The Register of Pennsylvania : devoted to the preservation of facts and documents and every other kind of useful information respecting the state of Pennsylvania, Vol. XII, Part 59

Author: Hazard, Samuel, 1784-1870
Publication date: 1828
Publisher: Philadelphia : Printed by W.F. Geddes ;
Number of Pages: 438

USA > Pennsylvania > The Register of Pennsylvania : devoted to the preservation of facts and documents and every other kind of useful information respecting the state of Pennsylvania, Vol. XII > Part 59

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201

THE PRESIDENT'S REASONS FOR REMOVING THE PUBLIC DEPOSITS.

1833.]

consequences of blind fanaticism to the honest Germans who left Rapp's Society, and followed Count Leon with a view of bettering their condition. It affords an in- structive lesson, not to these Germans alone, but to all who place implicit confidence in fanatic leaders, who live on the credulity of an honest, but too confiding public .- Pitts. Manufacturer.

THE PRESIDENT'S LETTER, CONTAINING HIS REASONS FOR REMOVING THE PUBLIC DE. POSITS.

Read to the Cabinet on the 18th of September, 1833.

Having carefully and anxiously considered all the facts and arguments, which have been submitted to him, relative to the removal of the public deposites from the Bank of the United States, the President deems it his duty, to communicate in this manner to his Cabinet the final conclusions of his mind, and the reasons on which they are founded, in order to put them iu durable form, and to prevent misconceptions.

The President's convictions of the dangerous tenden- cies of the Bank of the U. S. since signally illustrated by its own acts, were so overpowering when he enter- ed upon the duties of Chief Magistrate, that he felt it his duty, notwithstanding the objections of the friends by whom he was surrounded, to avail himself of the first occasion to call the attention of Congress and the peo- ple to the question of its re charter. The opinions ex- pressed in his Annual Message of December, 1829, were reiterated in those of December, 1830, and 1831, and in that of 1830, he threw out for consideration, some suggestions in relation to a substitute. At the session of 1831-2, an act was passed by a majority of both houses of Congress re-chartering the present bank, upon which the President felt it his duty to put his constitutional veto. In his Message returning that act, he repeated and enlarged upon the principles and views briefly asserted in his Annual Messages, declaring the bank to be, in his opinion, both inexpedient and unconstitutional, and announcing to his countrymen, very unequivocally, his firm determination never to sanction by his approval, the continuance of that insti- tution or the establishment of any other upon similar principles.

There are strong reasons for believing that the mo- tive of the Bank in asking for a re-charter at that session of Congress, was to make it a leading question in the election of a President of the United States the ensuing November, and all steps deemed necessary, were taken to procure from the people, a reversal of the President's decision.

Although the charter was approaching its termina- tion, and the Bank was aware that it was the intention of the government to use the public deposite as fast as it accrued, in the payment of the public debt, yet did it extend its loans from January, 1831, to May, 1832, from $42,402,304 24, to $70,428,070 72, being an in- crease of $28,025,766 48 in sixteen months. It is con- fidently believed that the leading object of this immense extension of its loans, was to bring as large a portion of the people as possible under its power and influence; and it has been disclosed that some of the largest sums were granted on very unusual terms to conductors of the public press. In some of these cases, the motive was made manifest by the nominal or insufficient secu- rity taken for the loans, by the large amounts discount- ed, by the extraordinary time allowed for payment, and especially by the subsequent conduct of those receiv- ing the accommodations.

Having taken those preliminary steps to obtain control over public opinion, the Bank came into Congress, and asked a new charter. The object avowed by many of the advocates of the Bank, was to put the President to the test, that the country might know his final determi- nation relative to the Bank prior to the ensuing election. Many documents and articles were printed and circulat- ed at the expense of the Bank, to bring the people to

VOL, XII. 26

a favorable decision upon its pretensions. Those whom the Bank appears to have made its debtors for the spe- cial occasion, were warned of the ruin which awaited them, should the President be sustained, and attempts were made to alarm the whole people by painting the depression in the price of property and produce, and the general loss, inconvenience and distress, which it was represented would immediately follow the re- election of the President in opposition to the Bank.

