Chapter X

RETENTION OF THE FOURTH DEPOSIT INSTALMENT.

The deposit with the States had only reached its second instalment when the deposit banks, unable to stand a continued quarterly drain of near ten millions to the quarter, gave up the effort and closed their doors. The first instalment had been delivered the first of January, in specie, or its equivalent; the second in April, also in valid money; the third one demandable on the first of June, was accepted by the States in depreciated paper: and they were very willing to receive the fourth instalment in the same way. It had cost the States nothing,--was not likely to be called back by the federal government, and was all clear gains to those who took it as a deposit and held it as a donation. But the Federal Treasury needed it also; and likewise needed ten millions more of that amount which had already been "_deposited_" with the States; and which "_deposit_" was made and accepted under a statute which required it to be paid back whenever the wants of the Treasury required it. That want had now come, and the event showed the delusion and the cheat of the bill under which a distribution had been made in the name of a deposit. The idea of restitution entered no one's head! neither of the government to demand it, nor of the States to render back. What had been delivered, was gone! that was a clear case; and reclamation, or rendition, even of the smallest part, or at the most remote period, was not dreamed of. But there was a portion behind--another instalment of ten millions--deliverable out of the "_surplus_" on the first day of October: but there was no surplus: on the contrary a deficit: and the retention of this sum would seem to be a matter of course with the government, only requiring the form of an act to release the obligation for the delivery. It was recommended by the President, counted upon in the treasury estimates, and its retention the condition on which the amount of treasury notes was limited to ten millions of dollars. A bill was reported for the purpose, in the mildest form, not to repeal but to postpone the clause; and the reception which it met, though finally successful, should be an eternal admonition to the federal government never to have any money transaction with its members--a transaction in which the members become the masters, and the devourers of the head. The finance committee of the Senate had brought in a bill to repeal the obligation to deposit this fourth instalment; and from the beginning it encountered a serious resistance. Mr. Webster led the way, saying:

"We are to consider that this money, according to the provisions
of the existing law, is to go equally among all the States, and
among all the people; and the wants of the Treasury must be
supplied, if supplies be necessary, equally by all the people.
It is not a question, therefore, whether some shall have money,
and others shall make good the deficiency. All partake in the
distribution, and all will contribute to the supply. So that it
is a mere question of convenience, and, in my opinion, it is
decidedly most convenient, on all accounts, that this instalment
should follow its present destination, and the necessities of
the Treasury be provided for by other means."

Mr. Preston opposed the repealing bill, principally on the ground that many of the States had already appropriated this money; that is to say, had undertaken public works on the strength of it; and would suffer more injury from not receiving it than the Federal Treasury would suffer from otherwise supplying its place. Mr. Crittenden opposed the bill on the same ground. Kentucky, he said, had made provision for the expenditure of the money, and relied upon it, and could not expect the law to be lightly rescinded, or broken, on the faith of which she had anticipated its use. Other senators treated the deposit act as a contract, which the United States was bound to comply with by delivering all the instalments.

In the progress of the bill Mr. Buchanan proposed an amendment, the effect of which would be to change the essential character of the so called, deposit act, and convert it into a real distribution measure. By the terms of the act, it was the duty of the Secretary of the Treasury to call upon the States for a return of the deposit when needed by the Federal Treasury: Mr. Buchanan proposed to release the Secretary from this duty, and devolve it upon Congress, by enacting that the three instalments already delivered, should remain on deposit with the States until called for by Congress. Mr. Niles saw the evil of the proposition, and thus opposed it:

