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small difficulty and delicacy; and when governed by a strict and uniform adherence to sound principles, as has been attempted, must necessarily lead to many disappointed applications. But in the absence of that specific legislation on the subject, which has been, and still is, earnestly requested, the Department has not hesitated (it is hoped faithfully) to discharge, and frankly to explain, the duties, and the high and painful responsibility which so much discretionary power has imposed.
For various reasons of public importance, it was deemed desirable, and measures have been adopted, and recommendations urged, that the specie in the vaults of a number of the selected Banks, should be still more increased in comparison with their issues and deposites, and that a still larger portion of the whole currency of the country, especially for small purposes, should be metallic. In improvement of the currency during the past year, many of the selected banks have not only continued to obtain and pay, when wanted, to the public creditors, American gold, but have entered into salutary arrangements for the redemption, in our large cities, of most of their bills, which may be received in payment of the public dues. It is hoped, that in the progress of time, these beneficial arrangements may be further extended to most, if not all, of the bills in circulation, of the large institutions, and the introduction of hard money, for the ordinary uses of life, be facilitated, by all the banks ceasing to circulate bills of small denominations. It is gratifying to find, that since the adjournment of Congress, in addition to the States of Pennsylvania, Maryland, Virginia, Georgia, Tennessee, Louisiana, North Carolina, Indiana, and Kentucky, which, before that time, are believed not to have allowed the circulation of bills under five dollars, others, viz: Maine, Connecticut, New York, New Jersey, and Alabama, have united in similar legislative measures except Connecticut, has, as yet, extended the prohibition to only one and two dollar bills. In Mississippi and Illinois, it is understood that bills under five dollars have not recently been issued, and Missouri has no bank issuing bills of any denomination. So that more than two-thirds of the States have already usages or laws in existence, on this subject, of a highly salutary tendency. The great benefits which have already resulted to the general condition of the currency where such measures have been tested, besides numerous others to the security of the banks themselves, and to the less moneyed classes of society, detailed in the supplement to the last annual report from this Department, would seem to be a sufficient inducement for similar legislation on this important subject in all the States. In some of them, where no laws have yet been passed to suppress the circulation of small notes, their deposite banks have voluntarily entered into arrangements not to issue certain descriptions of them, and most of the deposite banks have, in a correspondence with the Department, evinced a willingness to cooperate in the suppression of small notes, whenever the regulation can be made general. The Treasury, so far as seemed practicable and judicious with its present powers, has endeavored to promote so desirable an end, not only by instituting the inquiries in that correspondence, but by instructions to its collecting officers not to receive in payment any bills
under five dollars after the 30th of September, 1835. It proposes to go further on this point the ensuing year, so as to prevent the receipt for public dues of all bank notes under ten dollars, unless Congress in the mean time shall adopt some new provisions on this subject, similar, it is hoped, to what previously have been, and still are, urged by this Department, not only as to the deposite banks, and the kind of bills received for the revenue, but as to the suppression entirely in the District of Columbia of the circulation of any bank notes under ten dollars in amount. The means for a sound currency in this country are at present ample. Within the last two years, or from October 1st, 1833, to Nov. 1st, 1835, in addition to the former stock of specie, there has been imported into the United States, beyond the exports from it, with a due allowance for what does not appear on the custom-house books, more than twenty-seven millions; and the produce of our own mines within that period, is estimated to have been over three millions. Hence the whole amount of specie now in the country, probably exceeds the sum of sixty-four millions, and the means of the community to obtain more from abroad, to meet any contemplated changes in the character of our currency, were never greater. The actual amount of specie returned, and estimated as belonging to all the banks in the United States, about the 1st of January, 1835, was near forty-four millions. As a portion of that may have been bullion, a sum quite equalling, if not exceeding the remainder of twenty millions, probably consists of the amount of specie in active circulation, which has been somewhat increased throughout the country during the last two years, so that, if the remaining small bills in circulation under five dollars in the whole Union, which are chiefly in seven States, and which probably do not exceed six or seven millions, were withdrawn, it would not require, to supply their places, one-third of the addition which has been made in the last two years to the national stock of the precious metals. The specie on hand, in banks, will in this way, as it ought, soon bear a larger proportion to their notes in circulation, and the security and real usefulness of all banking institutions to the community be thus greatly augmented. The specie in active circulation, thus increased by excluding small notes, will constitute, while retained in the country, a great and safe reliance for the banks to depend on, (beside what belongs to them in their vaults,) whenever an unfavorable course of exchange abroad, or a panic at home, should cause an unusual demand for specie to be shipped abroad, to meet a balance of trade against us, or to be used in circulation at home, by those whose confidence, from real or imaginary causes, may for a time become diminished in the security of banks. When the further suppression of small notes, extending to all under ten dollars in amount, shall be deemed advisable by Congress and the States, no doubt is entertained that sufficient specie can and will be readily found to supply their place, in connection with what now exists in the country. The proportion of specie to bank notes in circulation will not then be so great as it is in all the most commercial nations in Europe. How much further it may be deemed feasible to go, with a fair prospect of advantage to the community and our currency, can be better settled at that time than at the present.
