47th Congress, 1st Session.
Chester Alan Arthur (1829-1886), President.

Extension of Bank Charters.

Mr. Speaker, it is not my purpose to enter into the discussion of the details of the bill now before the House.  It is not to the form or to the means or mode by which the charters of the banks are to be continued that I make opposition;  but to their recharter, however made or with whatever restrictions surrounded.  I object to their recharter because there is no apparent popular or even bank demand for such legislation.  There is no evidence before this House that the stockholders of the national banks, or their officers, desire the passage of this bill.  There are no petitions from the people, no memorials from national-bank owners, no demand from the press that the extension of the charters of these banking associations is either a financial or a banking necessity.

I have not observed a bank president, cashier, officer, or stockholder besieging the room of the Banking and Currency Committee or thronging the aisle and corridors of the Capitol in behalf of continuation of the charters of the banks.  Three bills for that purpose have been introduced into this House and the Senate, each one a fac-simile of the other, and all bearing indubitable marks of a common paternity.  It seems to be generally understood that the Comptroller of the Currency is entitled to the credit of preparing the original bill for which the majority of the Committee on Banking and Currency have substituted the measure now before the House.  And unless he has permitted himself to become the agent and attorney of the banks, in securing the legislation proposed by this bill, I am warranted in the statement that it is not asked for by the banks or demanded by the stockholders, owners, or officers of the banks.

Why should they desire an extension of their charters for twenty years, when the law as it now stands invests every five "natural persons" having a sufficient amount of United States bonds with the privilege of incorporating themselves into a national bank ?  The seventy or eighty banks that have been organized, with a capital exceeding $7,000,000 invested in 3½ percents since the 1st of last July, have under the law a corporate existence running into the next century, and there are new banks now being organized and so they will continue to the end of time, provided the people consent to be taxed for the special purpose of keeping them alive.

The system was designed to be self-perpetuating, while every individual bank is limited in the duration of its corporate life.  It was never contemplated that any of these banks should have an existence longer than twenty years, and there is no reason why they should not at the end of that period go into final liquidation, close up their business, and divide their assets.  The owners and stockholders can organize a new bank with the same assets, as has already been done by banks in Michigan and Iowa, and those of the stockholders who prefer to realize upon their share of the bank assets will find no obstacle in their way.  That is their legal right under their contract of organization, and Congress has no power to divest any one stockholder of that right.  It is not sufficient to say that the continued bank will indemnify a dissenting stockholder against loss, or provide a mode by which he may realize the value of his interest in the expiring bank.  He has a right to stand upon his contract, and to require that the affairs of the bank shall be wound up and its assets distributed.

The fact stated in the report of the majority of the committee that the charters of 297 banks will expire February 25, 1883, involving a return of $54,000,000 of lawful money to the Treasury in order to effect the withdrawal of the bonds securing the circulation of these banks, instead of being an argument in favor of continuing the powers and franchises of these institutions, is a striking illustration of the vast power of contingent mischief which has been vested in these institutions.  It is not claimed that the banks expiring at that time, even after the passage of this enabling act, will be under any obligation to continue their charter existence.  A large or a small proportion of them may prefer to go into liquidation notwithstanding the passage of this act, and to the extent of their outstanding circulation they will still have the power to disturb the operations of trade, and no remedy can be provided to prevent it by this bill or any other, because it is a vice inherent in the system.  This power of contraction or expansion must be a continual menace to the stability and regularity of all the operations of business in any event.

All that can be said in favor of the provisions of the committee's bill is that it affords facilities for reorganization to those banks that desire to continue their corporate existence, and to those that determine to go into liquidation it offers no inducement to continue their business.  It is not at all probable that the banks who desire to extend their lease of life would, as the committee suppose, wait until the last day of their existence before they took the necessary steps for reorganization, but that months before that day they would have made the necessary deposit of lawful money and withdrawn their bonds, made a new deposit and obtained new circulation.  So that whether we have a contraction of the circulation to the extent of one million or fifty millions in the early part of next year depends wholly upon what each one of these banks considers to be its interest, and the passage or failure of this bill will have no perceptible influence on that decision.  For myself, I greatly prefer that they give a practical demonstration, as early as possible, of their vast powers of financial mischief and monetary disaster.  By all means, if the people need more proof than they had in March, 1881, of their capabilities in this direction, let us have it next year ---the sooner the better.  We may be better prepared for it next year than at any other time in the near future, and I would therefore offer no additional facilities to the continuation of a system which sooner or later will convince the most skeptical of the fatuity of those who uphold it.

Mr. Speaker, this bill is a vain and useless effort to galvanize into a short-lived and spasmodic existence a system that contains within its own organism the seeds of decay and death.  The breath of its life is debt, and without debt it ceases to live.  National banks and national debt are the Siamese twins of our financial system.  The one cannot exist without the other.  The right to continue their existence for another period of twenty years, as proposed by the committee's bill, cannot add a day to their duration or prolong the period of their final dissolution.  That depends entirely upon the rapidity with which the people are willing to discharge the bonds which guarantee their circulation.  The president of the American Bankers' Association and president of one of the leading banks of New York City said, in an address before the Niagara convention of bankers of last August:

It is very obvious that the continued reduction of the public debt is fast removing the foundation of the national banking currency, and that the system itself, thus losing its characteristic basis, is approaching dissolution, and it is evident that the existence of the present system of banking cannot be long protracted, and that very soon some substantial change in the basis of our national currency will be inevitable.

This sagacious and intelligent banker advocated the substitution of some other basis than United States bonds for the bank-note circulation, and neither he nor any other member of that convention even hinted at the necessity or desirability of the law now before the House.  Whether expiring banks go into liquidation by operation of law or by the vote of their shareholders, or some or all of the shareholders organize a new bank under the same or a different name, or whether their charters are extended by the provisions of this bill, the foundations of the system will in either contingency continue to be undermined and destroyed as long as debt redemption is continued;  and no such patent nostrum as prescribed by this bill will exempt the national banks from their inevitable doom.  I say inevitable, because there is no more universal sentiment in this country than the fixed and determined purpose to discharge the last dollar of the public debt-bearing interest as rapidly as the resources of the country will permit.  What the banks need, therefore, is not deceptive and unnecessary legislation, such as we have in this bill, but something to restore the constituent element of the system, and to secure a firmer and stronger foundation for their mischievous and vicious note circulation.

The Comptroller of the Currency, notwithstanding his inordinate admiration of a system which he has so long petted and caressed, in his last annual report seems to have a dim but unwilling conception that the object of his veneration and affection is going the way of all earthly things, and that the circulation of the banks will, under existing laws, diminish in volume "as the public debt shall be reduced," but inasmuch as the 2,248 banks now in existence could operate upon a bond guarantee of about eighty-two millions, and that from one hundred to one hundred and fifty millions of bonds would be sufficient to supply the minimum amount necessary to be deposited in the Treasury by all the banks which may be established during the next twenty years, he thinks it would be premature to recommend any substitute at present.  These conclusions as to the amount of bonds necessary to maintain the bank-note circulation as a part of our credit circulation I do not purpose to controvert.  But when analyzed, and their real significance understood, instead of affording a sufficient reason for the Comptroller's failure to recommend some substitute for the circulation which must diminish in volume as the debt is reduced, as he affirms, they manifest a singular indifference and unconcern as to the effects of such reduction on the business interests of the country.  The banking system may have a name to live when it is dead in fact and its feeble and lingering existence becomes a source of desolation and disaster to all the diversified interests it was designed to promote and foster.  Such it will be if we follow the counsels of the Comptroller, and fail to make early provision for its approaching dissolution.

Mr. Speaker, it will be my purpose to show that we cannot, without dereliction of duty to those who have confided their interests to our hands, look with such philosophic indifference to the necessary and inevitable effects of the continued reduction of the public debt on the paper circulation issued by the banks.  It is a question wholly outside of the expiration or continuance of their charters, and is forced upon our consideration by the constant and rapid diminution of the public debt.  Heretofore and even now the bank circulation has been continually on the increase, except during the period when the country was preparing for resumption by the tortures of contraction.  Henceforth we may reasonably look for a regular and constant contraction of the national-bank circulation growing out of the payment of the bonds held for their security.  Let us suppose that the minimum sum of bonds (namely, $82,000,000) required by the 2,248 banks in operation last November to sustain their circulation could be reached by redemption by the 1st of next January, what would be the necessary effect upon the circulation ?  It would reduce it under existing las by about the sum of 297,000,000 dollars in the withdrawal from circulation of that amount of lawful money deposited in the Treasury for the redemption of the circulating notes of the banks.  And notwithstanding this heavy curtailment of the paper circulation, as stated by the Comptroller of the Currency, the banking system could still live and breathe, but its breath would be freighted with universal ruin.

If we look at the probable events of the near future, with reference to the character of the bonds and the probability of their redemption, there is reasonable ground for the opinion that, as we redeem the 3½ percents, the paper circulation will suffer such a reduction as will necessarily inflict serious injury to all the vast industrial and commercial interests of the country.  It may be safely assumed that there will be no material reduction of the revenues of the Government during this Congress, and that one hundred millions of the public debt will be discharged during this and several succeeding years.  The Treasury is now discharging all its current obligations and paying off this debt at the rate of 150,000,000 per annum;  and any probable reduction of revenues will be more than counter-balanced by the difference in our interest account now and that of the preceding fiscal year, and by increased consumption from increasing population.

The amount of 3½ percents on the 1st of April subject to call was $511,400,000, and of this amount $245,601,000 was held on November 1, 1881, by the Treasury as security for the circulation of the banks, and 124,000,000 of 4½ and 4 percents and Pacific Railroad sixes aggregating $369,600,000 as the total amount of United States bonds held by the banks to secure their circulation of 330,000,000 November 1, 1881.  In other words, about 68 per cent. of the bonds securing bank circulation, consists of 3½ per cent. bonds, and they also constitute about 48 per cent. of the outstanding 3½ percents, all of which are payable at the pleasure of the Government.  If 150,000,000 of these bonds are called for redemption during the current year, the banks must respond by the surrender and cancellation of their bonds in the proportion of 245 to 511, and the deposit of lawful money by the banks to redeem their circulation will be required in nearly the same proportion as the amount of bonds deposited, the amount of circulation being three hundred and sixty millions, secured by three hundred and sixty-nine millions of bonds.  Each bank owning called bonds will thus be brought to the alternative of purchasing 3½ percents, which may be included in the next succeeding call of the Secretary, or 4½ or 4 percents, the former at a premium of 12 to 14 per cent. and the latter at a premium of 18 to 20.

Which will they do, or will they prefer to go into voluntary liquidation, give up their circulation, sell their bonds, and continue in the legitimate business of banks of discount and deposit ?  Their course of action will be determined by the interest of the stockholders of the several banks.  The interest of the public will not be consulted or regarded, but each bank will decide its action with reference solely to its own interest.  For myself I do not believe that any fair proportion of the banks whose circulation is based on 3½ percents, will continue their existence by reinvesting in 4 or 4½ per cent. bonds at the rates of premium at which they are now sold.  The banks chartered since the 1st of July are based almost exclusively on the 3½ percents, thereby showing that they are unwilling to pay the premium at which the fours and four-and-a-halfs are held, and it is not at all likely that the premium will be less in the face of the increased demand that will arise for them, as all other national bonds are redeemed or in course of rapid redemption.  To the extent that the 3½ per cent. bonds are withdrawn and not replaced by other bonds, the monetary circulation must be curtailed, and if the opinion of the late Secretary of the Treasury is to be relied upon, the whole of these bonds will be redeemed within the ensuing five and a half years at the rate of at least one hundred millions per annum.