Can it now be said that the question of a re-charter of the Bank was not decided at the election which en- sued? Had the veto been equivocal, or had it not covered the whole ground-if it had merely taken ex- ceptions to the details of the Bill, or to the time of its passage-if it had not met the whole ground of consti- tutionality and expediency, then there might have been some plausibility for the allegation that the question was not decided by the people. It was to compel the President to take his s'and that the question was brought forward at that particular time. He met the challenge, willingly took the position into which his adversaries sought to force him, and frankly declared his unalterable opposition to the Bank as being both unconstitutional and inexpedient.

On that ground the case was argued to the people, and now that the people have sustained the president, notwithstanding the array of influence and power which was brought to bear upon him, it is too late, he confi- dently thinks, to say that the question has not been de- cided. Whatever may be the opinion of others, the President considers his re-election as a decision of the people against the Bank. In the concluding paragraph of his Veto Message he said :-

" I have now done my duty to my country. If sus- tained by my fellow citizens, I shall be grateful and happy; if not, I shall find in the motives which impel me, ample grounds for contentment and peace."

He was sustained by a just people, and he desires to evince his gratitude by carrying into effect their deci- sion, so far as it depends upon him.

Of all the substitutes for the present Bank, which have been suggested, none seems to have united any considerable portion of the public in its favour. Most of them are liable to the same constitutional objections for which the present bank has been condemn- ed, and perhaps to all there are strong objections on the score of expediency. In ridding the country of an irresponsible power which has attempted to control the Government, care must be taken not to unite the same power with the Executive branch. To give the Presi- dent the control over the currency and power over in- dividuals now possessed by the Bank of the U. States, even with the material difference that he is responsible to the people, would be as objectionable and as dan- gerous as to leave it as it is. Neither the one nor the other is necessary, and therefore ought not to be resort- ed to.

On the whole, the President considers it as conclu- sively settled that the charter of the Bank of the United States will not be renewed, and he has no reasonable ground to believe that any substitute will be establish- ed. Being bound to regulate his course by the laws as they exist, and not to anticipate the interference of the legislative power, for the purpose of framing new sys- tems, it is proper for him seasonably to consider the means by which the services rendered by the Bank of the United States are to be performed after its charter shall expire.

The existing laws declare, that "the deposites of the money of the United States, in places in which the said Bank and branches thereof, may be established, shall be made in said Bank, or branches thereof, unless the Secretary of the Treasury shall at any time other- wise order and direct, in which case the Secretary of the Treasury shall immediately lay before Congress, if in session, and if not immediately after the commence- inent of the next session the reason of such order or direction."

202

THE PRESIDENT'S REASONS FOR REMOVING THE PUBLIC DEPOSITES.

[SEPTEMBER

The power of the Secretary of the Treasury over the deposites, is unqualified. The provision that he shall report his reasons to Congress, is no limitation. Had it not been inserted, he would have been responsible to Congress, had'he made a removal for any other than good reasons, and his responsibility now ceases, upon the condition of sufficient ones to Congress. The only object of the provision is to make his reasons accessible to Congress, and enable that body the more readily to judge of their soundness and purity,'and thereupon to make such further provisions by law as the legislative power may think proper in relation to the deposites of the public money. Those reasons may be very diversi- fied. It was asserted by the Secretary of the Treasury, without contradiction, as early as 1817, that he had power " to control the proceedings" of the Bank of the United States at any moment, "by changing the de- posites to the State Banks;" should it pursue an illiber- al course towards those institutions; that "the Secretary of the Treasury will always be disposed to support the credit of the State Banks, and will invariably direct transfers from the deposites of the public money, in aid of their legitimate exertions to maintain their credit;"' and he asserted a right to employ tlie State Banks when the Bank of the United States should refuse to receive on deposite the notes of such State Banks as the public interest required, should be received in payment of the public dues. In several instances he did transfer the public deposites to State Banks, in the immediate vicin- ity of branches, for reasons connected only with the safety of those banks, the public convenience, and the interests of the Treasury.

