Paper System

Niles’ Weekly Register


April 25, 1818.

Banking–general remarks.

We commence the publication of a series of numbers on “The Paper System.”  They are from the pen of a master, in the hand of a gentleman.

The evils of this system must be checked.  Look at the state of our country ! –It is overrun with clans of bank-makers, bank-note counterfeiters and bank robbers;  a terrible trio of characters, operating by different means to produce a like fraudulent end.  We can hardly take up a newspaper without seeing an account of the speculations or effects of one or another of these modern associations of money-makers and money-getters.  The soul is sickened in reflecting on the prostration of morals which the late system has caused;  and its consequences, on the best classes of society, is equal to the deliberate baseness and cruelty of the actors in it.  It is time to look dishonesty in the face, and frown those that seem to be above the law into a respect for the law.

Some of the effects of the paper system are disclosed in the report made to the legislature of New York –see a preceding number of the Register.  The same things daily occur in Maryland, Pennsylvania, &c. &c.  Four banks in the first named state, whose promises to pay are selling in the money market at from 6 to 10 per cent. discount, have eight hundred suits on the dockets of our courts, making glorious work for our sheriffs and lawyers.  In Pennsylvania, the like evils prevail;  and, in little Delaware, the suits of her banks against individuals are hardly less than seven hundred !  Every where –whilst the bank managers are adding farm to farm and house to house,** the laboring classes are driven from their homes, the seats of their fathers, to seek a subsistence in the regions of the west.  I am justified in saying that the operation of a certain bank in Maryland, has compelled the emigration of an eighth part of the productive white population of the county in which it is located, within the last four or five years –and the causes of such banishment is still raging as violently as ever.  Let any dispassionate man look at the workings of these paper-money-making-shops scattered through the country, and call to mind the revolutions of property that they have brought about, to estimate the object and the end of Banking.  He that but yesterday did not own land enough for a grave, is the possessor of extensive farms –and they that yesterday held such farms, are dispossessed even of their family burying ground ! –Management is too much for honest industry –the latter kicks the beam when opposed by the former. –Speculation is seated in the parlour, but labor is refused repose on the dung-hill.
**—[Woe unto them that join house to house, lay field to field, till no place, that they may be placed alone in the bosom of the earth !  (Isaiah 5:8)]

I have a letter from an honest man who was coaxed to his ruin by a bank (which, like a Cyprian goddess, exposed its polluted bosom and smiled to destroy,) and driven to the wilds of the west.  He laments the friends of his youth and loss of society –details the hardships that belong to a new settler and enumerates many privations –but “blesses God that he is out of the reach of a bank.”  May heaven grant unto him a continuance of this good fortune ! –but the serpent may come, the apple be eaten, and his paradise be reduced to an abode for unclean and filthy things.

The banks that pay, or affect to pay, specie, are, in some measure, under the public controll –but what is the morality of the managers of those that do not pay any of their debts ?  Do they not tell a falsehood, a most deliberate and mischievous falsehood, on every bill which they issue ?  What degree of reputation is an individual entitled to who renews and reiterates a promise to do a certain thing which he himself know that he is neither able, nor willing to do ?  The best men may be unable, sometimes, to come up to their promises –yet they will not tell voluntary lies, as is done on behalf of non-paying and bankrupt banks.  But, as has been observed by me before, such lies being divided among the directors, and again subdivided among the stockholders at large, the share of each is so small that the most conscientious does not feel the weight of it !  And these as they who vex the country, and break up families by suits at law against persons for not paying their debts !  O, that my power were equal to my will, to retaliate on iniquity the pangs it inflicts, and learn bank directors mercy through a suffering of the pains they impose ! –the sheriff should penetrate their vaults –the “beggarly account of empty boxes” should be exposed –and their paper, their bank paper, should be burnt by the common hangman, as forgeries on honor and honesty.

The excuse why the banks should not pay their debts, if ever well founded, no longer exists –it is the base principle of avarice and speculation that prevents nine out of ten of them from doing justice to their creditors.  What impudence is it in them to make high dividends of profits, when they do not pay their debts ? –It is superlative assurance and unrivaled brazenness;  were it committed by an individual it would cause all men to call him villain.
[Heaven grant me patience to speak of such transactions in words fitted for the ears of my readers!]

If the banks have not money, (I do not mean rags) to meet their engagements, let their dividends, at least, be sacrificed to purchase it –nay, the capital itself should be boldly touched to accomplish such an honorable purpose.  Why should it not be –do not they demand it of their debtors ?  They may be forced to this as they force others –the people, the laboring, productive classes, must refuse the bills of any bank that will not pay its debts;  or, if they receive them, they ought to protest and sue them, just like the banks are accustomed to protest and sue the meanest men of the community.  Justice is — justice;  and the speculators should be taught that the law is equally for the benefit of all.  Nay, I am inclined to believe, or at least to hope, that the managers of such banks as I have described, may be indicted, and to a happy issue, be prosecuted as combinations for fraudulent purposes.

I am very strong in the belief that we shall get to this point by and bye;  these associations will be convinced they are not above the law.  One or two independent upright men in every town and village, might cause our Paper Banks to disappear like shadows — let them perish, that the people may be saved !  The welfare of the two is incompatible;  and the interest of the unproductive crafty should sink for the good of the industrious undesigning.

But to the banks that, with courtesy and good faith, really exert themselves to meet their obligations, let every facility and aid be extended !  They should never be pressed, except of necessity –just as a good man would press an honest one struggling with adversity.  The fitness of things, as well as the public interest, is deeply concerned in supporting such institutions –we shall have to rely upon them to stand between us and the general distress that must follow the banking explosion that will inevitably, and very shortly, take place.  There is not one reflecting man in the United States who believes that the present banking mania can rage and increase as it does without producing banking death.  And I say, the sooner it comes to pass the better.  Our country, in every point of view, is every day wasting the strength needful for the blow up.  Let it come, before the vigor of the laboring classes (who only can be relied upon to resuscitate credit by production) is blasted by speculation.  The Upas, not fabulous, to destroy all within its atmospheric range.  A remnant shall be saved –as a living testimony that “honesty is the best policy.”
—[“the banks that meet their obligations” …. the banks that only issue three promises for each coin, as the bank of Girard ….]

A few words of exhortation, and I shall close this article.  I assure the distant readers of the Register of an unhesitating belief that the banks of Baltimore are as solvent as any in our country — even as the bank of the United States.  But several of them (as is the case every where else,) are managed by directors who traffic with each other for seats at their boards, and really buy and sell votes like common merchandize.  To two of the Baltimore banks I give this serious caution –that if they do not refrain from discounting for certain shavers, the very notes that they refuse to steady mechanics and moderate dealers, I will ear-lug them forth before the public, by name, and bring the case to issue, if they please, before a jury of my fellow-citizens.  I dare do this –and I pledge myself that I will do it, if these harpies are much longer enabled to influence the banks alluded to in the course just stated.  If the people will not support me in this –let them be shaved !

Some things that I have said may be rough — but they are wholesome, and suited to the occasion.

The Paper System.
Addressed to the Editor of the Register

Sir— I have read with much satisfaction your late papers on the subject of the present system of banking, as by courtesy it is called, and heartily wish you success in the arduous task you have undertaken.  I am aware of the opposition you will encounter from the mighty myriads that are wallowing in the filth of this corrupt system, and of the abuse which you will probably be fated to encounter.  I know also that plain downright truth must ever in the end prove an overmatch for interested falsehood, and ferret it from all those secret vaults and obscure retreats, where it is accustomed to hide itself from the eyes of mankind;  above all, I feel assured, that whatever manly firmness, plain unanswerable reasoning, and clearness of detail can perform, will be accomplished by you.  But as the task will be laborious, and as your other duties must necessarily interfere at times with this great undertaking, I have thought it possible the offer of aid from a plain well meaning man like myself might be acceptable.

I therefore propose to consider the system of banking, as it is now in operation in the United States, in relation to the various classes of the community –to trace its effects on the prosperity of the merchant, the manufacturer, the agriculturalist, the mechanic, the labourer, and the class of people drawing their support from regular and stationary incomes.

In the second place, I propose, unless you and I should both become tired of the subject, to demonstrate the impossibility of such a system remaining permanent in any country, and the certainty that its failure will involve the ruin of a large portion of the community, together with the revolution of one half of the real property of the people of the United States.

With your permission, I will then trace its effects on the morals and habits of the people, and the certain consequences that will result from creating a mass of monied –or rather, paper– institutions, that will, and in fact already do, pollute the fountains of justice, and poison the sources of legislative purity.

I prefer this method of considering the subject, because it enables me to bring it home to every man’s business and bosom.  Enough, and more than enough has been written by economists and financiers, to puzzle and confound the human understanding, and envelope the elements of this science, which like those of all others are simple in their nature, in an obscurity which even the brightest rays of intellect cannot enlighten, and through which the most penetrating genius fears to grope its way.  Where first principles are involved in darkness, the truth must be sought in practical results.

I have another reason for pursuing this method of enquiry –my object is a plain appeal to the understandings of the people, with whom alone the remedy of this great evil now rests.
—[dream on.  A fifty-page essay, long-winded generalities, is not the way to appeal to the “understanding of the people;”  they will not read it, and even if they did, it would be dog-whistle to them.  neither you, nor anyone in the following two centuries, who used your method managed to accomplish the allegedly desired goal.  The people were persuaded, misled, lead by those who propagandized them with simple, short, to-the-feelings remarks.]

Statesmen and legislatures have of late become confounded with banks and bank directors and sad experience has convinced me that it is now in vain to appeal either to the reason of statesmen or the feelings of legislators.  In seeking for one or the other, nothing is more common than to find each, combined in the form of a director of some paper bank, so that the important personage unites within himself all the constituents of greatness.  In his capacity as statesman, he devises expedients for the national happiness –in his character of legislator, he makes laws to carry these into effect –and in his station of bank director, it is both his duty and his interest to make both the expedient and the law subservient to the interests of the banking system of which he is a member.

It is therefore, I repeat, too late to turn our eyes to this quarter for relief.  The legislatures have forged chains, not only for the people, but for themselves, and are now in miserable durance to corporations of their own creation !  They have built up a structure which they have not power to pull down, and which they have not the will, if they had the power to destroy.  To the people then I make the last appeal, and earnestly desire their attention to the plain, practical, matter of fact statements and reasonings I shall propose for their consideration.