Act of June 23, 1836
[5 Statutes at Large 52, Twenty-Fourth Congress, Chapter 115, 1st Session, Approved June 23, 1836, by Andrew Jackson]
AN ACT TO REGULATE THE DEPOSITES OF THE PUBLIC MONEY.
Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That it shall be the duty of the Secretary of the Secretary of Treasury to select as soon as may be practicable and to select banks. employ as the depositories of the money of the United States, such of the banks incorporated by the several States, by Congress for the District of Columbia, or by the Legislative Councils of the respective Territories for those Territories, as may be located at, adjacent or convenient to the points or places at which the revenues may be collected, or disbursed, and in those States, Territories or Districts in which there are no banks, or in which no bank can be employed as a deposite bank, and within which the public collections or disbursements require a depository, the said Secretary may make arrangements with a bank or banks, in some other State, Territory or District, to establish an agency, or agencies, in the States, Territories or Districts so destitute of banks, as banks of deposite; and to receive through such agencies such deposites of the public money, as may be directed to be made at the points designated, and to make such disbursements as the public service may require at those points; the duties and liabilities of every bank thus establishing any such agency to be the same in respect to its agency, as are the duties and liabilities of deposite banks generally under the provisions of this act: Provided, That at least Proviso. one such bank shall be selected in each State and Territory, if any can be found in each State and Territory willing to be employed as depositories of the public money, upon the terms and conditions hereinafter prescribed, and continue to conform thereto; and that the Secretary of the Treasury shall not suffer to remain in any deposite bank, an amount of the public moneys more than equal to three-fourths of the amount of its capital stock actually paid in, for a longer time than may be necessary to enable him to make the transfers required by the twelfth section of this act; and that the banks so selected, shall be, in his opinion, safe depositories of the public money, and shall be willing to undertake to do and perform the several duties and services, and to conform to the several conditions prescribed by this act.
SEC. 2. And be it further enacted, That if, at any point or place at which the public revenue may be collected, there shall be no bank located, which, in the opinion of the Secretary of the Treasury, is in a safe condition, or where all the banks at such point or place shall fail or refuse to be employed as depositories of the public money of the United States, or to comply with the conditions
is no bank
where there which the Secretary where banks tion may be made at some
refuse, a selec
furnish certain statements; copy of charter, &c.
Terms to be agreed to by the banks.
prescribed by this act, or where such banks shall not have sufficient capital to become depositories of the whole amount of moneys collected at such point or place, he shall and may order and direct the public money collected at such point or place to be deposited in a bank or banks in the same State, or in some one or more of the adjacent States upon the terms and conditions hereinafter prescribed: Provided, That nothing in this act contained shall be so construed as to prevent Congress at any time from passing any law for the removal of the public money from any of the said banks, or from changing the terms of deposite, or to prevent the said banks at any time from declining any longer to be the depositories of the public money upon paying over, or tendering to pay, the whole amount of public moneys on hand, according to the terms of its agreement with the said Secretary.
