Thirty Years' View (Vol. I of 2)

Mr. B. made his acknowledgments to the great apostle of American liberty (Mr. Jefferson), for the wise, practical idea, that the value of gold was a commercial question, to be settled by its value in other countries. He had seen that remark in the works of that great man, and treasured it up as teaching the plain and ready way to accomplish an apparently difficult object; and he fully concurred with the senator from South Carolina [Mr. Calhoun], that gold, in the United States, ought to be the preferred metal; not that silver should be expelled, but both retained; the mistake, of any, to be in favor of gold, instead of being against it.

IV. Mr. B. believed that it was the intention and declared meaning of the constitution, that foreign coins should pass currently as money, and at their full value, within the United States; that it was the duty of Congress to promote the circulation of these coins by giving them their full value; that this was the design of the States in conferring upon Congress the exclusive power of regulating the value of these coins; that all the laws of Congress for preventing the circulation of foreign coins, and underrating their value, were so many breaches of the constitution, and so many mischiefs inflicted upon the States; and that it was the bounden duty of Congress to repeal all such laws; and to restore foreign coins to the same free and favored circulation which they possessed when the federal constitution was adopted.

In support of the first branch of his first position Mr. B. quoted the words of the constitution which authorized Congress to regulate the value of foreign coins; secondly, the clause in the constitution which authorized Congress to provide for punishing the counterfeiting of current coin, in which term, foreign coin was included; thirdly, the clause which prohibited the States from making any thing but gold and silver coin a tender in payment of debts; a clause which did not limit the prohibition to domestic coins, and therefore included foreign ones. These three clauses, he said, were concurrent, and put foreign coin and domestic coin upon the same precise footing of equality, in every particular which concerned their current circulation, their value, and their protection from counterfeiters. Historical recollections were the next evidence to which Mr. B. referred to sustain his position. He said that foreign coins were the only coins known to the United States at the adoption of the constitution. No mint had been established up to that time. The coins of other nations furnished the currency, the exclusive metallic currency, which the States had used from the close of the Revolutionary War up to the formation of this federal government. It was these foreign coins then which the framers of the constitution had in view when they inserted all the clauses in the constitution which bear upon the value and current circulation of coin; its protection from counterfeiters, and the prohibitory restriction upon the States with respect to the illegality of tenders of any thing except of gold and silver. To make this point still plainer, if plainer it could be made, Mr. B. adverted to the early statutes of Congress which related to foreign coins. He had seen no less than nine statutes, passed in the first four years of the action of this federal government, all enacted for the purpose of regulating the value, protecting the purity, and promoting the circulation of these coins. Not only the well-known coins of the principal nations were provided for in these statutes, but the coins of all the nations with whom we traded, how rare or small might be the coin, or how remote or inconsiderable might be the nation. By a general provision of the act of 1789, the gold coins of all nations, which equalled those of England, France, Spain and Portugal, in fineness, were to be current at 89 cents the pennyweight; and the silver coins of all nations, which equalled the Spanish dollar in fineness, were to be current at 111 cents the ounce. Under these general provisions, a great influx of the precious metals took place; doubloons, guineas, half joes, were the common and familiar currency of farmers and laborers, as well as of merchants and traders. Every substantial citizen then kept in his house a pair of small scales to weigh gold, which are now used by his posterity to weigh physic. It is a great many years – a whole generation has grown up – since these scales were used for their original purpose; nor will they ever be needed again for that use until the just and wise laws of '89 and '90, for the general circulation of foreign coins, shall again be put in force. These early statutes, added to historical recollections, could leave no doubt of the true meaning of the constitution, and that foreign coins were intended to be for ever current within the United States.

With this obvious meaning of the constitution, and the undeniable advantage which redounded to the United States from the acquisition of the precious metals from all foreign nations, the inquiry naturally presents itself, to know for what reason these coins have been outlawed by the Congress of the United States, and driven from circulation? The inquiring mind wishes to know how Congress could be brought, in a few short years after the adoption of the constitution, to contradict that instrument in a vital particular – to repeal the nine statutes which they had passed in favor of foreign coin – and to illegalize the circulation of that coin whose value they were to regulate, and whose purity to protect?

