HISTORIC SPEECHES
MARTIN VAN BUREN
1839 State of the Union Address
December 2, 1839
Fellow-Citizens of the Senate and House of Representatives:
I regret that I can not on this occasion congratulate you that the past year
has been one of unalloyed prosperity. The ravages of fire and disease have painfully
afflicted otherwise flourishing portions of our country, and serious embarrassments
yet derange the trade of many of our cities. But notwithstanding these adverse
circumstances, that general prosperity which has been heretofore so bountifully
bestowed upon us by the Author of All Good still continues to call for our warmest
gratitude. Especially have we reason to rejoice in the exuberant harvests which
have lavishly recompensed well-directed industry and given to it that sure reward
which is vainly sought in visionary speculations. I cannot, indeed, view without
peculiar satisfaction the evidences afforded by the past season of the benefits
that spring from the steady devotion of the husbandman to his honorable pursuit.
No means of individual comfort is more certain and no source of national prosperity
is so sure. Nothing can compensate a people for a dependence upon others for
the bread they eat, and that cheerful abundance on which the happiness of everyone
so much depends is to be looked for nowhere with such sure reliance as in the
industry of the agriculturist and the bounties of the earth.
With foreign countries our relations exhibit the same favorable aspect which
was presented in my last annual message, and afford continued proof of the wisdom
of the pacific, just, and forbearing policy adopted by the first Administration
of the Federal Government and pursued by its successors. The extraordinary powers
vested in me by an act of Congress for the defense of the country in an emergency,
considered so far probable as to require that the Executive should possess ample
means to meet it, have not been exerted. They have therefore been attended with
no other result than to increase, by the confidence thus reposed in me, my obligations
to maintain with religious exactness the cardinal principles that govern our
intercourse with other nations. Happily, in our pending questions with Great
Britain, out of which this unusual grant of authority arose, nothing has occurred
to require its exertion, and as it is about to return to the Legislature I trust
that no future necessity may call for its exercise by them or its delegation
to another Department of the Government.
For the settlement of our northeastern boundary the proposition promised by
Great Britain for a commission of exploration and survey has been received,
and a counter project, including also a provision for the certain and final
adjustment of the limits in dispute, is now before the British Government for
its consideration. A just regard to the delicate state of this question and
a proper respect for the natural impatience of the State of Maine, not less
than a conviction that the negotiation has been already protracted longer than
is prudent on the part of either Government, have led me to believe that the
present favorable moment should on no account be suffered to pass without putting
the question forever at rest. I feel confident that the Government of Her Britannic
Majesty will take the same view of this subject, as I am persuaded it is governed
by desires equally strong and sincere for the amicable termination of the controversy.
To the intrinsic difficulties of questions of boundary lines, especially those
described in regions unoccupied and but partially known, is to be added in our
country the embarrassment necessarily arising out of our Constitution by which
the General Government is made the organ of negotiating and deciding upon the
particular interests of the States on whose frontiers these lines are to be
traced. To avoid another controversy in which a State government might rightfully
claim to have her wishes consulted previously to the conclusion of conventional
arrangements concerning her rights of jurisdiction or territory, I have thought
it necessary to call the attention of the Government of Great Britain to another
portion of our conterminous dominion of which the division still remains to
be adjusted I refer to the line from the entrance of Lake Superior to the most
northwestern point of the Lake of the Woods, stipulations for the settlement
of which are to be found in the seventh article of the treaty of Ghent. The
commissioners appointed under that article by the two Governments having differed
in their opinions, made separate reports, according to its stipulations, upon
the points of disagreement, and these differences are now to be submitted
to the arbitration of some friendly sovereign or state. The disputed points
should be settled and the line designated before the Territorial government
of which it is one of the boundaries takes its place in the Union as a State,
and I rely upon the cordial cooperation of the British Government to effect
that object.
There is every reason to believe that disturbances like those which lately
agitated the neighboring British Provinces will not again prove the sources
of border contentions or interpose obstacles to the continuance of that good
understanding which it is the mutual interest of Great Britain and the United
States to preserve and maintain.
Within the Provinces themselves tranquillity is restored, and on our frontier
that misguided sympathy in favor of what was presumed to be a general effort
in behalf of popular rights, and which in some instances misled a few of our
more inexperienced citizens, has subsided into a rational conviction strongly
opposed to all intermeddling with the internal affairs of our neighbors. The
people of the United States feel, as it is hoped they always will, a warm solicitude
for the success of all who are sincerely endeavoring to improve the political
condition of mankind. This generous feeling they cherish toward the most distant
nations, and it was natural, therefore, that it should be awakened with more
than common warmth in behalf of their immediate neighbors; but it does not belong
to their character as a community to seek the gratification of those feelings
in acts which violate their duty as citizens, endanger the peace of their country,
and tend to bring upon it the stain of a violated faith toward foreign nations.
If, zealous to confer benefits on others, they appear for a moment to lose sight
of the permanent obligations imposed upon them as citizens, they are seldom
long misled. From all the information I receive, confirmed to some extent by
personal observation, I am satisfied that no one can now hope to engage in such
enterprises without encountering public indignation, in addition to the severest
penalties of the law.
Recent information also leads me to hope that the emigrants from Her Majesty's
Provinces who have sought refuge within our boundaries are disposed to become
peaceable residents and to abstain from all attempts to endanger the peace of
that country which has afforded them an asylum. On a review of the occurrences
on both sides of the line it is satisfactory to reflect that in almost every
complaint against our country the offense may be traced to emigrants from the
Provinces who have sought refuge here. In the few instances in which they were
aided by citizens of the United States the acts of these misguided men were
not only in direct contravention of the laws and well-known wishes of their
own Government, but met with the decided disapprobation of the people of the
United States.
I regret to state the appearance of a different spirit among Her Majesty's
subjects in the Canadas. The sentiments of hostility to our people and institutions
which have been so frequently expressed there, and the disregard of our rights
which has been manifested on some occasions, have, I am sorry to say, been applauded
and encouraged by the people, and even by some of the subordinate local authorities,
of the Provinces. The chief officers in Canada, fortunately, have not entertained
the same feeling, and have probably prevented excesses that must have been fatal
to the peace of the two countries.
I look forward anxiously to a period when all the transactions which have grown
out of this condition of our affairs, and which have been made the subjects
of complaint and remonstrance by the two Governments, respectively, shall be
fully examined, and the proper satisfaction given where it is due from either
side.
Nothing has occurred to disturb the harmony of our intercourse with Austria,
Belgium, Denmark, France, Naples, Portugal, Prussia, Russia, or Sweden. The
internal state of Spain has sensibly improved, and a well-grounded hope exists
that the return of peace will restore to the people of that country their former
prosperity and enable the Government to fulfill all its obligations at home
and abroad. The Government of Portugal, I have the satisfaction to state, has
paid in full the eleventh and last installment due to our citizens for the claims
embraced in the settlement made with it on the 3d of March, 1837.
I lay before you treaties of commerce negotiated with the Kings of Sardinia
and of the Netherlands, the ratifications of which have been exchanged since
the adjournment of Congress. The liberal principles of these treaties will recommend
them to your approbation. That with Sardinia is the first treaty of commerce
formed by that Kingdom, and it will, I trust, answer the expectations of the
present Sovereign by aiding the development of the resources of his country
and stimulating the enterprise of his people. That with the Netherlands happily
terminates a long-existing subject of dispute and removes from our future commercial
intercourse all apprehension of embarrassment. The King of the Netherlands has
also, in further illustration of his character for justice and of his desire
to remove every cause of dissatisfaction, made compensation for an American
vessel captured in 1800 by a French privateer, and carried into Curacoa, where
the proceeds were appropriated to the use of the colony, then, and for a short
time after, under the dominion of Holland.