To you, Mr. Niles, I tender my thanks, that, at length, through your means, there is one sober, respectable and patriotic paper open to the voice of truth and the just complaints of the people.  I am aware of the risks you run by this honest intrepidity.  You will, I fear, never get another discount –yon will become unpopular on ‘change –you will be denounced at the boards of directors –and, above all, you will assuredly get the ill will of all the numerous descendants of those honest people who were driven out of the temple of Jerusalem –you will, in short, be persecuted by the money-changers, money-brokers and lottery-office-men, that fatten into portentous maturity in the corruption of the banking system –the one will shave you terribly if you ever want to borrow money –and the others will, I fear, never sell you any of their high prizes.

Still, sir, under the most multiplied sufferings, an honest heart is not devoid of consolations that bank-directors cannot give, nor brokers take away.  There are always a few worthy people, even in the most corrupt times, whose silent approbation is worth having, and which is always given to undertakings like yours.  But there is a yet more independent gratification;  the silent testimony of an approving conscience, which makes ample amends for the ridicule of such exalted personages as bank directors, money brokers, and lottery-office-man.  That they may not, however, have all the laugh to themselves, I purpose, with the blessing of Heaven, in the course of these letters, to draw a full length likeness of each of these professions;  and if there should be found in the general features a striking likeness of any individual of either tribe, although I really mean to avoid all formal allusions, I shall certainly not disclaim any application of the picture to the original, let it be what it may.  They are all of the same blood, and of course, there will be a family likeness.

With these observations I shall conclude this letter, as I am fearful of encroaching on your limits.  In my next, I shall treat of the effects of the present system of banking, on the merchants, for whose especial benefit and convenience banks were originally supposed to be constituted, but who, I trust I shall demonstrate pretty clearly, are in a fair way of becoming victims of the monster, that was once their abject slave.  Banks are like the evil genius in Arabian stories, which was a useful daemon, while held in servitude, but a most unfeeling task master, whenever he broke his chains.

Sir— In the prosecution of this my honest undertaking, I shall endeavor, by the blessing of common sense, to keep clear of that theoretical jargon, by the aid of which the people of England and the United States, have been cheated into a belief in absurdities, which nothing but the most perplexing sophistries could have screened from derision and abhorrence.  Those who cannot elicit new truths, may sometimes render old established ones doubtful;  and thus it has often happened, that the precious lessons of long experience, as well as the dictates of sound discretion, have yielded to systems of false reasoning, too obscure to enlighten, but so intricate as to baffle all attempts to demonstrate their absurdity.  When a people are become thus hoodwinked, nothing is left, but a resort to plain matters of fact, and an appeal to their sufferings as the criterion of truth.  My object is plain English.  I mean to demonstrate the evils of the present Paper System of Banking, by pointing out, in plain English, its pernicious effects on the various classes of the community, leaving it to such as wish the continuance of the delusion, to reason on the subject, and quote authorities, if they will.

It may however be worth while to trace the present fashionable paper theories to their true source in England.  It was once the fashion there for statesmen to reason first and act afterwards.  In this case, however, they reversed the usual mode– they acted wrong first, and then resorted to reasoning to bolster up their errors.  Thus, when it was discovered that England was in debt, beyond her natural resources –and that it was necessary to anticipate the revenues of the nation a century at least to meet the exigencies of the present time –that in fact, artificial means, and legerdemain must be resorted to, in order to prevent national bankruptcy– then it was that patriotism was stimulated by pensions, and talent tempted by rewards to exert themselves.  Then all the sophistries of reasoning were put in requisition, to prove that a debt, beyond the power of the nation to pay, was a national blessing –that spending every year double one’s income, was the certain mode of growing rich; –and that debasing the currency, and depreciating its value by emitting ten times as much paper as there was silver and gold to redeem it with, was opening a mine of wealth, inexhaustible, and everlasting.  The good people of England behaved as in duty bound –for they had the fear of Napoleon before their eyes.  They feared for their liberties, so admirably secured by suspensions of the habeas corpus –and they feared for their prosperity, so admirably secured to them, by the laws and the taxes; –but above all they feared for their religion, so admirably sustained by the laws against dissenters, the tithes of the clergy, the immaculate piety of lord chancellor Eldon, and the pure morality of the famous bishop of Derry.  It is true they had but little left of either liberty, property or religion –but still it was incumbent upon them to take the more care of the little left to preserve.  And this, I take, to be the true reason why the good people of England make such a noise about these matters.  Their piety, patriotism, and love of liberty, however, such as they were, induced them to believe whatever they were told was necessary to keep Bonaparte and the guillotine out of England;  and thus it happened that they saw the Bank of England stop payment, without suspecting that it was insolvent, and the government bribed by a loan to support the bank in its violation of public faith, without dreaming that it was only two bankrupts clubbing their wits to cheat honest John Bull.  One cannot help admiring the English people, and their disinterested sacrifices, for the preservation of their religion, their property, their excellent government, and above all their national debt.

Such, sir, is the origin of the pernicious, and ruinous doctrine, that banks may be solvent without being able to pay their debts, and governments rich so long as any body is found fool enough to lend them money.  In the natural course of events this delectable theory found its way across the water;  and we who fancy every thing imported superior to our domestic productions, forthwith adopted it, without considering for one moment whether the policy of a desperate bankrupt, was befitting a plain, honest, independent country farmer.  England was excusable –she was too deeply involved to be extricated by the ordinary means of economy and retrenchment, and nothing was left her but to push the paper system as far as it would go.

But the United States were prosperous and happy;  their resources, public and private, were amply sufficient to answer every public and private exigency, had they been put in requisition;  yet, the paper system was adopted by the government, and this adoption cleared the way for the Great Paper System in all its various ramifications.  Here, where the power exists, or has been assumed by the state legislatures, of authorising loans, and issuing stocks, and chartering banks, it was to be expected that all would be anxious to avail themselves of such a mine of wealth.  They have done so, until at length, the crisis has arrived with a dreadful appalling celerity, when money is nothing but rags, and neither cash or character is necessary to constitute a bank.

I now proceed to trace the consequences of this state of things, as they are evident at present, and as they must appear in a few years –perhaps sooner;  for delusions that take a long time to mature, are often dissipated in a moment.  The people, and particularly the middle and lower classes of people of the United States, feel that there, somewhere or other, exists a cause, which saps the foundations of their prosperity — that entails distress on some and beggary on others.  They are starving in the regions of apparent plenty, and the more plenty paper money becomes, the greater are their distresses.

Some tell them this is owing to the general peace of Europe, which has caused the decrease of the demand for our supplies;  although ever since that peace the demand has been made greater by the failure of harvests in many countries –and the revival of manufactures in all, thus calling for an additional quantity of our grain, and our cotton, the two great articles of export.  Others tell them, this distress is owing to the want of national encouragement to our domestic manufactures;  and, in short, there is no end to these reasons, for the want of employment to so many laborers, and the impossibility which even those who get employment find in procuring for their families the common comforts of life.

I will tell them the simple honest truth.  It is the effect of the paper system–the multiplicity of banks.  The great capital of the nation is diverted from those objects which give singular and wholesome employment to the laboring class, into the hands of brokers and speculators, who use it to create artificial scarcity — to monopolize the necessaries of life, and to foster that distress which makes them flourish — while the poor become paupers.  Now let the pampered broker, the shaving bank director, and the prosperous speculator, laugh at this, if it shall so please them.  If they will only accompany me in these letters, I will venture to predict that if I do not convince them, I will at least spoil their laughing, even though they belong to the sect of Democritus.

Let us first enquire how this assertion is supported by the operation of The Paper System on the merchants.  It ought to be understood that banks were originally almost exclusively devoted to the purposes of this class of the community, in all countries.  Until of late years, neither the farmer or the mechanic, ever thought of ruining himself by borrowing money, except on bond, or mortgage, in which cases the loan was always for a length of time, proportioned to the slow yet certain nature of their gains.  They were too wise, or the happy simplicity of these times prevented their being duped into sixty-days loans, that might be suddenly resumed, to their complete ruin, by forcing them into the sacrifice of their property.  The merchant, on the contrary, by the profits of his trade, by the quick returns of money for his sales, and by the power of anticipating the proceeds of distant shipments by drawing bills of exchange, it was supposed, though I think erroneously, could afford to trade on a borrowed capital to a certain extent, without incurring the certain ruin of the mechanic and farmer.  I say I believe the idea was a mistaken one, since I cannot bring my mind to suppose, that loans for sixty days, liable to be withheld at the will of two bank directors, can be ultimately beneficial to any class of people whatever, except shavers, who give six per cent for their loans, and take as much as they can get –conscientiously, always conscientiously.  Be this as it may, however, it is certain that if the paper system can be of benefit to any honest class of the community, it is the merchants.  Let us therefore see what is the nature of these supposed benefits.

By creating an enormous redundancy of paper, bearing no kind of proportion to the solid wealth of the nation –nor to the real wants of the people, it is certain that at least two consequences will result, each highly injurious to the merchants.  The prices of the staple commodities of the country will necessarily be enhanced at home, to such a degree, that the nations abroad, which are not blessed with a paper system, cannot afford to buy them at this rate, and will look elsewhere for a supply.  This, and this alone, in a great degree, is the cause of that diminution in our proper export trade and employment of shipping, which is felt so seriously by the merchants of the United States.

Again, sir– This depreciation of money –or in other words, this high price, which is the result of the great plenty of paper rags, filthy to the touch and abominable to the smell– has another effect equally pernicious to the merchants.  It overstocks the exchange with merchants, who interfere with each other’s business, so that in fact the ordinary quantity is not sufficient to keep them from starving, and they become brokers, shavers, speculators –in other words, blood-suckers of the community.  I appeal to the merchants of our great trading cities, if this is not the truth, the honest truth.  I ask them, if there is half, nay one fourth regular business enough to keep them from starving ?  The market is overdone –the facility of borrowing money of the banks, has multiplied the race of merchants to such an extent that the business is not worth following;  and accordingly that high and respectable class of people, once the ornament and the boast of this land, is dwindling by degrees into a contemptible motly collection of money-brokers and speculators.