Sir, said Mr. B., I am unwilling to appear always in the same train, tracing up all the evils of our currency to the same fountain of mischiefs – the introduction of the paper system, and the first establishment of a federal bank among us. But justice must have its sway; historical truth must take its course; facts must be told; and authentic proof shall supply the place of narrative and assertion. We ascend, then, to the year '91 – to the exhibition of the plan for the support of public credit – and see in that plan, as one of its features, a proposition for the establishment of a national mint; and in that establishment a subsidiary engine for the support of the federal bank. We have already seen that in the proposition for the establishment of the mint, gold was largely undervalued; and that this undervaluation has driven gold from the country and left a vacuum for the circulation of federal bank notes; we are now to see that the same mint establishment was to give further aid to the circulation of these notes, by excluding foreign coins, both gold and silver, from circulation, and thus enlarging the vacuum which was to be filled by bank paper. This is what we are now to see; and to see it, we will look at the plan for the support of public credit, and that feature of the plan which proposes the establishment of a national mint.

Mr. B. would remark, that four points were presented in this plan: 1. The eventual abolition of the currency of foreign coins; 2. The reduction of their value while allowed to circulate; 3. The substitution of domestic coins; and, 4. The substitution of bank notes in place of the uncurrent and undervalued foreign coins. Such were the recommendations of Secretary Hamilton; and legislative enactments quickly followed to convert his recommendations into law. The only power the constitution had given to Congress over foreign coins, was a power to regulate their value, and to protect them from debasement by counterfeiters. It was certainly a most strange construction of that authority, first, to underrate the value of these coins, and next, to prohibit their circulation! Yet both things were done. The mint went into operation in 1794; foreign coins were to cease to be a legal tender in 1797; but, at the end of that time, the contingencies on which the Secretary calculated, to enable the country to do without foreign coins, had not occurred; the substitutes had not appeared; the mint had not supplied the adequate quantity of domestic coin, nor had the circulation of bank notes become sufficiently familiar to the people to supersede gold. The law for the exclusion of foreign coins was found to be impracticable; and a suspension of it for three years was enacted. At the end of this time the evil was found to be as great as ever; and a further suspension of three years was made. This third term of three years also rolled over, the supply of domestic coins was still found to be inadequate, and the people continued to be as averse as ever to the bank note substitute. A fourth suspension of the law became necessary, and in 1806 a further suspension for three years was made; after that a fifth, and finally a sixth suspension, each for the period of three years; which brought the period for the actual and final cessation of the circulation of foreign coins, to the month of November, 1819. From that time there was no further suspension of the prohibitory act. An exception was continued, and still remains, in favor of Spanish milled dollars and parts of dollars; but all other foreign coins, even those of Mexico and all the South American States, have ceased to be a legal tender, and have lost their character of current money within the United States. Their value is degraded to the mint price of bullion; and thus the constitutional currency becomes an article of merchandise and exportation. Even the Spanish milled dollar, though continued as a legal tender, is valued, not as money, but for the pure silver in it, and is therefore undervalued three or four per cent. and becomes an article of merchandise. The Bank of the United States has collected and sold 4,450,000 of them. Every money dealer is employed in buying, selling, and exporting them. The South and West, which receives them, is stripped of them.

