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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