BY
Anxious to promote the public interests as far as in my humble sphere I can do, I venture to suggest a plan for the restoration of the value of the public credit, which, I hope, if aided by your approval, will be adopted by Congress, and is therefore respectfully submitted for your consideration.
1. That all payments from the Treasury of the Confederate States be made in gold or else in coupon bonds, bearing a rate of interest which will be an equivalent for the use of money, or else in Treasury certificates bearing no interest, of denominations suitable for currency, not exceeding five hundred dollars, and convertible into bonds at the will of the holders.
2. That the bonds be of denominations not less than one thousand dollars, and convertible into certificates, deducting five per cent.
3. That all payments into the Treasury shall be made in gold or silver, or in Treasury Certificates.
4. That the Treasury Certificates shall bear date on the 1st of January, April, July and October, and, if not funded or paid on account of public dues, within six months from their date, shall be taxed five per cent., to be deducted when funded or paid; and if not funded or paid, as aforesaid, within twelve months from their date, then to be subject to a tax of ten per cent., and to an additional tax of five per cent for each additional three months, during which they may not have been funded or paid as aforesaid.
5. The whole of the public debt, as far as practicable, to be placed on the same basis, and all be made redeemable at the pleasure of the Government.
6. That the certificates be made a legal tender, and neither the certificates nor the bonds be taxed, except as above provided for, unless it becomes necessary to increase the tax on the certificates, as a means of maintaining their relative value as money.
If, at a cost not exceeding the cost of Treasury Notes, I could, on the 1st of January, April, July and October, of each year, deposit in the Treasury of the Confederate Government and of each of the separate States, a sum, in gold, equal to the disbursements of each, for the next succeeding three months, no one would dispute my claim as a public benefactor. I propose to demonstrate:
1. That Congress have power to make the certificates thus to be issued a tender.
2. That the certificates, if made a tender, will be money.
3. That this paper money will be more valuable than gold as a circulating medium.
4. That this money will be more stable and uniform in value than gold.
5. That Congress can regulate the value of such a currency and cannot regulate the value of gold.
6. That the measures proposed would not only diminish the burden of the public debt, but would convert it into capital, which would be much more available and beneficial in the progress and development of our industry, our agriculture, our manufactures, and our commerce, foreign and domestic, than if the whole disbursements of our Government, State as well as Confederate, were paid in gold.
7. That under such a system of paper money, the States can organize a system of banking, requiring each bank to place ample funds with the Treasurer of the State for the redemption of their notes, to be held in trust, and applicable solely to that object.
8. That this would protect the public against loss by bank failures; and, at the same time, enable the banks to increase their line of discounts and to greatly increase their profits.
9. That whilst it would greatly increase the public and individual resources, it would greatly diminish the burden of taxation.
10. That such a reform in our system of finance would ensure the payment of the interest and principal of the public debt, in a medium of much greater value than that in which it was created.
11. That the conversion of our present system of currency into a metallic, or into a paper, convertible into a metallic currency, would inevitably cause so great a depreciation of the values of labor and of property, as to render the payment of the public debt impossible, and to make revolution
and repudiation inevitable, after having reduced the whole country to a state of distress, bankruptcy and despair, in which we would be unable to make payment.
12. The measures which I propose will surely bring financial independence and prosperity, whilst the present system, if adhered to, will endanger our political independence, and surely overwhelm us with national and individual bankruptcy, and with unexampled disgrace, distress and ruin.
I am aware that many believe that ours is a hard money Government, and that nothing but gold or silver can be made a tender. I am also aware that many believe that it is impossible to prevent the depreciation of paper money. I am further aware that these opinions are so deeply impressed upon the public mind, that I must sustain my propositions by influential and reliable authorities, as well as by argument.
I proceed first to show what money is, and will then demonstrate that Congress has power to convert the Treasury Certificates into money, by making them a legal tender. The cause for which I plead, is the cause of Civil and Religious Liberty, of right, of justice, of good faith, of pecuniary independence, of human progress and prosperity, and I beseech you, the Congress, the Legislatures of the several States, and the people, for the sake of that cause, earnestly to consider the facts and arguments which I respectfully submit in support of it.
DUFF GREEN.
Worcester defines MONEY to be stamped metal, generally gold, silver or copper, used in traffic, or as the measure of price: coin.
MONEY differs from uncoined silver in that the quantity of silver in each piece of money is ascertained by the stamp it bears, which is a public voucher.-- Locke.
2. Cash generally; any current token or representative of
value, as bank notes exchangeable for coin, notes of hand, accepted bills on
mercantile houses, drafts, etc.
Wright.
Syn.-- Money, originally stamped coin, is now applied to whatever serves as a circulating medium, including bank notes and drafts, as well as metallic coins; cash is ready money, and is sometimes restricted to coin, or metallic money bearing a legal stamp; but it is commonly used to include bank notes, drafts, etc.
McCulloch, in his Commercial Dictionary, says:
When the division of labor was first introduced, commodities were directly bartered for each other; those, for example, who had a surplus of corn and were in want of wine, endeavored to find out those who were in the opposite circumstances, or who had a surplus of wine and wanted corn, and they exchanged the one for the other. It is obvious, however, that the power of changing, and consequently of dividing employment, must have been subjected to perpetual interruptions, so long as it was restricted to mere barter. The extreme inconveniences attending such situations must early have forced themselves on the attention of every one. Efforts would, in consequence, be made to avoid them, and it would speedily appear that the best, or rather the only way, in which this could be effected, was to exchange either the whole or part of one surplus produce for some commodity of known value and in general demand, and which,
consequently, few persons would be inclined to refuse to accept as an equivalent for whatever they had to dispose of. * * * * * Now this commodity, whatever it may be, is money.
An infinite variety of commodities have been used as money in different countries and periods. But none can be advantageously used as such unless it possesses several very peculiar qualities. The slightest reflection on the purpose to which it is applied must indeed be sufficient to convince every one, that it is indispensable, or at least exceedingly desirable, that the commodity selected to serve as money should be divisible into the smallest portions. 2d. That it will admit of being kept for an indefinite period without deteriorating. 3d. That it should, by possessing great value in small bulk, be capable of being easily transported from place to place. 4th. That one piece of money, of a certain denomination, should always be equal in magnitude and quality to every other piece of money of the same denomination. 5th. That its value should be comparatively steady, or as little subject to variation as possible. Without the first of these qualities, or the capacity of being divided into portions of every different magnitude and value, money, it is evident, would be of almost no use, and could only be exchanged for the few commodities that might happen to be of the same value as its indivisible portions, or as whole multiples of them. Without the second, or the capacity of being kept or hoarded without deteriorating, no one would choose to exchange commodities for money, except only when he expected to be able, speedily, to re-exchange that money for something else[.] Without the third, or facility of transportation, money could not be commercially used in transactions between places at considerable distance. Without the fourth, or perfect sameness, it would be extremely difficult to appreciate the value of different pieces of money; and without the fifth, or comparative steadiness of value, money could not serve as a standard, by which to measure the value of other commodities, and no one would be disposed to exchange the produce of his industry for an article that might shortly decline considerably in its power of purchasing.
The union of the different qualities of comparative steadiness of value, divisibility, durability, facility of transportation, and perfect sameness in the precious metals, doubtless formed the irresistible reason that has induced every civilized community to employ them as money.
John Taylor, Jr., defines money to be "a token issued by Government, and made a tender in payment of debts."
Adam Smith said:
A paper money consisting in bank notes, issued by a people of undoubted credit, payable upon demand, without condition, and in fact always readily paid as soon as presented, is, in every respect, equal in value to gold and silver money, since gold and silver money can at any time be had for it. Whatever is either bought or sold for such paper must necessarily be bought or sold as cheap as it could have been for gold and silver.
Ricardo says:
If there was perfect security that the power of issuing paper money would not be abused; that is, if there was perfect security for its being issued in such quantities as to preserve its value relatively to the mass of circulating commodities nearly uniform the precious metals might be entirely discarded from circulation.
Mr. Calhoun, in his speech in the United States Senate upon the removal of the deposits on the 3d of January, 1834, said:
Whatever the Government receives and treats as money, is money in effect; and if it be money, they have the right under the Constitution to regulate it * * * * *
If Congress has the right to receive anything else than specie in its dues, they have the right to regulate its value; and have a right, of course, to adopt all necessary and proper means, in the language of the Constitution, to effect its object.
McCulloch, under the title of "money," says:
No certain estimate can be formed of the quantity of money required to conduct the business of any country; this quantity being in all cases determined by the value of
money itself, the service it has to perform, and the devices used for economizing its employment. Generally, however, it is very considerable, and when it consists wholly of gold and silver, it occasions a very heavy expense. There can, indeed, be no doubt that the wish to lessen this expense has been one of the chief causes that have led all civilized and commercial nations to fabricate a portion of their money of some less valuable material. Of the various substitutes resorted to for this purpose, paper is, in all respects, the most eligible. * * * * * Hence, the origin of bank notes.
These extracts not only prove that money may be made of paper, but that all civilized and commercial people have used paper money because it is more convenient and cheaper than specie, and that if not issued in excess, it is more valuable than specie.
In his speech upon the Sub-Treasury, Dec. 19th, 1837, Mr. Calhoun said:
I am of the impression, to make this great measure successful, and secure it against reaction, some stable and safe medium of circulation, to take the place of bank notes, ought to be issued. I intend to propose nothing. It would be impossible, with so great a weight of opposition, to pass any measure without the entire support of the Administration; and if it were possible, it ought not to be attempted where so much must depend on the mode of execution. The best measure that could be devised might fail and impose a heavy responsibility on its author, unless it met with the hearty approbation of those who are to execute it. I now intend merely to throw out suggestions, in order to excite the reflection of others on a subject so delicate and of so much importance--acting on the principle that it is the duty of all, in so great a juncture, to present their views without reserve.
It is then my impression, that in the present condition of the world, a paper currency in some form, if not necessary, is almost indispensable in financial and commercial operations of civilized and extensive communities. In many respects, it has a vast superiority over metallic currency, especially in great and extended transactions, by its greater cheapness, lightness, and the facility of determining the amount. The great desideratum is to ascertain what description of paper has the requisite qualities of being free from fluctuation in value and liability to abuse in the greatest perfection. I have shown, I trust, that the bank notes do not possess these requisites in a degree sufficiently high for this purpose.
I go further. It appears to me, after bestowing the best reflection I can give the subject, that no convertible paper--that is, no paper whose credit rests upon a promise to pay, is suitable for currency. It is the form of credit proper in private transactions, between man and man, but not for a standard of value, to perform exchanges generally which constitute the appropriate functions of money or currency. * * * * *
On what, then, ought a paper currency to rest? I would say, on demand and supply, simply, which regulates the value of everything else--the constant demand which the Government has on the community for its necessary supplies. A medium, resting on this demand, which simply obligates the Government to receive it in all of its dues, to the exclusion of everything else, except gold and silver--and which shall be optional with those who have demands on the Government to receive or not, would, it seems to me, be as little liable to abuse as the power of coining. It would contain within itself a self-regulating power. It could only be issued to those who had claims on the Government, and to those only with their consent, and, of course, at or above par with gold and silver, which would be its habitual state; for, so far as the Government was concerned, it would be equal, in every respect, to gold and silver, and superior in many, particularly in regulating the distant exchanges of the country.
Nothing but experience can determine what amount and of what denominations might be safely issued; but it may be safely assumed that the country would absorb an amount greatly exceeding its annual income. Much of its exchanges, which amount to a vast sum, as well as its banking business, would revolve about it, and many millions would thus be left in circulation beyond the demands of the Government. It may throw some light on this subject to state that North Carolina, just after the Revolution, issued a large amount of paper, which was made receivable in dues to her. It was also made a legal tender, but which, of course, was not obligatory after the adoption of the Federal
Constitution. A large amount, say between four and five hundred thousand dollars, remained in circulation after that period, and continued to circulate for more than twenty years, at par with gold and silver during the whole time, with no other advantage than being received in the revenue of the State, which was much less than$100,000 per annum. I speak on the information of citizens of that State in whom I can rely.
Again, in a speech of Oct. 3, 1837, after demonstrating that in consequence of the receipt of bank notes by the Government they had in a great measure superseded the use of the precious metals, Mr. Calhoun said:
I am not the enemy but the friend of credit. Not as a substitute, but the associate, and the assistant of the metals. In that capacity I hold credit to possess, in many respects, vast superiority over the metals themselves I object to it in the form which it has assumed in the banking system, for reasons which are neither light or few, and that neither have been or can be answered. The question is not whether credit can be dispensed with, but what is the best possible form--the most stable, least liable to abuse, and the most convenient and cheap. I threw out some ideas upon this most important subject in my opening remarks. I have heard nothing to change my opinion I believe that Government credit, in the form I suggested, combines all the requisite qualities of a credit circulation in the highest degree, and, also, that the Government ought not to use any other credit but its own in its financial operations.
We are told that the form I suggested is but a repetition of the old Continental money--a ghost that is ever conjured up by all who wish to give the banks an exclusive monopoly of Government credit. The assertion is not true; there is not the least analogy between them. The one was a promise to pay when there was no revenue, and the other to receive in the dues of the Government when there was an abundant revenue.
We are told that there is no instance of a Government paper that did not depreciate. In reply, I affirm that there is none, assuming the form I propose, that ever did depreciate. Whenever a paper, receivable in the dues of Government, has anything like a fair trial, it has succeeded. Instance the case of North Carolina, referred to in my opening remarks. The drafts of the Treasury at this moment, with all their encumbrances, are nearly at par with gold and silver. I might add the instance alluded to by the distinguished Senator from Kentucky, in which he admits that as soon as the excess of the issue of the Commonwealth Bank of Kentucky were reduced to the proper point its notes rose to par. The case of Russia might also be mentioned. In 1827 she had a fixed paper circulation, in the form of Bank Notes, but which were inconvertible, of upwards of $120,000,000, estimated in the metallic ruble, and which had for years remained without fluctuation, having nothing to sustain it but that it was received in the dues of the Government, and that too with a revenue of only about $90,000,000 annually. I speak on the authority of a respectable traveller. Other instances might no doubt be added, but it needs no such support. How can a paper depreciate which the Government is bound to receive in all its payments, and while those to whom payments are to be made are under no obligation to receive it? From its nature it can only circulate when at par with gold and silver, and if it should depreciate none could be injured but the Government.
It will be seen that his purpose was to organize a financial system for the United States, in which the credit of the Government should be received and paid away at par with gold. Small as the minority in which he and his friends were, under the pressure of circumstances and the force of his arguments, Congress, in 1846, passed an act which, as quoted by Colwell, provides "that the Treasurer of the United States, the Treasurer of the Mint of the United States, the Treasurers, and those acting as such at the various Branch Mints, all Collectors of Customs, all Surveyors of the Customs acting also as collectors, all Assistant Treasurers, all receivers of public money at the several land offices, all Postmasters, and all public
officers of whatever character, be, and they are hereby required to keep safely, without loaning, using, depositing in banks, or exchanging for other funds than he is allowed by this act, all the public money collected by them, or otherwise, at any time, placed in their possession or custody, till the same is ordered by the proper department or officer of the Government to be transferred or paid out; that all collectors and receivers of public money of every character and description shall so frequently as they may be directed by the Secretary of the Treasury or the Postmaster General, to pay over to the Treasurers of their respective districts all public money collected by them or in their hands; and it shall be the duty of the Secretary and the Postmaster General respectively, to order such payments by the said collectors and receivers at all said places, at least as often as once in each week, and as much more frequently in all cases as they in their discretion may think proper." It is farther enacted in the same statute, "That on and after the first of January, 1847, all sums payable to the United States shall be paid in gold or silver coin, or in Treasury Notes issued by authority of the United States, that on and after the first of April, 1847, all payments shall be made in gold or silver coin, or in Treasury Notes, if the creditor agrees to receive said notes in payment."
Colwell quotes from the Secretary of the Treasury's (Mr. Guthrie) report, of December 3d, 1855, as follows:
The Independent Treasury Act still continues eminently successful in all its operations. The transfers, for disbursements, during the fiscal year, to the amount of $39,407,674.03, have been made at a cost of $10,762[.] 35, while the premium on the sale of drafts has amounted to $30,431.87. The receipts and expenditures during the fiscal year amounted to $131,413,859.59 have all been in the Constitutional currency of gold and silver without any perceptible effect upon the currency or upon the healthy business operations of the country.
And again from his annual report, December 1st, 1856:
The amount transferred, for disbursement, during the past fiscal year was $38,088,113.92, at a cost of $12,954.87; while the premiums paid on sale of Treasury drafts have been $54,924.16, leaving $41,978.29 over and above the expenses. * * * * * The receipts and expenditures, during the fiscal year, have amounted in the aggregate to $146,866,933.48, and have all been paid in the Constitutional currency of gold and silver without any disturbing effect upon the currency, the banks, or business of the country.
Commenting upon this act, Colwell says:
It proposed that all payments to and from the Treasury should be made in gold and silver coin, or in Treasury notes issued under the authority of the United States. Now this was offering to the creditors of the Government their choice of specie or the very best currency which could be issued in the country. No medium of payment which could be devised would better accommodate the public creditors than Treasury Notes, issued in forms and denominations to suit the wants and conveniences of the people.
I quote these extracts to demonstrate the correctness and wisdom of Mr. Calhoun's views of the proper use of public credit, intending, as I progress, to cite other facts, stronger if possible than these, to enforce the necessity of adopting the measures which I propose. It is true that the value of Treasury Notes, under the system adopted by the Federal Government, was kept at par with gold because the banks were required to redeem their notes with specie. I propose to make our Treasury Notes convertible into coupon bonds, worth as much as specie, and thus maintain their value.
In his speech upon the Sub-Treasury, delivered in the Senate March 10th, 1838, Mr. Calhoun said:
I do not deem it necessary to inquire whether, in conferring the power to coin money and regulate the value thereof, the Constitution intended to limit the power strictly to coining money and regulating its value, or whether it intended to confer a more general power over the currency; nor do I intend to inquire whether the word coin is limited simply to metals, or may be extended to other substances, if through a gradual change they may become the medium of the general circulation of the world. Whatever opinion there may be entertained in reference to them, we must all agree, as a fixed principle in our system of thinking on Constitutional questions, that the power under consideration, like other powers, is a trust power, and that, like all such powers, it must be so exercised as to effect the object of the trust, as far as it may be practicable; nor can we disagree that the object of the power was to secure to these States a safe, uniform, and stable currency. The nature of the power, the terms used to convey it, the history of the times, the necessity, with the creation of a common Government, of having a common and uniform circulating medium, and the power conferred to punish those who, by counterfeiting, may attempt to debase and degrade the coins of the country, all proclaim this to be the object. * * * * *
If Congress has a right to receive anything else than specie in its dues, they have the right to regulate its value, and have a right, of course, to adopt all necessary and proper means, in the language of the Constitution, to the object.
Again, in reply to Mr. Webster, March 22d, 1838, Mr. Calhoun said:
I now undertake to affirm positively, and without the least fear that I can be answered--what heretofore I have but suggested--that a paper, issued by Government, with the simple promise to receive it in all its dues, leaving its creditors to take it or gold and silver, at their option, would, to the extent that it would circulate, form a perfect paper circulation, which could not be abused by the Government; that it would be as steady and uniform in value as the metals themselves; and that if, by possibility, it should depreciate, the loss would fall, not on the people, but on the Government itself; for the only effect of depreciation would be virtually to reduce the taxes, to prevent which the interest of the Government would be a sufficient guarantee. I shall not go into the discussion now, but on a suitable occasion I shall be able to make good every word I have uttered. I would be able to do more--to prove that it is within the Constitutional power of Congress to use such a paper, in the management of its finances, according to the most rigid rule of construing the Constitution; and that those, at least, who think that Congress can authorize the notes of State corporations to be received in the public dues, are estopped from denying its right to receive its own paper. If it can virtually indorse by law, on the notes of specie paying banks, "Receivable in payment of the public dues," it surely can order the same words to be written on a blank piece of paper.
As the power to coin "money" and regulate its value, and to pass all laws necessary and proper to effect that object is expressly given to Congress, and, as the purpose of the Constitution was to enable Congress to give to the States "a safe, uniform, and stable currency," Mr. Calhoun refers to "the history of the times, and the necessity with the creation of a common government of having a common circulating medium," in support of his proposition, that whatever the Government may receive and pay away as money is money, and that it is the duty of Congress to regulate its value.
What was the history of the times? and what was the necessity for creating a common and uniform circulating medium?
Ayres, in his Financial Register for 1857, in his chapter on Banks and Banking in the United States, says:
The first description of paper money, as far back as 1690, was in form of Bills of Credit, secured on the property and revenues of the Colony, but war soon forced the
colonists to increase this currency to such an extent as greatly to depreciate its value compared with specie. This formed a very powerful difficulty with the States, yet it was made a legal tender, and received in payment of taxes and debts in New England at the rate of 6s. the Spanish dollar; in New York at 8s., and in Pennsylvania at 7s. 6d. These variations in the nominal value of the currency created the greatest confusion, which may be understood by the difference between its nominal and real value in 1748, when these bills, to the amount of $3,000,000, were issued. A bill on London for£100 in specie was equivalent to a bill for£1,100 of this paper money of New England; for £190 of New York; for£190 of East Jersey; £180 of West Jersey; for £180 of Pennsylvania; for£200 of Maryland; for£125 of Virginia; for £1,000 of North Carolina; and for£700 of the paper currency of South Carolina. A part of these issues were soon afterward redeemed at two shillings in the pound, but the War of Independence, in 1775, called forth the increased demand for an extended currency, so that, in September of 1779, $160,000,000 were issued; when Congress passed a law that it should never exceed $200,000,000, which sum it reached at the end of the year. In 1780 and 1781 these bills ceased to have currency.
Such was the "history of the times," which fully explains the necessity of giving to Congress, as the common agent of all the States, the exclusive and unrestricted power to coin money and regulate its value. The power is not to coin gold and silver money. It is to coin money. This brings us to the simple question: What is money? And inasmuch as the unrestricted power to coin money and regulate its value was given to Congress, without reference to the material of which it is to be coined, the power to determine of what material it may be coined as well as the fineness, weight and other properties of money, is necessarily vested in the discretion of Congress[.] For the clause forbidding the States to issue bills of credit, or to make anything else than gold and silver a legal tender proves that the propriety of our issue of paper money was under the consideration of the Convention which framed the Federal Constitution, and the fact that whilst the unlimited power to coin money and to regulate its value without reference to gold, silver, or paper, was given to Congress, and the power to issue paper money was not forbidden to Congress but was forbidden to the States, is conclusive to prove that it was not the purpose of the Convention to forbid the issue of paper money by Congress.
That Mr. Calhoun would concur in this construction of the power of Congress, appears in the quotation given above. He said: "Nor do I intend to inquire whether the word coin is limited simply to metals, or may be extended to other substances, if through a gradual change they may become the medium of the general circulation of the world." There can be no other interpretation to this quotation than that, if under any circumstances, it becomes necessary to issue paper money, then Congress may, if they deem it expedient, coin paper money, and have power to pass all laws necessary and proper to regulate the value of the paper money thus coined, and consequently to make it a tender.
In this view of the power of Congress, the Treasury Notes or Certificates issued and paid away by authority of Congress, are money, and the only question is, is it necessary and proper to make them a legal tender as a means of regulating their value? If so, then the power is vested in Congress.
The Edinburgh Review, of February, 1826, in a chapter on Banking, says:
Let us then endeavor briefly to inquire into the circumstances that determine the quantity of money in a country; first, when the currency is wholly of gold or silver; second, when it consists wholly of paper that is made a legal tender, but which is not convertible at pleasure into the precious metals; and third, when the currency consists partly of coin and partly of paper, immediately convertible into coin.
With respect to the first, or that in which the currency of any given country consists entirely of the precious metals, it is evident, inasmuch as they are always in demand, and can be imported and exported at a very small expense, that the quantity of precious metals which such a country would, in all ordinary cases, use as money, would be limited to the quantity which was required to preserve their value at the same level in it, as in other countries. If on the one hand, any greater additions were made to the amount of gold or silver in circulation, than were required to preserve the currency at this, its proper level, its value would fall, and there would, in consequence, be an immediate exportation of the precious metals; and if, on the other hand, the amount of gold or silver in circulation were unduly diminished, the opposite effects would be produced; the value of the currency would then be raised above its proper level, and there would be an importation of the precious metals from all the surrounding countries to restore that equality of value which could not in either case be permanently or even considerably deranged.
In the second case, we have supposed that of a country with a paper currency declared to be a legal tender but not convertible at pleasure into the precious metals, it is evident, inasmuch as such a paper can neither be exported to other countries, when it is issued in excess, nor imported when the issues are unduly limited; that it is not possessed of the same principle of self-contraction and expansion inherent in a currency consisting of the precious metals; and that, consequently, its value must always depend on the extent to which it has been issued compared with the demand. * * * * * The essential difference, then, between a currency consisting wholly of the precious metals and one consisting wholly of inconvertible paper, is this, that the value of the former, in any particular country, can never differ, either permanently or considerably from its value in others; and that its value, as compared with commodities, depend on the comparative cost of their and its production; whereas, the value of the latter, in any one country may vary to any conceivable extent from its value in others; and its value, as compared with commodities does not depend on the cost of producing it and them, but to the extent to which it has been issued compared to the demand. * * * * * It results from these principles, that convertibility into gold and silver, at the pleasure of the holder, is not necessary to give value to paper money; and that, if perfect security could be obtained that the power of issuing would not be abused, or that it would always be issued in such quantities as would render a one pound note uniformly equivalent to the quantity of standard gold bullion contained in a sovereign, the precious metals might be entirely dispensed with as a medium of barter, or used only to serve as small change. * * * * *
We are naturally led to the consideration of the third and most important head in our inquiry, or to that which has for its object to discover the circumstances which determine the amount and value of the currency of a country when it consists partly of coin and partly of paper, immediately convertible in to coin.