The death of the late Sultan has produced no alteration in our relations with
Turkey. Our newly appointed minister resident has reached Constantinople, and
I have received assurances from the present ruler that the obligations of our
treaty and those of friendship will be fulfilled by himself in the same spirit
that actuated his illustrious father.
I regret to be obliged to inform you that no convention for the settlement
of the claims of our citizens upon Mexico has yet been ratified by the Government
of that country. The first convention formed for that purpose was not presented
by the President of Mexico for the approbation of its Congress, from a belief
that the King of Prussia, the arbitrator in case of disagreement in the joint
commission to be appointed by the United States and Mexico, would not consent
to take upon himself that friendly office. Although not entirely satisfied with
the course pursued by Mexico, I felt no hesitation in receiving in the most
conciliatory spirit the explanation offered, and also cheerfully consented to
a new convention, in order to arrange the payments proposed to be made to our
citizens in a manner which, while equally just to them, was deemed less onerous
and inconvenient to the Mexican Government. Relying confidently upon the intentions
of that Government, Mr. Ellis was directed to repair to Mexico, and diplomatic
intercourse has been resumed between the two countries. The new convention has,
he informs us, been recently submitted by the President of that Republic to
its Congress under circumstances which promise a speedy ratification, a result
which I can not allow myself to doubt.
Instructions have been given to the commissioner of the United States under
our convention with Texas for the demarcation of the line which separates us
from that Republic. The commissioners of both Governments met in New Orleans
in August last. The joint commission was organized, and adjourned to convene
at the same place on the 12th of October. It is presumed to be now in the performance
of its duties.
The new Government of Texas has shown its desire to cultivate friendly relations
with us by a prompt reparation for injuries complained of in the cases of two
vessels of the United States.
With Central America a convention has been concluded for the renewal of its
former treaty with the United States. This was not ratified before the departure
of our late charge d'affaires from that country, and the copy of it brought
by him was not received before the adjournment of the Senate at the last session.
In the meanwhile, the period limited for the exchange of ratifications having
expired, I deemed it expedient, in consequence of the death of the charge d'affaires,
to send a special agent to Central America to close the affairs of our mission
there and to arrange with the Government an extension of the time for the exchange
of ratifications.
The commission created by the States which formerly composed the Republic of
Colombia for adjusting the claims against that Government has by a very unexpected
construction of the treaty under which it acts decided that no provision was
made for those claims of citizens of the United States which arose from captures
by Colombian privateers and were adjudged against the claimants in the judicial
tribunals. This decision will compel the United States to apply to the several
Governments formerly united for redress. With all these--New Granada, Venezuela,
and Ecuador--a perfectly good understanding exists. Our treaty with Venezuela
is faithfully carried into execution, and that country, in the enjoyment of
tranquillity, is gradually advancing in prosperity under the guidance of its
present distinguished President, General Paez. With Ecuador a liberal commercial
convention has lately been concluded, which will be transmitted to the Senate
at an early day.
With the great American Empire of Brazil our relations continue unchanged,
as does our friendly intercourse with the other Governments of South America--the
Argentine Republic and the Republics of Uruguay, Chili, Peru, and Bolivia. The
dissolution of the Peru-Bolivian Confederation may occasion some temporary inconvenience
to our citizens in that quarter, but the obligations on the new Governments
which have arisen out of that Confederation to observe its treaty stipulations
will no doubt be soon understood, and it is presumed that no indisposition will
exist to fulfill those which it contracted with the United States.
The financial operations of the Government during the present year have, I
am happy to say, been very successful. The difficulties under which the Treasury
Department has labored, from known defects in the existing laws relative to
the safe-keeping of the public moneys, aggravated by the suspension of specie
payments by several of the banks holding public deposits or indebted to public
officers for notes received in payment of public dues, have been surmounted
to a very gratifying extent. The large current expenditures have been punctually
met, and the faith of the Government in all its pecuniary concerns has been
scrupulously maintained.
The nineteen millions of Treasury notes authorized by the act of Congress of
1837, and the modifications thereof with a view to the indulgence of merchants
on their duty bonds and of the deposit banks in the payment of public moneys
held by them, have been so punctually redeemed as to leave less than the original
ten millions outstanding at any one time, and the whole amount unredeemed now
falls short of three millions. Of these the chief portion is not due till next
year, and the whole would have been already extinguished could the Treasury
have realized the payments due to it from the banks. If those due from them
during the next year shall be punctually made, and if Congress shall keep the
appropriations within the estimates, there is every reason to believe that all
the outstanding Treasury notes can be redeemed and the ordinary expenses defrayed
without imposing on the people any additional burden, either of loans or increased
taxes.
To avoid this and to keep the expenditures within reasonable bounds is a duty
second only in importance to the preservation of our national character and
the protection of our citizens in their civil and political rights. The creation
in time of peace of a debt likely to become permanent is an evil for which there
is no equivalent. The rapidity with which many of the States are apparently
approaching to this condition admonishes us of our own duties in a manner too
impressive to be disregarded. One, not the least important, is to keep the Federal
Government always in a condition to discharge with ease and vigor its highest
functions should their exercise be required by any sudden conjuncture of public
affairs--a condition to which we are always exposed and which may occur when
it is least expected. To this end it is indispensable that its finances should
be untrammeled and its resources as far as practicable unencumbered. No circumstance
could present greater obstacles to the accomplishment of these vitally important
objects than the creation of an onerous national debt. Our own experience and
also that of other nations have demonstrated the unavoidable and fearful rapidity
with which a public debt is increased when the Government has once surrendered
itself to the ruinous practice of supplying its supposed necessities by new
loans. The struggle, therefore, on our part to be successful must be made at
the threshold. To make our efforts effective, severe economy is necessary. This
is the surest provision for the national welfare, and it is at the same time
the best preservative of the principles on which our institutions rest. Simplicity
and economy in the affairs of state have never failed to chasten and invigorate
republican principles, while these have been as surely subverted by national
prodigality, under whatever specious pretexts it may have been introduced or
fostered.
These considerations can not be lost upon a people who have never been inattentive
to the effect of their policy upon the institutions they have created for themselves,
but at the present moment their force is augmented by the necessity which a
decreasing revenue must impose. The check lately given to importations of articles
subject to duties, the derangements in the operations of internal trade, and
especially the reduction gradually taking place in our tariff of duties, all
tend materially to lessen our receipts; indeed, it is probable that the diminution
resulting from the last cause alone will not fall short of $5,000,000 in the
year 1842, as the final reduction of all duties to 20 per cent then takes effect.
The whole revenue then accruing from the customs and from the sales of public
lands, if not more, will undoubtedly be wanted to defray the necessary expenses
of the Government under the most prudent administration of its affairs. These
are circumstances that impose the necessity of rigid economy and require its
prompt and constant exercise. With the Legislature rest the power and duty of
so adjusting the public expenditure as to promote this end. By the provisions
of the Constitution it is only in consequence of appropriations made by law
that money can be drawn from the Treasury. No instance has occurred since the
establishment of the Government in which the Executive, though a component part
of the legislative power, has interposed an objection to an appropriation bill
on the sole ground of its extravagance. His duty in this respect has been considered
fulfilled by requesting such appropriations only as the public service may be
reasonably expected to require. In the present earnest direction of the public
mind toward this subject both the Executive and the Legislature have evidence
of the strict responsibility to which they will be held; and while I am conscious
of my own anxious efforts to perform with fidelity this portion of my public
functions, it is a satisfaction to me to be able to count on a cordial cooperation
from you.
