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ing subject of dispute, and removes fnmij’ir.' tuture com
merci.tl intercourse all apprehension ol embarrassment.
The Kimjof the Necherlan Is lias al> >, in further illustra
tion of his character for justice, and « I hisdestte to te
tu tve every cause of dissatisfaction, made compensation
for an American vassel captured in 1800 by a 1' tench prt-
V.ueei, am! carried into Cmacoß, wltete the proceei.s wete
appropriated to the use of the colony, then, and lor ashott
lime after, tinder the dominion of Holland,
1 hn death of the late Sultan has produced no altera- I
tian m our r< I ttions with Turkey. Our newly appointed
M uister Resident has reached Constantinople, and I have |
received assurances Tom the present Ruler liiat the obli- I
gallons of our treaty, and those ot Iriendsldp, will be fill- ;
filled by himself in the sa.n spirit that actuand his i’.lus- j
trious father.
1 regret to be obliged to inform you that no convention
for the settlement of the claims of onr citizens upon Mex- j
ice has yet been ratified hr the Government ol that couu- i
try. The first convention formed for that purpose was ;
not presented by the President cd’ Mexico Inr tin tippioba
lion of Congress, fi rm a belie! that the King ol Prussia,
the arbitrator in a case of disagreement in the joint com
mission to be appointed by the I nited States and Mexico, |
would not consent to take upon himself that friendly office. ■
Although nut entirely satisfied w ith the course pursued by ,
Mexico, I feel no hesitation in receiving tn the most con
ciliatory spirit the explanation offered, and also cheerfully ,
consented to a new convention, in order to arrange the i
payments proposed to be made to onr citizens, in a man
ner which, while equally just to them, was deemed less;
oner ms and inconvenient to the Mexican Government.
Relying confidently upon the intentions of that Govern
ment, Mr. Ellis was directed to repair to Mexico, and di
plomatic intercourse has been resumed between the two
countries The new convention has, he informs us, been
rrren’ly submitted bv the President of that Republic to its
Congress, unde r < ircutnstunces w Inch promise a speedy ra
tification ; a result which 1 cannot allow myself to doubt.
Instructions have been given to the Commission"!' ot
the United States under our Convention with Texas, for
the demarcation of the line which sepaiales us from that
Republic. The commissioners of both Governments met
in X< w Orleans in August las’. The joint commission
was organised, and adjoin ned to convene at the same place
on the tm Itth of October. It is presumed to be notv in
the |ierio: mance of its duties.
The new Government ofTexas has shown its desire to
cultivate fiiendly relations with us, by a prompt repara
tion f>r inj in ins complained of in the cases of two vessels
ol tiic L'mted States.
With Central America a convention has been concluded
for the lenewal of its former treaty with the United States.
This was not ratified before the departure of our late
Charge <l*Affaires from that country, and the copy of it
brought by him was not received before the adjournment
of tiie Senate at tbo last session. In the mean w hile, the
period limited for the exchange of ratifications having ex
pired, I deemed it expedient, in consequence of the death
fthe Charge d’Afiaires, to send a special agent to Cen
tial America, to close the affairs of otir mission there, and
to arrange with the Government an extension of
for the exchange of ratifications.
The commission created by the States which formerly
■composed the Republic, of Columbia, for adjusting the
cl tints against that Government, bus by a v< ry unexpect
ed coii-ti ticliou of the treaty under w liich it acts, decided
that no provision was made for those claims of citizens of
tin- United Stales which arose from captures by Colombi
an privateers, and were adjudged against the ciairomis in
<1 . puli, i d tribunals. This decision w ill cotiqx 1 ihe ’ ni
ted states to applv to the several Govei llinents toimrily
united for re ress. With all these—Aw Gtanada, Ven
ezuela, a,id F. io, a pel fcctly good mid islanding exists.
Our treat t with Venezuela is faithfully carried it to exe
«t:li‘»i>. n ; that c u trv, in the eiqov.iient «f tranquillity
is giadn.diy , vtu.i i .g i:i pruspeiitv under the guidance of
its pies, a, ilistmguislied President, General Paez. \V illi
E< ii id ir, a liberal commercial convention has lately Seen
concluded, which w ill be transmitted to tf7e Senate at an
early day.
With the great American Empire of Brazil, our rela
tions continue unchanged, as does our friendly intercourse
•with the other Governments of South America—the Ar
gentina Republic and the Republic of Uruguay, Chili,
Peru and Bolivia. The dissolution of the Peru-Bolivian
Confederation may occasion some temporary inconveni
ence to our citizens in that quarter, but the obligations on
the new Governments which have arisen out of that Con-
Jedetstion to observe its treaty stipulations, will no doubt
be soon understood, and it is presumed that no indisposi
tion will exist to fulfil those which it contracted with the
United States.
