055_080_02.pdf

Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

4.--.9 -

77‘1104--4.-777rti. 0,-t7e

t"ea.L.a4: -

144 CfLiL

&etAg.

LI

•


erY-'

.6•Za.

71•-e

olf;‘,7-1

1C11114- A._

c t_

45:16- -1 cc_itz,

t_42— c-c_ -c -c_ 4r."-c2-

fry r

1

aCt--44-e -"P et- ,L e

9h

&X-ee-L

,

-t-

'

•11_

c

phfr:Ai.) (Zai

LI11;‘,4-Le.

lAtAAJ

ty-(- fry-

Cilt da.4-----pc=> •

,6_64.7

te.

c"1""

t.1

.31

•


,04.-7-1e0;„4I4(

de/C,

1,71

Ae-o

014 d"

blkeVC-(f_ L—ccor

4:2% -•weA;L__—ALD

•

po" bz>r-.0 z

AcecLic,„


•

I-OPerese to call your attee\tion-somewirat ift—fietail to' the

methods employed, the practices adopted, in the monetary

legislation and usages of the gre

ditions and,itrettmde are analo

that the experience of these cou

t countries whose business con-

us to ours, -laseakeii.4 believe

ries, covering centuries of dis-

cussion and experiment, must haiye the greatest practical value

for us in the construction of an plan for monetary/reform for

the United States. The more inpportant elements for the nec-

essary solution of the problem ar the same in every commercial

country. It Aieen be safely sai that the leading EuropeanI

countries, after many and cos ly experiments, have found

satisfactory solutions for the monetary problems which con-

front us—solutions theoretical itnd practical that have the

hearty approval alike of economists and bankers.....------While the essential governingrinciples of all he European

systems, great and small, are the same, there are 'differences iii

the details of their application, owing out of different condi-

tions in the various countries, these different .conditions arefound in the business habits an

their general financial requirem

tive use of other credit instru

relative character and importan

in the form of government and

sitated difference in the chara

differences have been recognize

monetary legislation as well as in

in the different countries. This

impaired the vital force of the

customs of their people and

kits. Differences in the rela-ents affects measurably the

of note issues. Differencestent of territory have neces-ter of organization. These

fully and provided for in thethe banking methods adoptedadjustment has not, however,

und economic doctrine upon

which these various systems art based, or disturbed the pro-

visions for a wise and effective' administration which are thedistinctive characteristics of all

There is a general agreement among students of monetary

problems that it would not be possible for us to adopt any of

the great European banking ystems without adjustment or

revision to meet our condition4, but we cannot afford to ignoreEuropean experience. We hate to contend with ancient preju-

dices in the fact that we hav to contend with ancient preju-

dices in the United States, I believe the American peoplehave a right to insist that all those who seek to influence the

Idetermination of this great uestion should be free from biasor prejudice of any kind. am aware that there are to befound in every community pieople who object to anything thatis foreign, but this prejudice iS , I believe, fast disappearing, and,in the long run, public opition in the United States will beinfluenced by knowledge ark intelligence.

aAA-


40.6.01:).••,.••••••••••••..•

CRITICISM OF THE BILL.

In considering the character of the remedies proposed by the

bill which recently passed the House of Representatives I am

not unmindful of the fact that it is much easier to criticise than

to construct, and I certainly do not intend by any criticism

I may make to increase the difficulties of legislators charged

with serious responsibilities, but rather to call attention to

changes which, it seems to me, must be made in the plan in

the interest of wise and permanent legislation. The authors

of the bill having in a majority of cases accepted remedies and

adopted ideas based on experience of other countries, and 'on

sound economic Principles, it is all the more to be regretted that

in some of the most important provisions of the bill the lessons

of universal experience have been ignored.

My suggestions with reference to certain provisions of the bill

are made with the hope that they may prove of service to those

who have the bill in charge, in their difficult task of perfecting

the measure. With- th‘ assurance from responsible sources

•thetwe are to have legislatkin ia the near future it is certainly

desirable that the American people, whose highest interests are

to be affected favorably or unfavorably by Congressional

action, should have as clear an understanding as possible of

the nature of the proposals. Serious mistakes cannot be cor-

rected after legislative action.1 i

The two features of the bill whielv violate all sound economic

principles and which are open to the most serious objection are,

first, the provisions which authorize the unlimited issue, by

iewn----7—Yr—hgeilts, of government notes to be circulated as

money and loaned on collateral security to the federal reserve

banks created by the bill second, the provisions which create a

government central bank of the most objectionable type, and

which, by compulsory methods, seek to place the entire bank-

ing capital and resources of the country under the control of an

inexperienced and unregulated organization, acting' without

capital or financial resources.


4.

drawn from European experience. The National Mo:.etary Commis-

sion, in the plan which they reported to Congress, sought to

present a workable scheme based on sound economic principles,

seeking to adapt to existing conditions in the United States

the methods and practices which have been found wisest in4

experience.


h-7

States notes for the purpose of loaning them to Federal Reserve

banks, under the conditions which I have already described.

This outline of some of the salient features of the two plans

discloses their radical difference in character and methods.


h-1. 11,

I have been frequently reminded that there is a marked simi-

larity between the plan proposed by the National Monetary Com-

mission and that of the bill reported from the House Committee

on Banking and Currency. It is true that the plan reported

seems to recognize the defecte .n existing conditions which the

Commission sought by its plan to remedy, and while the plan of

the Committee follows in many respects that of the Commission,

in many important respects the remedies proposed are essentially

unlike.

The plan of the bill follows that of the Com.,Assion in re-

cognition of the necessity of an organization with power to re-

diecount the notes and bills of exChange of existing banking

institutions for the purpose of maintaining requisite reservee,

and the further fact of the necessity of concentrating and mo-


h-2

bilizing reserves for the benefit of contributing members. The

methods by which these two objects E,re to be accomplished are

fundamentally different.

The Commission plan provides, first, for a voluntary associa-

tion of State and national banks into local and district organi-

zations, and, second, for a central organization with a large

capital, in the management of which the Government has a poten-

tial voice. The local and district associations, which are under

local management, rediscount the paper of contributing banks.

