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FROM the first settlement of the of the government, or those officers North American continent by a free sent out from England to enrich themand enterprising Anglo-Saxon race, selves at the expense of the colonists, the great and unequalled advantages of only by direct taxation, or by obtaining soil, climate and population which it the products of industry on promises, has possessed have been counteracted, issued in a shape to circulate as money. to a very great extent, by two modes of The issue of this paper absorbed a seeking the same end, viz., to make the large portion of the proceeds of inmany work for the few, or to procure dustry on the specious pretence of large profits for capital at the expense “ furnishing a currency." The feeble of labor. The means used for this state of a colony, which had hardly purpose have been monied corporations taken root in the country, could not and the protective system. Of all de- bear the weight of sudden and heavy vices for appropriating the proceeds of taxes, levied at the will of an imported the labor of many to the service of a governor ; he therefore issued bills to few, the paper system, as conducted the amount of what he wanted, and by monied corporations, having special caused them to pass current in all payprivileges, has been the most success ments. A moderate tax was then ful and the most injurious to the well- commonly laid, or some persons were being of the country at large. That found willing to engage their lands as sethe country, with its great natural ad- curity for gradually sinking this debt and vantages, has progressed in wealth and calling in the bills. New exigencies power in spite of the pernicious influ- and new demands upon the government ence of paper money, has been taken produced constantly increased emisin many quarters as a proof of the sions, and in spite of all the rigor of the necessity of such issues.
authorities, in attempting by laws to The body of men who first came to sustain the value of the paper as comthis country as settlers, may be said to pared with specie, the bills fell to have stood on a footing of perfect very heavy rates of discount. The inequality in relation to each other. That tercourse of business and the industry is to say, each depended on the pro- of society suffered intensely under the ceeds of his own labor and industry, fluctuations of this wretched currency, and enjoyed their fruits. The common the increase of which indicated the neproduct of all their labor enhanced the cessities of the government, which were general wealth. Very soon, however, the greater the more trade declined, the scheming and the knavish sought by reason of the various oppressions it to obtain more of the general wealth underwent. The evils that grew out than their own industry would yield of this use of paper were great ; and them. This could be done on the part the clause of the Constitution of the
United States, prohibiting the new quantity of gold or silver in some other states from ever renewing such a de- situation, and also where gold and silver scription of issue, is evidence of the are most wanted. A barrel of flour in deep sense entertained by the framers of New York, for instance, is worth five that instrument of the mischiefs that at- dollars, or 129 grains of gold 900 thoutend such a currency. They had had no sandths fine. În Liverpool it is worth experience of the paper money issued 30 shillings sterling, or 185 grains of by banks, and the new-formed states gold 915 thousandths fine. It will imagined if corporations, created by command, therefore, in Liverpool, 56 state governments, issued the “ bills of grains of a little better quality of gold credit,” and pretended to pay them no than it will in New-York. A part of demand in specie, that that restriction that difference is, however, the value would remedy the great evils that of the labor and capital employed in the sprung from the issues of the govern- transportation. When this difference ment, made a legal tender.