Ttw» financial operations of the Government during die
present year iiave, I am happy to say, been successful.
The difficulties tinder w hich the Treasury Department has
labored from known defects in the existing laws relative
to the sate keeping of the public moneys, aggravated by
the suspensicn of specie payments by several of the banks
holding public deposites, or indebted to public officeis for
notes received in payment of public dues, have been sur
mounted to a very gratifying extent. The laige current
expenditures have been punctually met, and the faith of
the Government ,n all its pecuniary concerns has been
scrupulously rnvintaiued.
The nineteen millions of Treasury nates authorised by
the act of Congress of 1837, and the modifications there
of, with a view to the indulgence of metchanls on their du
ty bonds, and of the deposite banks in die payment of pub
lic moneys held by them, have been so punctually re
deemed as to leave less than the oi ; giual leu millions out
standing at any one time, and the whole amount unre
deemed now falls short of three millions. Os these the
chief portion is not due ti l next year, and the whole would
have been already extinguished could the Treasury have
realised the payments due to it from the banks. If those
due from them during the next year sit ail be punctually
made, and if Congress shall keep the appropriations with
in the estimates, there is every reason to believe that all
the outstanding Treasury notes can be redeemed, and the
ordinary expenses defrayed, without imposing on the peo
ple any additional burthen, either of loans or increased
tales.
To avoid this, mid to keep the expenditures within rea
sonable bounds, is a duty, second only in importance to
the preservation of our national character, and the protec
tion of our citizens in their civil and political rights. The
creation, in tune of peace, of a <h bt likely to become per
manent, is nil evil Io which there is no equivalent. The
rapidity with which iiihiiv of tin.- Stales are apparently ap
proaching to this condition, admonishes us of our own du
ties, iti a manner too impressive to Ue disregarded. One,
not the least important, is to keep the Federal Govern
ment always in a condition to discharge, with ease and vi
gor, its highest functions, should their exercise be requited
by anv sudden conjuncture of public affaiis—a condition
to which we are always exposed, and which may occur
when it k least expected. To this end, it is indispensable
that i s finances should be untrammelled, and its resources,
as fur as practicable, unincumbered. No circumstance
could present greater obstacles to the accomplishment of
these vitally important objects, than the creation of an
unoro't* national debt. Our own experience, and also
that of other nations, have demonstrated the unavoidable
and feaiful tapidily with which a public debt is increased,
when the Government lias once surrendered itself to the
ruinous practice of supplying its supposed tieccssitius by
new loans. The struggle, therefore, on our part, to be
successful, must be made at the threshold. To make our
efforts ieffective, severe economy is necessary. This is
the surest provision for the national welfare ; and it is, at
the same time, the best preservative of the principles on
which our institutions test. Simplicity and economy in
the affairs of State have never failed to < hasten and invig
orate’ republican principles, while these have been as sure
ly subverted by national prodigality, under whatever spe
cious pretexts it mav have been introduced or fostered.
These considerations cannot be lost upon a people who
have never been inattentive to the effect of their policy
upon tho institulivua they haw created fur thamselvua;
but nt the present moment their force is augmented by
the necessity woich a decreasing tevenuc must impose.
The check lately given to impoi taiions of at tides subject
to duties, the dei Mtigeinents in the operations of internal
trade, and especially the reduction gradually taking place
in our tariff of duties, ail tend materially to lessen our
receipts; indeed it is probable that the diminution re
sulting from the last cause alone, will not fall short ol live
millions of dollars in the year 1842, as the final reduction
ot all duties to twenty per cent, then takes effect. The •
whole revenue then accruing from the customs, and from |
the sales ol public lands, if not more, will undoubtedly be
wanted to defray the necessary expenses of the Govern
ment under the most prttdt nt administration of its affairs,
t hese are circumstance s that impose the necessity of ri
gid economy, and require its prompt and constant exer
cise. Willi the Legislature rest the power and duty of so
adjusting the public expenditure as to promote this end.
By tho provisions of the Constitution, it is only in conse
quence of appropriations made by law, that money can be
drawn from the Treasury; no instance has occurred since
the establishment of (lie Government in which the Execu
tive, though a component part of the Legislative power,
has interposed an objection to an appropriation bill on the
side ground of its extravagance. His duty in this respect
has bren considered fulfilled by requesting such appropri
ations only as the public, service mav be reasonably ex
pected to requite. In the pieseat earnest direction of the
public mind towards this subject, both the Executive and
the Legislature have evidence of the strict responsibility
to which they will be held, and while 1 am conscious of,
my own anxious efforts to petform with fidelity this pot
tion of my public functions, it is a satisfaction to me to be
able to count on a cordial co-operation from you.