If it was lawful for Mr Crawford, the Secretary of the Treasury, at that time, to act on these principles, it will be difficult to discover any sound reason against the application of similar principles in still stronger cases. And it is a matter of surprise that a power which, in the infancy of the bank, was freely asserted as one of the ordinary and familiar duties of the Secretary of the Treasury, should now be gravely questioned, and at- tempts made to excite and alarm the public mind, as if some new and unheard of power was about to be usurp- ed by the Executive branch of the Government.

It is but a little more then two and a half years to the termination of the charter of the present bank. It is "considered as the decision of the country that it shall thence cease to exist, and no man, the President be- lieves, has reasonable ground for expectation that any other Bank of the United States will be created by Congress. To the Treasury Department is entrusted the safe keeping and faithful application of the public moneys. A plan of collection different from the present, must therefore be introduced and put in complete ope- ration before the dissolution of the present bank. When shall it be commenced? Shall no step be taken in this essential concern until the charter expires, and the Treasury find's itself without an agent, its accounts in confusion, with no depositary for its funds, and the whole business of the Government deranged? or shall it be delayed until six months, or a year, or two years, before the expiration of the charter? It is obvious that any new system which may be substituted in the place of the Bank of the United States, could nut be suddenly carried into effect on the termination of its existence, without serious inconvenience to the Government and the people. Its vast amount of notes are then to be re- deemed and withdrawn from circulation, and its im- mense debt collected. 'These operations must be gra- dual, otherwise much suffering and distress will be brought upon the community. It ought to be not a work of months only, but of years, and the President thinks it cannot, with due attention to the interests of the people, be longer postponed. It is safer to begin it too soon, than to delay it too long.

It is for the wisdom of Congress to decide upon the best substitute to be adopted in the place of the Bank of the United States; and the President would have felt

himself relieved from a heavy and painful responsibility if in the charter of the Bank, Congress had reserved to itself the power of directing, at its pleasure, the public money to be elsewhere deposited, and had not devolv- ed that power exclusively on one of the Executive Departments. It is useless now to inquire why this high and important power was surrendered by those who are peculiarly and appropriately the guardians of the public money. Perhaps it was an oversight. But as the President presumes that the charter to the Bank is to be considered as a contract on the part of the Go- vernment, it is not now in the power of Congress to disregard its stipulations, and by the terms of that con- tract the public money is to be deposited in the Bank, during the continuance of its charter, unless the Secre- tary of the Treasury shall otherwise direct. Unless, therefore, the Secretary of the Treasury fisrt acts, Con- gress have no power over the subject, for they cannot add a new clause to the charter, or strike out one of it without the consent of the Bank; and consequently the public money must remain in that institution to the last hour ofits existence, unless the Secretary of the Trea- sury shall remove it at an earlier day. The responsbili- ty is thus thrown upon the Executive branch of the Government, of deciding how long before the expira- tion of the charter, the public interest will require the deposites to be placed elsewhere. And, although, ac- cording to the frame and principle of our government, this decision would seem more properly to belong to the legislative power, yet as the law has imposed it up- on the Executive department, the duty ought to be faithfully and firmly met, and the decision made and executed upon the best light that can be obtained, and the best judgment that can be formed. It would ill become the Executive branch of the Government to shrink from any duty which law imposes on it, to fix upon others the responsibility which justly belongs to itself. And while the President anxiously wishes to abstain from the exercise of doubtful powers, and to avoid all interference with the rights and duties of others, he must,yet, with unshaken constancy,discharge his own obligations: and cannot allow himself to turn aside, in order to avoid any responsibility which the high trust with which he has been honored requires him to encounter, and it being the duty of one of the Executive Departments to decide in the first instance, subject to the future action of the legislative powers, whether the public deposites shall remain in the Bank of the United States until the end of its existence, or be withdrawn some time before, the President has felt himself bound to examine the question carefully and deliberately in order to make up his judgment on the subject: and in his opinion, the near approach of the termination of the charter, and the public considerations heretofore men- tioned, are of themselves amply sufficient to justify the removal of the deposites without reference to the con- duct of the bank, or their safety in its keeping.