The central organization controls the concentrated reserves, with

power to use these and other resources at its command for the pro-

tection of the public interests and those of the banks in differ-

ent sections. Under the bill, national banks are forced to con-

tribute to the capital stock of Federnl Reserve banks within a


h-3

year, upon penalty of dissolution. They are obliged to maintain

deposits with the Federal Reserve banks of not less that 5% of tk

their outstanding liabilities. All the functions of the Federal

Reserve banks, including discount, are controlled practically by

the Federal Reserve Board, an organization without capital and

without financial responsibility, and in the management of which

the banks have no voice. Under the Commission plan, the local,

district, and :Ational organizations are forbidden to do any bus-

iness except with contributing members and the Government of the

United States. Under the plan of the bill, in addition to their

business in connection with their member banks and the Govern-

ment, trie Federal Reserve banks are authorized, under the pro-

visions of open market purchases, to practically carry on a gen-

eral banking business in competition with other banks. They


h-4

are authorized to purchase in the open market commercial paper

from corporations, firms, or individuals. The provisions of

the bill confining the discount powers of the banks to members

is rendered nugatory by these provisions.

A large part of the investment business of banks today is

done through the purchase of paper from brokers. These are not

technically discount transactions, but they have the same prac-

tical effect, and open wide the door for the possibility of pur-

chase on account of favoritism or to secure political influence.

It was transactions of this nature which largely furnished the

basis of the attacks made by General Jackson and his followers

upon the Second Bank of the United States, and which, to a very

great extent, was responsible for the creation of a very strong

1 (t-et,t_ciL

publc sentiment againF.t. the .b4±1.


h-5

The Commission were unwillirg to give to Reserve Association's

the power to compete for ordinary business of the banks of the

country. The Commission sought to interfere as little as pos-

sible with the business of banks and bankers, while the bill

proposes that the Government, through the Federal Reserve Board,

by provisions which I have elsewhere described, with reference to

reserves and currency, shall take control not only of Federal Re-

serve banks but of the entire banking business of the country.

The Commission sought to create an organization which, as the in-

strument of the allied banks and under their control, could ren-

der efficient assistance and service to the public and the banks

at all times, while the bill creates a political board with au-

thority to control the business and dominate the policy of all the

banks which can be forced into submission to its control.


( CI 3.

and individuals prosperotie_by' the unlimited use of their-cmill

obligations circulating as money. The depreciation and disasters

which have, on every occasion, followed the adoption of this a1lur-

2 eCilar_trig policy have, unfortunately, not deterred theorists

,A)in succeed-

ing generations from reopening the discussion and seekin6 to in-

CAA-s- ;0-ir4)4 ' , /74:47

cite a popular belief that the govern.nent can create value and

insure perpetual prosperity by an unlimited use of government pro-

mises to pay.

Insert. after "significant"

(Pa o beginning "I need hardly r, ount in this presence, fttc.//


frU.

It can hardly be necessary for me to recount in this pres-

ence the disastrous results which have inevitably followed the

issue of paper money by governments or states. I need only re-

mind you of our own colonial and continental experiences. That

1111 t .A‘ t

of France at the time of th-e-R4-te.4014y and French Revolution is

equally significant. In exceptional cases'. where continuous de-

preciation has not ended in absolute worthlessness of issues,

like our own experience with United States notes, the losses

arising from the use of a depreciated currency have greatly ex-

ceeded any possible financial belefits to the_g_pulatT7 which have

resulted from thtviolation of economic laws.

Competent authorities estimate the greater cost of our civil

war, owing to the use of depreciated currency, at

q,uote Mitchell and Horace White.


2

,••• iv- .1In all cases of government issues the resulting expansion

11

r7 ter

and inflation, bringkfig about instability of conditions and

values, those dependent upon wages and salaries and engaged in

agriculture and other production have been the principal suffer-

ers, while the capitalists and speculators who could take advant-

age of constantly changing conditions have been the only classes

who have been benefited. This condition has never been better

Danielcharacterised than by,1110‘ Webster, who said:

(2:2 I 3--


,6(/

S7-1-x--,),

e‘-J-,w-icA&72 <71t

t<r71 " ' e -‘.,,,„•,",irc4-"-r • --&291/

_C

^P;q-6e

&17


It The emitting of paper money by the authority of Governmenti,

is wisely prohibited to the individual States by the national

constitution, and the spirit of that prohibition ought not to be

disregarded by the Government of the United States. Though

paper emissions, under a general authority, miEht have some ad-

vantages not applicable, and be free from some disadvantages

which are applicable to the like emissions by the States, sep-

arately, yet they are of a nature so liable to abuse---and, it

may even be affirmed, so certain of being abused---that the Wis-

dom of the Government will be shown, in never trusting itself

with the use of so seducing and dangerous an expedient.4 4

(7'1 tt.r4,A p&5

It is true that in the pertoifrom lt14 to 1861 Con'gress

had _authorized the issue of Treasury notes in limited- amount-yr


Peletiah Webster, writing in 1781, after the total volume

of Continental paper money had become worthless, said:

We have suffered more from this than from any other cause

of calamity; it has killed more men, pervaded and corrupted thq

choicest interests of our country more, and done more injustice;

than even the arms and artifices of our enemies.

ZIGB-4acp4m4-ef1ee—of—Alle- wox1i, the- unanimous °pint on—of

eading economists an.47,e financiers and statesmen of every

11tt Kg_ 7 . 0-E) It

% )-1

shade of political belief, condemn the use of the obligations

or notes of states as a circulating medium.

4).„01

atAx plevor q-ulr41-4

The—eihiga-frorr of H. D. Macleod,

bri banking and currency qtt,ot;t3,•

tik

crally acquiesced in.' He says:

.•^'

the'Leading authority

ke_adwza4448 view theet

/1 )7k• 4:( 4.)

Governments snd states should never issues paper money

themselves. When states and governments once begin to issue

Paper money, they never can resist the temptation to issue it

in boundless quantities, so that it soon begins to depreciate.

They have no power to redeem it and the depredation is unavoid-able.

11


ftr

, •te

ech-4

0-47 e-fs

21 ,e-41L.L__cLeN‹,

ofZiet-ct•

"kve


II...441—Atirttr-wtha4 President Jackson Lad, on several occa-'

4;44 (4.1

sions, suggested tile......JC.Ztalion of a Government Bank, but thts

-A ,suggestion was always more or less vague and he never committed

himself in detail to any definite plan. His opponentsphowever,

claimed that General Jackson intended , by these indefinite sug-

,0( gestions to 0.41~4is4u4e a Government Central l'iank under political

control,end that the effect would be to place the whole banking

power of the country at the mercy of the president. I think it

may be spid thet this cls.im did not fairly repreeent General

. r ;\ tA. t• IA t' tA-4- 4./144 44 4 C. —• It. err-1.4Jackson's views. The quotation which I have already made rom I,

A

stRtee,

t' I)his letters to Lewis are confirned in this respect by a

ment made in his farewell address which was as fol]ows;--


17.