Can we afford to take the risk of having the volume of circulation curtailed at the rate of from ten to fifty millions of dollars per annum for the next five years ?  Is our present prosperity so assured, or is the business of this country on so solid and firm a foundation that we can intrust the vast monetary interests of this country to the doubtful and capricious action of banks and bankers ?  Shall we take no warning from the diminution of our exports, from the short crops of last season, from the expenditure of millions of dollars in unproductive enterprises, from the wild and reckless speculation that is pervading all classes of men in every part of the country, and commit the question whether we shall have two hundred millions of circulation, more or less, to the decision of two thousand national banks ?

If I do not grossly misconceive the present situation we shall richly merit the execration of the people of this country if we leave them subject to such unnecessary hazards.  It is but little over a year ago since the banks gave us a striking illustration of their power to produce a monetary panic.  It was a legitimate result of free banking, and of what is known as the "elasticity of the circulation," the power to contract or expand the circulation of the banks at will.  Whether the bill of the committee is or is not enacted into law, that dangerous and vicious power still remains to the banks, and if I am not greatly mistaken they will find it to their interest to exercise it in such a way that will not only startle the country but produce such a revulsion in financial and commercial circles as will forever consign banks of issue to the opprobrium they so well merit.

But, Mr. Speaker, let it be conceded that my apprehensions as to the immediate future are groundless;  that I am taking counsel either of my wishes or my fears, and that such is the value of the sovereign right of issue to the banks that they will maintain the present volume of paper circulation by the purchase of 3½ percents to replace those that may be redeemed.  Is there any one who believes that they will pay the present premium for the 4 and 4.5 percents, when all the 3.5 percents are redeemed, which will take place, in all human probability, within the next five or six years ?  Or are they prepared, with the Comptroller of the Currency, never to abandon the national banking system as long as the bonded debt amounts to one hundred or one hundred and fifty millions, and without making an effort, either to strengthen its foundations, or substitute anything in its place, permit the bank-note circulation gradually to dwindle down from its present volume of three hundred and sixty millions to one-fourth of that sum ?  Instead of extending the charters of the outgoing banks, it becomes this Congress to prepare for the probable contingencies of the future, and either authorize them to issue circulating notes on some other security, substitute some other kind of circulation in their place, or resolve that the taxpayers of this country shall in all time pay an annual interest of twelve millions of dollars, in the shape of interest on an interminable bond, in order to maintain a bank-note circulation.

To this complexion it must come sooner or later, if not in this exact form, by such changes in the revenue laws and by lavish expenditure of the revenues as will practically make a portion of the public debt a perpetuity.  Nothing will be done on a question of this character during the next Congress, because no radical change in existing revenue or financial legislation is ever made during the term in which a Presidential election occurs, and in the mean time we are by our non-action exposing the business interests of the country to the doubtful and capricious action of more than two thousand distinct and independent banks, controlled by no other consideration than the pecuniary interests of their owners.

I come now to consider the provisions and principles of the proposed substitute for the bill of the committee, both of which will be found in the appendix to these remarks.  And at the outset I beg the House to believe that the proposition involved in the substitute of the direct issues of the Government for its indirect bank issues is primarily a question of monetary circulation, and not a question of interest reduction or debt paying.  It involves the question of a stable and steady volume of circulation of far greater importance to the commerce, trade, agriculture, and manufactures of the country than the annual saving of ten or twelve millions of dollars.  It is a part of the history of this country that we have had several monetary convulsions, most of which are traceable remotely or proximately to the vicious system of bank issues and the union of banking in its proper sense, with authority in the banker to make money out of his credit by the issue of his promissory notes.  In each of these monetary crises ---of 1814, 1817, 1837, 1857--- when the banks suspended cash payments, the losses and bankruptcies of the country were a hundred-fold greater than the saving to the Government of the difference between a non-interest-bearing and an interest-bearing debt of four hundred millions, which will be the effect of the substitute now before the House.  Hence I shall treat the question before the House simply as one of currency, that of interest saving being altogether subordinate and incidental.

The substitute I have proposed asserts the exclusive right and duty of the Government to issue all the credit circulation directly, and not through the intervention of corporations, and without shock or disturbance to the business of the country to substitute the promisory note of the United States for the promissory note of the banks.  It neither increases nor decreases the present volume of national note circulation, and endows the note of the United States with functions conferred by law on the bank note, with the exception of making the former receivable for customs dues, and making the Treasury note redeemable in coin, which the bank note is not.  It goes further, and separates the business of banking, and the issue of notes;  and except in taking away from the national banks their note issue it does not interfere with their business as banks of discount and deposit.  And as an inducement to the note circulating banks to surrender their circulation and to become banks of discount and deposit simply, the substitute offers to repeal all taxes of non-circulating banks on capital and deposits.  Such, sir, is the remedy that is proposed to ward off the dangers of a great reduction of the circulation by the payment of the debt on which it is based, and at a time when an unfavorable condition of our international exchanges may be greatly aggravated by this unrestricted action of the banks.

When it is considered that one-half of our paper circulation is now issued by the Government, and that there has never been a successful effort openly made to withdraw this circulation during the score of years it has been in use by the people, it cannot but excite surprise that any defense of a proposition that the other half of the circulation should in like manner be issued by the Government should be necessary.  As in the war of 1812, so in the late civil war, when the credit of the banks had failed and they were powerless to meet the exigencies of the occasion, the credit of the Government was resorted to as the only resource to pay its soldier and carry on its vast military operations.  It would seem that a credit and the use of such credit which could be made available to the wants of the people and the Government in time of war might be profitably and advantageously used in peace.  Such in fact has been the experience of the people of the United States as to the notes of the Government known as greenbacks, and notwithstanding the various insidious and clandestine efforts to supplant them with the note of the banks, I hazard nothing in saying that they have a hold upon the judgment and esteem of the people that will make them the last debt of the Government that will be paid, if they are ever paid.

In popular estimation their value as a circulating medium is not enhanced by the fact that they are made a lawful tender in the discharge of debt, or that they are redeemable in coin at the treasury in New York.  They are valued because of the faith of the people in the Government which utters them ---because of their uniform value in all parts of the Union--- and of their receivability for all taxes, national, State, county, and municipal, and necessarily in all the multiform transactions of daily life.  And when the plain, blunt common sense of the man of ordinary understanding and average intelligence demands to know why all the paper money, as he terms it, cannot be issued directly by the Government instead of half of it being issued by corporations created by that Government, no answer that you can give, however fortified by authority or experience, or replete with the theories of monetary science, will satisfy him that in permitting this condition of things we are not countenancing a great folly, if not a great wrong.

If I were to answer this question I should say that we employed banking corporations to issue a portion of our circulation because of the proclivity of all governments to legislate for the benefit of privileged classes and special interests, because of the natural distrust of large numbers of men of the capacity of the people for self-government, and of a still larger number who have a morbid and superstitious dread of every innovation upon the existing order of things.

If, Mr. Speaker, Congress, instead of authorizing the creation of two thousand banking corporations, had invested a single individual and his assigns with the right to issue his promissory notes to the extent of three hundred and sixty millions of dollars for twenty years, and had made them receivable for public dues and payable on account of debts by the Government, as provided by the national-bank act as to national notes, and with like power to expand and contract the paper circulation as these institutions now have, I am perfectly safe in the assertion that there is not a member in this House who could be found willing to extend such powers and privileges for a day.  Such abuse of our legislative authority would shock the minds and consciences of all men ---not because a single individual might not secure to the people as safe a currency and one as uniform in value in all parts of the country as that furnished by two thousand corporations, but because of the special and peculiar privileges bestowed upon this fortunate individual, and of the inconsistency of such legislation with that equality of right which is the corner-stone of republican government.

There is nothing in the Constitution which makes any distinction in favor of a thousand corporations over one, or of any number of individuals over a single individual.  If Congress has constitutional power and jurisdiction over any subject or matter, there is no restriction upon the means it may adopt to carry into effect the grant of powers.  It has the same power to incorporate Jay Gould or William Vanderbilt as it has to incorporate ten thousand bank shareholders or two thousand banks.  We should be giving to the favored individual the right to exchange his promissory notes without interest to the extent of three hundred and sixty millions for the promissory notes of others, bearing interest, with the pledge of the Government that it would receive them for hundreds of millions of annual taxation, and pay them out to all employes, officers, and creditors of the Government, except where it had stipulated for some other mode of payment, and at the same time forbid by stringent legislation any interference by other individuals or State corporations with the valuable privileges thus conferred.  Such is the extent of the extraordinary franchise which would inure to the exclusive benefit of the beneficiary of our legislation.  Need I say that such a franchise conferred upon a street beggar would in a few years transform him into a millionaire !

I speak not of the indirect result of the elastic principle of the bank-note circulation, so much lauded by its advocates, which enables bank-owners to expand or contract their note obligations at will, and thus, by advancing or depressing the prices of commodities, afford them the opportunity of enriching themselves at the expense of the great mass of the people, and at the same time bankrupting merchants and traders and embarrassing all kinds of business.  And now, sir, what pretext of justification can be offered for such unjust, partial, and anti-republican legislation ?  Can we delude ourselves into the belief that what cannot be justified when for the benefit of a single individual will find its justification when the number of beneficiaries is increased a hundred or a thousand fold.  Is there such magic in an act of incorporation as to make a franchise conferred upon a corporation justifiable, and without justification or excuse when conferred upon a single individual and his assigns ?  Can we sugar-coat injustice in the form of class legislation by increasing the beneficiaries of our injustice and multiplying the number who participate in the robbery of the general public ?

No, sir. Banks of issue are inimical to republican institutions, and cannot be justified, except by an abandonment of the principle of equality of all men before the law.  "Power is ever stealing from the many to the few," and note-issue by banks is one of the chief instruments of power by which the few are aggrandized at the expense of the many.  It has been the fruitful source of vast accumulations of wealth in the hands of a moneyed oligarchy in this country, which is the sure forerunner of public corruption and the bane of republican institutions.  Yet, we are discussing in republican America the question whether we will continue to the national banks the payment from the pockets of the people of a subsidy of millions by allowing them to issue their notes and endowing them with most of the functions of money.

Will it be said that they repay the Government for the franchise of note-issue by making a market for the bonds of the Government ?  When first established and the credit of the Government was depressed, they served the purpose of sustaining its credit, but it is not pretended that the Government stands in need of any such adventitious aid to sustain its credit now.  Its bonds are sought for in every market of the world and stand first on the list of the world's securities.

For the last ten years the banks, instead of being a help to the Government, have been an obstruction to every effort to appreciate their value and obtain a lower rate of interest.  Even now they are engaged in stealthy, underhand, and indirect schemes to perpetuate the public debt, in order that they may have a plausible pretext to retain their subsidy of note-issue, by a reduction or repeal of all internal taxation.

Shall I be told that the banks pay the Government a bonus of 1 per cent. on their circulation in consideration of the grant to them of the privilege of making money out of their indebtedness.  This is an admission that the right of note-issue belongs to the Government as a part of its sovereign power, and has been bartered away for a mere song.  If it were any adequate compensation for this valuable franchise, how is it, when the interest on the securities for the circulation has been reduced from 6 to 3½ per cent., that there were as many or more banks organized within the last half year than ever before in the same period of time, and how does it happen that the rate of bank dividends for the last twelve months is greater than the ordinary rate of interest through the country, notwithstanding the continued complaint of ruinous and excessive bank taxation ?  If there is any profit in bank circulation to justify the payment of a large or small bonus, it belongs to the whole people, and not to an inconsiderably small fraction, and should no more be bargained away or farmed out than the transportation of the mails or the coinage of metallic money.

