they vainly hoped might produce relief. It was a most unfortunate error, as the subsequent history and final catastrophe of that dangerous and corrupt institution have abundantly proved. The Bank, with its numerous branches, ramified into the States, soon brought many of the active political and commercial men in different sections of the country into the relation of debtors to it, and dependents upon it for pecuniary favours; thus diffusing throughout the mass of society a great number of individuals of power and influence to give tone to public opinion, and to act in concert in cases of emergency. The corrupt power of such a political engine is no longer a matter of speculation, having been displayed in numerous instances, but most signally in the political struggles of 1832, 1833, and 1834, in opposition to the public will, represented by a fearless and patriotic President.

"But it has been urged that the national bank, which constituted so essential a branch of this combined system of measures, was not a new measure, and that its constitutionality had been previously sanctioned, because a bank had been chartered in 1791, and had received the official signature of President Washington. A few facts will show the just weight to which this precedent should be entitled, as bearing upon the question of constitutionality.

"Great division of opinion upon the subject existed in Congress. It is well known that President Washington entertained serious doubts both as to the constitutionality and expediency of the measure; and while the Bill was before him for his official approval or disapproval, so great were these doubts that he required 'the opinion in writing' of the members of his cabinet, to aid him in arriving at a decision.

"Additional light has been recently shed upon the serious doubts which he had on the subject, amounting at one time to a conviction that it was his duty to withhold his approval from the Bill. This is found among the manuscript papers of Mr. Madison, authorized to be purchased for the use of the Government by an Act of the last session of Congress, and now for the first time accessible to the public. From these papers it appears that President Washington, while he yet held the Bank Bill in his hands, actually requested Mr. Madison, at that time a member of the House of Representatives, to prepare the draught of a veto message for him. Mr. Madison, at his request, did prepare the draught of such a message, and sent it to him on the 21st of February, 1791. A copy of this original draught, in Mr. Madison's own handwriting, was carefully preserved by him, and is among the papers lately purchased by Congress.

"The weight of the precedent of the bank of 1791, and the sanction of the great name of Washington, which has been so often invoked in its support, are greatly weakened by the development of these facts. The experiment of that bank satisfied the country that it ought not to be continued, and at the end of twenty years Congress refused to recharter it. It would have been fortunate for

the country and saved thousands from bankruptcy and ruin, had our public men of 1816 resisted the temporary pressure of the times upon our financial and pecuniary interests, and refused to charter the second bank. Of this the country became abundantly satisfied, and at the close of its twenty years' duration, as in the case of the first bank, it also ceased to exist. Under the repeated blows of President Jackson it reeled and fell, and a subsequent attempt to charter a similar institution was arrested by the veto of President Tyler.

"The Vice-President (of the senate) exercises the veto power as effectually by rejecting a bill by his casting vote, as the President does by refusing to approve and sign it. This power has been exercised by the Vice-President in a few instances, the most important of which was the rejection of the bill to recharter the Bank of the United States, in 1841.

"The bank has been succeeded by a practical system of finance, conducted and controlled solely by the Government. The constitutional currency has been restored; the public credit maintained unimpaired, even in a period of foreign war; and the whole country has become satisfied that banks, national or state, are not necessary as fiscal agents of the Government. Revenue duties have taken the place of the protective tariff. The distribution of the money derived from the sale of the public lands has been abandoned, and the corrupting system of internal improvements, it is hoped, has been effectually checked.

"The operations of the constitutional treasury established by the Act of the 6th of August, 1846, in the receipt, custody, and disbursement of the public money, have continued to be successful. Under this system the public finances have been carried through a foreign war, involving the necessity of loans and extraordinary expenditures, and requiring distant transfers and disbursements, without embarrassment, and no loss has occurred of any of the public money deposited under its provisions. Whilst it has proved to be safe and useful to the Government, its efforts have been most beneficial upon the business of the country. It has tended powerfully to secure an exemption from that inflation and fluctuation of the paper currency so injurious to domestic industry, and rendering so uncertain the rewards of labour; and, it is believed, has largely contributed to preserve the whole country from a serious commercial revulsion, such as often occurred under the bank deposit system. In the year 1847, there was a revulsion in the business of Great Britain of great extent and intensity, which was followed by failures in that kingdom unprecedented in number and amount of losses. This is believed to be the first instance when such disastrous bankruptcies, occurring in a country with which we have such extensive commerce, produced little or no injurious effect upon our trade or currency. We remained but little affected in our money market, and our business and industry were still prosperous and progressive.

"During the present year nearly the whole continent of Europe

has been convulsed by civil war and revolutions, attended by numerous bankruptcies, by an unprecedented fall in their public securities, and an almost universal paralysis of commerce and industry; and yet, although our trade and the prices of our products must have been somewhat unfavourably affected by these causes, we have escaped a revulsion, our money market is comparatively easy, and public and private credit have advanced and improved.