It appears, from what has been already stated, that an excessive quantity of the precious metals can never be imported into any country, which allows them to be freely sent abroad, without occasioning their instant exportation. But when the currency of any particular country, as of England, consists partly of the precious metals and partly of paper, convertible into them, the effects produced by an over issue of paper are the same as those resulting from an over issue of gold or silver. The excess of paper will not be indicated by a depreciation or fall in the value of paper, as compared with gold; but by a depreciation of the value of the whole currency, gold as well as paper, as
compared with that of other States. * * * * * It is obvious that this issue of paper must have precisely the same effect on the value of money as the issue of additional sovereigns. There cannot, it is clear, be any depreciation in the value of paper as compared with gold; for gold may be immediately obtained in exchange for it, and it is as readily received in all payments throughout the country. The effect of increased issues of notes, immediately convertible into gold, is not, therefore, to cause any discrepancy between the value of paper and the value of gold, in the home market, but to increase the amount of the currency, and by rendering it redundant or depreciated, as compared with that of other countries, to depress the nominal exchange; and thus, inasmuch as notes do not circulate abroad, to cause the exportation of coin, and, consequently, a drain upon the bank.
I have quoted thus at length from the Review, because it gives the argument relied upon by the advocates of a currency convertible into specie. It is the argument of the Bank of England, and lies at the foundation of the power and of the measures and policy of that institution. It assumes, 1st. That inasmuch as they are always in demand and can be imported and exported at a very small expense, the quantity of precious metals which would, in ordinary cases, be used as money in any country in which the currency consists entirely of gold and silver, would be limited to the quantity which may be required to preserve their value at the same level in it as in other countries. 2d. That the effect of a paper currency, convertible into specie in case of an over issue, will be to reduce the value of gold as much as if the excess consisted of gold, and in like manner to cause an export of specie. 3d. That the effect of a paper currency, which is a legal tender and not convertible into specie, would be, that inasmuch as it would not be exported to other countries when it is issued in excess, nor imported when the issues are unduly limited, its value may vary to any conceivable extent from its value in other countries; and its value, as compared with commodities, does not depend upon the cost of producing it or them, but upon the extent to which it has been issued as compared with the demand. 4th. That it results from these principles that convertibility into gold and silver, at the pleasure of the holder, is not necessary to give value to paper money, and that, if perfect security could be obtained that the power of issuing would not be abused, or that it would always be issued in such quantities as would render a one pound note uniformly equivalent to the quantity of standard gold bullion contained in a sovereign, the precious metals may be entirely dispensed with as a medium of barter.
The Constitution authorizes Congress to "levy and collect taxes, duties, imposts and excises for revenue necessary to pay the debts, provide for the common defence, and carry on the Government of the Confederate States," "To coin money and regulate the value thereof and of foreign coins," "To regulate commerce with foreign nations," "To raise and support armies," "To provide and maintain a navy," "To borrow money on the credit of the Confederate States," and to pass all laws which may be necessary and proper to carry into execution any of the foregoing powers, etc. If to make Treasury Certificates a legal tender be necessary and proper, as a means of carrying on the Government of the Confederate States, of regulating the value of money, of regulating commerce with foreign nations, of raising and supporting an army, of providing and maintaining a navy, or of borrowing money on the credit of the Government of the Confederate
States, then the power is expressly vested in Congress, and as Congress has authorized the issue of paper money, it is the incumbent duty of Congress to make its tender, because it is impossible otherwise to restore or maintain the value of Treasury Notes or Certificates as a circulating medium; and, as Adam Smith, Ricardo, McCulloch, the Edinburgh Review, the London Quarterly, Colwell, Mr. Calhoun, and all other reliable writers on the subject of currency, agree that if there is a perfect security that the power of issuing paper money would not be abused--that is, that if there can be perfect security that it will be so limited in quantity as to maintain its value relatively to the value of the mass of circulating commodities--not of gold, but of the mass of circulating commodities, nearly uniform, then the precious metals may be entirely discarded from circulation.
It is this principle which gives value to the notes of non specie banks during their suspension--because, inasmuch as the public owe the banks more than the banks owe the public, and the debt due the banks must be paid in bank notes or in specie, the demand for bank notes for this use maintains their value as a medium of purchase as well as of payment; and they are received and circulated by the public because, although they may not be a tender elsewhere, they are a tender to the bank of issue, and as the sum in circulation is presumed not to be more than is wanted for payment to the banks, that fact gives them credit and currency. Now, I will demonstrate not only that the Congress can, by a judicious system of funding and taxing, as I propose, so limit the quantity of certificates in circulation, as to make them uniform and stable in value, as currency, but that, inasmuch as they will not be subject to the contingencies which affect the value of gold in the foreign market, they will be more stable in value, and therefore a much better currency than gold.
The purpose of our Constitution was to enable Congress to create a common and uniform circulating medium for the people of the Confederate States[.] If it be true, as asserted by the Review, and as I admit it to be, that specie will be exported when the price in any foreign country is such as to pay a sufficient premium, and that it will return when the value be so much increased that the price in that country from which it was exported is so much greater than the price in that to which it was taken, as to pay a sufficient premium; then, as Congress cannot regulate the contingencies which may affect the value of gold in any foreign country, and consequently cannot regulate the quantity or the value of specie in any other country, it is manifest that Congress cannot regulate the value of a metallic or of a paper currency convertible into specie. Inasmuch as Congress cannot regulate the value of a metallic or of a paper currency convertible into specie, and can regulate the value of a fundable paper issued by the Government, then as the exclusive power to coin money and to regulate its value is vested in Congress, it is the imperative duty of Congress to regulate the value of the paper money which they have authorized to be issued. The question is not whether Congress shall authorize the issue of paper money. It is, will Congress regulate the value of the paper money which they have already issued, and is its being a tender necessary to regulate its value?
Can Congress discharge their duties in the exigencies in which we are placed, without the use of the public credit, as money? If Congress is compelled to use the public credit as money, who can deny the power of Congress to make it a tender, and to adopt all such measures as are necessary and proper to regulate its value? If we admit that the value of money, whether it be metallic or paper, depends upon the quantity in circulation, and that it is a fixed law of a metallic and a convertible paper currency that specie will be exported whenever its value is greater in any foreign market, and that it is a fixed law of paper currency not convertible into gold, that if the quantity in circulation be no more than is requisite for use as money, it will be of equal value as gold, and that the precious metals in such case may be dispensed with, then it follows that if Congress makes the paper, which they issue, a tender, and reduces the quantity in circulation to the sum required for use as money, the paper thus issued may be as stable and uniform in value as gold. Can Congress, by a judicious system of taxing, cause the excess of their issues to be funded? If five per cent. tax will not suffice, then impose a tax of ten per cent., but my earnest belief is that the tax proposed will be sufficient.
As such a currency will not be subject to the general laws which regulate the quantity and value of specie, it will be more uniform and stable in value than gold. For it is admitted that if, from any cause, gold is more valuable in England than elsewhere, then the quantity of gold in England will be so increased by importation from abroad, that its value will be reduced to the same level as it may be in the foreign countries from which it may have been imported; then, if it shall appear that the importation of gold will necessarily continue long after the requisite supply of specie has been obtained, and that the inevitable consequence will be an undue expansion of the currency to be followed by a re exportation of specie, and, consequently, by an undue contraction of the currency, then it follows that the precious metals, being thus liable to be increased and diminished in quantity, must necessarily fluctuate so much in value that it is impossible to predicate upon them a stable and uniform currency. This truth is forcibly illustrated by the annexed table, prepared with great care from authentic official sources:
Table showing the rate of interest charged by the Bank of England at the dates given, the quantity of bullion in the Bank, the notes in circulation and the notes in reserve, with a statement of the loans of the Banks of the City of New York, the amount of their notes in circulation, and of the specie in their vaults, given in millions, omitting the small fractions.
It will be seen that the average of specie and bullion held by the Bank of England, from January 1, 1852, to October 1, 1858, was about sixty-three millions of dollars. If we assume this to be the "proper level," then the fluctuations between ninety nine and thirty five millions of specie, and the various fluctuations between two per cent. and ten per cent. in the rate of interest, as charged by the Bank, show that specie, as administered by the Bank of England, instead of being the basis of a stable and uniform currency, is no more than the medium, through the agency of which a few monied men are enabled, by the use of their credit and the organization of the Exchanges, to control and regulate not only the value of money, but the values of property--spreading ruin and bankruptcy broadcast throughout the world, enriching themselves by creating those fluctuations in the values of money and of property, which, as they declare, it is their purpose to prevent.
It should be remembered that it was the wars in India and China which created an extraordinary demand for specie in 1857. That from the commencement of the war in the Crimea to the close of the wars in India and China, the export of specie from the United States was more than two hundred and eighty millions of dollars. That the average bullion in the banks of the city of New York, from 1st July, 1852, to the 20th October, 1857, was $11,774,785, and that Gibbon, in his history of the panic and the suspension in New York in 1857, says that although there were seven millions of dollars withdrawn between the 10th and 17th of October, the depletion in coin was but $5,483,864, and yet he says that the effect of the panic, created by the loss of this sum in specie, was that: "The regular discount of bills by the banks had mostly been suspended, and the street rates for money, even on unquestionable securities, rose to three, four, and even five per cent. a month. On the ordinary securities of merchants, such as promissory notes and Bills of Exchange, money was not to be had at any rate. House after house, of high commercial repute, succumbed to the panic, and several heavy banking firms were added to the list of failures. * * * * * Commercial business was suspended everywhere. The avalanche of discredit swept down merchants, bankers, monied corporations and manufacturing companies, without distinction; old houses, of accumulated capital, which had withstood the violence of all former panics, were prostrated in a day, and when they believed themselves to be perfectly safe against misfortune."
He gives a list of the sales at the broker's board of bonds and stocks, which, he says, includes a wide range of securities, from the best down to what are called "fancy," which shows an average depreciation of more than one third. These securities represented a class of investments exceeding one thousand millions of dollars, the depreciation of the exchangeable value of which, being more than three hundred millions of dollars, was caused by the withdrawal of five and a half millions of dollars from the Banks in the city of New York; which withdrawal was caused by the demand for specie to pay the expenses of the war in the Crimea, in India, and in China. Now, if the United States had made her disbursements in certificates, made a tender, and receivable in payment of taxes, and
convertible into bonds bearing six per cent. interest, and reconvertible into certificates which were a legal tender, and the banks had held twelve millions of such bonds, instead of twelve millions of specie, there would have been no panic--there would have been no run for specie-- no failure of merchants, bankers, monied corporations, and manufacturing companies-- there would have been no depreciation of the value of bonds and stocks, and no loss of hundreds and hundreds of millions of dollars in the exchangeable values of property.
Is it not apparent that a system of paper money, made a legal tender, resting upon the public credit as a basis, and regulated by a judicious system of funding and taxation, may be made more stable and uniform in value than the system of banking and currency as regulated by the Bank of England? And this, I affirm, is the question involving no less our interests and welfare than the question of our political independence. We have no alternative--we must adopt a system of finance which can be regulated by our Congress, or the values of our credit, of our currency, and of our property, will be regulated by the Bank of England, and the combination of monied men of whom that bank is but the agent.
In June, 1852, the Bank of England held more than one hundred millions of dollars of bullion and specie, and interest was but 2 per cent, and that on the 10th of December, 1857, this sum was reduced to thirty-five millions, and the bank interest was ten per cent.--the effect of this pressure, on the London market, was that by the 1st of October, 1858, the bullion and specie in the bank had again increased to ninety-five millions, and the rate of interest was again reduced.
The power of the Bank of England over the currency and credit of all foreign commercial nations is forcibly exhibited by the ruinous effect upon the credit and currency of the city of New York, and the consequent value of property. The average of specie held by the Banks of the city of New York, from 1st September, 1853, to 20th October, 1857, was, say eleven and a half millions of dollars; the pressure by the screw of the Bank of England reduced this quantity to $7,843,231, and interest rose to "three, four and five per cent. a month," "on unquestionable securities," and the exchangeable value of property depreciated one third. But the table before us shows that, although the demand for specie in London to meet the disbursements of the wars in the Crimea, and in India and China, had reduced the bullion and specie in the Bank of England from ninety nine millions, in June 1853, to thirty five millions in December, 1857, and had reduced the specie in the Banks of New York from seventeen millions, on the 26th of June, 1856, to $7,843,231 on the 20th October, 1857, yet the effect of the pressure by the Bank of England, and of the refusal of the Banks of New York to discount the best commercial paper, was to cause such a movement of specie that, whilst the bullion in the Bank of England had, on the 1st of October, 1858, increased from thirty five millions to ninety-five millions, the specie in the Banks of New York had, on the 8th of May, 1858, increased from $7,842,231 to $35,463,146.
Does it require argument to prove that this fluctuation in the quantity of specie held by the Bank of England and the banks of New York, and in
the rates of interest charged in London and in New York, was the consequence of the fact that the currency in London and New York was a convertible paper, predicated on a specie basis, and that, by refusing to renew discounted commercial paper and increasing the rate of interest, the demand for specie caused it to flow toward London and New York, the controlling commercial centres, until the accumulation was much beyond the sums requisite to maintain the value of specie at the "proper level?" Thus we see that the average held by the Bank of England was sixty-three millions, and that the average of the banks of New York was a fraction more than eleven millions, yet as soon as the banks in London and New York applied the screw with sufficient force, the quantity in the Bank in London rose from thirty-five to ninety-five millions, and the sum in the Banks of New York rose from less than eight to more than thirty five millions. Thus, the tide rose in London more than fifty per cent., and in New York to more than three hundred per cent. above the "proper level;" and it is worthy of note that the fluctuation of the quantity of bank notes, in London and New York, was much less under this severe pressure of the bank screw than the fluctuation of the quantity of specie. Thus the diminution of specie in the Bank of England was sixty[-] four millions, whilst the reduction of bank notes was but twenty[-]five millions, and the loss of specie by the New York banks under the panic was $5,483,864, whilst the notes in circulation were reduced but one million and a half.
Is it not apparent, from these facts, that, if the value of money is regulated by its quantity, the fluctuations in the quantity of specie being greater than the fluctuations in the quantity of bank notes, a paper currency, made a legal tender and predicated on an issue of public credit, and regulated by a proper system of funding and taxation, will be more stable and uniform in value than it is possible for a metallic or convertible paper to be? Is it not apparent that, if from any cause, gold is so much more valuable in London than it may be in the foreign market, that the Bank of England finds it necessary to so increase the rate of interest, and so reduce the discounted commercial paper as to cause the precious metals to flow back to London, the same pressure of the Bank screw which forces gold to flow from New York to London, will cause it to flow from South America, from Africa, from India and China, and from the Mediterranean and Continental Europe to London? And if we assume that sixty[-]three millions in the Bank of England indicates the proper specie level for England, and that eleven and a half millions in the Banks of the city of New York indicates the proper specie level for the United States, is not the fact that immediately after the pressure by the Bank of England, in December, 1857, the specie in that Bank increased from thirty-five millions to ninety-five millions, and that it also increased in the Banks of the city of New York from less than eight millions to more than thirty-five millions, conclusive to prove that Congress cannot regulate the quantity or the value of the precious metals; and that the public credit, in the form which I propose, may be so regulated as to create a currency more uniform and stable in value than gold?
The purpose of the Constitution is to establish justice, insure domestic tranquility, and secure the blessings of liberty to ourselves and our posterity.
Is it just that we should be compelled to pay a debt in a currency worth, to the creditors, twenty times the sum which they paid for it? Take the case of those who have made fabulous millions by dealing in foreign merchandise purchased with the public credit at the rate of twenty dollars of Treasury Notes for one of gold. Is it just that we shall be compelled to pay them one hundred and twenty per cent. per annum interest, when our promise is to pay them but six per cent.? And will not the payment, in gold, of six per cent. interest on the nominal amount of the debt, be equivalent to the payment of one hundred and twenty per cent. on the debt created? If the interest is paid in a currency of equal value to that in which the debt was created, will not the just claims of the public creditor be discharged? If, instead of making payment in the same medium in which the public debt was contracted, we are compelled to pay it in a medium worth twenty times as much, will we not increase the public debt twenty fold, and will not this increase the burden of the debt more than one hundred fold? Mr. Calhoun estimates the relative value of the property, as compared to the money of a commercial country, to be thirty for one. If we assume the amount of our public debt to be only two thousand millions of dollars, contracted in a medium so depreciated that it requires twenty paper dollars to purchase one of gold, the effect, upon the values of property, of paying that debt in gold will be not as twenty to one, but as thirty times twenty to one--that is, not only to increase the burden of our debt, payable in the medium in which it was created, to forty thousand millions of dollars, but to thirty times forty thousand millions of dollars--for whilst it will increase the value of the medium of payment twenty fold, it will reduce the value of our property thirty fold, and thus it will consequently increase the burden of debt and taxation in the same relative proportions, for the burden of the debt will be increased in the same proportion as the exchangeable value of our labor and of our property is diminished. If, on the other hand, we make payment in the same medium in which the debt was contracted, and so regulate that medium as to increase its exchangeable value nearly or quite twenty fold, and thus maintain the exchangeable value of our property, and at the same time that we diminish the burden of the public debt, relatively increase its value in the hands of the public creditor, the hopes of calculating avarice may be disappointed, but who can deny that the fullest claims of justice will be satisfied?
But, under the Constitution, Congress have power to regulate "commerce with foreign nations," and under that power can transfer to England, and to those who consume British goods, a large part of the burden of our public debt. As we progress, it will be seen that England is chiefly responsible for the war in which we are now engaged, and that strict justice, as well as a wise political economy, calls for the measures of retaliation which it is in our power to inflict.
In the Cotton Planters' Convention, held in Macon on the 4th July, 1861, I suggested the propriety of the purchase, by the Confederate Government, of the entire Cotton crop, as a means of sustaining the credit of the Government and providing funds for prosecuting the war. It was in reply to my personal argument, urging the propriety and necessity of this measure, that Mr. Memminger issued his remarkable letter, intended to act on the business convention
held in Macon, in October, 1861, in which he denied the power of Congress to authorize the purchase of Cotton!! There are none, now, so blind as not to see the propriety of my suggestion, and the culpable ignorance, to call it by no harsher name, of the Secretary of the Treasury. Cotton is now worth, in Liverpool, from fifty six to sixty cents per pound. The present high price is the result of a deficient supply, and the impossibility of obtaining it elsewhere than from the Confederate States. If the market is thrown open, the competition will soon reduce the price to less than one third the sum which the Government could realise if Congress were to authorize the purchase and hold it for an arbitrary price. The monopoly of tobacco by France and the high duties levied by England illustrates the effect. If we assume that the average cotton crops for the next ten years after peace will be but four millions of bales, of five hundred pounds each, and the whole is purchased at a price which will enable the Government to pay the producers twice the sum which they could otherwise obtain, and yet leave a margin of profit as great or greater than the price paid the producers, it is obvious that the monopoly by the Government would not only greatly benefit the producer, but place in the public Treasury ample specie funds to sustain the public credit so as to render the Treasury Certificates equal to gold. Say that the Government price to the producer was fixed at thirty cents per pound, and to the consumer at sixty; this, upon the four millions of bales, would give six hundred millions of dollars per annum to the producers and a like sum to the Government. If to this be added the like profits on our tobacco and naval stores, it will be seen that a wise administration of our finances will enable us to pay our debt and maintain the value of our currency. If the producer is unwilling to sell, and prefers a foreign market, then let the export duty be such as to protect the value of that purchased by the Government, and secure the profits on the Government monopoly.
I am aware that it is believed by some that Congress cannot make Treasury Certificates a legal tender, alleging that the effect will be to impair the obligation of contracts. The Federal Constitution provides that Congress shall pass no law impairing the obligation of contracts, and yet under the power to enact a bankrupt law, the old Congress released bankrupt debtors from the obligation to pay their debts. Our Constitution provides that "no law of Congress shall discharge any debt contracted before the passage of the same." To authorize payments in the certificates which Congress have issued and paid out as money, will not be to discharge the debt without payment. As properly remarked by Mr. Calhoun, the meaning and purpose of the Constitution are explained by reference to the history of the times and the circumstances connected with its adoption. Ours, with the exception of a few modifications, is a transcript of the Federal Constitution--that part which gives to Congress power to coin money and to regulate its value is a literal copy. We, therefore,
recur to the purpose of granting these powers, and find that it was "to secure to the States a safe, uniform and stable currency," and that it was given to Congress, because, if each State were permitted to coin money and regulate its value, and to make the money coined by them a legal tender, there would be no guarantee that each would not coin money for itself, and that, instead of having a money common to all the States, and of equal value in all, the value of the money of the several States would not be as various as the coinage and regulations of each might vary from the coinage and regulations of the other States. Thus the money of account of England is pounds and shillings; of France, livres and francs; of Germany, the Rix dollar; of Russia, the ruble, and of Spain, the dollar. As all contracts are made, and books and accounts are kept in the money of account, the necessity of having, for a people living under a common government, one common money of account, is obvious; and hence the necessity of vesting the power of coinage and regulating the value of money in Congress. If an Englishman, a Frenchman, a German, an American, and a Russian, were each, in his own money of account, to offer to purchase the same property, one offering to pay in sovereigns, another in livres, another in Rix dollars, another in rubles, and the other in American dollars, scarce one man in a million could estimate the relative value of the several offers, because all men are accustomed to the money of account of that country in which they live, and in which their transactions are made, and few, very few are sufficiently familiar with the money of account of other countries to use it in the purchase or sale of commodities without an estimate of its value in their own money of account. Thus, as the Spanish dollar was current in the States, and was worth in the money of account of New York eight shillings, whilst it was worth in the money of account of Virginia but six, if a citizen of New York were to offer thirty shillings per barrel for flour, the Virginian would inquire what shilling was meant? the shilling of New York or of Virginia? Was the offer at the rate of eight or six shillings to the dollar? As I have before remarked, it was not the purpose of our Constitution to restrict our Congress to the coinage of gold or silver. It was not to prevent the use of paper money, for inasmuch as it did forbid the States, and did not forbid Congress, to make paper money a legal tender, and gave to Congress an unlimited control over the coinage and the value of money, it is conclusively apparent that the subject of paper money was under the consideration of the Convention, and that Congress may, in their discretion, coin paper money. To me, it is an unanswerable argument in favor of the exercise of this power by Congress, that the purpose of the Constitution being to create, for the people of the Confederate States, a safe, uniform and stable currency, Congress can so regulate the value of paper money not convertible into specie, as to make it safe, uniform and stable in value, and cannot so regulate the value of a metallic or of a paper currency convertible into specie. It is generally assumed and admitted that the value of the precious metals, as well as of paper money, depends upon the quantity in circulation. I hold that this principle is modified by the circumstances under which they are used, and that their value, and the quantity requisite to maintain their relative value as compared with other commodities, depends upon the regulations which control domestic and foreign commerce.
Experience fully proves that the value, in the foreign market, of cotton, rice, sugar, naval stores and tobacco, does not depend upon the cost of production in the home market, but that it does depend upon the circumstances under which they are sold in the foreign market.
We have seen that the Constitution took from the States the power to coin money and regulate its value, and gave it to Congress because the purpose was to create a common currency, of uniform value in all the States, and experience had proved that it was necessary to deprive the States of the power to coin money and to regulate its value, and vest it in Congress as the common agent of all the States, as the only means of preventing that confusion and diversity of the money of account and depreciation of the value of the currency, which had been the result of the control over the coinage and the currency theretofore vested in each of the several States. We have also seen that the power which the Bank of England can exert over the currency of all other countries, which is predicated on a specie basis, is such, that, by refusing to renew the discount of commercial paper, and increasing the value of money in London, by increasing the rate of interest, that bank can compel the banks in the United States to suspend specie payments, as was the case in 1857, when but for the demand in London for specie to pay the expenditures of the wars in the Crimea, and in India and China, there would have been no pressure upon our banks, and no depreciation in the exchangeable values of our property; whereas, the actual depreciation was from thirty to fifty per cent. or more. Is it wise, or can any one believe that it was the purpose of the Constitution to vest in the Bank of England that power over our currency of which it was the purpose to deprive the States? What is the Bank of England, and what are the motives, and who are the persons, and what are the interests that regulate its measures and policy, that we should give to that Bank a control over the values of our currency, and of our credit and property, of which we have deprived the Legislatures of our own several States? Are not the directors and managers of that Bank English merchants, whose duty it is to exert the powers and influence which they possess for the advancement of British interests?
It is proper that, at this point, we should pause and inquire, WHAT HAVE BEEN THE MOTIVES WHICH HAVE REGULATED THE MEASURES AND POLICY OF THE BANK OF ENGLAND? And what has been the effect of the financial management of that Bank? It originated in a loan at eight per cent. of six millions of dollars to the Government, and became the agent of the Government in the collection and disbursement of the public revenue. Besides, the eight per cent. as interest on the sum advanced, the Bank received $20,000 a year as the expense of management.
The capital is now $72,765,000, all of which is lent to the Government at a rate of about three per cent. per annum, and yet it pays a dividend of seven per cent.!! Its notes are a legal tender, except at its own counter, and it is the only joint stock bank which can issue notes in, or within sixty-five miles of it, or can draw or accept bills of exchange on London. It receives the public revenues, and holds the deposits of the various public offices--being not less than $20,000,000. For discharging these duties and registering
transfers and paying the dividends on the public debt, it now receives $640,000. It is a close corporation, managed by twenty-four directors, who furnish no accounts to the proprietors. Eight go out every year and eight come in. When the period of election draws near, the directors make out what is termed a house list, giving the names of those whom they wish to have as colleagues, and this list is uniformly elected. This body is absolute in the extreme, and perfectly free to act as it sees fit under all circumstances. It is led by no authority and restrained by no responsibility.
The following table, carefully prepared from the official data, shows the amount of Exchequer bills and public deposits held by the Bank of England, the bank notes in circulation, the commercial bills discounted by the bank, and the actual taxation from 1808 to 1831:
By the reference to Mr.
Calhoun's speeches, as quoted, it will be seen that North Carolina maintained
for years a circulation of irredeemable paper money of four times the sum of the
annual taxation, which did not depreciate, although it was not a legal tender;
the value being maintained by the fact that it was receivable at par with gold
in the payment of taxes; and also, that Russia, upon a current revenue of ninety
millions of dollars, sustained, at par with gold, a current circulation of
irredeemable paper of one hundred and twenty millions of dollars. Is it not
apparent that, if instead
of borrowing the credit of the Bank, the Government of England had issued its
certificates, receivable in the payment of taxes and fundable at a proper rate
of interest, the value of the public credit would have been equal to the value
of the notes of the Bank of England? The table shows that the annual average of
the Exchequer bills held by the Bank, and upon which
Why did the Government pay
interest on the EXCHEQUER BILLS? Was it not because these bills, instead of
being a tender, represented the unfunded debt, and the payment of interest was
necessary to make them of equal value as bank notes, which were a tender? If so,
by making the public credit, issued as certificates, receivable in payment of
taxes, a tender (that is, converting them into money), the payment of interest
would no longer be requisite to maintain the value of so much as was requisite
for use as money? And who, with our own experience, will deny that Parliament
could, by a judicious system of taxing the unfunded certificates, cause all to
be funded, except the sum requ site for use as money? Is
it not further apparent that such a use of the public credit would save to the
people and the Government the whole of the interest on the sum used as currency?
