My Dear Sir: -- I promised at parting to resume the subjects of our conversation -- the condition of the currency of the United States, and the bank question in Pennsylvania.  I shall now perform my engagement -- beginning with an explanation of the controversy about the bank in Pennsylvania.

The Bank of the United States chartered by Congress but fixed in Pennsylvania, was always an object of state pride and state policy.  It had been proposed by a Pennsylvanian, had always been governed by Pcnnsylvanians -- and when the state lost, in the course of nature, its commercial ascendancy, the bank still maintained its superiority as the financial centre of the Union.  Accordingly when the charter was about to expire, Pennsylvania made great efforts to renew it.

Thus in the year 1831, a resolution passed the House of Representatives of Pennsylvania, in the following form:

February 24th, 1831.--

"A motion was made by Mr. [Charles Jared] Ingersoll, and read as follows:

Resolved, As the sense of the senate and house of representatives, that the Constitution of the United States authorises, and near half a century's experience sanctions, a Bank of the United States as necessary and proper to regulate the value of money, and prevent paper currency of unequal and depreciated value."

This was modified as follows, in the senate, and finally passed, by a vote almost unanimous, both branches of the legislature, on the 21st of April 1831:

"That whereas the Bank of the United States has tended in a great degree to maintain a sound and uniform currency, to facilitate the financial concerns of the government, to regulate foreign and domestic exchange -- and has been conducive to commercial prosperity, the Legislature of Pennsylvania recommend a renewal of its charter, under such regulations and restrictions, as to the power of the several states, as congress may deem right and proper."

The subject was resumed the next year.  On the 2d of February, 1832, the following resolution passed the senate unanimously, and the house of representatives by a vote of 77 to 7.

"Resolved, That the senators from this state in the congress of the United States be instructed, and the representatives requested, to use their exertions to obtain a renewal of the charter of the Bank of the United States during the present session of congress -- with such alterations (if any be necessary) as may secure the rights of the states."

So decided was the feeling in regard to the bank -- that at the same session, while the question of rechartering the bank was under deliberation in Congress, the following resolution was passed unanimously by both branches:

"Resolved, That connected as the prosperity of agriculture and commerce is with the successful financial operations and sound currency of the country, we view the re-chartering of the Bank of the United Slates as of vital importance to the public welfare."

The representatives in Congress shared these opinions of their state -- for out of their thirty votes, only a solitary member voted against the re-charter of the bank.

All those proceedings of Pennsylvania were wholly voluntary -- the stockholders of the bank taking no part whatever in them.

The bill passed by Congress re-chartering the bank being vetoed by the President, the bank began to make preparation for closing its concerns, and distributing the capital among the stockholders.  The division would have been as follows:

There were, in all, 3417 stockholders:-- Of whom there were Pennsylvanias 590, other citizens of the United States 2267, foreigners 560.

To these the funds would be appropriated, as follows:

To the New England States, .... $3,111,000
New York and New Jersey, ....... 4,569,000
Delaware, Maryland, and D.C. ... 2,027,000
Virginia and North Carolina, ..... 894,000
South Carolina and Georgia, .... 3,031,000
Other states, ..................... 99,000
Foreigners, .................... 9,168,000
The government of the United States, 6,278,000
Pennsylvania, .................. 5,219,000

From this you will perceive that Pennsylvania, owning little more than five millions, had the use and management of thirty-five millions of capital, and those who governed Pennsylvania very naturally reasoned thus:

Pennsylvania has embarked in a great system of improvement, which has already cost more than twenty millions of dollars.  She will want more.  But if the currency is deranged, she will not be able to borrow, ---[because none of these domestic improvers would consider spending only what they have, on what they can afford] and her citizens must pay back the ten or twelve millions which they owe to the bank, to be dispersed among rival states or sent to Europe.  Will it not be wiser to retain the capital for Pennsylvania ?  There is no inconsistency in doing so, Pennsylvania has done all in her power to preserve the bank as a national institution.  Failing in this, if the Union will not share with her its benefits, let no one complain that she appropriates them to herself.  Under the influence of such views, Pennsylvania saw with anxiety the approach of the end of the charter.  The directors meanwhile went on quietly winding up its concerns.  They did not apply to the legislature of Pennsylvania, nor to any other legislature, for a chatter of the bank.  At last, when it became evident that the capital of the institution would leave Pennsylvania, a movement was made in the legislature.  It began by a joint letter from the chairman of the committee of ways and means, and the chairman of the committee on banks, to the president, asking whether the bank would accept a charier from Pennsylvania.  The letter is in these words:

"Harrisburg, January 5,1836.