in the quantity of gold that may be obThe Constitution of the new states tained in each place extends to many forbade the legalizing of paper money. articles, it signifies not the abundance It recognized gold and silver only as a of those articles, but the scarcity of gold ; circulating medium, and gave to Con- and commerce, therefore, transfers gress the exclusive right “to coin mo as much of the precious metals to the ney and regulate the value thereof." place where they are wanted as supThe idea of requiring any corporation plies the demand for them. When, or government to furnish a currency however, they arrive in the country; was not dreamed of. There was, how- they are in a shape not suited to be used ever, at that time, nothing that could as money. The public are not familiar be called money in the country; specie with the quantity and quality of the had disappeared, and issues of bills of metals contained in each piece of foreign credit, to which the Confederation had coinage, and the labor of ascertaining resorted as a means of carrying on the those facts by assay and weighing, rewar, bad ceased, in consequence of the duces the operation to one of barter. worthlessness of the paper as money. It is, therefore, of the highest necessity Then it was, with returning peace, that the government should meet these renovated energies and revived industry, arrivals of the metals at the threshold, that Congress should have adhered to and with as little delay and expense as specie in its transactions, and faithfully possible, place a stamp upon them which performed its duty of " coining money makes their value known to every citiand regulating the value thereof." The zen at a glance. The demand for the gold and silver of most countries is metals, and the necessity for this coinfurnished in such quantities as are re age, was intensely felt when the new quired by the operations of commerce; governmánt was organized, and in 1790 and the “ money" of a country signi- a law was passed establishing the mipt fies merely the government stamp fixed at Philadelphia. This location of the upon a piece of the metal, to certify mint was an error. To be useful, the that it contains a certain quantity of a mint should be at the point where the certain quality of gold. This stamp is specie arrives from abroad, in order that affixed for no other purpose than to no expense of its coinage may be infacilitate its transfer from hand to hand. curred by the owner. Most of the preThe prices of commodities signify the cious metals arrive at New-York; and quantity of the precious metals that until late years the expense of getting can be obtained for them, and also sig- it to Philadelphia was so great as to nify the quantity of any article that amount to prohibition, and down to 1838 may be obtained for a certain number that mint was the only means of roining of grains of gold. These quantities money for the whole United States. vary under different circumstances of This error of the government in relaproduction in all countries. It is the tion to the mint, was accompanied by business of commerce to ascertain the another in its neglect to establish a differences, and to strive continually to treasury of the United States. The equalize them. The argus eyes of the fiscal affairs of the government were merchants of all countries are contin- left without regulation in the hands of ually seeking for commodities in one the officers for thie time being. These ocation, that will command a larger officers sought the most convenient
mode of conducting the public business, up to the charter of the new United and they in a manner legalized paper States Bank, in 1816, the custom and money, and discouraged the use of the usage in respect to the keeping of the precious metals by receiving and paying public money remained the same as it out the promises of local institutions as ever had been. The charter of the new money. At the same time the specie bank provided that the public monies that arrived in the country, not being should be deposited in the institution made suitable to be readily used as and its branches, unless the Secretary money, was sold to brokers or deposited of the Treasury should otherwise direct. in banks, and their promises taken to That bank retained the public funds use as money. Thus banks came to until October, 1833, when, as experiborrow and trade upon not only the ence has since fully proved, it became revenues of the country, but the pro- necessary to remove them to places of ceeds of individual industry.
greater safety, and state banks were seWhen the confederation was formed lected by the Secretary of the Treasury, to carry on the war and administer the and made use of precisely in the manner government, the United Colonies were adopted by Mr. Gallatin in 1811. This obliged to have recourse to the old sys- plan was pursued through one of the tem of bills of credit, which were is greatest commercial revulsions that the sued, and the revenues collected under world ever saw; yet so vigilant, active the direction of committees of Congress and sagacious was the Secretary, that, -the law recognizing no place for keep- amid the failure of banks, the ruin of ing the public money, nor any system merchants, and finally the insolvency of finance. The military chests of the of nine state governments, the finances army, the loan offices, and such tempo- of the federal Treasury remained unrary places as the committees, and sub- disturbed, and no loss was sustained sequently the treasury officers chose to by the government. When the whole direct, constituted the Treasury. In currency of the country consisted of 1789 the Bank of North America, individual “shin-plasters" and deprechartered by Pennsylvania, as well as ciated bank promises, the large by Congress, was generally employed revenues of the government were colby the officers of the Treasury, but at lected and disbursed without loss and their own option. The three banks of without confusion. The state of affairs, Massachusetts, New-York and Mary- however, amply demonstrated, and the land were next used; and on the incor- officer who had so skilfully preserved poration of the old United States Bank, the credit of the government through in 1791, it also obtained part