If we assume that the sum thus used would be no more than the annual taxes, as
this average, as given in the table, was $305,446,758, the interest upon that
sum, at three per cent. only, would be an annuity of $9,163,402.74, which, if
compounded at three per cent., would create a sinking fund which would soon
absorb the whole public debt of England!! This, however, is apart from the
ruinous effect which the management of the Bank has had, and will have, upon
individual credit and upon the progress of individual industry and the general
prosperity of this country. That England herself is not
satisfied with that system appears in the fact stated by Hardcastle, in his
treatise upon Banks and Bankers, that the bare titles of the acts of Parliament
passed upon the subject of the affairs of the bank "occupy more than 200 pages
of the index of the statutes at large."
Surely there must be some defect in a system which requires so much
tinkering--and I, for one, am unwilling that the tinkers who have so botched
their own system shall be permitted to regulate ours. And that is the very
danger which threatens us. Let me be distinctly
understood. I do not complain of or censure the bank as a bank. It is not the
bank, but the system as regulated by Parliament, and those who manage the bank
under that system, which I believe rests upon three fundamental errors. 1st. That the paper
circulation should at no time exceed the value of the gold and silver of which
it supplies the place[.] 2d. That the paper
circulation should depend upon the quantity of the bullion in the Bank and be
regulated by the foreign Exchange. 3d. That whenever there is a
foreign demand for gold, the Bank, by refusing to discount commercial paper, and
the sale of Exchequer bills, shall diminish the quantity of bank paper in
circulation and so increase the demand for gold, as a means of payment, as to
render gold of more value in England than it may be in the country to which it
may have gone, and thus coerce its reflux to the Bank. These, we believe, are
fundamental principles in the management of the Bank, and we believe them to be
fundamental errors, as the history of the Bank and of the world, so far as the
world has been under the influence of the bank, demonstrates. This error is the
more striking, when we take into consideration the causes which induce the
export of gold. In case of wars, gold may be in greater demand elsewhere, and
being at a premium, will be sent abroad. In case of foreign loans, a premium
will be given which will cause it to be exported. In case of bad harvests,
foreign wheat must be paid for in gold. In all such cases the bank refuses to
renew discounts. If this does not produce a sufficient pressure, then she goes
into the market, sells Exchequer bills in exchange for bank notes, thus renders
the demand for gold so severe as to compel the reflux. That some idea may be
formed of the effect of this turning of the bank screw, I quote from Hardcastle.
He says: Our banking system is bad in
the extreme; it has been everything by turns, but what it ought to be, and
nothing long. It is not only bad itself, but it communicates evil to everything
around it. It is an epidemic that arrests and affects all classes; a plague that
corrupts and kills high and low, poor and affluent, without distinction--a
thousand incidents have taken place in this city within a year [London in 1842]
which exhibit our monetary affairs in a most deplorable condition . . . . I have
seen, last spring, a bill broker go from house to house, of an afternoon, with
the bills of a country bank, accepted by first rate firms in Lombard street, and
cash could not be got for them at five per cent. interest and one and a half per
cent. commission. I have known, about the same time, a man with £10,000
Exchequer bills, unable to raise £4,000 upon them at his banker's, and that bank
one of the best in Lombard street. I have known a city banker, at the beginning
of last year, confess, in a mixed company, that he would be glad to allow ten
per cent. for money for six months to come. At the same time, I have known
another banker in Lombard street pay eight per cent. for an advance of money on
Exchequer bills; and ten per cent. to be charged on the discount of a bill of
Exchange, the acceptor of which was then, and still is, a Bank Director. These
are facts that tell the true story of our banking system--these are realities
that prove our distress . . . . While they last, credit is prostrate, labor
fails of its market, and property almost ceases to be wealth . . . . Our
currency has resembled the shifting sands that impede the navigation of some of
our most capacious harbors, and shifting sands that impede the navigation of
some of our most capacious harbors, and
defy the skill of the most experienced mariners. We have been dealing with a
series of experiments, and each succeeding writer has distinguished himself by
showing where and how it was that the last experiment had proved a particular
failure. . . . The Bank of England had the complete control and absolute
management of the finances of the whole country, and the losses which the
country has now, for fifty years or so, sustained by repeated abuses of that
currency in the hands of the Bank, have been incalculable; so wild and
extravagant have been the alternate expansions and contractions; so suddenly and
capriciously have the value of money and prices been jerked up and tossed down,
that it is not unreasonable to compare the Bank Directors to a set of awkward
showmen at a fair, with the trading interests of the nation in a great
ill-contrived swing-swong, which at one moment they fling up high in the sky,
and at another bring down so low as to drag the ground and rake the gutters with
it. . . . The habit of tampering with the currency was contracted by these
gentlemen at an early period. We can trace it distinctly as far back as 1782,
and find it persevered in up to 1839, invariably with the same pernicious
results. . . . A heavy panic, fraught with great commercial distress, ran
through the years 1783 and 1784, which has been brought home to the Bank by more
than one conclusive witness. . . . . . In 1814, the Dutch ports were opened, the
harvest was deficient; and that most searching of the calamities, to which our
artificial condition is exposed, no sooner visited the land, than the
importation of foreign corn occasioned a great decline in the price of this
principal article of agricultural produce, which gradually extended to the price
of commodities generally[.] Unprecedented suffering now
took place; the storm swept the country through, and raged with increasing
violence until 1819, by which time the agricultural and banking interests
generally were reduced to the lowest pitch of distress. Farmers were insolvent
everywhere; mercantile firms became bankrupt by thousands and levelled their
connexions indiscriminately in the dust; whilst as to the bankers, between those
who either partially suspended business or wholly broke, in the years 1815 or
1816, there was a diminution of no less than 240 firms. . . . In noticing the
moving causes of the calamities of 1816, we should bear in mind that the
cessation of hostilities on the continent was an established condition of the
long promised resumption of cash payments. Much of the panic then existing is
referable to a proposal for carrying that measure into effect, in 1818. The Bank made some
preparations for the change by a partial contraction of its issues. But the
depression of all the leading interests of the country was too intense, and the
notion was quickly abandoned. He quotes Mr. Atwood, in
1818, as saying: In the midst of this fall of
prices, what operation in business could proceed without loss or ruin? There has
been no firm in which the capital of the merchant, none in which the capital of
the manufacturer, could be invested without the half of it being sacrificed
during this calamitous period. We have been thrown back upon a condition of
events in which all industry and enterprize have been rendered pernicious or
ruinous, and where no property has been safe, unless hoarded in the shape of
money, or lent to others on double security. He quotes further from Mr.
Atwood's evidence before a committee: The reward of labor being
destroyed, the laborers, who can each produce four times as much of the comforts
of life as they and their families could possibly consume, are starving while
superabundance reigns around them. They find no employment, because the organ of
industry, which is money, does not exist in sufficient quantities to give
productive classes a reward for their exertions. The peasant idly wanders about,
and looks over the hedge of the uncultivated farm, where the land is suffering
for want of his labor, but at the same time the farmer has neither the profit
nor the labor to bring the land into cultivation. Speaking of the crisis in
1836, Hardcastle says: Of the bankruptcies that then
took place, and of the extreme depression of our manufactures and commerce, it
would be impossible to give any exact account. Prices fell forty per cent. In
the manufacturing districts there was no employment for the workmen; merchants
stopped payment in numbers, not because they were insolvent and had
no property, but because no market was to be had for their goods, no discount
for their bills, no advance upon their stocks. It was a rare and melancholy
sight to behold English merchants going through the Gazette in numbers,
while their warehouses were full of commodities, and their characters
unimpeached for knowledge of business, integrity and exemplary conduct; yet such
were the incidents that characterized the panic of 1836. . . . . . There was another
panic in 1839 which may be said to have extended itself by a series of fits and
convulsions all though the years 1840 and 1841, at which date our commercial
system was reduced to the lowest ebb of distress. The number of banks which
stopped or disappeared during this interval was unusually great, the difficulty
of getting money as rigid as ever, find the stagnation of our commerce, the
scarcity of good merchant paper, extreme. . . . Late in 1840 began the storm
which, continuing to rage all through 1841, and not even as yet (in 1842) blown
over, has swept away, during its protracted and ruinous courage; an unusual
number of banking establishments. A history of these misfortunes, in their
various details, is here out of the question; to trace the separate cases to
their source, and detail at length their consequences, would fill a volume, and
then, in all probability, leave the subject unexhausted[.] I had prepared a summary of the losses occasioned by the
different failures amongst the private and joint stock banks during the last two
years, but the amount appears so formidably large on the one side and so small
on the other, that it would be invidious to publish it. . . . The cause of these disasters
are explained by the eminent banker, Jones Loyd, who, speaking of the crisis of
1840, said: Against the actual exhaustion
of its treasure by a drain through the foreign exchanges, the bank, under almost
any circumstances, has the power of protecting herself; but to do this she must
produce upon the money market a pressure ruinous from its suddenness and
severity; she must save herself by the destruction of all around her. I have said that, among other
causes, the creation of foreign loans in England will cause a demand for bullion
for export, and, consequently, cause fluctuations in the quantity and value of
money, and, in proof of this, I refer to[:] If we recur to the history of
the times it will do much to establish the truth of the arguments, and to
enforce the necessity of adopting the measures which I propose as the only means
of preventing the frequent recurrence of the overwhelming disasters which have
fallen upon the commercial world and especially upon the United States, as the
consequence of the demand for specie, created by the measures and policy of the
Bank of England. To supply the Government of
the United States with funds to prosecute the war of 1812, the Banks in the
Southern and Western States were compelled to suspend specie payment. Congress
in 1816 chartered the Bank of the United States as a means of aiding, or rather
of coercing, the resumption of specie payments. The Indian tide to large tracts
of fertile lands was extinguished by the peace, which lands were immediately
surveyed and put upon the market. The notes of the suspended banks were received
in payment for these lands and for duties; these notes were placed in the Bank
of the United States as Government deposits, and by that Bank presented to the
local Banks for specie. Sir Robert Peel's bill requiring the Bank of England to
resume specie payment of her one pound notes in 1822, and generally in 1825,
passed in 1819, the consequence was that the specie which was thus withdrawn
from the local banks by the Bank of the United States, was withdrawn from that
Bank by the operations of commerce and remitted to England, until, in
August; 1825, the specie in the Bank of England had increased to more than
seventy-five millions of dollars. But the pressure created by the Bank of the
United States upon the local banks had been such, and the opposition to the Bank
became so great in Virginia, Maryland, Tennessee, Kentucky, Ohio, and other
Southern and Western States, that it was arranged between Mr. Cheves, then the
President of the Bank, and Mr. Crawford, the Secretary of the Treasury, that
large sums were left on deposit with certain selected local banks, upon
condition that they would convert the notes of other local banks into specie, to
be by them deposited in the Bank of the United States. Thus, the Banks of
Edwardsville in Illinois, and of Missouri at St. Louis, being on opposite sides
of the river, were each made depositaries, with large standing deposits, upon
condition that they would cash the notes of each other and remit, by the same
steamer, the specie thus obtained to the Branch of the United States Bank in
Louisville, Kentucky. Mr. Cheves, then the President of the Bank, in a Report to
the Stockholders, in 1822, says: "The specie in the vaults at the close of the
day, on the 1st of April, 1819, was only 126,745 dollars and 28 cents, and the
Bank owed to the City Banks, deducting balances due to it, 79,125 dollars and 99
cents. It is true, there were in the mint 267,978 dollars and 9 cents, and in
transitu from Kentucky and Ohio, overland, $250,000; but the Treasury dividends
were payable on that day to the amount of near 500,000 dollars, and there
remained at the close of the day more than one half the sum subject to draft. *
* * * * On the 12th of the same month, the Bank had in its vaults but 71,522
dollars and 47 cents, and owed to the City Banks a balance of 196,148 dollars
and 47 cents; exceeding the specie in its vaults 124,895 dollars and 19 cents. *
* * * * The Bank in this situation, the office in New York was little better,
and the office in Boston a great deal worse. At the same time, the Bank owed to
Baring Brothers& Co., and to Thos. Wilson& Co., nearly 900,000 dollars,
which it was bound to pay immediately, and which was a charge upon its vaults to
that amount. It had, including the notes of its offices, a circulation of six
millions of dollars." The effect of this pressure
was another suspension of specie payments, and a depreciation of more than fifty
per cent. of the exchangeable values of property, and the Government of the
United States was compelled to compromise with the purchasers of public lands on
the deferred payments, allowing them to consolidate their payments theretofore
made at the rate of less than fifty cents on the dollar. That is, a party who
had purchased lands and paid ten thousand dollars, owing thirty thousand, was
permitted to relinquish lands to the amount of thirty thousand dollars in
payment of his debt, and apply the ten thousand paid, at the rate of less than
fifty cents on the dollar, in payment for lands not relinquished. Such were the
effects, in England and in the United States, of the delusion which enforced the
necessity of maintaining a specie currency. And for whose benefit? Did it
benefit the people, or the Government of England, or of the United States? No;
for inasmuch as the delay in the resumption of specie payment by the Bank of
England, and the large amount of its paper in circulation, enabled the country
banks and private bankers greatly to increase their issues, the effect was to
beget in England a spirit of speculation, which embraced not only large foreign
loans, but ran into the working of foreign mines and other visionary and
delusive schemes.
The Edinburgh Review, of 1826, gives a table showing in detail the
sums advanced by England on loans to Prussia, Spain, Naples, Denmark, Columbia,
Chili, Poyais, Peru, Portugal, Austria, Greece, Buenos Ayres, Brazil, Mexico,
Guatemala, Guadalaxara, which, with other advances on French, Russian and
American securities, made the sum $522,692,500 advanced by England, on foreign
account, during the eight years, from 1818 to 1825, inclusive. It is apparent
that the advances made upon these loans must have created an extraordinary
demand for specie in England, and it is obvious that, as the loss of five and a
half millions of dollars, in 1857, by the banks of New York, created results so
disastrous, as described by Gibbon, the export of so large an amount to pay off
the foreign loans, produced the overwhelming losses, bankruptcies and distress
so forcibly referred to by Hardcastle, and the Edinburgh and London Quarterly
Reviews, and that that monetary crisis was caused by the fact that the
currency of England was convertible into specie, and that the demand for specie
thus produced, compelled the bank, to use the words of Jones Loyd, quoted above,
to "save herself by the destruction of all around her." I give the following from the
London Quarterly, of September, 1832, illustrating the effect of changing
a paper into a metallic currency: "As a single specimen of the condition of our
internal trade, we give the memorial of the iron and coal masters of Shropshire,
Staffordshire and Wales, presented to Earl Grey by a deputation in October last,
after being signed by more than three-fourths of the trade in those great
manufacturing districts." We, the undersigned, iron
masters and coal masters of the Staffordshire iron and coal districts, think it
our duty respectfully to represent to His Majesty's Government the following
facts: 1. That for the last five
years, ever since what is called the panic of 1825, we have found, with very
slight intermissions, a continually increasing depression in the prices of the
products of industry, and more particularly in those of pig and bar iron, which
have fallen respectively, from upward of 81. per ton to under 31. per ton, and
from £15 per ton to under £5 per ton. 2. Against this alarming and
long continued depression, we have used every possible effort in our power to
make bread. We have practiced all manner of economy, and have had recourse to
every possible improvement in the working of our mines and manufactories. Our
workmen's wages have in many instances been reduced, and such reduction has been
attended with, and effected by, very great distress; but the royalties, rents,
contracts, and other engagements, under which we hold our respective works and
mines, have scarcely been reduced at all, nor can we get them effectually
reduced, because the law enforces the payment in full. 3. The prices of the products
of our industry having thus fallen within the range of the fixed charges and
expenses which the law compels us to discharge, the just and necessary profits
of our respective trades have ceased to exist, and in many cases a positive loss
attends them. 4. Under these circumstances,
we have long hesitated in determining what line of conduct our interest and our
duties require us to adopt. If we should abandon our respective trades, our
large and expensive outlays in machinery and erections must be sacrificed at an
enormous loss to ourselves, and our honest and meritorious workmen must be
thrown, in thousands, upon parishes already too much impoverished by their
present burthens to support them; and, if we should continue our present trades,
we see nothing but the prospect of increasing distress and certain ruin to all
around us. 5. In our humble opinion, the
great cause which has been mainly instrumental in producing this depression and
distress in our respective trades, and among the productive classes of the
country generally, is the attempt to render the rents, taxes, royalties,
and
other various engagements and obligations of the country, convertible, by
law, into gold, at £3 17s. 10 1/2d. per oz. This low and antiquated price of the
metallic standard of value is no longer capable of effecting a just and
equitable distribution of our products between the producer and the consumer; it
renders incompatible the permanent existence of remunerating prices, without
such a reduction of taxation as we cannot hope to see effected in time to afford
us any relief--and it thus tends, ultimately and surely, to destroy the
industry, and the peace and happiness of the country. 6. That until the
establishment of a circulating medium of a character better suited to the
various and complicated demands of society, and to the increased transactions
and population of the country, and more competent to effect an interchange, and
preserve a remunerating level of prices in the products of industry generally,
we can see no prospect of any permanent restoration of the prosperity of our
trades, or of the country being able to escape the most frightful sufferings and
convulsions. We, therefore, most
respectfully, but very earnestly, request the early attention of His Majesty's
Government to these great facts and considerations, and we insist that they will
recommend to Parliament the speedy establishment of some just,
adequate and efficient currency, which may properly support the
trade and commerce of the country, and preserve such a remunerating level of
prices as may ensure to the employers of labor the fair and reasonable profits
of their capital and industry, as well as the means of paying the just and
necessary wages to their workmen. Such are the views of
practical working men in England of the operation of contracting a debt in paper
money at the rate of $150 for one hundred, and paying the interest of three per
cent. on it in specie. If such was the effect there, what will be the effect
here of paying the interest, in specie, on so large a debt as we will have
contracted, at the rate of twenty for one? The London Quarterly says: Our country gentlemen must
learn to penetrate the arcana of the Exchanges, and fathom the depths of
the banking system, if they mean to preserve their broad acres from the grasp of
the mortgagee, and their title deeds and mansions from the blaze of
revolutionary fires. Difficult and obscure, indeed!! Yes, the subject is
difficult, just as difficult to the public comprehension as is a juggler's
trick, by which, with a "heigh, presto!!" he conjures the half crown we thought
we had safe in our pocket into his own. How the money vanished it is not so easy
to say; but it is nevertheless certain that we had it, and ought still to have
it, but he has got it. So it was exactly with the currency juggle. Few of the
sufferers can explain or understand how it happened, but the fact is very plain
to them that they have somehow lost a great deal of money, and other persons
have got hold of it. A little consideration, however, may, we think, render the
nature of the trick intelligible to the simplest. It is very clear that those
who are in business pay nearly the same sum in taxes, at present, as when
the goods they deal in sold for double their present prices; so that they really
pay two hundred weight of wool, or of cheese, or of sugar, or two pieces of
cloth, linen, or calico, or two tons of iron or hardware, to the tax gatherer,
for one that they formerly paid; and the taxes, reckoned in goods, which
is the only sure way of knowing their cost to the producers of goods, by whom
they are paid, are clearly twice as high at the end of sixteen years of peace,
as they were at the close of a long war!! Is it wonderful then that the
productive classes are laboring under severe distress? That peace, which usually
brings plenty, has thrown away her emblematic horn, and selected hunger for her
motto!! And can there be any doubt that the fall in prices, which has wrought
this fearful evil, is the necessary result, foretold by ourselves and many
others at the time, of the legislation of 1819 and 1826, which, by crippling the
banking system of England and attempting a currency of dear metal for one
of cheap paper, has caused a continually increasing scarcity of money and
contraction of credit!! If we succeed in showing that
the unjust restrictions, kept up by the present laws, on the circulating medium
of exchange, have had the effect, within a few years past, of silently but
forcibly transferring a vast amount of property from the possession of one class
to that of another, who had no just right or title to it--of covertly
despoiling, in short, one portion of the community, namely: the persons engaged
in industry, for the benefit of another portion, the owners of fixed money
obligations, payable out of the
labor and capital of the former--it will be acknowledged that, until the laws
which have perpetuated and continue to sanction this wholesale swindling are
repealed, there is no safety for property; nor can there be any reliance on the
stability of those institutions, of which a confidence in the security of
property is the indispensable foundation. Remarking upon the
Staffordshire memorial, the Review says: The sufferers here most
correctly attribute their losses to the late increase in the value of money, but
they seem to look for relief in a deterioration of the standard. In this view we
do not concur with them, only because we think so desperate a remedy is not
necessary, for that other and unexceptionable plans may be resorted to for the
relief of industry . . . . Next to a direct increase of the supply of the
precious metals, the most obvious resource seems to be to augment the efficiency
of that which we possess, by a degradation of the standard--in other words, by
diminishing the intrinsic value of the coinage; cutting, for instance, our
sovereigns, shillings and other pieces of money, into two or more parts, which
should each, by law, retain the nominal value of the whole. This is, in
substance, the proposal which seems to find most favor with the persons who have
spoken or written on the subject of the currency for some years past. It is
this, as we have seen, that is advocated by the iron trade, and by their
powerful champions, the Messrs. Atwood. It is this to which Mr. Westen, and a
large body of agriculturalists have been long pointing as the only practicable
mode of permitting them to come to an equitable adjustment with their
creditors, public and private. . . . . . . We acknowledge, indeed, the
force of the retorts levelled by the advocates of this alteration against their
opponents, when the necessity of preserving the national faith inviolate is
thrown in their teeth. They ask, with bitterness, and with justice, too: "Is faith to be kept only
with the monied interests? Was no good faith to be kept with the landholder, the
merchant, the manufacturer, the vast laboring population who bore the weight of
the national struggle, who cheerfully made great and numerous sacrifices during
the war, and who continue the real strength and greatness of the Kingdom? No
faith whatever was kept with them. They, through their representatives,
engaged themselves to a debt of so many pound notes--but not to the same
number of sovereigns--to a debt consisting of money, at its then value,
but they protest being held responsible for the same annual sum now that its
value has been artificially doubled. Does not good faith require that the
scale should be held fairly between debtor and creditor? Was it consistent with
the national faith, upon the plea of arresting the progress of depreciation in
1819, to turn the tables wholly the other way, and, by reviving an obsolete
standard, to give to monied obligations a value that is a command over the
produce and property of others, which the persons originally forming those
contracts could never have contemplated, and which consigned at once to
overwhelming and unmerited ruin, the commerce, the manufactures and agriculture
of the empire?" We freely admit the weight of
these remonstrances. We acknowledge that, through an overstrained anxiety for
observing the letter of the national faith, the spirit of the obligation was
disregarded and a gross injustice committed on the great body of producers
throughout the Kingdom, as well as on all debtors. It is true-- "Nothing could be more
honorable than the feeling which induced our statesmen to return to the ancient
standard; but, to our sorrow, their estimate of its effects was much below the
mark. They did not see what a revolution of property would ensue. They consulted
our honor, our reputed solvency, but not our real means. Mr. Ricardo told them
the change would be five per cent. Events have proved it fifty. . . . There
remains another course for consideration; one which we have urged for some time
past upon the public, as the true mode of relief from our monetary difficulties.
. . . We mean the removal of the mischievous restrictions which now fetter the
circulation of credit through this country, and the concession of the free right
of commerce to provide itself with whatever instruments it may require for
effecting its exchanges uninterfered with by those officious legislative
intermeddlings which experience has sufficiently proved to be fatal to almost
everything they touch, but to nothing so much so as to the currency. It is
physically impossible to carry on the commerce of the civilized world by the aid
of a purely metallic currency--no, not though our gold and silver coins were
every tenth year debased to a tenth!! Why, in London alone, five
millions sterling ($25,000,000) are daily exchanged at the Clearing House in
the course of a few hours. We should like to see the attempt made to bring this
infinity of transactions to a settlement in coined money. Credit money, in some
shape or other, always has, and must have, performed the part of a circulating
medium to a very considerable extent. And by one of those wonderful compensatory
processes which so frequently claim the admiration of every investigation of
civil as well as of physical economy there is in the nature of credit an
elasticity which causes it, when left unshackled by law, to adapt itself to the
necessities of commerce and the legitimate demands of the market. . . . The only
measures which appear to us to be needed upon the expiration of the Bank
Charter, are: 1st. That all banks be required to deposit security in Government
stock to the full amount of the notes they issue[.] 2d.
That the law be repealed which forbids the issue of notes under five pounds. 3d.
We would make the notes of metropolitan banks only convertible into bars
of bullion, on the plan of Mr. Ricardo, and allow the notes of country banks to
be paid in those of the metropolitan banks." The following table, compiled
from data given by John Taylor, Jr., and Ayres' Financial Register, gives
the amount of debt bonded, the equivalent in three per cent[.] consols, the stock created for one hundred pounds in money,
the highest and the lowest prices for consols, and the market value of paper
currency per cent., from 1800 to 1824, inclusive: It will be seen that,
although the Bank of England suspended payment in 1797, the notes were at par
with gold in 1800 and again in 1820, and continued at par until it resumed
payment in 1825, the average depreciation during the suspension being less than
seven per cent. It is a striking fact
that the greater part of this depreciation was during the years from 1810 to
1815, inclusive, when the loans and subsidies given to her allies, and the
expenditures of the French war, created an extraordinary demand for specie to be
disbursed on the continent (these loans and subsidies amounting to the enormous
sum of $301,047,813!!!). McCulloch, in a note (p. 78),
says: So early as December, 1794,
the Court of Directors (of the Bank) represented to Government their uneasiness
on account of the debt due by the Government to the Bank, and anxiously
requested a repayment of at least a considerable part of what had been advanced.