Having gone through this narrative of facts, and shown the exclusion of foreign coins from circulation to be a part of the paper system, and intended to facilitate the substitution of a bank note currency, Mr B. went on to state the injuries resulting from the measure. At the head of these injuries he was bound to place the violation of the constitution of the United States, which clearly intended that foreign coins should circulate among us, and which, in giving Congress authority to regulate their value, and to protect them from counterfeiters, could never have intended to stop their circulation, and to abandon them to debasement. 2. He denounced this exclusion of foreign coins as a fraud, and a fraud of the most injurious nature, upon the people of the States. The States had surrendered their power over the coinage to Congress; they made the surrender in language which clearly implied that their currency of foreign coins was to be continued to them; yet that currency is suppressed; a currency of intrinsic value, for which they paid interest to nobody, is suppressed; and a currency without intrinsic value, a currency of paper subject to every fluctuation, and for the supply of which corporate bodies receive interest, is substituted in its place. 3. He objected to this suppression as depriving the whole Union, and especially the Western States, of their due and necessary supply of hard money. Since that law took effect, the United States had only been a thoroughfare for foreign coins to pass through. All that was brought into the country, had to go out of the country. It was exported as fast as imported. The custom-house books proved this fact. They proved, that from 1821 to 1833, the imports of specie were $89,428,462; the exports, for the same time, were $88,821,433; lacking but three quarters of a million of being precisely equal to the imports! Some of this coin was recoined before it was exported, a foolish and expensive operation on the part of the United States; but the greater part was exported in the same form that it was received. Mr. B. had only been able to get the exports and imports from 1821; if he could have obtained those of 1820, and the concluding part of 1819, when the prohibitory law took effect, the amount would have been about ninety-six millions of dollars; the whole of which was lost to the country by the prohibitory law, while much of it would have been saved, and retained for home circulation, if it had not been for this law. The loss of this great sum in specie was an injury to the whole Union, but especially to the Western States, whose sole resource for coin was from foreign countries; for the coinage of the mint could never flow into that region; there was nothing in the course of trade and exchanges, to carry money from the Atlantic States to the West, and the mint, if it coined thousands of millions, could not supply them. The taking effect of the law in the year 1819, was an aggravation of the injury. It was the most unfortunate and ruinous of all times for driving specie from the country. The Western banks, from their exertions to aid the country during the war, had stretched their issues to the utmost limit; their notes had gone into the land offices; the federal government turned them over to the Bank of the United States; and that bank demanded specie. Thus, the necessity for specie was increased at the very moment that the supply was diminished; and the general stoppage of the Western banks, was the inevitable and natural result of these combined circumstances.

Having shown the great evils resulting to the country from the operation of this law, Mr. B. called upon its friends to tell what reason could now be given for not repealing it? He affirmed that, of the two causes to which the law owed its origin, one had failed in toto, and the other had succeeded to a degree to make it the curse and the nuisance of the country. One reason was to induce an adequate supply of foreign coins to be brought to the mint, to be recoined; the other to facilitate the substitution of a bank note currency. The foreign coins did not go to the mint, those excepted which were imported in its own neighborhood; and even these were exported nearly as fast as recoined. The authority of the director of the mint had already been quoted to show that the new coined gold was transferred direct from the national mint to the packet ships, bound to Europe. The custom-house returns showed the large exportation of domestic coins. They would be found under the head of "Domestic Manufactures Exported;" and made a large figure in the list of these exports. In the year 1832, it amounted to $2,058,474, and in the year 1833, to $1,410,941; and every year it was more or less; so that the national mint had degenerated into a domestic manufactory of gold and silver, for exportation to foreign countries. But the coins imported at New Orleans, at Charleston, and at other points remote from Philadelphia, did not go there to be recoined. They were, in part, exported direct from the place of import, and in part used by the people as current money, in disregard of the prohibitory law of 1819. But the greater part was exported – for no owner of foreign coin could incur the trouble, risk, and expense, of sending it some hundred or a thousand miles to Philadelphia, to have it recoined; and then incurring the same expense, risk, and trouble (lying out of the use of the money, and receiving no interest all the while), of bringing it back to be put into circulation; with the further risk of a deduction for want of standard fineness at the mint, when he could sell and export it upon the spot. Foreign coins could not be recoined, so as to supply the Union, by a solitary mint on the Atlantic coast. The great West could only be supplied from New Orleans. A branch of the mint, placed there, could supply the West with domestic coins. Mexico, since she became a free country, has established seven mints in different places, because it was troublesome and expensive to carry bullion from all parts of the country to be coined in the capital; and when coined there, there was nothing in the course of trade to carry them back into the country; and the owners of it would not be at the expense and trouble of carrying it back, and getting it into circulation, being the exact state of things at present in the gold mines of the Southern States. The United States, upon the same principles and for the same reasons, should establish branches of the mint in the South, convenient to the gold mine region, and at New Orleans, for the benefit of that city and the West. Without a branch of the mint at New Orleans, the admission of foreign coins is indispensable to the West; and thus the interest of that region joins itself to the voice of the constitution in demanding the immediate repeal of all laws for illegalizing the circulation of these coins, and for sinking them from their current value as money, to their mint value as bullion. The design of supplying the mint with foreign coins, for recoinage, had then failed; and in that respect the exclusion of foreign coins has failed in one of its objects – in the other, that of making room for a substitute of bank notes, the success of the scheme has been complete, excessive, and deplorable.