The foregoing are the inevitable results of the paper system, even admitting that the banks in general conduct their business fairly and honestly.– There are others equally, nay more, fatal, originating in the pernicious, wanton, and cruel conduct of these institutions towards their debtors.  These, though not the inevitable, are the natural consequences of placing so dangerous a power in the hands of men, to be examined, not according to the laws of the land, but directed by the interests, the passions and caprices of their nature.  By granting large loans to themselves, that is to say, the respective directors, they enable themselves to monopolize –to create artificial scarcity–to stop the regular course of business which must always depend on a regular demand and supply– in short, to take undue advantage of distresses of their own creation.  The moral effect of such transactions is, that the great monopolizers make enormous gains, while the miserable dupes, who believe this artificial scarcity a real one, finding at length the article depreciating every day on their hands, and pushed for money, send their goods to auction, where not unfrequently they are purchased at half price, by the same monopolizers.  Were it not for this paper capital, such things could not take place, because the silly merchants are enabled to buy of each other the very same article, over and over again –in fact, to consummate their own ruin, by bank discounts.  I remember a game of this kind played in New-York, some years ago.  Goods were purchased, under the influence of this mania, six, eight, ten times over, without ever being removed from the place where they were originally stored.  It was computed that these very goods were pledged, in effect, to the banks for accommodations, by their respective purchasers, for at least six times their value !  The banks hereupon took the alarm –drew in their discounts when every body was in debt, and the consequence was a sacrifice of goods at auction that ruined hundreds, aye, thousands of people.  But, my masters –you see, sir, I wish to make friends in time with the future rulers of the nation– my masters, the money brokers, bank directors and speculators, waxed rich, and flourished beyond all former example, and a race of miserable reptiles aspired to the dignity of men.

And here permit me to say a few words on the righteous fraternity of money brokers, which by its power, wealth and numbers, has become of such consequence as to influence the value of money, to direct the course of exchange from one part of this continent to another, and to establish the relative rates of bank notes in every market.  In the present filthy state of the national currency, these animals are generated “like maggots in a dead dog,” and actually crawl about in such numbers as to keep each other in countenance, and diminishing our abhorrence by the frequency of their appearance.  It is not long since money brokers and money changers were held in a contempt, inherited from father to son, from generation to generation, ever since their great ancestors were driven from the temple at Jerusalem.  I am one of those, sir, who are not in the habit of branding a whole class of people with disgrace;  but in this instance, as in most others, I am satisfied, that the universal opinion of mankind in all ages, is founded in strict immutable justice.  Universal feeling, is truth;  and though mankind may not always be able to assign reasons for their belief, yet do they believe correctly.  The maxim, that, “what every body believes must be true,” like all other homely sayings, is the result of the combined experience of mankind.

It is certain, that the man who enters on the business of making the most of his money by lending it out at illegal interest, must live not only in the habitual violation of the laws, but likewise in the habitual disregard of every feeling of humanity.  Distress, which to other men is a motive for relief –to him is only a temptation to more bitter oppression.  He must begin by shutting his heart to the first duty of a citizen, obedience to the laws –and to the first duty of a man, humanity to his fellow creatures.  He trades in the miseries of mankind, and their wants are his wealth.  If any one come to him with a story of desperate distress –of most disastrous misfortune– he must pause, not to see how he can soften his misery, but how he can make the most of his wretchedness –how he can but strip him of the little yet left from the wreck of his fortunes.  So far from this distress, or that misfortune, being considered as giving claim to compassion, they are only motives for demanding a more exorbitant premium, for his temporary accommodation.  A money broker, sir, if he had a heart like other men, would be ruined instead of growing rich;  and here it is, that without enquiring particularly into his character, we set him down ex tempore, a hard unfeeling man, and we are right in so doing.  The profession ought to be –and it has every where, and until lately, been held disreputable and contemptible.  The people who followed it, have every where lost their Caste, except since the corruptions of the paper age, whose influence has raised them not unfrequently to situations, where a combination of them could mine the credit of the public funds, and thwart the most important measures of the government.

It will generally be found, sir, that in each of the honorable –perhaps I should say right honorable banks– there is an animal of the species I have just delineated, who by his busy impatience, low cunning, and want of principle (not always, but sometimes, a recommendation among certain people) manages to obtain a mighty sway over the deliberations of the dignified body of which he is a worthy member.  He has moreover a great command of money –to lend or to refuse to lend– and even bank directors, notwithstanding the liberal allowance they receive from alma mater,* sometimes want money.  Moreover, sir –I speak openly because I speak with ample proof of the fact– many, I will not say a majority of the bank directors, are leagued with these brokers, and employ the discounts they receive, in his very dirty shop, in shaving notes through his agency;  thus escaping the odium, while they receive the gains of such vile degradation.
* I understand this allowance for shaving, speculating, &c. in the respectable city banks averages about, to each of the directors, $3000 a week.

In truth, I am heartily sick of this part of the subject, but I must and will explore this common sewer of human turpitude, from beginning to end.

A moment’s reflection will show us the natural and inevitable consequence of a person of the true broker stamp, exercising a sway over a monied –I beg pardon, a paper institution.  Let us see what it is the interest of this man, and his coadjutors to do what they have the power of doing– for this they assuredly will do, until rogues cease to be without principle, and brokers are governed by every other tie than simple –or compound interest.  The principal business of the money broker is discounting notes –shaving them, as the phrase is– that is to say, buying them at as great a discount as possible –no matter what the laws say on the subject.  I am told that in ordinary cases where the security is good, and the paper undoubted, they don’t charge more than two per cent. a month discount;  but this is really a piece of moderation I think quite creditable.

The more people want money, of course, the more the broker flourishes.  Other men’s prosperity is identified with the prosperity of the country, but the broker is like the grave digger, who grows rich in time of pestilence –the more people are distressed the better for the one, and the more people die the better for the other. –It follows, then, that the broker will endeavor to create this want of money, this public distress, so far as lies in his power.

The shortest, and most usual way of doing this extensively, is to discount freely to the merchants, until they are over head and ears in debt, or at least to the extent of the means of payment, possessed by drawers and endorsers, and then suddenly refuse to renew the notes of accommodation thus discounted.  This, of course, puts the merchants upon their resources –forces them to raise money at any sacrifice, and the short and the long of it is, they go to the worthy broker, with the very notes thrown out of the banks, and which both he and his fellow-shavers know to be good notes.  They however, take advantage of the distress thus created by themselves, and the unfortunate, deluded, swindled merchant pays as much for getting his note discounted for sixty days by the broker, as he would in better times, for a two, nay five or six years loan.  Again I appeal to the experience, the bitter experience, of the merchants, to say whether these are not solemn truths ?

But it may be said, that such acts are beneath honorable men.  I grant you, sir– but however it might have been in times past, I do seriously, yet with due deference, suggest, that bank directors and honorable men, are now no longer synonymous.  I see nothing in the conduct of many of them which justifies a single doubt, that they would not descend to these acts, or indeed to any of the dirty acts of money making.  I know, sir, that not only the directors of one, but of many banks, combine in this manner, to suck the hearts-blood of the honest merchant –and I know also, that if they do not combine, it is always in the power of two persons,** to prevent a note being discounted by a bank.  The vote of two directors can prevent the discount of all the notes offered at the board of which they are members.
** There is a great want of precise information as to the interior administration of banks.  The directors, I believe, are sworn to secrecy, like the familiars of the inquisition, and little is allowed to transpire with respect to these mysterious institutions.  I have it, however, on the authority of an ex-director, that the usual mode of deciding on a note presented at the board for discount, is as follows:  The note is handed round from one to another and if two members lay it up-side down on the table, it is refused without further explanation.  There is no necessity of assigning reasons.

Thus, sir, are the merchants placed within the grasp of the money brokers –liable to be worried, shaved, and ruined, at the interest, the caprice, or the enmity of a man without a soul !  Perhaps they may think, the desperate chance of gaining wealth afforded by these temporary accommodations –the power they give of passing a short lived impunity of worthless splendor, to be followed by poverty and disgrace, may be sufficient to over-balance the degradation of this wretched dependence on the lowest cast of human animals.  It may be so, sir;  every man to his taste –but for my part give me honest poverty and honest rags –rather than paper rags, and miserable dependence –wealth to-day, the prison bounds to-morrow –and all the horrible contrast between a few years, perhaps months only, of extravagance, and a long life of penury, insignificance, or contempt.

P.S.  The length of this letter forbids my doing more than merely to suggest, the loss and inconvenience, and difficulty arising from the various and irregular state of the currency, which prevents remitting without paying a premium of some kind or other.  The brokers who manage these matters, generally find the balance of trade in some way or other against the honest gentleman who wants to part with his notes, no matter of what place, east, west, north or south.  By a weekly statement of the rates of bank-note exchanges in New-York corrected by a stock and exchange broker, it appears that the notes of various banks, in the eastern, middle, southern and western states are received in that city subject to a depreciation of from one to ten per cent.  The banks issue them at par, and may buy them up again at ten per cent. discount. — What a thriving trade.

Its Effects on the Farmers.

Sir— The cultivators of the earth constitute the American nation.  The products of the soil are its only real and substantial wealth.  They furnish the food of man –they give to the merchant the staples of his trade –to the manufacturer the materials of his workmanship;  to the laborer his most wholesome and virtuous occupation –and to the mechanic, his employment and his bread.  Agriculture is the only lasting source of national wealth, because it is independent of those political changes that turn the course of commerce and manufactures into new channels;  and its history never presents such examples of short-lived grandeur, founded by permanent decay, as are exhibited by Tyre, Venice, Genoa, and many other states.

An agricultural people belong exclusively to their own country, and are, in a great degree, out of the reach of those regulations, made at the pleasure of governments, over which they have no control;  which exercise a decisive influence on the well being of merchants, and render those, dependent on commerce, almost as much the subjects of every other commercial state as of their own. Agriculture is, most emphatically, the employment becoming a republican people, since it introduces none of those tremendous inequalities of wealth and poverty, that create the materials of tyranny –nobles and beggars –oppressors and slaves.  Its gains are moderate and sure; it enriches by salutary degrees, and by the exercise of industry and frugality, the two great pillars of a virtuous state.  Its inviolable operation is, in short, to produce a beautiful system of equality –equally removed from the splendid, corrupting prodigality of unbounded wealth, and the debasing wretchedness of pinching poverty.  It was Agriculture that changed the earth from a wilderness to a garden, and man from a brute to a civilized being.  Its virtuous labors, while they mellowed the soil, humanized his manners, and turned him from war and plunder, hitherto his only occupations, to cultivate social feelings, to cherish social rights, and that sacred good-fellowship which arises from the influence of neighborhood –the interchange of friendly offices, and the sense of mutual dependence.