In January, 1795, they resolved to limit their advances upon Treasury bills to
£500,000; and, at the same time, they informed Mr. Pitt that it was their wish
that he would adjust his measures for the year, in such a manner, as not to
depend on any assistance from them. On the 11th of February, 1796, they
resolved, "that it is the opinion of this Court, founded upon the experience
of the late Imperial loan, that if any further loan or advance of money to the
Emperor, or to any of the foreign States, should, in the present state of
affairs, take place, it will, in all probability, prove fatal to the Bank of
England[.]" If we recur to the value of
money, as compared with the value of the mass of circulating commodities, it
will be seen that this difference between the value of bank notes (paper money)
and specie indicates an increased value of the precious metals rather than a
decreased value of paper money. By reference to the table
given above, it will be seen that, in 1814, the public credit was depreciated
nearly 84 per cent., and that the value of paper, as compared with gold,
fluctuated between 72 1/2 and 61 1/2 per cent., and yet, the Edinburgh
Review, speaking of the effect of the causes then operating on prices in
England, says: The bank failures that then
occurred were the more distressing, as they chiefly affected the industrious
classes, and frequently swallowed up in an instant the fruits of a long life of
unremitting and laborious exertion. Thousands upon thousands, who had, in 1813,
considered themselves as affluent, found they were destitute of all real
property, and sunk, as if by enchantment and without any fault of their own,
into the abyss of poverty!! The late Mr. Horner, the accuracy and extent of
whose information on such subjects will not be disputed, stated in his place in
the House of Commons, that the destruction of the country bank paper, in 1815
and 1816, had given rise to an universality of wretchedness and misery, which
had never been equalled, except, perhaps, by the breaking up of the Mississippi
scheme in France. Engaged, as England was, in a
struggle upon which, as she believed, depended her maritime and commercial
supremacy, she was compelled to advance loans and subsidies to her allies, and
hence we find that the Bank was allowed to suspend specie payment in 1797, and
that in the year 1814 and 1815 England advanced, in loans and subsidies, to
Spain, Portugal, Sicily, Sweden, Russia, Prussia, Austria, France,
Hanover, Denmark, and other minor powers of the Continent, £19,366,307 15s. 9d.
(or $96,831,539), and it is, therefore, apparent, that inasmuch as the current
expenditures of the British army on the Continent, as well as these large loans
and subsidies, were paid in specie, the demand for specie to these payments
caused the relative depreciation of bank notes, the fall of prices, the
destruction of the country banks, and the consequent failures, bankruptcies and
distress. Had England used her credit, as I propose, instead of using the Bank
credit, there would have been no such failures of her banks and no such fall of
prices or depreciation of the values of property. Is it not obvious that,
inasmuch as the whole capital of the Bank consisted of the public credit, the
Government,
having the power of taxing and funding, could have purchased gold at the same
price, or less, than that which the bank paid for it? Why, then, did the
Government give her credit bearing interest in exchange for bank notes bearing
no interest? As bank notes were not
current on the continent the Government could not pay the loans and subsidies to
their allies in bank notes, and were, therefore, compelled to give a premium for
gold; and hence the depreciation of bank notes as compared with gold. McCulloch, in his article
upon the general principles of banking, says: Every country has a certain
number of exchanges to make; and whether these are effected by the employment of
a given number of coins of a particular denomination, or by the employment of
the same number of notes of the same denomination, is, in this respect, of no
importance whatever. Notes which have been made a legal tender, and are not
payable on demand, do not circulate because they are of the same real value as
the commodities for which they are exchanged, but they circulate because having
been selected to perform the functions of money, they are as such received by
all individuals in payment of their debts. Notes of this description may be
regarded as a sort of tickets or counters to be used in computing the value of
property, and in transferring it from one individual to another. And as they are
nowise affected by fluctuations of credit, their value, it is obvious, must
depend entirely on the quantity of them in circulation as compared with the
payments to be made through their instrumentality, or the business they have to
perform. By reducing the supply of notes below the supply of coins that would
circulate in their place were they withdrawn, their value is raised above the
value of gold; while by increasing them to a greater extent it is
proportionally lowered. Hence, supposing it were
possible to obtain any security other than convertibility into the precious
metals, that notes declared to be legal tender would not be issued in
excess, but that their number afloat would be so adjusted as to preserve their
value as compared with gold nearly uniform, the obligation to pay them on demand
might be done away. But it is needless to say that no such security can be
obtained. Whenever the power to issue paper, not immediately convertible, has
been conceded to any set of persons it has been abused, or, which the
same thing, such paper has been uniformly over issued or its value depreciated
by excess. It will be seen that
McCulloch's objection to an unconvertible paper is limited to the fact that
whatever the power to issue such paper has been conceded to any set of
persons they have uniformly issued it in excess. It is apparent that he
refers to an issue of such paper by banks and bankers, and not to an issue by
Government under such a system of taxation and funding as would limit the sum in
circulation to the sum wanted as money. I agree that an over issue will
depreciate the vale of such a paper, and therefore I propose not that it shall
be issued by the banks but by the Government, and that the excess be funded, and
that the funding shall be coerced by a judicious system of taxing. He adds: In 1793, 1814, 1815, 1816,
and in 1825, a very large proportion of the country banks were destroyed, and
produced by their fall an extent of ruin that has hardly been equalled in any
other country. And when such disasters have already happened it is surely the
bounden duty of Government to hinder by every means in its power their
recurrence. McCulloch was the partisan of
the Bank of England, and his remedy for the evils of which he complains was to
strengthen that bank by making large bars of gold, instead of the current coins
a tender, and to prevent an issue of small notes by the country banks. He
believed that the large
dealers would not run upon the bank for specie, and that the holders of small
notes were liable to become alarmed and demand payment. His remedy was
suspension on small sums and masses of bullion for large. I would recur to the
large sums remitted by the Government to the continent, for the support of the
armies and in the payment of subsidies, as the cause of the demand for gold in
1814, 1815, and in 1816 and, I would explain the monetary crisis of 1825 by the
fact that the foreign loans contracted and the vast speculations entered into in
England after the war, and before the resumption of specie payments created so
great a demand for specie to comply with the engagements then entered into, that
the pressure upon the bank and the contraction of the currency below the
specie level produced then the ruinous depreciation of the values of
property as compared with gold. For, as before remarked, it is obvious that it
was the increased value of gold, and not the decreased value of bank notes,
which caused the disasters so forcibly described. If, instead of placing in the
bank an annual
If the alloy in the metallic coins was so increased, or the weight was so
reduced, as that its exchangeable value would be no more than the value of the
paper dollar issued by Government, the dollar would be a dollar still, and as
much a legal tender as it now is. If Congress can so reduce the value of gold,
as a tender, the argument that Congress cannot make paper a tender, because to
do so would impair the obligation of contracts, by authorizing payment in a less
valuable medium, is untenable. The fallacy of that argument is further
illustrated by supposing that A, being indebted to B, has, in his possession,
corn, wheat, sugar, beeves, iron, or any other articles liable to be taken for
the public use, and upon the sale of which he relies to obtain the means of
paying the debt due to B; yet, the Government sends an agent who forcibly takes
A's property, and compels him to take Treasury Notes in payment. If the Treasury
Notes are a legal tender, they can be used to pay A's debt to B; but if not a
tender, and Congress has no power to make them so, upon what principle can the
seizure of the property of A be justified? If it be "necessary and proper" to
pay A in Treasury Notes, which I maintain it is, certainly it is also "necessary
and proper" to enable A to pay his debt in the same money which the Congress
have compelled him to receive, for the very purpose of the Constitution was to
"establish justice;" and, surely, it is not justice if the Government deprives A
of the means of payment, and at the same time arms B with the power of the law
to enforce it. The promise of A would be to pay in dollars; Congress has
authorized the issue of paper dollars, and compels the public creditors
to receive them in payment. And why do we permit Congress to do this? Is it not
because it is "necessary and proper for carrying into execution" the powers
"vested by the Constitution in the Government of the Confederate States?" If
Congress has power to issue and compel the creditors to receive, in payment, a
depreciated paper money, surely Congress may pass laws making it a tender to the
creditors of those who have been coerced by the Government to receive it; and
especially if the effect will be to greatly increase its value when it is used
by the Government.
It is the duty of Congress to
regulate the value of money. Can Congress regulate the value of gold or silver?
How, and by what standard, will they measure their value? Sir William Petty said
that the day's food of an adult man, and not the day's labor, is the common
measure of the value of silver; John Taylor, Jr., says that the corn consumed in
the production; and Adam Smith and Ricardo, and the Edinburgh Review, say
that the labor requisite to produce them is the proper measure of the value of
the precious metals. If the value of gold depends upon the value of the day's
food, or of the corn consumed, or of the labor expended in producing it, it
follows that the value of gold must fluctuate as the value of the food, the
corn, or the labor used in producing it may fluctuate. Chivalier says: "If there
be anything confirmed by history, it is that the efforts of Government are
powerless to regulate the
value of gold and silver in relation to other commodities." If Congress
cannot regulate the value of gold and silver, it is manifest that they cannot
regulate the value of specie or of a paper money convertible into specie. If
Congress cannot regulate the value of a metallic currency, because they cannot
regulate the cost of gold and silver, the power to regulate its value is
rendered more difficult by the fact that, inasmuch as the precious metals are of
universal use among all civilized nations, and are easily exported from one
nation to any other, the value of metallic money in the Confederate States will
be regulated by the contingencies which may effect its value in the foreign
markets; which value will be determined by circumstances, over which our
Congress can exercise no control. This is further illustrated by the annexed
diagrams--for the first of which I am indebted to Mr. Edward Hazlewood, of
London, and for the other to Gibbon's work on the Banks and Banking in New
York.
The second represents the
liabilities and the issues of the Bank of England from 1844 to 1853, inclusive,
the horizontal lines each representing five millions of dollars. Thus, in 1844,
the issues of the bank were less than one hundred and forty millions of dollars,
and, in 1847, they were less than one hundred and ten millions; and yet, in
1852, they were one hundred and eighty. Now, as the effect of an over issue of a
paper, convertible into specie, is to depreciate the value of the whole
currency, gold as well as paper, and consequently to cause the gold to be
exported, inasmuch as the issues of the Bank of England are regulated by the
quantity of specie in its vaults, it is obvious that the regulation, which
requires the Bank to reduce its issues under an unfavorable foreign exchange,
and allows an increased issue of bank notes when the exchange is favorable,
must, of necessity, create that fluctuation in the value of money and
depreciation in the values of property which characterizes the history of
British banking and finance. The pretence of those who
manage the Bank is, that they prefer a paper convertible into specie, because it
is more stable in value than an inconvertible paper would be. By reference to
the first diagram, it will be seen that the figures on the margin represent the
years, and the sums of bullion in the Bank; the perpendicular lines the months,
and the horizontal lines indicating each five millions of dollars. The irregular
lines represent the fluctuations in the quantity of specie in the Bank, whilst
the figures on these lines represent the fluctuations in the rates of interest
charged by the Bank. Thus, in January, 1852, the bullion in the Bank was
eighty-five millions, and in February, interest was 2 1/2 per cen[.]t; in June, the bullion was more than one hundred millions,
and interest was but two per cent., whilst in January, 1857, there was in the
Bank say forty-six millions, and interest was, in March, 6 1/2 per cent. The
bullion rose, in July, to fifty-seven millions, and interest was 5 1/2 per cent.
It continued at the same level until October, and interest was 5 per cent.; from
October 1st to 10th December, it ran down to thirty-five millions, and interest
rose to 6 1/2, 8, 9 and 10 per cent. The effect of the severe pressure for gold
in London was a universal panic throughout the commercial world, forcing a
current of gold toward the great commercial centres of
London, Paris, Vienna and Hamburg. The accumulation at these centres was greatly beyond the sum requisite to maintain the
proper specie level. This is forcibly illustrated by the table given on page 14,
and by the third diagram, for which I am indebted to Gibbon's work on the "Banks
and Banking in New York." I have explained that the
effect of this contraction and expansion of the specie and circulation of the
Bank of England, instead of giving uniformity and stability to the monetary
system of England, is to cause the most ruinous fluctuation in the values of
money and of property, not only in England, but in all other countries having a
metallic or convertible paper currency, and having extensive commercial
relations with England. The diagrams and statistics, taken from Gibbon's very
valuable work, show that, whilst the pressure of the Bank screw in London
compelled the Banks of New York to so diminish their discounts as to cause
unexampled pecuniary
losses and distress, the ultimate effect was to accumulate in the Banks of
New York, by force of the reaction, more than three times the sum, in specie,
requisite to maintain the value of the credit and circulation of the Banks of
New York on a par with specie--demonstrating, beyond question, that the credit
of the Banks of New York does not depend upon the specie in their vaults, but
upon the securities, consisting of mortgages on real estate, and the bonds of
the State and of the United States, deposited with the State as collateral
security for the payment of their notes, and upon the solvency of those who deal
with the banks, and use the credit and circulation of the banks in their
purchases and payments. The operation of the
financial system, predicated on a metallic basis, is this: England, by the
magnitude and expansion of her commerce, can create balances in her favor in
most of all other countries with whom she trades. By refusing to renew her
discount of commercial paper, and by the sale of exchequer bills, the Bank of
England can render money so much dearer in London, than it may be elsewhere, as
to coerce the greater part of the balances to be paid in specie. Thus say that
the commercial balances due to England are $100,000,000, and the demand, for
specie in payment, brings to London eighty millions of dollars, of which fifty
millions are an excess beyond the sum required to reduce the value of money in
England to the "proper level," the extra demand having put the precious metals
of all other countries in motion towards London, would create an excess greatly
beyond the wants of London. The bank, which but yesterday demanded ten per
cent., and refused to discount the best commercial paper, even at that rate, to
day will be in the market, seeking investment at two per cent.!! Is it
surprising that those who regulate the foreign exchange, and make untold profits
by the movement of specie, insist upon a specie basis? It will be impossible to
create such a demand for money under the system which I propose. The
certificates of our Government, made a legal tender here, will not be a tender
in London. They will be money here, but, as they will not be money in London,
they cannot be exported to London. With us they may be made equal to gold for
the purchase of our exports, and through our exports we can command whatever we
may desire of foreign merchandise. Whilst the large sum of the public debt will,
as I have said, become the basis of bank issues, the payment of which, being
secured by the convertible bonds of the Confederate States, will, at no time, be
affected or depreciated by a foreign demand for specie. In that case, specie,
like cotton, will be a commodity, the value of which will depend upon the demand
for it. If we wish to obtain foreign exchange to pay for British goods, and the
British merchants, or the British bankers, or their agents, refuse to take our
Treasury certificates in payment, we must give, in exchange for it, our cotton,
or some other exportable commodity which we can purchase with our Treasury
certificates, or with our bank notes, predicated upon the bonds which represent
the certificates that have been funded. If the British gold is worth more than
our certificates, then we must demand so much the more for our cotton, if
payable in our currency. We must regulate the value of our surplus produce by
the relative
value of our currency. The value of gold, as compared with silver, is as
fifteen to one; yet, with us, silver is a legal tender, although it is not a
tender, but as small change, in England. If we can so regulate the value of our
paper money as to make it equal to silver in the purchase of foreign exchange,
then all that we have to do is to so regulate the price of all other commodities
that their price, if sold for our paper money, will command the same amount of
foreign exchange as if they were sold for silver or gold. If the price of gold
be twice the value of our paper money, then our cotton should bring twice the
price in our paper money as if sold for gold. If we make the paper money a
tender, and regulate the quantity, in circulation, by a proper system of taxing
and funding it, we can make it of equal value as gold in the payment debts and
the purchase of property, including foreign exchange. SUCH PAPER MONEY WILL BE
WORTH MORE THAN SPECIE, as I now proceed to demonstrate. By the report of the
Secretary of the Treasury of the United States, there were in the banks in the
non[-]slaveholding States, in 1860, $44,662,408 of
specie, and in the banks of the slaveholding States, $38,912,129. This sum was
held by the banks to enable them to redeem their circulation, which, in the
Northern States, was $119,997,469, and in the slaveholding States, $87,107,108.
It paid no interest, and, to use the words of Adam Smith, was so much dead
capital. What the sum held by individuals was, I have no sufficient data
to state, except that the coinage in the United States, from 1850 to 1856
inclusive, adding six months of 1857, was $415,226,717.74, of which there were
exported $285,881,176, leaving $129,345,541.74. Now, if we assume that the
interest, upon the specie held by the banks and the public in the Confederate
States, is but ten millions ($10,000,000) per annum, and that that sum was
substituted, by the public and the banks, by the six per cent. convertible
bonds, as I propose, the saving to the banks and to the public, holding specie,
would, in forty years, be $1,660,285,359. 69/100; and yet, great as this saving
would be, it is, as it were, small, very small indeed, as compared to the effect
which the increased stimulus given to the productive industry of the country
would be, and to the saving in the expenditures and taxes of the Government of
the Confederacy and of the several States. The States cannot make their Treasury
Notes a legal tender, but they can issue their certificates, fundable in six per
cent. convertible bonds, and authorize the suspension of specie payments
by their banks if the holders of bank notes refuse to receive the fundable
certificates of the State or of the Confederate States in payment, upon
condition that the banks have deposited, with the Treasurer of the State, the
convertible bonds of the State or of the Confederate States, to be held in trust
for the payment of their notes. In such case, the holders of the notes will know
that the banks cannot fail; and, unless the value of the money be less than the
interest paid upon the bonds, the notes will not be presented for payment, and
the value of the currency will be as uniform as the rate of interest paid upon
the bonds. As there will be no apprehension of their failure, there will be no
inducement to run upon the banks; and, as money would be abundant and cheap, the
greater part of the surplus capital of the whole country would be invested in
public securities or in banks, whose profits would consist chiefly
in the circulation of their own notes. And, as under such a system, there
would be no sudden or ruinous contraction of the currency--no sudden or ruinous
depreciation of the values of property, it would be the business of our banks to
stimulate the energies, industry and enterprise of our people, by an advance of
the requisite capital, whenever the previous habits and character of the
applicant, sustained by the requisite security, would justify it. This is not
theory. The principle has been fully tested in Scotland. I refer to the comment
of the London Quarterly Review for March, 1830, upon the Report of the
select committee on promissory notes in Scotland and Ireland in 1826, and give
the following extracts upon If, however, the privilege of
issuing negociable notes was granted to banks only on terms which would remove
all doubt from the public mind, as to the solvency of these establishments, a
run never would practically take. The holders of these notes, knowing that they
ran no possible risk of loss, would be no more disposed to rush with them into
the different banks, to be converted into cash, than to run with a sovereign
into the mint to have it exchanged for bullion. The cause of every run upon
banking establishments is the fear which, from whatever unforeseen cause, seizes
the public mind that they may not be solvent. Let the ground of this fear be
effectually removed; assure the public mind that, as far, at least, as concerns
the notes circulated by a banking establishment, it cannot prove insolvent, and
these runs will never take place. That a system of banking
might be organized in this country, (England), which would practically remove
every danger and inconvenience attendant upon the issue of one pound notes, is a
fact capable of being demonstrated by the evidence of actual experience. It has
already been put to the test in one part of His Majesty's dominions, and has
been found to stand its ground, unaffected by the violent and sudden
fluctuations which, at various periods, have taken place in the transactions of
trade and commerce[.] We need not tell our readers that
we allude to Scotland, where the circulating medium (with the exception of
silver for change) consists wholly of paper, and where a sovereign, as a current
coin, is rarely ever seen. But, although it be well known that paper money forms
the whole circulating medium of Scotland, we are inclined to suspect that the
principles of the banking system of our Northern neighbors are not generally
understood, or, at least, generally appreciated in this part of the empire.
Nothing but the want of adequate information, as to this subject, could have led
to the attempt which was made, in 1826, to meddle with the banking system of
Scotland, and deprive the inhabitants of that country of institutions, under the
protection of which they had reached, and continued to enjoy, a high degree of
public as well as private prosperity. Our wary neighbors, however, led on by the
redoubted Malagrowther (Sir Walter Scott), successfully resisted the attempts of
the Treasury to force upon them the use of a metallic circulating medium, and,
by that means, secured themselves (in as far as the intimate connexion of the
two countries could permit) against the difficulties and inconveniences which
the change, effected at that period, in our monetary system, has entailed upon
this part of the Island. An impression prevails very generally, on this side of
the Tweed, that the superior stability of the Scottish Banking system rests upon
the proverbial sagacity and wariness of the inhabitants of Scotland, and not
upon any peculiarity inherent in the system itself. From this it is inferred
that a circulating medium, which has been found safe among our Northern
neighbors, would be attended with danger and insecurity, if adopted here. This,
however, appears to us a mistake. The security of Scottish banking arises from
the general principles on which the system has been organized, and not from
anything which is peculiar either to the character or the habits of those by
whom its operations are conducted. If adopted elsewhere, these principles would,
we feel persuaded, be attended with similar results: hence it becomes important
to point out their nature and trace their effects. * * * * * Even in times of
commercial panic and confusion, the inhabitants of Scotland never, for a single
moment, harbor the suspicion that their principal banks can, by possibility,
fail. * * * * * The principles on which the banks are established place their
solvency beyond all doubt. All the banks which issue notes are joint stock
companies,
consisting of a great number of partners, and, possessing a large capital,
not merely subscribed, but actually paid up, and invested in mortgages or in
Government securities. This fund is always ready to cover any losses which the
bank may sustain in its transactions. * * * * * This is in truth the foundation
of the unlimited credit enjoyed by the Scotch banks; it is the basis of that
undoubting confidence which the public repose in their stability. The public
confidence does not rest upon the credit, the discretion or the integrity of the
directors; it has a much more stable foundation for its support; it is based
upon actual capital which can neither be withdrawn nor diminished without the
knowledge of the public. In that country, as we have
said, a sovereign is seldom seen, except in the card case of an old maid, or the
cabinet of some recluse virtuoso. One of the witnesses says: There is a prejudice against
gold in Scotland. This prejudice is simply on account of the trouble attending
it: it is weighed; when it is found light, the people refuse it; the country
people are afraid to touch it. There is not a district in Scotland but where, if
you were endeavoring to pass a sovereign, they would say, if you had a note of
any bank in Scotland they would prefer it. There is, no doubt, a small
quantity of gold in the coffers of the different bankers, in order to meet the
occasional whim of some capricious customer; but that a bank should be asked to
five gold in exchange for notes is an event which happens so rarely, that a very
trifling sum, indeed, is found fully adequate to meet all demands of this
kind[.] "Although," says a witness,
examined before the committee, "I have been for ten years in an office that,
perhaps, does more business than any other individual office in Scotland, or out
of London, I can state, as my experience, that I have never refused gold to any
person that wished it. They only ask it when they have occasion to go to Ireland
or to England, or to emigrate to America. I could state it as a fact that ten
thousand sovereigns would have supplied all the demands for the ten years I have
been in Glasgow." "The rottenness and insecurity of the English system of
banking are known to aggravate very greatly the effects of the panics to which
all bodies, trading upon credit, are unavoidably subject. The general distrust
prevailing at such periods is particularly directed toward the English banks,
which are sure to be the first to feel the raging of the storm. The weakest of
these fail, and this adds fuel to the flame which had already burst forth. A
partial want of confidence is thus speedily converted into a general panic, and
all banks, whatever may be their opulence and character, suffer more or less
from the consequences. Even banks, upon which no actual run takes place, sustain
great losses during these seasons. Uncertain of the direction which the tempest
may take, they are all compelled to make preparations to meet its violence, and
the sacrifice of property required for this purpose has frequently been
enormous. The faintest whisper or the most trifling accident, often proves
sufficient to inflict incalculable losses on English Banks. * * * * * The
bankers of Scotland do not, like those of England, derive their profits from the
employment of floating balances left in their hands without interest by those
who deal with them. On the contrary, they allow interest for every pound of
capital deposited in their hand; this interest is always less by one per cent.
than that which they charge upon the loans advanced to borrowers; and the
difference between the interest paid and that charged upon the whole of the
profits of Scotch banking accrue." "By this practice, allowing
interest upon all deposits, these banks attract every shilling of unemployed
capital which any inhabitant may happen to possess. The witnesses, who were
examined by the committee of 1826, estimated the average of these deposits at
about twenty millions sterling. Persons possessed of small capitals in Scotland
never purchase into the public funds; having the most unbounded confidence in
the solidity of their own banks, they universally deposit in these
establishments all the capital which they can spare[.] *
* * * * Their general rule is to allow interest upon every deposit, however
small may be its amount. One of the witnesses examined by the committee, and
thoroughly conversant with the subject, states that, in towns like Glasgow, a
very large proportion of the deposits come from the laboring classes. In country
places, like Perth or Aberdeen, it is from servants and fishermen, and just the
class of the community who save from their earnings, in mere trifles, small
sums, till
they reach a sufficient amount to form a bank deposit. * * * * * A great part
of the depositors are of this description." Another witness examined
touching the same point, estimates the whole bank deposits at twenty millions
sterling ($100,000,000), and the proportion of the small deposits as fully equal
to one-half the whole. He then adds: "I have had many opportunities, both
professionally and in various situations in which I have been placed, of
observing the effects of those deposits; and I do think that the system of the
Scotch banks, allowing the rates of interest which they have done, upon these
small deposits, has influenced very considerably the moral character of the
people. The deposit is seldom drawn out until the depositor has to build a
cottage or to buy a house; or perhaps he himself begin business, or set out his
eldest son in the world; or, it may be, furnish a house for his daughter at her
marriage. A deposit is often laid up for old age; and, in many instances, I have
no doubt, has likewise been the means of enabling men in the humble class of
society to give their children what we in Scotland value above all the
advantages of wealth--the benefit of an intellectual and religious
education." "In truth, nothing can be
conceived more admirably adapted to encourage industry and economy than the
system of banking which has been so long in full operation in Scotland; and we
have no doubt that the saving and persevering disposition, which forms a
prominent feature in the character of our Northern neighbors, must be ascribed,
in a considerable degree, to the habits instilled into them by these valuable
institutions. The industrious laborer finds, at his own door, a safe and
profitable receptacle for every shilling he can save. Without trouble, anxiety,
or loss of time, he takes his pound to the bank, where it bears interest from
the moment in which it is deposited. The banks thus constitute public
depositories, in which every shilling that can be spared, throughout every
district of Scotland, finds its place." "Nor is the disposal of the aggregate
capital thus collected less beneficial in its effects, upon the habits and
enterprise of the people, than the economy by which it is saved. The bank
reservoirs, thus kept constantly full, furnish every person of character and
enterprise with a ready, certain and never failing supply of capital, wherewith
to embark in any undertaking which holds out the reasonable probability of
success. The managers of the different banks, having collected into one focus
the whole capital of the country, offer every facility to those who wish to
borrow this capital, and turn it to profitable account. Their profit is derived
exclusively from this source. Upon all the capital which may be unemployed in
the coffers of these banks a dead loss is sustained: hence they are eager to
find out safe borrowers as saving depositors." The bankers of Scotland are,
in fact, dealers in unemployed capital. They form an open and universally known
channel of communication between the borrower and the lender in the money
market. They acquire a perfect knowledge of both parties. They borrow money of
those who have it to lend, and lend money to those who want to borrow, and
charge a profit of one per cent. upon all cash transactions for the use of their
own credit, labor, and skill. Any person, opening an account with the Scotch
banks, receives four per cent. (or some other amount less by one per cent. than
the average rate of interest) upon the balance left in their hands. He may pay
in money whatever he chooses. This is carried to the credit of his account, and
interest is allowed for it from the day on which it is deposited. He may draw
his money out when and in what sums he thinks proper, and his loss of interest
on the sums so drawn out commences only from the day on which it is received.