Mr. Speaker, no argument can be urged against the proposition contained in the substitute for the bill of the committee that is not equally potent in favor of the redemption and destruction of the three hundred and forty-six millions of greenbacks.  But what party or segment of a party will champion a measure that looks to that result since the policy and design of the resumption act in that respect was defeated and reversed ?  I do not speak of depriving the greenback of its legal-tender character, but of its redemption and cancellation, and thus permit the bank oligarchy to "filch from us," to use the expressive language of Mr. Jefferson, the exclusive right to issue all the credit circulation for our fifty millions of people.  If there were not an urgent necessity growing out of the rapid reduction of the public debt that some substitute should be provided for the national notes, the fact that we have two kinds of currency performing the same office, one issued by the people and for the people, and the other issued by the banks and for the banks, will give the question, "who shall emit the future currency ?" a prominence that will demand a final solution in the very near future.  It cannot continue to be half greenback and half national-bank note.  It must all be issued directly by the Government or by the banks.  There is the same irrepressible conflict between the two that once existed in this Union between slavery and freedom, and one or the other must and will be exterminated.

I pass to the consideration of the monetary objections, as I understand them, to the issue by the Government of the entire credit circulation.  I grant that it involves a "fixed issue" of the whole credit circulation ---just as the maximum amount of the greenback circulation is now fixed by law.  It is because it is so fixed and possesses no "elasticity," as it is termed, and that it is so fixed in amount by Congress, that it encounters apparently the strongest objection.  I maintain that what I have denominated the credit circulation, that is, circulation based on credit and not on coin, however secured or redeemed, should have no elastic power;  that is, should not be contracted or expanded at the will of those who make a profit for themselves by loaning it or discounting notes in exchange for it.  Elasticity, in the sense I have used it, and as it is generally understood, necessarily involves the power to contract as well as expand the circulation.  That such a power should not be lodged in the hands of those interested in abusing it seems to be too evident to admit of argument.  Banks follow the law of their being when they maintain their circulation at the highest amount.  To give them the unrestricted power to increase their circulation as they may consider needful for the demands of trade and commerce, is to give them the power to make or unmake the fortunes of individuals and to advance or depress the prices of all property and commodities.

It is universally agreed that paper circulation has precisely the same influence on prices as so much metallic money, and as it increases in amount the whole volume of circulation, both coin and paper, all other conditions being equal, is relatively depreciated, and the depreciation of the whole vo1ume manifests itself in the advance of the prices of commodities.  High prices here diminish our exports and tend to increase our imports, and the result of this state of things is, that we become indebted to foreign countries and the foreign exchanges become adverse to this country.  A drain of coin takes place in order to liquidate the foreign balances against us, and if not arrested by increased exports and diminished imports, it will result in panic, and not infrequently in a monetary revulsion and general bankruptcy.  If there were no increase of paper money ---when a metallic drain sets in--- the decrease in the stock of coin produced by the outflow to foreign countries would soon bring prices down to an exporting point;  but it is just at this stage that the banks continue their paper issues and thus aid to keep up high prices and stimulate speculation.  Especially is this true of the national banks, whose notes are not redeemable in coin and never have been, and therefore would not be affected directly by the unfavorable condition of foreign exchanges.

From a combination of causes there is now an outflow of bullion abroad which will likely continue during the greater part of this year.  I doubt not that the increase of bank issues from three hundred and twenty to three hundred and sixty-two millions in three years has tended to this result, and may aggravate it very seriously;  and instead of reducing the circulation, and thus aid in bringing prices down to an exporting point, the banks are now adding to an already redundant paper circulation, notwithstanding the vast increase in the gold and silver circulation.  That they will continue to do this, not to satisfy any real monetary or trade necessity, but to put money in the pockets of the shareholders, as long as they can obtain United States bonds at a paying rate, is proved by all experience.  In truth, the demand for increased circulation is as insatiable as death.  It grows by what it feeds on.  The more that is issued the more will be wanted.

"The supply does not satisfy the demand ---it excites it.  Like an unnatural stimulus taken into the human system, it creates an increasing desire for more;  and the more it is gratified, the more insatiable are its cravings."

"There are two reasons for this:  one that as the currency is expanded prices are raised correspondingly, and more currency is required to effect the same exchanges;  that the speculation inevitably following the rise of prices leads to an enormous extension and repetition of indebtedness, which requires for its discharge a greatly increased amount of the circulating medium.  Thus, by the action and interaction of these causes, the demand for the issue of this kind of currency is certain to be greatest when it is already redundant."

The idea of having a credit circulation that will expand or contract, according to the demands and the state of trade and commerce, is folly and fallacy combined.  Issue banks are organized because they hope to realize profits by loaning their own credit and the deposits of their customers, and not to give facilities to the growth of trade and business, except as an incident to the profits to be derived from making loans on their credit and on their deposits, and the more of their note they can keep out the larger is their income.  An elastic credit currency is as great an absurdity as an elastic yardstick.

What is most needed for the permanent prosperity of all kinds of business and all classes of the community is a volume of circulation which will give steadiness to prices and regularity to the movements of trade and commerce.  Security to the note-holder is of inferior moment compared with the injury which constant fluctuation in the amount of the paper issues inflicts upon the business of the country by creating corresponding fluctuations in the prices of commodities, and by deranging the equilibrium of exchange with foreign countries, and producing panic and financial disaster, insolvency and failure to redeem its obligations by a bank of issue will entail loss and inconvenience to individuals and localities, but every industrial interest, and the entire business of the country is affected by the exercise of this power to curtail or expand the credit circulation at the will or caprice of bank owners.  Trade and commerce are but other names for gambling, and all kinds of mercantile operations are but lotteries in which the prizes are few and far between and the blanks without number.  If the notes of the bank were redeemable in coin at the bank counter, or elsewhere, it might offer some slight check to their capacity to inflate the paper circulation, but there is no pretense of coin redemption of the bank note anywhere.  The only check which the people have against excessive issues is the condition of the public debt and the premium upon Government securities which tends to reduce their profits on circulation.

If I have failed to show by the application of admitted monetary principles that the elasticity of a paper circulation is necessarily productive of disaster to the industrial and commercial interests of the country sooner or later, it is undeniable that it is condemned by all the most important and advanced nations of the world, and if not abandoned in this country it is because the people are misled by the sophistries and fallacies of those who are interested in the profits of note-issues, or the apprehensions of those who are controlled by a false and fatal conservatism.  We have copied our opinions and practice as to bank issues from England;  but England has long since discovered the mischiefs which necessarily cling to the exercise of the unrestrained issue of a mere credit circulation.  The bank act of 1844 was passed after an exhaustive investigation of all the questions pertaining to coin and currency, and the examination of the most distinguished practical and scientific experts in the United Kingdom.  Under this law the credit circulation was fixed in amount, and has been gradually but very slowly decreasing for the last thirty-eight years.  Prior to this period Great Britain had a somewhat similar system of currency and banking as that of the United States, during the existence of the last Bank of the United States ---the stock banks of England answering to our State banks, and the Bank of England occupying a somewhat similar position as the Bank of the United States.  The right of issue, except as to the outstanding emission, was taken from the local banks by the Peel bank act, and the Bank of England fell heir to two-thirds of any circulation thereafter surrendered by the local banks.

So far from there being any elasticity in the present credit circulation, the fixed issue of the whole kingdom is actually less than it was forty years ago, notwithstanding the vast increase in wealth, population, and commerce, and "elasticity" is provided for solely by coin, or the actual representative of coin.  An almost exactly similar currency system has been adopted in Germany.  The prohibition of any increase of the fixed credit issue is not absolute, as in Great Britain, but any excess of paper issues, except that bottomed on coin, can be made only on the payment of a tax of 5 per cent. on such excess.  In France nearly the entire circulation of its great bank is based on coin, and the evident tendency of that institution is to make its note circulation a representative rather than a mere credit circulation.  In fact, the United States alone, of all the great commercial nations of the world, countenances this vicious elastic credit circulation, which is said to be the chief merit of our national banking system.

Mr. Speaker, I flatter myself that I have shown from admitted laws of monetary and currency science, as well as from the example of two of the most enlightened commercial nations of the world, that what is termed the elasticity of the bank-note circulation is a dangerous fallacy, and that there is no foundation for the objection to my proposed substitute that it fixes and restricts the credit circulation to a given amount.

I hope I have disposed of the objection commonly urged against the issue of a paper circulation directly by the Government, and with it the false and pernicious theory of an elastic credit circulation and the combination of banking in its proper sense, with note-issuing.  I repeat, this mischievous practice is confined to the United States almost exclusively, and has been repudiated by Great Britain after a trial of one hundred and fifty years and after the whole subject of currency had undergone, through the press, by committees of Parliament, and by numberless publications, the most thorough and exhaustive discussion.  The same may be said of Germany and Austria-Hungary as to the issue of paper circulation being fixed and rigid.  Indeed, in the establishment of national banks and in giving them the right to issue their promises to pay many of the attributes of money, and compelling them to pay a royalty into the Treasury on their circulation, the sovereign right of the Government over the whole question is admitted.  And the fact that the only redemption of the bank note now authorized by law is in the greenback is equally an admission that the credit of the Government is superior to that of the banks, and for this reason alone, if for no other, the Government should be the sole issuing authority.

No monarchy in Europe or elsewhere possesses more unrestricted control over its currency than the Constitution gives to Congress.  It not only has by express grant the power "to coin money and regulate the value thereof, and of foreign coins," but the States are in terms prohibited from coining money, emitting bills of credit, "and from making anything but gold and silver coin a tender in the discharge of debts."  The United States has exclusive sovereign power over the whole question of coinage and money, and necessarily, in my opinion, over everything that performs the function of money.  It is not because other governments have taken direct charge of the credit circulation that they are more or less monarchical, or that there are more or less restraints upon the executive or legislative departments of these governments, but it is because by common consent and universal usage the world over, coinage and money are a part of the sovereignty of all government whether republican, monarchical, or imperial.

And I repeat that no government has more unrestricted power in this regard than the Constitution give to the Government of the United States.  It is supreme and omnipotent within the sphere of this power.  It has the power to regulate commerce, and we build light-houses, improve harbors and rivers.  It has power to establish post-offices and post-routes, and we provide for transmitting newspapers, letters, and books, to the remotest hamlet of the wilderness, and we cannot permit any State, community, or corporation, to throw obstacles in the way of the unrestricted exercise of these grants of power.  Nor have we ever thought that we could or ought to delegate the execution of these powers to a corporation, partnership, or association of individuals.  This Government executes its authority by it own officer and it own agents, with the exception of the sovereign power of issuing and giving to a promise to pay the function of money.  This power it has intrusted to a corporation, not because Congress is incompetent to the task of making proper rule for its issue and management, but for the reason that there are "millions in it" to the members of this corporation.  We execute the power to coin money by establishing mints and fabricating eagles, double-eagles and dollars.  We have not called in a corporation to aid the Government in supplying metallic money, for no other reason than capital has never yet seen its way clear, by which it could rob the labor of the country, and satisfy its voracious maw by being incorporated to run the mints.  Is it possible for any man to give a reason that will bear the least scrutiny why Congress cannot intrust the power to issue its promissory notes and to pay them out to an officer of the Government or to a board of officers, as it confide the management of the mint to the Director of the Mint and his subordinates ?