"Dear Sir-- We have been informed that the stockholders of the United States bank would accept a charter from this state.  It is proper, in our opinion, that this subject should, as soon as possible, be brought before the action of the legislature.

"We therefore take the liberty of addressing you as the organ of that institution on the subject.

"Be good enough to inform us upon what terms this can be effected.  You will understand us:  We wish to know the number of years that you would be satisfied to be chartered for --the amount of capital-- als, the premium and other encouragements that would be given to the state in consideration thereof.

"You need not confine your answer to these particulars, as much additional information will be proper.

Yours,
John H. Walker,
E.F. Pennypacker.

"N. Biddle, Esq."

This was the first step in the charter of the bank.  No memorial, no solicitation from the bank itself, but a formal and official application from the legislature to the bank, enquiring if the "bank would accept a charter from this state" -- "upon what terms this can be effected" -- "the number of years that you would be satisfied to be chartered for" -- "the premium and other encouragements that would be given to the state."

The president of the bank, in his reply, put the subject on this footing:

"The question you perceive is, what inducements can be offered to the stockholder in the other parts of the Union, or in other countries, to leave his funds in Pennsylvania rather than recall them home to be employed elsewhere.  As a Pcnnsylvanian, devotedly attached to the interests and the fame of our state, I would give more to Pennsylvania than to any other state for the charter, and would endeavour to induce the other stockholders to do the same;  yet where there are so many other states possessing equal power to grant a charter, the effort would of course be fruitless unless the charter from Pennsylvania, while it was beneficial to the state, presented a reasonable prospect of not being too burdensome to the stockholder.  Both these objects should be, and I think can be, attained,"

Accordingly, a bill passed for chartering the bank, "not to take effect until it shall have been accepted by the stockholders at a general meeting."

The stockholders, to whom this charter was thus offered, proceeded to examine it.  They saw at once that the terms were very onerous:

There were to be paid in money, ..... $4,500,000
In subscriptions to internal improvements, .... 675,000
In premiums on loans when wanted by the state, .... 600,000
Making, .............. $5,775,000

The effect of that provision in exposing the rights of strangers to the caprice of a future legislature became obvious, and accordingly, that 5th section was re-considered in the house of representatives, and amended as follows:  "That if the said corporation, at any time during the continuance of the charter, shall abuse or misuse the privileges and powers hereby granted, then this charter shall be forfeited, and the said powers and privileges shall cease and become void."

To this it was objected that it might enable the legislature to claim the right of judging of these alleged abuses, and they were distinctly and decidedly informed, that if when the charter was offered to the stockholders it contained any such provision, it would be certainly and instantly rejected by them.  Accordingly, when the bill reached the senate, a motion was made to strike out this fifth section, and substitute a provision, exactly similar to that in the old charter, that the fact of any violation of the charter ihould be first determined by the courts, before the legislature could repeal it.  This passed by a unanimous vote of the senate -- every member being in his place.  And all attempts to give the uncontrolled right of repeal to the legislature were negatived.

Thus, a motion was made to amend as follows:

"The privileges hereby granted to said bank shall be subject to such alterations and restrictions as the legislature may at any time hereafter think proper to enact for the better regulation of the banking institutions of this commonwealth, and shall be liable to such taxes, whether on dividends or otherwise, as the legislature may at any time hereafter impose."

It was rejected by a vote of eleven to twenty-two, being two to one.

Again -- A motion was made to amend as follows:

"Also, if it shall appear that the charter and privileges by this act granted to the bank herein mentioned, are injurious to the citizens of this commonwealth, the legislature reserve full power to alter, revoke and annul them, or any of them, at any time they may think proper."

This was rejected by a vote of twenty-one to twelve.

The facts thus briefly stated, present this case:-- A certain number of citizens of other states and other countries had a large amount of capital which they were about to withdraw from Pennsylvania.  All the authorities of Pennsylvania interpose to prevent what they deem injurious to the state -- they request these distant citizens to leave their funds in the state -- they pass a law offering certain inducements for them to remain -- and declare that if they will consent to stay, they shall never be disturbed.  They trust to these promises.  They pay a large sum of money with which the legislature is enabled to dispense with the taxes in Pennsylvania -- to continue the public works of Pennsylvania -- and to educate gratuitously the citizens of Pennsylvania.  They do more -- they subscribe voluntarily half a million of dollars to other Pennsylvania improvements -- they establish three branches to lend money to citizens of Pennsylvania -- they resumo their active business in Philadelphia, which probably saved that city and the whole state from the general bankruptcy which would have followed the winding up of its affairs.  And now after all this, certain persons are endeavouring to induce the people of Pennsylvania to violate this solemn engagement -- to break the plighted faith of the commonwealth -- and to annul a contract which it voluntarily sought, nay, solicited from these strangers.

