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ternatives they would adopt, under the circumstances in which they would be placed. The imperious wants of a suffering community would call for discounts, in language which could not be disregarded. The public necessities would demand, and public opinion would sanction, the suspension, or at least an cvasion, of specie payments.
But, even if this desperate resort could be avoided in a period of peace and general prosperity, neither reason nor experience will permit us to doubt, that a state of war would speedily bring about all the evils which so fatally affected the credit of the Government and the national currency, during the late war with Great Britain. We should be again driven to the same miserable round of financial expedients, which, in little more than two years, brought a wealthy community almost to the very brink of a declared national bankruptcy, and placed the Government completely at the mercy of speculating stockjobbers.
The Committee feel warranted, by the past experience of the country, in expressing it as their deliberate opinion, that, in a period of war, the financial resources of the country could not be drawn into efficient operation without the aid of a national bank, and that the local banks would certainly re sort to a suspension of specie payments. The maxim is eminently true in modern times, that money is the sinew of military power. In this view of the subject, it does appear to the committee, that no one of the institutions of the country, not excepting the army or navy, is of more vital importance than a national bank. It has this decided advantage over the army and navy: while they are of scarcely any value except in war, the bank is not less useful than either of them in war, and is also eminently useful in peace. It has another advantage, still greater. If, like the army or navy, it should cost the nation millions annually to sustain it, the expediency of the expenditure might be doubted. But, when it actually saves to the Government and to the country, as the committee have heretofore attempted to show, more millions annually than are expended in supporting both the army and navy, it would seem that, if there was any one measure of national policy, upon which all the political parties of the country should be brought to unite, by the impressive lessons of experience, it is that of maintaining a national bank.
It is due to the persons, who, for the last ten years, have been concerned in the administration of the bank, to state, that they have performed the delicate and difficult trust committed to them, in such a manner, as, at the same time, to accomplish the great national ends for which it was established, and promote the permanent interest of the stockholders, with the least practicable pressure upon the local banks. As far as the committee are enabled to form an opinion, from careful inquiry, the bank has been liberal and indul. gent in its dealings with these institutions, and, with scarcely an exception, now stands in the most amicable relation to them. Some of those institutions have borne the most disinterested and unequivocal testimony in favor of the bank.
It is but strict justice also to remark, that the direction of the mother bank appears to have abstained, with scrupulous care, from bringing the power and influence of the bank to bear upon political questions, and to have selected, for the direction of the various branches, business men in no way connected with party politics. The committee advert to this part of the conduct of the directors, not only with a view to its commendation, but for the purpose of expressing their strong and decided conviction that the usefulness and stability of such an institution will materially depend upon a steady and undevi. ating adherence to the policy of excluding party politics and political parti=;" zans from all participation in its management. It is gratifying to conclude Dil this branch of the subject, by stating, that the affairs of the present bank,
under the able, efficient, and faithful guidance of its two last presidents and to their associates, have been brought from a state of great embarrassment into
a condition of the highest prosperity. Having succeeded in restoring the paper of the local banks to a sound state, its resources are now such as to
justify the directors in extending the issue and circulation of its paper so as * to satisfy the wants of the community, both as it regards bank accommodations
and a circulating medium. Upon the soundest principles of banking, the et very ample resources of the institution would justify the directors in grant
ing accommodations to a much greater extent than they have yet done; and I though they have increased the circulation of their paper from four and a half to fourteen millions, since January, 1823, they are ready and willing to in
crease it still further, by discounting bills of exchange and other business Ipaper. It is believed that the discounts and issues of the institution are now actually limited by the want of applications resting upon these, the only substantial and safe foundations of bank credit and circulation.
III. Having said thus much on the constitutionality and expediency of an incorporated National Bank, the only question which remains to be examined by the committee is, the expediency of establishing “a National Bank founded upon the credit of the Government and its revenues.”