But it is said that the Government of the United States ought not to go into the banking business and that the exercise of the power that I claim for the General Government tends to centralization and the absorption by it of the reserved rights of the State and of the individual citizen.  The power to borrow money on the credit of the United States is one of the expressly granted power conferred upon Congress and under that power the Government has issued its interest-bearing as well as its non-interest-bearing obligations.  The Treasury note has been emitted since the foundation of the Government under this grant of power without question from any source and is a clearly within the terms of the power as any of the class of bond of the United States now outstanding.  Nor can it be predicated of any grant of constitutional power, that it tends to centralization or take from the States the exercise of a power which, if exercised by them, defeats one or more of the great object for which the Union of the States was formed.  Centralization is to be apprehended and avoided when by a strained construction of the Constitution the Federal Government obtains jurisdiction of such matters as have not been delegated to it by the States.

It may be conceded that all increase of patronage, and every additional bureau needed by the Government to perform its duties under the Constitution strengthens the Federal authority, but that is a centralization of legitimate and authorized power, and the necessary result of our development and growth.  It is such centralization as was contemplated and provided for by the framers of the Constitution.  Aside from the prohibition against the States to emit bills of credit, and yielding to the doubtful authority of the Supreme Court, (Briscoe vs. Commonwealth Bank of Kentucky, 11 Peter , 257,) that the note of banks authorized by the States are not within the meaning of this prohibition, the experience of this country prior and subsequent to that decision leaves no room for doubt that the issue of credit money by banks tends to defeat the object of the mintage of coins.  That object was primarily to provide a means of exchange and a measure of values.  If the States can, as they have done, enter into competition with each other in the issue of credit money, they will inevitably expel from circulation all the metallic money that may be issued from the mints, and thus deprive the people of the medium of exchange intended to be provided them by the Constitution.

In vain may Congress provide mints and fabricate the coins authorized by law, if the printing and engraving of paper promises to pay is allowed to the States, and credit money issued according to what each State may deem necessary to supply the real or imaginary demands of trade.

Our own experience alike with the teachings of monetary science, enforces the truth that whatever performs the office of money should be under the direct control of the authority that coins the money of the Constitution.  Credit or paper money is a convenient labor-saving necessity in the advanced condition of the business methods of the world, and supplements the supply of metallic money.  Its increase or decrease of volume has the same effect on the prices of commodities as a like addition to or diminution of the stock of coin.  As long as it is maintained to an equivalency with coin it practically performs the office of coin in ill monetary and business transactions.  It is a part of one whole and not an independent and distinct element of the national circulation, and the intimate and dependent relations between the two kinds of circulation demand that they should not be controlled by discordant and inharmonious authority.

The power to coin money and regulate the value thereof and of foreign coins is a grant of power over whatever is current as money, and is not confined merely to the mintage of coined money.  It must of necessity embrace the whole subject of currency in order to make the power of coinage effective and to prevent the depreciation and expulsion of metallic money.  To allow national or State banks to issue their notes with the functions of money is to surrender the control of the entire circulating medium, both coin and paper, to them, and to defeat one of the great objects of the Constitution--- a uniform and stable metallic circulation.  The business of banking in its proper sense belongs exclusively to the jurisdiction of the States;  and that is left to them to control and manage as the States may deem best for the interests of the people.  Note-issue, or the right to convert debt into money, is an exercise of the sovereign power of the Government, and is no part of the business of banking.  That consists in loaning money, receiving deposits, and dealing in exchange, and when combined with that of note-issuing, makes a union of incompatible and incongruous functions.  It is this mischievous union to which the people of this country have been so long habituated and in which they have been educated for a century that causes them always to associate note-issue as an inseparable part of the business of banking.

Hence the objection that the issue of the credit circulation by the Government through the Treasury or by a commission expressly authorized for that purpose will make the Treasury a bank and convert the Government into a mammoth banking institution.  If that were true or had the semblance of truth, the Government has been engaged in the banking business for nearly twenty years, and if the issue of credit money constitutes a bank the issue of real money by the mints should a fortiori constitute a bank also;  and, according to this logic, we have never been without a Government bank since its foundation.

Such objections are hardly worthy of the name of argument, especially in the face of the fact that one-half of our credit circulation is now issued directly by the Treasury Department, and no one can be found who entertains the faintest hope that we shall redeem it and substitute bank issues, State or national, for it.  They are of a piece with the arguments that were urged against the establishment of the Independent Treasury nearly fifty years ago by the banks and their advocates.  The simple proposition that the Government should be the custodian of its own revenues, and not intrust them to the keeping of banks, and thus increase their line of discounts and profits, was characterized as a union of the purse and sword ---as a Government bank, and as making one currency for the Government and another for the people.  Notwithstanding the false clamor raised against it, it received the assent of Congress, and no one of its opponents has ever dared to ask for its repeal, and is everywhere accepted as a useful and necessary part of the fiscal machinery of the Government.

That act decreed a divorce of the Government from the banks in the custody of its revenues;  the proposition I am advocating divorces note-issuing from banking in its proper sense, and secures to the Government the direct issue and control of the credit circulation, as it has ever had of the cash circulation, in the interest of the whole people, and not in the interest of bank owners alone.

Mr. Speaker, what shall I say to the objection so current among the bank organs, that Congress would be forever engaged in increasing the circulation, and thus disturb all values and derange all kinds of business ?  This in fact would be doing just what is considered the chief merit of the elastic bank-note system, and which is one of the most pernicious features of free banking.  It is what the banks are now doing, and have been doing systematically for years.  But, say the advocates of this bank privilege, this inflation of bank notes is to accommodate the trade and business of the country.  I say it is to increase bank dividends, without reference to the wants and demands of trade.

The real gist of this objection is that Congress is incapable of legislating on so important and intricate a question, and that it must be relegated to the directories of 2,000 banks.  Congress is authorized to provide for coining money, and to regulate the value and quantity thereof.  It has unlimited power over the whole subject of taxation, internal and external;  it legislates as to foreign and domestic commerce;  it declares war and makes peace, but to regulate the issue of the credit circulation for the best interest of the people involves so much financial wisdom and such disinterested patriotism, that Congress should turn it over to the exclusive jurisdiction of capitalists, money-mongers, merchants, and bankers !  If there is any force in this argument it proves too much;  It proves that our republican Government is built on a sandy foundation, and that the capacity of the people for self-government is a delusion and a cheat.

I have shown that the principle of the propositions embodied in the substitute for the committee's bill is not an experiment.  It has been tried in this country by the emission of the greenback, and in England by the enactment of Peel's bank bill, providing for a "fixed issue" uttered in fact by the state.  Nor is the principle of a Treasury issue for circulation and a separation of note-issuing from banking without the indorsement of high authority in this country.  Mr. Jefferson is on record as one of the earliest advocates of the issue by the Government of Treasury notes, which should take the place of bank-note circulation.  During the war of 1812 he declared---

"Bank paper must be suppressed, and the circulating medium must be restored to the nation to whom it belongs. .... Let banks continue if they please, but let them discount for cash alone or for treasury notes."

At another time he wrote:

"The banks have discontinued themselves.  We are now without any medium; and necessity, as well as patriotism and confidence, will make us all eager to receive treasury notes, if founded on specific taxes."

But among all the renowned statesmen who have adorned the history of America, Mr. Calhoun stands pre-eminent in exposing the injustice and anti-republican character of note-issue banking and its corrupting and demoralizing consequences.  It is worthy of note that Mr. Calhoun several years before the passage of Peel's bank act of 1844, which separated the issue department of the Bank of England from the banking department, condemned the union of banking and note-issuing as a blending of incompatible and dangerous functions.  On two different occasions in the 25th Congress he advocated the issue of Treasury notes as a circulating medium in place of the issues of the banks.  He had held in 1837 that it was the duty of the General Government to assume entire control of the paper circulation, if the effect of State issues was to deprive the people of the benefits of a metallic coinage, to depreciate it, or expel it from the country, or the channels of circulation, and his wonderfully sagacious and analytic mind did not fail to detect the mischiefs as well as the injustice of uniting the credit of the Government with that of individuals and giving the latter the entire benefit of such credit.  I submit a short extract from his speech delivered in the Senate on 3d of October, 1837, to show that the advocates of the issue of Treasury notes as a circulation are supported by the authority of his great name:

"He who does not see that the credit system is on the eve of a great revolution, has formed a very imperfect conception of the past, and anticipation of the future.  What changes it is destined to undergo, and what new form it will ultimately assume, are concealed in the womb of time, and not given us to foresee.  But we may perceive in the present many of the elements of the existing system which must be expelled, and others which must enter it in its renewed form.

"In looking at the elements at work, I hold it certain that in the process there will be a total and final separation of the credit of Government and that of individuals, which have been so long blended.  The good of society, and the interests of both, imperiously demand it, and the growing intelligence of the age will enforce it.  It is unfair, unjust, unequal, contrary to the spirit of free institutions, and corrupting in its consequences.  How far the credit of Government may be used in a separate form, with safety and convenience, remains to be seen.  To the extent of its fiscal action, limited strictly to the function of the collection and disbursement of its revenue, and in the form I have suggested, I am of the impression it may be both safely and conveniently used, and with great incidental advantages to the whole community.  Beyond that limit I see no safety, and much danger."

It is that separation of Government credit from the credit of individuals predicted by Mr. Calhoun, and in part already accomplished by the greenback, and which will necessarily separate the business of banking from note-issuing, I propose to accomplish in full by the adoption of the substitute.

Mr. Speaker, it has not been my purpose to make any other change in the existing status of the credit circulation than to substitute the emission of the Treasury note for that of the banks as their charters expire, and to forbid the creation of any new banks or the issue of any additional circulation.  The substitute does not interfere with any other portion of the credit or metallic circulation, or with the representative circulation, (gold and silver certificates.)  Nor does it ofter any impediment to such banks as may elect to do so to continue the business of banking under the restrictions of the national banking act during the continuance of their charters, as many of the banks are now doing in the larger cities.  It seeks to redress but one grievance at a time, and in doing this it destroys the "elastic" character of the whole credit circulation.  What becomes "the fixed issue" of the Government to be paid out to the creditors of the Government and to be exchanged for specie at the pleasure of the holder.  But in order to give elasticity, and elasticity not of credit money but of the money of the Constitution, I would modify the emission of gold and silver certificates by requiring them to be issued upon deposits of gold and silver bullion and redeemable in coin.  Instead of giving elasticity to the credit circulation, a stable and uniform circulation will be more certainly secured by a circulation which denotes accumulations of wealth by labor, industry, and economy, and not by an increase of the instruments of credit.

It has been suggested that these certificates for bullion deposits could be used successfully in filling the place of the bank notes, as their charters expire or the banks go into liquidation.  This is an equivalent proposition to diminish the circulation by the amount of the bank notes outstanding, because practically the deposit certificates are no more than so much gold and silver coin.  If we had never issued any other credit money than the three hundred and forty-six millions of greenbacks, the suggestion would be admissible, but I leave to those gentlemen who favor this proposition to consider what would be the effect of such a diminution of the circulation upon the prices of all commodities, and especially its influence upon the debtor and taxpayer.  All other things being equal, the effect of a reduction of one-third of the circulation will reduce the prices of commodities one-third and add to the burdens of debt and taxation in the same ratio.