You will naturally ask by what process this is to be accomplished.  There is a difference of opinion -- some thinking it should be done by the legislature -- others, by the convention -- some, with a return of the bonus -- some, without it.  Now, none of these will be done -- or can be done -- and not one of them will even be attempted.

The difficulty with the legislature is this:-- They asked the stockholders to take the charter -- they received the stockholders' money and gave the charter.  Now, if this is not a bargain -- a contract -- what is ?  What difference is there between this and the other engagements of the state ?  It takes my money and gives a paper declaring that I own certain land.  It takes your money and gives you a certificate of debt -- to another it says, build a bridge, or a canal, or a railroad, and you shall have a paper declaring that you may take toll.  They all stand on the same footing.  The constitution of Pennsylvania forbids the legislature from violating any one of such engagements.  It contains what it calls "a declaration of rights," as follows:

"That the general, great and essential principles of liberty and free government may be recognised and unalterably established, we declare,

"That no ex post facto law, nor any law impairing contracts, shall be made."

How, then, can the legislature make a law violating its own contracts ?  Even were it disposed to do so, it is forbidden by a power still higher than the legislature, or even the constitution of Pennsylvania.

The Constitution of the United States is a guarantee by all the States against any wrong done by any one state.  That instrument declares that "this constitution shall be the supreme law of the land, and the judges in every state shall be bound thereby -- any thing in the constitution or laws of any state to the contrary notwithstanding" -- and that Constitution declares that "no state shall pass any law impairing the obligation of contracts."  So obvious is this, that even Mr. George M. Dallas, saw it.  The charter, he says, "is essentially a contract made by at least our nominal representatives with numerous persons, nine-tenths of whom are strangers to our soil, and each of whom contributed, in the payment of the bonus, some portion of his private property in execution of his share of its stipulations."  "The rights which it imparted are now absolutely vested, and the Constitution of the United States prohibits any State from passing any law impairing the obligation of contracts."  "I am aware," he add, "of the natural and prevailing impression that the next general assembly might be called upon to pronounce the incorporating act null and void, on the ground of its having been fraudulently, surreptitiously and corruptly obtained."  "But such a movement violates fixed maxims -- making declamation equivalent to proof, forfeiting private property, and passing sentence of infamy without judicial trial.  We must not debase our pursuit by any such hypocritical pageantry and summary injustice."  And accordingly he recommends as the only remedy, the convention.  But, if the legislature cannot do it, how can the convention do it ?

The convention is a body created under a law of the state, entitled "An act to provide for calling a convention with limited powers."

The act declares that the convention shall have power to propose amendments of the constitution, to the people, for their ratification or rejection, and "no other or greater powers whatsoever."  "To propose amendments to the constitution."  Well -- what is there in the constitution about the bank ?  How can its repeal be put into the constitution? and if it were in the constitution, what force would it have against the paramount power of the Constitution of the United States, which declares that no State shall impair the obligation of a contract, either by its laws or its constitution.

If then the legislature or the convention were to attempt such a breach of faith, not merely the people of Pennsylvania, but the people of the other States, whose citizens will be thus defrauded by Pennsylvania, would unite in putting down this usurpation.

But there is not the slightest danger that either the legislature or the convention will make this abortive attempt.  There are not twenty men in Pennsylvania who would not scorn thus to degrade this ancient and honourable commonwealth.  Nevertheless, that question shall be tried before the convention.  It involves interests far deeper than the temporary existence of the bank -- it concerns the whole character of our free institutions.  If a convention in Pennsylvania can dissolve the obligations contracted by the legislature, so can a convention in New York or Virginia.  If, when a legislature has pledged the failh of the state, its members may disperse, and, re-appearing in a few months as delegates to a convention, annul all the acts of that legislature -- there can be no safety in dealing with the states.  The hundred millions of money lent by Europeans on the pledge of the faith of the states -- the thousand millions invested on the security of the engagements of tho states, the titles to lands, and to all other property, bridges, turnpikes, canals, railroads, banks, every private right, every corporate power, are wholly at the mercy of the state authorities, call them as you please, legislatures or conventions.  The whole institutions of the country would become frauds.  This must not be.  It must be decided whether this Pennsylvania of ours is a virtuous community, or a mere society of plunderers -- nor will the honour of the state be relieved, either at home or abroad, from the stain which a few small politicians wish to fix upon her, until the convention adopts some solemn declaration that there is no power in this nation capable of violating tho sacred engagements of the state authorities.  That should be done, and, if any efforts of mine may avail, that shall be done for the honour of this state, for the character of her sister states, and for the stability of all popular institutions.  In the mean time there is not the least reason for anxiety about it.  The question was agitated merely for the election, and expired with it, and there is no party in the state at all desirous of resuming a controversy, which can only distract and injure the commonwealth.