To me, then, the face of the country is the true mirror in which to look for the expression of national happiness.  The situation of the Farmer is my criterion of national prosperity.  Agricultural plenty makes a people rich and happy —commercial plenty, such as our’s, is the forerunner of national degradation –for great importations of goods, if they are not paid for by an exchange of the products of the land, make a nation of debtors;  and a nation of debtors is a nation of slaves.  Let brokers and speculators perish, so the farmer preserves his sturdy independence;  for, so long as that is preserved, the other honest classes of the community will not decay;  unless, as in the present state of things, the country has been bloated, by artificial means, into a precocious expansion, which cannot be either salutary or lasting.  Only let us free ourselves from the wretched rag-system, and, though we may not see so many upstart brokers rolling in wealth, or so many suffering laborers, who are swallowed up by the monopoly of speculators –or so many wretched paupers, reduced from fancied riches to real beggary– yet, sir, we shall see what is much better: we shall see, in their stead, a wholesome, widely diffused competence among all classes, equally removed from the extremes of splendor and poverty, on which the Republican Institutions of our country may rest with permanent security.

Looking, then, to the welfare of the farmer as the least, and the only, foundation of national prosperity, whenever I would test the character of any system, financial or commercial, I always study its effects on the landed interest;  and if I find them injurious to that, I do not hesitate to pronounce the system unwise and impolitic.  The interests of the cultivators of the land can never be sacrificed to those of any other class, or classes, of the community, without the injury recoiling upon their own heads.  As well might we attempt to deepen a stream of water by drying up its source –or to purify it by polluting the fountain from whence it issues.

Let me now proceed to enquire into the efficiency of the paper system, testing it by these plain principles, which I defy the most logical broker, or causistical speculator to overthrow, however he may obscure them, by quoting the jargon of political economists, originally hired to prop up the national debt of England.

The two boasted benefits which the farmers are said to derive from the paper-rag system, are the facility of procuring money, from the banks, wherewith to improve their lands, and the increased price of the land, as well as of its produce.  As to the first, sir, I am one of those desperate unbelievers, who doubt whether the virtue, the happiness, or the prosperity of a people, are enhanced by the facility of running in debt.  I believe that the only true and lasting basis of honorable and salutary independence, to the laboring classes, is industry and frugality;  for I know, by experience, that a dependence on any other props is sure to be followed by idleness, debauchery, extravagance and ruin.

Whenever a state of public feeling is produced, where men are not ashamed of being in debt, the mind loses its proper sense of manly independence;  and whenever the salutary obstacles to borrowing money are removed, and men are invited to become debtors by the facility of borrowing, the axe is laid to the root of national industry, which is the foundation of national virtue and prosperity.  In no well-organized state of society ought the generality of men to become borrowers;  and in no class of any community can borrowing become general, without ultimately ending in its ruin.  A man may some times be placed in a situation where a loan will be greatly advantageous;  but he who bottoms his prosperity on money belonging to others, and which may be reclaimed at any time, is worse than the fool who built his house on a foundation of sand.

There was a time –I speak in the melancholy past tense when recurring to the days of agricultural prosperity– there was a time, when it was disgraceful in a farmer to borrow money, and his respectability was seriously injured by becoming a dependent on banks.  These honest people had a just and instinctive abhorrence to these institutions, and, without exactly reasoning on the subject, they arrived at just conclusions.  They saw that the art of becoming rich, without either capital or industry –the power of creating wealth from rags– must, in the end, inevitably prove highly injurious to every man possessed of real property.  It was plain, that if men could grow rich by such means, the value of industry and land must continue to diminish insensibly, because it is impossible to give a fictitious value to any imaginary and worthless commodity, without diminishing, in the like proportion, the value of what is real.  The farmer had earned dearly, the money with which he purchased his land;  and when he saw the facility with which land could be acquired without labor, or silver, or gold, he could not fail to be struck with a conviction of the truth.  He saw and felt, that the system of rags must either be destroyed or that he must become an accomplice or a victim.  These truths are every day coming home to the farmers, in proportion as the number of banks, without capital, is increased;  and we now every day see them, either selling their lands to invest their proceeds in banks, or to flee to some sequestered region where none are to be found –or we see them driven to sacrifice their inheritance to pay their discounts.

Of all men living, the American Farmer had the least occasion to borrow money.  If he was born to the inheritance of a farm, that farm would support him as it did his father before him –if, like him, he was frugal and industrious.  If he had no land of his own, he could get it in his neighborhood;  he could buy it without money, and pay for it by his industry.  The payments were always so proportioned as to give him a fair chance of meeting them from the profits of his land;  and, being aware of this, he lost every other dependence but that becoming a man –a dependence on his own exertions.  The different periods of payment were distant and certain, and he knew the precise time that they would be demanded.  He gave no security, but a mortgage on his farm, and he allowed no extraordinary premium on the score of the uncertainty of being able to pay.  He could, therefore, pursue the even tenor of his industry, without being drawn off every sixty days, to raise the ways and means for paying his sixty days’ bank accommodations;  and seldom, if ever, did it happen that he was forced, as now-a-days, to sacrifice his farm and his produce, at half price, to the same hungry bank director, to pay a loan, unexpectedly demanded, upon some frivolous pretence.  If, in short, he was prudent and industrious –and, without these, even bank loans will not enrich the farmer– he soon became independent;  for he did not rely on the conscience of brokers, or the good will of the petty directors of a petty village bank, thirsting for his land, because they were poor, and careless of the means of acquiring it –because they were unprincipled.

Or if, sir, he found it difficult to procure a farm on these terms, in his more immediate neighborhood, the fertile regions of the west and south, where land was cheap and labor the source of wealth, were open to his enterprize and industry.  Here he was certain of independence, and sure to grow moderately rich, as rapidly as it is salutary for a man to become so.  He required not a shilling to buy a farm, his labor was sure to make it his own;  and his landlord knew his interest too well not to render the situation of his settlers as easy as possible.  There was a contest for settlers, and not for lands on which to settle.  I assert, therefore, that the farmers wanted no greater facilities in raising money than they possessed before the erection of a single bank;  and I appeal to their present declining state, that the facilities they now possess, in consequence of the multiplication of these mischievous and unprincipled institutions, are the sources their speedy and inevitable decay.  Such however was the situation of the agricultural interest, previous to the grand conspiracy of desperate speculators against the laboring classes and holders of real property in the United States.  In this happy state of self-dependence they lived increased and flourished, until the grand discovery which has immortalized the age, and will in the end make its fate an example, and a warning to posterity.  I mean the discovery of the Magnum Honum of brokers, beggars and speculators –the great chymical desideratum which baffled the science of former ages, and eluded the researches of wicked wights, where ingenuity was supposed to be quickened by unholy leagues with the prince of darkness –I mean, the true and genuine Philosopher’s Stone, heretofore believed to reside in metals, but now found to consist in a mere transmutation of rags.  We know not the name of the chosen genius who first made this fortunate discovery, and calculated so justly on the credulity of mankind, but as necessity is said to be the mother of invention, it is probable the world is indebted for this most valuable secret to some beggarly itinerant, who, having exhausted all methods of swindling by retail, luckily, at last, hit upon this admirable expedient for carrying on business by wholesale.

Since then the decline of the landed interest has been exactly in proportion to the increase of the means of trading, speculating, monopolizing, and lending, by the agency of paper banks –to the increase of bank dividends, and the rate of depreciation in the paper currency.  The temptation of nine or ten per cent. per annum, obtained by investing money in the banks, no matter whether gained honestly or not, has caused all the floating capital of the country to be embarked in banks, which are now become the only lenders of money, through discounts, or through the channel of usurers, brokers, and bank directors.  To the banks then the farmer is courteously invited to borrow money, whether he wants it or not.  There is no difficulty in his getting loans to the amount of nearly the value of his farm.  Nay, it appears by a report of committee of the assembly of the state of New York, that he is actually coaxed, seduced, into borrowing, by the cunning jackalls of the country banks.  That this seduction is carried on, on a most extensive scale, my own experience has demonstrated.  It is proved by the innumerable suits brought by the banks at every town against the holders of real property; –it is proved by the testimony of thousands of farmers, forced into the sacrifice of their lands, to pay bank discounts;  and it is unanswerably proved, by the notorious fact, that the banks are gradually acquiring possession of a great portion of the real property in their respective neighborhoods.

No wonder, sir, people who can manufacture rags at pleasure, which they never mean to redeem, and pass them off for money, and get real property pledged for the payment of debts thus incurred, Must and Will, at no distant period, acquire virtual possession of all the real property of the country.

I, sir, live in a district where there are sixteen or seventeen banks and corporations issuing paper money, within ten miles square.  Its population may be 30,000, and its trade may amount to three, four or five millions annually.  One would be puzzled to guess where all these banks find employment for their capitals –it really makes me smile, when I apply the word capitals to modern paper banks !  The riddle is easily read –they lend them out on the security of lots bought, and houses built with rags borrowed of these banks, to whom almost every house and foot of land is tributary, and every man a slave.  I have estimated on correct general data, that all the property, real and personal, land and live stock, two legged and four legged animals inclusive, if it were sold to-morrow, would not redeem the paper issued by these precious monied institutions.  By a late exposition of the affairs of these banks, made to the secretary of the treasury, and inadvertently published, it appears that the amount of specie, then in their vaults, was somewhere about one fifteenth the amount of their debts to the public !

Whats glorious state of things! and what a consoling reflection it is, to know that this state of things is not peculiar to the flourishing district I have the good fortune to inhabit, but is widely diffused, and every day becoming more extensive and diversified.  South of the Connecticut river, we seldom find a state legislature meeting without increasing these blessings;  and the first embryo act of legislation in the new states, is the creation of a litter of banks, to enable a knot of speculators to monopolize the land, and hold it at a fictitious value, which imposes on the land holder an idle and erroneous persuasion, that he has all at once grown rich.  Thus instead of the country prospering by its pure and genuine sources of prosperity;  these are in fact destroyed by fictitious substitutes, that possess no other attribute of reality, than the means of scattering ruin around them.

All suffer more or less by this substitution of ideal, for real wealth, but none so vitally as the great landed interest, which is the back-bone of this country.  The means which formerly sufficed to make the farmer independent, are now no longer so, because the value of money is decreased, in a much greater ratio than the rise in the price of his land and its produce;  and above all, because, a mode of living extravagant beyond all former example is introduced every where in this country, by the brokers, bank directors, and speculators, to which the revenues and the gains of every other class of people are entirely inadequate.  The natural, and therefore the inevitable consequences of this state of things, may be readily anticipated.