I do not hesitate to express the opinion that our credit circulation is needlessly redundant, but having risen up to the present amount through the vices of the national-bank system in great part, the reduction of its volume, now that its bad influence has permeated the business of the country, presents a very different question from that of its original increase.  Prosperity usually attends an enlargement of the circulation, whether credit or cash, and it may well coexist with a stationary circulation, but a diminution almost invariably produces pecuniary pressure more or less aggravated.

Mr. Speaker, I am not unmindful that the banks have given us a note circulation of uniform value in every part of the Union, and that the holder of the notes is secured beyond all reasonable contingencies.  These are the chief, if not the only merits of the system, and they constitute the prominent features for which it meets the approval of the unthinking multitude and of those who seek to profit by its franchises.  Its vices will only be manifest in a season of great commercial disaster and monetary pressure, to which every enterprising and credit-using people seem to be fated and against which no human foresight has ever made provision.  Its capacity to expand or contract the credit circulation ---the union in the same hands of the making of money with the loaning of that money--- its sham convertibility, or rather its utter want of convertibility, and the powerful temptation which it offers to its owners to promote such legislation as will perpetuate the system by perpetuating the national debt, to say nothing of its anti-republican and aristocratic features, entitles it to no just claim to the extension of its privileges, even if we had an absolute assurance that the capacity of the banks for mischief would not be greatly aggravated by the rapid diminution of the public debt within the next few years.  Unless we prove faithless to the traditions of our past history and to the principles of republican government, and are deaf to the demands of the producing classes of the country, we will discountenance every measure, of whatever character, which looks to such reduction of taxation as will detract from our power to reduce the public debt and extinguish the last dollar of it.

Already, schemes are on foot and plans are laid, the covert if not avowed purpose of which is to perpetuate the twin sisters of class legislation ---national banks and our prohibitory tariff.  Far better will it be that the taxation on tobacco and whisky shall be undisturbed until every vestige of the internal-revenue system can be obliterated, than that it shall continue with diminished rates of taxation and with its regiments of collectors, assessors, spies, and detectives.  Present rates of internal taxation mean payment of the public debt and the total repeal of internal taxation, with the disbandment of the internal-revenue army;  reduced rates mean postponement of the payment of the public debt and the indefinite continuance both of the debt and of the service of the internal-revenue battalions.  Let those who have so long suffered from the wrongs and exactions of the internal-revenue system console themselves with the reflection that every million of surplus revenue is a knell of the departing power of the banks and a harbinger of the approach of the day when the omnipotent voice of the American people will demand that the million of interest-bearing bonds held as security for the circulation of the banks shall be exchanged for the non-interest-bearing notes of the Treasury, to be forever used as currency by our growing population.  And as that day is ushered into being the last vestige of internal taxation will be consigned to the grave, may we not hope, to rise no more forever ?

Appendix A.

A bill to enable national banking associations to extend their corporate existence.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That any national banking association organized under the acts of February 25, 1863, June 3, 1864, and February 14, 1880, or under section 5133, 5134, 5135. 5136, and 5154 of the Revised Statutes of the United States, may, at any time within two year previous to the date of the expiration of its corporate existence under present law, and with the approval of the Comptroller of the Currency, to be granted as hereinafter provided, extend its period of succession by amending its articles of association for a term of not more than twenty years from the expiration of the period of succession named in said articles of association, and shall have succession for such extended period, unless sooner dissolved by the act of shareholders owning two-thirds of its stock, or unless its franchise becomes forfeited by some violation of law.

Sec. 2.  That such amendment of said articles of association shall be authorized by the consent in writing of shareholders owning not less than two-thirds of the capital stock of the association;  and the board of directors shall cause such consent to be certified over the seal of the association, by its president or cashier, to the Comptroller of the Currency, accompanied by an application made by the president or cashier for the approval of the amended articles of association by the Comptroller;  and such amended articles of association shall not be valid until the Comptroller shall give to such as ociation a certificate under his hand and seal that the association has complied with all the provisions required to be complied with, and is authorized to have succession for the extended period named in the amended articles of association.

Sec. 3.  That upon the receipt of the application and certificate of the association provided for in the preceding section, the Comptroller of the Currency may, if he deems it necessary, cause a special examination to be made, at the expense of the association, to determine its condition;  and if after such examination or otherwise it appears to him that said association is in a satisfactory condition, he shall grant his certificate of approval provided for in the preceeding section, or if it appears that the condition of said association is not satisfactory, he shall withhold such certificate of approval.

Sec. 4.  That any association so extending the period of its succession shall continue to enjoy all the rights and privileges and immunities granted and shall continue to be subject to all the duties, liabilities, and restrictions imposed by the Revised Statutes of the United States and other acts having reference to national banking associations, and it shall continue to be in all respects the identical association it was before the extension of its period of succession, with the same rights, immunities, and liabilities.

Sec. 5.  That when any national banking association has amended its articles of association as provided in this act, and the Comptroller has granted his certificate of approval, any shareholder not assenting to such amendment may give notice in writing to the directors, within thirty days from the date of the certificate of approval, of his desire to withdraw from said association in which case he shall be entitled to receive from said banking association the value of the shares so held by him, to be ascertained by an appraisal made by a committee of three persos, one to be selected by such shareholder, one by the directors, and the third by the first two;  and in case the value so fixed shall not be satisfactory to any such shareholder, he may appeal to the Comptroller of the Currency, who shall cause a reappraisal to be made, which shall be final and binding;  and if said reappraisal shall exceed the value fixed by committee, the bank shall pay the expenses of said re-appraisal, and otherwise the appellant shall pay said expenses;  and the value so ascertained and determined shall be deemed to be a debt due and be forthwith paid to said shareholder from said bank;  and the shares so surrendered and appraised shall, after due notice, be sold at public sale, within thirty days after the final appraisal provided in this section.

Sec. 6.  That the circulating notes of any association so extending the period of its succession which shall have been issued to it prior to such extension shall be redeemed at the Treasury of the United States, as provided in Section 3 of the act of June 20, 1874, entitled "An act fixing the amount of United States notes, providing for a re-distribution of national bank currency, and for other purposes," and such notes when redeemed shall be forwarded to the Comptroller of the Currency, and destroyed, as now provided by law;  and at the end of tree years from the date of the extension of the corporate existence of each bank the association so extended shall deposit lawful money with the Treasurer of the United States sufficient to redeem the remainder of the circulation which was outstanding at the date of its extension as provided in sections 5222, 5224 and 5225 of the Revised Statutes, and any gain that may arise from the failure to present such circulating notes for redemption shall inure to the benefit of the United States ;  and from time to time, as such notes are redeemed or lawful money deposited therefor, as provided herein, new circulating notes shall be used as provided by this act, bearing such devices, to be approved by the Secretary of the Treasury, as shall make them readily distinguishable from the circulating notes heretofore issued.

Sec. 7.  That national banking associations whose corporate existence has expired or shall hereafter expire, and which do not avail themselves of the provisions of this act, shall be required to comply with the provisions of sections 5221 and 5222 of the Revised Statutes in the same manner as if the shareholders had voted to go into liquidation, as provided in section 5220, of the Revised Statutes;  and the provisions of sections 5224 and 5225 of the Revised Statutes shall also be applicable to such associations.

Appendix B.

Mr. Buckner submitted the following proposed substitute for the bill (H.R. No. 4167) to enable national banking associations to extend their corporate existence:

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That whenever the charter of any national banking association is about to expire, or whenever any such association shall, by a vote of its share-holders owning two-thirds of its stock, determine to go into liquidation, and the bonds deposited by such bank to secure its circulation, or any part thereof, shall consist of 5 or 6 per cent. bonds now continued at 3½ per cent. interest and redeemable at the pleasure of the United States, the Secretary of the Treasury is hereby authorized to exchange the notes hereinafter authorized for the bonds so held by said banking association at par and accrued interest, or he may exchange the notes aforesaid for standard gold or silver coin, and redeem said bonds with coin;  and thereafter the circulating notes of said bank shall be redeemed at the Treasury of the United States, and when so redeemed said circulating notes shall be canceled and destroyed.  And any national banking association whose circulation is secured by bonds of the United States other than those above described, and whose charter is about to expire, or whose stockholders, by a vote of two-thirds thereof in amount, shall determine to go into liquidation, shall proceed, as provided in sections 5221, 5222, 5224, and 5225 of the Revised Statutes, by making a deposit of the notes hereinafter authorized;  legal-tender notes, or gold or silver coin and thereafter the circulating notes of such banking association shall be redeemed at the Treasury with the notes hereinafter authorized.

Sec. 2.  That the Secretary of the Treasury is hereby authorized and directed to cause to be printed and engraved Treasury notes of the United States, to an amount not exceeding the present outstanding national-bank-note circulation, with such devices and inscriptions as he may direct and approve, in denominations of ten, twenty, fifty, one hundred, and one thousand dollars, and which shall be made payable on demand, at the office of the assistant treasurer in the city of New York, in standard gold or silver coin, when presented in sums of not less than $100;  and said notes shall be signed by the Treasurer and counter-signed by the Register of the Treasury, or their signatures thereto engrafted.  Said Treasury notes shall be receivable by the United States for all taxes, customs dues, demands. and claims of the United States, and shall be received at par in all parts of the United States in payment for all salaries and other debts and demands owing by the United States to individuals, corporations, and associations within the United States, except where some other mode of payment is expressly provided by law.

Sec. 3.  That no national banking association shall hereafter be organized;  nor shall any circulating notes be hereafter issued to any bank now organized, except in redemption of mutilated, worn and defaced notes issued by such banking institutions already organized and outstanding at the passage of this act;  nor shall any existing banking association increase its circulation, or the amount of Treasury notes authorized by this act exceed at any time the amount of national-bank notes outstanding at the passage of this act.  And for the purpose of the prompt redemption of said Treasury notes the Secretary of the Treasury shall maintain a redemption fund, in standard gold and silver coin, of not exceeding 25 and not less than 15 per oent. of the outstanding issue of said Treasury notes;  and in order to obtain said coin-redemption fund he is hereby authorized to set aside from accruing surplus revenues, from time to time, such sums of standard gold and silver coin as with the redemption fund for the outstanding legal-tender notes now held in the Treasury will constitute the maximum percentage above stated on the outstanding legal-tender circulation and the Treasury-note circulation hereby authorized.

Sec. 4.  That all taxes on bank checks now authorized by law are hereby abolished after the expiration of six months from the passage of this act;  and section 5214 of the Revised Statutes, so far as it imposes taxes on the deposits and the capital stock of banking institutions and bankers, is hereby repealed as to all bankers and banks not issuing circulating notes.

National Banking Associations.

Mr. Voorhees [Daniel Wolsey Voorhees (September 26, 1827 -- April 10, 1897) Terre Haute Indiana, D;  studied law, admitted to the bar].  Mr. President, the bill under consideration is one to enable the national banks of the United States to extend their corporate existence.  A more important measure was never discussed in Congress in time of peace.  It takes hold upon the very formulations of free, popular government.  I do not care to enter into the details of the bill before the Senate;  it could not be so framed as to make me willing to become responsible for the existence of such a financial system.  A better system can be easily substituted and a worse one is hardly possible.  A brief glance at the conduct of the banks during the last year and a half is all that I can indulge in in at this time, but it is sufficient to prove the truth of what I say.

In the closing days of the last Congress and of the last administration, the banks precipitated an issue upon the people which ought not to be forgotten on an occasion like this;  an issue so full of danger to constitutional liberty that it ought to be faithfully remembered now that they are asking a new and indefinite lease of power.

It is now more than twenty years since this Government first engaged in building up, fostering, and encouraging the present vast and overshadowing system of national banking.