At the time I entered upon my piesent duties, our or
ditiaty disbursements—without including those on account
of the public debt, the Post Office, and the trust funds in
charge of the Government—had been lately increased bv
appropriations for the removal of the Indians, for repell
ing Indian hostilities and for other less urgent expenses
which grew out of an overflowing Treasury. Indepen
dent of the redemption of the public debt and trusts, the
gross expenditures of seventeen and eighteen millions in
1834 and .1835 had, by these causes, twenty-nine millions
in 1836; and the appropriations for 1837, made previous
ly to the fourth of March, caused the expenditure to rise
to the very large amount of thirty-three millions. We
were enabled, dining 1838, notwithstanding the continu
ance ol our Indian embarrassments, somewhat to reduce
this aniimnt; and that for the present year, 1839, will not
m all probability exceed twenty-six millions—or six mil
lions less than it was last year. With a determination so
(ar as depend* on me to continue this reduction, I have di
rected the estimates for 1840 to be subjected to the sever
est scrutiny , and to be limited to the absolute requirements
of the public service. They will be found less than the
expenditures of 1839 by over live millions of dollars.
The precautionary measures which will be recommend
ed by the Secretary of the Treasury, to protect faithfully
the public credit under the fluctuations and contingencies
to which onr receipts and expenditures are exposed, and
especially in a commercial crisis like the present, are
commended Io your early attention.
On a former occasion your attention was invited to va
rious considerations in support of a pre-emption law' in be
half ol the settlers on the public lauds; and also of a law
. graduating the prices lor such lauds as had long been in
!Hi market unsold, in consequence of their inferior quality.
1 tie ixi cution ol the act w hich was passed on the first
subject lias been attended with the happiest consequences,
in quie.i' g titles, and securing improvements to the in
[ dusttions; and it has also, to a very gratifying extent,
i been exempt from the frauds which were practised under
I pri vimts pre-emption laws, ii has, at the same time, as
was anticipated, contiibtitcd liberally during the present
year to the receipts of the Treasury.
I’he passage of a graduation law, with the guards before
recommended, would also, 1 am persuaded, add consider
ably tothu revenue for several years, and prove in other
respects just and beneficial.
our early consider e.ton of tho subject is, therefore,
once more earnestly requested.
The present condition of the defence of our principal
seaports and navy y ards, as represented by the accompa
nying report of the Secretary of War, calls for the early
and serious attention of Congress; and, as connecting itself
intimately with this subject, 1 cannnt recommend too
strongly to your consideration the plan submitted by that
officer for the organization of the Militia of the United
States.
In conformity with the expressed wishes of Congress,
an attempt was made in the spring to terminate the Flor
ida War by negotiation. It is to be regretted that these
humane int< ritimis should have been frnstiated, and that
the effort to bring lir se unhappy difficulties to a satisfac
tory conclusioir should have failed. Bt.l, after entering
into solemn en»ageme>its with the Commanding Genera),
the Indians, without any provocation, recommenced their
acts of tii acbcry and murder. The renewal of hostilities
in that Territory renders it necessary that I should recom
mend to your favorable consideration the plan which will
be submitted to you by the Secretary of War, in order to
enable that department to conduct them tw a successful
issue.
Having had an opportunity of petsonally inspecting a
portion of the troops during the last summer, it gives me
pleasure to bear testimony to the success of tlm ellort to
improve their discipline, by keeping them together in as
large bodies as the nature ol our service will permit. 1
reemnmend, therefore, that commodious and permanent
. barracks be constriicled at the serveral posts designated
;by the Secretary ol War. Notwithstanding the high state
I of their discipline and excellent police, the evils resulting
to the service from the deficiency of company officers,
were very apparent, and 1 recommend that the staff ofli
! cei s be pel maneiitly separated from the line.
I he navy lias been usefully and honorably employed
in protecting the rightsand property of our citizens, wher-
I ever the condition es aflairs seemed to require its presence.
\ V» i:h the exception of one instance, where an outrage,
j accompanied by murder, was committed on a vessel of
( the United Slates wbile engaged in a lawful commerce,
I nothing is known tn have occurred to impede or molest
the enterprise ol onr citizens on that c lement where it is
so signally displayed. On learning thisdariug act of pi-
I racy. Commodore Reed pioceeded immediately to the
I spot, and receiving no satisfaction, either in the surrender
I of the murderers or the restoration of the plundered pro
! petty, i' flirted severe and merited chastisement on the
1 barbarians.
Ii will be seen by tho report of tho Secrotary of the
I N ivy respecting the disposition of our ships of war, that
i it has bi en deemed necessary to statiort a competent force
, nn th ■ coast of Africa, to prevent a fraudulent use of our
flag by foreigners.
Recent experience has shown that the provisions in onr
I existing laws which relate to the sale and transfer of Amer
ican vessels while abroad, are extremely defective. Ad
vantage lias been taken of these defects to givo to vessels
wholly belonging to foreigners, and navigating the ocean,
an apparent American ownership. This character has
been so well simulated as to afford them comparative se
; ettrity in prosecuting the slave trade, a traffic emphatical
ly denounced in our statutes, with abhorrence by
our citizens, and of which the effectual supptessiotfc'ls no
where more sincerely desired than in the United Stales.