Either the farmer is tempted to sell his land, and invest it in some neighboring bank, lured by the irresistable argument of nine or ten per cent., or he is tempted to borrow money which he does not want, to speculate, and grow rich of a sudden, like his neighbor the bank director.  If he takes the first course –the stock of capital invested in the cultivation of the land is diminished in proportion to the recruits thus lured from honest and permanent independence, to take the chances of banking and speculation, and deposite their real riches in the same fate with the ideal wealth of pennyless adventurers.  From a useful citizen adding every day to the wealth of his country and the happiness of his fellow beings, he sinks into a useless drone, nay, a mischievous tempter –an animal who preys on the unsuspecting, and grown rich on the distresses of his neighbors.

If, on the contrary, the farmer is tempted, and coaxed to accept of a discount, and this is done continually by the country and village banks –which are of course ever on the alert to procure the security of real property for their rags– what then is the common effect of such imprudence ?  He obtains a temporary accommodation for sixty days, which cannot be useful to him in the slow progress of agricultural economy, and which the assurance of his friend, the bank director, that his note will be renewed forever if he wishes it, renders him careless in repaying.  Nine times out of ten he is not ready to pay the note –which is renewed a decent number of times, until the favorable period for refusing all further accommodation arrives.

Banks never want a decent excuse for this, but the real reason generally is, that some hungry bank director, has cast the eyes of longing on the good man’s farm, which, in process of time, is sold at public venue, and sacrificed for half or one third its value, –because the little country bank, having every body in debt, has only to draw in its discounts suddenly, to make money so scarce in their neighborhood, that there is no competition of purchasers.  Instances of this kind occur so frequently in the vicinity of these petty unprincipled establishments, that the price of land so far from being really enhanced in the country, has sustained a real depreciation, on account of the number of farms, that are every where sacrificed in the manner I have stated.

There are more farms for sale than fair and honest purchasers to buy them;  and though we find land nominally at a great price, we do not find ready purchasers, nor indeed any purchasers at all for it, except bank directors and speculators, who having a manufactory of money of their own, don’t mind a few thousands one way or other.  To those who never mean to redeem their rags, the emission of a few more or less is of no earthly consequence.  Hence it is that the most carelessly generous people in the world, are for the most part those who never pay their debts.  It is not they who give the money –but the laborious tradesmen who is never paid for his work –and the honest farmer who is stinted in the enjoyment of his well earned independence, to supply the unprincipled prodigality of gamblers and spendthrifts.  It is thus that laborers dwindle into paupers, and land passes away for paper money –for an ideal equivalent –impudently professing to be what it is not; –for a mere promise, that will not, and as I shall hereafter prove, cannot, and is not meant, to be fulfilled.  It is thus that the agriculturalist, the proprietor of real estate, is impoverished by the diversion of the capital of the country, from the land to the bank –from the bank to the broker’s shop– to be dealt out at usurious interests.  It is in this way that real property is swallowed up by an ideal monster, having neither flesh, or substance or soul, but voracious beyond the fabled appetites of either giant or ogre.

A little reflection will convince us, that the universal substitution of a currency bearing no intrinsic value, and represented by nothing of intrinsic value –and moreover subject to be increased at the will of needy men, must produce one of two consequences.  Either the ideal substitute will gradually decline, till it becomes worth nothing, or it will acquire a solid basis to itself, by a gradual substitution of real property for ideal nothings –by the simple process of lending nothing and taking something, as security– in plain English, by exchanging rags for lands, houses and goods.  Either of these alternatives, is almost equally fatal to the possessor of property –for it matters not much, whether he is ruined by a general bankruptcy, or by the exchange of his property for worthless bank paper.  If either, however, the latter is the most fatal –for in the event of the former catastrophe, he may still chance to keep his land, which will again attain to its proper value– whereas, in the latter case, he gets nothing but rags for his land, and when they are worthless, he is worth nothing.

To this last and most fatal catastrophe are we approaching;  for it is a maxim, self-evident, that as the gains on false capitals are real, they cannot be the genuine produce of these capitals.  Out of nothing–nothing can come;  and of those who possess nothing, nothing can be obtained.

Whence then the enormous bank dividends with which the people are every day insulted ?  They come from the men of real capital, and the honest laborer, whose labor is his capital –they are the aggregate of the diminution of the wealth of the one, and the hard earned gains of the other –they are the sum total of the great tax levied on property and labor, by brokers, bank directors, and speculators.

No wonder then, that the laborers are in want of their usual and customary comforts;  or that the farmers finding themselves becoming the helpless and hopeless victims of this pernicious system of swindling, are every day selling their lands, either voluntarily or from necessity.  Either to invest their proceeds in some newly erected bank, foisted through a corrupt legislature, or to pay for the loan of money which they have frittered away upon expensive improvements, that add nothing to their wealth and comfort, and desperate speculations that have ended in their ruin.

A gentleman who holds large estates in the northwestern part of the state of New York, related to me the following facts, the summer previous to the last.  About two years before, he had sold several farms, at the usual price, and customary periods of payment.  The first payment had been made without any complaints, but in the interval between that and the second, a litter of banks had been whelped in the neighborhood, and the poor husbandmen were in a fair way of being swallowed up by the speculations and monopolies of an upstart race of rag nobility.  They offered to forfeit the sum already paid, if he would take back the land.  They said they wanted to remove to someplace, where there were no banks to eat them up.  Alas! where shall they go to find this asylum from brokers and speculators ?

The borders of the Mississippi, the Missouri, Illinois, Ohio, Kentucky, and Tennessee, are infested by this pernicious fry –and the depths of the forests swarm with paper banks, that lend their money at par, to miserable dupes, who pass it away at a depreciation of ten or fifteen per cent.

A moment’s consideration will let us into the manner in which this operates on the borrower.  Every time he goes to the bank, he loses ten or fifteen per cent. on the money he procures –and in this way his property, as the honest farmer expresses it, is “eaten up,” by ten and fifteen per cent. at a time.  It may he urged by the ingenious abstract reasoners, on the mysteries of financiering and banking, that the farmers are not obliged to borrow of the banks;  they can let alone if they please, and for the consequences of his voluntary acts, a man can blame none but himself.  The position is true, provided no coaxing or temptations are used.  Yet after all, “lead us not into temptation” is the wisest prayer ever put into the mouth of man.  Nothing that offers an extensive allurement to folly, imprudence and extravagance, ought ever to receive the sanction of a wise and virtuous legislator, whose first duty it is to guard a people against factitions and unnecessary temptations, and shield them from those arts which cunning and unprincipled men use to deceive and ruin the simple and the unwary.

Unless I deceive myself, I have now pretty clearly proved, by general reasonings founded on the nature of man, which is the same yesterday, to-day and forever, –as well as by facts drawn from actual experience and observation– that the paper system is rapidly undermining the prosperity of the landed interest.  That its inevitable operation is to swallow up all the real property of the nation, as it has done in England !**  The same consequences will result here.  The farmers will become paupers, and the laborers street beggars or midnight thieves.  Whether I have succeeded or not, however, in this attempt, I hereby invite the right honorables of the nation –the lofty Rag Men– the righteous fraternity of brokers, bank directors, speculators, lottery office men, Legislative Converts, and bribery mongers –the bribers and the bribed, to crawl forth, and club their wits to disprove what I have thus plainly stated.  The newspapers, which are silent as the grave, concerning the abuses of the paper system, I dare swear may be made vocal like Memnon’s statue, at the touch of the golden ray.  These watchful guardians of the rights and liberties of the people, will doubtless marshal their columns, if the proper arguments are applied, to defend these calumniated worthies, and help to bolster a system, so admirably calculated to further the great ends of all “Legitimate Governments” –beggary, dependence and roguery on one hand –inordinate wealth, irrepressible insolence, and boundless corruption on the other.

** This remark deserves most serious consideration.  The middle class, so long the boast and glory of England, has been swept away by the modern flood of paper.  It is this that has caused a fifth part of the laboring population to become paupers;  and which, if it lasts a little longer, will “restore” to that country the “ancient and venerable” feudal system, in fact, if not in form.  I have a sketch of an article prepared to show by figures that pauperism has advanced in England pari pasu with the increase of paper money.

Its Effects on Manufacturers

Sir— In the present state of the world, when by the instrumentality of commerce, the wants of one nation are supplied from the superfluities of another, a country where labor and materials are cheap, will always be able to ruin the manufactures of one, in which they are dear, by underselling them in their own market.  Before I apply this great and undeniable truth to the subject of my present enquiry, I will distinctly premise that I do not mean to enter upon the question which has excited so much discussion, as to the possibility of the United States becoming in their present situation, a great manufacturing nation.  My object in this paper, is to enquire into the effects of the Great Paper System on a particular class of the community, and I wish sedulously to avoid the discussion of any other topic, that may weaken the effect of my statements, by exciting opposite opinions, on matters having no particular relation to my present subject.  With this explanation, I shall proceed, with my undertaking.

It is not necessary, I trust, to offer arguments to prove that the value of money has depreciated in the United States, in consequence of the countless millions of paper dollars now in circulation, since the experience of every man will demonstrate this truth.  Neither is it worth while to detain you with proofs that the prices of labor, and of raw materials have greatly increased, although not in an equal ratio, particularly the former. —The same experience is here also amply sufficient.  Now, the manufacturers of the United States cannot meet this rise in labor, and raw materials, by a corresponding price for their manufactures, because while the market is open to foreign nations, not blessed with such a redundancy of paper, and where of course every thing is cheap but money, will immediately come into our markets, and under sell them.  Poor nations can always under-sell rich ones;  and this is one of the great, –I speak seriously sir– one of the many great bleuings of national poverty.  There are but two ways to protect domestic manufactures in such a case:  the one is to put down the paper system and thus restore the old value of money –the other, high duties and prohibitions on foreign goods to prevent their introduction.

Laws prohibiting, or duties greatly enhancing the price of foreign manufactures, may indeed force the people to buy domestic ones;  and they will also enable the manufacturers at home to hold them at a price corresponding with that of labor, and raw materials.  But these prohibitions are manifestly unjust to every other class of the community, for there exists no social tie binding one body of men by their necessities, to purchase of another at a great price, what, if things were left to their natural course, they could procure on much more reasonable terms.  Men are not called upon to make such sacrifices to each other, by any obligation of the social compact, which never demands of all the other classes of the community to become tributary to one.  It is at once establishing a privileged order, incompatible with the spirit of all our institutions.  But even if this were not the case, it is not to be expected that the representatives of the different classes of people in the United States, will ever be induced to levy so great a tax on their constituents, until a majority of their constituents shall be manufacturers.

