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nexed for the consideration and action of Congress, [B.] It may be proper to add, that, within a few days past, a new communication in relation to this transaction has been received from the Bank, and, when a reply is finished, both will be submitted, if desired. No foundation appears to have existed, in law or equity, for the great claim of damages made by the Bank on account of the protest of what has been called, in common parlance, the bill of exchange drawn on the French Government by this department. It is believed that the bill, when protested, ought by our agents abroad, had they acted with due regard towards their principal, to have been taken up for the credit of that principal, which was the United States, rather than for the credit of the Bank; or, at the furthest, if similar and conflicting relationsexisted between them and the Bank, they should have pursued the equitable course of taking it up for the credit of both the United States and the Bank, or the more liberal one of giving the preference to the Government, which was the drawer; and, in either of these events, no room for difficulty by this extraordinary claim would probably have been left. But as these agents preferred a different course, thereby justly impairing the further confidence of the Government in their discretion, it would seem that the Bank, in the next place, having long been the general fiscal agent of the Government, and the primary one in importance, should have returned the bill, and made no charge against its principal, the United States, except for the actual advances, and the actual costs and expenses it had incurred in the transaction. The actual advances by the Bank, when the bill was originally received, had only been a matter of form, and were nothing.
The money, in fact, never belonged to this department, except in trust for the merchants, or their widows and orphans, who had suffered by French spoliations: and a sum exceeding the whole amount of it having been left in the Bank and its branches, and no part of the money having ever been brought into the Treasury by warrant, it was, immediately on notice of the protest, restored in form, and a willingness was expressed to make remuneration to the Bank for all reasonable costs and expenses.
But the temptation of an opportunity to obtain more from its principal, by a novel species of litigation, through a virtual judicial prosecution for damages against the Government of the Union, seems to have been too strong for resistance; and the Bank concluded to depart from the above equitable rule, and, by some technical regulation of strict law between indivduals, to attempt to procure a large sum, as mere constructive damages; and by the extraordinary mode of seizing on the dividends, which had been declared by the Bank itself to belong to the United States, and of withholding them, to abide the ordinary contingencies of a law-suit. It seems to have preferred this unprecedented course rather than to pursue the usual mode of a petition addressed to the justice of Congress, though Congress is well known to be the customary and only tribunal for adjusting controverted claims against the Government, when no suit is pending by the United States, and the only tribunal, which, under the constitution, is empowered to appropriate money to discharge any claim whatever. After applying to this department, and being, so long as a year ago last June, informed of its inability to admit, or authority to discharge
the damages demanded, it is remarkable that the Bank should have continued to pay over the accruing dividends, and not till after the last session closed, and when any deficiency in the current revenue could not be provided for, should, without any prior application to Congress, have resorted to this unusual proceeding, and sought to have its claim against the United States adjudicated by the Judiciary, when the United States are not amenable to any citizen or corporation, high or low, before the Judiciary, for the decision of any claim, unless they have, of their own accord, been pleased to resort to that tribunal, by a previous action against a debtor; and in which event only is a set-off, under certain limitations, authorized to be pleaded as either equitable or legal. But here the United States had instituted no such action against the Bank, and had no intention or foundation to institute one: and yet the Bank, not in the case provided in the charter where dividends might be withheld, but by an unfaithful act as an agent, and as a public corporation, towards its principal and the community, proceeded to seize their dividends in a case entirely different and most questionable, in equity as well as law, and refused to fulfil the duty imposed by its charter, and by civil and moral obligations, of paying over those dividends promptly to the Treasury. In the adoption of this reprehensible course, an attempt is made to force the Government either to lose their dividends entirely, or to pay a controverted claim for damages, which, so far as any of its departments or officers have examined it, was found, and pronounced to be, groundless; or consent to let the United States be arraigned as a debtor, and compelled to submit the claim to decision before a branch of their own Government, to which such claims are not ordinarily submitted, and to whose decision it could not be referred, in this instance, but by the previous commission, on the part of the Bank, of a deliberate violation of its obligations.