These circumstances make it proper to recommend to
your early attention a careful revision of these laws, so
that, without impeding the freedom and facilities ol our
navigation, or impairing mi impottaiit branch of our indus
try connected w ith i', the integrity and honor of our flag
may be carefully preserved. Informal ion derived from
our Consul at Havana, showing the necessity ot this, was
communicated to a committee ol the Senate near the close
of the lust session, but too la e, as it appeared, to be acted
upon. It will be brouglil to your notice by the proper
deparimiuit, with additional communications from other
sources.
Tho latest accounts fiom tho Exploring Expedition re
present it u« proceeding successfully in its objects, and
promising results no less useful to trade and navigation ■
than to science.
The extent of post roads covered by mail service on
the first of July last, was about 133,999 miles, and the
rate of annual transportation upon them 34,496,878 miles.
I’lic number ol post offices on that day was twelve thou
sand seven hundred and eighty, and on the thirtieth ulti
mo, thirteen thousand and twetilv-ei<_dit.
The revenue of the Post Office Department for the
year ending with the 30th of June last, was four million
four hundred and seventy-fix thousand six hundred and
thirty-eight dollars—exhibiting an increase over the pre
ceding year ol two bundled and forty-one thousand five
hmulred and sixty dollars. The engagements and liabili
ties ol the Department for the same period are four mil
lion six hundred and twenty-four thousaid one hundred
and seventeen dollars.
r l'he excess of liabilities over the revenue for the last
two years Iris been met out of the surplus which Lad pre
viously accumulated. The cash on hand on the 30th ult.
was about $206,701 95, and the current income wf the ■
Department varies very little from the rate of current ex
penditures. Most of the service suspended last year has !
been restored, and most of the new routes established by ;
the act of 7tli J tdy, 1838, have been set in operation at an ;
annual cost of $136,963. Notwithstanding the pecuniaty |
difficulties of the country, the revenue of the Department
appears to be increasing; and unless it shall be seriously
checked by-the recent suspension of payment by so many
of the banks, it will be able not only’ to maintain the pre
sent mail service, but in a short time to extend it. It is
gratifying to witness the promptitude and fidelity with
whicn the agents of this Department in gcneial perform
their'public duties.
Some difficulties have arisen in relation to contracts for
the transportation of the mails by rail road and steam boat
companies. It appears that the maximum of compensa
tion provided by Congress for the transportation of the
mails upon rail roads is not sufficient to induce some of
the companies to convey them at such hours as are requit
ed for the accommodation of the public. It is one of the
most important duties of the General Government to pro
vide and maintain for the use of the people of the States
the best practicable mail establishment. To arrive at
that end it is indispensable that the Post Ollice Depart
ment shall be enabled to control the hours at whir h the
mails shall be carried over rail roads, as it now does over
all other roads. Should serious inconveniences arise from
the inadequacy of the compensation now provided bv
law, or from unreasonable demands by any of tiie rail
road companies, the subject is of such general importance
as to require the prompt attention of Congress.
In relation to steam boat lines, the most efficient remedy
is obvious, and lias been suggested by the Postmaster
General. The War and Navy Departments already em
ploy steamboats in their service, and although it is by no
i<ea:is desirable that the Government should undertake
the transportation of passengers or freight as a business,
there can be no reasonable objection to running boats,
temporarily, whenever it mav be necessary to put down
attempts at extortion, to be discontinued as soon as rea
sonable contracts can be obtained.
The suggestions of the Postmaster General relative to
the inadequacy of the legal allowance to witnesses in cases
of prosecutions for mail depredations, merit your serious
consideration. The safety of the mails requires that such
prosecutions shall be efficient, and justice to the citizen
whose time is required to be given to the public, demands
not only that his expenses shall be paid, but that he shall
receive a reasonable compensation.
The Reports from the War, Navy and Post Office De
partments will accompany this commui ication, and one
from the Treasury Department will be presented to Con
gress in a few days.
For various details in respect to the matters in charge
of these departments, I would refer you to those important
documents, satisfied that you will find in them many val
uable suggestions, w hirb will be found well deserving the
attention of the Legislature.
From a report made in December of last year, by the
Secretary of State, to the Senate, showing the trial dock
et of each of the Circuit Courts, and the number of miles
each Judge has to travel in the performance of his duties,
a great inequality appears in tiie amount of labor assigned
to each Judge. The number of terms to be held in each
of the courts composing the ninth circuit, the distances be
tween the places at which they sit, and from thence to the
seat ot Government, are represented to be such as to ren
der it impossible for the Judge of that circuit to perform,
in a manner corresponding with the public exigencies, bis
term and circuit duties. A revision, therefore, of the pre
sent arrangement of the circuits seem to be called for, and
is recommended to your notice.
