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In order to supply the wants of the Government, an intelligent constituency, in view of the best interests, will, without hesitation, submit to all necessary burdens. But it is nevertheless important so to impose them as to avoid defeating the just expectations of the country, growing out of pre-existing laws. The act of 2d March, 1833, commonly called the Compromise Act, should not be altered except under urgent circumstances, which are not believed at this time to exist. One year only remains to complete the series of reductions provided for by that law, at which time provisions made by the same law, and which will then be brought actively in aid of the manufacturing interests of the Union, will not fail to produce the most beneficial results. Under a system of discriminating duties imposed for purposes of revenue, in unison with the provisions of existing laws, it is to be hoped that our policy will, in the future, be fixed and permanent, so as to avoid those constant fluctuations which defeat the very object they have in view. We shall thus best maintain a position which, while it will enable us the more readily to meet the advances of other countries calculated to promote our trade and commerce, and will at the same time leave in our own hands the means of retaliating with greater effect unjust regulations.
In intimate connexion with the question of revenue is that which makes provision for a suitable fiscal agent ca. pable of adding increased facilities in the collection and disbursement of the public revenues, rendering more secure their custody, and consulting a true economy in the great multiplied and delicate operations of the Treasury Department. Upon such an agent, depends, in an eminent degree, the establishment of a currency uniform in value, which is of so great importance to all the essential interests of society ; and on the wisdom to be manifested in its creation much depends.
So intimately interwoven are its operations, not only with the interests of individuals, but with those of the States, that it may be regarded in a great degree as controlling both. If paper be used as the chief medium of circulation, and the power be vested in the Government of using it at pleasure, either in the form of Treasury
drafts or any other, or if banks be used as the public depositories, with liberty to regard all surplusses, from day to day as so much added to their active.capital, prices are exposed to constant fluctuations, and industry to severe sustering. In the one case, political considerations, di. rected to party purposes, may control, while excessive cupidity may prevail in the other. The public is thus constantly liable to imposition. Expansions and contractions may follow each other in rapid succession, the one engendering a reckless spirit of adventure and speculation, which embraces States as well as individuals; the other causing a fall in prices, and accomplishing an entire change in the aspect of affairs. Stocks of all kinds rapidly decline individuals are ruined, and States embarrassed even in their efforts to meet with punctuality the interest on their debts. Such, unhappily, is the state of things now existing in the United States. These effects may readily be traced to the causes above referred to. The public revenues, on being removed from the Bank of the United States, under an order of the late President, were placed in selected Banks, which actuated by the double motive of conciliating the Government and augmenting their profits to the greatest possible extent, enlarged extravagantly their discounts, thus enabling all other existing banks to do the same.
Large dividends were declared, which, stimulating the cupidity of capitalists, caused a rush to be made to the legislatures of the respective States for similar acts of incorporation, which, by many of the States, under a temporary infatuation, were readily granted, and thus the augmentation of the circulating medium, consisting almost exclusively of paper, produced a most fatal delusion. An illustration, derived from the land sales of the period alluded to, will serve best to show the effect of the whole system. The average sales of the public lands, for a period of ten years prior to 1834, had not much exceeded $2,000,000 per annum. In 1834 they attained in round numbers, to the amount of $6,000,000. In the succeeding year, of 1835, they reached $16,000,000. And the next year, of 1836, they amounted to the enormous sum of $25,000,000. Thus crowded into the short space of three years upwards of twenty-three years' purchase of the public domain. So apparent had become the necessity of arresting this course of things, that the Executive department assumed the highly questionable power of discriminating in the funds to be used in payment by difserent classes of public debtors—a discrimination which was doubtless designed to correct this most ruinous state of things by the exaction of specie in all payments for the public lands, but which could not at once arrrest the tide which had so strongly set in. Hence the demands for specie became unceasing, and corresponding prostration rapidly ensued under the necessities created with the banks to curtail their discounts, and thereby to reduce their circulation. I recur to these things with no disposition to censure pre-existing administrations of the Government, but simply in exemplification of the truth of the position which I have assumed. If, then, any fiscal agent which may be created, shall be placed, without due restrictions, either in the hands of the administrators of the Government, or those of private individuals, the temptation to abuse will