Their object, however, in borrowing capital, is to make a profit by lending it:
hence the facilities which they give to borrowers are as great as they can be
consistently with safety. In the first place, they will discount bills and other
mercantile securities, which are perfectly regular and good, at all times and to
any amount. This is an incalculable advantage to the merchants of Scotland. They
know
that they can fail of success only through their own rashness or
miscalculation--never from any sudden withdrawal of that accommodation which had
originally stimulated their enterprise. The inconvenience felt by the merchants
of Scotland, during times of panic, arise exclusively from their transactions
with England, where the storm, whenever it happens, rages with destructive
violence. A second mode of lending,
practiced by the Scotch bankers, is to grant what is called a cash credit
to any industrious person desirous to borrow capital, to be embarked in any
species of profitable employment. When a person applies for a cash account,
which is not an immediate advance of money on the part of the bank, but a
conferring of the power of drawing upon the bank for a certain specified extent,
he proposes two or more securities; a bond is made out, and he draws as occasion
requires. In this way he has never more from the bank than is absolutely
necessary for the purposes of his business. The account is never recalled
unless, by having been but little operated upon, it has ceased to be beneficial
to the banker in the circulation of his notes; and interest is charged only on
the amount of the balance which may be owing to the bank. These credits run from
so low as£50 to£1000, and in some instances more. They are granted to persons of
every description--to small farmers, who require assistance in stocking their
farms, or who carry on a petty trade in cattle; to shop keepers, principally on
their commencing business; to tradesmen generally; to all sorts of law agents.
The beneficial effects of this system are incalculable with regard both to the
interests of individuals and the public. * * * * * It is on all hands agreed
that, for the rapid advances which it has for the last century made in wealth
and prosperity, Scotland is very largely, if not mainly, indebted to her banking
system. I regret that want of space
compels me to limit my extracts relative to Scotch banks, for the system has
become so identified with the progress, the industry, the commerce and
civilization of mankind, that, in considering the question of currency, we
should remember that banks and bankers have become an indispensable part of the
system of credits--that it is their business to deal in money and in credit, and
that, therefore, they are an important agency in the regulation of the value of
money. Hence the necessity of a careful examination into the history and nature
of banks and banking, that we may guard against the defects of existing systems
and the errors which have characterised their administration. Thus we see that
in Scotland and New York banking is free, yet the amount of circulation is
comparatively less than in England and some of the other States where it is
limited by severe penalties and restrictions. We see, also, that, under the
Scotch system, the accommodation given to the public is much greater than in
England; and yet, in the midst of failures and bankruptcies which have
characterised the British system, during the panic of 1826, when more than four
hundred banks failed in England, there was not a single failure in Scotland. I have referred to the
organization of the Bank of the United States, and of the agency of that bank in
depleting the other banks of specie, to be remitted to London preparatory of the
resumption of specie payment
by the Bank of England. As the ultimate failure of the Bank of the United
States was the result of political and financial combinations, a proper
explanation of which would, as I believe, furnish forcible arguments in support
of the measures I propose, I very briefly refer to them. It is known that Mr. Clay and
John Q. Adams were American commissioners at Ghent, and that the tenth article
of the treaty of peace bound the United States to co
operate with England in preventing the trade in African slaves, which was
construed by Mr. Adams to include the domestic as well as the foreign slave
trade. From Ghent Mr. Adams went to London as the American Minister, where he
was in contact with the leading British Abolitionists. In 1816, Mr. Monroe
appointed Mr. Cook, of Illinois, bearer of dispatches notifying Mr. Adams of his
appointment as Secretary of State. I then resided in Kentucky. Mr. Cook brought
a letter of introduction, and told me that, being in delicate health, his
purpose, in going to Europe, was to try the effect of a sea voyage, intending,
on his return, to remove to the South. I saw him the next year in Washington,
when he told me that Mr. Adams had satisfied him that the migration to the north
of the Ohio would be such that the anti slavery party
would soon control the political destiny of the United States, and that, under
the advice of Mr. Adams, instead of going South to live, he was going back to
Illinois with a view to come into Congress and agitate the slavery question. He
said that he had already commenced the agitation, and gave me a pamphlet,
containing a series of letters, written by him, addressed to Mr. Monroe, under
the signature of D. P. C., which had been published in Meade's Register,
and contained the text of the slavery agitation in Congress and in the press
from the time of the Missouri Question until now. He did go to Illinois, was
elected to Congress, and took a leading part in enacting the Missouri
restriction. I removed to Missouri in 1817. John Scott was our delegate in
Congress. I was in the army of 1812. I was sick at Vincennes, where his mother
nursed me as if I had been her son. I did not forget her kindness, and was the
intimate, personal and political friend of her son. Peculiar circumstances gave
me a controlling influence in the Western part of the State. I was a member of
the Convention which adopted the State Constitution, and then of the House of
Representatives and of the Senate. Col. Benton, having been driven from
Tennessee by General Jackson, went to St. Louis and established the St. Louis
Enquirer. Being, constitutionally, a parasite, he attached himself to
Governor Clarke. I had been a classmate at school of George Croghan and John O.
Fallon, the Governor's nephews, and was received by him with special favor, and
was his devoted personal and political friend. Party politics were there, as in
most new countries, chiefly personal. In the distribution of offices, under the
State Government, Mr. Scott was elected to the House of Representatives and
Benton to the Senate. In 1823, Benton, then a partisan of Mr. Clay, came to St.
Charles, where the Legislature was in session, and urged a caucus nomination of
Mr. Clay for the Presidency. I opposed the nomination, and it was rejected by a
nearly unanimous vote. I, immediately after this, purchased the St. Louis
Enquirer and removed to St. Louis, and took an active part in support of the
election of General Jackson. Col. Benton returned to Missouri from Washington,
and canvassed
the State actively for Mr. Clay. Wherever he went in the State, he found the
influence of my paper counteracting his efforts. The vote of the Southern
District was cast for the Jackson elector; the other two were given in favor of
Mr. Clay by a small majority. Mr. Clay's half brother happened to be the
returning officer in one of the Southern counties, and refused to make returns.
Mr. Clay's partisans had taken the ground, in a circular issued by his Kentucky
committee, of which John J. Crittenden was a member, that if the election
devolved upon the House, it would there be carried by "bargain, intrigue and
management;" and yet, they urged that, as Mr. Clay was popular in Congress, if
returned as one of three, he would be elected. The Legislature, acting under
the advice of Col. Benton, declared the election of electors illegal, and gave
to Mr. Clay the three electoral votes of Missouri, hoping to secure his election
by Congress. Jackson, Adams and Crawford, to the exclusion of Mr. Clay, were
returned to the House of Representatives, and Mr. Adams was elected by the votes
of Mr. Clay, Mr. Scott, of Missouri, and Mr. Cook, of Illinois. It so happened that, as the
attorney for persons having large claims against the Government, I reached
Washington a few days after the election of Mr. Adams. One of my family
relatives and J. Q[.] Adams had married sisters. Mr. Cook
had married my niece; and inasmuch as Mr. Clay had been assailed for his vote
for Mr. Adams, it was deemed important to secure the influence of my paper in
his support, and my nephew, Mr. Cook, and my friend, Mr. Scott, were selected to
make the arrangement--Col. Benton having availed himself of the election of Mr.
Adams to go over to the support of General Jackson as a means of identifying
himself with the party which I had organized in the State. They rolled up the
curtain of their future; they tendered me the support of the Government as a
candidate for the United States Senate, in opposition to Mr. Benton, with a
controlling influence over the Federal patronage in the State. I saw that the purpose of the
coalition was to create a sectional party in the North, for the purpose of
governing and controlling the Union. Mr. Adams, relying upon the anti-slavery
element, and Mr. Clay, standing astride of the Alleghanies, with one foot on a
high tariff to enrich the Yankee manufacturers, and the other upon turnpike
roads for the benefit of the Northwest, I saw that the sinking fund of ten
millions of dollars then appropriated to that object would, in a few years,
discharge the national debt; and that, instead of a system which would increase
the public revenue, creating a large surplus to be expended under appropriations
to be made by a corrupt sectional majority in Congress, it was indispensable to
so modify the tariff as to reduce the current revenue to the proper expenditures
of the Government. Instead of supporting the coalition, I purchased the
Telegraph, and removed to Washington to oppose them. General Jackson was elected.
I had made an arrangement with Amos Kendal to remove to Washington and aid me as
an associate editor. I had been a schoolmate of T. P. Moore, of Kentucky. He had
been my active friend, and had gained the soubriquet of "Free Tom"
by aiding in the circulation of my paper. After Gen. Jackson had reached
Washington, Moore
requested me to aid in obtaining for him the appointment of Postmaster
General. I refused to do so. A few days afterward, Col. Richard M. Johnson told
me that the partisans of Martin Van Buren had, after consultation, determined to
put him in nomination for the Presidency in 1832; that the selection of the
Cabinet and the important foreign missions had been arranged with a view to aid
his election; and that, in that consultation, Moore had told them that he had
known me from a boy, and that they could not control me or my press through the
public patronage; and advised that, instead of permitting Kendal to be my
associate editor, they should make him an Auditor, with the understanding that
he would establish a Van Buren paper when it became necessary. When Major Lewis brought me
the names of the Cabinet, upon reading them, I went to General Jackson and told
him what I had heard from Col. Johnson, and said to him that I was yet a young
man--that I had made some reputation as an editor--that I was then the Printer
to both Houses of Congress--that my paper had, as I believed, a greater
circulation than any other political paper in the United States--that I had one
of the best, if not the most valuable, printing offices in the United
States--that I could not and would not support Mr. Van Buren for the
Presidency--that I was unwilling to come in conflict with my political
friends--that I was young enough to return to my profession--that I wanted no
office in his gift, but if his purpose was as I had been told, then it was my
wish that he would select some one else who could purchase my paper--that I
asked no advance upon the actual cost, and no compensation, for my services in
the past. My objection to Mr. Van Buren was, that I believed that as soon as he
believed that, by the influence of the party organization, aided by the public
patronage, he could command the Southern vote, he would then bid against Mr.
Clay and Mr. Adams for the Northern vote, and thus strengthen that sectional
organization which it was my desire to defeat. General Jackson urged me to
remain, pledging himself, in the most solemn manner possible, that, if any
member of his Cabinet should, at any time, use the patronage of his department
with a view to promote the election of Mr. Van Buren, the member doing so should
resign; and, as an earnest of his sincerity, said that the first official act,
after his inauguration, would be to cause the patronage of the State department
to be sent to my office, which he did. I have not the time or space, now, to
explain the measures or the motives which, if General Jackson was sincere in the
pledges then given, induced him afterward to exert his whole personal and
official influence in aid of the election of Mr. Van Buren as his successor,
although it is my purpose, if life and health permit, to do so hereafter. I
recur to them now to explain that the purpose of Mr. Adams and Mr. Clay being to
organize a sectional Northern party, predicated on the emancipation of our
slaves, and a system of high duties for the benefit of Northern manufacturers
for making turnpike roads, to be constructed under the patronage of a corrupt
sectional Northern Congressional majority for the purpose of electing Mr. Clay
President, and Gen. Jackson having become the acknowledged partisan of Mr. Van
Buren, the near approach of the payment of the national debt, whilst admitting
the full power of Congress to lay and collect duties requisite to pay the debts
and carry on the Government, had made it necessary for those who did not believe
that they had the power to increase the duties for the purpose of creating a
large surplus revenue, to be expended under appropriations made by a corrupt
sectional majority of Congress, to rally all their energies and resources to
prevent a system of measures which we foresaw, and foretold must result in
sectional conflicts which would, of necessity, alienate the South from the
North, and, if not arrested, terminate in a dissolution of the Union. Hence the
nullification of South Carolina was a movement for the preservation of the Union
by restraining the action of Congress within the powers granted by the
Constitution. That movement was, for a time, successful. The subsequent action
of Van Buren fully justified my opposition to him, and the crisis in which we
are now placed proves not only the propriety, but the necessity, os the measures which I have again and again urged upon the
people of the slav holding States. How different would
have been our present position if, as a people, the South had adopted, with
proper energy, the system of measures which I have recommended. One purpose of
this statement is to show that the opposition to the tariff of 1828, and to Mr.
Clay's American system, was not, as many believe, an opposition to domestic
manufactures. It was an opposition to the organization of a sectional party upon
principles and measures in open violation of the letter and spirit of the
Constitution, which, it was foreseen, must terminate in the dissolution of the
Union. Another purpose is to refer
to the fact that Congress being driven, by the action of South Carolina and of
the State Rights party, to modify the tariff of 1828, and the payment of the
public debt having left a large surplus of public funds in the Bank of the
United States, Van Buren induced General Jackson to go through Pennsylvania and
New York to Boston, where he was met by Mr. Van Buren and several of his leading
political partizans, who, Mr. Poinsett dissenting, as he assured me he did,
induced him to seize upon the public deposits, which were transferred from the
Bank, where they were placed by operation of law, and placed on deposit in local
Banks, selected by a partisan Secretary of the Treasury. It was the influence of
the public money in these banks, and the corrupt abuse of the public patronage
which elected Mr. Van Buren. This transfer of the public deposits to the pet
banks led to a vast expansion of the currency, and immense speculations,
especially in the public lands, so that, although the average sales for the ten
years preceding General Jackson's election, did not amount to 800,000 acres,
12,564,218 acres were sold in 1835, and 20,074,870 acres were sold in 1836; and
although there were, in 1830, but 330 banks with a circulation of $61,323,898,
there were 634 banks, with a circulation of $149,185,890, in 1837.* * NOTE.--The following table
shows the number of banks that were in the United States, their capital, loans
and discounts, specie, circulation, and deposits, from 1830 to 1840
inclusive:
These speculations and this
expansion of the currency took place cotemporaneously
with like speculations and expansion of the currency in England consequent upon
the placing, by the Government, in the Bank of England, of the large sums, paid
under the acts emancipating the West India slaves and the abrogation of the East
India monopoly, being about $120,000,000, the greater part of which, in
anticipation of the payments to be made by the bank, was loaned to money
dealers, and the consequence was in inflation of the currency nearly or quite as
great as in the United States. The payment by the Bank of England to the proper
claimants, as their accounts were adjusted, and the transfer from the pet banks
of the surplus revenues to the States under an act of Congress, operating in
England and the United States at the same time, caused the reaction in both
countries, inflicting unexampled pecuniary losses and distress, originating in
both countries from the efforts of those who held the control of the currency to
increase their power and influence by the use of a defective system of finance.
Had England made her credit in the shape of certificates receivable in public
dues and fundable, as I propose, a legal tender, the excess would have been
funded, and there would have been no inflation of the currency, and consequently
no reactionary demand for specie, and no pecuniary losses or bankruptcy. Had the
United States issued their credit in the form and fundable as proposed, there
would have been no surplus revenue in the banks, no speculation in the public
lands, no specie circular, issued by a party President to protect the pet banks
from the demand for specie, the consequence of the over-issue of their
circulation in aid of the corrupt speculations of political favorites. The pretence for the transfer
of the public deposits from the Bank of the United States to the pet banks was,
that the power of that bank would be abused, and hence the pet banks were
required, by an order from the Secretary
of the Treasury, to discount freely, and thus prevent the monetary crisis
which, by some it was urged, would be the consequence of the sudden withdrawal
of so large a deposit. Failing to get a renewal of its charter from Congress,
the bank obtained a charter from the Legislature of Pennsylvania, and instead of
reducing their line of discounts, the Directory availed themselves of the
inflation of the currency to sell out their branches, receiving the notes of the
pet banks in payment; and, instead of making war upon the pet banks by demanding
payment in specie, the large sums thus obtained were invested in public
securities and in advances upon cotton, intending, by the sale of the cotton and
the State securities in Europe, to reinstate the capital which had been invested
in the branches; and Biddle and Humphries were sent to Liverpool as the agents
of the bank charged with the sale of the cotton, and Mr. Jaudon, the cashier,
was sent to London with the State securities. The great fire in New York had
deprived many of the merchants of that city of the means of paying the large
sums falling due to their British creditors. The bank, under the advice of Mr.
Biddle, relying on the sale of cotton by Biddle and Humphries, and of State
securities by Mr. Jaudon, advanced large sums in the shape of bills on London
and Paris. Before this time, any American merchant who could get an acceptance
by Wilde, Wiggin or Wilsons, three American houses in London, could purchase
British goods upon six and twelve months credit. Apprehending a monetary crisis,
Wiggin wrote to his American correspondents that he could no longer accept as he
had done. His having done so came to the knowledge of the Directors of the Bank
of England. The Governor of that bank called on Mr. Wiggin and urged him to
withdraw his letters, saying that the English warehouses were filled with goods;
and, as the bank wished to encourage the trade with America, although he could
not pledge the bank, yet as governor of the bank, he would exert his influence
to sustain Mr. Wiggin in case of a crisis. Under that pledge Mr. Wiggin recalled
his letters, and was under acceptance for more than thirteen millions of
dollars, when the bank passed an order that no bill, predicated on any
transactions in American produce, should be discounted in bank. The consequences
was that Wilde, Wiggin and Wilsons all failed that Biddle and Humphries could
not sell cotton, nor could Jaudon sell the securities upon which he relied to
protect the credit of the Bank of the United States, and he was compiled to make
hypothecations and borrow money at rates which was followed by so great a
depreciation of the values of the securities, in which the capital of the bank
was invested, as ultimately to absorb much the greater part of its assets. I do not charge that the
conduct of the Bank of England was purposely intended to inflict the severe
suffering and distress which were its consequence; nor do I charge that the
assurances of aid, given by the Governor of the Bank to Mr. Wiggin, were
intended to induce him to make acceptances which he (the Governor) knew he would
not be able to meet. But I do charge that the fluctuations in the value of money
and property were the inevitable resulting consequence of the system of currency
and finance which compelled the Bank, to use the words of Samuel Jones Lloyd, to
"SAVE HERSELF BY THE DESTRUCTION OF ALL AROUND HER." Thus, if we recur to the
crisis of 1704, we find the directory of the Bank in a formal protest to the
Government, notifying the Minister, "that if any further loan or advance
of money
to the Emperor, or to any of the foreign States, should, in the present state
of affairs, take place, it will in all probability prove fatal to the Bank of
England. It was indispensably necessary to make the loan, and hence the
Bank, in 1797, was forced to suspend specie payment. Again, in 1814 and 1815,
the loans to the allies of England were $96,831,539, and there was unexampled
distress. Again, in the eight years, from 1818 to 1825 inclusive, the sums
advanced on foreign loans and speculative schemes was $522,692,500, and the
consequence was, that the demand for specie was so severe and the depreciation
of the value of property so great, as to cause unparalleled loss, bankruptcy and
distress. Again, in 1836-37, the Government having placed in the Bank of England
the funds intended to pay the West India claimants, large sums were loaned to
the money dealers--this gave birth to speculations, the currency was increased,
prices were consequently inflated, to be followed by a reaction, causing, if
possible, still greater reduction of prices, with greater pecuniary losses and
distress. And again, in 1853 to 1857, the demand for gold to pay the expenses of
the wars in the Crimea, in India and China, created a renewed demand for gold
and silver, acting upon the values of property precisely in the same manner.
Now, why did these frequent recurring demands for money always cause a ruinous
depreciation in the values of property, enriching the creditor without merit and
impoverishing the debtor without fault? Was it not because the creditor was
enabled to compel the debtor to make payment in gold, under the delusion that
gold and silver are more uniform and stable in value than any other medium of
purchase or payment, and that therefore nothing but gold and silver should be
recognized as money. Is it necessary to adduce
additional facts or arguments to prove that this is a delusion? We have seen
that the average specie in the banks of the city of New York, from 1853 to
October, 1857, was about eleven and a half millions, whilst the daily average
settlements between the banks alone were about thirty millions of dollars, and
the daily average settlements between individuals, which do not appear in the
returns of the Clearing House, are estimated at fifty millions of dollars, and
Colwell estimates the payments made through the banks in the United States in
1857, by set off, without one dollar in specie, at eighty-five thousand
millions of dollars, and we are told by Chivalier, that the amount of the
Bills of Exchange, at one time in circulation in Great Britain, was£180,000,000
or $900,000,000. These facts prove that
property, and not specie, is the true basis of credit, and that a currency
predicated on the entire property of an agricultural and commercial country, may
be made much more uniform and stable in value than if convertible into gold, for
surely it will not be necessary to adduce other proofs to demonstrate that every
monetary crisis, every general suspension of the banks in the United States, has
been caused by the monetary revulsions which have occurred in England, and the
demand for specie created through the Bank of England. My proposition is to
create for the Confederate States a currency predicated on the entire property
of the whole country. The value to be regulated by receiving nothing but the
public credit or gold in payment of taxes, and to cause the excess, if any there
be, to be funded in convertible bonds, bearing a proper rate of interest. Thus
say that the current expenditures often peace, including the interest, on the
public debt, will be one hundred millions of dollars, and that the annual taxes
be the same, it will require the
whole sum of the current issue to pay the taxes, and any deficiency must be
paid in gold or by reconverting so much of the funded debt as may be requisite.
If the banks are required to redeem their notes in the Confederate currency, and
to place the convertible funded debt with the Treasurers of the several States,
in trust for that purpose, then the value of the Treasury Certificates will be
regulated by the rate of interest paid upon the funded debt, and the value of
the bank notes will be regulated by the value of the certificates. God, in His Providence, has
given to the people of the Confederate States sources of individual
independence, wealth and prosperity, such as He has given to no other people on
the globe. He has given us a soil and climate peculiarly adapted to the
cultivation of cotton and wool; He has filled our mountains with a greater
abundance of mineral wealth; He has given us an abundant supply of living
streams, which, in their progress from our mountains to the sea, proclaim in a
language not to be misunderstood the purpose of their creation; He has given us
a territory so large and so fertile, as to be capable of feeding a population as
great as that of Europe; He has given us the labor peculiarly adapted to the
cultivation of the great staples which constitute the chief elements of modern
industry and of modern commerce. He has so identified the interests of the
governing class with those of the servile race as to secure to us a purer
religion, a more refined individual and social morality, and a more enlightened,
more independent, and a freer political organization than He has given to any
other nation upon earth. He has separated us from the rest of mankind, as He
separated His chosen people under the Mosaic dispensation, and that He has had a
special purpose in doing so, no one, who carefully and prayerfully studies the
manifestations of His will and the indication of His purposes, can doubt. He has
not so richly endowed us, as a people, by accident. His purpose is forcibly
illustrated by the parable given in the twenty-fifth chapter of Matthew--we are
but trustees, and are responsible to God for the manner in which we execute the
trust committed to us. If we would discharge our duty, we must so use the
abundance which we possess as best to promote His purpose and glory, and this
cannot be done unless we become a manufacturing and commercial, as well as an
agricultural people; and this we cannot do unless we so organize our credit as
to make it available in the development of our abundant resources, and enable us
successfully to compete with the most favored nations in all the mechanic arts,
the manufactures, and the commerce, which characterize the progress of modern
society. The measures which I propose
will simplify the functions of the Confederate Government. It will reduce the
action of that Government to the payment of the current expenses, and collecting
the current taxes after funding the existing debt. It will greatly curtail the
corrupting influence of Executive patronage. It will give greater stability to
the values of the currency, and consequently to the values of property, and it
will give us an abundant and cheap currency, uniform and stable in value, giving
life and energy to the productive industry of the country in all the departments
of labor. It will lessen the burden of taxation by substituting the certificates
of the Confederate and State Governments for bank notes convertible into specie,
and save to the Government, and to the public, and to the banks, the interest on
the mass of specie which,
under a revival of a specie currency, must be held as the basis of credit. It
will enable us to organize a system of education, embracing the children of our
deceased soldiers, enabling all, females as well as males, to earn the
compensation requisite to feed, clothe and educate themselves, training them to
be useful members of society, self-reliant and self-sustaining, inspiring the
rising generation with a proper sense of personal independence and of public
liberty. The experience of the war
demonstrates the necessity of a greater distribution of labor, and to do this
requires an appropriation of the requisite capital in aid of the efforts of
individual enterprise. There is a praiseworthy movement to organize an ample
fund to educate the children of our deceased soldiers. I would embrace all of
the rising generation--the children of the living and of the dead--the rich and
the poor; and would so diversify their training and their knowledge as to enable
them to relieve us from our dependence upon the foreign markets for articles
which may be better and cheaper produced at home. The public debt in the shape
of convertible interest bearing bonds, deposited with the Treasurers of the
several States, as the basis of bank issues, will give us an abundant, cheap and
stable currency, and banks organized for the purpose of advancing requisite
capital to competent persons who will employ male and females in appropriate
departments of labor, with the understanding that their compensation shall be
such that six, or at most eight, hours labor per day shall be sufficient to pay
for their clothing, board and tuition, and also to provide a surplus fund to aid
them in the outset of life, will give to the shareholders of such banks a proper
profit on the capital thus invested, and stimulate the energies and industry of
the employer, giving to the children from four to six hours for study, with
twelve hours per day for refreshment and recreation. Such a system can be
organized if the Government will make the Treasury certificates a tender, and
adopt the system of finance and currency which I propose. It will convert the
public debt into a fund; will build our railroads, establish our manufactures,
and educate our children, and make us the most enlightened and prosperous people
upon the face of the globe. It will do more. It will achieve our financial
independence by elevating us above the controlling influence of that new power
in Europe, so forcibly described in the article from the London
Spectator, given in the appendix, which will then be no longer able to
place us beneath the pressure of the machinery by which they regulate the value
of the property of all those who are subject to its control. THE EFFECT OF FUNDING AT A
LOW RATE OF INTEREST is forcibly illustrated by the history of the public debt
of England and the system of finance under which that debt was created. It would
seem that our Congress and the late Secretary of the Treasury believe that the
excellence of human wisdom consists in tracing, as nearly as possible, the
example of England. Thus, instead of giving value to our currency by funding the
surplus at a rate of interest which will, at the same time, give value to the
currency and the funded debt, they depreciate the currency and the debt,
requiring the currency to be funded at a depreciation of thirty-five per cent.
for six per cent. bond. If funded at par, as I propose, the value of the bond
would regulate the value of the currency.