At the time I entered upon my present duties our ordinary disbursements, without
including those on account of the public debt, the Post-Office, and the trust
funds in charge of the Government, had been largely increased by appropriations
for the removal of the Indians, for repelling Indian hostilities, and for other
less urgent expenses which grew out of an overflowing Treasury. Independent
of the redemption of the public debt and trusts, the gross expenditures of seventeen
and eighteen millions in 1834 and 1835 had by these causes swelled to twenty-nine
millions in 1836, and the appropriations for 1837, made previously to the 4th
of March, caused the expenditure to rise to the very large amount of thirty-three
millions. We were enabled during the year 1838, notwithstanding the continuance
of our Indian embarrassments, somewhat to reduce this amount, and that for the
present year (1839) will not in all probability exceed twenty-six millions,
or six millions less than it was last year. With a determination, so far as
depends on me, to continue this reduction, I have directed the estimates for
1840 to be subjected to the severest scrutiny and to be limited to the absolute
requirements of the public service. They will be found less than the expenditures
of 1839 by over $5,000,000.
The precautionary measures which will be recommended by the Secretary of the
Treasury to protect faithfully the public credit under the fluctuations and
contingencies to which our receipts and expenditures are exposed, and especially
in a commercial crisis like the present, are commended to your early attention.
On a former occasion your attention was invited to various considerations in
support of a preemption law in behalf of the settlers on the public lands, and
also of a law graduating the prices for such lands as had long been in the market
unsold in consequence of their inferior quality. The execution of the act which
was passed on the first subject has been attended with the happiest consequences
in quieting titles and securing improvements to the industrious, and it has
also to a very gratifying extent been exempt from the frauds which were practiced
under previous preemption laws. It has at the same time, as was anticipated,
contributed liberally during the present year to the receipts of the Treasury.
The passage of a graduation law, with the guards before recommended, would
also, I am persuaded, add considerably to the revenue for several years, and
prove in other respects just and beneficial. Your early consideration of the
subject is therefore once more earnestly requested.
The present condition of the defenses of our principal seaports and navy-yards,
as represented by the accompanying report of the Secretary of War, calls for
the early and serious attention of Congress; and, as connecting itself intimately
with this subject, I can not recommend too strongly to your consideration the
plan submitted by that officer for the organization of the militia of the United
States.
In conformity with the expressed wishes of Congress, an attempt was made in
the spring to terminate the Florida war by negotiation. It is to be regretted
that these humane intentions should have been frustrated and that the effort
to bring these unhappy difficulties to a satisfactory conclusion should have
failed; but after entering into solemn engagements with the commanding general,
the Indians, without any provocation, recommenced their acts of treachery and
murder. The renewal of hostilities in that Territory renders it necessary that
I should recommend to your favorable consideration the plan which will be submitted
to you by the Secretary of War, in order to enable that Department to conduct
them to a successful issue.
Having had an opportunity of personally inspecting a portion of the troops
during the last summer, it gives me pleasure to bear testimony to the success
of the effort to improve their discipline by keeping them together in as large
bodies as the nature of our service will permit. I recommend, therefore, that
commodious and permanent barracks be constructed at the several posts designated
by the Secretary of War. Notwithstanding the high state of their discipline
and excellent police, the evils resulting to the service from the deficiency
of company officers were very apparent, and I recommend that the staff officers
be permanently separated from the line.
The Navy has been usefully and honorably employed in protecting the rights
and property of our citizens wherever the condition of affairs seemed to require
its presence. With the exception of one instance, where an outrage, accompanied
by murder, was committed on a vessel of the United States while engaged in a
lawful commerce, nothing is known to have occurred to impede or molest the enterprise
of our citizens on that element, where it is so signally displayed. On learning
this daring act of piracy, Commodore Reed proceeded immediately to the spot,
and receiving no satisfaction, either in the surrender of the murderers or the
restoration of the plundered property, inflicted severe and merited chastisement
on the barbarians.
It will be seen by the report of the Secretary of the Navy respecting the disposition
of our ships of war that it has been deemed necessary to station a competent
force on the coast of Africa to prevent a fraudulent use of our flag by foreigners.
Recent experience has shown that the provisions in our existing laws which
relate to the sale and transfer of American vessels while abroad are extremely
defective. Advantage has been taken of these defects to give to vessels wholly
belonging to foreigners and navigating the ocean an apparent American ownership.
This character has been so well simulated as to afford them comparative security
in prosecuting the slave trade--a traffic emphatically denounced in our statutes,
regarded with abhorrence by our citizens, and of which the effectual suppression
is nowhere more sincerely desired than in the United States. These circumstances
make it proper to recommend to your early attention a careful revision of these
laws, so that without impeding the freedom and facilities of our navigation
or impairing an important branch of our industry connected with it the integrity
and honor of our flag may be carefully preserved. Information derived from our
consul at Havana showing the necessity of this was communicated to a committee
of the Senate near the close of the last session, but too late, as it appeared,
to be acted upon. It will be brought to your notice by the proper Department,
with additional communications from other sources.
The latest accounts from the exploring expedition represent it as proceeding
successfully in its objects and promising results no less useful to trade and
navigation than to science.
The extent of post-roads covered by mail service on the 1st of July last was
about 133,999 miles and the rate of annual transportation upon them 34,496,878
miles. The number of post-offices on that day was 12,780 and on the 30th ultimo
13,028.
The revenue of the Post-Office Department for the year ending with the 30th
of June last was $4,476,638, exhibiting an increase over the preceding year
of $241,560. The engagements and liabilities of the Department for the same
period are $4,624,117.
The excess of liabilities over the revenue for the last two years has been
met out of the surplus which had previously accumulated. The cash on hand on
the 30th ultimo was about $206,701.95 and the current income of the Department
varies very little from the rate of current expenditures. Most of the service
suspended last year has been restored, and most of the new routes established
by the act of 7th July, 1838, have been set in operation, at an annual cost
of $136,963. Notwithstanding the pecuniary difficulties of the country, the
revenue of the Department appears to be increasing, and unless it shall be seriously
checked by the recent suspension of payment by so many of the banks it will
be able not only to maintain the present mail service, but in a short time to
extend it. It is gratifying to witness the promptitude and fidelity with which
the agents of this Department in general perform their public duties.
Some difficulties have arisen in relation to contracts for the transportation
of the mails by railroad and steamboat companies. It appears that the maximum
of compensation provided by Congress for the transportation of the mails upon
railroads is not sufficient to induce some of the companies to convey them at
such hours as are required for the accommodation of the public. It is one of
the most important duties of the General Government to provide and maintain
for the use of the people of the States the best practicable mail establishment.
To arrive at that end it is indispensable that the Post-Office Department shall
be enabled to control the hours at which the mails shall be carried over railroads,
as it now does over all other roads. Should serious inconveniences arise from
the inadequacy of the compensation now provided by law, or from unreasonable
demands by any of the railroad companies, the subject is of such general importance
as to require the prompt attention of Congress.