"He must ask for the yeas and nays on the amendment, and was
sorry it had been offered. If it was to be fully considered, it
would renew the debate on the deposit act, as it went to change
the essential principles and terms of that act. A majority of
those who voted for that act, about which there had been so much
said, and so much misrepresentation, had professed to regard
it--and he could not doubt that at the time they did so regard
it--as simply a deposit law; as merely changing the place of
deposit from the banks to the States, so far as related to the
surplus. The money was still to be in the Treasury, and liable
to be drawn out, with certain limitations and restrictions, by
the ordinary appropriation laws, without the direct action of
Congress. The amendment, if adopted, will change the principles
of the deposit act, and the condition of the money deposited
with the States under it. It will no longer be a deposit; it
will not be in the Treasury, even in point of legal effect or
form: the deposit will be changed to a loan, or, perhaps more
properly, a grant to the States. The rights of the United States
will be changed to a mere claim, like that against the late Bank
of the United States; and a claim without any means to enforce
it. We were charged, at the time, of making a distribution of
the public revenue to the States, in the disguise and form of a
deposit; and this amendment, it appeared to him, would be a very
bold step towards confirming the truth of that charge. He deemed
the amendment an important one, and highly objectionable; but
he saw that the Senate were prepared to adopt it, and he would
not pursue the discussion, but content himself with repeating
his request for the ayes and noes on the question."

Mr. Buchanan expressed his belief that the substitution of Congress for the Secretary of the Treasury, would make no difference in the nature of the fund: and that remark of his, if understood as sarcasm, was undoubtedly true; for the deposit was intended as a distribution by its authors from the beginning, and this proposed substitution was only taking a step, and an effectual one, to make it so: for it was not to be expected that a Congress would ever be found to call for this money from the States, which they were so eager to give to the States. The proposition of Mr. Buchanan was carried by a large majority--33 to 12--all the opponents of the administration, and a division of its friends, voting for it. Thus, the whole principle, and the whole argument on which the deposit act had been passed, was reversed. It was passed to make the State treasuries the Treasury _pro tanto_ of the United States--to substitute the States for the banks, for the keeping of this surplus until it was wanted--and it was placed within the call of a federal executive officer that it might be had for the public service when needed. All this was reversed. The recall of the money was taken from the federal executive, and referred to the federal legislative department--to the Congress, composed of members representing the States--that is to say, from the payee to the payor, and was a virtual relinquishment of the payment. And thus the deposit was made a mockery and a cheat; and that by those who passed it.

In the House of Representatives the disposition to treat the deposit as a contract, and to compel the government to deliver the money (although it would be compelled to raise by extraordinary means what was denominated a surplus), was still stronger than in the Senate, and gave rise to a protracted struggle, long and doubtful in its issue. Mr. Cushing laid down the doctrine of contract, and thus argued it:

"The clauses of the deposit act, which appertain to the present
question, seem to me to possess all the features of a contract.
It provides that the whole surplus revenue of the United
States, beyond a certain sum, which may be in the Treasury on
a certain day, shall be deposited with the several States;
which deposit the States are to keep safely, and to pay back
to the United States, whenever the same shall be called for by
the Secretary of the Treasury in a prescribed time and mode,
and on the happening of a given contingency. Here, it seems
to me, is a contract in honor; and, so far as there can be a
contract between the United States and the several States, a
contract in law; there being reciprocal engagements, for a
valuable consideration, on both sides. It is, at any rate, a
quasi-contract. They who impugn this view of the question argue
on the supposition that the act, performed or to be performed
by the United States, is an inchoate gift of money to the
States. Not so. It is a contract of deposit; and that contract
is consummated, and made perfect, on the formal reception of
any instalment of the deposit by the States. Now, entertaining
this view of the transaction, I am asked by the administration
to come forward and break this contract. True, a contract made
by the government of the United States cannot be enforced in
law. Does that make it either honest or honorable for the United
States to take advantage of its power and violate its pledged
faith? I refuse to participate in any such breach of faith. But
further. The administration solicits Congress to step in between
the United States and the States as a volunteer, and to violate
a contract, as the means of helping the administration out of
difficulties, into which its own madness and folly have wilfully
sunk it, and which press equally upon the government and the
people. The object of the measure is to relieve the Secretary of
the Treasury from the responsibility of acting in this matter
as he has the power to do. Let him act. I will not go out of my
way to interpose in this between the Executive and the several
States, until the administration appeals to me in the right
spirit. This it has not done. The Executive comes to us with
a new doctrine, which is echoed by his friends in this House,
namely, that the American government is not to exert itself for
the relief of the American people. Very well. If this be your
policy, I, as representing the people, will not exert myself for
the relief of your administration."