of the surrounding ruin, urged the necessity Treasury business. It was not, how- of some distinct system of finance, and ever, until 1809, that the law first indi- some mode of preventing the public cated the depositories that should be funds from becoming the basis of specuused for the public money. A Congres. lations, the results of which were so sional enactment then required that the disastrous. Accordingly, in July, 1840, disbursing officers should, “ wherever a bill was approved, separating entirely practicable,” keep their funds in some the fiscal affairs of the government incorporated bank designated by the from the banks, and creating a “ TreaPresident. This law did not apply to sury” for the first time. the collections, which were kept in the The revenue and expenditure of the banks by direction of the Secretary of federal government, in usual years, the Treasury, under the power confided very nearly equal each other. The to him by acts of Congress, for super- receipts from all quarters in the year vising the finances and the doings of ending June 30, 1845, were $29,769,the subordinate officers of the Treasury. 133, and the expenditures, including In 1811 the public funds were removed payments on account of the public debt, from the old United States Bank, on the were $29,968,207, being an excess of approach of the period for the expiration expenditure equal to $199,074. This of its charter, by Mr. Gallatin, who, revenue, in round numbers thirty milwithout consulting Congress, or any lions, is collected and disbursed over a other authority, proceeded of his own territory of nearly two million square act to select other banks, and make his miles in extent. The officers of collecdeposites with them. From that time tion are located in twenty-seven differ
ent states, each one of which has its in a reasonable time for transmission. own system of finance, its own reve The gold and silver having previously nues and expenditures, entirely irre- been collected at the government despective and independent of the collec- pository is paid to the pensioner on tions on account of the federal govern- sight of his draft. He carries the gold ment within its own borders. With to his home in the country and spends the exception of Massachusetts, New- it in his neighborhood. It passes from York and Louisiana, the collections of hand to hand in circulation until paid the federal government in no state into the hands of the shop-keeper; it is equal the amount collected by the gov- by him used in the payment of his note ernment of that state. In the southern, at the local bank, or sent to Boston, south-western and western states, the where it ultimately again passes from expenditures of the federal government the importer's hands into the public uniformly exceed its collections in those vaults, to be repaid to the pensioner or quarters. In all the New-England other public creditor. In Boston the states, except Massachusetts, the ex dishursements of the federal governpenditures of the federal government ment are larger than in all the other exceed its revenues collected in those states of New-England together. The states ; but including Boston, the re circulation of the specie is therefore venue received in New-England very far more active ; that is, it will pass nearly equals the whole expenditure: with less delay from the Treasury to as thus, the customs of Boston usually the creditor, from the latter into genefurnish a sum which, after discharging ral circulation-more readily again accuall the government obligations due mulate as the deposites of merchants in there, leaves a surplus equal to all the banks, whence it will again be transwants of the government in the other ferred to the Treasury. What Boston New-England states. In one year is to the New-England states is Newthe revenues in the whole of the New York to the rest of the Union. The England states was $2,948,908; of collections in New York, for the same this sum $2,590,572 was collected in year as that for which the figures are Boston, and $1,572,800 was expended given for New-England, were $9,021,there; the balance, $1,017,772, was 491, and the expenditure $3,649,600, drawn against by the Secretary in fa- leaving a surplus of $5,371,891 to be vor of the other five New-England expended in western and southern states, in which the whole expenditure states. In all the states of the Union, was $1,347,200, and the revenue $368,- south of New-England, and exclusive 336 ; consequently the balance, $978,- of New-York, the collections were 864, was very nearly met by the $1,- $8,654,368, and the expenditure $14,017,772 surplus that accrued from the 724,600, leaving $6,070,282 to be met customs at Boston. This, it will be by drafts on the surplus accumulating observed, affords a complete operation in New-York. These were to be for New-England. Boston is the com drawn in favor of every state of the mon centre of business for that section, Union and almost every section of every and all moneys and drafts flow to it from state, in payment of construction of every quarter of the six states, and forts, army and navy expenditures, saladrafts on Boston are always desirable ries of officers, pensions, &c. The as a remittance thither. Therefore payments from all quarters fall due as the operation of the Treasury comes fast as the revenue is collected. The eminently in aid of the current of busi- amount of duties on a cargo arrived at
The principal expenditure of New York scarcely comes into possesthe federal government in the interior sion of the receiver-general before a of New-England is for pensions. Thus, Treasury draft reaches him, ordering out of the $1,347,200, stated above the payment of all, or a portion of it, to as the expenditure in five states, $815,- some pensioner in Illinois or other state. 000 was for pensions. Now the ope- The gold drawn from bank vaults on ration of the specie-clause of the in- the check of the importer is by the dependent Treasury is to issue a draft order of the Treasurer put into the to the public creditor in the interior of hands of the public creditor, whence it the state, payable in Boston, in gold, on passes into circulation, performing those presentation, and it must be presented legitimate functions which were pre