may be safely said that no citizen of the Union is under the necessity of taking depreciated paper, because a sound currency cannot be obtained. North Carolina is believed to be the only State where paper of the local Banks is irredeemable in specie, and consequently depreciated. Even there the depreciation is only one or two per cent; and, what is more important, the paper of the Bank of the United States can be obtained by all those who desire it, and have an equivalent to give for it.

"The Committee are aware that the opinion is entertained by some that the local Banks would, at some time or other, either voluntarily, or by the coercion of the State legislatures, have resumed specie payments. In the very nature of things, this would seem an impossibility. It must be remembered that no Banks ever made such large dividends as were realized by the local institutions during the suspension of specie payments. A rich and abundant harvest of profit was opened to them, which the resumption of specie payments must inevitably blåst. While permitted to give their own notes, bearing no interest and not redeemable in specie, in exchange for better notes bearing interest, it is obvious that, the more paper they issued, the higher would be their profits. The most powerful motive that can operate upon moneyed corporations would have existed to prevent the State Banks from putting an end to the very state of things from which their excessive profits proceeded. Their very nature must have been changed, therefore, before they could have been induced to co-operate voluntarily in the restoration of the currency. It is quite as improbable that the State legislatures would have compelled the Banks to do their duty. It has already been stated that the tendency of a depreciated currency to attract importations to the points of greatest depreciation, and to lighten the relative burdens of federal taxation, would naturally produce among the States a rivalry in the business of excessive bank issues. But there remains to be stated a cause of more general operation, which would have prevented the interposition of the State legislatures to correct those issues.

"The Banks were, directly and indirectly, the creditors of the whole community; and the resumption of specie payments necessarily involved a general curtailment of discounts and withdrawal of credit, which. would produce a general and distressing pressure upon the higher class of debtors. These constituted the largest portion of the population of all the States where specie payments were suspended and Bank issues excessive. Those, therefore, who controlled public opinion in the States where the depreciation of the local paper was greatest were interested in the perpetuation of the evil. Deep and deleterious, therefore, as the disease evidently was in .many of the States, their legislatures could not have been expected to apply a remedy so painful as the compulsion of specie payments would have been, without the aid of the Bank of the United States. And here it is worthy of special remark, that, while that Bank has compelled the local Banks to resume specie payments, it has most materially contributed, by its direct aid and liberal arrangements, to enable them to do so, and

that with the least possible embarrassment to themselves and distress to the community. If the State legislatures had been ever so anxious to compel the Banks to resume specie payments, and the Banks ever so willing to make the effort, the Committee are decidedly of the opinion that they could not have done it, unaided by the Bank of the United States, without producing a degree of distress incomparably greater than has been actually experienced They will conclude their remarks on this branch of the subject by the obvious reflection, that if Congress, at the close of the war, had left it to the States to restore the disordered currency, this important function of sovereignty would have been left with those from whom the Constitution had expressly taken it, and by whom it could not be beneficially or effectually exercised. But another idea, of considerable plausibility, is not without its advocates. It is said that this government, by making the resumption and continuance of specie payment the condition upon which State Banks should receive the government deposits, might have restored the currency to a state of uniformity. Without stopping to give their reasons for believing that specie payments could not have been restored in this way, and that, even if they could, a uniform currency of general credit, throughout the Union, would not have been provided, the Committee will proceed to give their reasons for thinking that such a connection between the Federal Government and the State Banks would be exceedingly dangerous to the purity of both. While there is a National Bank, bound by its charter to perform certain stipulated duties, and entitled to receive the government deposits as a compensation fixed by the law containing the charter, and only to be forfeited by the failure to perform those duties, there is nothing in the connection at all inconsistent with the independence of the Bank and the purity of the government. The country has a deep interest that the Bank should maintain specie payments, and the government an additional interest that it should keep the public funds safely, and transfer them, free of expense, wherever they may be wanted. The government, therefore, has no power over the Bank, but the salutary power of enforcing a compliance with the terms of its charter. Every thing is fixed by the law, and nothing is left to arbitrary discretion. It is true that the Secretary of the Treasury, with the sanction of Congress, would have the power to prevent the Bank from using its power unjustly and oppressively, and to punish any attempt, on the part of the Directors, to bring the pecuniary influence of the institu tion to bear upon the politics of the country, by withdrawing the government deposits from the offending branches. But this power would not be lightly exercised by the treasury, as its exercise would necessarily be subject to be reviewed by Congress it is in its nature a salutary corrective, creating no undue dependence on the part of the Bank.

"But the state of things would be widely different if there was no National Bank, and it was left to the discretion of the Secretary of the Treasury to select the local Banks in which the government deposits should be made. All the State Banks would, in that case,

be competitors for the favor of the Treasury; and no one who will duly consider the nature of this sort of patronage can fail to perceive, that, in the hands of an ambitious man not possessed of perfect purity and unbending integrity, it would be imminently dangerous to the public liberty. The State Banks would enter the lists of political controversy, with a view to obtain this patronage; and very little sagacity is required to foresee, that, if there should ever happen to be an administration disposed to use its patronage to perpetuate its power, the public funds would be put in jeopardy by being deposited in Banks unworthy of confidence, and the most extensive corruption brought to bear upon the elections throughout the Union. A state of things more adverse to the purity of the government, a power more liable to be abused, can scarcely be imagined. If five millions of dollars were annually placed in the hands of the Secretary of the Treasury, to be distributed, at his discretion, for the purposes of internal improvement, it would not invest him with a more dangerous and corrupting power. . . .