resistless. Objects of political aggrandizement may seduce the first, and the promptings of a boundless cupidity will assail the last. Aided by the experience of the past, it will be the pleasure of Congress so to guard and fortify the public interests in the creation of any new agent, so as to place them, so far as human wisdom can accomplish it, on a footing of perfect security. Within a few years past, three different schemes have been before the country. The charter of the Bank of the United States expired by its own limitation in 1836. An effort was made to renew it, which received the sanction of the two houses of Congress, but then the President of the United States exer. cised the veto power, and the measure was defeated. A regard to truth requires me to say that the President was fully sustained in the course he had taken, by the popu. lar voice. His successor to the Chair of State unqualifiedly pronounced his opposition to any new charter of a . similar institution ; and not only the popular election which brought him into power, but the elections through much of his term, seemed clearly to indicate a concurrence with him in sentiment, on the part of the people. After the public moneys were withdrawn from the United States Bank, they were placed in deposit with the State Banks, and the result of that policy has been before the country. To say nothing as to the question whether that experiment was made under propitious or adverse circumstances, it may safely be asserted that it did receive the unqualified condemnation of most of its early advocates, and it is believed was also condemned by the popular sentiment. The existing Sub-Treasury system does not seem to stand in higher favor with the people, but has recently been condemned in a manner too plainly indicated to admit of a doubt. Thus, in the short period of eight years, the popular voice may be regarded as having successfully condemned each of the three schemes of finance to which I have adverted.
As to the first, it was introduced at a time (1816) when the State banks then comparatively few in number, had been forced to suspend specie payments, by reason of the war which had previously prevailed with Great Britain. Whether, if the United States Bank charter which expired in 1811 had been renewed in due season, it would have been enabled to continue specie payments during the war and the disastrous period to the commerce of the country which immediately succeeded, is, to say the least, problematical ;--and whether the United States Bank of 1816 produced a restoration of specie payments, or the same was accomplished through the instrumentality of other means, was a matter of some difficulty at that time to determine. Certain it is, that for the first years of the operation of that bank, its course was as disastrous as for the greater part of its subsequent career it became eminently successful.
As to the second, the experiment was tried with a redundant Treasury, which continued to increase until it seemed to be the part of wisdom to distribute the surplus revenue among the States, which, operating at the same time with the specie circular, and the causes before adverted to, caused them to suspend specie payments, and involved the country in the greatest embarrassment. And, as to the third, if carried through all the stages of trans. formation, from paper and specie to nothing but the pre cious metals, to say nothing of the insecurity of the public moneys, its injurious effects have been anticipated by the country in its unqualified condemnation.
What is now to be regarded as the judgment of the American people on this whole subject, I have no accu. rate means of determining, but by appealing to their more immediate representatives. The late contest which terminated in the election of General Harrison to the Presidency, was decided on principles well known and openly declared—and while the Sub-Treasury received in the result the most decided condemnation, no other scheme of finance seemed to have been concurred in. To you, then, who have come more immediately from the body of our common constituents, I submit the entire question, as best qualified to give a full exposition of their wishes and opinions. I am ready to concur with you in the adoption of such system as you may propose, reserving to myself the ultimate power of rejecting any measure which may in my view of it conflict with the Constitution, or otherwise jeopard the prosperity of the country-a power which I could not part with even if I would, but which I will not believe any act of yours will call into requisition.
I cannot avoid recurring, in connexion with this subject, to the necessity which exists for adopting some suitable measure whereby the unlimited creation of banks by the States may be corrected in future. Such result can be most readily achieved by the consent of the States, to be expressed in the form of a compact among themselves, which they can only enter into with the consent and approbation of this Government; a consent which might, in the present emergency of the public demands, justifiably be given in advance of any action by the States, as an inducement to such action upon terms well defined by the act of the tender. Such a measure addressing itself to the calm reflection of the States, would find in the experience of the past, and the condition of the present, much to sustain it. And it is greatly to be doubted whether any scheme of finance can prove for any length of time successful, while the States shall continue in the unréstrained exercise of the power of creating banking corpo