No favor ever demanded by the banks has been withheld, no privilege denied, until now they constitute the most powerful moneyed corporation on the face of the globe.  Congress has heretofore on nearly all occasions abdicated its powers under the Constitution over the finances to the banks, except when called upon to legislate in their favor.  They have demanded the violation of legislative contracts with the people, and the demand has been granted, whereby their own gains and the people's burdens have been increased a thousand-fold beyond right and justice.  They have demanded the remission of all taxation on their bonds, and it has been conceded, thus leaving the poor to pay the taxes of the rich.  They have been fortified in their strongholds of moneyed caste and privilege by double lines of unjust laws, supplemented with, here a redoubt and there a ditch, to guard them from the correcting hand of popular indignation, until now, deeming themselves impregnable, they bully and defy the Government.

Sir, the Forty-sixth Congress expired and passed into history on the 4th day of March, 1881, and it will stand to its credit for all time to come that it departed from the general custom of former Congresses and enacted a law on the subject of the finances in the interest of the people.  Let it be engraven upon the minds of the tax-payers of this country that a Congress, Democratic in both branches, enacted a bill for the refunding of a large portion of the national debt, by virtue of which more than $12,000,000 a year would have been saved to the people in the reduction of interest.  Under the violent, arrogant, insolent dictation of the national banks, a Republican President vetoed this wholesome measure of economy and relief.

The resistance of the banks to the funding bill originated in no concern for the public interest.  Their hostility did not arise from a fear of its failure, or that bonds could not be sold bearing 3 per cent. interest.  On the contrary, the certainty of success in refunding at that rate aroused their opposition.  The fifth section of the bill startled all the mean and sordid selfishness of avarice, and inspired that inhuman and unpatriotic movement of the banks which overawed the Executive and nullified the will of Congress.  That section simply provided that for the purposes of banking, the banks should own and deposit the bonus authorized by the act, and draw 3 per cent. interest on them, the same exactly as others who might invest in bonds.  Against this requirement the banks and the organs of the banks broke forth in a widespread, thoroughly concerted, and defiant rebellion.  They speedily demonstrated that the means to coerce this Government were in their hands.

The banks, the creatures of the Government, found themselves able to compel the submission of the Government itself.  The method resorted to, in order to accomplish this result should fill every mind with alarm.  He who is willing to inflict misery and destruction on the innocent in the accomplishment of his revenge or his avarice is a wretch held in universal loathing.  A midnight robber, tearing up a railroad and wrecking a train freighted with sleeping and helpless travelers, is treated with sufficient mercy when hung to the nearest tree.  What shall be said of men who, for the sake of obstructing the passage of a law to which their avarice was opposed, conspired together, with cool deliberation, to throw the business of the country into confusion and panic, break down and paralyze trade, bring the industries of the country to a stand-still, stagnate commerce, deprive laborers of employment, create bankruptcy, and fill the homes of millions with desolation and sorrow ?

The story of Alexander the Great and the robber brought before him is familiar to all.  One was condemned to death because be was an ordinary highwayman and preyed in small sums on a few pictilus, while the other wore imperial purple with the pillage and spoils of whole races and countries in his hands.

The banks of the United States, gorged with legislative favors and swollen with their ill-gotten gains, determined to deprive the country of its currency and thus rob labor and property of their just values as a means by which to compel submission to their wishes.  They inaugurated the influence of distress.  They applied the thumb-screws of financial contraction to the business men of the country, in order that their cries of pain and apprehension might reach Congress and the Executive.  They relied on the appliances of torture to innocent victims in order that their sufferings might terrify and intimidate the Government.  They boldly assailed the prevailing prosperity of the country and proceeded to its overthrow.  Within a space of less than three weeks, the banks withdrew from circulation and retired over $19,000,000 as a revolt against the passage of the funding bill.  They openly threatened to continue this rapid and wholesale contraction of the currency until every channel of trade was dried up and financial ruin darkened the whole land unless the Government receded from its purposes and surrendered to their greed.  Already prices were falling;  already the crash of failures and bankruptcies were heard;  already the business of the country was seized with terror, and the first stages of a financial panic, when the veto of the Executive appeared as the white flag of a surrender to the banks on their own terms.

Everybody can now realize the danger of having clothed a vast, selfish, and soulless corporation with control over the volume of our currency.

We have constantly heard for some years past that the whole financial question ought to be driven out of Congress, that such a question was too profound and complicated for the comprehension of the representatives of the States and of the people.  It is true the Constitution expressly confides that question to Congress but the banks and their friends vehemently insist that the framers of the Constitution were mistaken in placing it there.  They declare that the regulation of the circulating medium, the quantity and the quality of money in use in the hands of the people ---that all-pervading, vital question which determines from day to day the values of the laborer, and the current prices of wheat, corn, cattle, pork, and cotton, should be withdrawn from popular influence and locked up in iron vaults beyond the reach of public opinion.

Sir the people created this Government, and, in theory at least, they still own all its powers.  Senators and members of the House are responsible to those who send them here, and they can be reached by a betrayed constituency.  At short intervals they can be superseded because of their attitude on any public question, and it is this responsibility on the part of Congress, this sublime principle of free government, this constitutional dependence of the power and majesty of public opinion from which the whole National Bank Association shrinks in terror.  To escape from its effects has been the task and the struggle of that tremendous corporation for years.  Chartered privileges, special legislation, sudden repeals, amendments, and nullifications of existing laws, surreptitious acts smuggled through Congress without the knowledge of the country, legislative surprises, congressional ambuscades, compulsory vetoes, perfidious breaches of plighted faith with the people, and a long period of dismal bankruptcy have been some of the means adopted by the banks to intrench themselves in supreme power over every interest of the people, and beyond the range of responsibility to the popular will.

By the act of January, 1875, supported by other legislation, they were given the unrestrained and unlimited power of contracting or expanding the currency at their own will.  If a stringency in the money market best suited the interests of the banks they were clothed with the power to make it.  If a depression of prices, stagnation of business, and the trembling throes of bankruptcy would bring money to their coffers they have but to contract their circulation, make money scarce, and the specter of distress will at once stalk through the land.  If, on the other hand, the banks can at times best replenish their profits by inflation, they have that power, too, in their hands.  Well might one of the great organs of the banking monopoly [the New York Tribune, January 11, 1878.] on a former occasion exclaim:

The machinery is now furnished by which in any emergency the financial corporations of the East can act together at a single day's notice, and with such power that no act of Congress can overcome or resist their decision.

Yes, the banks can act together at a single day's notice with such power that no act of Congress can overcome their decisions !  Sir, has this declaration a wholesome sound, a tone friendly to free institutions ?  A threat more deadly to the rights of the people of this Government was never uttered, either in peace or in war, during the whole course of American history;  and yet the events of the last eighteen months amply prove that this threat can be executed at any moment.  It was fully shown that the machinery did indeed exist for instant concert of action among the banks to enforce their decision against the will of Congress.  They moved together.  A bank in New England and a bank on the Wabash were found contracting the currency by retiring their circulation for the same purpose and on the same day.  Co-operation existed from one ocean to the other on the part of the money power against the beneficial legislation of Congress.  To such an amazing extent was the power of the banks displayed in their recent hostile movement against the funding bill that even the New York Herald was forced to utter the following note of alarm:

In the late Wall street flurry it was demonstrated that the national banks (no matter whether with or without concert) can suddenly depress values to any extent they please, carrying the rates of interest up to 300 or 400 per cent. a year, and that the only remedy for such a calamity is the bad remedy of manipulating the currency by the Secretary of the Treasury.  Such possibilities should not exist.  If we concede that the banks acted in self-defense without combination, that would not disprove the power of the banks to produce similar and greater disasters by combination.  When they have been proven to possess so much dangerous power, the business of the country cannot safely be left to their forbearance.  They must be restrained by the strong hand of the law.  While they should have every reasonable facility for withdrawing their circulation, they must not be allowed to do it without proper notice, nor without precautions against distress and panic.  Their present stupendous power to put on the screws is intolerable in a free country, and must be put under wholesome restrictions, which equally guard the convenience of the banks and the rights of the people.  We will not undertake to say where the line should be drawn ---that is a question for Congress;  but there will certainly be a widespread public clamor if the next Congress fails to apply a remedy.

Sir, with full and unrestricted power over the volume of currency, and, consequently, over all values, conceded to the banks, together with ample machinery by which in an emergency they can defy the passage of any act of Congress, what is left to the Government except an abject submission ?  This Government could not to-morrow go to war in defense of its flag, its honor, or its existence, without first asking permission to do so of the great financial corporations of the country.  If there was an invading force on our soil this hour Congress could not with safety or a show of success, declare war to repel it without first supplicating cowardly and unpatriotic capital, engaged in banking, not to contract the currency, withhold financial aid and leave the Army to starve.  In fact there is no measure of this Government, either in peace or in war, which is not wholly dependent on the pleasure of the banks.

This Government is at the mercy of its own creatures. It has begotten and pampered a system which is now its master.  The people have been betrayed into the clutches of a financial despotism which scorns responsibility and defies lawful restraint.  If it is claimed as some palliation for the banking system that out of the two thousand banks, and more, only two or three hundred openly and actively joined in the attempt to ruin the business of the country in order to defeat the funding bill, it is only necessary to observe that enough was done to accomplish the result, and not a bank was heard to protest against the conduct of its associates.  The movement was understood in banking circles throughout the United States, and reinforcements stood ready to support the attack, and compel the surrender of the Executive.

Sir, I am glad the mask is off;  I am glad the banks have displayed their dangerous powers and sinister purposes;  I am glad they have uncovered their batteries and given notice that they intend to rule or to ruin;  to rule the Government or to ruin the people, to control legislation or to put business to the rack.  I have faith in the intelligence and courage of the people and I rejoice that they now behold the monstrous pretensions of the money power without disguise.  This revelation of a conspiracy against the principles of popular government will more than compensate the American people for the defeat of the funding bill and the consequent loss of many millions a year.

Liberty is worth more than gold ---the liberty of the people to make laws for their own government without let or hinderance from corporation monopolies or from any other source whatever.  I believe the insulting, threatening, and tyrannical issue made by the banks will be sternly met by the people.  I appeal to the toiling, tax-paying millions to see to it that their representatives in Congress resume and retain hereafter their constitutional powers over the money of the country.  I appeal to them to compel the restoration to Congress of all those great and vital powers over the finances, which have heretofore been abandoned to the banks.  The American people are not without experience on such an issue.

There is a notable precedent for the present attitude of the banks.  Fifty years ago a great financial corporation attempted to dictate the policy of this Government and to browbeat and coerce the administration of its affairs.  The United States Bank, a half century ago, assumed the same defiant attitude toward the legislative and executive departments of the Government now maintained by the national banks of the present day.  The United States Bank of the past was invested with the same dangerous powers over the currency now possessed and exercised by an association of more than two thousand banks.  Benton believed this power belonged to Congress, and ought to remain there.  Speaking on this point in the Senate, in 1834, he said:

the government ought not to delegate this power [of regulating currency], if it could.  It is too great a power to be trusted to any banking company whatever, or to any authority but the highest and most responsible which is known to our form of government.  The government itself ceases to be independent — it ceases to be safe — when the national currency is at the will of a company.  The government can undertake no great enterprise, neither of war nor peace, without the consent and co-operation of that company;  it cannot count its revenues for six months ahead without referring to the action of that company — its friendship or its enmity — its concurrence or opposition — to see how far that company will permit money to be plenty, or make it scarce;  how far it will let the moneyed system go on regularly, or throw it into disorder;  how far it will suit the interests, or policy, of that company to create a tempest, or to suffer a calm, in the moneyed ocean.  The people are not safe when a company has such a power.  The temptation is too great — the opportunity too easy — to put up and put down prices;  to make and break fortunes;  to bring the whole community upon its knees to the Neptunes who preside over the flux and reflux of paper.  All property is at their mercy.