With great respect and regard, yours,
Nich. Biddle.

My Dear Sir, -- I proceed to the second subject of our conversation -- the present state of the currency -- which I shall treat dispassionately, as an abstract question of mere finance.

Our pecuniary condition seems to be a strange anomaly.  When congress adjourned, it left the country with abundant crops and high prices for them -- with every branch of industry flourishing -- with more specie than we ever possessed before -- with all the elements of universal prosperity.  Not one of these has undergone the slightest change, yet after a few months congress will reassemble and find the whole country suffering intense pecuniary distress.  The occasion of this, and the remedy for it, may well occupy our thoughts.

In my judgment, the main cause of it is the mismanagement of the revenue -- mismanagement in two respects: the mode of executing the distribution law, and the order requiring specie for the public lands.

1st.  The distribution law.

In July, 1836, congress declared that the surplus in the treasury on the 1st of January, 1837, should be divided among the states.  That it might be done as gently as possible, the payments were to be made, not at once on the 1st of January, but quarterly throughout the whole year 1837;  and as the aggregate sum to be distributed is from thirty-six to forty millions, we may assume the first payment in January to be about nine millions.  To prepare for this, the treasury has had in hand forty or fifty millions -- it would receive in the course of the operation thirty or forty millions of revenue more -- and as there was probably money in every state, the operation was so simple and easy that it ought not to have occasioned the slightest pressure either on public or private interests;  and the whole might have been accomplished without any derangement of trade, and without the movement of a single dollar in specie.  That this not only could be done, but has actually been done, you will find in the public documents of 1829.

In that year the new administration of Mr. Jackson, anxious to appropriate every disposable dollar of the revenue to the reduction of the public debt, sought and obtained the aid of the Bank of the United States.  Notice was accordingly given on the 31st of March, 1829, that, on the 1st of July, the debt and interest, amounting to $8,715,462.87, would be paid.  At the period of the notice, the whole available means of the Treasury were only six millions, scattered throughout the United States, and these, with the accruing revenue in the interval, were, at a notice of ninety days, to be collected, to pay nearly nine millions.  So closely was the Government pressed, that, after paying these sums, the actual balance in the Treasury throughout the United States, was reduced to $164,365.04.  The bank, however, undertook the arrangement, with what success may be seen in the following part of the message of Mr. Jackson to Congress in December, 1829.  "The payment on account of the public debt, made on the 1st of July last, was $8,715,462.87.  It was apprehended that the sudden withdrawal of so large a sum from the banks in which it was deposited, at a time of unusual pressure in the money market, might cause much injury to the interests dependent on bank accommodations.  But this evil was wholly averted by an early anticipation of it at the Treasury, aided by the judicious arrangement of the officers of the Bank of the United States."  The respective shares of the bank and the Treasury may be conjectured from the Secretary's letter of the 14th July, 1829, in which he takes occasion to express "the great satisfaction of the Treasury Department in the preparation of the heavy payment of the public debt on the first instant -- which has been affected by means of the prudent arrangement of your board, at the time of severe depression on all the productive employments of the country, without causing any sensible addition to the pressure, or even visible effect upon the ordinary operations of the state banks.

If then nine millions, being almost the last dollar in the Treasury, could be thus distributed -- two millions of it to foreigners -- at a time of unusual pressure, how happens it that with funds equal to fifty millions, and with six months' notice, nine millions cannot now be distributed -- exclusively among our own people -- at a time of great abundance, without hazarding a convulsion ?  The answer is to be found in the different mode of conducting the operation.  This may be seen by contrasting what the Secretary might have done, with what he has done.

The distribution law assigned to him two duties, both simple and both easy -- the division of the funds among the banks and the division among the states.  As to the first, he was to "select, as soon as may be practicable, and employ as the depositories of the money of the United States, such of the banks as may be located at, adjacent or convenient to, the points or places at which the revenues may be collected or disbursed" -- "provided that at least one such bank shall be located in each state or territory" -- "and that no bank sball have on deposite more than three fourths of its capital."