In relation to steamboat lines, the most efficient remedy is obvious and has
been suggested by the Postmaster-General. The War and Navy Departments already
employ steamboats in their service; and although it is by no means desirable
that the Government should undertake the transportation of passengers or freight
as a business, there can be no reasonable objection to running boats, temporarily,
whenever it may be necessary to put down attempts at extortion, to be discontinued
as soon as reasonable contracts can be obtained.
The suggestions of the Postmaster-General relative to the inadequacy of the
legal allowance to witnesses in cases of prosecutions for mail depredations
merit your serious consideration. The safety of the mails requires that such
prosecutions shall be efficient, and justice to the citizen whose time is required
to be given to the public demands not only that his expenses shall be paid,
but that he shall receive a reasonable compensation.
The reports from the War, Navy, and Post-Office Departments will accompany
this communication, and one from the Treasury Department will be presented to
Congress in a few days.
For various details in respect to the matters in charge of these Departments
I would refer you to those important documents, satisfied that you will find
in them many valuable suggestions which will be found well deserving the attention
of the Legislature.
From a report made in December of last year by the Secretary of State to the
Senate, showing the trial docket of each of the circuit courts and the number
of miles each judge has to travel in the performance of his duties, a great
inequality appears in the amount of labor assigned to each judge. The number
of terms to be held in each of the courts composing the ninth circuit, the distances
between the places at which they sit and from thence to the seat of Government,
are represented to be such as to render it impossible for the judge of that
circuit to perform in a manner corresponding with the public exigencies his
term and circuit duties. A revision, therefore, of the present arrangement of
the circuit seems to be called for and is recommended to your notice.
I think it proper to call your attention to the power assumed by Territorial
legislatures to authorize the issue of bonds by corporate companies on the guaranty
of the Territory. Congress passed a law in 1836 providing that no act of a Territorial
legislature incorporating banks should have the force of law until approved
by Congress, but acts of a very exceptionable character previously passed by
the legislature of Florida were suffered to remain in force, by virtue of which
bonds may be issued to a very large amount by those institutions upon the faith
of the Territory. A resolution, intending to be a joint one, passed the Senate
at the same session, expressing the sense of Congress that the laws in question
ought not to be permitted to remain in force unless amended in many material
respects; but it failed in the House of Representatives for want of time, and
the desired amendments have not been made. The interests involved are of great
importance, and the subject deserves your early and careful attention.
The continued agitation of the question relative to the best mode of keeping
and disbursing the public money still injuriously affects the business of the
country. The suspension of specie payments in 1837 rendered the use of deposit
banks as prescribed by the act of 1836 a source rather of embarrassment than
aid, and of necessity placed the custody of most of the public money afterwards
collected in charge of the public officers. The new securities for its safety
which this required were a principal cause of my convening an extra session
of Congress, but in consequence of a disagreement between the two Houses neither
then nor at any subsequent period has there been any legislation on the subject.
The effort made at the last session to obtain the authority of Congress to punish
the use of public money for private purposes as a crime a measure attended under
other governments with signal advantage--was also unsuccessful, from diversities
of opinion in that body, notwithstanding the anxiety doubtless felt by it to
afford every practicable security. The result of this is still to leave the
custody of the public money without those safeguards which have been for several
years earnestly desired by the Executive, and as the remedy is only to be found
in the action of the Legislature it imposes on me the duty of again submitting
to you the propriety of passing a law providing for the safe-keeping of the
public moneys, and especially to ask that its use for private purposes by any
officers intrusted with it may be declared to be a felony, punishable with penalties
proportioned to the magnitude of the offense.
These circumstances, added to known defects in the existing laws and unusual
derangement in the general operations of trade, have during the last three years
much increased the difficulties attendant on the collection, keeping, and disbursement
of the revenue, and called forth corresponding exertions from those having them
in charge. Happily these have been successful beyond expectation. Vast sums
have been collected and disbursed by the several Departments with unexpected
cheapness and ease, transfers have been readily made to every part of the Union,
however distant, and defalcations have been far less than might have been anticipated
from the absence of adequate legal restraints. Since the officers of the Treasury
and Post-Office Departments were charged with the custody of most of the public
moneys received by them there have been collected $66,000,000, and, excluding
the case of the late collector at New York, the aggregate amount of losses sustained
in the collection can not, it is believed, exceed $60,000. The defalcation of
the late collector at that city, of the extent and circumstances of which Congress
have been fully informed, ran through all the modes of keeping the public money
that have been hitherto in use, and was distinguished by an aggravated disregard
of duty that broke through the restraints of every system, and can not, therefore,
be usefully referred to as a test of the comparative safety of either. Additional
information will also be furnished by the report of the Secretary of the Treasury,
in reply to a call made upon that officer by the House of Representatives at
the last session requiring detailed information on the subject of defaults by
public officers or agents under each Administration from 1789 to 1837. This
document will be submitted to you in a few days. The general results (independent
of the Post-Office, which is kept separately and will be stated by itself),
so far as they bear upon this subject, are that the losses which have been and
are likely to be sustained by any class of agents have been the greatest by
banks, including, as required in the resolution, their depreciated paper received
for public dues; that the next largest have been by disbursing officers, and
the least by collectors and receivers. If the losses on duty bonds are included,
they alone will be threefold those by both collectors and receivers. Our whole
experience, therefore, furnishes the strongest evidence that the desired legislation
of Congress is alone wanting to insure in those operations the highest degree
of security and facility. Such also appears to have been the experience of other
nations. From the results of inquiries made by the Secretary of the Treasury
in regard to the practice among them I am enabled to state that in twenty-two
out of twenty-seven foreign governments from which undoubted information has
been obtained the public moneys are kept in charge of public officers. This
concurrence of opinion in favor of that system is perhaps as great as exists
on any question of internal administration.
In the modes of business and official restraints on disbursing officers no
legal change was produced by the suspension of specie payments. The report last
referred to will be found to contain also much useful information in relation
to this subject.
I have heretofore assigned to Congress my reasons for believing that the establishment
of an independent National Treasury, as contemplated by the Constitution, is
necessary to the safe action of the Federal Government. The suspension of specie
payments in 1837 by the banks having the custody of the public money showed
in so alarming a degree our dependence on those institutions for the performance
of duties required by law that I then recommended the entire dissolution of
that connection. This recommendation has been subjected, as I desired it should
be, to severe scrutiny and animated discussion, and I allow myself to believe
that notwithstanding the natural diversities of opinion which may be anticipated
on all subjects involving such important considerations, it has secured in its
favor as general a concurrence of public sentiment as could be expected on one
of such magnitude.
Recent events have also continued to develop new objections to such a connection.
Seldom is any bank, under the existing system and practice, able to meet on
demand all its liabilities for deposits and notes in circulation. It maintains
specie payments and transacts a profitable business only by the confidence of
the public in its solvency, and whenever this is destroyed the demands of its
depositors and note holders, pressed more rapidly than it can make collections
from its debtors, force it to stop payment. This loss of confidence, with its
consequences, occurred in 1837, and afforded the apology of the banks for their
suspension. The public then acquiesced in the validity of the excuse, and while
the State legislatures did not exact from them their forfeited charters, Congress,
in accordance with the recommendation of the Executive, allowed them time to
pay over the public money they held, although compelled to issue Treasury notes
to supply the deficiency thus created.
