Chapter XVI

FIRST REGULAR SESSION UNDER MR. VAN BUREN'S ADMINISTRATION: HIS MESSAGE.

A brief interval of two months only intervened between the adjournment of the called session and the meeting of the regular one; and the general state of the public affairs, both at home and abroad, being essentially the same at both periods, left no new or extraordinary measures for the President to recommend. With foreign powers we were on good terms, the settlement of all our long-standing complaints under General Jackson's administration having left us free from the foreign controversies which gave trouble; and on that head the message had little but what was agreeable to communicate. Its topics were principally confined to home affairs, and that part of these affairs which were connected with the banks. That of the United States, as it still called itself, gave a new species of disregard of moral and legal obligation, and presented a new mode of depraving the currency and endangering property and contracts, by continuing to issue and to use the notes of the expired institution. Its currency was still that of the defunct bank. It used the dead notes of that institution, for which, of course, neither bank was liable. They were called resurrection notes; and their use, besides the injury to the currency and danger to property, was a high contempt and defiance of the authority which had created it; and called for the attention of the federal government. The President, therefore, thus formally brought the procedure to the notice of Congress:

"It was my hope that nothing would occur to make necessary, on
this occasion, any allusion to the late national bank. There
are circumstances, however, connected with the present state
of its affairs that bear so directly on the character of the
government and the welfare of the citizen, that I should not
feel myself excused in neglecting to notice them. The charter
which terminated its banking privileges on the 4th of March,
1836, continued its corporate powers two years more, for the
sole purpose of closing its affairs, with authority 'to use the
corporate name, style, and capacity, for the purpose of suits
for a final settlement and liquidation of the affairs and acts
of the corporation, and for the sale and disposition of their
estate, real, personal and mixed, but for no other purpose
or in any other manner whatsoever.' Just before the banking
privileges ceased, its effects were transferred by the bank to a
new State institution then recently incorporated, in trust, for
the discharge of its debts and the settlement of its affairs.
With this trustee, by authority of Congress, an adjustment was
subsequently made of the large interest which the government
had in the stock of the institution. The manner in which a
trust unexpectedly created upon the act granting the charter,
and involving such great public interests, has been executed,
would, under any circumstances, be a fit subject of inquiry; but
much more does it deserve your attention, when it embraces the
redemption of obligations to which the authority and credit of
the United States have given value. The two years allowed are
now nearly at an end. It is well understood that the trustee
has not redeemed and cancelled the outstanding notes of the
bank, but has reissued, and is actually reissuing, since the 3d
of March, 1836, the notes which have been received by it to a
vast amount. According to its own official statement, so late
as the 1st of October last, nineteen months after the banking
privileges given by the charter had expired, it had under
its control uncancelled notes of the late Bank of the United
States to the amount of twenty-seven millions five hundred and
sixty-one thousand eight hundred and sixty-six dollars, of
which six millions one hundred and seventy-five thousand eight
hundred and sixty-one dollars were in actual circulation, one
million four hundred and sixty-eight thousand six hundred and
twenty-seven dollars at State bank agencies, and three millions
two thousand three hundred and ninety dollars _in transitu_;
thus showing that upwards of ten millions and a half of the
notes of the old bank were then still kept outstanding. The
impropriety of this procedure is obvious: it being the duty
of the trustee to cancel and not to put forth the notes of an
institution, whose concerns it had undertaken to wind up. If
the trustee has a right to reissue these notes now, I can see
no reason why it may not continue to do so after the expiration
of the two years. As no one could have anticipated a course
so extraordinary, the prohibitory clause of the charter above
quoted was not accompanied by any penalty or other special
provision for enforcing it; nor have we any general law for the
prevention of similar acts in future.

"But it is not in this view of the subject alone that your
interposition is required. The United States, in settling with
the trustee for their stock, have withdrawn their funds from
their former direct ability to the creditors of the old bank,
yet notes of the institution continue to be sent forth in its
name, and apparently upon the authority of the United States.
The transactions connected with the employment of the bills
of the old bank are of vast extent; and should they result
unfortunately, the interests of individuals may be deeply
compromised. Without undertaking to decide how far, or in what
form, if any, the trustee could be made liable for notes which
contain no obligation on its part; or the old bank, for such
as are put in circulation after the expiration of its charter,
and without its authority; or the government for indemnity,
in case of loss, the question still presses itself upon your
consideration, whether it is consistent with duty and good
faith on the part of the government, to witness this proceeding
without a single effort to arrest it."