Here is no authority whatever to distribute the money from the banks of one state to the banks of another state.  On the contrary, by the twelfth section, all transfers for "any other purpose whatever, except to facilitate the public disbursements, and to comply with the provisions of this act, are hereby prohibited and declared to be illegal," and "in cases where transfers shall be required for purposes of equalisation under the provisions of this act, in consequence of too great an accumulation of deposites in any bank, such transfers shall be made to the nearest deposite banks which are considered safe and secure;"  and although the supplement says that nothing shall prevent him from making transfers from state to state, "when required to prevent large and inconvenient accumulations in particular places, or in order to produce a due equality and just proportion according to the provisions of this act," the general policy of the law to keep the deposites together, unless under peculiar emergencies, remains unchanged.

Under this law his duty was as clear as possible.  He was to see that no bank should have a deposite of more than three fourths of its capital.  The revenue in the great cities, then, should be divided among the banks in those cities -- there being in each of them solvent banks enough to receive it.  There was no necessity for sending a dollar of it out of those cities.  In New York alone, says he, "the operation will require the transfer of something like eight millions of dollars from the old deposite banks to new ones, either in the state or out of it."  But why out of it at all ?  Why could not the revenue already received in New York, and falling due in New York, be divided among the New York banks to support the trade of New York ?  Why not let it remain active there up to the last hour when it was payable to the states ?  But the law required that there should be at least one deposite bank in each state.  Be it so.  Then make a deposite bank in each state, if there be not one already, and give it a deposite, which, while it satisfies the law, will not carry away into inactivity funds that might be useful in places of business.  There was then no necessity to send a dollar from New York, or the other commercial cities, merely for the purpose of preventing nny one bank from having more than three fourths of its capital.  That is clear.

Nor was it more necessary for the purpose of distribution among the states.  The law says:  "That the money which shall be in the treasury of the United States on the 1st of January, 1837, shall be deposited with such of the several states as shall, by law, authorise their treasurer, or other competent authorities, to receive the same;  and the secretary of the treasury shall deliver the same to such treasurer, or other competent authorities, on receiving certificates of deposite therefor."  This is the whole law.  Now what does it contemplate ?

The money must be in the treasury on the 1st of January, 1837, because, up to that time, it is not known whether the states will take it.  Technically and legally, the treasury is at Washington -- practically, the treasury is wherever the deposites of the public moneys are.  But the secretary of the treasury is an official person, whose only official residence is Washington.  Accordingly, a treasurer of a state goes to the secretary at Washington, and presents to him the certificates of deposite.  The secretary thereupon "delivers" to the treasurer his state's quota.  But how does he deliver it ?  By an actual manual counting out of these dollars ?  No.  By a check on the deposite bank at Washington ?  No.  But he delivers to the state treasurer, as he does to any other person receiving money, a draft for the amount on some one or more of the depositories which compose the treasury.  Is not such a draft the usual and proper mode of making public payments ?  Undoubtedly.  And then we come to the real question.  Was it necessary to make in advance any transfer of funds whatsoever into the several states, merely because they had the option, on certain conditions, of receiving them ?  If there was no such necessity, then the twelfth section of the law makes these transfers illegal.  Now there is clearly no such necessity.  The money was to be deposited with the states, not in them.  It was necessarily paid in Washington, by drafts on other places.  If you say that the secretary must pay it into the state treasury, it is not enough to bring it into the state -- he must take it to the seats of government.  Pennsylvania must have her share -- not in Philadelphia, but in Harrisburg.  New York must be paid -- not in the city of New York, but in Albany.  If the place be not fixed by law, the mutual convenience of the parties will designate it.  Now there is no individual and no state in the Union that would not prefer payments in New York, or the north Atlantic cities, to payments any where else;  and for this obvious reason -- that money is worth more there than any where else.  If the state of Ohio, for instance, had a draft on New York, it could sell it to its citizens, usefully to them, and profitably to the treasury.  It does not want the money brought to Ohio.  Every mile it comes on the road lessens its value.  We may safely conclude, then, that there was no necessity for sending a dollar of public money from New York, or the commercial cities, for the purpose either of equalising funds among the banks, or distributing them through the states.

The true theory of the case, therefore, was simply to let the excesses of revenue in the several states be transferred, in the course of trade, to the great commercial points, and then to pay the states by drafts on those points.