course of this report, the following statement was made.--

But the patronage resulting from the appointment, the-an-

nual appointment, of these agents, great ai it would floubtless

be, would be insignifipant and harmless,'hen compared to that,

which would result from the dispensation/of bank accommodations

to the standing amount of at least fifty millions of dollars:

The mind almost instinctively shrinks trom the contemplation of

an idea so ominoue to the purity of tile Government', and the

liberties of the:people. No government of which, the committee.

have 1

have any knowlqa //ge, except, perhaps, the despotiam of Russia, I

was ever inveeted with a patronage at once so prodigious in its /,I /

influence, aiid so dangerous in i4s character. ,In the most/des-

/ !!perate fin.Ocial extremities, n4 other European government has,

/ever ventlired upon an experim4it so perilous. / If the whole

ii

patron of the English montirchy were concentrated in the hande,, ., .of thelAmerican Executive, fit may be well doubted whether the

/publif liberty would be soy much endangered by it, as it would br,this. vast pecuniary machine, which would place in the hands of ,,,, #every administration f0'ty millions of dollars,

rewarding political partizans.

as a fund for

11,A, C*11 ,t ii cDigitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Nothing that has not happened can be more certain, than

'that every favorable vicissitude in trade, every period of com-

mercial distress and embarrassment, would give rise to importu-

nate and clamorous calls for indulgence, and for an injudicious

extension of discounts, which no administration would have thei 4

firmness to resist.'

the Government would have scarcely any faculty of re-

sistance, when appeals for indulgence should come from all quar-

ters of the Union, sustained by the strong plea of public distress

and embarrassment.


( 2.

circulated as money and loaned on tollateral security to the

federal reserve banks created by the bill. Second,-the provisions

which create a Government Central Bank of the most objectionable

,72

type, seek to place theA.

C7 6o2control of the entire banking resources

/‘•

of the country in the hands of n inexperienced and unregulated

organization, acting without capital or financial resources.

These proposals are so radical and revolutionary in their charac-

ter, so at variance with all the accepted canons of economic law04

that it seems incredible that their adoption should be seriously

proposed. The theories of government upon which they are based

and the doctrines which they embody have been repeatedly and em-

phatically condemned by the American people. I am aware that,

in spite of the verdict of history and the teachings of all

accepted authorities, there has been periodical assertio of

the theory that the government could make communities


t ' 'r -1 PlarAk,

0 ( ri 4..,./i 6.,-,--fe oh-, , t ,., e, ir,. fit; .

/itfir. 14

,

1

•P" /fr''"

( -"T • ,-A 1..- c". t 10'. 4,. 41

_ . .,.., if.. .4..i v . /at._,, c.c.,. c.c.,. c,--..„. -, -,-u,

/ ,.....,,,t :, f. C 4 e., 4. i eky- Oet,40.,4,....747.1%.7-1-7- 1( Cat- a" Gr r I. -V.Th 4.4

/

,, .,

41/4.

.../ 0 ;:i, tki, . OS. (4 4 • 4"11

e i" , ot t 6 frkel--4, 'f : •-. 44 %., 0) iierk erdpplc. -,d i.v..--141N-71.-ft,..c.

t,,114.6A/v.A..

I,Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

/4_ A:e•‹) ()v,_0t1 z

7e-ea C-7-tr-2-

r2?-- /

/41 4 C9

/4,e

ifL'4 „

' 1(A 14V- 42 -et—et-j- tr—>s

cac

V

r>1

l-fr 2

•

4tino 07 .

1

A-2

e.•••e

411.4110.0

_

•

4 —t-a

Z r Ct "Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis


4-11%---74

eye"c(

44, etilLt„

) 17 2&

,

4E'

e21`

cg-4-574,

ta_l.t„oe __

ft-a2-1 c15 , esk4emp,-

41A7.-X-t

ry„ ei,ozi A(49 4. ;64--e---vN2-,

-#1,5t-' 75 c e ‘-f 4L,

A

A of 7 .r/e,gz.„_ .E427-771-7'4.1,0

•A•4.4-‘-&

g

wdr X? AP-44-14"/itt , 0... ce_

44-J14:41

Ikt_rscap,,,,i li.leeft.>ce--€A tA,


At--424 >eP

C--ZE,

("7-t et_

_=46-di 10

cr•--‘1.-e---4--4--

/_4L-6tAe 04(--e4t_j

/ 1 • -1"1 41.*

4122L4g d4e4

17 e7

elgr7M7‘7Z:

A,A.wte--3

OfI-. Pit z‘-t-r

of

L.8-nt fezAV74_,e-

#Pa"4 Xd'eohl

2°7't

#'1.17 • 4446"- 446Peef..

4CW"-OL. X e'-e 4741 eALO SI L4Q.e,

07- zc.C.,sea.

-e2 62- 4>--ted

"71 icr51 0 91' C‘se ft)/4-


•s.


Speeches of William J. Bryan. Vol. I. Page 222.

If it is said that we must institute banks of issue in order

to putMoney into circulation, I

way. The issue of money by the

gives us a safer money and saves

profit arising from its issue.

answer that there is a better

Government directly to the peopke

to the people as a whole the

When a bank issues money you must

pay the market rate of interest in order to

Government issues money the people save the

money is afterward called in, and they save

get it, but when the

interest, if the

the principal also if

the money is kept in circulation. Numerous plans have been sug-

gested for putting this money into circulation. Some have an

Idea that a Government issue can only be put forth by loaninE it

to the people, either directly or through the agency of banks.

There are, in my judgment, other and better ways. If a

limited amount is issued, and of course the amount must be

strictly limited, and it is loaned to the people, partiality

will be shown in its distribution, for only a few, relatively

speaking, can be accommodated.

But aside from the danger of placing so great a power in

the hands of a dominant party, there are plans more just and

equitable than that

the expenses of the

lation were used to

of loaning. The money can be used to pay

Government, as the greenbacks now in circu-

pay the expenses of war. If Congress de-

cides to increase the currency a certain amount annually, say

for illustration fifty millions a year, it can reduce the tax

levy to that extent and the people will receive the benefit of

the issue just in proportion as they pay taxes, for they willsave to that extent the taxes which they would otherwise pay.


In a recent letter to a member of the Banking and Currency

Committee of the House of Representatives, Mr. Bryan makes the

following statement:

The provision in regard to the Government issue of notes tobe issued by the banks is the first triumph of the people in con-nention with currency legislation in a generation. It is hard

to overestimate the value of this feature of the bill.

In the second place the bill provides for Government contr&l,of the issue of this money---that is, control through a board

composed of Govt:rnment officials selected by the President with

the approval of the Senate. This is another distinct triumphfor Vie people, one without which the Government issue of themoney would be largely a barren victory.

