fail to renew its efforts in the same and in other forms so long as there is a hope of success, founded either on the inattention of the people or the treachery of their representatives to the subtle progress of its influence. The bank is, in fact, but one of the fruits of a system at war with the genius of all our institutions-a system founded upon a political creed the fundamental principle of which is a distrust of the popular will as a safe regulator of political power, and whose great ultimate object and inevitable result, should it prevail, is the consolidation of all power in our system in one central government. Lavish public disbursements and corporations with exclusive privileges would be its substitutes for the original and as yet sound checks and balances of the Constitutionthe means by whose silent and secret operation a control would be exercised by the few over the political conduct of the many by first acquiring that control over the labor and earnings of the great body of the people. Wherever this spirit has effected an alliance with political power, tyranny and despotism have been the fruit. If it is ever used for the ends of government, it has to be incessantly watched, or it corrupts the sources of the public virtue and agitates the country with questions unfavorable to the harmonious and steady pursuit of its true interests.

We are now to see whether, in the present favorable condition of the country, we can not take an effectual stand against this spirit of monopoly, and practically prove in respect to the currency as well as other important interests that there is no necessity for so extensive a resort to it as that which has been heretofore practiced. The experience of another year has confirmed the utter fallacy of the idea that the Bank of the United States was necessary as a fiscal agent of the Government. Without its aid as such, indeed, in despite of all the embarrassment it was in its power to create, the revenue has been paid with punctuality by our citizens, the business of exchange, both foreign and domestic, has been conducted with convenience, and the circulating medium has been greatly improved. By the use of the State banks, which do not derive their charters from the General Government and are not controlled by its authority, it is ascertained that the moneys of the United States can be collected and disbursed without loss or inconvenience, and that all the wants of the community in relation to exchange and currency are supplied as well as they have ever been before. If under circumstances the most unfavorable to the steadiness of the money market it has been found that the considerations on which the Bank of the United States rested its claims to the public favor were imaginary and groundless, it can not be doubted that the experience of the future will be more decisive against them.

It has been seen that without the agency of a great moneyed monopoly the revenue can be collected and conveniently and safely applied to all the purposes of the public expenditure. It is also ascertained that instead of being necessarily made to promote the evils of an unchecked paper system, the management of the revenue can be made auxiliary to the reform which the legislatures of several of the States have already commenced in regard to the suppression of small bills, and which has only to be fostered by proper regulations on the part of Congress to secure a practical return to the extent required for the security of the currency to the constitutional medium.

Severed from the Government as political engines, and not susceptible of dangerous extension and combination, the State banks will not be tempted, nor will they have the power, which we have seen exercised, to divert the public funds from the legitimate purposes of the Government. The collection and custody of the revenue, being, on the contrary, a source of credit to them, will increase the security which the States provide for a faithful execution of their trusts by multiplying the scrutinies to which their operations and accounts will be subjected. Thus disposed, as well from interest as the obligations of their charters, it can not be doubted that such conditions as Congress may see fit to adopt respecting the deposits in these institutions, with a view to the gradual disuse, of the small bills will be cheerfully complied with, and that we shall soon gain in place of the Bank of the United States a practical reform in the whole paper system of the country. If by this policy we can ultimately witness the suppression of all bank bills below $20, it is apparent that gold and silver will take their place and become the principal circulating medium in the common business of the farmers and mechanics of the country. The attainment of such a result will form an era in the history of our country which will be dwelt upon with delight by every true friend of its liberty and independence. It will lighten the great tax which our paper system has so long collected from the earnings of labor, and do more to revive and perpetuate those habits of economy and simplicity which are so congenial to the character of republicans than all the legislation which has yet been attempted.

To this subject I feel that I can not too earnestly invite the special attention of Congress, without the exercise of whose authority the opportunity to accomplish so much public good must pass unimproved. Deeply impressed with its vital importance, the Executive has taken all the steps within his constitutional power to guard the public revenue and defeat the expectation which the Bank of the United States indulged of renewing and perpetuating its monopoly on the ground of its necessity as a fiscal agent and as affording a sounder currency than could be obtained without such an institution. In the performance of this duty much responsibility was incurred which would have been gladly avoided if the stake which the public had in the question could have been otherwise preserved. Although clothed with the legal authority and supported by precedent, I was aware that there was in the act of the removal of the deposits a liability to excite that sensitiveness to Executive power which it is the characteristic and the duty of freemen to indulge; but I relied on this feeling also, directed by patriotism and intelligence, to vindicate the conduct which in the end would appear to have been called for by the best interests of my country. The apprehensions natural to this feeling that there may have been a desire, through the instrumentality of that measure, to extend the Executive influence, or that it may have been prompted by motives not sufficiently free from ambition, were not overlooked. Under the operation of our institutions the public servant who is called on to take a step of high responsibility should feel in the freedom which gives rise to such apprehensions his highest security. When unfounded the attention which they arouse and the discussions they excite deprive those who indulge them of the power to do harm; when just they but hasten the certainty with which the great body of our citizens never fail to repel

an attempt to procure their sanction to any exercise of power inconsistent with the jealous maintenance of their rights. Under such convictions, and entertaining no doubt that my constitutional obligations demanded the steps which were taken in reference to the removal of the deposits, it was impossible for me to be deterred from the path of duty by a fear that my motives could be misjudged or that political prejudices could defeat the just consideration of the merits of my conduct. The result has shewn how safe is this reliance upon the patriotic temper and enlightened discernment of the people. That measure has now been before them and has stood the test of all the severe analysis which is general importance, the interests it affected, and the apprehensions it excited were calculated to produce, and it now remains for Congress to consider what legislation has become necessary in consequence.