I think it proper to call your attention to the power as
sumed by Territorial Legislatures, to authorise the issue
of bonds by corporate companies on the guarantee of the
Territory. Congress passed a law in 1836, providing that
no act of a Territorial Legislature incorporating banks
should have the force of law until apptoved by Congress,
but acts of a very exceptionable character previously pass
ed by the Legislature of Florida, were siifl'cred to remain
in force, by virtue of which bonds may be issued to a very
large amount by those institutions, upon the faith of the
Territory. .A resolution intending to be a joint one pass
ed the Senate at the same session, expressing the sense ot
Congress that the laws in question ought not to be per
mitted to remain in force unless amended in many materi
al respects, but ii failed in the House of Representatives
for want of time, and the desired amendments have not
been made. The interests involved are of great impor
tance, and the subject deserves your early and careful at
tention.
The continued agitation of the question relative to the
best mode of keeping and disbursing the public money,
still injuiiously aflecls the business of the country. The
suspension of specie payments in 1837, rendered the use
of deposite banks, as preset ibed by the act of 1836, a
source rather of embai rassment than aid, and of necessity
placed the custody of must of the public money afterwards
collected in charge of the public officers. The new secu
rities for its safety, which this required, were a principal
cause of my convening an extra session of Congress ; but
in consequence of a disagreement between the two houses,
neither then, nor at any subsequent period, has there been
any legislation on the subject. The effort made at the
last session to obtain the authority of Congress to punish
the use of public money for private purposes as a crime,a
measure attended under other Governments with signal
advantage, was also unsuccessful, from diversities of opin
ion in that body, notwithstanding tbe anxiety doubtless felt
by it to afford every practicable security. The result of
this is still to leave, the custody of the public money with
out those safeguaids which have been for several years ear
nestly desired by the Executive; and as the remedy’ is on
ly to be found in the action of the Legislature, it imposes
on me the duty of again submitting to voti the propriety of
passing a law providing for the safe keeping of the public
-moneys, ami especially to ask that its use for private put
poses by tiny officers entrusted with it, may be declared a
felony, punishable with penalties proportioned to the mag
nitude of the offence.
These circumstances, added to known defects in the ex
isting laws, and unusual derangement in the general ope
rations of trade, have, during the late three years, much
increased the difficulties attendant on the collection, keep
ing, and disbursement ot the revenue, and called forth
corresponding exertions from those having them in chaige.
Happily these liave been successful beyond expectation.
Vast sums liave been collected and disbursed by the sever
al Departments with unexpected cheapness and ease ; '
transfers have been readilv made to every’ part of tho;
Union, however distant: and defalcations have been far j
less than might have been anticipated, from the absence of ,
adequate legal restraints. Since the officers of the 1 rca
sttry and Post Otliie Departments were charged with the
custody of most of the politic monies received by them,
there have been collected sixty-six millions of dollars, and
excluding the case of the late collector at New York, tho I
aggregate amount of losses sustained in (lie collection can-I
not, it is believed, exceed sixty thousand dollars. The do-'
falcation of the late collector at that city, < f the extent ai d
circumstances of which Congress has been fully informed,
ran through all the modes of keeping the public money
that have been hitherto in use, and was distinguished by
an aggravated disregard of • my, that broke through the
t esti aims of every system, ant cannot, therefore, be use
fully referred to ns a test of tho comparative safety of ei
ther. Additional information will also be furnished by
the report of the Secretary of the Treasury, in reply to a
call made upon that officer by tbe House of Representa
tives at tile last session, re piiiing detailed information on
tiie subject of defaults bv public, oflii.ers or agents under
each administration, from 1789 to 1837. This document
will he submitted to you in a few days. The general re
sults, (independent of the Post Office, which is kept sepa
rately, and will be stated by itself,) so far as they bear
upon this subject, are, that the losses which have been,
hud are likely to be, sustained, by any class of agents liave
been—the greatest by banks, including, as required in the
resolution, their depreciated paper received for public
dues ; that the next largest have been by disbursing offi
cers, and the least by collectors and receivers. If the
losses on duty bonds are included, they alone will be
threefold those by both collectors and receivers. Our
whole experience, therefore, furnishes the strongest evi
dence that the desired legislation of Congress is alone
wanting to insure in those operations the highest degree of
security and facility. Such also appears to be the experi
ence of other nations. From the results of inquiries made
by the Secretary of the Treasury in regard to the practice
among them, 1 am enabled to state that in 22 out of 27
governments, from which undoubted information has been
obtained, the public moneys are kept in charge of public
officers. This concurrence of opinion in favor of that
system is perhaps as great as exists on any question of
internal administration.
in the inodes of business and official restraints on dis
bursing officers, no legal change was produced by the
suspension of specie pay merits. The report last referred
to will be found to contain also much useful information in
relation to this subject.