If these general premises are true, it results that the only practicable remedy for the distresses so loudly complained of by the manufacturers, is to put down the great paper system, by the free and sovereign will of the people –by whose sufferance alone it exists, and on whose senseless credulity it alone is sustained.  This will at once reduce the capital of the country from a nominal to a real standard –consigning it to flow as it was wont to do, through regular channels from which it is now diverted– and giving a real value to real money, that will at once bring down the nominal price of labor and of every thing essential in manufactures.

And here it becomes necessary to expose the two great fallacies of the paper system — the pillars on which it rests.  The one is, that the depreciation of money operates in a circle –that is to say, that the corresponding plenty makes amends to all classes, for the diminution in its value;  and the other, that the facility of procuring a false capital by bank discounts, makes ample amends for the diminution of value on the real one.  I shall proceed to demonstrate that both these propositions are eminently false with respect to the manufacturers;  and in a future letter, I trust, I shall equally prove them fallacious in their application to every other class of the community, except that which always prospers in the decay of a nation –the honorable band of brokers and speculators.
—[the rising tide does not lift all boats, or it is not rising everywhere]

To disprove the first it is only necessary to repeat, that the domestic manufacturers of goods cannot keep pace with the high price of labor and raw materials, because the poorer nations will undersell them.  Consequently, as they cannot sell their goods without loss, the more goods they manufacture, the greater will be their loss;  and thus the means of extending their business afforded by the great plenty of rags, and the facility of procuring them from the banks, only precipitates their ruin.

But there is yet another point in which this subject is to be viewed.  Nobody that I have ever heard of, has ventured to broach the absurdity, that the depreciation of money actually increases either the value of labor, or of real property.  The only advantage then resulting from the great plenty of depreciated money, must be the facility in procuring, by means of this plenty, an additional capital, which is done by borrowing of the banks, or brokers, now the only lenders.  I will therefore proceed to shew, how the decrease in the value of money operates entirely to the disadvantage of the borrower.  It would seem, indeed, and it is thus argued by the defenders –for it has no advocates– of the paper system, that if the borrower pays the interest and principal of his loan, in the same depreciated medium, he sustains no loss by its depreciation.  This reasoning is utterly unfounded, as I will proceed to demonstrate.

The use of money is always more profitable to the borrower, than the lender –that is to say, the former can so apply it, as to make it produce a greater interest than he pays– else there would be no advantage in borrowing, and the argument I am combatting would fall to the ground of itself.  The borrower is enabled to do this, either by the profits of his own labor, or the labor of those he employs.  This is what is called, Productive Labor –the only real source of national wealth.  It is here the paper system pinches.  It is in the sensible diminution of the value of this productive labor, that the pernicious operation of this depreciation in the value of money is most clearly distinguished, upon a close investigation.  This, however, is the obscure part of the subject, and as general reasonings, on intricate subjects are apt to be rather indistinct, I will endeavor to make my meaning plain, by a plain example.

I am anxious to shew to the people of this abused, swindled nation, what this boasted advantage is, which is thus supposed to over balance the evils of a ragged, depreciated currency –worthless in proportion to its plenty– and bearing no specific equal value at any two places –for the present enjoyment of having their honest gains diminished by the plenty which surrounds them, and for the consoling prospect of a relief from these evils by a bankruptcy ten times more expensive in its consequences than the downfall of Continental Money –for the oppression of an upstart, unprincipled aristocracy that grinds them to dust;  and for the facilities afforded to a useless, nay, pernicious band of brokers and speculators, the despicable progeny of a despicable system, in picking their pockets.

Suppose I borrow a hundred dollars, for which I pay seven per cent. per annum –you perceive I don’t mean to borrow of a broker !  I am enabled by my productive labor to employ this money, so as to make it produce me fourteen per cent.  The surplus seven per cent. is my clear gain –it is from the sweat of my brow, the labor of my hands– and on such gains I live.  But if, this value of my productive labor, is depreciated one half, instead of seven per cent, I virtually gain but three and a half, and the difference is, that instead of being enabled to live comfortably, I starve.  But this is not all, there is something yet to come.  Not only the worth of my labor, but the worth of my borrowed hundred dollars, is diminished one half, by this depreciation in the value of money.  I cannot buy half the raw materials with it, that I could twenty years ago, and consequently my business suffers, first by the depreciation of my profit, and, secondly, by the depreciation of the means by which I extend my business.

But here again comes in the circular system of reasoning to which I have before alluded.  I must so proportion my profits as to make up this deficiency.  But I have already clearly shewed that the manufacturer cannot do this without being undersold by foreign dealers, and the same will apply to every class of mechanics and labourers, who are dependent on the rich for employment.  I have endeavored to make this matter plain, and I hope I have succeeded, for it is here, that the round-about reasoning which goes to prove that the great plenty of money operates alike on the lender, and the borrower, is arrested in its circle, by an obstacle that no reasoning has ever yet been able to surmount.  In vain, therefore, will the manufacturing interest expect to flourish while this paper system flourishes.  Nothing but its downfall, or a prohibition of foreign importations, which congress cannot sanction, or duties that the people will not pay, can possibly save them from ruin.

Such sir, are the inevitable effects of the high prices of labor and materials, produced by the enormous emission of paper money, on the manufacturers of the United States.  If it be asked why the same causes do not produce the same effects in Great Britain, I answer, the cases are not parallel, because labor in that country bears no proportion to the increased price of every thing else, and hence it is that the great manufacturers still maintain a precarious existence, while the laboring classes are in a state of object distress.  Did the price of labor in England correspond with the high price of every thing else in that country, by the operation of the paper system, there is not a nation of Europe that would not undersell the British manufactures in every market.  It is the distresses of the laboring classes in England, that enables her with her paper system, still to undersell the world.

But the evils inherent in the great paper system, are heightened, as is generally the case with every bad system, by those abuses, that will ever be the consequence of placing a power in the hands of men, to the abuse of which they are tempted by the irresistable love of gain –and for the abuse of which they are not responsible to any human tribunal.

This brings me to a consideration of the general unprincipled system of conduct pursued by a great portion of the banks towards every other class of the community.  I call it unprincipled, for I know not what other name to apply to a system which acts under the uniform influence of a total disregard to the interests and the happiness of others, and which could not be tolerated in my country, where legislative purity, or legislative wisdom, was not exactly in an inverse ratio with the quantity of paper rags.  I assert sir, and I will establish it by referring to the records of our courts, for thousands of proofs of the fact, in the number of suits brought at every term by banks against real capitalists –I assert that the grand objects of banks, since they stopped payment and persisted in evading their promises, even when they pretended to resume the payment of specie, has been the substitution of real property in the place of rags.  Their whole policy has been to give a basis of reality to that which had none before.

This suspension –let us give it its plain English name– this total and final suspension of specie payments, was the signal for the creation of litters of banks in every part of the middle and western states, under the auspices of various combinations of needy speculators, without capital or principle, who being at once by this great blow at the national prosperity, freed from the necessity of paying their debts, and gifted with the privilege of coining their own money, had no limits to their cupidity.  Their resources were the credulity of the people, and their joint funds the great stock of national folly.  But they felt, even in the midst of their prosperous career, that credulity is not everlasting, and that nations some times suddenly recover their wits.  It became necessary, therefore, in order to perpetuate the blessings of this happy age of paper, to take advantage of this folly and credulity while they lasted, so effectually as to render a return of the people to their senses unavailing.

It was a simple method they pursued, for they had simpletons to deal with.  They got rid of as many of their rags as possible, either by lending them out, and taking the security of real property;  or by employing fellows to go hawking and peddling them the country round, for which they received a commission of so much per cent.  It may be objected, that this ingenious method of paying a premium on passing away one’s own money, would inevitably produce the ruin of the lender in the end.  And so it would, but for one thing.  It ought to be understood, that one of the first acts of these contemptible little paper banks, is to enter into a kind of partnership with one, or two, or three other little contemptible institutions, in different places, for the neighbourly exchange of each other’s notes, and for the purpose of negociating the support of each other’s Credit !  We shall see now what advantages this produces.

In process of time, the notes thus palmed upon the people, by the banks, or their travelling agents, come home again for payment, and if paid at all, –that is in any real value– the poor bank would be in danger of bankruptcy !  But they are not paid, except by other rags equally depreciated, which the other banks of this righteous partnership kindly furnish each other with, to pay their debts.  The honest dupe hereupon goes to the bank whose notes have been given him to pay the notes of the other bank, and here he is offered the notes of the very bank that he has just came from.  Thus the creditor is bandied about from one to the other until he submits in despair to the imposition, and goes and does as well as he can with rags.

If he should prosecute the bank for the amount of the debt, a clamour is raised against him, sufficient to deter the stoutest heart –he is persecuted by the whole clan of paper manufacturers –he suffers all the keen effects of awakening the enmity of a body of men as powerful as unprincipled in their hostility –and if he perseveres in his demand of justice, his claims are tried by a jury, one half of whom perhaps are at the mercy of the banks, and decided according to laws propounded by a magistrate who is himself a bank director, or if not, whose interests, or the interests of some of his friends, are dependent on the good will and pleasure of the members of the great paper aristocracy.

Is not this plain statement, which every body knows to be true –of the combinations of banks to cheat the people –to fright them from resorting to the law –and to render that resort ineffectual, sufficient to excite alarm, in every reflecting mind ?  Does it not strike directly at the security of property; the freedom of seeking justice, the possibility of obtaining it;  in short at every thing dear and essential to human happiness ?  Individuals dare not prosecute the very banks that are every day prosecuting without remorse these very individuals.  When we consider in addition to all this, that the banks, by being thus virtually exempted from paying their debts, are thus left at free liberty to create out of others the means of buying and selling human consciences;  of tempting and punishing;  of extending their influence over legislative and judicial bodies;  of drawing the people from opposing or chastising their faithlessnes;  of preventing their attaining justice.  When we consider all this sir, is it not certain –absolutely certain– that if the paper system is not immediately circumscribed in its means of acquiring influence, the whole property of the country, and the sum total of the rights of the people, will be at its mercy ?

As the nation is now situated, the honest part of it, which alone is worthy of protection and sympathy, is unconditionally at the mercy of the paper aristocracy.  I say unconditionally, because when a privileged body of men are permitted to carry on their affairs in secret –to act on motives which they dare not own, and cannot justify –to claim the privilege of guilt in not telling any thing that may condemn –to put the law in force against others, and to evade it themselves –to issue rags, without the necessity of redeeming them, except by other rags –while all this continues, who shall dare to say that the honest part of the community is not laid unconditionally at the feet of an order of authorised swindlers, who began with nothing, but are gradually swallowing up the property of the property of the farmer and manufacturer, and the gains of honest labor.