The deposite banks at those points, knowing what they had to pay, would have been ready to pay up, and, up to the hour of payment, would have employed the funds usefully;  so that, in every stage of that progress, business would bo assisted, commercial activity stimulated, and all parties be gainers.

Even supposing these transfers at all necessary, the funds should have been remitted by bills to the points of accumulation -- blending these operations so insensibly with tho business of the country, as to be unfelt except in their benefits.

But what has the secretary done ?  Instead of gradual preparations to provide funds at the distant points, the whole science of the treasury seems to have consisted in drawing warrants -- in taking up the columns of the returns, and directing drafts from the banks throughout the United States, without necessity, without reference to the wants or the business of the different sections of the Union, the season of the year, or the course of trade -- and thus making the whole revenue of the country work against the whole industry of the country.

His secret is thus revealed in the letter to Messrs. Griswold and Swan:

"I have, therefore, in cases where the public money had accumulated in any banks in any one state, and new banks could be seasonably obtained in other states, where only a little public money already existed, made but one transfer to accomplish both objects, and, by a single operation, have reduced the excess in certain banks in certain states, and placed it in the states where it would be needed next year, and where they before had not an equal portion of the public money."

We thus perceive -- what on less authority would be incredible -- the extraordinary manner in which the public revenue has been scattered.  The secretary sees an accumulation of public revenue in any one state.  He sees another place in another state "where only a little public money already existed" -- whereupon he resolves, without the least authority from congress, to bestow upon that place "an equal portion of the public money;"  and as he will have, twelve months hence, to pay some money in that state, he makes "a single operation" of it -- and accordingly he confesses that he has actually transferred public moneys into states which cannot receive them for a year afterwards -- depriving the very community which raised the money, of the use of it during that whole period.

Such a measure was of itself sufficient to disorganise the currency.  But it was accompanied by another, which armed it with a tenfold power of mischief.  This was the treasury order prohibiting the receipt at the land offices of any thing but specie -- an act which seems to me a most wanton abuse of power, if not a flagrant usurpation.

The whole pecuniary system of this country, that to which, next to its freedom, it owes its prosperity, is the system of credit.  Our ancestors came here with no money, but with far better things -- with courage and industry -- and the want of capital was supplied by their mutual confidence.  This is the basis of our whole commercial and internal industry.  The government received its duties on credit, and sold its lands on credit.  When the sales of land on credit became inconvenient from the complication of accounts, the lands were sold for what is termed cash.  But this was only another form of credit, for the hanks, by lending to those who purchased lands, took the place of the government as creditors -- and the government received their notes as equivalent to specie, because always convertible into specie.  This was the usage -- this may be regarded as the law of the country.  By the resolution of congress passed on the 30th of April, 1816, it was declared that "no duties, taxes, debts, or sums of money, accruing or becoming payable to the United States as aforesaid, ought to be collected or received otherwise than in the legal currency of the United States, or treasury notes, or notes of the Bank of the United States, or in notes of banks which are payable and paid on demand in the said legal currency of the United States."

This resolution presented various alternatives -- the legal currency -- or treasury notes -- or notes of the Bank of the United States -- or notes of specie paying banks.  A citizen had a right to choose any one of these modes of payment.  He had as much right to pay for land with the note of a specie paying bank as to pay it for duties at the custom-house.  If this be denied, certainly any one of them might be accepted by the treasury -- but to proscribe all but one -- to refuse every thing but the most difficult thing -- to do this without notice of the approaching change in the fundamental system of our dealings -- is an act of gratuitous oppression.

Under the operation of this resolution, the banks had gone on, fearing nothing, as they had only to provide for the usual specie calls upon them -- and saw the country full of specie, with no foreign demand to drain it from them -- when, on a sudden, without any intimation of the coming shock, an order was issued by the secretary, declaring that their notes were no longer receivable, and of course inviting all who held their notes, or had deposites in those banks, to convert them into specie.  It in fact made at once the whole amount of their circulation and private deposites a specie demand upon them.  The first consequence was, that the banks nearest the land offices ceased making loans.  The next was, that they strove to fortify themselves by accumulating specie.  It was just at this moment that the warrants for transfers were put into their hands.  The combination of the two measures produced a double result -- first, to require the banks generally to increase their specie, and next, to give them the means of doing it, by drafts on the deposite banks.  The commercial community were thus taken by surprise.  The interior banks making no loans, and converting their Atlantic funds into specie, the debtors in the interior could make no remittances to the merchants in the Atlantic cities, who are thus thrown for support on the banks of those cities, at a moment when they are unable to afford relief, on account of the very abstraction of their specie to the west.  The creditor states not only receive no money, but their money is carried away to the debtor states, who, in turn, cannot use it, either to pay old engagements, or to contract new.  By this unnatural process, the specie of New York and the other commercial cities is piled up in the western states -- not circulated, not used, but held as a defence against the treasury;  and while the west cannot use it, the east is suffering for the want of it.  The result is, that commercial intercourse between the west and the Atlantic is almost wholly suspended, and the few operations which are made are burdened with the most extravagant expense.  In November, 1836, the interest of money has risen to twenty-four per cent., merchants are struggling to preserve their credit by ruinous sacrifices -- and it costs five or six times as much to transmit funds from the west and southwest as it did in November, 1835, or '34, or '32.  Thus, while the exchanges with all the world are in our favour -- while Europe is alarmed, and the Bank of England itself uneasy at the quantity of specie we possess -- we are suffering because, from mere mismanagement, the whole ballast of the currency is shifted from one side of the vessel to the other.