I have heretofore assign' d to Congress my reasons for
believing that the establiishment of an independent Na
tional Treasury, tis contemplated bs the Constitution, is
necessary to the safe action of the Federal Government.
The suspension of specie payments in 1837, by the banks
having the custody of the public m nev, showed in so a
larniing a degree our dependeace on those institutions for
the performance of duties require,] by law, that I then re
commended the entire dissolution ol that connection. This
lecomrm ttdalion has been subjected,as 1 desired it should
be, to severe scrutiny and animated discussion; and I allow
myself to believe that, notwithstanding the na'ural diver
sities of opinion which may be anticipated on all subjects
involving such important considerations, it has secured in
its favor as general a concurrence of public sentiment as
could be expected on one of such magnitude.
Recent events have also continued to develope new ob
jections to such a connection. Seldom is any bank, under
the existing system and pratice, able to meet, on demand,
all its liabilities for deposites and notes in circulation. It
maintains specie payments, and transacts a profitable busi
ness, only by the confidence of the public in its solvency ;
and whenever this is destroyed, the demands of its dep.'.-
itors and noteholders—-pressed more rapidly than it cun
make collections from its debtors-—force it to stop p iy
ment. This loss of confidence with its consequences oc
curred in 1837, and afforded the apology of the batiks for
their suspension. The public then acquiesced in the val
idity of the excuse ; and, while the State Legislature did
nut exact from them their forfeited charters, Congress, in
accordance with the recommendation of the Executive,
allowed them time«to pay over the public money they held,
although compelled to issue Tieasury notes to supply the
deficiency thus created.
II now appears that there are other motives than a want
of public confidence under which the banks seek (o justify
themselves in a refusal to meet their obligations. Scarce
ly were tbe country and Government relieved, inadegree,
from the difficulties occasioned by the general suspension
of 1837, when a partial one, occurring within thirty months
of the former, produced new and serious embarrassments,
though it bad no palliation in such circumstances as were
alleged in justification of that which had previously taken
place. There was nothing in the condition of the country
to endanger a well managed banking institution ; commerce
was deranged by no foreign war; every branch of manu
facturing industry was crowned with rich towards ; and tbe
more than usual abundance of our harvests, after supply
ing our domestic wants, had left our granaries and store-
I houses tilled with a surplus for exportation. It is in the
I midst of this, that an ir; eileemable and depreciated paper
j currency is entailed upon the people by a large portion ol
i the batiks. They are not drivetr to it by the exhibition
of a loss of public confidence, or of a sudden pressure from
their depositors or note-holders, but they e v use themselves
bv alleging that the ctirrcm of business, and exchange with
foreign countries, which draws the precious metals from
their vaults, would requite, in order to meet it, a larger
curtailment of their loans to a comparatively small portion
of the community, than -it will be convenient for them to
bear, or perhaps safe for the banks to i Xuct. The plea
has ceased to be one of necessity. Convenience and pol
icy are now deemed sufficient to warrant these institutions
in disregarding their solemn obligations. Such conduct is
not merely an injury to individual *creditors, but it is a
wiong to the whole community, from whose liberality they
bold most valuable privileges—whose rights they violate,
whose business they derange, and the value ot whose pro
perty they render unstable and insecure. It must be evi
dent that this new ground for banks suspensions, in refer
ence to which their action is not only disconnected with,
but wholly independent of, that of the public gives a char
acter to their suspensions more alarming than any which
they exhibited before, and greatly increases the impropri
ety of relying on the banks in the transactions of the Gov
ernment.
A large and highly respectable portion of our banking
institutions are, it affords me unfeigned pleasure to state,
exempted from all blame on account of this second delin
quency. They have, to their great credit, not only con
tinued to meet theireng igements, but have even repudiated
the grounds of suspension now resorted to. It is only by
such a course that the confidence and good will of the com
munity can be preserved, and, in the sequel, the best in
terests of the institutions themselves, promoted.
New dangers to the banks are also daily disclosed, from
the extension of thatsistem of extravagant credit of which
they are the pillars. Formerly our foreign commerce was
principally founded on an exchange of commodities, inelu
-1 ding the precious metals, and leaving in its transactions but
' little foreign debt. Such is not now thecas’. Aided by the
I'acilites afforded by the hanks, mere credit has become too
j commonly the basis of trade. Many of the banks themselves,
' not content with largely stimulating this system amongotliers,
have usurped the while they impair the stability
‘ of the. inercantile community ; they have become borrowers
' instead of lenders ; they establish their agencies abroad; they
' deal largely in stocks and merchandise; they encourage the
issue of Slate securities mitil the foreign market is glutted
wilb them : mid. unsatisfied with the legitimate use ol'ilieir
own capital mid the exercise of their lawful privileges, they
raise, by large loans, additional means for eveiy variety of
speculation. The disasters attendant on a deviation from
the former course of business in this country are now shared
alike by banks and individuals, to an extent of which there
is perhaps no previous example in the annals of our country.