There is some little consolation in the midst of slavery in knowing that our masters are good and worthy men, to whom power is not the warrant for its abuse, and whose estimation in society is a guarantee for justice and moderation in the exercise of their prerogative.  But, alas! such consolation is not ours! we are, unhappily, subjected to a different, far different, dynasty.  Men who feel a consciousness that money is the only thing that can, by any possibility, elevate them to an association with respectable human beings, and whom nature has debarred from the exercise of any other means of acquiring influence, but money will not, and cannot, be scrupulous as to the attainment of this only means of giving themselves importance.  Nay, experience justifies the conclusion, that they will, in time, come to consider every method of obtaining money, that does not subject them to the penalty of the laws, as justifiable.

From this state, in which the mind acquiesces in a welcome delusion, there is but one stop to the most possible corruption of the heart, when it feels a pride in dexterously employing bad means to the attainment of bad ends.  It is in this deplorable state of moral perversion, that the highwayman will triumph in the intrepidity of his murders –the thief in the superior dexterity of his nightly depredations –and that the brokers, speculators and trash, which constitutes the paper aristocracy, will, like the hardened prostitute, boast of the number of their victims.

From an aristocracy, thus mainly constituted, whose wealth is obtained by the sacrifice of the wholesome morals, the wholesome prosperity, and the precious freedom of the nation, I would wish to warn, and do most solemnly warn, the people of these United States.  To guard that gallant, and yet virtuous people, from the effects of a system that debases the human mind, and destroys that strong feeling of personal independence, which is the safeguard of their rights, the basis of their freedom, I have taken up my pen.  I have employed the term Aristocracy, which is often used in our country without being understood, in its general signification.  We are authorised to apply it, exclusively, to the feudal barons of old, and their successors, the titled nobility, of the present day.  It is time to tell our people that titles alone do not make an aristocracy.  It is the exemption from certain general laws and regulations of society –the freedom from rules that circumscribe the freedom of others– and, above all, the exclusive possession of the land which gives the means of wealth –or of some other prerogative– such, for instance, as that of issuing the paper-money, that constitutes our aristocracy.  In the feudal ages, there was neither commerce nor manufactures, and the land furnished the sole and only source of wealth.  Hence the barons, by possessing the land, held, of necessity, every other class of people in hereditary dependence.  Now, however, the great extension of commerce and manufactures has given to money the influence formerly exclusively possessed by land;  and a privileged order, exercising the sole right of making the only money we have, is, to all intents, an aristocracy of the most dangerous kind.  It possesses all the odious features of aristocracy except titles;  and who shall tell us how long it will be before a bank director shall signify a nobleman ?

I am not in the habit of railing at the constituted authorities of our country, nor of passionately arraigning every act that does not accord with my views or my wishes;  but I do not hesitate to say, that when the different legislative bodies co-operated, with such singular harmony, in the creation of a Privileges Order –possessing and exercising the sole power of dispensing a false capital of between two and three hundred millions –a privileged order, distinct from any other in the nation in its powers and immunities –bound together by the strong tie of mutual interest, separate and independent from any other class of the community –adding nothing to the mass of national capital, or to the amount of productive labor– they forged chains for themselves and the people of the United States.  They laid the foundation of a system which, if not destroyed by the virtue and firmness of that people, will, at no distant period, generate an organized and united aristocracy, with greater and more active means for enslaving the people, than were ever possessed by the barons of the feudal ages –an aristocracy gifted with the exclusive privilege of dispensing, now that gold and silver have disappeared, the means by which men alone in a civilized state can promptly procure the indispensable necessaries, and pursue the indispensable occupations of life.  They entailed upon every other class of men a dependence on this one alone for the means of satisfying all the wants, and obtaining all the enjoyments that constitute a great portion of the happiness of civilized human beings.

The incorporated manufacturers of rags, by banishing or withholding the precious metals from circulation, have become the sole dispensers of that which have usurped its place.  The exclusive privilege of coining money, not from silver and gold –which, whether earned or not, every where among civilized nations possess a specific value– but from rags, is resigned to a gang of needy speculators.

What, sir, would the good people of the United States have thought, what would they have said –for to speak and to think are one and the same with a free people– if their representatives had given to one small Privileged Order the exclusive right to all the profits of creating, out of nothing, two or three hundred millions of paper-money, which they were authorised to pass away, at the value of silver and gold, and which the people were virtually obliged to take –I say obliged, because they could get no other ?  And what would they have said, if, while this privileged order was permitted to deal their paper out at the full value of silver and gold, they were graciously exempted from redeeming it in like manner ?  Would they not have withdrawn their confidence from people capable of such enormous folly, or something worse, and brand them with infamy and contempt ?  And yet, such is the plain, honest, undeniable truth.  A privileged order, not recognized by the constitution of the United States, or any of the states, has been thus created, and at this very moment is exercising the sole right of issuing two or three hundred millions of paper-money –the only money we now have, or ever shall have while this unnatural and anti-republican state of things shall continue.

I acquit, from my soul, the different legislatures of any attempt to enslave the people;  and I wish I could, with equal frankness, acquit them of being rationally blind, or of wilfully shutting their eyes to consequences so inevitable as those I have been stating.  Still more heartily do I wish that I could acquit the people of the United States from the imputation of stupidity, or what is worse, indifference to their rights.  It is precisely this condition of the legislative power, the sovereign power of this country, and this state of the public mind, that inevitably, if not checked in time, leads to the downfall of the public liberty.

When the legislative power is rationally or wilfully blind, and when the people become careless of any thing they do –and when the press is as silent as the grave– then the designing and unprincipled, the needy and the avaricious –the ambitious rich man and the desperate bankrupt– crawl forth to take advantage of this blindness, indifference, and lack of salutary watchfulness.  Then the legislative power is deceived or tempted into acts that strike at the root of liberty;  and, at such times, the people, themselves and their guardians fast asleep, suffer such things to pass and fancy all is right, because nobody complains.  Such has been the conduct of the legislatures and the people in a large portion of the states, and such have been the consequences.  A Feudal Paper Aristocracy, an Order of Rag Barons has been erected, with power equal to the old feudal chiefs, and with means ten times greater of enslaving the people.  The people, under the old feudal system, were only dependent on their masters for their lands;  but the people of the United States are in vassalage to the new order of Rag Barons for the medium by which they procure every thing in the world –and without which they are, in a manner, interdicted from all the comforts of life.  The difference is not much, and that difference is in favor of the ancient feudal vassal.

These observations on the consequences of that easy facility, or something worse, with which the different legislative bodies have yielded to the seductions of the paper system, are not intended for any party purpose.  On a subject like this, I belong to no party, but the party opposed to the paper system, which judging by the dread and awful silence reigning around, is not as yet very numerous, although I trust in the glorious influence of bright, and ever during truth, that it will ere long become sufficiently so, to free the people from this upstart ragged aristocracy.

The writer of these papers disclaims any intention of a discriminating to the interests, or the antipathies of either party, federalists or republicans, by these sketches.  In truth there is but little difference between them, as respects the encouragement of the paper system.  The honor of its first introduction is certainly due to the former;  but the anxiety of the latter to favor so illustrious an example, has led them as deep into this mischievous folly as the other.  I am not causist enough to strike the balance between two partners in guilt, one of whom commits the crime, while the other consents to share in its rewards.  Neither do I mean to cast any general imputation on the feelings, views, or motives of the different legislative bodies that have been most liberal in creating banks.  I will do them the favor, to believe that at first they did not distinctly perceive the consequences of giving every year new vigour, means, and activity to a privileged order.
[ As if these charter-issuing representatives managed to persuade themselves and believe that those bank corporators came in, year after year, spent time and money lobbying them, solely for the non-profit purpose of benefiting the general population;  that is why the representatives accepted bribes and shares in the proposed money corporations….]

I say privileged order, for however this paper system may be extended, it cannot comprehend the whole nation.  Every man his own lawyer, is bad enough, but everyman his own money manufacturer –paper money would at once be good for nothing.

In a certain province of Spain, there once occurred violent disputes between certain powerful families on the score of nobility of birth, which threatened to involve the country in a civil war.  A certain wise king –for there have been wise kings as well as black swans in this world– in order to remedy these disorders, ennobled the whole province, man, woman and child, at one blow, and the consequence was that nobody afterwards valued a distinction possessed by every body.  Such would be the effect of incorporating the whole nation into knots of money makers;  none would value what each could make with so little trouble.  The making of paper money therefore, however the system may be extended, must of necessity, be confined to a privileged order, and the legislative powers have consequently sacrificed the rights of the people in erecting, increasing and maturing an order of this description.

Far be it from me to say that they have done this with their eyes open. —[yes they were so good at it that they managed to accomplish all this with their eyes closed] I believe most seriously that ignorance of the consequences of their acts was, in a variety of instances, the real source of this evil –and legislative ignorance most happily for certain dignified bodies, is not felony, either in courts of conscience, or courts of law, although its effects are often more pernicious than those of willful downright wickedness.  Yet I mean to make no formal charges against Our Sovereigns –for such are the legislative bodies– and even now I do not think them altogether unqualified to be the guardians of my rights, although I see them still obstinately, and willfully persisting in a line of conduct, of which they cannot be still blind to the fatal consequences.

I am puzzled sir, to invent an hypothesis that will without impeaching that legislative purity, which is the sole safeguard of the people’s rights, account for the singular fact of their still continuing to multiply banks, at the moment they see that those already created are either unwilling or incapable of fulfilling their engagements to the public, and where it is notorious that their capitals have not been, and cannot be paid in.  Some of them are issuing notes to twice, and thrice the amount of their whole authorized capitals, when only one or two installments have been paid in, and others upon nothing.  Is this a foundation for a National Currency ?
[Surely, it was not expected, that men who associated with the professed design of making profit for themselves, and who admitted the Government as a partner, should trammel themselves with restrictions which the Legislature had, either through design or oversight, failed to impose ?]

** By a report made to the secretary of the treasury in 1814, it appears that but one of the banks of the district of Columbia had its capital fully paid in, some of them scarcely one half.  It is also notorious that the capitals, as they are called, of the bank of the United States, and almost all the banks established since the suspension of specie payments, have been paid by loans from these very banks !  For the payment of these loans, the scrip of the stockholders, together with their individual credit, are pledged –a notable security as we shall see.  The scrip thus pledged, is worth nothing, unless the capital of the bank is actually paid in;  and the value of the security of individuals who cannot pay it in without borrowing of the bank to pay the bank is, to say the least, exceedingly suspicious.  They depend on being eventually able to pay, by the sale of this precious stock –and if by any accident it should depreciate, it is not probable they will be able to pay at all.  We have then, after all, no security for the debts of these banks, thus indebted to every one in the community, but the individual credit of bank speculators !  It were much to be wished that the different legislative bodies would call upon each and every one of these banks, for a similar statement with that demanded of the banks of the district of Columbia, and appoint sagacious and incorruplible agents to see that the statements were fairly made.  I am mistaken if this would not disclose not only a beggarly amount of specie, but also demonstrate that not one half the capitals of the banks has been actually realized, even in paper rags.