Such was the chicanery, unworthy of a _pie-poudre_ court--with which a statute of the federal Congress, stamped with every word, invested with every form, hung with every attribute, to define it a deposit--not even a loan--was to be pettifogged into a gift! and a contract for a gift! and the federal Treasury required to stand and deliver! and all that, not in a low law court, where attorneys congregate, but in the high national legislature, where candor and firmness alone should appear. History would be faithless to her mission if she did not mark such conduct for reprobation, and invoke a public judgment upon it.

After a prolonged contest the vote was taken, and the bill carried, but by the smallest majority--119 to 117;--a difference of two votes, which was only a difference of one member. But even that was a delusive victory. It was immediately seen that more than one had voted with the majority, not for the purpose of passing the bill, but to gain the privilege of a majority member to move for a reconsideration. Mr. Pickens, of South Carolina, immediately made that motion, and it was carried by a majority of 70! Mr. Pickens then proposed an amendment, which was to substitute definite for indefinite postponement--to postpone to a day certain instead of the pleasure of Congress: and the first day of January, 1839, was the day proposed; and that without reference to the condition of the Treasury (which might not then have any surplus), for the transfer of this fourth instalment of a deposit to the States. The vote being taken on this proposed amendment, it was carried by a majority of 40: and that amendment being concurred in by the Senate, the bill in that form became a law, and a virtual legalization of the deposit into a donation of forty millions to the States. And this was done by the votes of members who had voted for a deposit with the States; because a donation to the States was unconstitutional. The three instalments already delivered were not to be recalled until Congress should so order; and it was quite certain that it never would so order. At the same time the nominal discretion of Congress over the deposit of the remainder was denied, and the duty of the Secretary made peremptory to deliver it in the brief space of one year and a quarter from that time. But events frustrated that order. The Treasury was in no condition on the first day of January, 1839, to deliver that amount of money. It was penniless itself. The compromise act of 1833, making periodical reductions in the tariff, until the whole duty was reduced to an _ad valorem_ of twenty per cent., had nearly run its course, and left the Treasury in the condition of a borrower, instead of that of a donor or lender of money. This fourth instalment could not be delivered at the time appointed, nor subsequently;--and was finally relinquished, the States retaining the amount they had received: which was so much clear gain through the legislative fraud of making a distribution under the name of a deposit.

This was the end of one of the distribution schemes which had so long afflicted and disturbed Congress and the country. Those schemes began now to be known by their consequences--evil to those they were intended to benefit, and of no service to those whose popularity they were to augment. To the States the deposit proved to be an evil, in the contentions and combinations to which their disposition gave rise in the general assemblies--in the objects to which they were applied--and the futility of the help which they afforded. Popularity hunting, on a national scale, gave birth to the schemes in Congress: the same spirit, on a smaller and local scale, took them up in the States. All sorts of plans were proposed for the employment of the money, and combinations more or less interested, or designing, generally carried the point in the universal scramble. In some States a pro rata division of the money, per capite, was made; and the distributive share of each individual being but a few shillings, was received with contempt by some, and rejected with scorn by others. In other States it was divided among the counties, and gave rise to disjointed undertakings of no general benefit. Others, again, were stimulated by the unexpected acquisition of a large sum, to engage in large and premature works of internal improvement, embarrassing the State with debt, and commencing works which could not be finished. Other States again, looking upon the deposit act as a legislative fraud to cover an unconstitutional and demoralizing distribution of public money to the people, refused for a long time to receive their proffered dividend, and passed resolutions of censure upon the authors of the act. And thus the whole policy worked out differently from what had been expected. The States and the people were not grateful for the favor: the authors of the act gained no presidential election by it: and the gratifying fact became evident that the American people were not the degenerate Romans, or the volatile Greeks, to be seduced with their own money--to give their votes to men who lavished the public moneys on their wants or their pleasures--in grain to feed them, or in shows and games to delight and amuse them.