So long as a willingness of a foreign lender, and a sufficient
export of our productions to meet any necessary partial pay
ments leave the flow of credit undisturbed, all appears to he
prosperous ; but as soon as it is cheeked by any hesitation
abroad, or by anlnability to make payment here in our pro
ductions, the evils of the system are disclosed. The paper
currency, which might serve for domestic purposes, is useless
to pay the debt due in Europe. Gold ami silver are therefore
drawn, in exchange for their notes, from the banks. To
keep up ihcirstipply of coin, these institutions are obliged to
call upoli their own debtors, who pay them principal y in
their own notes, which are as unavailable to them as thev
are to tho merchants to meet the foreign demand Thi
calls of the banks, therefore, iti such emergencies, of neces
sity, exceed that, demand, and produce a corresponding cur
tailment of their accommodations andof the currency, at tho
very moment when the state of trade renders it most incon
venient to be borne. 'l’he intensity of this pressure on the
community is in proportion to the previous liberality of cre
dit, and consequent expansion! of the currency; forced sales
of property are made at the time w hen the means of puicbas
ing are most reduced, mid the worst calamities io individuals
are only at last arrested, by an open violation of their ebliga
tions by flic hanks, a refusal to pay specie lor their notes,and
an imposition upon the community of a fluctuating and de
preciated cun ency.
'1 hese consequences are inherent in the present system.
They me not influenced by the banks being large or small,
created by National or State Governments. I hey are ihe
results of the iiresistible laws of trade aud credit. In the
reecnt events which have so strikingly illustrated tho certain
effects of these laws, we have seen the bank of the largest
capital in the Union, established uuder a National charter,
and lately strengthened, as w e were autboritivcly informed,
by exchanging that or a State charter with new and unusal
piivileges—in a condition too, as it was said, of entire sound
ness any great prosperity—not merely unable te resist these
effects, but the first to yield to them.
Nor is it to be overlooked that there exists a chain of ne
cessary dependence among these institutions, which obliges
them, to a great extent, to follow the course of others, not
withstanding its injustice to their own immediate creditors,
or injury to the particular community in which they are
placed. This dependence of a bank, which is in proportion
to the extent of its debts for circulation and deposites, is not
mciely on others in its own vicinity, but on all those w’hieh
connect it with the centre of trade Distant banks may fail,
without seriously affecting those in uur principal commercial
cities ; but the failure of the latter is felt at the extremities of
the Union. Tbe su-pension at New York, in 1837, was
everywhere, with very few exceptions, followed, as soon as
it was known; that recently at Philadelphia immediately
affected the banks of the South and West in a similar man
ner. This dependence of our whole banking system mi the
institutions in a few large cities, is not found in the laws of
their organization, but in those of trade and exchange. ’l’he
banks at that centre to which currency flows, and where it is
required in payments for merchandise, hold the power of
controlling those in regions whence it comes, while the latter
possesses no means of restraining them, so that the value of
individual property, and the prosperity of trade, through the ''
w hole interior of tho country, are made to depend on the
good or bad management of the banking institutions in the
great seat of trade on the seaboard. . ,
Bui this chain of dependence does not stop here. It does
not terminate at Philadelphia or New York. It reaches
across the ocean, and ends in London, the centre of the cre
dit system. Tbe same laws of trade, which give to the
banks in our principal cities power over the whole banking
system of the United Stares, subject tho former, in their turn,
to the money power in Great Britain, it is not denied that
the suspension of the New York banks in 1837. which was
followed in quick succession throughout the Union, was pro
duced by an application of that power ; and it is now alleged,
in extenuation of the present condition of so large a portion of
our batiks, that their embarrassments have arisen from tbe
same cause.
From this influence they cannot now entirely escape, for it
has origin in the credit currencies of the two coaatries ; it is
strengthened by the current cf trade and exchange, which
centres in London, and is rendered almost irresistible by tbs
large debts contracted there by our merchants, our banks,
and om States It is thus that an introduction of a new
bank into the most distant of our villages, places the business
ot that village within the influence,of the money-power in
England. It is thus that every new' debt which we contract
in tharUountry, seriously affects our own currency, and ex
tends over tiie pursuits of our citizens, its powerful influence.
