Chapter LXV

THE THREE PER CENT. DEBT, AND LOSS IN NOT PAYING IT WHEN THE RATE WAS LOW, AND THE MONEY IN THE BANK OF THE UNITED STATES WITHOUT INTEREST.

There was a part of the revolutionary debt, incurred by the States and assumed by Congress, amounting to thirteen and a quarter millions of dollars, on which an interest of only three per centum was allowed. Of course, the stock of this debt could be but little over fifty cents in the dollar in a country where legal interest was six per centum, and actual interest often more. In 1817, when the Bank of the United States went into operation, the price of that stock was sixty-four per centum--the money was in bank, more than enough to pay it--a gratuitous deposit, bringing no interest--and which was contained in her vaults--her situation soon requiring the aid of the federal government to enable her to keep her doors open. I had submitted a resolve early in my term of service to have this stock purchased at its market value; and for that purpose to enlarge the power of the commissioners of the sinking fund, then limited to a price a little below the current rate: a motion which was resisted and defeated by the friends of the bank. I then moved a resolve that the bank pay interest on the deposits: which was opposed and defeated in like manner. Eventually, and when the rest of the public debt should be paid off, and the payment of these thirteen and a quarter millions would become obligatory under a policy which eschewed all debt--a consummation then rapidly approaching, under General Jackson's administration--it was clear that the treasury would pay one hundred cents on the dollar on what could be then purchased for sixty-odd, losing in the mean time the interest on the money with which it could be paid. It made a case against the bank, which it felt itself bound to answer, and did so through senator Johnson, of Louisiana: who showed that the bank paid the debt which the commissioners of the sinking fund required. This was true; but it was not the point in the case. The point was that the money was kept in deposit to sustain the bank, and the enlargement of the powers of the commissioners resisted to prevent them from purchasing this stock at a low rate, in view of its rise to par: which soon took place; and made palpable the loss to the United States. At the time of the solicited renewal of the charter, this non-payment of the three per cents was brought up as an instance of loss incurred on account of the bank; and gave rise to the defence from Mr. Johnson; to which I replied:

"Mr. Benton had not intended, he said, to say a word in relation
to this question, nor should he now rise to speak upon it, but
from what had fallen from the senator from New Jersey. That
gentleman had gone from the resolution to the bank, and from
the bank he had gone to statements respecting his resolutions
on alum salt, which were erroneous. Day by day, memorials were
poured in upon us by command of the bank, all representing,
in the same terms, the necessity of renewing its charter.
These memorials, the tone of which, and the time of their
presentation, showed their common origin, were daily ordered to
be printed. These papers, forming a larger mass than we ever
had on our tables before, and all singing, to the same tune,
the praises of the bank, were ordered to be printed without
hesitation. The report which he had moved to have printed for
the benefit of the farmers, was struck at by the senator of
New Jersey. In the first place, the senator was in error as to
the cost of printing the report. He had stated it to be one
thousand nine hundred dollars, whereas it was only one thousand
one hundred dollars. A few days ago, two thousand copies of
a report of the British House of Commons on the subject of
railroads was ordered to be printed. Following the language of
that resolution, he had moved the printing of another report
of that body, which would interest a thousand of our citizens,
where that report would interest one. There was not a farmer in
America who would not deem it a treasure. It covered the whole
saline kingdom; and those unacquainted with its nature had no
more idea of it than a blind man had of the solar rays. It was
of the highest value to the farmer and the grazier. It showed
the effect of the mineral kingdom upon the animal kingdom; and
its views were the results of the wisdom, experience, and first
talents of Great Britain. The assertion of the senator, that
the bank aided in producing a sound currency, he would disprove
by facts and dates. In 1817 the bank went into operation. In
three or four years after, forty-four banks were chartered
in Kentucky, and forty in Ohio; and the United States Bank,
so far from being able to put them down, was on the verge of
bankruptcy. With the use of eight millions of public money,
it was hardly able, from day to day to sustain itself. Eleven
millions of dollars, as he could demonstrate, the people had
lost by maintaining the bank during this crisis. But for a
waggon load of specie from the mint, as Mr. Cheves informs us,
it would have become bankrupt. In addition to this, the use
of government deposits, to the extent of eight millions, was
necessary to sustain it; and the country lost eleven millions
by the diversion of those deposits to this purpose. Congress
authorized the purchase of the thirteen millions of three
per cents,--at that time, they could have been purchased at
sixty-five cents, now they were at ninety-six per cent. This
was one item of the amount lost, and the other was the interest
on the stock from that time to the present, amounting to six
millions more. It was shown by Mr. Cheves that the United
States Bank owed its existence to the local banks--to the
indulgence and forbearance of the banks of Philadelphia and
Boston, notwithstanding its receipt of the silver from Ohio and
Kentucky, which drained that country, destroyed its local banks,
and threw down the value of every description of its property.
The United States Bank currency was called by the senator the
poor man's friend. The orders on the branches--these drafts
issued in Dan and made payable in Beersheba--had their origin
with a Scotchman; and, when their character was discovered,
they were stopped as oppressive to the poor; and this bank,
which was cried up as the poor man's friend, issued those same
orders, in paper so similar to that of the bank notes, that the
people could not readily discern the difference between them. It
was thought that the people might mistake the signature of the
little cashier and the little president for the great cashier
and the great president. The stockholders were foreigners, to a
great extent--they were lords and ladies--reverend clergymen and
military officers. The widows, in whose behalf our sympathy was
required, were countess dowagers, and the Barings, some of whom
owned more of the stock than was possessed in sixteen States of
this Union."