McCulloch, in his Dictionary,
says that-- During the reigns of William
and Anne, the interest stipulated for loans was very various. But in the reign
of George II, a different practice was adopted. Instead of varying the interest
upon the loan according to the state of the money market at the time, the
interest was generally fixed at 3 or 3 1/2 per cent[.],
the necessary variation being made in the principal funded. Thus suppose the
Government were anxious to borrow; that they preferred borrowing in a 3 per 100
stock, and that they could not negotiate a loan for less than 4 1/2 per 100;
they effected their object by giving the lender in return for ever£100
advanced£150 3 per cent. stock--that is, they bound the country to pay him his
assignees£4 10s. a year in all time to come, or otherwise, to extinguish the
debt by a payment of£150. In consequence of the prevalence of this practice, the
principal of the debt now existing amounts to nearly two-fifths more than the
sum actually advanced by the lenders. In a note we are referred to
the 93d No. of the Edinburgh Review, where we are told that "in 1781, a
loan of£12,00,000, or $60,000,000, was negotiated, and for this sum the
Government gave£18,000,000 (or $90,000,000) of 3 per cent. stock, and£3,000,000
(or $15,000,000) of 4 per cent. stock. On the whole therefore,£660,000 (or
$3[, ]300,000) of interest was paid for this loan, being
rather more than 5 1/2 per cent[.]; and a fictitious
capital was created in favor of the leader of no less than£9,000,000 (or
$45,000,000)!! But it is obvious that, had this loan been negotiated without any
increase of capital at 6, or even 6 1/2, per cent., the charge on the account
might have been reduced in the course of half a dozen years to 3 or 3 1/2 per
cent. on the£ 2,000,000 (or $60,000,000) actually borrowed; whereas, owing to
the mode in which it was contracted, nothing could be deducted from the annual
charge without being previously prepared to offer the holders £21,000,000 for
the£12,000,000 (or $105,000,000 for the $60,000,000) they had originally
advanced. The Review adds: Nothing, we are sorry to say,
is more easy than to point out innumerable instances of this sort, in which the
public interests have been sacrificed, not intentionally, indeed, but through
ignorance, or a desire to grasp at an immediate advantage in the most
extraordinary manner. The very next loans negotiated by Lord North, in 1782, was
for£13,500,000, for which Government gave£15,500,000 of 3 per cents;
and£6,750[,] 000 4 per cents., exclusive of an annuity of
17s. 6d. for every£100 advanced for seventy-eight years. The country was in this
way bound to pay an interest of£793,125 a year, inclusive of the annuity, being
at the rate of£5 16s. 10d. per cent.; and it was rendered impossible to reduce
this heavy charge at any future period without previously consenting to
sacrifice£6,750,000. But it is unnecessary to go
back to the American war for proof of the extreme inexpediency of funding in
this manner. Most of the loans negotiated during the late (French) war were
funded in the same way, and some of them on still more ruinous and improvident
terms on the part of the public. Thus, according to the terms on which a loan
of£18,000,000 sterling was bargained for in 1795, a capital of£21,000,000 3 per
cent. stocks and£4,500,000 4 per cents., exclusive of a long annuity of£58,500,
were assigned to the subscribers. But the terms of the loan of£13,000,000,
negotiated in 1798, were still more extravagant. For every£100 advanced entitled
the lender to£175 3 per cent. stock,£20 4 per cent. stock, and all annuity of 6
shillings for 62 3/4 years; or, in other words, for every£100 advanced to the
Government, it bound the country to pay an annual interest of£6 1s., exclusive
of the long annuity of 6 shillings[.] The Review then adds
further: The improvidence of this
transaction is glaring and obvious. There can be no manner of doubt that an
addition of from 1/4 to 1/2 per cent. would have procured this loan without any
increase of principal; but supposing that 1 per cent[.]
additional interest had been required, instead of being subjected to a constant
payment in all time to come of£5 12s. 4d., for every£100 advanced, we should
have had£6, or£6 10s. to pay for three or four years, and£3, or at most£3 10s.
ever after. By way of illustrating the
system in a still more striking light, and bringing the results of the different
operations connected with the funding of the
British national debt during the French war, into one point of view, the
Review gives a statement of loans contracted in each year, from 1793 to
1816, both inclusive; of the amount of all sorts of stock created on account of
these loans; of the total interest on dividend payable on them; of the portions
of said loans paid to the commissioners of the sinking fund; of the amount of
all sorts of stock purchased by said commissioners; and of the amount of the
dividends on said stock. Upon this exhibit, the
Review remarks that-- It appears, then, that the
sums borrowed on account of the public service, during the late war, really
amounted to£396,352,206; and it also appears that an excess of $173,028,782
(£569,380,988--£396,352,206), of capital or stock, was created in favor of the
lenders, over and above the sums advanced by them, being at the rate of nearly
fifty per cent. on the sum lent. And it further appears that, the whole annual
charge on account of the money borrowed during the late war, amounted, at its
close, to£21,0006,631 being at the rate of about 5 1/4 per cent. But it is evident that had
the sums thus borrowed been funded, without any artificial, increase of capital,
in a 5 1/2, a 5 3/4, or a 6 per cent[. ]stock, the charge
on account of interest might now have been reduced from 5 1/4 to 3 or 3 1/2 per
cent., or from twenty-one to twelve or fourteen
millions!! It thus appears from this
statement that the British public are now paying 3 per cent. per annum,
on£172,078,782, more than they would pay if the loans had been contracted at
par; and McCulloch says that between 1822 and 1824, by an application of part of
the surplus revenue and the reduction of interest on the 4 and 5 per cent.
stocks, existing in 1817, and by that paid on the unfunded debt, the total
annual saving by the reduction of interest, between 1822 and 1824, has
been£2,355,845, or $11,779,225. If to this be added interest, at 3 per cent.,
upon the£173,028,782, or $865,143,910--the excess created by the erroneous
system of funding--it will give an an annuity of
$37,633,542, which compounded at 3 per cent., will, in forty-one years, give the
sum of $3,089,426,392. If the loss to the British
Government and people, by their system of borrowing and funding£396,352,206
(equal to $1,961,761,392), was, in 41 years, $3,089,426,392, what will be the
loss to the people and Government of the Confederate States by our present
system of borrowing and funding the sums required to "carry on the Government of
the Confederate States?" Whilst I am writing, a
morning paper says: "We understand, from an authority which we regard as
altogether reliable, that the features of a bill for arming the negroes and
placing them in the field, is being canvassed by a circle of politicians, prior
to the introduction before the Confederate Congress. The bill proposes--1st. To
conscribe all the able-bodied negroes of the country, between the ages of 18 and
45, respectively. 2d. To organize this force into regiments, brigades and
divisions, and to arm and equip them thoroughly as soldiers. 3d. To officer the
forces thus organized from meritorious soldiers and subalterns now in the field.
4th. To offer each negro who serves faithfully to the end of the war his
freedom." Coupled with the suggestion
that we are not fighting for the institution of slavery, this is, indeed, a most
startling and alarming proposition--To arm and train our negroes as soldiers,
with the
promise of freedom in case they serve faithfully to the end of the war!! What
would be the inevitable effect of such a measure? Would it not, of itself,
accomplish all that the North can do by the most successful prosecution of the
war? Would it not substitute the Northern for the Southern social organization
and characteristics? Would it not be worse than reconstruction? Would it not be
subjugation? Would it not deprive us of the labor requisite to produce cotton
and tobacco, and thus deprive us of the means of sustaining our credit and of
transferring to the consumers of British goods a large part of the burden of our
public debt? Under such circumstances, I feel it to be my duty to give a brief
notice of the rise and progress of Abolition in England and in the United
States, and to call upon the people, and especially upon our gallant army, to
unite in denouncing a measure so unwise, and to mark with the severest
reprobation any public man who dares to give to it the slightest encouragement,
countenance or support. By the 16th article of the
treaty of Utrecht, England confirmed the contract made by the English Guinea
Company with the King of Spain, by which that company gave to Spain 200,000
crowns, and to the Kings of Spain and of England each one fourth part of the
profits of their trade, for the privilege of supplying the Spanish American
Colonies with African slaves. This was in 1713. It is well known that England
compelled Virginia, regardless of her remonstrance, to receive slaves imported
by the Yankees. England, then, engaged in the
slave trade because it gave employment to British ships and large profits to
British trade. In 1817, England gave to
Spain two millions of dollars to abolish the slave trade!! Why, after having
given Spain 200,000 crowns and one fourth part of the profits of the trade, for
the privilege of supplying her colonies with slaves, did England give to Spain
two millions of dollars to abolish the slave trade? Wilberforce, in his
discussion of the treaty in the House of Commons, gave the answer. He says: I cannot but think that the
grant to Spain will be more than repaid to Great Britain in commercial
advantages, by the opening of a great continent to British industry--an
object which would be entirely defeated if the slave trade was to be carried on
by the Spanish nation. Our commercial connection with Africa will much more than
repay us for any pecuniary sacrifices of this kind. I myself will live to see
Great Britain deriving the greatest advantages from its intercourse with
Africa. That we may the better
understand the motives which govern the measures and policy of England, it is
proper that we look into her domestic and colonial systems, and first,
of I quote from the Edinburgh
Review, of August, 1825: The act of 1650, passed by
the Republican Parliament, laid the foundation of the monopoly system, by
confining the import and export trade of the Colonies exclusively to British or
Colony built ships. But the famous Navigation Act of 1660 (12 Charles II., cap.
18) went much farther. It enacted that certain specified articles, the produce
of the Colonies, and since well known in commerce as enumerated
articles, should not be exported directly from the Colonies to any foreign
country; but that they should first be sent to Britain, and there unladen (the
words are, laid upon the shore), before they could be forwarded to their
final destination. Sugar, molasses, ginger, fustic, tobacco, cotton and indigo
were originally enumerated; and the list was subsequently enlarged by the
addition of coffee, hides and skills, iron, corn, lumber, etc . . . . . But the
insatiable rapacity of monopoly was not to be satisfied with compelling the
colonists to sell their produce exclusively in the English markets. It
was next thought advisable that they should be obliged to buy such
foreign articles as they might stand in need of, exclusively from the merchants
and manufacturers of England. For this purpose it was enacted, in 1663, that no
commodity of the growth, production or manufacture of Europe, shall be imported
into the plantations, but such as are laden and put on board in England, Wales,
or Berwick-upon-Tweed, and in English built shipping, whereof the master and
three fourths or the crew are English . . . . . It was also a leading principle
in the system of Colonial policy, adopted as well by England as by the other
European nations, to discourage all attempts to manufacture such articles in the
Colonies as could be provided for them by the mother country. The history of our
Colonial system is full of attempts of this sort; and so essential was the
principle deemed to the idea of a Colony, that even Lord Chatham did not
hesitate to declare in his place in Parliament, that the British Colonists in
North America had no RIGHT to manufacture even a nail for a horse
shoe!! And when such were the enactments made by the Legislature, and such
the avowed sentiments of a great Parliamentary leader and a friend to the
Colonies, we need not be surprised at a declaration of a late Lord Sheffield,
who did no more, indeed, than express the decided opinion of almost all the
merchants and politicians of his time, when he affirmed thus: THE ONLY use of
American Colonies or West India Islands is THE MONOPOLY of their
consumption and the carriage of their produce. . . . . Were it not for the
perverse and most injurious regulations to which this system has given rise, we
might supply ourselves with sugar from the East Indies or South America, for a
great deal less than it now costs to buy it from the West India planters. This
is a much more serious loss than is generally supposed. Sugar has become a
necessary, equally indispensable to the poor and the rich. The quantity of West
India sugar, annually consumed in Great Britain, may, we believe, be taken on an
average at about 380,000,000 of pounds weight. And it has been repeatedly shown,
that a reduction of the duties on sugar from the East Indies and South America
to the same level with those laid on West India sugar, would enable us to obtain
as good sugar for 4 1/2d. per lb, as now costs 6d.; but taking the difference at
only 1d. per lb, it would make on the above-mentioned quantity a saving of no
less than £1,583,000 ($7,915,000) a year. . . . . Not only, however, do we
exclude the sugars of the Dutch colonies, Brazil and Louisiana, but we actually
lay 10s. a cwt. of higher duties on the sugar imported from our own dominions in
the East Indies, than on that which is imported from the West!! Not satisfied
with giving the West India planters a monopoly of the home market against
foreigners, we had given them a monopoly against our own subjects in the East.
It is impossible to speak too strongly in condemnation of this arrangement--not
that we mean to insinuate that the East Indians have any right whatever to be
more favorably treated than the West Indians; but we contend that they have a
clear and undoubted right to be as favorably treated. To attempt to enrich the
latter, by preventing the former from bringing their produce to our market, or
by loading it with higher duties, is not only to prefer the interests of one
million, and those--we do not say it disparagingly of the planters--mostly
slavers, to the interests of one hundred millions of subjects; but is totally
inconsistent with, and subversive of, every principle of impartial justice and
sound policy. It is said, however, that
slavery exists in Hindostan as well as in Jamaica, and that by reducing the
duties on East India sugar and facilitating its cultivation, by allowing
Europeans to purchase and farm lands, we should not get rid of the evils of
slavery, but would be merely substituting the produce of one species of slave
labor for another. Now, admitting for a moment that this statement is well
founded, still it is certain from the cheapness of free labor in Hindostan, no
slaves ever have been, or ever can be, imported into that country. And hence it
is obvious that, by substituting the sugars of the East for those of the West,
we should neither add to the number nor deteriorate the condition of the
existing slave population in our dominions, while we should save above
a million and a half in the purchase of one of the principal
necessaries of life, at the same time that we subverted a system of monopoly and
laid the foundations of a new and extensive intercourse with India--a market
which may be enlarged to almost any conceivable extent." Here is the key which unlocks
the motives, and controls and regulates the measures and policy of England. To
encourage and foster the slave trade, she had given to the West Indies a
monopoly of the supply of the home market with tropical produce--the discovery
of the power loom, the cotton gin and the spinning jenny had so increased her
manufactures that it had become necessary to find new markets for the sale of
the surplus products of her machinery, and hence she emancipated her West India
slaves, and opened the trade of India to British enterprise. The motive is
indicated by historical facts as well as by her arguments. Thus, in 1825, the
Edinburgh Review assails the West India monopoly upon the ground that its
repeal would lay the "foundation of a new and extensive intercourse with
India --A MARKET WHICH MAY BE ENLARGED TO ALMOST ANY CONCEIVABLE
EXTENT." The appeal to the pocket
nerve of England, however, prevailed, and as Wilberforce urged, in 1817, that
the grant of two millions of dollars to induce Spain to abolish the slave trade
would be more than repaid by opening to England the commerce of the continent of
Africa, which could not be done so long as Spain was permitted to carry on the
slave trade, so, in 1833, it was argued that the one hundred millions of dollars
paid to the West India proprietors would be more than repaid to England by the
increased commerce with India, which "would be entirely defeated," unless the
West India monopoly was repealed; and this could not be done without first
emancipating the West India slaves and indemnifying the West India
proprietors. The prevailing impression in
England then was, that free labor was cheaper than slave labor, and that the
effect of opening the trade of India would be to so reduce the price of tropical
products that it would be equivalent to the confiscation of the West India
estates, and, therefore, the indemnity given was, in fact, a remuneration for
the depreciation of West India property, caused by admitting into the British
market the cheaper produce of the East Indies; and the emancipation of the West
India slaves was but an act of justice to their masters in remuneration for the
destruction of the value of their property, and not an act of mercy or of
sympathy for the slaves. This is proved not only by
the fact admitted by the Edinburgh Review, as quoted above, that slavery
existed then in the East Indies, and continues to exist there now, and is
enforced by the authority of British law, but by the farther fact that, finding
that the cheap slave labor of India cannot successfully compete with the slave
labor of America, the diplomatic energies of England have been exerted to
increase the value of the tropical products of India by the abolition of slavery
wherever slave labor elsewhere has come in competition with the labor of India.
The war now waged against us is the fruit of the abolition movement of England,
and to arm and emancipate our slaves would be the consummation of her efforts to
aggrandise her power and influence by the destruction of that principle of our
social and political organization which constitutes the basis of our strength
and prosperity. It is admitted that slavery exists in India, but who ever heard
a British statesman or a British press denounce the slavery of India? Why does
England send her
sympathies on a voyage or discovery to Africa and America, instead of
enlisting them in behalf of her own suffering poor in England, in Ireland and
India? That there may be no doubt as
to the motive of England, I quote from Lord Stanley in the House of Commons in
1842. He said that on sixty-two sugar estates in the British West Indies, the
loss from January to December, 1841, had been $983,000 on an outlay of
$1,250,000; and Sir Robert Peel said, "He must say he had his doubts if a
colony, in which slavery had been abolished by law, could at present enter into
successful competition with a district in which the system continues to
exist." Urged on by these
convictions, England has not only continued slavery in India, but, by a system
of internal police, she has levied upon the free labor, as well as the slave
labor, of India exactions much more onerous than are laid upon our slaves. McCulloch, speaking of the
revenue and expenditure of the East India Company, says: "The far greater part
of the revenue of India is, at present, and has always been, derived from the
soil. The land has been held by its immediate cultivators generally in small
portions, with a perpetual and transferable title; but they have been under the
obligation of making an annual payment to the Government of a certain portion of
the produce of their farms, which might be increased or diminished at the
pleasure of the sovereign, and which has, in almost all cases, been so large as
seldom to leave the cultivators more than a bare subsistence. Under the
Mahomidan Government, the gross produce of the soil was divided, into equal or
nearly equal shares, between the ryots or cultivators, and the Government. We
regret we are not able to say that the British Government has made any material
deduction from this enormous assessment. Its oppressiveness, more than anything
else, has prevented our ascendancy in India, and the comparative tranquility and
good order we have introduced from having the beneficial effects that might have
been anticipated. The cultivators throughout Hindostan are proverbially poor,
and, until the amount of the assessment they are at present subject to be
effectually reduced, they cannot be otherwise than wretched. They are commonly
obliged to borrow money to buy their seed and carry on their operations, at a
high interest, on a species of mortgage over the ensuing crop. Their only
object is to get subsistence --to be able to exist in the same obscure
poverty as their forefathers. If they succeed in this they are satisfied. Mr.
Colebrook, whose authority on all that relates to India is so deservedly high,
mentions that the quantity of land occupied by each ryot or cultivator, in
Bengal, is commonly about six acres, and rarely amounts to twenty-four; and it
is obvious that the abstraction of half the produce raised on such patches can
leave the occupiers nothing more than the barest subsistence for themselves and
their families. Indeed, Mr. Colebrook tell us that the
condition of ryots, subject to this tax, is generally inferior to that of a
hired laborer, who receives the miserable pittance of two annas, or about three
pence a day wages. Besides the land revenue, a considerable revenue is derived
in India from the monopolies of salt and opium, the sale of spirituous liquors,
land and sea customs, post office, etc. Of these monopolies, the first is, in
all respects, decidedly the most objectionable. Few things, indeed, would do
more to promote the improvement of India than the total abolition of this
monopoly. An open trade in salt, with moderate duties, would, there can be no
doubt, be productive of the greatest advantages to the public and a large
increase of revenue to the government. The opium monopoly, the less
objectionable than the last, is, notwithstanding, very oppressive. It interferes
with the industry of the inhabitants-- those who are engaged in the
cultivation of opium being obliged to sell their produce to the Government at
prices arbitrarily fixed by the Company's agents." Finding that the labor of
India could not compete with the slave labor of America, England, in 1840,
negotiated what she termed her slave trade treaty, which was intended to be an
amendment to the law of nations authorizing her to arrest, on the high seas, any
ship suspected of being engaged in
the slave trade, to be carried into British ports and condemned by British
Judges. And such was the tone of the British press, and such the character of
British diplomacy, that the President (Mr. Tyler) deemed it expedient to send me
as a confidential agent to London, where I spent several months writing a series
of articles for the Morning Chronicle. From London I went to Paris, and
wrote a series for the Journal of Commerce. The ratification of the
treaty was before the French Chamber of Deputies. There was then a slaveholding
interest in the French West Indies. My arguments were addressed to that interest
and to the continental powers of Europe. I endeavored to unmask the purpose of
England, and to show that the emancipation of American slaves would enable
England to exchange her manufactures for the tropical products of India, which
products she would then sell to consumers on the continent at much higher prices
than would otherwise be paid to the American producers. I urged and aided
General Cass to write his protest against the ratification of the treaty. My
articles were reproduced in the French Chamber of Deputies. They were translated
and circulated in Germany, and the ratification of the treaty was defeated. Whilst in Paris I had a free
and confidential conversation with one of the leading diplomatists of England
(Sir Henry Ellis), to whom I urged the necessity of an early and satisfactory
adjustment of the issues, then pending with the United States, as the only means
of preventing a combination between the United States and Russia, and other
leading powers of Europe, for the purpose of emancipating the British East
Indies, and opening the commerce of India to all the world. He urged me to write
out the substance of my remarks for him, saying that he wished to send them to
Lord Aberdeen. I found it impossible to
prepare a communication sufficiently respectful to be submitted to His Lordship,
and, instead, wrote an article giving extracts from the official reports of the
poor law commissioners, proving the condition of the laboring poor of Ireland
and England to be much more degraded than that of our slaves, and charging that
the purpose of England was to substitute the tropical products of India for
those of America, and that having by her experiment in the West Indies
ascertained that the cheap labor of India could not successfully compete with
the slave labor of America, her efforts to abolish the slave trade and to
emancipate African slaves were promoted by the hope that if, under the pretence
of sympathy for the slave, she could accomplish this, then she could obtain
tropical produce from the East Indies in exchange for her manufactures, and thus
levy tribute on the consumers of East India produce at the same time, that by
the monopoly of the trade to India she could greatly increase her manufactures,
her shipping and her navy. That such is her purpose, I proceed to quote
authorities which place the matter beyond question: In the debate on the Corn
Laws in 1842, the Duke of Wellington said: I am sure no man laments more
than I do that commerce of manufactures should be at all depressed; but I
believe if the Corn Laws were repealed to-morrow, not a yard of cloth or a pound
of iron more would be sold in any part of Europe or of the world, over which
this country does not exercise a control. My Lords, the greatest number of
European nations, and of the nations of the globe, have adopted measures for the
encouragement of home manufactures. These measures were not, as stated by some,
taken in consequence of the English Corn Laws. They are attributable to the
example of this
country. They had their rise in the spectacle which this country exhibited
during the late war, and in the great and noble exertions by which her power and
strength were displayed on every occasion. Those who contemplated these
exertions, as well as those who were relieved and assisted by them, thought they
might as well follow the example of our power, of our industry, and our system
of commerce. They have followed our example, and have established among
themselves manufactures, and given a stimulus to their commerce. In the debate on the state of
the country, on the 6th July, 1842, Lord Palmerston having explained that the
markets of France and Germany were closed to British manufactures, said: I therefore look to more
distant regions for future prosperity. We must look to the rising nation which
inhabits the North American continent. There we are met by our Corn Laws, and
until we alter these we will be crippled in our commercial intercourse. We must
look also to South America. There again we are met by heavy duties on sugar, and
until these are modified we cannot expect to carry on commerce with South
America to the extent it is possible. We must look again to Africa, and we must
look especially to India and to China. That the animus which
governs the measures and policy of England may be better understood, I quote
from a pamphlet written in 1835 by Mr. Cobden. He says: We are on the eve of a novel
combination of commercial necessities that will altogether change the relation
in which we have hitherto stood with our colonies. We call them necessities;
they will be forced on us not from our conviction of the wisdom of such change,
but by the irresistible march of events. The new world is destined to become the
arbiter of the commercial policy of the old. * * * * * It is to the industry,
the economy and peaceful policy of America, and not to the growth of Russia,
that our statesmen and politicians, of whatever creed, ought to direct their
most anxious study; for it is by these and not by the efforts of barbarian force
that the power and greatness of England are in danger of being superceded; yes,
by the successful rivalry of America shall we in all probability be placed
second in the rank of nation. * * * * * Bearing in mind that the
supply of the raw material of nearly one half of our exports is derived from a
country that threatens to eclipse us by its rival greatness, we cannot, whilst
viewing the relative position of England and the United States at this moment,
refrain from recurring to the somewhat parallel cases of Holland and Great
Britain before the latter became a manufacturing State. * * * * * The latter
(England) now sees in America a competitor in every respect calculated to
contend with advantage for the sceptre of naval and commercial
supremacy. In 1841 Frazer's
Magazine published an article headed "War with America a blessing to
mankind," in which, after laboring to enforce the propriety of a declaration of
war by England, and the necessity of making a war subservient to the great and
permanent object of freeing our slaves, he says: "Policy not less than
philanthropy prescribes such a course of warfare," and adds: In one morning a force of ten
thousand men could be raised in Jamaica for the enfranchisement of their
brethren in America. Such a force, supported by two battalions of Englishmen and
20,000 muskets, would establish themselves in Carolina, never to be removed. In
three weeks from their appearance, the entire South would be in one
conflagration. The chains of a million of men would be broken, and by what power
could they ever again be rivetted? We say that this course is dictated alike by
self-preservation and by philanthropy. It will thus be seen that the
programme of the invasion of Virginia by
John Brown, and the Federal scheme of a servile war, originated in England.
