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It is unpleasant to allude to other states for negative examples; yet, if any one were inclined to the inquiry, it might be found, that cases had happened in which laws, known to be at best very questionable as to their consistency with the constitution, had been passed; and at the same session, effectual measures taken, under the power of removal by address, to create a new bench. Such a coincidence might be accidental; but the happening of such accidents often would destroy the balance of free governments. The history of all the states, I believe, shows the necessity of settled limits to legislative power. There are reasons, entirely consistent with upright and patriotic motives, which, nevertheless, evince the danger of legislative encroachments. The subject is fully treated by Mr. Madison, in some numbers of the Federalist, which well deserve the consideration of the convention.
There is nothing, after all, so important to individuals as the upright administration of justice. This comes home to every man; life, liberty, reputation, property, all depend on this.-No_government does its duty to the people, which does not make ample and stable provision for the exercise of this part of its powers. Nor is it enough, that there are courts which will deal justly with mere private questions. We look to the judicial tribunal for protection against illegal or unconstitutional acts, from whatever quarter they may proceed. The courts of law, independent judges, and enlightened juries, are citadels of popular liberty, as well as temples of private justice. The most essential rights connected with political liberty, are there canvassed, discussed, and maintained; and if it should at any time so happen that these rights should be invaded, there is no remedy but a reliance on the courts, to protect and vindicate them. There is danger, also, that legislative bodies will sometimes pass laws interfering with other private rights, besides those connected with political liberty. Individuals are too apt to apply to the legislative power to interfere with private cases, or private property; and such applications sometimes meet with favor and support. There would be no security, if these interferences were not subject to some subsequent constitutional revision, where all parties could be heard, and justice administered according to standing laws.
These considerations are among those which, in my opinion, render an independent judiciary equally essential to the preservation of private rights and public liberty. I lament the necessity of deciding this question at the present moment; and should hope, if such immediate decision were not demanded, that some modification of this report might prove acceptable to the committee, since, in my judgment, some provision, beyond what exists in the present constitution, is necessary.
ON THE BANK OF THE UNITED STATES, DELIVERED IN THE HOUSE OF REPRESENTATIVES OF THE UNITED STATES, JAN. 2, 1815.
On the 20 January, 1815, the bill to incorporate a bank being under consideration, Mr. Webster moved that it be recommitted to a select committee, with instructions to make the following alterations, to wit:
1. To reduce the capital to twenty-five millions, with liberty to the government to subscribe on its own account, five millions.
2. To strike out the thirteenth section.
3. To strike out so much of said bill as makes it obligatory on the bank to lend money to government.
4. To introduce a section providing, that if the bank do not commence its operations within the space of months, from the day of the passing of the act, the charter shall
thereby be forfeited.
5. To insert a section allowing interest at the rate of
per cent. on any bill or note of the bank, of which payment shall have been duly demanded, according to its tenor, and refused; and to inflict penalties on any directors who shall issue any bills or notes during any suspension of specie payment at the bank.
6 To provide that the said twenty-five millions of capital stock shall be composed of five millions of specie, and twenty millions of any of the stocks of the United States bearing an interest of six per cent. or of treasury notes.
7. To strike out of the bill that part of it which restrains the bank from selling its stock during the war.
In support of this motion, the following speech was delivered. The motion did not prevail, but the bill itself was rejected the same day on the third reading. Some of the main principles of these instructions were incorporated into the charter of the present bank, when that charter was granted the following year; especially those, which were more particularly designed to insure the payment of the notes of the bank in specie, at all times, on demand.
HOWEVER the House may dispose of the motion before it, I do not regret that it has been made. One object intended by it, at least, is accomplished. It presents a choice, and it shows that the opposition which exists to the bill in its present state, is not an undistinguishing hostility to whatever may be proposed as a national bank, but a hostility to an institution of such a useless and dangerous nature, as it is believed the existing provisions of the bill would establish.
If the bill should be recommitted and amended according to the instructions which I have moved, its principles will be materially changed. The capital of the proposed bank will be reduced from
fifty to thirty millions: and composed of specie and stocks in nearly the same proportions as the capital of the former bank of the United States. The obligation to lend thirty millions of dollars to government, an obligation which cannot be performed without committing an act of bankruptcy, will be struck out. The power to suspend the payment of its notes and bills will be abolished, and the prompt and faithful execution of its contracts secured, as far as, from the nature of things, it can be secured. The restriction on the sale of its stocks will be removed, and as it is a monopoly, provision will be made that if it should not commence its operations in reasonable time, the grant shall be forfeited. Thus amended, the bill would establish an institution not unlike the last bank of the United States in any particular which is deemed material, excepting only the legalized amount of capital.
To a bank of this nature I should at any time be willing to give my support, not as a measure of temporary policy, or as an expedient to find means of relief from the present poverty of the treasury; but as an institution of permanent interest and importance, useful to the government and country at all times, and most useful in times of commerce and prosperity.
I am sure, sir, that the advantages which would at present result from any bank, are greatly overrated. To look to a bank, as a source capable, not only of affording a circulating medium to the country, but also of supplying the ways and means of carrying on the war, especially at a time when the country is without commerce, is to expect much more than ever will be obtained. Such highwrought hopes can end only in disappointment. The means of supporting an expensive war are not of quite so easy acquisition. Banks are not revenue. They cannot supply its place. They may afford facilities to its collection and distribution. They may furnish, with convenience, temporary loans to government, in anticipation of its taxes, and render important assistance, in divers ways, to the general operation of finance. They are useful to the state in their proper place and sphere, but they are not sources of national income.