SEC. 3. And be it further enacted, That no bank shall hereafter be selected and employed by the Secretary of the Treasury as a depository of the public money, until such bank shall have first furnished to the said Secretary a statement of its condition and business, a list of its directors, the current price of its stock; and also a copy of its charter; and likewise, such other information as may be necessary to enable him to judge of the safety of its condition.
SEC. 4. And be it further enacted, That the said banks, before they shall be employed as the depositories of the public money, shall agree to receive the same, upon the following terms and conditions, to wit:
First. Each bank shall furnish to the Secretary of the Treasury, from time to time, as often as he may require, not exceeding once a week, statements setting forth its condition and business, as prescribed in the foregoing section of this act, except that such statements need not, unless requested by said Secretary, contain a list of the directors, or a copy of the charter. And the said banks shall furnish to the Secretary of the Treasury, and to the Treasurer of the United States, a weekly statement of the condition of his account upon their books. And the Secretary of the Treasury shall have the right, by himself, or an agent appointed for that purpose, to inspect such general accounts in the books of the bank, as shall relate to the said statements: Provided, That this shall not be construed to imply a right of inspecting the account of any private individual or individuals with the
Secondly. To credit as specie, all sums deposited therein to the credit of the Treasurer of the United States, and to pay all checks, warrants, or drafts, drawn on such deposites, in specie if required by the holder thereof.
Thirdly. To give, whenever required by the Secretary of the Treasury, the necessary facilities for transferring
the public funds from place to place, within the United States, and the Territories thereof, and for distributing the same in payment of the public creditors, without charging commissions or claiming allowance on account of difference of exchange.
Fourthly. To render to the Government of the United States all the duties and services heretofore required by law to be performed by the late Bank of the United States and its several branches or offices. SEC. 5. And be it further enacted, That no bank shall be selected or continued as a place of deposite of the public money which shall not redeem its notes and bills on demand in specie; nor shall any bank be selected or continued as aforesaid, which shall after the fourth of July, in the year one thousand eight hundred and thirty-six, issue or pay out any note or bill of a less denomination than five dollars; nor shall the notes or bills of any bank he received in payment of any debt due to the United States which shall, after the said fourth day of July, in the year one thousand eight hundred and thirty-six, issue any note or bill of a less denominaiton than five dollars.
Banks issuing five dollars selected.
notes less than
not to be
SEC. 6. And be it further enacted, That the Secretary Secretary of the Treasury shall be, and he is hereby authorized, security. and it shall be his duty, whenever in his judgment the same shall be necessary or proper, to require of any bank so selected and employed as aforesaid, collateral or additional securities for the safe keeping of the public moneys deposited therein, and the faithful performance of the duties required by this act.
enter into contracts.
SEC. 7. And be it further enacted, That it shall be law- authorized to ful for the Secretary of the Treasury, to enter into contracts in the name and for and on behalf of the United States, with the said banks so selected or employed, whereby the said banks shall stipulate to do and perform the several duties and services prescribed by this act.
SEC. 8. And be it further enacted, That no bank which shall be selected or employed as the place of deposite of the public money, shall be discontinued as such depository, or the public money withdrawn therefrom, except for the causes hereinafter mentioned, that is to say: if at any time, any one of said banks shall fail or refuse to perform any of said duties as prescribed by this act, and stipulated to be performed by its contract; or, if any of said banks shall at any time refuse to pay its own notes in specie if demanded; or shall fail to keep in its vaults such an amount of specie as shall be required by the Secretary of the Treasury, and shall be, in his opinion, necessary to render the said bank a safe depository of the public moneys, having due regard to the nature of the business transacted by the bank; in any and every such case it shall be the duty of the Secretary of the Treasury to discontinue any such bank as a depository,
selected to be discontinued causes.
but for certain