Even now, Earl Russell and Mr. Lindsay both declare that if England could be
satisfied that the purpose of the Federal Government is to emancipate our slaves
then the sympathy of England would be with the North. And why does England wish
to emancipate our slaves? It is because she believes that then the cost of
producing cotton, rice and sugar in America would be so much increased that her
cheap labor in India could drive the American cotton, sugar and rice out of the
market. The debate in 1842 on the
proposition to repeal the tax on Cuban and Brazilian sugar, Sir Robert Peel
said: To open our markets to the
sugars of Cuba and Brazil would detract from the high character this country
(England) has acquired in its efforts and sacrifices to put down the slave
trade. * * * * * What I say is, make the attempt--try to get concessions from
those of whom we get our supply--those countries themselves are in a peculiar
position. You may depend upon it that there is a growing conviction among the
people of those countries that slavery is not unaccompanied with great dangers.
In Cuba, Brazil, and in the United States, there is a ferment on the subject of
slavery which is spreading and will spread. Some from humane and benevolent
motives--some on account of interested fears, begin to look at the great example
we have set, and begin to look at the consequences which may result from that
example nearer home. This speech was made in
opposition to a proposition to repeal the duty on Cuban and Brazilian sugar,
based upon a petition which alleged that the tax on these sugars was $47,085,715
per annum. The argument, interpreted, was "pay this tax a little longer and I
will soon he able to induce Cuba and Brazil to abolish slavery, and then the
United States will follow their example," for, said in addition: "It is
impossible to look to the discussion in the United States, and especially to the
conflicts between the Southern and the Northern States without seeing that
slavery in that nation stands on a precarious footing." And why should Sir
Robert Peel urge the people of England to continue to pay a tax of $47,085,715
per annum, under the hope that it would aid in the emancipation of our slaves?
In the same debate he said : I must say that I have my
doubts if a colony in which slavery has been abolished by law can, at present,
enter into competition with a district in which the system continues to
exist. And Lord Stanley, then a
member of the Government, said that on sixty-two West India sugar estates, from
the 1st of January to December, 1841, the actual loss to the proprietors was
$983,000 on an outlay of 1,269,000 dollars. These extracts prove that The Government and people
England have become satisfied that cheap as the labor of India is, it cannot
successfully compete with the slave labor of America, and they therefore wish to
emancipate our slaves, believing that, if this be done, then they can compel the
people of India to exchange the raw products of India for British manufactures,
upon terms that will increase the power, wealth and resources of England. In proof of this I quote
further from Sir Robert Reel. He said: The honorable member for
Montrose announced his wish to maintain our colonial
dependencies, but said that his object was to see each colony paying for
itself. I apprehend that the proposal of the honorable and learned member from
Bath to admit an unlimited competition with slaves possessing colonies is not
the way to insure that object. The honorable member said that if the weavers of
Lancashire were asked what benefit they derive from the duty on foreign sugar,
they will assuredly say-- "none." But I put it to the honorable member whether
that is the test by which any great question affecting this country is to be
decided? If I ask a Lancashire weaver what benefit he derives from Jamaica and
his reply is-- "none," ought that to induce me to abandon my measure? Is the
honorable gentleman prepared to test the advantages derived from our connexion
with India in the same manner? or should we abandon our colonial dependencies
altogether, upon the assurance of a distressed weaver of Lancashire, that he is
not aware that any benefit is conferred upon this country by our dependencies?
If that is the principle of the honorable gentleman, it is quite clear that in
order to conform to it, we must resolve ourselves into the narrow limits of our
own resources and try what England can do against the world, after having
abandoned all those dependencies which she has established to her glory. Yes, England, under pretence
of benevolence, would pay a tax of forty-seven millions of dollars, under a hope
that by the emancipation of our slaves, she could drive us out of the market,
and then she would bind the poor East Indians to the muzzle of her cannon, and
shoot them into fragments, by way of compelling India to exchange her raw
products for British manufactures, because she hopes, by such means, to
monopolize the greater part of the trade in tropical produce and thus increase
her power and resources. Is it not obvious that for this she repealed the duties
favoring West India produce, emancipated the West India slaves, and opened the
trade of India to British subjects? Is it surprising that she refuses to
recognize the Confederate States ? Before the act of 1833, any
English laborer, whose wages were not sufficient to maintain him and his family,
was entitled to receive such an allowance from the poor rates as would make the
sum requisite for their support. This was termed "out door relief," and could be
claimed only by those who were settled in the parish. To obtain a
settlement required that an applicant should have been born in the parish, or
have been in service twelve months, or the owner of a freehold worth ten pounds
per annum. The Edinburgh Review
for May, 1828, quotes a member of the House of Commons, who said: This forced and expensive way
of relieving the poor has put many gentlemen and parishes upon contriving all
possible methods of lessening their number, particularly by discouraging, and
sometimes hindering, poor persons from marrying, when they appear likely to
become chargeable, and thereby preventing an increase of useful laborers, by
discharging servants in their last quarter, and preventing them from getting a
settlement, whereby they become vagrants--by pulling down cottages and suffering
no places of inhabitation for paupers, whereby estates are flung into a few
hands, and several parishes are, in a measure, depopulated. England complains of
a want of useful hands for agriculture, manufactures, for the land and sea
service; and, for remedying this, a bill for a general naturalization was lately
introduced. * * * * * But no scheme, I believe, will ever succeed so long as
parishes are so apprehensive of paupers, and take all manner of precaution to
prevent a multiplication of inhabitants. Again, from Arthur Young: There is no parish but had
much rather that its young laborers would continue single; in that state they
are not in danger of becoming chargeable; but when married the case alters. All
obstructions are, therefore, thrown in the way of their marrying; and none
more immediately than that of rendering it as difficult as possible for the
men, when married, to procure a house to live in; and this conduct is found
so conducive to easing the rates, that it universally gives rise to an open war
against cottages . . . . . The Act of 43d Elizabeth, by devolving the
protection of the poor on the landlords and occupiers of land, compelled the
latter to take all possible precautions to prevent the too rapid increase of the
former. A premium was given to those who lived in a state of celibacy; early and
improvident marriages were discourage by what could not fail to be considered
very severe penalties. The Review adds: The able-bodied tenant of a
work house should be made to feel that his situation is decidedly less
comfortable than that of the industrious laborer who supports himself, and
that a life of unremitting toil, supported on course and scanty fare, is to be
his portion so long as he continues in this degraded state. It adds further: Dr. Burn, who is one of the
very highest authorities as to all that respects the poor, has given the
following graphical de ineation of the peculiar business
of a parish overseer: The office of an overseer of the poor seems to be
understood to be this: To keep an extraordinary lookout, to prevent persons
coming to inhabit without certificates, and to fly to the Justices to remove
them; and if a man brings a certificate, then to caution the inhabitants not to
let him a farm of£10 a year, and to take care to keep him out of all parish
offices. To warn them, if they will hire servants, to hire them by the month,
the week, or the day, rather than by any way that can give them a settlement;
or, if they do hire them for a year, then to endeavor to pick a quarrel with
them before the year's end, and so to get rid of them; to maintain their poor as
cheaply as they possibly can, and not to lay out two pence in prospect of any
future good, but only to serve the present necessity; to bargain with some
sturdy person to take them by the lump, who is not yet intended to take them,
but to hang over them in terrorem, if they shall complain to the justice
for want of maintenance; to send them out into the country a begging; to bind
out poor children apprentices, no matter to whom or to what trade, but to take
special care that the master live in another parish; to move heaven and earth,
if any dispute happens about a settlement; and, in that particular, to invert
the general rule and stick at no expense; to pull down cottages; to drive out
as many inhabitants, and admit as few, as they possibly can--that is, to
depopulate the parish in order to lessen the poor rate; to be generous
indeed sometimes in giving a portion with the mother of a bastard child to the
reputed father, on condition that he will marry her: or with a poor widow,
always provided that the husband be settled elsewhere; or, if a poor man, with a
large family happen to be industrious, they will charitably assist him in taking
a farm in some neighboring parish, and give him£10 to pay his first
year's rent with, that they may thus for ever get rid of him and his
progeny. The Review quotes the
Morning Chronicle as saying : These restraints which
persons of property, interested in pulling down poor rates, will
infallibly impose, are much more likely efficacious than those he (the laborer)
will impose on himself. Until lately, no pauper could marry, and no pauper ought
to be allowed to marry. If there was no opening for a married man in his own
parish, and if the attempt to marry in another led to his removal as a pauper,
the laborer found himself governed by circumstances to which his inclinations
were forced to yield. So much for the Edinburgh
Review. The London Quarterly,
of December, 1832, says: 1st. The able-bodied laborer
must be discouraged from relying on parish aid. 2d. He must be enabled to
maintain himself in independence. The first end is to be attained only by
requiring from all parish laborers full work for a rate of pay barely
sufficient to support the individuals. A mere subsistence, in return for
their utmost exertions, is all that, in justice or policy, the parish can or
ought to be compelled to afford them. Harshly as this may sound, it is
absolutely necessary, to prevent our degenerating into a nation of paupers, that
the parish should always have the character of the hardest task masters, and
the worst pay-master a laborer can apply to.
It will be seen that the
system is so organized as to compel the able-bodied laborer to work, and to
reduce the compensation below the pint of subsistence. The Review gives
the following as the pay allowed to infirm poor in a county in the west of
England per week: The Edinburgh Review
says that it has been "affirmed, and truly, that there was no considerable
increase of population in England from the period when the poor laws were first
established (1601) up to the middle of the last century; and it is alleged that
its recent increase has been wholly owing to the prodigious extension of
manufactures and commerce;" and the London Quarterly, of March, 1826,
says: We are inclined to suspect
that in all agricultural districts the population suffered a diminution by no
means inconsiderable during this interval (from 1550 to 1750). For the purpose
of investigating this point, we have consulted a variety of parish registers,
considering these as the most certain sources of authentic data for forming an
opinion on the subject. The register book of the parish in which we are now
writing commences about 1550. On an average of fifty years, the number of
baptisms annually entered in it stands thus: There is nothing peculiar
either in the situation or circumstances of this parish. It is situated in a
country purely agricultural, near one of the main public roads, and at no great
distance from the Metropolis. The land is divided into farms of very moderate
dimensions, and a considerable portion of it is copyhold, a circumstance
forming, at all times, a powerful impediment to the demolition of houses of
husbandry and the consolidation of farms. The laboring poor, under the
regulation of the wages of labor, in England, have not increased in these
agricultural districts for more than two hundred years; whilst, under our system
of slave labor, the four hundred thousand African slaves brought to this country
by the Yankees have increased to more than four millions in less than one
hundred years. Could there be a stronger or more satisfactory test of the two
systems?
It will be seen by what I
have written, that I am enabled to trace the Abolition movement of the North to
the purpose of organizing the North as a sectional political party, upon the
basis of emancipating our slaves, digested by Mr. Adams, as far back as 1815, in
concert with British Abolitionists. I refer to this fact now, and to the efforts
which I have heretofore made to arouse the people of the slaveholding States to
the necessity of counteracting the Northern sectional organization, and that up
to the election of Mr. Lincoln, I did not despair of preserving the Union by
restraining the action of the Federal Government within the limits of the powers
granted by the Federal Constitution. In proof of this, I refer to the
explanation which I have given of the Nullification of South Carolina, to which
I would add an appeal which I made to the people of the slaveholding States, in
1850, given in this appendix below. I would refer now to the fact that the
Federal Government was organized by the States as States, and that that
Government has no powers but those granted by the Constitution, and that the
question of slavery was expressly reserved to the States. The purpose of the
North is dominion, power. If it were possible for them to subjugate the South,
then, instead of independent, or co-equal States, we will be subjugated
colonies, and the fate of Ireland, and of India, and of the pauper population
England, should admonish us of what our condition will then be. The following address was
published in 1850. It will be seen that it contemplated the possibility of
preserving the Union. He who desires a reconstruction must be deaf to all the
teachings of history.
The Jews were a peculiar
people, chosen of God, and under His guidance and protection, until, as a
punishment for their sins, He permitted Samuel to anoint Saul to be their King.
As in His goodness and mercy, under the Mosaic dispensation, God committed the
Ark of the Covenant to their keeping, so has He, in like manner, committed to
the slaveholding race of this favored country, the maintenance and preservation
of our Republican institutions. How is this to be done? God requires that man
should labor. Idleness is sinful and will surely be punished. Neither health,
strength,
power, intelligence, wealth, or influence, can be preserved without labor. We
must, therefore, meet the issues involved in the present crisis, investigate
their origin and progress, and prepare with a united energy for the defence of our rights and interests. We are told that what was
written aforetime was "written for our learning, that we, through patience and
comfort or the Scriptures might have hope." Christ Himself said, "Search the
Scriptures, for in the them ye think ye have eternal life, and they are they
which testify of me." He wrought miracles because it was part of His divine
mission to convince his immediate disciples and the world, that He was the Son
of God, having power to save sinners; but He Himself appealed to the Prophets,
because their words, verified by their fulfillment in subsequent ages, are so
many living witnesses, appealing to the judgments and consciences of men,
confirming the truth of Revelation. Indeed, the prophecies concerning the
destruction of Jerusalem--the character dispersion, persecution, and
preservation of the Jews--the desolation to befall Judea, Ammon, Moab, Idumea,
Philistia, Ninevah, Babylon and Tyre, testify unto us, who live in this
enlightened age, that the Scriptures are true, with even greater force than the
miracles wrought in the presence of His immediate followers by our Saviour
himself; for our knowledge of those miracles depends upon the testimony of those
who bore witness of them, whereas the literal fulfilment of the prophecies are
constantly proclaiming, in language which no one can deny, that the Scriptures
are true. We then turn to the Scriptures and find that God said unto Adam,
"Because thou hast hearkened unto the voice of thy wife, and hast eaten of the
tree of which I commanded thee, saying, thou shalt not eat of it; cursed is the
ground for thy sake, in sorrow shalt thou eat of it all the days of thy life;
thorns and thistles shall it bring forth to thee, and thou shalt eat of the hero
of the field; in the sweat of thy face shalt thou eat bread, until thou art and
unto dust shalt thou return." We thus see that God's decree
is, thas man must labor, and that no one is exempt therefrom. He, therefore, who
complains that the African is made to work, arraigns the wisdom, goodness, and
justice of God himself. Are we told that the complaint is not that the African
is made to work, but that he is a slave? We find that the first prophecy after
the flood was by Noah, in these words: "Cursed be Canaan, a servant of servants
shall he be unto his brethren. Blessed be the Lord God of Shem, and Canaan shall
be his servant. God shall enlarge Japheth, and he shall dwell in the tents of
Shem, and Canaan shall be his servant." God is not controlled by
accidents. He has a wise and beneficent purpose in all that He does. He made the
earth, the fowls of the air, the beasts of the field, the fish of the sea, and
the man "to have dominion over them." He made the climates and the seasons, and
intended that each should act its part in the great purpose of creation. He made
the lands within the tropics produce, in great abundance,
articles indispensable to the comfort and happiness of man. He gave to the
descendants of Ham a physical organization and constitution which enable them to
endure the exposure and fatigue, without which, the rich lands of that climate
cannot be brought under "the dominion of man;" and yet, although no one who
believes the Scriptures can deny that the purpose of God was, that man should
subdue the earth, all must admit, that without the aid, the guidance, and
control of the Christian white man, who, for want of a like physical
organization and constitution, cannot labor under a tropical sun, the savage
African, endowed as he is, and otherwise qualified for the task, never would put
the fairest and most productive part of the habitable globe under cultivation.
And the fact that the most powerful combination ever witnessed in the civilized
world, acting in the name of religion and humanity, cannot suppress the slave
trade, should admonish us that God has a purpose to accomplish through African
slavery. And who can now doubt what that purpose is? Look upon Africa, and what
do we see? A vast continent teeming with an idolatrous population, unable to
subdue the earth, or otherwise fulfill the great end of their creation. God
works by means that He may accomplish His purpose. What has He done through
African slavery? Has he not brought millions of benighted savages to dwell under
the droppings of His sanctuary? Has He not given them the blessings of the
Gospel, and greatly improved the condition, physical, temporal and spiritual, of
the savage African? Compare His way with the ways of man. He arrests the savage
in the midst of superstitious idolatry, and, by force, places him under the
protection of Christian laws, and within the influence of the Christian
religion, and has thus brought millions to a knowledge of the truth. Now, how
doth man work? Where are the fruits of his labor? Where are the African souls
whom he hath saved? How many heathen have those who denounce African slavery
converted to God? Verily, by their works will they be judged. Who that looks over the
habitable globe, and reflects upon the purposes of God, as indicated by the
wants, necessities, habits, condition and history of men, can believe that the
lands within the tropics are to be occupied by savages, beasts of prey and
venomous reptiles? And who that is not misled by a false philanthropy, can
believe that these lands can ever be brought under man's dominion, so as to
contribute their due share to man's comfort and happiness, in any otherwise than
that by the labor of Africans, regulated and directed by the intelligence and
perseverance of white men? It will thus be seen that
African slavery was intended by an all-wise Providence to promote our happiness
and prosperity; and that He had this end in view when He placed the black race
under the control of the greater intelligence of the white, and made it the duty
and interest of the Christian master to protect, educate, civilize and
Christianize the slave. This institution has been assailed--a combination more
powerful than any other formed upon earth is arrayed against it, and we alone
are left to defend it.
The press and the pulpit are
the great elements of modern power. We are assailed through the press and the
pulpit, and through the press and the pulpit we must be defended; we must
convince our own judgments and relieve our own consciences, that we may unite in
support of African slavery as a permanent institution. We have no
alternative. We must protect our rights as masters, or we become worse than
slaves. We must go into our own mountains; we must educate our own
daughters; we must qualify them to become governesses and teachers, that they
may educate our children, and themselves become the mothers of sons worthy to
inherit and qualified to defend our property and our institutions. We must
encourage our own merchants; we must employ our own mechanics, lawyers, doctors,
teachers, professors, and ministers of the Gospel; and, above all, we must
employ our own editors. We must make railroads, connecting our seaports with the
great West, and open a direct trade with Europe. We must revise our monetary
system, so as to employ our own capital in maintaining our own credit, instead
of handing over the products of our industry to the agents of foreign bankers,
subject to the fluctuations of the foreign market, which those bankers can
regulate at pleasure. We must print our own books, and especially our own school
books. We must create a Southern sentiment, and unite our own people. We must
educate our sons to command our armies, and prepare to maintain our rights,
peaceably, if we can, forcibly, if we must. That the South may act in
concert and with efficiency, a Southern Education Society has been organized and
chartered by the State of Georgia. The charter and the constitution of the
Society are hereto annexed. The Legislature have also incorporated a female
college and a university, to be located at Dalton, in this State. They have also
incorporated a city company, who, as the proprietors of the city property, have
agreed to give twenty thousand dollars from the proceeds of the sale of lots, if
a like sum is contributed by other persons. The Society will send agents
throughout all the Southern States, for the purpose of soliciting contributions
to its funds, and as soon as a sufficient sum is obtained, they will commerce
the publication of books, and put their schools into operation. They have issued the
prospectus of the Southern Statesman, and, as the paper will be the
property of the Society, and the profits derived from it applied in aid of the
Female College, it is hoped that the entire Southern public, and especially the
ministers of the Gospel and the ladies of the South, will exert themselves to
obtain subscriptions and donations to place the publication on a permanent and
efficient basis. The prospectus explains its purpose and objects. It will be seen that the
managers of this Society must be Baptists, and that the University and College
will be under their control. We are prepared for objections. It have been said,
and will be again repeated, that such institutions should not be under sectarian
influence. We place these institutions under Baptist control, because,
while we invite the co-operation and solicit the aid
of persons belonging to all other religious denominations, and also of those who
are not members of any church, we rely chiefly upon members of the Baptist
society for the means of building them up and giving them efficiency; hoping
that our success, as pioneers in a field which requires so many laborers, will
stimulate other churches to follow our example. It will further be seen that the
Society wish to educate Baptist missionaries, who shall go from our schools into
the non-slaveholding States for the purpose of establishing Baptist churches in
those States in fellowship and communion with the Baptist churches in the
Southern States, and thus bring the combined influence of religion and
patriotism in aid of the Federal Union, and that this proceeding must
necessarily be of a denominational character. In further vindication, we add,
that other Christian churches have established sectarian schools and colleges,
and that it will be fortunate for them and for the country if our example should
induce them to be more careful in the selection of teachers. We are aware that, as our
newspaper will treat of political subjects, it will be said that our purpose is
to blend religion and politics. The greatest of temporal blessings is a good
government[.] We admit that Christ's kingdom is not of
this world, but we, as men, have our relations to temporal as well as spiritual
matters; and it is no less the duty of Christian men to resist Satan's influence
in affairs of State than resist it in the government of the Church. P.S.--It may be well to add a
few words in further illustration of the plans and purposes of the Southern
Education Society. No one, who will carefully
read the history of the past, can doubt that the infidelity which preceded the
French Revolution led to the massacres which marked that period, nor can any one
who carefully examines the Scriptures fail to see that the false philanthropy
and the false religion which have arrayed the Abolitionists of the North against
the peace and perpetuity of this Union, is the legitimate offspring of that
false philosophy which, in the name of reason and humanity, deluged the world in
blood. It is the purpose of the
Southern Education Society, through its publication, to examine into the history
of the past, to employ able writers to prepare a series of school books and
other publications suited to the times in which we live, and free from the
morbid and sickly sentiment which is the peculiar characteristic of most of the
books now in use. An estimate has been made,
showing that the profits on the Northern books and publications used in the
South, would feed, clothe, and educate several thousand females. Southern
planters must necessarily occupy large tracts of land, and are compelled to send
their children from home or employ private teachers. John Q. Adams was one of
the most active Abolitionists. It was under his advice that Daniel P. Cook moved
the Missouri restriction in Congress, and under his advice Governor Slade, of
Vermont, organized an Education Society, who are sending into the South and West
hundreds of Abolition Missioners, in the shape of beautiful
women, who, trained for the purpose, go in search of husbands, and, as
teachers and governesses, are introduced into our families, train up our
daughters, and marry our sons, thus building up in our midst a morbid feeling on
the subject of slavery, which saps the foundation of our prosperity. It was thus
that Adam was driven from Paradise. We must counteract these
proceedings by educating our own daughters to be teachers and governesses; and
this we can do if the people of the South will unite in aid of the efforts of
this Society.
Whereas, The Baptist
churches in the non-slaveholding States, heretofore in fellowship and communion
with the Baptist churches in the slaveholding States, have instituted new rules
of faith and practice, which deny to slaveholders their equal rights of
conscience and equal religious privileges, and which rules of faith and practice
have a direct tendency to create sectional prejudices, operating upon the
religious and political opinions of the people of the non-slaveholding States;
in such manner as to endanger the peace and harmony of the people of the United
States, and by inducing strife and animosities, greatly to prejudice the cause
of civil and religious liberty, which all men should promote by all proper
means; therefore, the undersigned, having this end in view, do hereby organize
themselves into a Society, to be called "The Southern Education Society," and do
ordain and establish for its basis and government the following
Constitution: ARTICLE 1. The objects of
this Society shall be to promote the cause of Education generally, and
especially in all the slaveholding States--to qualify females to become teachers
in common schools, in public and private academies, and in private families, and
also to quality all who in the Southern States are to exercise an influence over
public opinion, and especially the rising generation, the graduates of our
colleges, and all men who are hereafter to fill public stations, whether in the
pulpit, at the bar, or in the Legislature or in Congress, to assert, vindicate,
and maintain all the rights which belong to us as citizens of the United States,
and especially,
ARTICLE 2. The means by which
this Society proposes to act, are: 1st. The endowment and
support of Female Seminaries, in which females may be qualified to become
teachers in public and private schools, and in private families, and thus
economize the cost of education, by bringing into requisition the character,
talents and influence of woman, and permitting her to do her part in aid of the
great cause of civil and religious liberty. 2d. The endowment and support
of Common Schools and Colleges, in
which the teachers and professors shall be persons whose opinions on these
fundamental questions are known and approved. 3d. To create a literature
for the South, by the publication in the South, of school books, bibles, hymn
books, periodicals, and newspapers, and, as far as practicable, all other books
and publications suited to or required by the public; and, with this view, to
establish Bible Societies, Sunday School Societies, Tract Societies, and
Auxiliary Education Societies, auxiliary to the Southern Education Society. 4th. To qualify ministers of
the Gospel, who, holding the Constitution of the United States in one hand and
the Holy Bible in the other, shall go forth from our Colleges as missionaries to
the non-slaveholding States, rebuking the sinful proceedings in those States,
and especially the Pharisaical pretensions to greater holiness; teaching their
churches Christian charity and brotherly love, and planting churches in those
States, wherever two or more can be found who will stand forth as witnesses of
the truth, and willing to become members of a church in fellowship and union
with the churches of the South.
The following are extracts from the
article referred to on page 60, which I published in London: In explaining their relation
which the United States bear to the subject of slavery, we must look to the
organization, the powers, and purposes of the Federal Government. The United States were
originally colonies, settled under the authority and subject to the crown of
Great Britain. One of the grievances of which they complained, before the
Revolution, was, that the mother-country compelled them to receive African
slaves, imported by authority of British law. The immediate cause of the
Revolution was, the attempt of the British parliament to tax the colonies. This
led them to scrutinize the principle of taxation. They saw that no
representation in parliament would protect them against oppression; that the
right of taxation was in fact a right of conversion, and that to permit
parliament to levy taxes, was to surrender their property to the destruction of
that body. This principle was carried into the struggle of the Revolution. The
colonies dispersed over so large an extent of territory, saw clearly that their
Congress, composed as it was of delegates representing different sectional
interests, would sympathize with the interests which they represented, and that
they, too, might abuse the power of taxation. Hence the Congress of the
Revolution had no power to levy taxes. They were but an advisory council. Men
and money were furnished by the States. Each State was a distinct organization;
its governor, its legislature, its judiciary, its civil and military officers.
Upon declaring themselves independent of the mother country, each State
organized their respective governments for themselves. The people of slave[-]holding States were compelled to take into consideration the
state of their society as it then existed. The question was not whether
they would institute slavery; it had already been instituted by the British
Government. The black man was already the property of the white, by the law of
England. Is it matter of surprise
that, under such circumstances, the master believed that his slave was not
qualified by habits, education, or intelligence, to exercise political
rights?--that the black man was not the equal with the white, and that
legislation could not make him so?--that to emancipate the slave, without giving
him equal political rights, would have created a degraded caste, which,
so far from contributing to their moral or physical improvement, would have led
to their still further degradation? and that, to have given them equal political
rights, constituting them a part of the Government itself, would have inoculated
the Government with a moral disease, which must have caused its premature decay?