It is presumed to have been the intention of the President, in suggesting the inquiry as to a bank founded upon the credit and revenues of the Government, to be understood as having allusion to a bank of discount and deposite. Such a bank, it is taken for granted, would have branches established in various parts of the Union, similar to those now established by the Bank
of the United States, and co-extensive with them. The great object of furnishLing a national currency could not be accomplished, with an approach to uni
formity, without the agency of such branches; and another object, second only in importance to the one just stated, the extension of the commercial facilities of bank accommodations to the different parts of the Union, could not be at all effected without such agency. If there should be simply a great central bank established at the seat of Government, without branches to connect its operations with the various points of the commerce of the Union, the promise to pay specie for its notes, whenever presented, would be almost pureiy nominal. Of what consequence would it be to a merchant or planter of Louisiana, or å manufacturer or farmer of Maine, that he could obtain specie for bills of the National Bank, on presenting them at the City of Washington a place wholly unconnected either with Louisiana or Maine by any sort of commercial intercourse, and where, consequently, these bills would never
come in the regular course of trade? A promise to pay specie at a place so - remote from the place of circulation, and where the bills would never come * but at a great expense, and for the sole purpose of being presented for paym ent, would neither give credit to the notes, nor operate as an effective check upon excessive issues. Whatever credit such notes might have, at a distance from the place of issue, would not be because they were redeemable at the pleasure of the holder-for such would not be the fact; but principally because of the ultimate responsibility of the Government, and of their being receivable in payment of all dues to the Treasury. They would rest, therefore, upon almost precisely the same basis of credit as the paper money of our Revolution, the assignats of Revolutionary France, and the Treasury notes of the late war. These were receivable in discharge of debts due to the Treasury, and the Government was of course ultimately responsible for their payment; yet the two former depreciated almost to nothing, and the latter, though bearing interest, sunk to 20 per cent. below par. But the notes of a central Government Bank, without branches, would be subject to depreciation from a cause which constitutes a conclusive objection to such an institution. There would be nothing to limit excessive issues but the discretion and prudence of the Government or of the direction. Human wisdom has never devised any adequate security against the excessive issues, and, consequently, the depreciation of bank paper, but its actual, and easy, and prompt convertibility into specie at the pleasure of the holder. Experience has shown that, where the paper of a bank is, by any means, habitually circulated at places remote from the point where it is issued, and not connected with it by a regular commercial intercourse, there will not exist that easy and prompt convertibility which is so essential to the credit of bank paper. When bank bills are confined to their appropriate sphere of circulation, a redundant issue is certainly and immediately followed by a run upon the bank for specie. This timely admonition is as useful to the bank as it is to the community: for it enables the directors to avoid, with unfailing certainty, an excess equally injurious to both, and which no human sagacity could anticipate or prevent, by calculation merely. Whatever, therefore, in a system of bank circulation, prevents the reflux of redundant issues, necessarily destroys the only adequate security against these injurious and ruinous excesses.
But a Government Bank, without branches, would be obnoxious to another objection, which could not be obviated. Its loans would be confined to • the District of Columbia; or, if extended to the various parts of the Union
to say nothing of the inconvenience to which it would expose those at a distance who obtained accommodations—they would be unavoidably granted without any knowledge of the circumstances of the persons upon whose credit the Government would depend for re-payment. It would, in fact, be, for all useful purposes, a mere District Bank.
These views of the subject have brought the committee to the conclusion, that, if a Government Bank should be established, it would have at least as many branches as the Bank of the United States, and probably a much greater number. Few administrations would have the firmness to resist an application to establish a branch, coming from any quarter of the Union, however injudicious the location might be, upon correct principles of commerce and banking.
The Bank of the United States now employs five hundred agents, in the various parts of the Union where its offices are established. From this fact some idea may be formed of the very great addition which would be made to the patronage of the Executive Government by the establishment of such a bank as the one under consideration.
But the patronage resulting from the appointment-the annual appointment-of these agents, great as it would doubtless be, would be insignificant and harmless, when compared with that which would result from the dispensation of bank accommodations to the standing amount of at least fifty millions of dollars! The mind almost instinctively shrinks from the contemplation of an idea so ominous to the purity of the Government and the liberties of the people. No government of which the committee have any knowledge, except, perhaps, the despotism of Russia, was ever invested with a patronage at once so prodigious in its influence and so dangerous in its character. In the most desperate financial extremities, no other European government has ever ventured upon an experiment so perilous. Ir the whole patronage of the English monarchy were concentrated in the hands of the American Executive, it may be well doubted whether the public liberty would be so much endangered by it as it would by this vast pecuniary machine, which would place in the hands of every administration fifty millions of dollars, as a fund for rewarding political partizans.