It now appears that there are other motives than a want of public confidence
under which the banks seek to justify themselves in a refusal to meet their
obligations. Scarcely were the country and Government relieved in a degree from
the difficulties occasioned by the general suspension of 1837 when a partial
one, occurring within thirty months of the former, produced new and serious
embarrassments, though it had no palliation in such circumstances as were alleged
in justification of that which had previously taken place. There was nothing
in the condition of the country to endanger a well-managed banking institution;
commerce was deranged by no foreign war; every branch of manufacturing industry
was crowned with rich rewards, and the more than usual abundance of our harvests,
after supplying our domestic wants, had left our granaries and storehouses filled
with a surplus for exportation. It is in the midst of this that an irredeemable
and depreciated paper currency is entailed upon the people by a large portion
of the banks. They are not driven to it by the exhibition of a loss of public
confidence or of a sudden pressure from their depositors or note holders, but
they excuse themselves by alleging that the current of business and exchange
with foreign countries, which draws the precious metals from their vaults, would
require in order to meet it a larger curtailment of their loans to a comparatively
small portion of the community than it will be convenient for them to bear or
perhaps safe for the banks to exact. The plea has ceased to be one of necessity.
Convenience and policy are now deemed sufficient to warrant these institutions
in disregarding their solemn obligations. Such conduct is not merely an injury
to individual creditors, but it is a wrong to the whole community, from whose
liberality they hold most valuable privileges, whose rights they violate, whose
business they derange, and the value of whose property they render unstable
and insecure. It must be evident that this new ground for bank suspensions,
in reference to which their action is not only disconnected with, but wholly
independent of, that of the public, gives a character to their suspensions more
alarming than any which they exhibited before, and greatly increases the impropriety
of relying on the banks in the transactions of the Government.
A large and highly respectable portion of our banking institutions are, it
affords me unfeigned pleasure to state, exempted from all blame on account of
this second delinquency. They have, to their great credit, not only continued
to meet their engagements, but have even repudiated the grounds of suspension
now resorted to. It is only by such a course that the confidence and good will
of the community can be preserved, and in the sequel the best interests of the
institutions themselves promoted
New dangers to the banks are also daily disclosed from the extension of that
system of extravagant credit of which they are the pillars. Formerly our foreign
commerce was principally rounded on an exchange of commodities, including the
precious metals, and leaving in its transactions but little foreign debt. Such
is not now the case. Aided by the facilities afforded by the banks, mere credit
has become too commonly the basis of trade. Many of the banks themselves, not
content with largely stimulating this system among others, have usurped the
business, while they impair the stability, of the mercantile community; they
have become borrowers instead of lenders; they establish their agencies abroad;
they deal largely in stocks and merchandise; they encourage the issue of State
securities until the foreign market is glutted with them; and, unsatisfied with
the legitimate use of their own capital and the exercise of their lawful privileges,
they raise by large loans additional means for every variety of speculation.
The disasters attendant on this deviation from the former course of business
in this country are now shared alike by banks and individuals to an extent of
which there is perhaps no previous example in the annals of our country. So
long as a willingness of the foreign lender and a sufficient export of our productions
to meet any necessary partial payments leave the flow of credit undisturbed
all appears to be prosperous, but as soon as it is checked by any hesitation
abroad or by an inability to make payment there in our productions the evils
of the system are disclosed. The paper currency, which might serve for domestic
purposes, is useless to pay the debt due in Europe. Gold and silver are therefore
drawn in exchange for their notes from the banks. To keep up their supply of
coin these institutions are obliged to call upon their own debtors, who pay
them principally in their own notes, which are as unavailable to them as they
are to the merchants to meet the foreign demand. The calls of the banks, therefore,
in such emergencies of necessity exceed that demand, and produce a corresponding
curtailment of their accommodations and of the currency at the very moment when
the state of trade renders it most inconvenient to be borne. The intensity of
this pressure on the community is in proportion to the previous liberality of
credit and consequent expansion of the currency. Forced sales of property are
made at the time when the means of purchasing are most reduced, and the worst
calamities to individuals are only at last arrested by an open violation of
their obligations by the banks--a refusal to pay specie for their notes and
an imposition upon the community of a fluctuating and depreciated currency.
These consequences are inherent in the present system. They are not influenced
by the banks being large or small, created by National or State Governments.
They are the results of the irresistible laws of trade or credit. In the recent
events, which have so strikingly illustrated the certain effects of these laws,
we have seen the bank of the largest capital in the Union, established under
a national charter, and lately strengthened, as we were authoritatively informed,
by exchanging that for a State charter with new and unusual privileges--in a
condition, too, as it was said, of entire soundness and great prosperity--not
merely unable to resist these effects, but the first to yield to them.
Nor is it to be overlooked that there exists a chain of necessary dependence
among these institutions which obliges them to a great extent to follow the
course of others, notwithstanding its injustice to their own immediate creditors
or injury to the particular community in which they are placed. This dependence
of a bank, which is in proportion to the extent of its debts for circulation
and deposits, is not merely on others in its own vicinity, but on all those
which connect it with the center of trade. Distant banks may fail without seriously
affecting those in our principal commercial cities, but the failure of the latter
is felt at the extremities of the Union. The suspension at New York in 1837
was everywhere, with very few exceptions, followed as soon as it was known.
That recently at Philadelphia immediately affected the banks of the South and
West in a similar manner. This dependence of our whole banking system on the
institutions in a few large cities is not found in the laws of their organization,
but in those of trade and exchange. The banks at that center, to which currency
flows and where it is required in payments for merchandise, hold the power of
controlling those in regions whence it comes, while the latter possess no means
of restraining them; so that the value of individual property and the prosperity
of trade through the whole interior of the country are made to depend on the
good or bad management of the banking institutions in the great seats of trade
on the seaboard.
But this chain of dependence does not stop here. It does not terminate at Philadelphia
or New York. It reaches across the ocean and ends in London, the center of the
credit system. The same laws of trade which give to the banks in our principal
cities power over the whole banking system of the United States subject the
former, in their turn, to the money power in Great Britain. It is not denied
that the suspension of the New York banks in 1837, which was followed in quick
succession throughout the Union, was produced by an application of that power,
and it is now alleged, in extenuation of the present condition of so large a
portion of our banks, that their embarrassments have arisen from the same cause.
From this influence they can not now entirely escape, for it has its origin
in the credit currencies of the two countries; it is strengthened by the current
of trade and exchange which centers in London, and is rendered almost irresistible
by the large debts contracted there by our merchants, our banks, and our States.
It is thus that an introduction of a new bank into the most distant of our villages
places the business of that village within the influence of the money power
in England; it is thus that every new debt which we contract in that country
seriously affects our own currency and extends over the pursuits of our citizens
its powerful influence. We can not escape from this by making new banks, great
or small, State or national. The same chains which bind those now existing to
the center of this system of paper credit must equally fetter every similar
institution we create. It is only by the extent to which this system has been
pushed of late that we have been made fully aware of its irresistible tendency
to subject our own banks and currency to a vast controlling power in a foreign
lad, and it adds a new argument to those which illustrate their precarious situation..
