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dustry and improvement, I do not deny; but that, in its present excess, it impedes rather than promotes either, I hold to be certain. That we are not indebted to it for our extraordinary advance and improvements, wholly or mainly, there is an argument which I regard as decisive. Before the Revolution we had no banks, and yet our improvement and prosperity, all things considered, were as great anterior to it as since, whether we regard the increase of population or wealth. At that time not a bank-note was to be seen, and the whole circulation consisted either of gold and silver, or the colonial paper money, which all now, and especially the Senator, consider so worthless. Had the Senator lived during that period, he might, with equal plausibility, have attributed all the improvement and prosperity of the country to the old colonial paper money, as he now does to the banks ; and have denounced any attempt to change or improve it as an overthrow of the credit system, as warmly as he now does the separation of the Government from the banks. I tell the Senator, the time is coming when his present defence of the banking system, as it is now organized, will be considered as extraordinary as we now would regard a defence of the old and exploded system of colonial paper money. He seems not to see that the system has reached a point where great changes are unavoidable, and without which the whole will explode. The state of its manhood and vigor has passed, and it is now far advanced in that of decrepitude. The whole system must be reformed, or it must perish in the natural course of events. The first step towards its renovation is the measure he denounces in such unmeasured terms. —the separation from the Government; and the next, a separation between discount and circulation. The two are incompatible; and so long as they are united, those frequent vicissitudes of contractions and expansions, to which bank circulation is so subject, and which is rapidly bringing it into discredit, must continue to increase in frequency and inten

VOL. III.-21

sity, till it shall become as completely discredited as Continental money.

The Senator seems not to be entirely unaware of the danger to which the system is exposed from its frequent vibrations and catastrophes. He tells us, by way of apology, that had it not been for the specie circular, the present catastrophe would not have occurred. That it hastened it, I do not in the least doubt ; but that we should have escaped without it, I wholly deny. The causes of the explosion lay deep-far beneath the circular--and nothing but the most efficient measures, during the session immediately after the removal of the deposits, could have prevented it. Then was the crisis ; and the period having passed without doing any thing, what has since followed was inevitable. But admitting what he says to be true, what a picture of the system does it exhibit! How frail, how unstable must it be, when a single act of the Executive could bring it to the ground, and spread ruin over the country! And shall we again renew our connection with such a system, so liable, from the slightest cause, to such disasters ? Does it not conclusively show that there is some deep and inherent defect in its very constitution, which renders it too unsafe to confide in without some radical and thorough reform?

The Senator himself seems conscious of this. He entered into the question of its expansions and contractions, and suggested several remedies to correct an evil which none can deny, and which all must see, if not corrected, must end in the final overthrow of the system. He told us, that the remedy was to be found in the proportion between bulliou and circulation ; and that the proper rule to enforce the due proportion between the two was, when exchange was against us, for the banks to curtail. I admit that the disease originates in the undue proportion, not between bullion and circulation, but between it and the liabilities of the banks, including deposits as well as circulation (the former is even

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more important than the latter), and that the remedy must consist in enforcing that proportion. But two questions here present themselves : What is that due proportion ? and how is it, under our system of banking, to be enforced? There is one proportion which we know to be safe : and that is when, for every dollar of liability, there is a dollar in bullion or specie ; but this would bring us back again to the old, honest, and substantial Bank of Amsterdam, so much abused by all the advocates of banks of discount. If that proportion be transcended—if we admit two or three to one to be the due proportion, or any other that would make banking more profitable and eligible than the mere loaning of money, or other pursuits of society, the evil under which we now suffer would continue. Too much capital would continue to flow into banking, to be again followed by the excess of the system, with all its train of disasters. But admit that such would not be the fact, how are we to compel the twenty-six States of this Union to enforce the due proportion—all of which exercise the right of establishing banks at pleasure, and on such principles as they may choose to adopt ? It can only be done by an amendment of the constitution ; and is there any one so wild and visionary as to believe that there is the least prospect of such an amendment ? Let gentlemen who acknowledge the defect, before they insist on a reunion with a system, acknowledged to be exposed, as it now stands, to such frequent and dangerous vicissitudes, first apply a remedy and remove the defect, and then ask for our co-operation.

But the Senator tells us, that the means of enforcing the due proportion is to be found in the regulation of the exchanges; and for this purpose the only rule necessary to be observed is, to curtail when exchanges are against us, and as a counterpart, I suppose, to enlarge when in our favor. How much dependence is to be put on this rule, we have a strong illustration in the late catastrophe, under which the country is now suffering. The exchanges remained in our favor till the very last ; and before the rule, on which the Senator so confidently relies, could be applied, the shock was felt and the banks ingulfed ; and this will ever be the case, when preceded by a general expansion in the commercial world, such as preceded the late catastrophe.

The cause of this commenced on the other side of the Atlantic, and originated mainly in the provisions on which the charter of the Bank of England was renewed, which greatly favored the extension of banking operations in a country which may be considered as the centre of the commercial system of the world. The effect of these provisions was a depreciation of the value of gold and silver there, and their consequent expulsion to other countries—especially to ours—which turned the exchange with England in our favor ; and which, in combination with other causes, the removal of the deposits, and the expiration of the charter of the late Bank of the United States, was followed by a great corresponding expansion of our banking system. The result of this state of things was a great increase of the liabilities of the banks compared with their specie in both countries, which laid the train for the explosion. The Bank of England first took the alarm, and began to prepare to meet the threatened calamity. It was unavoidable, and the only question was, where it should fall. The weakness of our system, and the comparative strength of theirs, turned the shock on ours; but of the approach of which, the exchanges gave, as I have stated, no indications almost to the last moment.

And even then-so artificial are exchanges, and so liable to be influenced by other causes besides the excess of currency on the one side and the deficit on the other after it began to show unfavorable indications, we all remember that a single individual, at the head of a State institution (I mean Mr. Biddle), by appearing in New-York, and bringing into market bonds on England drawn on time, turned the current, and restored the exchange. All this conclusively proves, that when there is a general expansion (the most dangerous of all), exchanges give no indication of the approach of danger ; and, of course, their regulation, on which the Senator relies, affords no protection against it.

I might go further and show, that at no time is it to be relied on as the index of the relative expansion or contraction in different countries; and that it is liable to be influenced by many circumstances besides those to which I have alluded, some of which are fleeting, and others more permanent. It presupposes the perfect fluidity of currency, and that it is not liable to be obstructed or impeded by natural or artificial causes in its ebbs and flows; which is far from being true, as I have already shown in the instance of Mr. Biddle's operations preceding the late shock. In fact, it may be laid down as a rule, that where the currency consists of convertible paper, resting on a gold and silver basis, the small portion of specie which may be required to uphold the whole, has its fluidity obstructed by so many and such powerful causes, as to afford no certain criterion of the relative expansion of the currency between it and other countries ; and, of course, afford no certain rule of regulating banking operations. The subject is one that would require more time to discuss than I can bestow on the present occasion ; but of its truth we have a strong illustration in the state of things preceding the late shock, when, as I have stated, the exchanges remained favorable to the banks, while the vast amount of our imports, and the unusual character of many of the articles imported, clearly indicated that our currency was relatively greatly expanded, compared with the currency of those countries with which we have commercial relations.

To correct the defects of the system, the Senator must go much deeper. The evil lies in its strong tendency to increase ; and this, again, in the extraordinary and vast advantages which are conferred on it beyond all other pursuits of the community—which, if not diminished, must terminate

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