Without assuming that a corrupt use would be made of this new species, of government patronage, a very slight acquaintance with the practice of all political parties, whatever may be their professions, will be sufficient to satisfy any reflecting mind that all the evil consequences of corruption would flow from its exercise. Have not our political contests too frequently degenerated into a selfish scramble for the offices of the country? Are there not those who sincerely and honestly believe that these offices are legitimate objects of political warfare, and the rightful reward of the victorious party? And, disinterested and patriotic as the great body of every political party is admitted to be, the fact is no less true than it is lamentable, that the most devoted and active partizans are very often mere soldiers of fortune, who watch the political signs, and enlist, at the eleventh hour, under the banners of the party most likely to prove successful. Such being; more or less, the composition of all political parties, what would be the probable use made of fifty millions of bank patronage, by a political party which conscientiously held the doctrine that all the offices in the gift of the Executive should be divided among the partizans of a successful political leader? Would not the same principle be even more applicable to bank loans? and would not the Treasury of the United States, under the sanctifying influence of party delusion and party infatuation, be literally plundered, by mercenary retainers, bankrupts in fortune, and adventurers in politics?
Even if the administration should be ever so much disposed to restrain the abuse of this prtronage, it would be utterly impracticable to exercise any efficient control over the great number of bank directors who would be scattered over the Union, and who, upon all the known principles of human nature, it may be confidently predicted, would principally consist of busy and officious political partizans.
Such would be the depositaries--acting, not under the public eye, but under the protecting niystery of a sort of concealment and secrecy deemed indispensable in hanking operations—to whom not only the whole Treasury of the Union would be confided, to be squandered, perhaps, in profligate favoritism, but the tremendous power of putting the whole property of the nation under mortgage, for the redemption of the bills issued at their discretion. To say nothing of the utter insecurity of the public revenues un. der such a system, a new species of legislative power, unknown to the Constitution, would be committed to these irresponsible bank directors, of which no human sagacity can predict the consequences.
A just analysis of the operation of granting loans by this Government bank, in exchange for the notes of private individuals, will show, that it involves the exercise, on the part of the directors, of the two-fold power of appropriating the public revenue in the most dangerous of all forms-discrgtionary loans-and of pledging the responsibility of the Government, to an unlimited extent, for the payment of the debts at the same time created gianst it. These are among the highest functions of legislative power, aid
have been expressly and exclusively vested in Congress. Unless, therefore, it be assumed, that Congress may rightfully transfer the powers with which it is invested to these bank directors, it will be difficult to find any warrant, either in the letter or spirit of the Constitution, for the creation of this tremendous engine of pecuniary influence. It may, indeed, be doubted, whether all the branches of the leg slative authority united, have any constitutional power to lend the public revenue, either to individuals, corporations, or States, without reference .o the objects to which it shall be applied. But, whatever, may be the power of Congress on this subject, it appears to the committee to be inexpedient, in every view of the question, that the Goverament should be converted into a great money lender. There is no species of trade in which it would be wise for the Government to embark; but of all the variety of pursuits known to human enterprise, that of lending money by the Government to the citizens of the country, would be fraught with the most pernicious consequences.
In the first place, it is a business to which, in the very nature of things, no Government is adapted, and, least of all, a popular Government. There is no employment of capital that requires a more vigilant and skilful superintendence. Nothing but the ever active motive of individual interest can supply the watchfulness necessary to secure a banking institution against the grossest. frauds and impositions. In pecuniary transactions, few men are to be found who will serve .others, in cases involving the exercise of discretionary power, with the same fidelity that they would serve themselves; and, when we consider the strong motives, both of private friendship and political attachment, which would operate on the directors of a Government bank, to bestow its favors without impartiality or prudence, it requires but little sagacity to foresee that enormous losses would be annually sustained by the insolvency of the Government debtors.
All Governments have found it expedient to place the public Treasury under the guardianship of a high and confidential officer, aided, in the enforcement of a rigid responsibility, by a system of checks and counterchecks, operating upon all the subordinate officers concerned in collecting and disbursing the public revenue. Such is our own system. No discretion is vested in the chief officer of the Treasury, much less in those that are subordinate, in the appropriation of a single dollar of the public money. “No money can be drawn from the Treasury but in consequence of appropriations made by law." How far these wise and provident safeguards, and this constitutional barrier, would be prostrated by placing not only the public revenue, but the public credit, at the disposal of some hundreds of bank directors in various parts of the Union, is a very grave question for the consideration of the House.
Our own experience has demonstrated the great danger of having large masses of the community indebted to the Government. It was a deep conviction of this danger that induced Congress to abolish the system of credit sales in the disposition of the public lands. Congress has been compelled to yield to the pressing importunities of the purchasers of these lands,, by granting them not only repeated indulgencies, but by remitting some millions of the debt. Whal, then, would be the situation of the Government, with a debt of fifty millions diffused throughout the country, and due to it from the most active, enterprising, and influential classes of the community? Nathing that has not happened can be more certain, than that every unfavorable vicissitude in trade, every period of commercial distress and embarrassment,