The third provision of the bill, which I regard as of thefirst importance, is the one permitting State banka to share

with national banks the advantages of the currency system pro-

posed.

These three provisions are, to my ruing, of such transcendentimportance that I am relatively very little concerned as to the

details of the bill.

This frank and courageous declaration of Mr. Bryan's is sig-

nificant.


President Cleveland, in his nessage to Congress, August 8, 1893.

The people of the United States are entitled to a sound and

stable currency and to money recognized as such on every exchange

and in every market of the world. Their Government has nc

right to injury them by financial experiments opposed to the

policy and practice of other civilized states, nor is it justi-

fied in permitting an exaggerated and unreasonable reliance on

our national strength and ability to jeopardize the soundness of

the people's money.


1

4\\


16

0-1,a--ce-A-- 40X

the commercial world to one generalIL

e

monetary policy.

The central aa4 caliag_ALIdee-d1=-Tor-te -(5T-ea-C1I of thEWe

et JAA, ,akirx.t. vi -yr ALthe duties and recognized functions f, these central banks, wheth-

i%

The- char ete t er --trf

er prescribed by statute or exacted by public opinion, ha vi been

es.tah14.4h-e-4-4491.-eh a process of evolution covering generations

of practical experience. It has not been found possible to se-

cure an effective credit or6anizaticn in any country without this

0.1tt1

c..44-f4-r144-1-414g factor. For my present purpose ai mere outline of

eCt.tAs't

the characteristics and methods of these institutions is suffi-/

cient.

1. Each of these institutions is essentially t bank of

banks, and is looked upon by all the financial institutions of the


17

country asser6 unfailing remiource for assistance and support in

time of trouble.

2. They are given by law the sole right of note issue.

The expiring remnants of ancient grants furnish the only excep-

tion to this rule, and these are insignificant in character.

3. They hold a very large part of the sa4ta11ic reserves oftt_

Ike') Acittheir respective countries, and hav-e ample power, tiQx4u6L-4144-ir

..5/

ctaalautut---co.s, to increase their holdings indefinite-

_ALA..- 4-17-ly. These reserves form a central reservoir wich is vailable

trkst all times car- protection or assistance, pt required. This fund

-

is looked upon by the public as a substantial guaranty loy--‘he=tmadri.

of the convertibility of it41 ncte issues and of iAis ability to

meet at all times its obligations.

The central banks are the fiscal agents of their respective


15

within our reach. While we have suffered greatly in almost

every decade of our history from the evil effects of financial

crises, the people of the great commercial countries of Europe

have, for nearly half a centurylkbeen entirely free/from disas

trous losses arising from this cause. This exemption may be

said to be due solely to the character and efficacy of their

credit and banking organization. The experience of England and

France, and later of Germany, in this respect, has led all the

important commercial nations of the world except the United

States, in the essential features of their credit organization

and banking systems o follo in the footsteps of these great

countries. The adoption within a few years by Sweden, Switzer-

land, and Japan of rammbseq banking organization along the lines

of the countries I have referred to, completes the adherence of


S

6,1 /4,/ t

- is"

Mdig—100eleROPE

14\ '-/%04/1- e'C't/t4.-- CT-a- Atio,0614 fOCI.45L, (- )


14

'point of view of sound banking, to the highest credit.

66714.1.c) We have now no meanie of preventing, through a general a9d

AI ,/ 4 /7\te

effective raise in the 4iscount rite or othvrwi,ffle, a 4angerOus;t /

over-expansion of credit

Aside from these recognized defects in our banking system

there is no one of the elements of our varied forms of currency

that is responsive, either in expansion or contraction, to nor-

mal or unusual demands.

While there is very general agreement among students and

,bankers as to the nature of thAefects of our monetary system

there is unfortunately no such accord as to the character of the

remedies that should be applied. This is to ue regretted, as

it seems certain from the experience of other nations that simple

and effective remedies for the defects I have named are


13

cryexchange issued or drawn fPom agricultural, commercial, or in-

dustrial purposes, have only a narrow, local market for discount

t t 0 Qsc,,,, Az gay iii_ te,,,_ i-et t t, (4_ ,-, cc7-4.4_4Lcv (2--ex-4.-4--4---e f- rl-c-e• 12

purposes, and and we have no provisions of law creating standards

ily:cil rtr,--7, ,LLe te-.I 1,,,,, tr-v- (f (-1 /- e---z(4-

whi-e.h—wete-14—he 11.14e—tteme-epobene.e, and no organization of credit

which would secure to these obligations a wider market through

rediscount. The result has been that our farmers and others en-

gaged in productive industries have been obliged to pay higher

rates for their loans and have been placed At a great disadvan-

tage in securing the credit which they have required and to which

they are fairly entitled, for the growth, retention, and distri-

bution of their products, and our bankers at the same time have

been deprived of an opportunity to invest their funds in a class

t 1 JqL

of securitie!1 which ,in every other country, La.—G-Q-ffe41.4erttel theri

to- cute .1-14,

grerr—itighwert—renk—ryf—±nrertmnr, and which is entitled, from the


:1101'TETARY

bureau of Engrav inr, and Tinting.

See "TREASURY."


wirer. 11 qp

•

to2c'

criV 0

00.

q L., R. a c„,4#

,

c)

it. ; 4 /..%:)i,-k.,.) ‘

4,144 on k /-. 9k 0 6 C.4,

4‹:

Cit ol 174

..e a

,

I. 4

RetA.,

\,..4.) el# j, •

CLC•

t 1-

/it.. :*4 e,-1\

f .I /

d swe

vi) cr-- 406fZ

,•••••

17 , [ J'( C--tr), - ,ILeA•

. A.

att

"6ork..L '?:.

cv c


7")

e "

11(

(-0

•—•-wer,

-v) 1•).4 ,"Y\t/V

At•tvi9 2J .2,71v

-,s~110

\te,a2 -Yb°

,-

IAD F9t.,

7*-7/7 ).-11 In)

•

-1%01 eY7tyvbci4'

r-rrN4,...6

wv 251/ n-.1-p t.6

N-1• 4, 1'

-10'%7 ' "d0

27,1

2.44

rc,

11/

.•••10.4

oo

•


.-,••••••••••.-

•

• •

n‘•

iF

(rr

tk,tk- fi.--7 4y-y-

t

Cf,A.At..

it? CIL 4-- A, y "

04-

Ce,

eCte t,A--1-L mi--6a.