We cannot excape from this by making new nanks, great or
small, State or National. The same chains w hich bind those
now existing to the centre of this system of paper credit.must
equally fetter every similar institution we create. It is only
by the extent to which this system has been pushed of late,
that we have been made fully aware of its irresistible ten
dency to subject our ow n batiks ami currency to a vast con
trolling power in a foreign land ; and it adds a new argument
to those which illustrate their precarious situation. Eudan
gsred in the first place by their own mismanagement, and
again by theconduct of every institution which connects them
with tbe centre of trade in our own country, they are yet
subjected, beyond all this, to the effect of whatever measures,
policy, necessity, or caprice, may induce those who control
ths credits of England to resort to. I mean not to comment
upor. these measures, present or past, and much less to dis
courage the prosecution of fair commercial dealing between
the two countries, based on reciprocal benefits : bat it hav
ing now been made manifest that the power of inflicting these
and similar injuries, is, by the resistless law of a credit cur
rency and credit trade, equally capable of extending their." ' ■
consequsnces through all the ramifications of our banking
system, and by that means indirectly obtaining, particularly
when our banks are used as depositories of the public mcneys,
a dangerous political influence in the United States, I have
deemed it my duty to bring the subject to your notice, and ask
for it your serious consideration.
Is an argument required beyond the exposition of these
facts, to show the impropriety of using our banking instXu
tions as depositories of the public money? Can we venture "
not only to encounter the risk of their individual and mutual
mismanagement, but, at the same time, to place our foreign js
and domestic policy entirely under the control of a foreign » •
moneyed interest? To do so is to impair the independence
of our Government, as the present credit system has
impaired the independence of our banks. It is to submit all ,>{■
its important operations, whether of peace or war, to be cotM(»
trolled or thwarted at first by our own banks, and then by-a,
power abroad greater than themselves. 1 cannot bting my
self tn depict the humiliation to w hich this Government and
people might he sooner or later reduced, if the means for de- f
lending their lights are to he made dependent upon those
who may have the most powerful of motives to impair them. *
Nor is it only in reference to the effect of this state of
things on the independence of our Government or of our '
hanks, that the subject pr rnts itself for consideration; it is
to be viewed also in its relations to the geneial trade of our •
country. 'l’he lime is not long past when a deficiency ol I’m -. , 4
eign crops was thought to afford a profitable maikct for the. ' ,
surplus of mir industry: but now' we await with feverish anx- ” .
iety the news of the English harvest, not so much from tno
lives of commendable sympathy, but fearful lest its anticipa- .
ted failure should narrow the field of credit there. Does not
this speak volumes to the patriot? Can a system be bene
ficient, wise, or just, which cieates greater anxiety for inter
ests dependent on foreign credit, than sot the general pros
perity of our ow n country, and the profitable exportation-of
the surplus’produ e of our labor?
The circumstances to which I have thus adverted appears
to me to afford w eighty reasons, developed by late events, to
be added to those which I have on former occasions offered,' •
when submitting to your better knowledge and discernment
the propriety of separating tbe custody of the public money
from banking institutions. Nor has any thing occurred to
lessen, in my opinion, the force of what has been heretofote
urged. The only ground on w hich that custody cab be de
sired by the banks, is ihe profitable use which they may make
of the money. Such use would be regarded in individuals
as a breach of trust, or a crime of great magnitude, and yet
it may be reasonably doubted whether, first and last, it is not
attended with more mischievous consequences, when permit
ted to the former than to the latter. The practice of pet
mitting the public money to be used by its keepers as here, is
believed to he peculiar to this country, and to exist scarcely
any where else. To procure it here, improper influences
are appealed to; unwise connections are established between
the Government anti vast numbers of powerful State insti u
timis; other motives than the public good are brought to hear
both on the Executive ai.d Legislative departments, and
selfish combinations, leading to special legislation, are form
ed. It is made the interest of banking institutions ami their
“tockholders throughout the Union to use their exertions for *
tho increase of taxation and the accumulation of a surplus
revtuitie; and, w hile an excuse is afforded, the means are
tarnished for those excessive issues which lead to extrava
gant trading and speculation and are the forerunners of a•’
vast debt abroad, and a suspension of the banks at home.
Impressed, therefore, as I am, with the propriety of the „
tiinds ol the Govermuem being withdrawn from the private
use ot cither banks or individuals, ami tbe public money kept
by duly appointed public agents; and believing, as I do. that,
such also is the judgment which discussion, reflection and
experience have produced on the public mind. I leave the
subject w ith you. It is, at all events, essential to the inter
ests of the community and the business of tho
ib it a decision should be made.
Most of tbe arguments that dissumlo us from employing ,
b inks, m the custody mid disbursement of the public money,
apply w ith equal torce to the receipt of thei;’ notes for pub
lic dues. Ihe difference is oulv in form. In one instance,
the Government is a creditor for its deposites. mid in lie
other lor the notes it bods. They afford the same oppoita
m y forttsmu the public moneys, ami equally lead to iWL
evils attendant upon it. since a bunk cau extend jte •
discounts on a deposite of its notes iu flfaJSitjftM