But in the conduct of the Bank may be found other reasons very imperative in their character, and which require prompt action. Developments have been made from time to time ofits faithlessness as a public agent, its misapplication of public funds, its interference in elec- tions, its efforts, by the machinery of committees, to deprive the government directors of a full knowledge of its concerns, and above all, its flagrant misconduct as recently and unexpectedly disclosed in placing all the funds of the Bank, including the money of the Govern- ment, at the disposition of the President of the Bank, as means of operating upon public opinion and procuring a new charter without requiring him to render a vouch- er for their disbursement. A brief recapitulation of the facts will justify these charges, and which have come to the knowledge of the public and the President, will, he thinks, remove every reasonable doubt, as to the course which it is now the duty of the President to pur- sue.

We have seen, that in sixteen months, ending in May,

203

THE PRESIDENTS REASONS FOR REMOVING THE PUBLIC DEPOSITES.

1833.]

1832, the Bank had extended its loans more than $28,000,000, although it knew the Government intend- ed to appropriate most of its large deposites during that year in payment of the public debt. It was in May, 1832, that its loans arrived at the maximum-and in the preceding March, so sensible was the Bank, that it would not be able to pay over the public deposites when it would be required by the Government, that it com menced a secret negotiation without the approbation or knowledge of the Government, with the agents, for about $2,700,000 of the three per cent. stocks, held in Holland, with a view of inducing them not to come for- ward for payment for one or more years after notice should be given by the Treasury Department. This arrangement would have enabled the Bank to keep and use during that time the public money set apart for the payment of these stocks.

After this negotiation had commenced, the Secretary of the Treasury informed the Bank, that it was his in- tention to pay off one-half of the three per cents. on the the first of the succeeding July, which amounted to about $6,500,000. The President of the Bank, although the committee of investigation was then looking into its affairs at Philadelphia, came immediately to Washing- ton, and upon representing that the Bank was desirous of accommodating the importing merchants at New York, (which it failed to do,) and undertaking to pay the interest itself, procured the consent of the Secretary, aftea consultation with the President, to postpone the payment until the succeeding first of October. Con- scious that at the end of that quarter, the Bank would not be able to pay over the deposites, and that further indulgence was not to be expected of the Government, an agent was despatched to England secretly to negoti- ate with the holders of the public debt in Europe, and induce them by the offer of an equal or higher interest than that paid by the Government to hold back their claims for one year, during which the Bank expected thus to retain the use of $5.000,000 of public money, which the Government should set apart for the payment of that debt. The agent made an arrangement on terms, in part, which were in direct violation of the charter of the Bank, and when some incidents connect- ed with this secret negotiation accidentally came to the knowledge of the public and the government, then and not before, so much of it as was palpably in violation of the charter was disavowed. A modification of the rest was attempted with the view of getting the certificates without payment of the money, and thus absolving the Government from its liability to the holders. In this scheme the Bank was particularly successful, but to this day the certificates of a portion of these stocks have not been paid, and the Bank retains the use of the monev.

'This effort to thwart the Government in the payment of the public debt, that it might retain the public mo- ney to be used for their private interests, palliated by pretences, notoriously unfounded and insincere, would have justified the instant withdrawal of the public de- posites. The negotiation itself rendered doubtful the ability of the Bank to meet the demands of the Treasu ry, and the misrepresentations by which it was attempt- ed to be justified, proved that no reliance could be placed upon its allegations.

the conduct and condition of the Bank and its branches, in order to enable the Executive Department to decide whether the public money was longer safe in its hands.