In the absence of good reasons for these measures, and as a pretext for them, it is said that the country has overtraded -- that the banks have over-issued, and that the purchasers of public lands have been very extravagant.  I am not struck by the truth or the propriety of these complaints.  The phrase of overtrading is very convenient, but not very intelligible.  If it means any thing, it means that our dealing with other countries have brought us in debt to those countries.  In that case the exchange turns against our country, and is rectified by an exportation of specie or stocks in the first instance -- and then by reducing the imports to the exports.  Now, the fact is, that, at this moment, tho exchanges are all in favour of this country -- that is, you can buy a bill of exchange on a foreign country cheaper than you can send specie to that country.  Accordingly much specie has come in -- none goes out.  This too at a moment when the exchange for the last crop is exhausted, and that of the new crop has not yet come in the market -- and when we are on the point of sending to Europe the produce of the country to the amount of eighty or one hundred millions of dollars.  How then has the country overtraded ?  Exchange with all the world is in favour of New York.  How then can New York be an overtrader ?  Her merchants have sold goods to the merchants of the interior, who are willing to pay, and, under ordinary circumstances, able to pay -- but by the mere fault of the government, as obvious as if an earthquake had swallowed them up, their debtors are disabled from making immediate payment.  It is not that the Atlantic merchants have sold too many goods, but that the government prevents their receiving payment for any.  Moreover, in the commercial cities money can be had, though at extravagant rates, for capitalists, and to the ordinary charges for the use of it a high insurance against the loss of it.  It is not then so much that money is not to be procured, as that doubt and alarm increase the hazards of lending it.

Then as to the banks.  It is quite probable that many of the banks have extended their issues -- but whose fault is it ?  Who called these banks into existence ?  The executive.  Who tempted and goaded them to these issues ?  Undoubtedly the executive.  The country five years ago was in possession of the most beautiful machinery of currency and exchanges the world ever saw.  It consisted of a number of state banks, protected, and, at the same time, restrained, by the Bank of the United States.

The people of the United States, through their representatives, rechartered that institution.  But the executive, discontented with its independence, rejected the act of congress -- and the favourite topic of declamation was, that the states would make banks, and that these banks could create a better system of currency and exchanges.  The states accordingly made banks -- and then followed idle parades about the loans of these banks, and their enlarged dealings in exchange.  And what is the consequence ?  The Bank of the United States has not ceased to exist more than seven months, and already the whole currency and exchanges are running into inextricable confusion, and the industry of the country is burdened with extravagant charges on all the commercial intercourse of the Union.  And now, when these banks have been created by the executive, and urged into these excesses, instead of gentle and gradual remedies, a fierce crusade is raised against them -- the funds are harshly and suddenly taken from them, and they are forced to extraordinary means of defence against the very power which brought them into being.  They received, and were expected to receive, in payment for the government, the notes of each other, and the notes of other banks, and the facility with which they did so was a ground of special commendation by the government.

And now, that Government has let loose upon them a demand for specie to the whole amount of these notes.  I go further.  There is an outcry abroad, raised by faction, and echoed by folly, against the banks in the United States.  Until it was disturbed by the government, the banking system of the United States was at least as good as that of any other commercial country.  What was desired for its perfection, was precisely what I have so long striven to accomplish -- to widen the metallic basis of the currency, by a greater infusion of coin into the smaller channels of circulation.  This was in a gradual and judicious train of accomplishment.  But this miserable foolery about an exclusively metallic currency, is quite as absurd as to discard the steamboats, and go back to poleing up the Mississippi.  Banks may often err from want of skill, and occasionally be injurious, as steam is -- but it is not the less true, that the banks of this country have been the great instruments of its improvement, and that during all the convulsions of the last fifteen years, for every American bank which has failed, at least ten English banks have failed.