The further attempt appears to be made, in this way, to take from Congress and the Executive the constitutional power, on their high official responsibilities and deep sense of duty, to make or withhold appropriations to discharge all controverted demands against the United States, and to enable the Judiciary, instead of them, indirectly and unconstitutionally to make these appropriations, in all cases of citizens or corporations who possess doubtful claims, and are unscrupulous enough to commit, in order to prevent their adjudication by Congress, a deliberate attack on the property of the United States, or a deliberate sequestration of their acknowledged dues.
For further and more detailed views on this extraordinary case, a reference is made to the whole correspondence and opinions annexed, without the discussion of any course which the power and the wisdom of Congress are able to select for evincing its opinions on this outrage, whether by withdrawing indulgencies from the Bank as to the receipt of its notes for public dues, or by adopting some other measure on the subject, which the nature of the transaction, the rights of the United States, and the constitutional authority of Congress, may be thought to justify and demand. Believing that a similar seizure was not likely to be repeated by the Bank in 1835, under the other pretence of satisfying claims for damages, in consequence of
the removal of the deposites, as set up in its second letter, this department has estimated the probable revenue the ensuing year from this source, at the usual rate of dividends lately made on all our stock in the Bank, remaining after the sales which have taken place for the investment of the Navy Pension and Hospital funds. But should Congress, on a full examination of the subject, think otherwise, it may be provident to supply some other equivalent for this portion of the estimated receipts.
This subject of interest from the deposite banks, at some rate, and under some circumstances, was adverted to in a report by a committee in one House of Congress the last session, and would at this time be more fully examined, in connexion with that report, and the subsequent intimation of the United States Bank of its claim for damages on account of the late removal of the deposites, connected, it is apprehended, with the idea of a profit or interest derived from them, were it supposed that either point could, in the present condition of things, be considered of any practical importance. But the balance of money at present on hand, as before remarked, is merely the usual and convenient amount for current fiscal operations, and most of it is liable, at any moment, to be withdrawn to meet existing appropriations.
While the intimation of the Bank, resting, as it probably must, on an impression that the bonus was paid instead of interest on the public deposites, is not believed to be supported by the language or spirit of the charter, which required the bonus "for the exclusive privileges and benefits conferred by this act on the Bank," and which exclusive favors, whether termed privileges or benefits, consisted principally in the sole right of banking for twenty years, and for which alone Mr. Madison, in his veto of 1815, and Mr. Dallas, in his letter of December 24, 1815, thought that a bonus should be paid to the Government; the latter further observed, that, "independent of the bonus here proposed to be exacted, there are undoubtedly many public advantages to be drawn from the establishment of a National Bank, but they are generally of an incidental kind, and, as in the case of deposites and distribution of the revenue, may be regarded in the light of equivalents, not for the monopoly of the charter, but for the reciprocal advantages of a fiscal connexion with the Government."
If the reasons should ever be presented to this department, in support of the late intimation of a demand for damages for the removal of the deposites, in a case where the bonus was claimed and paid on the above grounds, and where the right to remove the deposites was expressly reserved in the charter to the officer removing them, it will then, probably, be in season to enter more fully into this collateral question. Or should the balance in the possession of the State banks at any time become much larger than the current demands existing against the Treasury, it will, if Congress do not earlier think proper to act on it prospectively, nor to authorize any temporary investment of it, be then considered necessary and proper for this department to examine in what cases, and under what circumstances, on what surpluses, and at what rate, interest could equitably be demanded, in addition to the useful duties performed by the selected banks in behalf of the Treasury.
On these points, however, it is hoped that this department will not be understood as recommending that taxes should ever be imposed with a view to permit a large surplus any more than a deficiency to occur; but that, when the former unexpectedly and unintentionally happens, an income should be realized from it, by interest or an investment, until, at the end of every few years, a thorough revision of the tariff would, in the pursuit of this policy, be made, and so graduated, as during the next succeeding term to be likely to correct any great irregularities, whether excesses or deficiencies, that had happend during the preceding term, and to lead to the sale and use of any interest or investments which, in the mean time, had accumulated.