Foreign coins were again made a legal tender, their value regulated and their importation encouraged, at the expiration of the charter of the first Bank of the United States. This continued to be the case until after the present Bank of the United States was chartered; as soon as that event happened, and bank policy again became predominant in the halls of Congress, the circulation of foreign coins was again struck at and, in the second year of the existence of the bank, the old act of 1793, for rendering these coins uncurrent, was carried into final and complete effect. Since that time, the bank has enjoyed all her advantages from this exclusion. The expulsion of these coins has created a vacuum, to be filled up by her small note circulation; the traffic and trade in them has been as large a source of profit to her as of loss to the country. Gold coin she has sold at an advance of five or six per cent.; silver coin at about two or three per cent.; and, her hand being in, she made no difference between selling domestic coin and foreign coin. Although forbid by her charter to deal in coin, she has employed her branches to gather $40,040,000 of coin from the States; a large part of which she admits that she has sold and transported to Europe. For the sale of the foreign coin, she sets up the lawyer-like plea, that it is not coin, but bullion! resting the validity of the plea upon English statute law! while, by the constitution of the United States, all foreign coins are coin; while, by her own charter, the coins, both gold and silver, of Great Britain, France, Spain, and Portugal, and their dominions, are declared to be coin; and, as such, made receivable in payment of the specie proportion of the bank stock – and, worse yet! while Spanish dollars, by statute, remain the current coin of the United States, the bank admits the sale of 4,450,142 of these identical Spanish milled dollars!

Mr. B. then took a rapid view of the present condition of the statute currency of the United States – of that currency which was a legal tender – that currency with which a debtor had a right by law to protect his property from execution, and his body from jail, by offering it as a matter of right, to his creditor in payment of his debt. He stated this statute currency to be: 1st. Coins from the mint of the United States; 2dly. Spanish milled dollars, and the parts of such dollars. This was the sum total of the statute currency of the United States; for happily no paper of any bank, State or federal, could be made a legal tender. This is the sum total out of which any man in debt can legally pay his debt: and what is his chance for making payment out of this brief list? Let us see. Coinage from the mint: not a particle of gold, nor a single whole dollar to be found; very few half dollars, except in the neighborhood of the mint, and in the hands of the Bank of the United States and its branches; the twenty, ten, and five cent pieces scarcely seen, except as a curiosity, in the interior parts of the country. So much for the domestic coinage. Now for the Spanish milled dollars – how do they stand in the United States? Nearly as scarce as our own dollars; for, there has been none coined since Spain lost her dominion over her colonies in the New World; and the coinage of these colonies, now independent States, neither is in law, nor in fact, Spanish milled. That term belongs to the coinage of the Spanish crown, with a Spanish king's head upon the face of it; although the coin of the new States, the silver dollars of Mexico, Central America, Peru, and Chili, are superior to Spanish dollars, in value, because they contain more pure silver, still they are not a tender; and all the francs from France, in a word, all foreign coin except Spanish milled dollars, the coinage of which has ceased, and the country stripped of all that were in it, by the Bank of the United States, are uncurrent, and illegal as tenders: so that the people of the United States are reduced to so small a list, and so small a supply of statute currency, out of which debts can legally be paid, that it may be fairly assumed that the whole debtor part of the community lie at the mercy of their creditors, to have their bodies sent to jail, or their property sold for nothing, at any time that their creditors please. To such a condition are the free and high-minded inhabitants of this country reduced! and reduced by the power and policy of the first and second Banks of the United States, and the controlling influence which they have exercised over the moneyed system of the Union, from the year 1791 down to the present day.