PAAw -

•

kjirr) 1,1 0114A, tjt‘-% C.)-tt

'".11A0111't14...1Y V eer.r

OrY1-1

...11••••„.

•

Pb? t/t4,,` cfril-

IKL,1"17-1/

et fir‘. LA-4,-(C)-t-‘ 0./1-1 f•IN2A. vtxi—

Lel

o--) A-4

trry-

•4,


It

zkz.„- o,ç m at. A gliVh.,

•0--tie,..a „ct., 44-40

Ct-ti.717:t7-) (?4

•

0-) C"-

e /AO

91'1 C 11-))g kk. ) (104°1.4•01N-4A4.(4/I t

11

1-14

A GEAA-A-y,

>7) () ct. 2.A.4 gst-t.4.1.‘ w).. cl ci 4/4

01A-4

Cy-

f;1--

Lti tAtti_tot:"/"(t.--- 9.41Zeel

Lt„

444 la CA 11/<-

L. ?a_ faitA A A

ek-v r PIAA;v6 0 1-1/1

2 ci IAA t. 4, 1

CL,FL‘L_ ItA4 ot-to-,-vt,,vi"_0("n

7. IC cr-,./2 1.1-1

sa,56.

•


64-0-

6:- if it:\>•::

j

I. et-Licc..4)

etc i; (it

1,1 r

'"I'vec.eressallillarlek"

etA-Ikt 0 p

Cis( .4: 4- I- Cril"- 4

4-/


b

VNt

cg tk

17 %

N\ \ 4

it

o Q\ t)c ,4

A ii\\


(7' cC7. —er

c72?- t oceit

_

4,1c 7

-

aiAz • t .4 4

C t A A 4 fA 44


apt,

4-1 "-11

,; • ,-,47 ..4-7 /„.10 -

.t.e N1,10

-P1-0

trZ C'T C) YV frld Ae"

00 j$

)--reI 7

I

e vv‘a

1

/

•3 "0/ p 1.y/ 'VA

" f0-9

1.4 , 7417,,itratippif

.J., /21*

--V• If() --)/en12,9 I -.? -0 .4,-,1- r --erz, -y,,, t--ThQ- 0 -1\ - i)i

,ii, -1* % ' 1 1 1 ' P \ ,

l -""

- 7 •\,:1-1-- *

-74 , 7 4

°a'

,1)

ti '-ts1"4T- '

,t,0 e/ f---Tru4

•

t 0

111.A4 c_- / 0 •i? )4

-r.v1r-17

1:4


r.\-d

0-4-T-Ai

/4_1,,t4: .7

/7-

00.4). v. le: L.

.C c's doec

4, A C.,,4 •

4/2

,O......1•411.stv I., MO. P. '

•


cat-cLtL

(.‘,/t.• Let-

D'X'tt' 1- 401•4A.-- 4 a-t t •"( 1. t_

//i//')e A

J

A

g-/

Cr

cr. '

4-k-e

)4

en. 142

;,.

L.t.,4._ (Jo-4-c, tiv'sV•L ,

aL.

h- 4

eete*.

/14—

6astrt_t_./C.- L

t t. 4-

11, —4

-

Aisumamea.

cae.".7

4-i; t ff

4,....

7;'46' <i

fVIA Ok/A1

q44-0) A 1 /


. jcc 6-_o_r/t7

cv) -.Err

0

(./

j

e. 0 i• kt-t-

6Ay

-4/AA

ent

)/

,(//)

-e

-'1\ --C4,144--------7)-4 \ ..-et—e-/C-4 _4_ A• 44-'1- 1"/ e''".' i ti

1 , / /CmC

a_. y.....t....e...-.4..,t.,,Z4/

t "•

.1


GQC;•

etrioz_Log74;v),.

6c-k^c..t_K ittA_ti&„f

IL essZe,,csa,_e_c;._fl^ gi.ACe1442,4.7

C,‘ 6A

a

•


0.1111r,

L-GcAr

cy---LLL c,

j It

(

400(

• 4"

4f,f t

J.-tt

eh-Ler--7,

t4...1 9'11 Ct L ,

tl


I

• /7

t"-tiA-e

The Federal Reserve Board ige—ao4-4a4-414*on

1.

• eet,c4...-thRn-7

paisier.....14..issue government notes w44‘414,4411.4-tr. The authority

is granted without any of the safegUards to prevent fraudulent

or unauthorized issues or eny proviiion for records or reports

of their proceedings tro-4e available to the public or to the

banks which form their constituency: There is no plaelristionckat,

efpr appeal or review any flagrant abuse of the enormous

c91-- t!, tti)2/:-/?A7t-tfires.1-4- )4y11-' rkz £(4

.voirehc4.44AeL 4ity(ste..4,4power placed in their hands. Thii14tWer extends over the form

eLfand denomination of the- notes, )1 power over denominationSWill

t141.4"4-1F) e4;we-soe-asenable them to control the. cmeaLlaa of government notes at their

pleasure, aa4..p=a4=444—...244ftvatteir—or other issues of currency

now in use. Heretofore, government obligations have been issued

by the government direct through its officials . We have a

iBureau of Issue in the Treasury e It through which all certifi-

)

cates and notes of the United States and National banks are


'issued, the terms, conditions, and character of the obligations

have been carefully set forth.in the acts authop izing the issue.

4

To illustrate my meaning, Congress, by law, pr4vides for their

ioeue in small denominations g4oPeli.-4.--pniewbot—e-er4i-firee, =0 et

placia-mia4eh insures their status as a permanent part of our

X

circulating medium witIa414-431e liability of their being pre-

sented for redemption in large quantities. The friends of the

House bill apparently are not able t admit that the authority

given to the Federal Reserve Board i unlimited power. They

cite the provision that notes can only be issued upon the appli-

cation of Federal Reserve banks , the Board reserving the right

to decline any application. The deimand for actual cur-T

1i

rency under ordinary circumstances as shown , by universta

texperience , is insatiable and rar ly resisted, but in times

of trouble t#e necessity for increased issues becomes imperative.

ilDigitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Citations of a similar cha

racter could readily be/ma

de from

clf If1-L,L4nA4

the public utterances of

triive- leading mispubt*manz r

epresentatives

4LA,L?

ft=totof every party,

c-ea.coiLAit,t,„

up.La—the-41me_lat—the_cix44

—war.

11-812117 e at- 15-

7 CI5e et,c_

c/C°‘

( 2---1--

_ •

'4air

4.4

81

41

49.1cc.„

1


Professor Woodrow Wi son, iTrirlrer-threttrry—ae-Itm710111ted

/1

a4eitrelh 1114'4"--

ILZ kiLLet 1A.1

1G<J7r1Pie‘4. 0e7-%g-1 At.'It (the constitution) absolutely forbade the States to

6

hes40=#>,

issue bills of credit, did not give the federal government power

to do so, and was meant practically to prohibit the use of any

currency which was not at least based directly upon gold and

silver. p.46.