Such, sir, is the picture drawn by Thomas Benton of the helpless dependence of the Government and the people on the old United States Bank, when it was fighting with a high hand, as the banks are now, to perpetuate its mastery.  How clearly and truthfully these sentences of the great Missourian depict the present condition of the country ?  The only change he would make, could he speak now, would be to declare a greater danger to the liberties of the people from the power of incorporated money than ever confronted him in his lifetime.  One bank then, located at Philadelphia, with but few branches, assumed supreme control over the currency of the people;  now there are more than two thousand, located in nearly all the counties in the United States, reaching every neighborhood, stretching their influences into every household, and stimulating or depressing for their own interests the fluctuating pulse of every public or private business enterprise.  What was then a comparatively circumscribed and limited influence in the affairs of the people is now as general and as penetrating in every American home as the light of the sun.

Benton in his Thirty Years' View, arraigning the national banks of his day, says that "experience had shown such an institution to be a political machine, adverse to free government, mingling in the elections and legislation of the country, corrupting the press, and exerting its influence in the only way known to the moneyed power, by corruption."The experience of the present day is the same, only on a larger scale.  The political party and the public men enlisted under the banner of the banks can and do flood the polls with money on election day.  The liberties of this Republic will not long survive the triumph of a political organization bottomed on the corrupt use of incorporated capital.  The venality of ancient Rome was not a more certain prelude to her downfall than the combination of partisan politics and corporation wealth is to the overthrow of American institutions.

The methods adopted by our present national banking system are also similar to those pursued by the United States Bank in its rebellion against the Government.  The contest between the United States Bank and the United States Government commenced in 1829 and terminated in 1836, covering a period of seven years, as long as the American Revolution, and involving results as important to the right and power of the people to govern themselves.  The charter of the bank was to expire in 1836 and Andrew Jackson, who was a magnanimous foe, gave notice in 1829 that it should never be renewed with his consent.  The war at once opened.  A torrent of incessant abuse was at once poured on General Jackson and his supporters by the bank and its stipendiaries.  The newspapers of that period show that he and his followers were all stigmatized as hopelessly ignorant on the subject of the finances, and bent on destroying the public credit.  These charges have a familiar sound and are in daily use now, as they wore fifty years ago, against all who dare oppose the insolent pretensions of the banks.  Benton, in speaking of Jackson and his friends, says:

Under this sense of duty, and under the obligation of this oath, President Jackson had recommended to Congress the non-renewal of the bank charter, and the substitution of a different fiscal agent for the operations of the government ---if any such agent was required.  And with his accustomed frankness, and the fairness of a man who has nothing but the public good in view, and with a disregard of self which permits no personal consideration to stand in the way of a discharge of a public duty, he made the recommendation six years before the expiration of the charter, and in the first message of his first term;  thereby taking upon his hands such an enemy as the Bank of the United States, at the very commencement of his administration.  That such a recommendation against such an institution should bring upon the President and his supporters, violent attacks, both personal and political, with arraignment of motives as well as of reasons, was naturally to be expected;  and that expectation was by no means disappointed.  Both he and they, during the seven years that the bank contest (in different forms) prevailed, received from it ---from the newspapers and periodical press in its interest, and from the public speakers in its favor of every grade--- an accumulation of obloquy, and even of accusation, only lavished upon the oppressors and plunderers of nations ---a Verres, or a Hastings.  This was natural in such an institution.

It seems to be as natural now as then in similar institutions.  The comprehensive sneer was also a favorite weapon against General Jackson by the controllers of the bank.  It is curious and most instructive now to examine the report of a meeting of the directors of the United States Bank, called to consider a paper read by Jackson to his Cabinet in his official capacity as President.  The report was fashioned into a memorial and presented to Congress.  In commenting on an official act of the President of the United States, the bank does not in this memorial deign to speak of him as President.  It refers to the document bearing his official signature as "a paper signed 'Andrew Jackson,' purporting to have been read to a Cabinet," placing his name between inverted commas to mark the depth of its contempt.

"Of the paper itself, and of the individual who signed it," as the President was designated, the authors of this memorial, the committee of bank directors, say "it is difficult to speak with the plainness by which such a document, from such a source, should be described without wounding their own self-respect."

There was in fact no form of insolence spared and no degree of menace omitted.  The practices of the bully, however, were lost upon Andrew Jackson.  He launched his immortal veto, in the name of the people, against tho continued existence of a monster which had turned to rend and destroy the power which had created it.  He removed the public funds from its custody into safer hands.  The bank and its branches, in the mean time, were resorting in all quarters of the country to the influence of distress.

With their power over the money of the country they created panic and dismay in all business circles and dried up the fountains of prosperity.  They impoverished millions of innocent men, women, and children in order by their piteous cries to force Congress and the President into their support.  Thousands of distress meetings, as they were called, convened throughout the country, listened to inflammatory speeches, and adopted passionate prayers to Congress for relief by sustaining the bank against the President.  "All this distress and alarm, real and factitious, was according to the programme which proscribed it, and easily done by the bank and its branches in the States, its connection with money dealers and brokers, its power over its debtors, and its power over the thousand local banks which it could destroy by an exertion of its strength or raise up by an extension of its favor."

There is hardly in human history a page more wicked and infamous than that which records the efforts of the old United States Bank to perpetuate its power by the misery of the people, or to involve the country in its own ruin if it had to fall.  The past has already shown, and the future will still further prove, that the national banks of today believe in the same policy of coercion toward the Government, and will resort to it without compunction whenever an issue is joined between the greed of incorporated wealth on the one hand and the business interests of the country on the other.  Sir, others may vote to perpetuate the corporate existence of this hydra of oppression and corruption, with its more than two thousand heads reared up all over the land, armed with teeth, and ready to strike and destroy the prosperity of the country and the Government itself whenever its arrogance and supremacy are molested or interfered with by the will of the people legitimately expressed in Congress;  I can do no such thing.  I am aware there are many who blindly believe that the national banking system is the perfection of wisdom, and that when it fails the sun, moon, and stars will fall out of the heavens and the earth be wrapped in darkness.

On the contrary, it is not only the most dangerous system of finance to the rights of the people ever known in a free government, but it has proven itself likewise the most expensive, and it has not a single element of safety, except that which is directly guaranteed by the Government.  It has not only shown its power and its exceeding willingness to convulse and agonize every business and branch of labor in the whole land to increase its enormous gains;  it has done more that calls for special condemnation.  Reliable statistics prove that the national banks of the United States have received from the pockets of the tax-payers into their own, for the lucrative privilege of acting as mere agents to put the money of the Government into circulation, almost enough to have paid the entire national debt [~$3,000million].  Is there any necessity thus to plunder the people in order to furnish them a circulating medium ?  Is there any reason for such oppression and robbery except that the few are to be enriched at the expense of the many ?  Am I to be answered that the safety, security, and stability of our currency justify such a system of domination and spoliation as this, and that those desirable ends can be obtained in no other way ?

Sir, what quality of safety do the banks confer upon the money of the American people at this time ?  Is it the individual responsibility of those engaged in banking ?  In the hour of strain, emergency, or panic, that would not be worth more nor last longer than a wisp of straw before the fires of the prairie.  It is the potential voice of the Government itself, pledging the honor and the resources of fifty million inhabitants for the safety, security, and stability of its currency of all kinds, which has given value and circulation to every dollar ever pushed across the counter of a national bank.  It is the Government which the people see and trust behind that counter, and not the banker, cashier, teller, or clerk.  The Government guarantees the bonds on which the whole structure of banking rests;  it guarantees every dollar of bank notes and of greenbacks handed to the banks to be put in circulation;  and without its colossal responsibility the currency of the country of every kind and description, would wither and perish in an hour.

Why then should we longer foster and endow with hundreds and thousands of millions a system which brings not one atom of strength or reliability to the money it puts in circulation;  which adds nothing of value or character to the currency of the country;  which deranges the business of all classes by contracting or expanding the amount of money in circulation at its own pleasure, and for its own interests;  which holds the issues of general bankruptcy in its hands, which has not hesitated to resort to the appliances of panic and popular suffering for its own selfish ends;  which defies the will of the people, controls legislation, and appears on the stage of public affairs more like a dictator in the degenerate days of Rome, than an obedient creature of law, in a republic of liberty and equality.

I would not lightly nor hurriedly nor without due consideration for the future call for changes in any branch of the public services but in this instance I find the line of duty, as it appears to me, free from difficulty.  The amendment to the pending bill of which the Senator from Missouri, [Mr. Vest] worthy successor to Benton, has given notice, meets my approbation, and presents the basis of a financial system insuring the strength, stability, and equality of our currency, without tribute from tax-payers to corporations, and without danger to business, to the purity of elections, or the independent action of the various departments of the Government.  I call for its reading by the Clerk.

The Acting Secretary.  Strike out all after the enacting clause, and insert the following:

That whenever the charter of any national banking association is about to expire, or whenever any such association shall, by a vote of its shareholders owning two-thirds of its stock, determine to go into liquidation, and the bonds deposited by such bank to secure its circulation, or any part thereof, shall consist of 5 or 6 per cent. bonds now continued at 3.5 per cent. interest, and redeemable at the pleasure of the United States, the Secretary of the Treasury is hereby authorized to exchange the notes hereinafter authorized for the bonus so held by said banking association at par and accrued interest, or he may exchange the notes aforesaid for standard gold or silver coin, and redeem said bonds with coin; and thereafter the circulating notes of said bank shall be redeemed at the Treasury of the United States, and when so redeemed said circulating notes shall be canceled and destroyed.  And any national banking association whose circulation is secured by bonds of the United States other than those above described, and whose charter is about to expire, or whose stockholders, by a vote of two-thirds thereof in amount, shall determine to go into liquidation, shall proceed, as provided in sections 5221, 5222, 5224, and 5225 of the Revised Statutes, by making a deposit of the notes hereinafter authorized, legal-tender notes, or gold or silver coin, and thereafter the circulating notes of such banking association shall be redeemed at the Treasury with the notes hereinafter authorized.

Sec. 2.  That the Secretary of the Treasury is hereby authorized and directed to cause to be printed and engraved Treasury notes of the United States to an amount not exceeding the present outstanding national-bank note circulation, with such devices and inscriptions as he may direct and approve, in denominations of ten, twenty, fifty, one hundred, and one thousand dollars, and which shall be made payable on demand, at the office of the assistant treasurer in the city of New York, in standard gold or silver coin, when presented in sums of not less than $100;  and said notes shall be signed by the Treasurer and countersigned by the Register of the Treasury, of their signatures thereto engraved.  Said Treasury notes shall be receivable and payable for all dues, demands, and claims for which national-bank notes are now receivable and payable.