Mr. B. would conclude what he had to say, on this head, with one remark; it was this: that while the gold and silver coin of all the monarchs of Europe were excluded from circulation in the United States, the paper notes of their subjects were received as current money. The Bank of the United States was, in a great degree, a foreign institution. Foreigners held a great part of its stock, and may hold it all. The paper notes issued by this institution, thus composed in great part of the subjects of European kings, are made legal tenders to the federal government, and thus forced into circulation among the people; while the gold and silver coin of the kings to which they belong, is rejected and excluded, and expelled from the country! He demanded if any thing could display the vice and deformity of the paper system in a more revolting and humiliating point of view than this single fact?

V. Mr. B. expressed his satisfaction at finding so many points of concurrence between his sentiments on currency, and those of the senator from South Carolina (Mr. Calhoun). Reform of the gold currency – recovery of specie – evils of excessive banking – and the eventual suppression of small notes – were all points in which they agreed, and on which he hoped they should be found acting together when these measures should be put to the test of legislative action. He regretted that he could not concur with that senator on the great points to which all the others might be found to be subordinate and accessorial. He alluded to the prolonged existence of the Bank of the United States! and especially to the practical views which that senator had taken of the beneficial operation of that institution, first, as the regulator of the local currencies, and next, as the supplier of a general currency to the Union. On both these points, he differed – immeasurably differed – from that senator; and dropping all other views of that bank, he came at once to the point which the senator from South Carolina marked out as the true and practical question of debate; and would discuss that question simply under its relation to the currency; he would view the bank simply as the regulator of local currencies and the supplier of a national currency, and would give his reasons for differing – irreconcilably differing – from the senator from South Carolina on these points.

Mr. B. took three distinct objections to the Bank of the United States, as a regulator of currency: 1, that this was a power which belonged to the government of the United States; 2, that it could not be delegated; 3, that it ought not be delegated to any bank.

1. The regulation of the currency of a nation, Mr. B. said, was one of the highest and most delicate acts of sovereign power. It was precisely equivalent to the power to create currency; for, a power to make more or less, was, in effect, a power to make much or none. It was the coining power; a power that belonged to the sovereign; and, where a paper currency was tolerated, the coining power was swallowed up and superseded by the manufactory which emitted paper. In the present state of the currency of the United States, the federal bank was the mint for issuing money; the federal mint was a manufactory for preparing gold and silver for exportation. The States, in the formation of the constitution, gave the coining power to Congress; with that power, they gave authority to regulate the currency of the Union, by regulating the value of gold and silver, and preventing any thing but metallic money from being made a tender in payment of debts. It is by the exercise of these powers that the federal government is to regulate the currency of the Union; and all the departments of the government are required to act their parts in effecting the regulation: the Congress, as the department that passes the law; the President, as the authority that recommends it, approves it, and sees that it is faithfully executed; the judiciary, as standing between the debtor and creditor, and preventing the execution from being discharged by any thing but gold and silver and that at the rate which the legislative department has fixed. This is the power, and sole power, of regulating currency which the federal constitution contains; this power is vested in the federal government, not in one department of it, but in the joint action of the three departments; and while this power is exercised by the government, the currency of the whole Union will be regulated, and the regulation effected according to the intention of the constitution, by keeping all the local banks up to the point of specie payment; and thereby making the value of their notes equivalent to specie.