The limited power of the Secretary of the Treasury over the subjects, disabled him from making the inves- tigation as fully and satisfactorily as it could be done by a committee of the House of Representatives, and hence the President desired the assistance of Congress to obtain for the Treasury Department a full knowledge of all the facts which were necessary to guide his judg. ment. But it was not his purpose, as the language of his message will show, to ask the Representatives of the people to assume a responsibility which did not belong to them, and relieve the executive branch of the Go- vernment from the duty which the law had imposed upon it. It is due to the President, that his object in that proceeding should be distinctly understood, and that he should acquit himself of all suspicion of seeking to escape from the performance of his own duties, or of desiring to interpose another body between himself and the people, in order to avoid a measure which he is called upon to meet. But although, as an act of jus- tice to himself, he disclaims any design of soliciting the opinion of the House of Representatives in relation to his own duties, in order to shelter himself from respon- sibility under the sanction of their counsel, yet he is at all times ready to listen to the suggestions of the repre- sentatives of the people, whether given voluntarily or upon solicitation, and to consider them with the pro- found respect to which all will admit that they are just- ly entitled. Whatever may be the consequences, how - ever, to himself, he must finally form his own judgment where the constitution and the law make it his duty to decide, and must act accordingly; and he is bound to suppose that such a course on his part will never be regarded by that elevated body as a mark of disrespect to itself; but that they will, on the contrary, esteem it the strongest evidence he can give, of his fixed resolu- tion conscientiously to discharge his duty to them and the country.

A new state of things has, however, arisen since the close of the last session of Congress, and evidence has since been laid before the President, which he is per- suaded would have led the House of Representatives to a different conclusion, if it had come to their knowledge. The fact that the Bank controls, and in some cases sub- stantially owns, and by its money supports some of the leading presses of the country, is now more clearly es- tablished. Editors to whom it loaned extravagant sums in 1831 and 1832, on usual time and nominal security, have since turned out to be insolvent, and to others ap- parently in no better condition, accommodations still more extravagant, on terms more unusual, and some- times without any security, have also been heedlessly granted.

The allegation which has so often circulated through these channels that the Treasury was bankrupt, and the Bank was sustaining it, when, for many years, there has not been less on an average, than six millions of public money in that institution, might be passedl' over as a harmless misrepresentation; but when it is attempted, by substantial acts, to impair the credit of the Govern- ment, and tarnish the honor of the country, such charges require more serious attention. With six millions of public money in its vaults, after having had the use of from five to twelve millions for nine years without inte- rest, it became the purchaser of a hill drawn by our Go- vernment on that of France for about nine hundred thousand dollars, being the first instalment of the French indemnity. The purchase money was left in the use of the Bank, being simply added to the Treasury deposite. The Bank sold the bill in England, and the holder sent it to France for collection, and arrangements not having been made by the French Government for its payment, it was taken up by the agents of the Bank in Paris with the funds of the Bank in their hands. Under those cir-

If the question of a removal of the deposits presented itself to the Executive in the same attitude that it ap- peared before the House of Representatives at their last session, their resolution in relation to the safety of the deposites would be entitled to more weight, although the decision of the question of removal has been confid- ed by law to another department of the Government. But the question now occurs, attended by other circum- stances and new disclosures of the most serious import. It is true that in the message of the President, which produced this inquiry and resolution on the part of the House of Representatives, it was his object to obtain the aid of that body in making a thorough examination into | cumstances, it has, through its organs openly assailed

204

THE PRESIDENT'S REASONS FOR REMOVING THE PUBLIC DEPOSITES. [SEPTEMBER

the credit of the Government; and has actually made, and The expenditures purporting to have been made persists in a demand of fifteen per cent. or $158,842,77, [ under authority of these resolutions, during the years as damages, when no damage, or none beyond some tri- fling expense, has in fact been sustained, and when the Bank had in its own possession on deposite, several millions of the public money which it was then using for its own profit. Is a fiscal agent to the Government, which thus seeks to enrich itself at the expense of the public, worthy of further trust?

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The Register of Pennsylvania : devoted to the preservation of facts and documents and every other kind of useful information respecting the state of Pennsylvania, Vol. XII, Part 59

Author: Hazard, Samuel, 1784-1870 Publication date: 1828 Publisher: Philadelphia : Printed by W.F. Geddes ; Number of Pages: 438

Author: Hazard, Samuel, 1784-1870
Publication date: 1828
Publisher: Philadelphia : Printed by W.F. Geddes ;
Number of Pages: 438