Sec. 3.  That no national banking association shall hereafter be organized;  nor shall any circulating notes be hereafter issued to any bank now organized, except in redemption of mutilated, worn, and defaced notes issued by such banking institutions already organized, and outstanding at the passage of this act;  nor shall any existing banking association increase its circulation, or the amount of Treasury notes authorized by this act exceed at anytime the amount of national-bank notes outstanding at the passage of this act.  And for the purpose of the prompt redemption of said Treasury notes the Secretary of the Treasury shall maintain a redemption fund, in standard gold and silver coin, of not exceeding 25 and not less than 15 per cent. of the outstanding issue of said Treasury notes;  and in order to obtain said coin redemption fund he is hereby authorized to set aside from accruing surplus revenues from time to time such sums of standard gold and silver coin as with the redemption fund for the outstanding legal-tender notes now held in the Treasury will constitute the maximum percentage above stated on the outstanding legal-tender circulation and the Treasury-note circulation hereby authorized.

Mr. Voorhees.  There maybe some points in which this amendment, or substitute rather, might be improved, but in the main it is sound, wise, and in the interest of the business and laboring people of the country.  Its provisions are simple and prove themselves to be safe and practicable.  It calls for the exercise of no more power and no different kind of power on the part of the Government than is now exercised on the subject of the finances.  The second section of this substitute provides that the bank-note circulation now outstanding shall give place to an equal amount of Treasury notes of the United States, redeemable on demand in standard gold or silver coin.  With the Treasury notes thus authorized, or with the coin into which they would always be exchangeable at par, the bonds now deposited to secure bank-note circulation are to be paid off and the interest account stopped.  By the third section, no more national banks are to be organized, and the substitute, taken as a whole, is an extinction of the system.

The Government, however, would only do directly under the measure proposed by the Senator from Missouri what it is now doing indirectly at an enormous expense through a favored class and with constant peril to the general welfare.  It would by virtue of this measure guarantee the redemption of its own currency, as it does now.  The same responsibility which now sustains the credit of the greenback, the bank note, the silver certificate, as well as gold and silver money, is here invoked for the support of the Treasury note.  The safe and sure foundation on which our currency rests, the guarantee of the Government, is not here disturbed;  a cumbrous, expensive, dangerous, intermediate agency between the Government and the people is simply eliminated from our financial system;  the national banks are gradually abolished.  It is a consummation devoutly to be wished.

Sir, it may be that it is not for us to accomplish this great work of financial reform now, but the fate which the national banking association has been so long provoking is as certain to overtake it, in the near future, as that man is capable of self-government.  Of this fact I have not a doubt.  The laboring masses are not patient in any country, much less this, under the domination of an aristocracy based on idle wealth, organized to reap golden harvests of interest, and to pay no taxes.

The old United States Bank fell because it rebelled against the instincts of self-government in the hearts of the American people, and it fell like Lucifer, never to hope again.  It threatened as the banks now threaten, it denounced the representatives of the people as they are now denounced, it played the Pharisee and boasted of its superior wisdom and virtue as its descendants do now;  it sneered, and mocked, and scoffed at the brightest names in American history, and at the Constitution itself, but an aroused and enlightened public opinion at last trampled it to the earth in ruins.  And there is nothing more certain to my mind than that sooner or later the people of this country, awake to their rights and tired of imposition, will rise against the fatal pretensions of the present system of national banks, and, instead of extending and perpetuating their corporate existence, tear their  charters to pieces.  The American people are slow to be moved to extreme measures, even for their own safety, but my belief is that they will not much longer look calmly on while the creatures of their bounty and toleration obstruct beneficial legislation, dictate to Congress what laws may be enacted, and to the Executive when to interpose his veto.

My reliance for the future liberties of this country is upon the thrifty, active, productive business classes;  upon those whose morning prayer is, "Give us this day our daily bread," and who do an honest day's work to procure it;  upon the farmer, the mechanic, and all such as labor to add something to the wealth and progress of the world.  There is no hope in any other quarter.  If the historian shall ever be called upon to record the decline and fall of the American republic and to assign the causes which led to its overthrow, he will place in the foreground those vast corporations, financial and otherwise, now in existence, irresponsible to the people, yielding neither obedience nor support to the Government except upon the terms of masters.  I hope, however, for better things;  I appeal to the people, the whole people;  irrespective of party names, to stand firmly by their right, to govern themselves in all things;  in matters of finance as well as all other matters which pertain to their welfare.  If the people hold fast to this principle, all will be well;  if they do not, an will be lost.  If they abdicate to the banks, they will place themselves and their children at the mercy of the most grasping, lawless, and odious oligarchy ever known among the darkest curses inflicted on the human race.  Indeed, it is claimed that the abdication is already complete;  that the banks can extend their existence without the passage of the pending bill;  that its only use to them is to make it easier for them to do so, and to confer upon them some additional profits and privileges.  This may all be true.  If so, it is all the more incumbent on the American people to arouse to vigilant action;  and it is all the more important that the substitute, and not the pending bill should be enacted into law.

Mr. Sherman.  All banks under existing law can withdraw their circulation.  There is no law which requires a bank to issue any given amount of circulation at all, and under existing law they can withdraw their circulation;  but this bill restrains them in the withdrawal of their circulation.  Another section of the bill provides that not more than $3,000,000 shall be withdrawn during any month by all the banks of the United States, and this, it is supposed, cuts up by the roots the attempted sudden withdrawal of bunk circulation.

I do not care whether the eighth section is in or out.  If the section is stricken out entirely, as suggested by my friend from Vermont, the result would be that this discrimination against the small national banks of $50,000 capital would still continue;  the old law would stand requiring them to buy $30,000 of bonds out of their capital of $50,000, while if this amendment prevails, they will only have to buy $16,666 of bonds instead of $30,000.

That is the way I understand it.  But as I said before, as this is a bill to accomplish a particular object, that is, to authorize banks to renew their organization, I do not think it very important whether the section is in or out;  I do not suppose it will make very much difference.  If this section is kept in, these small banks with a capital of $50,000 will be eased up a little.  They will have to buy about $14,000 less of bonds.  It does not change the amount of bonds held by a bank with a capital of $100,000, because the present law requires all banks up to a certain grade of capital to have at least one-third of their capital stock in bonds.

I think myself this section might have been made a little more clear by confining it only to banks having a minimum of circulation;  but it was thought that that would answer the same purpose.  I think it does.  Now, I do not care whether it is in or not, but that is the only legal effect of the operation of the amendment.

Mr. Sherman.  Under existing laws a bank can now reduce its circulation and withdraw its bonds.  If you wish to prevent that, you must have broader affirmative legislation.  Under existing law a bank with any capital whatever may withdraw its bonds upon withdrawing its circulation or depositing lawful money in place of the circulation.   That is the law now.  This bill, however, steps in and says that all the banks shall not do this to an extent greater than $3,000,000 a month;  and let me remind my friend from Indiana, [Mr. Voorhees] who talked a while ago about the facility with which banks may reduce their circulation, that that was a provision adopted on the motion of our Greenback friends in those good old times in 1874, when almost everybody was in favor of a flexible currency, withdrawing the currency or expanding the currency according to the demands of trade;  and that proposition, which I thought was a bad one and which I resisted at the time, was the means by which the banks did undertake to withdraw their circulation whenever they thought they could speculate a little.  But this bill cuts that up by the roots by declaring that the total amount of circulation to be withdrawn during any one month shall be only $3,000,000.

I repeat so that Senators may not misunderstand it ---and if I am mistaken about it I wish the Senator from Missouri would point it out--- that the only effect of this section now is to authorize a bank of $50,000 capital, which now must deposit $30,000 in bonds, instead of that to deposit $16,666;  that is one-third of $50,000.  The same role of one-third of the capital stock applies still to banks above $50,000 capital.  As to that, it is a question of public policy whether it is best on the whole to encourage the formation and organization of these small banks.  On that there is a difference of opinion.  You will find in all the large cities that they are utterly opposed to the organization of these small banks.  It is rather for the country people, as they are called, the people in small towns, that this provision is made, and I suppose the gentleman who introduced it in the House probably represents a number of small banks.  As the Senator from Missouri properly said, the great body of the banks of this country have a capital of $100,000 or under.  They cannot get under $50,000.  I think he stated that there were some twelve hundred or thirteen hundred, but I think he is mistaken about that, though I would not say.  I think probably it would be correct to say that there are twelve hundred or thirteen hundred banks under $150,000 capital, but I think not that many with $100,000 capital or less.  But whether there be more or less, the only benefit of this section to any of these small banks would be to enable them to withdraw a small portion of their bonds in case they have no circulation.  Where they have circulation the old law prevails that their circulation must be 10 per cent. less than the amount of bonds deposited.

Mr. Vest.  The National Bank of the State of Missouri was not any better, because no climatic influence affects national banks;  they are the same everywhere, in every State.

Here was a great institution held up as a sample of the system.  If you were asked in New York or in New Jersey for an illustration of the stability, the solidity, the blessing of the national-bank system, they pointed to the massive structure across the river, the Merchants' National Bank of Newark.  It had been examined over and over again and up to a few weeks before the development was made.  It had $500,000 capital, $400,000 surplus, $2,000,000 on deposit, and not one dollar in the vaults;  and the excuse made by the friends of the national banks, with all their censorious boasting about the inestimable blessing of this system, is that a rascally cashier was enabled to impose upon the officers of the Government.

Mr. President, it simply illustrates what is known by every sensible man in this country, that wherever there are rascally officers of a bank, the national-bank system no more protects the depositors than any other system.  I grant you the circulation of the national banks is well secured, but before this debate closes I want some Senator on that side of this Chamber who defends this system, the Senator from Ohio, the Senator from Iowa, or any other of the champions of the national banks, to tell me where there is one particle of superior advantage or value in the national-bank circulation over the greenbacks of the country.

I assert here to-day, and I can prove it mathematically, that the greenback circulation is better than the national-bank circulation, and always has been and always will be.  What gives stability or validity or value to the circulation of the national banks ?  It is the name and credit of the United States;  it is the strong arm of the country, the resources, the climate, the soil, the water, the mountains, and the lakes of this great country owned by fifty millions of people.  The greenback circulation comes directly from them.  The national-bank circulation is simply the paper of the Government based on the credit of the Government loaned to a few gentlemen for banking purposes.  The greenbacks of the country are good for all dues, public and private.  The national-bank circulation is limited in its legal-tender qualities;  and yet we hear over and over that this national-bank system, its circulation being its great basis, its chief value, is to be retailed, as I have said, to all the little villages and all the little towns and hamlets in the country as a great blessing, and the greenbacks and the silver of the country are to be stricken down in order to make way for the circulation of the national banks.

The only difference, as the Senator says, in the principle of this eighth section as it came from the House and the amendment now offered, is simply the difference between $10,000 and $16,666, a difference in amount.  The principle is the same, and just as objectionable.

Mr. Vest.  The assumption is always made, when ignorance will concede it, that there is something celestial and peculiar about the national banking system which gives additional safeguards that no other system has given.  Where is the State bank which has solvent stockholders which, according to the law of any State, would not pay the depositors ?  What is there in the national banking law that makes it so superior ?  The Senator asks me to point to a bank that has ever paid so much as the Merchants' National Bank of Newark.  Show me a State bank with solvent stockholders that has not paid every dollar, too.  It was not the peculiar virtue of the national banking law;  it was the peculiar solvency of the owners and stock-holders of the Merchants' Bank at Newark ---that, and nothing more and nothing less.

Mr. President, strip off those pretenses.  I want the Senators on the other side to answer the question that I shall continue to put, and I propose to put it as long as the banks are in existence, where is the superiority of your national bank circulation (for that is your chief argument) over the greenback circulation of this country ?  Point me out one feature of superiority.  Point me to one single scintilla of argument that shows that your national banks give to the people of this country a money superior to the greenback circulation, which is a legal tender for everything and everybody.  Until it is answered, the argument goes against the system.