Endangered in the first place by their own mismanagement and again by the conduct
of every institution which connects them with the center of trade in our own
country, they are yet subjected beyond all this to the effect of whatever measures
policy, necessity, or caprice may induce those who control the credits of England
to resort to. I mean not to comment upon these measures, present or past, and
much less to discourage the prosecution of fair commercial dealing between the
two countries, based on reciprocal benefits; but it having now been made manifest
that the power of inflicting these and similar injuries is by the resistless
law of a credit currency and credit trade equally capable of extending their
consequences through all the ramifications of our banking system, and by that
means indirectly obtaining, particularly when our banks are used as depositories
of the public moneys, a dangerous political influence in the United States,
I have deemed it my duty to bring the subject to your notice and ask for it
your serious consideration.
Is an argument required beyond the exposition of these facts to show the impropriety
of using our banking institutions as depositories of the public money? Can we
venture not only to encounter the risk of their individual and mutual mismanagement,
but at the same time to place our foreign and domestic policy entirely under
the control of a foreign moneyed interest? To do so is to impair the independence
of our Government, as the present credit system has already impaired the independence
of our banks; it is to submit all its important operations, whether of peace
or war, to be controlled or thwarted, at first by our own banks and then by
a power abroad greater than themselves. I can not bring myself to depict the
humiliation to which this Government and people might be sooner or later reduced
if the means for defending their rights are to be made dependent upon those
who may have the most powerful of motives to impair them.
Nor is it only in reference to the effect of this state of things on the independence
of our Government or of our banks that the subject presents itself for consideration;
it is to be viewed also in its relations to the general trade of our country.
The time is not long passed when a deficiency of foreign crops was thought to
afford a profitable market for the surplus of our industry, but now we await
with feverish anxiety the news of the English harvest, not so much from motives
of commendable sympathy, but fearful lest its anticipated failure should narrow
the field of credit there. Does not this speak volumes to the patriot? Can a
system be beneficent, wise, or just which creates greater anxiety for interests
dependent on foreign credit than for the general prosperity of our own country
and the profitable exportation of the surplus produce of our labor?
The circumstances to which I have thus adverted appear to me to afford weighty
reasons, developed by late events, to be added to those which I have on former
occasions offered when submitting to your better knowledge and discernment the
propriety of separating the custody of the public money from banking institutions.
Nor has anything occurred to lessen, in my opinion, the force of what has been
heretofore urged. The only ground on which that custody can be desired by the
banks is the profitable use which they may make of the money. Such use would
be regarded in individuals as a breach of trust or a crime of great magnitude,
and yet it may be reasonably doubted whether, first and last, it is not attended
with more mischievous consequences when permitted to the former than to the
latter. The practice of permitting the public money to be used by its keepers,
as here, is believed to be peculiar to this country and to exist scarcely anywhere
else. To procure it here improper influences are appealed to, unwise connections
are established between the Government and vast numbers of powerful State institutions,
other motives than the public good are brought to bear both on the executive
and legislative departments, and selfish combinations leading to special legislation
are formed. It is made the interest of banking institutions and their stockholders
throughout the Union to use their exertions for the increase of taxation and
the accumulation of a surplus revenue, and while an excuse is afforded the means
are furnished for those excessive issues which lead to extravagant trading and
speculation and are the forerunners of a vast debt abroad and a suspension of
the banks at home.
Impressed, therefore, as I am with the propriety of the funds of the Government
being withdrawn from the private use of either banks or individuals, and the
public money kept by duly appointed public agents, and believing as I do that
such also is the judgment which discussion, reflection, and experience have
produced on the public mind, I leave the subject with you. It is, at all events,
essential to the interests of the community and the business of the Government
that a decision should be made.
Most of the arguments that dissuade us from employing banks in the custody
and disbursement of the public money apply with equal force to the receipt of
their notes for public dues. The difference is only in form. In one instance
the Government is a creditor for its deposits, and in the other for the notes
it holds. They afford the same opportunity for using the public moneys, and
equally lead to all the evils attendant upon it, since a bank can as safely
extend its discounts on a deposit of its notes in the hands of a public officer
as on one made in its own vaults. On the other hand, it would give to the Government
no greater security, for in case of failure the claim of the note holder would
be no better than that of a depositor.
I am aware that the danger of inconvenience to the public and unreasonable
pressure upon sound banks have been urged as objections to requiring the payment
of the revenue in gold and silver. These objections have been greatly exaggerated.
From the best estimates we may safely fix the amount of specie in the country
at $85,000,000, and the portion of that which would be employed at any one time
in the receipts and disbursements of the Government, even if the proposed change
were made at once, would not, it is now, after fuller investigation, believed
exceed four or five millions. If the change were gradual, several years would
elapse before that sum would be required, with annual opportunities in the meantime
to alter the law should experience prove it to be oppressive or inconvenient.
The portions of the community on whose business the change would immediately
operate are comparatively small, nor is it believed that its effect would be
in the least unjust or injurious to them.
In the payment of duties, which constitute by far the greater portion of the
revenue, a very large proportion is derived from foreign commission houses and
agents of foreign manufacturers, who sell the goods consigned to them generally
at auction, and after paying the duties out of the avails remit the rest abroad
in specie or its equivalent. That the amount of duties should in such cases
be also retained in specie can hardly be made a matter of complaint. Our own
importing merchants, by whom the residue of the duties is paid, are not only
peculiarly interested in maintaining a sound currency, which the measure in
question will especially promote, but are from the nature of their dealings
best able to know when specie will be needed and to procure it with the least
difficulty or sacrifice. Residing, too, almost universally in places where the
revenue is received and where the drafts used by the Government for its disbursements
must concentrate, they have every opportunity to obtain and use them in place
of specie should it be for their interest or convenience. Of the number of these
drafts and the facilities they may afford, as well as of the rapidity with which
the public funds are drawn and disbursed, an idea may be formed from the fact
that of nearly $20,000,000 paid to collectors and receivers during the present
year the average amount in their hands at any one time has not exceeded a million
and a half, and of the fifteen millions received by the collector of New York
alone during the present year the average amount held by him subject to draft
during each week has been less than half a million.
The ease and safety of the operations of the Treasury in keeping the public
money are promoted by the application of its own drafts to the public dues.
The objection arising from having them too long outstanding might be obviated
and they yet made to afford to merchants and banks holding them an equivalent
for specie, and in that way greatly lessen the amount actually required. Still
less inconvenience will attend the requirement of specie in purchases of public
lands. Such purchases, except when made on speculation, are in general but single
transactions, rarely repeated by the same person; and it is a fact that for
the last year and a half, during which the notes of sound banks have been received,
more than a moiety of these payments has been voluntarily made in specie, being
a larger proportion than would have been required in three years under the graduation
proposed.
It is, moreover, a principle than which none is better settled by experience
that the supply of the precious metals will always be found adequate to the
uses for which they are required. They abound in countries where no other currency
is allowed. In our own States, where small notes are excluded, gold and silver
supply their place. When driven to their hiding places by bank suspensions,
a little firmness in the community soon restores them in a sufficient quantity
for ordinary purposes. Postage and other public dues have been collected in
coin without serious inconvenience even in States where a depreciated paper
currency has existed for years, and this, with the aid of Treasury notes for
a part of the time, was done without interruption during the suspension of 1837.
At the present moment the receipts and disbursements of the Government are made
in legal currency in the largest portion of the Union. No one suggests a departure
from this rule, and if it can now be successfully carried out it will be surely
attended with even less difficulty when bank notes are again redeemed in specie.
Indeed, I can not think that a serious objection would anywhere be raised to
the receipt and payment of gold and silver in all public transactions were it
not from an apprehension that a surplus in the Treasury might withdraw a large
portion of it from circulation and lock it up unprofitably in the public vaults.
