Volume: III Pages: 333-334 (extract) The use by
the banks, for their own benefit, of the money deposited
with them has received the sanction of the Government
from the commencement of this connection. The money
received from the people, instead of being kept till it
is needed for their use, is, in consequence of this
authority, a fund on which discounts are made for the
profit of those who happen to be owners of stock in the
banks selected as depositories. The supposed and often
exaggerated advantages of such a boon will always cause
it to be sought for with avidity. I will not stop to
consider on whom the patronage incident to it is to be
conferred. Whether the selection and control be trusted
to Congress or to the Executive, either will be
subjected to appeals made in every form which the
sagacity of interest can suggest. The banks under such a
system are stimulated to make the most of their
fortunate acquisition; the deposits are treated as an
increase of capital; loans and circulation are rashly
augmented, and when the public exigencies require a
return it is attended with embarrassments not provided
for nor foreseen. Thus banks that thought themselves
most fortunate when the public funds were received find
themselves most embarrassed when the season of payment
suddenly arrives. Unfortunately, too, the evils of
the system are not limited to the banks. It stimulates a
general rashness of enterprise and aggravates the
fluctuations of commerce and the currency. This result
was strikingly exhibited during the operations of the
late deposit system, and especially in the purchases of
public lands. The order which ultimately directed the
payment of gold and silver in such purchases greatly
checked, but could not altogether prevent, the evil.
Specie was indeed more difficult to be procured than the
notes which the banks could themselves create at
pleasure; but still, being obtained from them as a loan
and returned as a deposit, which they were again at
liberty to use, it only passed round the circle with
diminished speed. This operation could not have been
performed had the funds of the Government gone into the
Treasury to be regularly disbursed, and not into banks,
to be loaned out for their own profit while they were
permitted to substitute for it a credit in account.
In expressing these sentiments I desire not to
undervalue the benefits of a salutary credit to any
branch of enterprise. The credit bestowed on probity and
industry is the just reward of merit and an honorable
incentive to further acquisition. None oppose it who
love their country and understand its welfare. But when
it is unduly encouraged: when it is made to inflame the
public mind with the temptations of sudden and
unsubstantial wealth; when it turns industry into paths
that lead sooner or later to disappointment and
distress, it becomes liable to censure and needs
correction. Far from helping probity and industry, the
ruin to which it leads falls most severely on the great
laboring classes, who are thrown suddenly out of
employment, and by the failure of magnificent schemes
never intended to enrich them are deprived in a moment
of their only resource. Abuses of credit and excesses in
speculation will happen in despite of the most salutary
laws; no government, perhaps, can altogether prevent
them, but surely every government can refrain from
contributing the stimulus that calls them into life.
Volume: III Page: 340 (extract) "Amidst all
conflicting theories, one position is undeniable, the
precious metals will invariably disappear when there
ceases to be a necessity for their use as a circulating
medium. It was in strict accordance with this truth that
whilst in the month of May last they were everywhere
seen and were current for all ordinary purposes they
disappeared from circulation the moment the payment of
specie was refused by the banks and the community
tacitly agreed to dispense with its employment. Their
place was supplied by a currency exclusively of paper,
and in many cases of the worst description.
Already are the bank notes now in circulation greatly
depreciated, and they fluctuate in value between one
place and another, thus diminishing and making uncertain
the worth of property and the price of labor, and
failing to sub-serve, except at a heavy loss, the
purposes of business. With each succeeding day the
metallic currency decreases; by some it is hoarded in
the natural fear that once parted with it can not be
replaced, while by others it is diverted from its more
legitimate uses for the sake of gain. Should Congress
sanction this condition of things by making irredeemable
paper money receivable in payment of public dues, a
temporary check to a wise and salutary policy will in
all probability be converted into its absolute
destruction.
M. VAN BUREN
[END OF ARTICLE]
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