Is it surprising that they should have believed that the public safety forbade
to engraft the blacks upon the body-politic, and that they had no alternative to
recognize and continue the pre-existing system of slavery? Having
resolved to do this, they passed laws to ameliorate the condition of the
slave, and placed him under protection. They identified the interest of the
master and the slave, and compelled the master to provide him sufficient food
and raiment. Instead of living on dry potatoes, as is the case with the Irish
laborer, the American slave has an abundance of wholesome diet, and to spare.
Instead of sleeping upon wet straw, with a single poverty blanket for a whole
family, as in Ireland, the American slave has good bedding and an abundance to
spare of bed-clothes. Instead of one suit in seven years, as in Ireland, he has
his three new suits--one for winter and two for summer, and good shoes and
stockings. Instead of killing them by unmitigated toil long before they become
burthensome, through age or infirmity, as charged by the Edinburgh
Review; and instead of permitting them to perish by exposure to hunger
and cold, as in Ireland, the American slave is nursed in sickness, and
comfortably provided for in his old age. We have said that the
colonies, in declaring themselves independent, refused to organize a Central
Government with the power of taxation; that the Congress of the Revolution was
but an advisory council, and that the States were separate sovereignties. As
such, on the 4th of July 1776, they declared themselves independent, which
independence, as separate sovereign States, was recognized by England herself in
the treaty of peace. These separate sovereign
States thus became a part of the society of nations, who recognised their right
to establish their own form of Government, and, in doing so, recognised the
institution of slavery as by them established. After they had thus been admitted
into the family of nations--after their forms of Government, including the
institution of slavery, had been recognized and adopted, they determined to form
a more perfect union, and for this purpose the States selected delegates, who
met in convention and proposed for their adoption the present Federal
Constitution. In that convention each State had the same voice, and the
constitution thus prepared had no binding force until it was adopted by nine
States, and then only as between the States so adopting it. It will thus be seen
that the Federal Constitution is a compact between sovereign and independent
States. These States carried into the
convention great diversity of opinion. Some of the delegates were in favor of a
monarchy; some preferred a President and Senate for life; many desired to create
a strong Central Government; but the conflict between the colonies and the
mother country had begotten a repugnance to monarchy; and an apprehension that a
strong Central Government would end in the despotism of an absolute majority, in
which the interest of the weaker sections would be sacrificed by combinations of
the stronger, induced the weaker States to insist upon reserving an equal voice
in the Senate, and to resist every attempt to give the Federal Government any
further domestic control than was indispensable to union among themselves, and
to a successful administration of their foreign relations. The Federal
Constitution, therefore, while it constitutes them one distinct nation as to all
the rest of the world, is but a compact between sovereign States, regulating
their intercourse with each other, which compact was not intended to interfere
with the Constitution or form of Government pre[-]existing in the several States, who, in adopting it,
considered and treated each other as separate Governments. Slavery had been
established by Great Britain, and continued by the States in which
it had been thus established, because the people of those States, in declaring
themselves independent of the mother country, did not believe that they could,
consistently with their own safety, or the happiness of the blacks themselves,
change the relation which the British Government had forced upon them; and the
other American States, in forming the Federal Constitution, had no more right to
insist that the slaveholding States should abolish slavery, and to make that a
condition of their becoming parties to the Federal Government, than France or
England had to require it as a condition to the treaty of peace, by which their
independence was established. In fact, the question of slavery never has been
submitted to the American people as such. The question before them was not
whether slavery should be abolished, but whether they should become parties to
the Federal Constitution. In doing so, the several States became members of the
Federal Government, reserving to themselves the exclusive control, over their
domestic institutions. And hence, as domestic slavery was a domestic
institution, and
under the exclusive jurisdiction of the respective States, the Federal
Government being charged with the foreign relations of all the States, is alike
bound to protect the interest and property of all; and hence, so long as any
State shall recognize the property of the master in his slave, the Federal
Government is as much bound to protect that right of property as it is to
protect the right of property of the merchant in his ships. This brings us to
the case of the Creole, where slaves, the property of an American
citizen; on board an American ship, passing from one American port to another,
prompted by assurances that if they could reach a British port, they would be
liberated, rose upon the crew, murdered part of them, and compelled the others
to navigate the ship to Nassau (New Providence), where they were set at liberty
by the British authorities. The case cannot be strengthened by argument. The
Federal Government was constituted to promote the rights of property of the
slaveholder in all questions arising between him and foreign Governments. We
know that very high authority have declared that there is no law in England
which will authorize the delivery of these slaves. We hold that slaves, by the
law of nations, are admitted to be property; that while on board an American
ship, they are slaves; and that a vessel carried by mutiny into a neutral port
is not subject to the municipal regulations of that port; and that the seizure
of these slaves was an illegal confiscation. Can any one suppose that the
American Government would permit any other Government to confiscate an American
ship carried into a neutral port under such circumstances? And if they would not
permit the confiscation of the ship, how can they, without dishonor, permit the
confiscation of the slaves? They are as much bound to
protect the property of the Southern planter as of the Northern merchant. Thus, in the working of this
complex system, the institution of slavery counteracts the influence of
universal suffrage, and prevents the ascendancy of that absolute majority of the
evils of which M. De Toqueville was apprehensive; and, therefore, the American
statesman places a much higher estimate upon it than the mere right of property;
and the intelligent European will see that it constitutes a distinct element in
American society, acting upon the machinery of government, which is not
applicable to the States of Europe. The London Times tells
us that "the British Government has, with great exertions, managed to conclude
treaties, by which the slave trade is to be punished as piracy; that the right
of searching American ships is indispensable to its execution, and that the
British Government is determined to enforce it." Following upon the heels of
this, even before these treaties are ratified, we have an order in council
authorizing the transportation of East India emigrants to the island of
Mauritius and we are told that extensive arrangements have been made to
transport emigrants from Africa to Jamaica, Trinidad and Guiana. The 20th
article of this order in council, which bears date January 14th, 1842, is in the
following words: "No emigrant arriving from India at Mauritius, shall, in
Mauritius, be capable of entering into any contract for service except for the
period, in the manner, and under the superintendence, which, by a law in force
there, is required in case of contracts for service by other laborers in
agriculture or manufactures within the said island." This order provides for the
emigration of free labor, and requires that such laborer shall be incapable of
making a contract, except by a law made by the party giving him employment[.] Now hear what the Edinburgh Review says in relation
to free labor in Jamaica, and the means used by the law-makers in Jamaica, to
reduce the price of free labor below that of slave labor. "It has been
attempted," says the Review, "to make the dwelling and provision ground
of the negroes the instrument of compelling them to work for the land-holder, on
whose plantation they reside, or reducing their wages!!" The language used has
been, if you do not work for me, you must immediately quit your house and land
(to the latter of which its tenant has given its principle value); if you demand
so much, a week for wages, I demand so much a week for rent, or rather so much
for each member of your family, without reference to the actual value of the
tenement and its appurtenances, and the one demand and the other shall be
simultaneously adjusted; the strong arm of the law has been liberally invoked to
carry on the contest commenced on such grounds; in some instances the
administrators of the laws, enactments
of the most heterogeneous description have been brought to bear upon the
unfortunate laborers; there are the contract act, the poundage act, the fishery
act, the huxter act and pedlar act, the police act, and the vagrant acts. When we come hereafter to
speak of the suffering poor of Ireland, the reader will understand the process
by which free labor is reduce below the cost of slave labor. But here again we
recur to the Edinburgh Review. It says: "When slavery is tempered with
ordinary humanity, what Mr. Gurney calls the 'dead weight,' the maintenance of
the old, the infirm, the sick, the shammers of sickness, the mothers of young
infants, and the numerous children, make the aggregate expense ruinous." Such is the theory of British
philanthropy; and, therefore, in order "to beat Cuba and Brazil out of the
market," they substitute free labor for slave labor, and leave the old, the
infirm, the sick, the widow and orphan, to perish of hunger and nakedness!! But
this is not enough. The same Review tells us "that the proposition for
declaring the slave trade piracy, assumes that the right of search and seizure
should be exercised, and that the culprit should be prosecuted in the courts of
this (Great Britain), and not of the culprit's country." But hear the Reviewer.
He says: "The poverty of India must be cured by the attraction of British
capital to the fields of production. United as it happily is with England it
NEVER can become a manufacturing country, * * * * * being happily disabled, by
their relative position, from levying contributions upon each other, by domestic
industry-protecting tariffs, the people of India may employ themselves
profitably for a period, to which it is impossible to fix a limit, in raising
raw produce to exchange for the manufactures of Great Britain. Both the capital
and the intelligence necessary even for this purpose must come from
England." But it may be well also to
look to the comparative resources of the two countries. America has no debt; she
has all the materials of war within herself. She has men, provisions, arms, and
all the munitions of war; and all these she can command at home, by means of her
power of taxation and her credit. She will not be compelled to come to Europe
for a dollar. She has the material for navies, also, and these she can produce
and equip with the facility of magic. She has six hundred steamboats on a single
river, and these can be converted into a fleet, bearing men and provisions, that
will drive the piratical fleets of England and the West Indies. But would she be
content with this? Would she not declare the emancipation of the British
colonies? Would not France, and Russia, and Holland, unite with America in
breaking the chains which bind down the independence of Ireland and of India?
Instead of compelling all the world to come to purchase India cotton, and India
sugar, will not all the world unite with America in declaring the servitude of
Ireland and India to be at an end? And would not this be accomplished? Is this
the just retribution which an all-wise Providence has decreed as the punishment
for the sins of England? and is the struggle of the British land-owner, to
maintain his position in society, to end in this? What, then, is to become of
British power? Who, then, will pay British rents and British taxes? We will not attempt to probe
the subject further. If Great Britain would avoid the consequences, she must
retrace her steps; if, indeed, the day of retribution has arrived, she will
persevere.
The traditionary policy of
Russia, from the time of Catherine, has been to seize upon Constantinople as the
gate to the commerce of India; and hence England, jealous of the progress of
Russia, has sustained the power and dominion of the Turk against the
encroachment of Russia. Preliminary to a renewal of the war with the Sultan,
Russia created a large fleet at Sebastopol. As a means of perpetuating his
dynasty, and hoping to secure the co-operation of
England, Napoleon the Third became a party to the war in the Crimea, and not
only destroyed the Russian fleet, and not only prevented a control of the Black
sea, but closed the Dardanelles to Russia. Shut out from the commerce of India
by way of the more direct route, the emissaries of Russia were soon found in the
north of China and the Japanese seas, and proposals were issued for a loan to be
applied to the construction of a railroad from St. Petersburg on the north of
China, to the mouth of the Amoor river. Seeing that such a railroad would,
unless otherwise prevented, give to Russia a preponderating influence in China,
and endanger the British supremacy in India, England induced France to unite
with her in the war upon China by which the monopoly of the trade of China by
Russia was prevented. With this introduction, I give in the appendix an article
from the London Spectator, of April 11, 1857, which, as was intended,
defeated the Russian loan, and has delayed, for how long remains to be seen, the
construction of the contemplated railway. The power thus described by
the Spectator acts in concert, and lives and moves, and has its being, in
the delusion that nothing but gold or silver is money. Its profits depend upon
its control over the exchanges, which are regulated by the movement of money and
of commodities.
[From the London Spectator, April 11, 1857.] The present state of affairs
on the Continent suggests the existence of some influence which is not generally
recognized, though its power must be overruling and its operation universal. It
is not seen, yet it reverses the councils of governments which appear to be
supreme; it disregards equally public opinion and the interests of the States in
which it has its agents. The monetary condition of France and of Northern Europe
draws attention once more to the irregular and dangerous speculation which the
most powerful man in Europe tries in vain to curb; it would seem that there is
some greater power than he, irresponsible and absolute; and when we turn to
ascertain the fact, we are not long in discovering at least enough to create
uneasiness and to demand scrutiny. We perceive some corroborative proof that
such an influence does exist--that its power is becoming supreme--that it is now
doing mischief, and that it may become dangerous alike to the material
condition, the political independence, and the domestic order of
States. Nor are we speaking of any imaginary or mere "moral" influence; we
speak of a powerful combination more than political, more personal than a
Congress of diplomatists or prince. The Emperor Napoleon has long
been engaged in the endeavor to draw out the enterprise of his subjects, and the
effect throughout France is great. Any traveller in the most outlying provinces
perceives a remarkable change in the aspect, action, and condition of the
people. The trading class, as well as the industrial classes, are animated by a
spirit of energy hitherto unknown to the Celtic population. They have learned
not only to employ their time with more vigor, but employ their savings--to
venture that which they once hoarded. In that economical sense France was almost
a virgin soil, and the effect is described by the traveller as marvellous. Thus
far a blessed change. But look beyond. The very capitalist who fostered if they
did not implant the idea in the Imperial mind, have seized the same opportunity
to project movements for the further development of capital, its power and
productivity. The great speculator in this sense differs in some degree from the
ordinary trader. The money merchant obtains his profit entirely from the simple
act of exchange, and he does so equally whether the original holders are
profiting in the transaction or not. He may be the broker between two
communities who are ruining each other, and build his fortunes upon their
downfall. And the individual trader in this merchandise will be instigated
principally by the desire to grasp large and prompt profits. He is not a safe
councilor for those who have in charge the permanent interests of States. For
the welfare of a community, immensely accumulated wealth, hoards of gold, are
not so essential as well diffused supplies of the necessaries of life and its
enjoyments. But the same movement which gave an impulse to the commercial spirit
in France made the largest opening that the world has ever seen for a forward
movement of great capitalists; and they have snatched it. Alarmed at the vast
proportions which these joint-stock combinations have attained in France, the
Emperor and his political ministers have issued their protest against excesses
in that direction; they have followed up protests with restrictive imposts; but
still the movement goes on[.] The commercial activity
directed to the development of real trade would, with as much steadiness as
rapidity, increase the available means of the French people--would make them
more independent of the casualties of the seasons--would make them more
comfortable, more orderly, more capable of supporting their ruler, more obedient
to his decrees. It is easily to be understood why the Emperor Napoleon desires
to add that element of English order to the military capabilities and energy of
the French. He has in great part succeeded. But the excess of speculation
invoked by those who have stood ready to take advantage of the impulse has,
again in the present moment as it did in the autumn of last year, threatened to
defeat the improvement by over-doing it; and we in England are under the same
commercial pressure which visited us in the autumn. At the same time there
appears to be no suspense in developing, extending and multiplying the immense
joint stock combinations which the French Emperor has endeavored to restrain,
though at such a time such operations ought to be entirely suspended. We see on
the stocks the new International Society of Commercial Credit, whose founders
are connected with the great money corporations in every capital of Europe--the
banks of France, England, Amsterdam, etc. The list of the Council of
Administration of the grand company lies before us. Of the great Russian Railway
Company, half of the members short of one are Russians, and the great number in
that half are Councillors of State and officers in the service of the Emperor
Alexander. In that Russian half, however, we see the name of "Thomas Baring,
banker, in London." The other half consists of men whose names are well known in
every capital: S. Gwyer, member of the Council of Commerce; Earnest Sillem, a
partner in the house of Hope& Co., at Amsterdam; Guillaume Borski, banker in
Amsterdam; Francis Baring, banker in London; Henri Hottinguer, banker in Paris;
Isaac Pereire, administrator of the Paris and Lyons Railway; Baron Seillere,
banker in Paris; M. Auguste Thurneyssen, administrator of the West of France
Railway; and M. Louis Fould, brother of the well-known State financier. Some of
those are the names we so constantly encounter in that comparatively small list
of men who are administering the greatest financial operations in Paris, Vienna,
St. Petersburg, Amsterdam and London. The object of this company is to take
forty-five millions of capital, a sum which could easily be raised for
reproductive purposes, but which they intend to sink in railways through the
Russian deserts: while the
actual state of the whole world--of Europe, England, America, and the far
East--proves that we cannot spare that forty-five millions, nor even the first
instalment of it[.] Yet these few gentlemen, who rule the
world at present, have determined that it shall be taken despite the Emperor of
the French, the Bank of England, or the commercial public of this country. It is said that the position
of M. de Morny is not satisfactory either to the Emperor of all the Russians or
to the Emperor of the French; but M. de Morny is fulfilling a career which has
become independent of Emperors. He has attached himself to the Grand Council of
the International Finance, and it is that Grand Council at present which
arranges the affairs of the world by the power of the purse, let potentates and
parliaments think what they may. The Emperor of the French is at present engaged
in attempting to restrain the use of fictitious titles--counties, vis-counties
and baronies--baubles at which the aristocracy of wealth may laugh. The power of
that order, which is the more powerful because its members are comparatively
limited, proceeds in its actions independently of those ordinary political
movements, and shows itself pursuing its course uninterrupted, undiverted,
whatever may be the state of the commercial world, whatever may be the mood of
the Imperial mind, whatever may be the action of ordinary statesmen. We are not considering the
diversion of capital, the dangers that may arise from over speculations, the
ruin that may visit shareholders in these huge joint stock companies, from which
the directors always withdraw before the crash. We are not considering the
commercial disturbance created by the necessity, which is forced upon Europe
just at present, of undergoing a high rate of interest for ordinary commercial
accommodation, while millions are lavished upon the fancies or the schemes of
those millionaire statesmen. We are simply considering the magnitude and the
independence of that power of combined millions. It is a new order--a new
administration in the world. The names most conspicuous in it are remarkable for
certain characteristics. Read them again--Rothschild, Baring, Steiglitz,
Pereire, Hottinguer and Fould; with a second order, comprising the Weguelins,
the Hopes, and the Seillieres. They form a grand council of small numbers that
could all be assembled in a dining room. They are remarkable for being closely
connected with the Governments of all the principal States in the world, while,
at the same time, they are not closely connected with the States under those
Governments. You would not accept a Baring as being peculiarly representative
England; you must choose many other names before it--the Russels, the Stanleys,
the Salts, the Crawshays, Cobdens and Tyrells. France would certainly not be
represented by Pereire, no country by a Rothschild; a Steiglitz is by no means
exclusively Russian, any more than Fould is French. The class is alien to any
particular country, and yet deeply rooted in the administration of each country.
It can command not only a mass of capital enough to determine the financial
operations of a Government; the success or failure of State loan, but it can
influence, beneficially or fatally, the course of trade, by turning upon any one
branch the combined mass of capitals from States elsewhere, just as the five
potentates of Europe can muster an army which would crush the people of any one
empire mutinying against any one of the five. But this grand council of
millionaires has proved that it is superior to the political administration of
the separate countries. It is at once alien to the aristocracy of any country,
and yet becoming more powerful, and therefore more respected, than any one
aristocracy. Unlike any order which we have yet seen, it has its home equally in
Paris, Berlin, Vienna, Amsterdam, St. Petersburg or London. It is republican,
but of the aristocratic republic, more close than the Grand Council of Venice,
infinitely more arbitrary. Like that commercial republic, kings bow down to it;
but the kings that now bend are the giant emperors of our day, not the brawling
leaders of the middle ages. The debates of this council are not reported; its
constitution is as yet unascertained and undetermined. We feet its power before
we can define it. It is independent of political councils, higher than political
responsibilities, ignorant of constitutional checks. It stands confessed in the
actual events of the present week; and in its independence, perhaps disregard of
the interests which it overrides, it extorts from us the question whether any
account has yet been taken of the immense institution that has sprung up while
Emperors and common politicians were thinking to settle the world with armies
and treaties.
The aggregation of capital
and credit and financial influence, thus described, was the fruit of the system
of funding and finance adopted by the British Government acting through the Bank
of England, and represents the profits created by dealing the public credit of
European and other Governments, and which, having concentrated into so small a
circle so great a control over public credit, from time to time so acts upon the
commerce and exchanges of the commercial world as to regulate the value of money
and of property, regardless of pecuniary losses which they inflict on those who
may be the victims of their remorseless speculations. Thus, as I have
stated:
Prior to 1838, any American
merchant, who could obtain an acceptance of either Wilde, Wiggins or Wilsons,
three American houses established in London in connection with the American
trade, could purchase British goods upon a credit of six and twelve months, and
as our commercial system was then organized, he could, by giving his Custom
House bond, get time to pay the duties. He was thus enabled, by the use of his
credit, to command British capital in the shape of merchandise, and having made
sales, he could with the proceeds purchase American produce, which, being
remitted to the credit of the London House, was sold, providing funds to meet
his payments.
Corresponding to the
emancipation of the West India slaves, and the opening of the East India trade,
the capitalists and financiers of England opened a bitter and relentless warfare
on American credit, which resulted in the prostration of American credit in
England, and a new organization of the American trade; under which, instead of
their giving us their capital upon our credit, we gave them our capital upon
their credit. The modus operandi was thus: An agent of a British banker
or manufacturer bought cotton or other exports in a Southern port, and made
payment in a bill payable sixty or ninety days after date, in New York, which
bill was discounted by our banks, because nor merchants,
no longer able to buy goods in Manchester, bought them in New York, and
therefore, funds in New York were worth more than funds in the Southern banks.
The bill upon New York, when due, was paid by a second bill upon London, which
was discounted by the banks of New York, because the New York merchants dealt in
Europe, and money in London was worth more than money in New York. When this
second bill became due, the cotton had reached Liverpool and had been sold to
the manufacturer, whose note at ninety days had been discounted, and the
proceeds placed to the credit, not of the Southern planter or of the Southern
merchant, but of the British agent, who was thus enabled to fix the price in our
market, and of course took into consideration all the cost and charges, and the
contingencies affecting the price in Liverpool, and especially the fact that he
would be compelled to sell the cotton in Liverpool in time to meet the payment
on the second bill. Consequently the price thus fixed was the lowest at which
the combination of English cotton spinners (the cotton supply association acting
in concert with their agents), could purchase in our market. The merchants and
the banks of New York were also deeply interested in this new system, because it
made New York the port of entry for the South, and gave to New York merchants
and New York banks the profits which have built their marble palaces, and
multiplied their wealth and resources. The effect of this
re-organization of the American trade was to reduce the price of cotton from
seventeen cents to three, and the effect of reinstating the control of
this "new power" in Europe over the values of the money, the property, and the
credit of this county, by resuming specie payments, will be to reduce us to a
condition equally, or even more, oppressive than the Egyptian bondage of the
Israelites.
DUFF GREEN.PUBLIC CREDIT BETTER THAN THE NOTES OF THE BANK.
Page 23
placed by the Government
with the Bank as its agent, and which sum was used by the Bank as the basis of
its issues. If the Government had applied these resources to sustain its own
credit, and that credit had been made a legal tender, instead of making the
notes of the Bank a tender, inasmuch as the public credit of England would not
have been subject to the laws which regulate the export and import of specie,
the quantity of the public credit, in circulation, could have been regulated by
Parliament, and the value of the currency would have been much more uniform and
stable than it has been under the regulations of the Bank. Is it not also
apparent that, in that case, there would have been no such fluctuations in the
quantity and values of money and of credit; no such suspensions of banks; no
such depreciations in the values of property and of labor; and no such
individual distress and bankruptcies as the management of that Bank has caused,
not only in England, but throughout the commercial world?
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THE CRISIS OF 1820 AND 1826.
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PAPER MONEY
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the Government
had issued its own credit, in a shape suitable for currency, which was a
legal tender, and receivable in payment of the public dues, and fundable at
a proper rate of interest and reconvertible into currency, limiting the amount
in circulation to the sum requisite for that purpose by a proper system of
taxing the excess; and had required each bank to place in the treasury an amount
of the reconvertible funded debt as a security for the payment of their notes,
there would have been no such speculations in foreign loans; no such
depreciation of the value of credit or of property would have then occurred; and
consequently there would have been no such bankruptcies and distress. The power
to coin money and regulate its value is vested in the British and French
Governments as in ours, and as the French livre of 1789, contains only
the seventy-eighth part of the original livre of the year 800, and the
English pound unit contains but a small fraction more than one-fourth
part of the original pound sterling, and the individual obligations, as well as
the public debt of England, had been contracted when the currency was
abundant and cheap, instead of urging the issue of the public credit as money
regulated as proposed, an effort was made to reduce the value of the coinage by
increasing the alloy or diminishing its weight, and the issue before the British
public was the use of bank notes or of a metallic coin thus depreciated, they
preferred a bank note convertible into specie; I would restore the value of our
currency by making it convertible, not into specie, but into a six per cent.
re-convertible bond, and would coerce the conversion by taxing the excess,
instead of depreciating the value of metallic coins by increasing the alloy or
reducing the weight. Few, I presume, will deny the power of Congress thus to
depreciate the coins of gold or silver; and as in that case the depreciated
dollar would still be a dollar, it is clearly in the power of Congress to reduce
the value of metallic coins much below what would be the value of the currency
under the system which I propose.
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CAN CONGRESS REGULATE THE VALUE OF A METALLIC OR A PAPER
CURRENCY CONVERTIBLE INTO GOLD?
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DIAGRAM
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SCOTCH BANKING.
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ENGLAND AND THE SLAVE TRADE.
THE COLONIAL POLICY OF ENGLAND.
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THE DUKE OF WELLINGTON.
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LORD PALMERSTON.
MR. COBDEN.
FRAZER'S MAGAZINE RECOMMENDS SERVILE WAR.
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SIR ROBERT PEEL.
THE CHEAP LABOR OF INDIA CANNOT COMPETE WITH SLAVE LABOR.
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BRITISH POOR LAWS.
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PAY OF PARISH LABORERS PER WEEK.
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APPENDIX A.
TO THE PEOPLE OF THE SLAVEHOLDING STATES.
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THE FOLLOWING IS THE CONSTITUTION OF "THE SOUTHERN EDUCATION
SOCIETY."
gross violation of propriety and of good faith for the people of any
non-slaveholding State of this Union, and especially for the Legislature of any
such State to do any act whatever, which may in any wise diminish the value of
our slaves, or endanger, or disturb our peaceful enjoyment of such property.
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APPENDIX B.
OF THE UNITED STATES, THEIR FORM OF GOVERNMENT, AND THEIR
RELATION TO SLAVERY AND THE SLAVE TRADE.
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APPENDIX C.
THE NEW POWER IN EUROPE.
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AMERICAN CREDIT IN ENGLAND.
THE FINANCIAL SYSTEM OF ENGLAND HOSTILE TO THE CONFEDERATE
STATES.