It would not, in my opinion, be difficult to prevent such an inconvenience from
occurring; but the authentic statements which I have already submitted to you
in regard to the actual amount in the public Treasury at any one time during
the period embraced in them and the little probability of a different state
of the Treasury for at least some years to come seem to render it unnecessary
to dwell upon it. Congress, moreover, as I have before observed, will in every
year have an opportunity to guard against it should the occurrence of any circumstances
lead us to apprehend injury from this source. Viewing the subject in all its
aspects, I can not believe that any period will be more auspicious than the
present for the adoption of all measures necessary to maintain the sanctity
of our own engagements and to aid in securing to the community that abundant
supply of the precious metals which adds so much to their prosperity and gives
such increased stability to all their dealings.
In a country so commercial as ours banks in some form will probably always
exist, but this serves only to render it the more incumbent on us,, notwithstanding
the discouragements of the past, to strive in our respective stations to mitigate
the evils they produce; to take from them as rapidly as the obligations of public
faith and a careful consideration of the immediate interests of the community
will permit the unjust character of monopolies; to check, so far as may be practicable,
by prudent legislation those temptations of interest and those opportunities
for their dangerous indulgence which beset them on every side, and to confine
them strictly to the performance of their paramount duty--that of aiding the
operations of commerce rather than consulting their own exclusive advantage.
These and other salutary reforms may, it is believed, be accomplished without
the violation of any of the great principles of the social compact, the observance
of which is indispensable to its existence, or interfering in any way with the
useful and profitable employment of real capital.
Institutions so framed have existed and still exist elsewhere, giving to commercial
intercourse all necessary facilities without inflating or depreciating the currency
or stimulating speculation. Thus accomplishing their legitimate ends, they have
gained the surest guaranty for their protection and encouragement in the good
will of the community. Among a people so just as ours the same results could
not fail to attend a similar course. The direct supervision of the banks belongs,
from the nature of our Government, to the States who authorize them. It is to
their legislatures that the people must mainly look for action on that subject.
But as the conduct of the Federal Government in the management of its revenue
has also a powerful, though less immediate, influence upon them, it becomes
our duty to see that a proper direction is given to it. While the keeping of
the public revenue in a separate and independent treasury and of collecting
it in gold and silver will have a salutary influence on the system of paper
credit with which all banks are connected, and thus aid those that are sound
and well managed, it will at the same time sensibly check such as are otherwise
by at once withholding the means of extravagance afforded by the public funds
and restraining them from excessive issues of notes which they would be constantly
called upon to redeem.
I am aware it has been urged that this control may be best attained and exerted
by means of a national bank. The constitutional objections which I am well known
to entertain would prevent me in any event from proposing or assenting to that
remedy; but in addition to this, I can not after past experience bring myself
to think that it can any longer be extensively regarded as effective for such
a purpose. The history of the late national bank, through all its mutations,
shows that it was not so. On the contrary, it may, after a careful consideration
of the subject, be, I think, safely stated that at every period of banking excess
it took the lead; that in 1817 and 1818, in 1823, in 1831, and in 1834 its vast
expansions, followed by distressing contractions, led to those of the State
institutions. It swelled and maddened the tides of the banking system, but seldom
allayed or safely directed them. At a few periods only was a salutary control
exercised, but an eager desire, on the contrary, exhibited for profit in the
first place; and if afterwards its measures were severe toward other institutions,
it was because its own safety compelled it to adopt them. It did not differ
from them in principle or in form; its measures emanated from the same spirit
of gain; it felt the same temptation to overissues; it suffered from and was
totally unable to avert those inevitable laws of trade by which it was. itself
affected equally with them; and at least on one occasion, at an early day, it
was saved only by extraordinary exertions from the same fate that attended the
weakest institution it professed to supervise. In 1837 it failed equally with
others in redeeming its notes (though the two years allowed by its charter for
that purpose had not expired), a large amount of which remains to the present
time outstanding. It is true that, having so vast a capital and strengthened
by the use of all the revenues of the Government, it possessed more power; but
while it was itself by that circumstance freed from the control which all banks
require, its paramount object and inducement were left the same--to make the
most for its stockholders, not to regulate the currency of the country. Nor
has it, as far as we are advised, been found to be greatly otherwise elsewhere.
The national character given to the Bank of England has not prevented excessive
fluctuations in their currency, and it proved unable to keep off a suspension
of specie payments, which lasted for nearly a quarter of a century. And why
should we expect it to be otherwise? A national institution, though deriving
its charter from a different source than the State banks, is yet constituted
upon the same principles, is conducted by men equally exposed to temptation,
and is liable to the same disasters, with the additional disadvantage that its
magnitude occasions an extent of confusion and distress which the mismanagement
of smaller institutions could not produce. It can scarcely be doubted that the
recent suspension of the United State Bank of Pennsylvania, of which the effects
are felt not in that State alone, but over half the Union, had its origin in
a course of business commenced while it was a national institution, and there
is no good reason for supposing that the same consequences would not have followed
had it still derived its powers from the General Government. It is in vain,
when the influences and impulses are the same, to look for a difference in conduct
or results. By such creations we do, therefore, but increase the mass of paper
credit and paper currency, without checking their attendant evils and fluctuations.
The extent of power and the efficiency of organization which we give, so far
from being beneficial, are in practice positively injurious. They strengthen
the chain of dependence throughout the Union, subject all parts more certainly
to common disaster, and bind every bank more effectually in the first instance
to those of our commercial cities, and in the end to a foreign power. In a word,
I can not but believe that, with the full understanding of the operations of
our banking system which experience has produced, public sentiment is not less
opposed to the creation of a national bank for purposes connected with currency
and commerce than for those connected with the fiscal operations of the Government.
Yet the commerce and currency of the country are suffering evils from the operations
of the State banks which can not and ought not to be overlooked. By their means
we have been flooded with a depreciated paper, which it was evidently the design
of the framers of the Constitution to prevent when they required Congress to
"Coin money and regulate the value of foreign coins," and when they forbade
the States "to coin money, emit bills of credit, make anything but gold and
silver a tender in payment of debts," or "pass any law impairing the obligation
of contracts." If they did not guard more explicitly against the present state
of things, it was because they could not have anticipated that the few banks
then existing were to swell to an extent which would expel to so great a degree
the gold and silver for which they had provided from the channels of circulation,
and fill them with a currency that defeats the objects they had in view. The
remedy for this must chiefly rest with the States from whose legislation it
has sprung. No good that might accrue in a particular case front the exercise
of powers not obviously conferred on the General Government would authorize
its interference or justify a course that might in the slightest degree increase
at the expense of the States the power of the Federal authorities; nor do I
doubt that the States will apply the remedy. Within the last few years events
have appealed to them too strongly to be disregarded. They have seen that the
Constitution, though theoretically adhered to, is subverted in practice; that
while on the statute books there is no legal tender but gold and silver, no
law impairing the obligations of contracts, yet that in point of fact the privileges
conferred on banking corporations have made their notes the currency of the
country; that the obligations imposed by these notes are violated under the
impulses of interest or convenience, and that the number and power of the persons
connected with these corporations or placed under their influence give them
a fearful weight when their interest is in opposition to the spirit of the Constitution
and laws. To the people it is immaterial whether these results are produced
by open violations of the latter or by the workings of a system of which the
result is the same. An inflexible execution even of the existing statutes of
most of the States would redress many evils now endured, would effectually show
the banks the dangers of mismanagement which impunity encourages them to repeat,
and would teach all corporations the useful lesson that they are the subjects
of the law and the servants of the people. What is still wanting to effect these
objects must be sought in additional legislation, or, if that be inadequate,
in such further constitutional grants or restrictions as may bring us back into
the path from which we have so widely wandered.