On the subject of the public lands, and the most judicious mode of disposing of them--a question of so much interest to the new States--the message took the view of those who looked to the domain less as a source of revenue than as a means of settling and improving the country. He recommended graduated prices according to the value of the different classes of lands in order to facilitate their sale; and a prospective permanent pre-emption act to give encouragement to settlers. On the first of these points he said:

"Hitherto, after being offered at public sale, lands have been
disposed of at one uniform price, whatever difference there
might be in their intrinsic value. The leading considerations
urged in favor of the measure referred to, are, that in almost
all the land districts, and particularly in those in which the
lands have been long surveyed and exposed to sale, there are
still remaining numerous and large tracts of every gradation of
value, from the government price downwards; that these lands
will not be purchased at the government price, so long as better
can be conveniently obtained for the same amount; that there are
large tracts which even the improvements of the adjacent lands
will never raise to that price; and that the present uniform
price, combined with their irregular value, operates to prevent
a desirable compactness of settlement in the new States, and to
retard the full development of that wise policy on which our
land system is founded, to the injury not only of the several
States where the lands lie, but of the United States as a whole.

"The remedy proposed has been a reduction of prices according
to the length of time the lands have been in market, without
reference to any other circumstances. The certainty that the
efflux of time would not always in such cases, and perhaps
not even generally, furnish a true criterion of value; and
the probability that persons residing in the vicinity, as the
period for the reduction of prices approached, would postpone
purchases they would otherwise make, for the purpose of availing
themselves of the lower price, with other considerations of a
similar character, have hitherto been successfully urged to
defeat the graduation upon time. May not all reasonable desires
upon this subject be satisfied without encountering any of
these objections? All will concede the abstract principle, that
the price of the public lands should be proportioned to their
relative value, so far as that can be accomplished without
departing from the rule, heretofore observed, requiring fixed
prices in cases of private entries. The difficulty of the
subject seems to lie in the mode of ascertaining what that value
is. Would not the safest plan be that which has been adopted by
many of the States as the basis of taxation; an actual valuation
of lands, and classification of them into different rates? Would
it not be practicable and expedient to cause the relative value
of the public lands in the old districts, which have been for a
certain length of time in market, to be appraised, and classed
into two or more rates below the present minimum price, by the
officers now employed in this branch of the public service, or
in any other mode deemed preferable, and to make those prices
permanent, if upon the coming in of the report they shall prove
satisfactory to Congress? Cannot all the objects of graduation
be accomplished in this way, and the objections which have
hitherto been urged against it avoided? It would seem to me
that such a step, with a restriction of the sales to limited
quantities, and for actual improvement, would be free from all
just exception."

A permanent prospective pre-emption law was cogently recommended as a measure just in itself to the settlers, and not injurious to the public Treasury, as experience had shown that the auction system--that of selling to the highest bidder above the prescribed minimum price--had produced in its aggregate but a few cents on the acre above the minimum price. On this point he said:

"A large portion of our citizens have seated themselves on
the public lands, without authority, since the passage of the
last pre-emption law and now ask the enactment of another,
to enable them to retain the lands occupied, upon payment of
the minimum government price. They ask that which has been
repeatedly granted before. If the future may be judged of by the
past, little harm can be done to the interests of the Treasury
by yielding to their request. Upon a critical examination, it
is found that the lands sold at the public sales since the
introduction of cash payments in 1820, have produced, on an
average, the net revenue of only six cents an acre more than the
minimum government price. There is no reason to suppose that
future sales will be more productive. The government, therefore,
has no adequate pecuniary interest to induce it to drive these
people from the lands they occupy, for the purpose of selling
them to others."

This wise recommendation has since been carried into effect, and pre-emptive rights are now admitted in all cases where settlements are made upon lands to which the Indian title shall have been extinguished; and the graduation of the price of the public lands, though a measure long delayed, yet prevailed in the end, and was made as originally proposed, by reductions according to the length of time the land had been offered at sale. Beginning at the minimum price of $1 25 per acre, the reduction of price went down through a descending scale, according to time, as low as 12-1/2 cents per acre. But this was long after.