I need only add to what I have on former occasions said on this subject generally that in the regulations which Congress may prescribe respecting the custody of the public moneys it is desirable that as little discretion as may be deemed consistent with their safe-keeping should be given to the executive agents. No one can be more deeply impressed than I am with the soundness of the doctrine which restrains and limits, by specific provisions, executive discretion, as far as it can be done consistently with the preservation of its constitutional character. In respect to the control over the public money this doctrine is peculiarly applicable, and is in harmony with the great principle which I felt I was sustaining in the controversy with the Bank of the United States, which has resulted in severing to some extent a dangerous connection between a moneyed and political power. The duty of the Legislature to define, by clear and positive enactments, the nature and extent of the action which it belongs to the Executive to superintend springs out of a policy analogous to that which enjoins upon all the branches of the Federal Government an abstinence from the exercise of powers not clearly granted.

In such a Government, possessing only limited and specific powers, the spirit of its general administration can not be wise or just when it opposes the reference of all doubtful points to the great source of authority, the States and the people, whose number and diversified relations, securing them against the influences and excitements which may mislead their agents, make them the safest depository of power. In its application to the Executive, with reference to the legislative branch of the Government, the same rule of action should make the President ever anxious to avoid the exercise of any discretionary authority which can be regulated by Congress. The biases which may operate upon him will not be so likely to extend to the representatives of the people in that body.

Annual Report, Secretary of Treasury (Levi Woodbury)

Twenty-Fourth Congress, 1st Session

DECEMBER 8, 1835.

[Source: House Doc. 3, 24th Congress, 1st Session, pp. 20-25]

VI. DEPOSITE BANKS AND THE CURRENCY

This Department takes pleasure in stating that the public money continues to be collected and deposited, under the present system of selected banks, with great ease and economy in all cases, and with greater in some than at any former period. The transfers of it to every quarter of the country where it is needed for disbursement, have never been effected with more promptitude, and have been made entirely free of expense to the Treasury. The payments to creditors, officers, and pensioners, have been punctual and convenient; and the whole fiscal operations through the State banks have, as yet, proved highly satisfactory. Incidental to this, the facilities that have been furnished to the commercial community in domestic exchanges, were probably never greater, or at so moderate rates. In the course of this year, additional depositories have been selected in four States, where no new ones before existed, and all the branches of the United States Bank, for some months, have been discontinued for ordinary fiscal purposes. They are, however, still used, as claimed by the Bank, under acts of Congress, for the payment of the outstanding portions of the funded debt, and of invalid and other pensions, prior to 1832, except where the Department has been notified that the branches were withdrawn, as in New Hampshire, Connecticut, Kentucky, Ohio, Missouri, Western Pennsylvania, Maryland, South Carolina, and the interior of New York. The whole number of selected banks, without including branches, is now thirty-four, being, notwithstanding the addition of four new ones, less by six, than last year.

This diminution has been effected by the discontinuance of various old, and to the Treasury, unimportant institutions, employed before 1833, in connection with the United States Bank, and by adding no new ones, except where the public interests seemed to render it imperative or expedient. A great, though not the chief, cause of some loss, which formerly happened in the deposites in State banks, is believed to have been the multiplication of them to something over one hundred in number. The system is now arranged so as probably to require hereafter few changes, excepting two or three instances, concerning which á correspondence is now pending, unless, as is not anticipated, such onerous conditions should be exacted by Congress, of the present safe and efficient depositories, as to derange the system, induce some of them to withdraw, and compel the Department to in

trust the public funds to other agents, less cautious, skilful, and trustworthy. Great care has been exercised in preparing, from the last returns made to this Department, and from data since obtained by an extensive correspondence, tabular statements, which show, in the most essential particulars, as near the first of January, 1835, and as fully as could be obtained, the names and condition of each of the State banks in the Union, of each of the selected banks, of the United States Bank, and of all combined. They exhibit, further, the capital and situation of all the banks in each of the large cities in the United States, as well as of all in each State, arranged together for convenience of reference, and the changes which have since happened in the condition of the deposite and United States banks. So far as regards the capital, discounts, &c. of all the State banks, only the general exhibit of the aggregate results in each State, is now communicated, but, in a few days, all the voluminous details on those points will be submitted to the House of Representatives, in compliance with its resolution of the 10th of July 1832.

It will be seen that the situation of the selected banks, as a whole, bears an enviable comparison with the rest.

In all cases deemed proper, they have given collateral security, and are all believed to be entirely safe, to the extent they have been confided in. Their discounts have been, in general, somewhat increased, but though tempted by the enterprising spirit of the times, not usually increased in a degree disproportioned to all their immediate available means. They have also, in some cases, been able to aid, and have liberally aided, other banking institutions in their neighborhood, by as large and long balances and other indulgences as would generally appear to have been sanctioned by correct principles. The names of each, with the amount of money in each belonging to the Treasury, and subject to draft, not only at the commencement of the present year, but at the very last returns received, can be seen in three of the columns of the statement. The distribution of these sums is generally that which has been given to them by circumstances connected with their collection and disbursement. No occasion has arisen, in which the Department felt justified in making transfers of the public money, except from points where it had accumulated, in the natural course of collection, much beyond the present and early anticipated wants of the Government in that neighborhood, or in sums not proportioned to the responsibility of the public depositories there, and to points where it either would be better secured, or probably would soon be needed for disbursement, or could, from the course of trade and exchange, be more readily applied to any new objects which Congress would be likely soon to sanction. These transfers, when rendered necessary, have been performed in such directions, and so gradually, that it is believed they have tended to obviate rather than create any pressure in the money market, and to aid materially the course of business in exchanges and the other commercial operations of the country.

The Department is aware, that, in the present overflowing condition of the Treasury, the regulation of these operations, with the selection and superintendence of the deposite banks, is a task of no