In the meantime it is the duty of the General Government to cooperate with
the States by a wise exercise of its constitutional powers and the enforcement
of its existing laws. The extent to which it may do so by further enactments
I have already adverted to, and the wisdom of Congress may yet enlarge them.
But above all, it is incumbent upon us to hold erect the principles of morality
and law, constantly executing our own contracts in accordance with the provisions
of the Constitution, and thus serving as a rallying point by which our whole
country may be brought back to that safe and honored standard.
Our people will not long be insensible to the extent of the burdens entailed
upon them by the false system that has been operating on their sanguine, energetic,
and industrious character, nor to the means necessary to extricate themselves
from these embarrassments. The weight which presses upon a large portion of
the people and the States is an enormous debt, foreign and domestic. The foreign
debt of our States, corporations, and men of business can scarcely be less than
$200,000,000, requiring more than $10,000,000 a year to pay the interest. This
sum has to be paid out of the exports of the country, and must of necessity
cut off imports to that extent or plunge the country more deeply in debt from
year to year. It is easy to see that the increase of this foreign debt must
augment the annual demand on the exports to pay the interest, and to the same
extent diminish the imports, and in proportion to the enlargement of the foreign
debt and the consequent increase of interest must be the decrease of the import
trade. In lieu of the comforts which it now brings us we might have our. gigantic
banking institutions and splendid, but in many instances profitless, railroads
and canals absorbing to a great extent in interest upon the capital borrowed
to construct them the surplus fruits of national industry for years to come,
and securing to posterity no adequate return for the comforts which the labors
of their hands might otherwise have secured. It is not by the increase of this
debt that relief is to be sought, but in its diminution. Upon this point there
is, I am happy to say, hope before us; not so much in the return of confidence
abroad, which will enable the States to borrow more money, as in a change of
public feeling at home, which prompts our people to pause in their career and
think of the means by which debts are to be paid before they are contracted.
If we would escape embarrassment, public and private, we must cease to run in
debt except for objects of necessity or such as will yield a certain return.
Let the faith of the States, corporations, and individuals already pledged be
kept with the most punctilious regard. It is due to our national character as
well as to justice that this should on the part of each be a fixed principle
of conduct. But it behooves us all to be more chary in pledging it hereafter.
By ceasing to run in debt and applying the surplus of our crops and incomes
to the discharge of existing obligations, buying less and selling more, and
managing all affairs, public and private, with strict economy and frugality,
we shall see our country soon recover from a temporary depression, arising not
from natural and permanent causes, but from those I have enumerated, and advance
with renewed vigor in her career of prosperity.
Fortunately for us at this moment, when the balance of trade is greatly against
us and the difficulty of meeting it enhanced by the disturbed state of our money
affairs, the bounties of Providence have come to relieve us from the consequences
of past errors. A faithful application of the immense results of the labors
of the last season will afford partial relief for the present, and perseverance
in the same course will in due season accomplish the rest. We have had full
experience in times past of the extraordinary results which can in this respect
be brought about in a short period by the united and well-directed efforts of
a community like ours. Our surplus profits, the energy and industry of our population,
and the wonderful advantages which Providence has bestowed upon our country
in its climate, its various productions, indispensable to other nations, will
in due time afford abundant means to perfect the most useful of those objects
for which the States have been plunging themselves of late in embarrassment
and debt, without imposing on ourselves or our children such fearful burdens.
But let it be indelibly engraved on our minds that relief is not to be found
in expedients. Indebtedness can not be lessened by borrowing more money. or
by changing the form of the debt. The balance of trade is not to be turned in
our favor by creating new demands upon us abroad. Our currency can not be improved
by the creation of new banks or more issues from those which now exist. Although
these devices sometimes appear to give temporary relief, they almost invariably
aggravate the evil in the end. It is only by retrenchment and reform--by curtailing
public and private expenditures, by paying our debts, and by reforming our banking
system--that we are to expect effectual relief, security for the future, and
an enduring prosperity. In shaping the institutions and policy of the General
Government so as to promote as far as it can with its limited powers these important
ends, you may rely on my most cordial cooperation.
That there should have been in the progress of recent events doubts in many
quarters and in some a heated opposition to every change can not surprise us.
Doubts are properly attendant on all reform, and it is peculiarly in the nature
of such abuses as we are now encountering to seek to perpetuate their power
by means of the influence they have been permitted to acquire. It is their result,
if not their object, to gain for the few an ascendency over the many by securing
to them a monopoly of the currency, the medium through which most of the wants
of mankind are supplied; to produce throughout society a chain of dependence
which leads all classes to look to privileged associations for the means of
speculation and extravagance; to nourish, in preference to the manly virtues
that give dignity to human nature, a craving desire for luxurious enjoyment
and sudden wealth, which renders those who seek them dependent on those who
supply them; to substitute for republican simplicity and economical habits a
sickly appetite for effeminate indulgence and an imitation of that reckless
extravagance which impoverished and enslaved the industrious people of foreign
lands, and at last to fix upon us, instead of those equal political rights the
acquisition of which was alike the object and supposed reward of our Revolutionary
struggle, a system of exclusive privileges conferred by partial legislation.
To remove the influences which had thus gradually grown up among us, to deprive
them of their deceptive advantages, to test them by the light of wisdom and
truth, to oppose the force which they concentrate in their sup-port--all this
was necessarily the work of time, even among a people so enlightened and pure
as that of the United States. In most other countries, perhaps, it could only
be accomplished through that series of revolutionary movements which are too
often found necessary to effect any great and radical reform; but it is the
crowning merit of our institutions that they create and nourish in the vast
majority of our people a disposition and a power peaceably to remedy abuses
which have elsewhere caused the effusion of rivers of blood and the sacrifice
of thousands of the human race. The result thus far is most honorable to the
self-denial, the intelligence, and the patriotism of our citizens; it justifies
the confident hope that they will carry through the reform which has been so
well begun, and that they will go still further than they have yet gone in illustrating
the important truth that a people as free and enlightened as ours will, whenever
it becomes necessary, show themselves to be indeed capable of self-government
by voluntarily adopting appropriate remedies for every abuse, and submitting
to temporary sacrifices, however great, to insure their permanent welfare.
My own exertions for the furtherance of these desirable objects have been bestowed
throughout my official career with a zeal that is nourished by ardent wishes
for the welfare of my country, and by an unlimited reliance on the wisdom that
marks its ultimate decision on all great and controverted questions. Impressed
with the solemn obligations imposed upon me by the Constitution, desirous also
of laying before my fellow-citizens, with whose confidence and support I have
been so highly honored, such measures as appear to me conducive to their prosperity,
and anxious to submit to their fullest consideration the grounds upon which
my opinions are formed, I have on this as on preceding occasions freely offered
my views on those points of domestic policy that seem at the present time most
prominently to require the action of the Government. I know that they will receive
from Congress that full and able consideration which the importance of the subjects
merits, and I can repeat the assurance heretofore made that I shall cheerfully
and readily cooperate with you in every measure that will tend to promote the
welfare of the Union.
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