So with regard to the lands.  For the last few years the amount of the sales of the public lands has been a constant theme of congratulation with the executive.  In the very last message, on the 12th of December, 1835, he repeats the same strain:--  "Among the evidences of the increasing prosperity of the country, not the least gratifying is that afforded by the receipts of the public lands, which amount in the present year to eleven millions of dollars.  This circumstance attests the rapidity with which agriculture, the first and most, important occupation of man, advances, and contributes to the wealth and pover of our extended territory."  In the same message he declared that "the circulating medium has been greatly improved.  By the use of the state banks it has been ascertained that all the wants of the community in relation to exchange and currency are supplied as well as they have ever been before."  Scarcely seven months elapse when these pastoral and financial visions dissolve in air.  Agriculture ceases to be "the first and most important occupation of man" -- the state banks cease to be the models of exchange and currency -- but forth issues the secretary with a declaration that to protect the treasury "from frauds, speculation, and monopolies in the purchase of public lands" -- from "excessive bank credits" -- from "ruinous extension of bank issues" -- nothing shall be received for land but gold and silver.

Now what an exhibition is this ?

The public lands are exposed to public auction, the prices reduced in order to encourage sales, and the president stands by, exulting at the amount, when suddenly he declares that he will permit no speculations, and that he will raise the price of the lands by raising the price of what alone he will receive for them.  Now, supposing it true that men have bought much land.  What right has the president to dictate to the citizens of this country whether they buy too much land or too much broadcloth ?  They might be permitted to know and to manage their own concerns quite as well as he does, leaving the evil, if it be one, to corret itself by its own excess.  If he prohibits the receipt of any thing but specie to correct land speculations, he may make the same prohibition as to the duties on hardware, or broadcloth, or wines, whenever his paternal wisdom shall see us buying too many shovels, or too many coats, or too much champagne -- and thus bring the entire industry of the country under his control.

These troubles may not, however, be wholly useless, if we extract from them two great lessons.  The first is, that we can have no permanent financial prosperity while the public revenue is separated from the business of the country and committed to rash and ignorant politicians, with no guides but their own passions and interests.  I have little doubt that the specie order is the revenge of the president upon congress for passing the distribution law.  I have less doubt that this dispersion of the revenue among a multitude of banks was to advance the obscure aspirings of some treasury Cæsar.

The other lesson is -- one a thousand times repeated and a thousand times forgotten -- to distrust all demagogues of all parties who profess exclusive love for what they call the people.  For the last six years the country has been nearly convulsed by efforts to break the mutual dependence of all classes of citizens -- to make the labourer regard his employer as his enemy, and to array the poor against the rich.  These trashy declaimers have ended by bringing the country into a condition where its whole industry is subject, far more than it ever was before, to the control of the large capitalists -- and where every step tends inevitably to make the rich richer, and the poor poorer.

It remains to speak of the remedy of these evils.  They follow obviously the causes of them.  The causes are the injudicious transfers of the public moneys, and the treasury order about specie.

The first measure of relief, therefore, should be, the instant repeal of the treasury order requiring specie for lands -- the second, the adoption of a proper system to execute the distribution law.

These measures would restore confidence in twenty-four hours, and repose at least in as many days.  If the treasury will not adopt them voluntarily, Congress should immediately command it.

In the mean time, all forbearance and calmness should be maintained.  There is great reason for anxiety -- none whatever for alarm -- and, with mutual confidence and courage, the country may yet be able to defend itself against the government.  In that struggle, my own poor efforts shall not be wanting.  I go for the country, whoever rules it -- I go for the country, best loved when worst governed -- and it will afford me far more gratification to assist in repairing its wrong, than to triumph over those who inflict them.

With great respect and regard, yours,
Nich. Biddle.

My Dear Sir-- In my letter of the 5th ult[imo mense, last month] I stated my belief that there could be no safe nor permanent resumption of specie payment by the banks, until the policy of the Government towards them was changed.

The repeal of the Specie Circular by Congress makes that chage.  I see now, what until now I have not seen, the means of restoring the currency.

I rejoyce very sincerely at the termination of this unhappy controversy, and shall cordially co-operate with the Government by promoting what the banks are, I am sure, anxious to effect, an early resumption of specie payments throughout the Union.

With great respect, yours,
Nich. Biddle.