Those schemes began now to be known by their consequences-evil to those they were intended to benefit, and of no service to those whose popularity they were to augment. To the States the deposit proved to be an evil, in the contentions and combinations to which their disposition gave rise in the general assemblies-in the objects to which they were applied—and the futility of the help which they afforded. Popularity hunting, on a national scale, gave birth to the schemes in Congress: the same spirit, on a smaller and local scale, took them up in the States. All sorts of plans were proposed for the employment of the money, and combinations more or less interested, or designing, generally carried the point in the universal scramble. In some States a pro rata division of the money, per capite, was made; and the distributive share of each individual being but a few shillings, was received with contempt by some, and rejected with scorn by others. In other States it was divided among the counties, and gave rise to disjointed undertakings of no general benefit. Others, again, were stimulated by the unexpected acquisition of a large sum, to engage in large and premature works of internal improvement, embarrassing the State with debt, and commencing works which could not be finished. Other States again, looking upon the deposit act as a legislative fraud to cover an unconstitutional and demoralizing distribution of public money to the people, refused for a long time to receive their proffered dividend, and passed resolutions of censure upon the authors of the act. And thus the whole policy worked out differently from what had been expected. The States and the people were not grateful for the favor: the authors of the act gained no presidential election by it: and the gratifying fact became evident that the American people were not the degenerate Romans, or the volatile Greeks, to be seduced with their own money-to give their votes to men who lavished the public moneys on their wants or their pleasures-in grain to feed them, or in shows and games to delight and amuse them. CHAPTER XI. INDEPENDENT TREASURY AND HARD MONEY PAYMENTS. THESE were the crowning measures of the session, and of Mr. Van Buren's administration,— not entirely consummated at that time, but partly, and the rest assured;--and constitute in fact an era in our financial history. They were the most strenuously contested measures of the session, and made the issue completely between the hard money and the paper money systems. They triumphed-have maintained their supremacy ever since—and vindicated their excellence on trial. Vehemently opposed at the time, and the greatest evil predicted, opposition has died away, and given place to support; and the predicted evils have been seen only in blessings. No attempt has been made to disturb these great measures since their final adoption, and it would seem that none need now be apprehended; but the history of their adoption presents one of the most instructive lessons in our financial legislation, and must have its interest with future ages as well as with the present generation. The bills which were brought in for the purpose were clear in principle-simple in detail: the government to receive nothing but gold and silver for its revenues, and its own officers to keep it— the Treasury being at the seat of government, with branches, or sub-treasuries at the principal points of collection and disbursement. these treasuries to be real, not constructivestrong buildings to hold the public moneys, and special officers to keep the keys. The capacious, strong-walled and well-guarded custom houses and mints, furnished in the great cities the rooms that were wanted: the Treasury building at Washington was ready, and in the right place. And This proposed total separation of the federal government from all banks-called at the time in the popular language of the day, the divorce of Bank and State-naturally arrayed the whole bank power against it, from a feeling of interest; and all (or nearly so) acted in conjunction with the once dominant, and still potent, Bank of the United States. In the Senate, Mr. Webster headed one interest-Mr. Rives, of Virginia, the |