5

Our own experience prior to the adoption of the constitu-

tion led the framers of that instrument torforbicl, expressly the

states from emitting bills of credit, and the doctrine that the

issue of lesper-immity,by the Government of the United States wells

.16

not authorized

tA/“:,‘-jA o r-00..1/frtf- ij,

by the constitution found aniTeraal

"ji IAA lei A

hOrisfObV:Ww."7.:110,,ti AL. LT-11_4v•

xtrsillik-Olf-leritO, said:I.

acceptance.


t

,44/r741L4,49 ";-424,L-AL)vkik 44)

ata kzz;w&-- 7704/1 /X

dee, .0C-e-ec,'

4

Ct,e_ 4 o4ee7


It. 4.6..1.rue-than In the pericd from 1814 to 1861 Congress

\411610Vnuthorized the issue of treery totes

in limited amounts,

4J 7.)

which were in every case evidences of indebtedness on account of

money borrowed to meet deficiencies in revenue or expenses

growing out of wars. These treasury notes were receivable for


public dues and were, with few exceptions, payable at a fixed

time with interest, and were usually 90f denominations that pre-

cluded their use as currency.

The power given Congress by the constitution to borrow

money clearly involves the right of issue of securities of such

character and in such form as Congress might determine, and the

right of the Government to issue obligations of this nature ligLiral

ng.t seriously questioned in any quarter., The first issues of

c.'i., .:United States notes with full legal tender qualities was made

during the civil war and grew out of the urgent necessities of the

Government at that time. The plea of necessity wE,s the only

justification urged for this radical departure from the policies

and doctrines of the founders of the Republic. Excessive is-

sues of these notes and the repeal of the right to exchange the


C00.04Ciii/ ( 4

tsv,*

8

notes for interest bearing obligations of the United States,

• - '4'4° • , '' • ••C,

• kie,•,:•• •

produced the usual result of depreciation and discredit. The

efforts of the friends of sound money to secure the resumption

of specie payments and their insistence that the public credit

could only be sustained by the payment of all Government obliga4

tions according to their tenor in standard coin, led to the for-

O f;i L#4, rc.

mation of a party who were opposed to resumption and demanded the

, 1 t1 I.,

Cletk 4 :Di.payment of Government bonds in a depreciated currency an4---the, /Kar;:„,...... k.sk..6 tytic..... "

4

::..,4ubiatitAiti-en -of United States notes for- national bank notes.

Simultaneously with this greenback movement the agitation for

the r;reater use of silver and its free coinage was inaugurated.

Free silvIr advocat lutr

were strong enough to/secure the adoption of the coinage

act of 1E348, which requir'ed the issue of silver certificates

/

\rsii4(pk -14.-.

V v 'based upon a limited coinage of silver dol3fars. The greenback

IDigitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

4

The reasons for this general condemnation are not difficult

to understand. No government has yet L.een found strong enough

to resist the pressure for enlarged issues in times of real or

imaginary stress, or to meet some real or fancied exigency in its

own affairs, or a popular demand for more money. In every case

44-rts issues were limited in amount, eurrounded by safeguards as

to exchangeability and convertibility, with ample provisions for

X-421 dfft,,"1iA

ultimate safety, but in every case these safeguards have been

one after another ignored or removed, mit Us 830'11/ malign wkiskx

restrictions as to amounts of issue have been modified or re-

moved, and the exhilaration which has followed the initial is

- ' A t ‘ 07 v-z.L.%,,. / .4i'7 .0,.L .. 0 r • mit.c...i.) 4:ey-,

......40a....................... -0

sues has been-aucaaeded by 'continuous inflation4iiii necessary 4TA t

ndestruction of values, progressive depreciation, and general

bankruptcy.


4.

that ip—th-is case, as in—all—thers prior to_the_ane—we ha-ire now

un er c-orm-tfterattzn, a-44m4-t • • •4. 3

c44-41.0 France had juo4 confiscated the real property of the French churtt

etkiYh4Q4 consisted of valuable estates -from town and country, forming

-about 1/3 of the real property and ociAxi1i44—value to/about four

4

thousand millions of francs and iieaded a yearly income of about

it-f-CL;'7*OLAtwo hundred millions. The first issue wcal made in 1790 and was

ebit-t--Aof-‘-'based upon a pledge of this f*-wMc-h

74. el_

Arg4-4A N, vikt-

,)- t- 74:i4.- ?-.., ici,Qe•-if.

A,1-- -4-.1--4-.—-'

•"7- 401r

Iff-TANI


4

z<

kYrAir

.4- 4f -ore Acer

*go Lb-

ArNc4-1,

1‘4044-

LV't

44-4_ de9•

- I t

r.?

e71-1Z---G4V. e-e7 -4C;(1:11---4 awl

?

4.

“p-e„.4,•4- e- -,`-/

d---..„ ,

pc., £4C4-alt4.017 it_..-art.' 0',--‘.. :A-- 4/4-4 4.A0202,,e4,4_44

A IL l'' fr•--4-R-1C°°"'"'7 01't-e- :h 4W-r""it.„..7--, -- *xi_ 44

er it,. a.,...t; 4,4) &c7 i 44....,...g..-Laz„..

tt.'-"1..,.,-,,,_ -L.c.„..,c 7 et-Li i— 4,-—r "e.

.

... .

szt

t

"-A_ a-Lc_

7 A7 I ro.e%e->‘-0-1

7 4.!I

a-


•

A . D . r e rI. at tft-Orley 4

ddi.7


No pape: currency ever had what seemed to be a more

practical guarantee for its security and value.

ttr- ct 77117-.