"A very grave and solemn question will be presented to Congress, when they come to decide upon the expediency of renewing the charter of the present Bank. That institution has succeeded in carrying the country through the painful process necessary to cure a deep-seated disease in the national currency. The nation, after having suffered the almost convulsive agonies of this necessary remedy, is now restored to perfect health. In this state of things, it will be for Congress to decide whether it is the part of wisdom to expose the country to a degree of suffering almost equal to that which it has already suffered, for the purpose of bringing back that very derangement of the currency which has been remedied by a process as necessary as it was distressing.

"If the Bank of the United States were destroyed, and the local institutions left without its restraining influence, the currency would almost certainly relapse into a state of unsoundness. The very pressure which the present Bank, in winding up its concerns, would make upon the local institutions, would compel them either to curtail their discounts, when most needed, or to suspend specie payments. It is not difficult to predict which of these alternatives they would adopt, under the circumstances in which they would be placed. The imperious wants of a suffering community would call for discounts, in language which could not be disregarded. The public necessities would demand, and public opinion would sanction, the suspension, or at least an evasion, of specie payments.

"But, even if this desperate resort could be avoided in a period of peace and general prosperity, neither reason nor experience will permit us to doubt that a state of war would speedily bring about all the evils which so fatally affected the credit of the government and the national currency during the late war with Great Britain. We should be again driven to the same miserable round of financial expedients, which, in little more than two years, brought a wealthy community almost to the very brink of a declared national bankruptcy, and placed the government completely at the mercy of speculating stock-jobbers.

"The Committee feel warranted, by the past experience of the country, in expressing it as their deliberate opinion, that, in a period of war, the financial resources of the country could not be drawn into efficient operation, without the aid of a National Bank, and that the local Banks would certainly resort to a suspension of specie payments. The maxim is eminently true, in modern times, that money is the sinew of military power. In this view of the subject, it does appear to the Committee that no one of the institutions of the country, not excepting the Army or Navy, is of more vital importance than a National Bank. It has this decided advantage over the Army and Navy: while they are of scarcely any value except in war, the Bank is not less useful than either of them in war, and is also eminently useful in peace. It has another advantage, still greater. If, like the Army or Navy, it should cost the nation millions annually to sustain it, the expediency of the expenditure might be doubted. But when it actually saves to the government and to the country, as the Committee have heretofore attempted to show, more millions annually than are expended in supporting both the Army and Navy, it would seem that, if there were any one measure of national policy, upon which all the political parties of the country should be brought to unite, by the impressive lessons of experience, it is that of maintaining a National Bank."

The preceding extracts present, succinctly and intelligibly, the reasons for the creation of both of the Banks; the constitutional objections that were urged; the final abandonment of these in 1816; the services that each Bank rendered both to the government and the people; and the tremendous disasters that were suffered in the interregnum between them. In the four years, the government in its operations made a loss of $54,000,000, from the depreciation of the currency, and in the cost of transfers which had been previously made by the Bank without charge. It had no alternative but to use the notes of the State Banks, no matter the degree of their depreciation. It was only too happy to obtain them at any rate in payment of loans. Coin was not to be had. In the dilemma in which all-government and people were alike placed, a new United States Bank seemed the only escape from utter ruin. If the former, with expenditures equalling only about $25,000,000 yearly, suffered a loss of $54,000,000 from a depreciated eurrency, how vast must have been that of the people whose transactions were tenfold greater! Those of the former were restricted in time to about three years; while nearly fifteen were required to restore the financial condition of the country to that existing at the expiration of the charter of the first

Bank. The reduction of the currency from $110,000,000, according to Mr. Crawford, to $15,000,000, in the short period of three years, is sufficient evidence of the terrible waste and destruction which all contemporaneous writers describe. In spite of all the efforts that the Bank could exert, vast numbers of State Banks were, for a long time after its organization, constantly coming into and going out of existence. It was not till after 1826 that the financial condition of the country seemed fully restored.

The report of the House Committee was generally accepted as effectually disposing of the attack by the President upon the Bank. Its friends, however, counted wholly without their host. They knew little of the man with whom they had to deal, and as little of the causes already at work which were to produce an outburst of fanaticism that was to sweep with resistless fury over the nation. Jefferson, who had carried the doctrine of nullification to the extremest limits short of an overt act, was followed by Presidents, who, from their characters rather than from purpose, tended to restore the government to the model of Washington and Hamilton. Madisonwho earnestly opposed, on constitutional grounds, the chartering of the first Bank; and who, as a member of the Legislature of Virginia, wrote an elaborate report in vindication of the Resolutions of 1798—wholly abandoned his former position, by recommending, and affixing his signature to, the Act incorporating, in 1816, the second Bank. His reasons were those which should influence and control the judgment of every rightminded man, the uniform precedents, through a long series of years, of the National Legislature, and of the legal tribunal of last resort. Monroe followed by the approval of the Bill making provision for elaborate surveys, with a view to the construction of extended lines of public works. Under such administrations, which accepted the precedents of the past as their guide, and which left the articulations of the people almost wholly free, the nation entered upon a period of natural and. orderly development, inferring the functions of government from the advantages resulting from their exercise. Such is the inference of every people capable of order and progress.

1 After his accession to the Presidency, he discharged from custody parties held under the Alien and Sedition Laws, on the ground that such laws were void from their unconstitutionality.