The fountains of revenue must be sunk deeper. The credit and circulation of bank paper are the effects, rather than the causes of a profitable commerce, and a well ordered system of finance. They are the props of national wealth and prosperity, not the foundations of them. Whoever shall attempt to restore the fallen credit of this country, by the creating of new banks, merely that they may create new paper, and that government may have a chance of borrowing where it has not borrowed before, will find himself miserably deceived. It is under the influence of no such vain hopes, that I yield my assent to the establishment of a bank on sound and proper principles. The principal good I expect from it is rather future than present. I do not see, indeed, that it is likely to produce evil at any time. In times to come, it will, I hope, be useful. If it were only to be harmless, there would be sufficient reason why it should be supported, in preference to such a contrivance as is now in contemplation.
The bank which will be erected by the bill, if it should pass in its present form, is of a most extraordinary, and, as I think, alarm
ing nature. The capital is to be fifty millions of dollars; five millions in gold and silver, twenty millions in the public debt created since the war, ten millions in treasury notes, and fifteen millions to be subscribed by government, in stock to be created for that purpose. The ten millions in treasury notes, when received in payment of subscriptions to the bank, are to be funded also in United States' stocks. The stock subscribed by government on its own account, and those in which the treasury notes are to be funded, to be redeemable only at the pleasure of the government. The war stock will be redeemable according to the terms upon which the late loans have been negotiated.
The capital of the bank, then, will be five millions of specie and forty-five millions of government stocks. In other words, the bank will possess five millions of dollars, and the government will owe it forty-five millions. This debt from government, the bank is restrained from selling during the war, and government is excused from paying, until it shall see fit. The bank is also to be under obligation to loan government thirty millions of dollars on demand, to be repaid, not when the convenience or necessity of the bank may require, but when debts due to the bank, from government, are paid; that is, when it shall be the good pleasure of government. This sum of thirty millions is to supply the necessities of government, and to supersede the occasion of other loans. This loan will doubtless be made on the first day of the existence of the bank, because the public wants can admit of no delay. Its condition, then, will be, that it has five millions of specie, if it has been able to obtain so much, and a debt of seventy-five millions, no part of which it can either sell or call in, due to it from government.
The loan of thirty millions to government can only be made by an immediate issue of bills to that amount. If these bills should return, the bank will not be able to pay them. This is certain, and to remedy this inconvenience, power is given to the directors, by the act, to suspend, at their own discretion, the payment of their notes, until the President of the United States shall otherwise order. The President will give no such order, because the necessities of government will compel it to draw on the bank till the bank becomes as necessitous as itself. Indeed, whatever orders may be given or withheld, it will be utterly impossible for the bank to pay its notes. No such thing is expected from it. The first note it issues will be dishonored on its return, and yet it will continue to pour out its paper, so long as government can apply it in any degree to its purposes.
What sort of an institution, sir, is this? It looks less like a bank, than a department of government. It will be properly the papermoney department. Its capital is government debts; the amount of its issues will depend on government necessities; government, in effect, absolves itself from its own debts to the bank, and by way of compensation absolves the bank from its own contracts with others. This is, indeed, a wonderful scheme of finance. The government is to grow rich, because it is to borrow without the obligation of repaying, and is to borrow of a bank which issues paper without liability to redeem it. If this bank, like other institutions
which dull and plodding common sense has erected, were to pay its debts, it must have some limits to its issues of paper, and therefore, there would be a point beyond which it could not make loans to government. This would fall short of the wishes of the contrivers of this system. They provide for an unlimited issue of paper, in an entire exemption from payment. They found their bank, in the first place, on the discredit of government, and then hope to enrich government out of the insolvency of their bank. With them, poverty itself is the main source of supply, and bankruptcy a mine of inexhaustible treasure. They rely not in the ability of the bank, but in its beggary; not in gold and silver collected in its vaults, to pay its debts, and fulfil its promises, but in its locks and bars, provided by statute, to fasten its doors against the solicitations and clamors of importunate creditors. Such an institution, they flatter themselves, will not only be able to sustain itself, but to buoy up the sinking credit of the government. A bank which does not pay, is to guaranty the engagements of a government which does not pay! "John Doe is to become security for Richard Roe." Thus the empty vaults of the treasury are to be filled from the equally empty vaults of the bank, and the ingenious invention of a partnership between insolvents is to restore and reestablish the credit of both.
Sir, I can view this only as a system of rank speculation, and enormous mischief. Nothing in our condition is worse, in my opinion, than the inclination of government to throw itself upon such desperate courses. If we are to be saved, it is not to be by such means. If public credit is to be restored, this is not one of the measures that will help to restore it. If the treasury is exhausted, this bank will not fill it with anything valuable. If a safe circulating medium be wanted for the community, it will not be found in the paper of such a corporation.
I wish, sir, that those who imagine that these objects or any of them will be effected by such a bank as this, would describe the manner in which they expect it to be done. What is the process,
which is to produce these results? If it is perceived, it can be described. The bank will not operate either by miracle or magic. Whoever expects any good from it, ought to be able to tell us in what way that good is to be produced. As yet, we have had nothing but general ideas, and vague and loose expressions. An indefinite and indistinct notion is entertained, nobody here seems to know on what ground, that this bank is to reanimate public credit, fill the treasury, and remove all the evils that have arisen from the depreciation of the paper of the existing banks.
Some gentlemen who do not profess themselves to be, in all respects, pleased with the provisions of the bill, seem to content themselves with an idea that nothing better can be obtained, and that it is necessary to do something. A strong impression that something must be done, is the origin of many bad measures. It is easy, sir, to do something, but the object is to do something useful. It is better to do nothing than to do mischief. It is much better, in my opinion, to make no bank, than to pass the bill as it now is.
The interests to be affected by this measure, the finances, the public credit, and the circulating medium of the country are too