IC 11,1,tay•

It was based

upon what woulci-e,elled the highest form of security , a

mortgage on productive real estate of unquestioned value. Thevir

tti"zt_

notes bore interest at a rate of 3 per cent it was claimed,

C V1/4-41;4-4.77--t INPILA-A 27,071,..4)

LO'4.t..-• 0-471.-t-Ac-.04<_

ILQ..:L.LL-jaisu=-e—tv+ttrtr-Wt"t'+tdrtrvrft1-trer prevent excessive issues. It was

claimed by the advocates of the assignats and mandats which follow-

ed that they were

var.444.14—pars.1.34.1.a.Loas

kt.ct et-rpgApiammcagud-and-mrte

bt-cubt

"FL 44=-44A-4--

freA, 1A-L-7ck-

as good as gold by the

• C3

: 9g,jr06.-.,0

71,,t4t7

•Nv i',

act_ L. ' •

L4 1


a-1

it, All Government notes issued under the provisions of the

bill are redeemable on demand at the Treasury of the United

States or at any of the Federal Reserve banks in gold or lawful

money. The notes are issued by the Federal Reserve Board and

loaned to the Federal Reserve banks. The banks are required to

deposit with the agent of the Federal Reserve Bobrd with their

application for notes, commercial paper and bills of exchange

equal in amount to the notes applied for. Whe'lever any of the

not receive l by the Federal Reserve bank shall be paid out,

the bank is required to segregat,.! fro:a its legal reserves held

against outstanding obligations an amount in gold or lawful money

w i.:11 shall be equal to 33 1,/3%of the notes paid out, which ,

iddr"amownt is held for the redemption of the notes. The notes

which are issued to any Federal Reserve bank are made a first


z_)

A..t.•

al IA_ ci a_

4 Aoti4Z' d /22 <


C k_c

t -

a-2

lien upon all the assets of such bank.

These elaborate provisions fe,P,Ao44-Art-i-777.-amt-smftty-e+-44-gle

ffective in ordianry times whenA

there was no call for redemption 04 the notes, bu-4-4ft-t-imen-o--e-

Take a condition of affairs like that t' lia%.4u44.444.erlit in

1907, when Ffrkf the banks of the country suspended payment. --Z111.

cJe-a 11c1nite 9 olal-kged to redeem

710-Fil-mmomm-/-th-u notev-. But the Treasury would have no gold or other law-

..

ful money in its possession,cf/4Ask.a',..-tey-474‘ t—t -A- e -I f‘Z-• c).

the yT 72me-atr -new La. he general fund of the Treas,Ary, which in-

cludes its gold coin and bullion, would be deposited in the sus-

pended banks, and there would be no alternative but Government

discredit and repudiation of its obligations.


Ect_er

a-3

the Federal Reserve banks,

notwithstanding an attempt is made to make it

responsible only

for notes issued to it, would be

practically, and it might be

actually, responsible for the wAriireracnf of

the total issue, as,

so far as the public is concerned,

all notes without distinction*

as to whom they are isfiued, are

entitled to redemption at any

ttrei

one of the Reserve banks.

The-lbri-iia-Ae-tier4i banks -are required by the bill to keep a

4100, 1-1 -• AAA_

reserve of 3I/3 in got& 'or lawful money o41---fitrI4---therir---uutwhimd.

1.3,- 4:artri-firks;' -and the obligation to redeem Goliernment notes is

azi...ahligation....wilizIvAppli-ett-,--stintter 'the' brti‘;--t-trttm-to-tyikl- ,is SAWA •

For instance, if a thousand millions were issued, any one of the

banks would be required to redeem the whole or any part of this

on demand, and this would apply to a Federal Reserve bank to whom

nc notes m4104144teme been issued by the Board. 1:4116b-ltgaiion


to redeem the full amount would be the same as that of a. bank

whtph. had applied for the largest amount. It must be, I think,

apparent that with any considerable amount of IlM neptstandig,

rI t7e- , lc

in—t-imes—o-f---atrtn3s all of-the Federai Reserve lottiRi- Tuia the

./? /2 e 6-1:;4-4-A----A- 7 tv ///,

Treasury of the United States m4lig444—wwwily find themselves in a

position where they would be unable to meet their obligations.

The epoe-te. redemption of the United States notes which were

/t.2_

issued during the war, was only possible after the accumulation

A

of one hundred millions of sold coin secured by the iasaws of

cit,4-44,411.?Government bonds, and the continuous redemption is sa4usuoldloy

one hundred and fifty millions of gold now held in the Treasury as

(A,t_

a trust fund. We now have a proposition to issue an unlimiteddr

amount of United States notes withou, any Government reserves of

any kind.


shotIld be borne in mind that there

is no limit to the issue of these notes. It ma be said that

the amount of posuible is Is limited by e amount OA. paper

in the hands of the Re erve banks avails.

cve44y4-- This is t ue, but the enti e amount of otes add bills

of exchange hel by the banks of he United tates is in the

neighborhood f 15 thousand illione of dollars, and the amount

2/

of all securities which might be available for this purpose is


C) -b9

-49P-P :ft/7

r

11

r) _.11p5p...--...11MOCAMB ; 7

hi", • -1-7221"4"1"2111P—T----rly

12-4:

• "---v-r-r-V

•')7-7 ;11 - 471"v-12

-.-10

"7"4"

•'/P

_ ---7c) • ar...-4.0r31( fr-or77rLee

431--C-1-"W

gM971-v°)tV P.t4Pr7"1%

7jv "P"''4PY —'1112P%°

e147 e7.11r"ge.4.tc)1Z.

,fro ,I'124:%r /64° '"'e -?-‘4

II 9 7: ---- 1--cod 73-1 -24/

1" %*Y791'

,rr-

`7' -1"r .7-1.6 y-vz_ft

)'191

"41‘Ae°6

•"-?-,e16

(1-7 -D-7a2

vi4r-j

-71, 6"-----•7

-7!Piv


72 2dc

Cfr

e

4ft

2 e_

giZ /1

feit41;14:11;)

17C--

e7-4:1-esi

/kg,

4-12-

°

Y1/4_12—.2Lt

,e{e ,e j1L c'di at,1-7L_c_ A n-r-

/

AZ-e-


J-1,‘

cVe--)7 e..

C

er---fet

_JC

./ecrz_>


'

t 1 t Z=S 4-2,CStz


1.

y)

cr40-14LL

I have calle your attentiqh

great central banks I f Europe

charter of the

dcA,AJoi,

contrast their

organization and 'unctions w&th 4h lor-the bill which

has passed the House of R*54entativesifor a Government Central

Bank. In vnter-ing- upun arv'-exan-in-a.tion of-the leoislation-pro-

/

2.4,sQA bY the House %Ix" I am not unmindful of the fact thatcto 74

.0, 404 /1_,c7CIAA-444

it is much easier to criticise than to construct and any criti-

cism that I may make is.cmat_imtwad-e4 to-4,betreeto.thv-prib-0444

or increase the difficulties of tile legislators charged with

serious responsibilities, but rather w4.444-e-Af 0C-.44,,gR4e4444g

changes which, it seems to me, trAm,the-wtor4AAIttrtitlence .aust

'

be made in the interesti. of wise and permanent leF,islation .