Those other questions naturally connected with the present deposite banks, and, indeed, with our whole existing system of finance, so far as regards the keeping and disbursing the public money, might here be appropriately considered. Yet, without any desire to avoid, but rather from a wish to submit, that full and frank discussion of them which their acknowledged importance, and the exciting interest in them, demand from the fiscal department of the Government, they will be postponed to a separate supplemental report, which will be confined exclusively to their consideration, and will soon be presented to Congress.
Seventh Annual Message-Andrew Jackson
Twenty-Fourth Congress, 1st Session
DECEMBER 7, 1835.
[Source: James D. Richardson, A Compilation of the Messages and Papers of the Presidents, Vol. 2, pp. 1382-1387]
It is also incumbent on Congress in guarding the pecuniary interests of the country to discontinue by such a law as was passed in 1812 the receipt of the bills of the Bank of the United States in payment of the public revenue, and to provide for the designation of an agent whose duty it shall be to take charge of the books and stock of the United States in that institution, and to close all connection with it after the 3d of March, 1836, when its charter expires. In making provision in regard to the disposition of this stock it will be essential to define clearly and strictly the duties and powers of the officer charged with that branch of the public service.
It will be seen from the correspondence which the Secretary of the Treasury will lay before you that notwithstanding the large amount of the stock which the United States hold in that institution no informaion has yet been communicated which will enable the Government to anticipate when it can receive any dividends or derive any benefit from it.
Connected with the condition of the finances and the flourishing state of the country in all its branches of industry, it is pleasing to witness the advantages which have been already derived from the recent laws regulating the value of the gold coinage. These advantages
will be more apparent in the course of the next year, when the branch mints authorized to be established in North Carolina, Georgia, and Louisiana shall have gone into operation. Aided, as it is hoped they will be, by further reforms in the banking systems of the States and by judicious regulations on the part of Congress in relation to the custody of the public moneys, it may be confidently anticipated that the use of gold and silver as a circulating medium will become general in the ordinary transactions connected with the labor of the country. The great desideratum in modern times is an efficient check upon the power of banks, preventing that excessive issue of paper whence arise those fluctuations in the standard of value which render uncertain the rewards of labor. It was supposed by those who established the Bank of the United States that from the credit given to it by the custody of the public moneys and other privileges and the precautions taken to guard against the evils which the country had suffered in the bankruptcy of many of the State institutions of that period we should derive from that institution all the security and benefits of a sound currency and every good end that was attainable under that provision of the Constitution which authorizes Congress alone to coin money and regulate the value thereof. But it is scarcely necessary now to say that these anticipations have not been realized.
After the extensive embarrassment and distress recently produced by the Bank of the United States, from which the country is now recovering, aggravated as they were by pretensions to power which defied the public authority, and which if acquiesced in by the people would have changed the whole character of our Government, every candid and intelligent individual must admit that for the attainment of the great advantages of a sound currency we must look to a course of legislation radically different from that which created such an institution.
In considering the means of obtaining so important an end we must set aside all calculations of temporary convenience, and be influenced by those only which are in harmony with the true character and the permanent interests of the Republic. We must recur to first principles and see what it is that has prevented the legislation of Congress and the States on the subject of currency from satisfying the public expectation and realizing results corresponding to those which have attended the action of our system when truly consistent with the great principle of equality upon which it rests, and with that spirit of forbearance and mutual concession and generous patriotism which was originally, and must ever continue to be, the vital element of our Union.
On this subject I am sure that I can not be mistaken in ascribing our want of success to the undue countenance which has been afforded to the spirit of monopoly. All the serious dangers which our system has yet encountered may be traced to the resort to implied powers and the use of corporations clothed with privileges, the effect of which is to advance the interests of the few at the expense of the many. We have felt but one class of these dangers exhibited in the contest waged by the Bank of the United States against the Government for the last four years. Happily they have been obviated for the present by the indignant resistance of the people, but we should recollect that the principle whence they sprung is an ever-active one, which will not