"It is confidently believed that we have been saved from their effect by the salutary operation of the Constitutional Treasury. It is certain that, if the 24,000,000 of specie imported into this country during the fiscal year, ending on the 30th June 1847, had gone into the banks, as to a great extent it must have done, it would, in the absence of this system, have been made the basis of augmented bank-paper issues, probably to an amount not less than $60,000,000 or $70,000,000, producing, as an inevitable consequence of an inflated currency, extravagant prices for a time and wild speculation, which must have been followed, on the reflux to Europe the succeeding year of so much of that specie, by the prostration of the business of the country, the suspension of the banks, and most extensive bankruptcies. Occurring, as this would have done, at a period when the country was engaged in a foreign war, when considerable loans of specie were required for distant disbursements, and when the banks, the fiscal agents of the Government, and the depositories of its money, were suspended, the public credit must have sunk, and many millions of dollars, as was the case during the war of 1812, must have been sacrificed on discounts upon loans, and upon the depreciated paper currency which the Government would have been compelled to

use.

"Under the operations of the constitutional treasury, not a dollar has been lost by the depreciation of the currency. The loans required to prosecute the war with Mexico were negotiated by the Secretary of the Treasury above par, realising a large premium to the Government. The restraining effect of the system upon the tendencies to excessive paper issues by banks has saved the Government from heavy losses, and thousands of our businessmen from bankruptcy and ruin. The wisdom of the system has been tested by the experience of the last two years; and it is the dictate of sound policy that it should remain undisturbed. The modifications, in some of the details of this measure, involving none of its essential principles heretofore recommended, are again presented for your favourable consideration."

As Sir Robert Peel refers to the banks of the United States, and adduces them as an instance where a central bank (the Bank of the United States) exercised a beneficial control, although imperfect, over other banks, and on the removal of which those banks

at some length, the opinions entertained by American statesmen of the utility of a national bank, derived from Mr. Gilbart's History of Banking in America, and from the Messages of Presidents to Congress.

In 1836, a very harsh measure was adopted by the government in obliging the "receivers of the public money in the Western and South-Western States to take nothing in payment of the public lands, but gold or silver, or the notes of banks in their vicinity, that would be redeemed forthwith in specie."

This proceeding is commented on by the correspondent of the "Times" at New York, of whose communication I have given an extract, "as anticommercial regulations, the gold and silver was withdrawn from the marts of commerce" "to remain unemployed in the vaults of certain banks."

This regulation may have had relation to General Jackson's plan of introducing a more general metallic currency. It furnished the government with gold and silver, but "embarrassed the merchants on the seabord."

A "Constitutional Treasury" was established in 1846, which is greatly lauded by President Polk in his Message to Congress on December 5, 1848 he attributes to it the comparative exemption of the United States from the commercial difficulties and losses, which occurred in Great Britain during the year 1847.

Experience would appear to have confirmed the utility of this system, as it was still acted upon in 1854. In the "Evening Mail," May 29th, 1854, after giving a statement respecting the banks of the United States, the writer in the " Money Article" proceeds:

of

"The government holds a total of nearly 6,000,000 sterling, which, being locked up in their own vaults, and unrepresented by paper any kind, is as valueless for all the immediate purposes of commerce, as if it were at the bottom of the sea. It is also believed that there is more gold and silver in circulation among the people, than at any previous period."

President Polk observes in his Message:

"The Bank was represented to be an indispensable fiscal agent for the Government, was to equalise the exchanges, and to regulate and furnish a sound currency, always and everywhere of uniform value.

"The Bank has been succeeded by a practical system of finance, conducted and controlled solely by the Government. The constitutional currency has been restored; the public credit maintained unimpaired, even in a period of foreign war; and the whole country has become satisfied that banks, national or state, are not neces sary as fiscal agents of the Government."

President Polk supposes that if the 24,000,000 dollars which were imported in America during the fiscal year ending 30th June, 1847, and which were deposited in the vaults of the Treasury, had been deposited in the banks, an issue of 60 or 70,000,000 dollars in promissory notes might have been issued upon the basis of this specie.

If the Government of the United States found it advantageous that its employment of bullion should not interfere with the domestic or national circulation of promissory notes; that the Government should have its separate treasury and be quite independent of the banks in this respect; is it not equally desirable that the "Great Mercantile Republic" should have their separate treasury? that the bullion employed in their international commerce should be distinct from the national circulation, and the employment of it perfectly independent of the Bank of England, of national banks, and of all banks?

Why should there be any antagonism between the national and international circulation? between banks of issue and the Great Mercantile Republic? between the domestic trade and foreign commerce?

The Constitutional Treasury was established in 1846, two years after the passing of the English Bank Act of 1844, and I think that the extracts from President Polk's Message merit an attentive perusal.

P. H. Muntz, Esq., in his evidence before the Committee of the House of Commons in 1848, gave an

* "1344. You mentioned that you had resided for a considerable time on the continent? I did for years.

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