'-,,th n f 1, (4------,--...•,rihe two features of the bill which are open to the most

serious objection are;- First, the provisions which authorize the

unlimited issue, by irresponsible aGente, of (-o\,erment notes to be


a

-47

• A

°'711I


dran----/elt(

G4-.01 /

C

4- L (o 7‘-in H‘.„

C--

et_c(

r-kt

/s-tr-vtel

-;;--e


z 1421LIn the 4.r.4o44-eirref a Federal Reserve Board, the

committee-• which prepAred the House bill evidently followed

ine4561,—merift—fraturvs eaplan sublpitted by President Tyler to

Congress in 1641 for the creation of an Exchequer Board. Presi-

1.

'c-4ft-AS A-0"Jc

dent Tyler, avine vttutd two-bill to establish a fiscal agency

whi4;h Vitt6 another name for va.-iwn.ie-4ef—dtirrr—trrtrrmtr-777TZ:.1, artrrer

ler•-• I et -N. CIL-- Q-1/

that he wouldplan f‘....* a Board of Control f'a—take the

4 c zEL444- AY-I

L

4.4.4.4.41

CA-4-0,010%.4„2 11..041/4-11"-

nc,icns which he

45zmg....^m-dicAt

nAL-7 4.N.

cuues ion 114e cretary o.„ the TrOrvf,l.try, -r

t (1 ,

.

Forward, suLmitted to Ccialgress, Dec.21, 1841, a plan for the

crevtion of an Exchequer Board, tho—Reme-ef the Btrard—havinc -been

t

401LA

changed from. a Board of Control. The b44-1 provided that thia.--

Exchequer Board was to be composed of the aecretary of the treas-

ury for the time being, the treasurer of the United Stakes for the

'A.

r,-


I,

time being, and three commissioners to be appointed by the presi-

dent wit il the advice and consent of the senate; one of the mid

commissioners first appointed, to be appointed for two years, one

for four years, and one for six years, and vacancies subsequently

occurring, to be at filled as-that one Tracanty-shall regularily

s_pater at the end of eviv period of two years. 11414.-Reerd-wes

aut

try-f

parts of the coun-

4,-ze,c_P 4v-et-a- 44,;/404:4_414:7

trwriWiFTT0371-7.717;77"71754Tffrww—mmt to_dlizect to be

E,1,44

prepared treasury notes of a denominaticn of not less than

five dollars or more than one thousand dollars which were to

circulate as money. These notes were redeemable in gold or

silver on demand ere issued a

prav-4410 ithat7latates SO issued ahould

- • 1

• —

IV)

of dollars unless otherwice provided by law. They were made re-

ceivable for all dues to the United States and it was provided


3.

that the Central Board and all of its several agencies should

keep on hand at all times an-amou-nt af gold and silver which

should equal 0 of the amount of outstanding notes. The Bigtrd‘&4, 3LP-'4""'" qt. (‘•1"*"‘ 67444144.01V

was also authorized to purchase and sell domestic bills of ex- ‘,

change whIril-w.er-e payable e4+4-tlf-m state tJi which they were

ti-trerA-4drawn. The purpose of this provision ims to facilitate domes-

21

lfg,exchanges which for some time had been in a most urrs-ftt-i-vfnrtvr7

condition, tivesz being dependent upon State banks in different

parts of the country, most of whom had suspended specie payments

•i

and whose were at a v

2'p%

discount freer/4 /4244.t2 ow--46- ,CA6

•

It irjaLbe 6614.4hat thir-plan of President Tyler 16.44effttenT---"

OL Alor"."-4"1 ft4-

wi n except that the amount of

nt""1-e-"47the notes to be issued was limited to fifteen millions ot dollars

• 14)4J%-e-t---,AA_sPeAccA_4....-/i7( a_op-7-& A_AL 4.- 7 .1"7•4•14 41'4'41-4.

7-(40,01.4.si,s to-the-character-of-reserves, aaa the rmous powers granted

pAar724171 41.44.44

the Federal Reserve Board aerie found.rfyler plan.e:4..


4.

' This plan was presented to Congress at the beginning of the

December session in 1841. It WAS discussed at the same length

in both houses and finally referred toe,/ comrnitteedin each house,

"

'

L Ar4e, OCC.10142.---t-

r en

C

/ try-7 r,--, 4

he

Etez_,matter was referred are very illuminating. The Damorraft who

L-4 4- /4..7 vir.7 Xe= o611„.16-1::."1—...-77,0'4!"

j-o-iike4-in the discussion in the senate timpineded James Buchanan,41-174., /4....etrv.

/Thomas H. Benton, John C. Calhoun, Levi Woodbury and Robert J.

Walker, posigiptpiewal- men whose right to speak for their party

was not then doubted and 42.4uld not now be called in question

n, by the friends of the modified Tyler plan which we ere now

considering. It was apparent upon presentation of President

Tyler's plan that it had no friends or even apologists in either

house, in the form in which it was presented. The principal

discussion occurred before thellekferenc,e of the bill to committees


Aittali-mon-a4 t

In the s(-nc.te, Cannen and Benton took the lorm.dirIE pa1:14-111-0pp°-

5.

t!"--k%-1 "1/7"'v1 '1(-t-Z;4"4,

•eitior to the measure. Senator Buchanan in his speech of Dec.29,

1841 said that he had viewed the plan suggested by the committee

in every aspect and he could see :othinE in it but a great Govern-

ment bank. He went on to say, "What was the next function of this

Board ? They were to put in circulation a Government paper currem

cy nct exceeding 1.5,000,000 in notes of a denomination not lower

than ftve nor higher than one thosand dollars and they were (-x-

pressly Euthorized , according to the rules of banking, to issue

three paper dollars for every gold and silver dollar ir their

pcssession. Then it was a bank of issue. Was it also a bank ofbuy a

discount? Could any man doubt it? ### Whether the Board should1 .

bill of exchange or discount a promissory nol,e, it came to the

same thing; it was neither more nor less than an accommodatic ;

loan. And it was a loan subject to all those risks to which ,

banks, brokers, and speculators could expose it. No prudent

man would ever be willing to put his own money into such hands.\

Yr. B. therefore took it for granted that it could not and woul

not be denied that this Exchequer Board was a bank. # # #

How could it possibly be supposed that any honorable Senator

belonging to the party with which it was Mr. B.'s happiness to

act could ever adopt a plan of this description.

What would the President become, according to this plan?

He was already the great fountain of political patronage; and

he was to become the head of an immense moneyed institution.Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Date post:	10-Dec-2015
Category:	Documents
Upload:	fedfraser
View:	4 times
Download:	2 times

055_080_02.pdf

Documents