One of the nearest things to a moral impossibility in this world, is to convince mankind that there may be too much of a good thing.  The next step in the grade of impossibilities is to persuade them that what they have been all along considering a very great blessing, is, on the contrary, a very great curse.  It is therefore, I fear, almost a hopeless task to undertake to apprize my worthy fellow-citizens, that the great exuberance of paper money, not only contributes to make the nation actually poor, by banishing a real, and substituting an imaginary wealth in its place;  but that it also inevitably impoverishes every class of people but one, by taxing them severely, for the benefit of that one alone.  The task however hopeless, is not perhaps quite impossible, especially as at this moment, the perceptions of many of your readers may have been quickened by an actual experience of the truth.

A definition is sometimes of service in argument, and I will begin mine with one –of banks.  Banks are ingenious devices of men without money, sanctioned by legislative bodies without discretion, to impoverish a nation by banishing its specie capital, and beggar the people by making them tributary to a privileged order.

As this definition, I believe is not put into such plain English by any of the learned writers on the paper system, I will endeavor to establish it by a plain appeal to honest common sense, that useful quality, which would indeed be invaluable, did it not so often consent to become the dupe of interested rogues, or visionary theorists.

In order to ascertain the true operation of any system, it is always necessary to look a little beyond era of its commencement, and see how matters stood at that period.  It will serve to simplify the matter, if I first state a case, and then apply it to this country.  Suppose then, a nation, previous to an introduction of the paper system, was in possession of twenty millions of actual specie, which was amply sufficient for all the purposes to which money is usually applied –in short, that it answered all the ends of a circulating medium.– We are to pay particular attention to the fact, that this money is already in the country –that it is bona fide the property of the nation, which pays no interest for it whatever.  At this period the paper system commences its operations, and we will suppose a paper currency of forty millions created by banking companies possessing an exclusive privilege of issuing this great substitute for the national specie.

Two consequences will inevitably result from this substitution.  The specie capital will disappear, its uses will be lost to the nation, as we have seen to our cost; –for money is an active ambitious demon, it will not lie idle, and if condemned to obscurity and unprofitableness in one country, will assuredly find means to reach another, where it can fulfil the great law of gold, “increase and multiply.”  Thus the nation will lose its twenty millions of real capital on which it paid no interest, and will get in its stead forty millions of paper, on which it pays an interest of ten or twelve per cent. –to privileged corporations, as I shall prove in a subsequent part of this letter.

Again– the twenty millions of specie dollars, having been fully adequate to all the actual wants of the nation, the inevitable consequence of doubling this capital, and putting the whole in circulation, must be a great diminution in the value of money –certainly not less than twenty-five or thirty per cent.  The nation will therefore be taxed ten or twelve per cent. on forty millions of dollars, for which it gains only an accession of twenty millions of paper money, depreciated more than one fourth in value.  Here then is a dead tax on the different classes of the community, excepting the bank corporations, to whom the tax is paid, of really five millions, simply for the great advantage of the difference between a circulating medium of twenty millions, which was actually what it professed to be, and forty millions of dollars, one half of which merely replaces the twenty millions it has expelled from the country, and the whole of which passes at a depreciation of at least one fourth its nominal value.

Is it a matter of wonder that every class of people but the privileged banking order, its pimps, jackalls, satellites, and dependents, should wither under a tax like this, thus silently and imperceptibly withdrawing from the proprietor of real property, and the honest laborer, a portion of their gains, amounting to nearly five millions of dollars, and giving them nothing or next to nothing in return ?

But it seems we must shut our eyes and understandings, and believe against the evidence of facts so plain and undeniable, that the Nation is benefitted, by an annual tax of ten per cent. on the profits of its labor, paid to a privileged order, while its actual means of extending those gains are only increased by a few millions of depreciated currency.  I hope that the definition of banks which may have appeared a little startling at first, is now made clear to the comprehension of those to whom alone I address myself –the people of plain, straight forward common sense.

It would appear absolutely impossible to account for the blindness of the people of England to these obvious consequences of the paper system, did we not revert to the ingenious system of reasoning, which always accompanies the system of paper.  All these disadvantages, are more than balanced it seems, by the high price of lands, labor, every thing indeed, by which the land holder and the laborer are enabled to pay this great tax to the privileged banking order, and pocket a surplus besides.  And this wonder is brought about by commerce, say these ingenious reasoners.

Commerce, sir, can do great things, but it cannot make foreign nations pay us more for productions of our lands and labor, than they pay to other people.  This is a species of favoritism not usually indulged by nations.  And here we will take occasion to apply the foregoing reasonings to our own country, to whose case they are most strictly applicable.

Very few, if any, of the productions of labor in the United States, except the labor applied to the land, are exported to other countries.  Consequently, this argument does not even speciously apply to any other class of people but farmers.  To them I shall prove, I trust, that it applies with nearly as little justice.  If the price of labor is raised so as to enable the laborer to pay his portion of the great tax on the paper money issued in the U. States, without actual loss, on whom does this additional price fall? on those who employ him, and who are they? the people of the United States –consequently, the nation is not enriched, because it is only one class paying what another receives.  The nation can, therefore, only be benefitted by this high price of its products and labor, by its exports, and I have, I think, proved, in a foregoing letter, that this can not happen, because we export none of our own productions, except those of the soil, which we can only sell in foreign countries at the price which is given for the same productions of other nations, our rivals in the market.  If the merchant gives more to the farmer or planter for his produce, than he can get for it in a foreign market, the nation gains nothing by it, since the gain of the farmer is the loss of the merchant.

The great plenty of paper money gives, consequently, no national equivalent, for the great tax it levies, as I have before proved, on the people –because the rivalship of other nations that can afford to sell cheaper, will always keep down our foreign market.  The whole argument of the defenders of the paper system falls to the ground, the moment the tax which it levies on labor, cannot be reimbursed to the laborer, by his employer in an increase of wages;  to the employer, by an increase in the value of the product of this labor;  and to the exporter, by his ability to lay the whole of this addition on the foreign purchaser.

In the United States there are now in circulation, probably, not less than two hundred millions of paper money.  There is no means of arriving at certainty in this case, except by a general call of the legislatures, which I think ought to be made, for a statement of the amount.  When however, we take into consideration the number of our banks and the fact that they must necessarily issue more than twice the amount of their pretended capitals, to divide eight, ten, twelve, nay fifteen per cent. of profits, independently of expenses and Bad Debt, I think two hundred millions of dollars a moderate calculation.

I am almost afraid to proceed, sir –the consequences of the truths before stated, when applied to this country, actually have induced a severe scrutiny of the principles I have just laid down, which has ended in a conviction still more firm.  On this two hundred millions of dollars the people of the United States are paying an interest of at least ten per cent. being more than the amount of all the taxes levied directly and indirectly by the government !  And this for what ?  For the support of a privileged order –a paper aristocracy, a small minority of the nation, which cannot become otherwise than a minority, because the majority can never be benefitted by a monopoly.  The great mass of the people are therefore forever excluded from sharing any of the real advantages of the paper system.  Let me go on and divide this blessing –this tax of twenty millions– among the people, and see where the greatest portion, the heaviest weight will fall.

When the means of obtaining the necessaries or luxuries of life are circumscribed to the laborers, and the men of real capital, they have but two alternatives.  Either they must make the labor or the real capital more productive, or they must give up –the one, a portion of the absolute necessaries, the other, of the luxuries of life.  Now, sir, let us, after having reasoned from the poor up to the rich, reverse the method and reason back again.  The rich man can associate himself with banks, and incorporate himself with the paper aristocracy, by investing his real capital in banks, and thus buying a title –that of bank director for instance, instead of a victim he becomes an accomplice, and shares, instead of paying, a portion of this great tax of twenty millions.  If he does not this, he must retrench his superfluities to escape falling into abject want.

The members of the laboring classes, on the contrary, until the acquire either great wealth, or great political influence in the cities, are never associated in this dignified order of privileged paper barons, simply because they have nothing to contribute but their due portion of the twenty millions of tax, which they are condemned to pay.  Indeed, the powerful classes of a community, can generally manage to shift their burthens on the labouring people –they gradually descend, step by step, until they fall upon the poor, where they stop.  They can not shift their burthens –there is here no further progress –no reaction.  Here they remain, and here they fester, and wither, and consume.

In no country where there are privileged orders, is there not to be found a corresponding order of beggars ?  These are the opposite extremes of the system.  The beggar makes the noble, and the noble repays him for the independence of which he has robbed him, by subscribing to charitable institutions and poor rates.  He takes from the poor laborer the honest gains of his labor, and repays the pauper by alms.  And it cannot be otherwise in such a system;  for although by the bountiful distributions of Providence there is enough on the Earth for the people who inhabit it, if that is left to its natural distribution;  yet unerring experience has demonstrated in a thousand instances, that there is no more than enough.  There cannot be a monopoly by one portion of a community, without a corresponding want in the other –there cannot be exclusive privileges granted to one class without infringing the rights of another –there never was and there never will be princes without paupers.

Industry always pays the piper for idleness –and a race of idle princes and nobility, that is to say, a privileged order, is much more expensive than an order of common paupers.  The people are taxed much more severely to supply the extravagancies of the one than the wants of the other.  The paper aristocracy in this country stands precisely in this situation;  it is taxing the people twenty millions of dollars to support its idleness and extravagance.  The laborer gets nothing of the banks, and is paying a great portion of this tax.  The two hundred millions of money, on which he is taxed, is no advantage to him –it does not enable him to do more work in a day than he did in the time of gold and silver currency– nor does he receive for that labor, as much real value as when he was paid in silver and gold.  Yet he is taxed some thirty or forty dollars yearly, to keep up the dignity of the paper aristocracy.

To be sure sir, forty dollars is no great matter, a broker would earn a thousand times that sum in a year, without benefitting the country a farthing.  A member of the paper aristocracy would give that sum for a fresh salmon, to treat his brother manificios;  and a speculator would risk ten thousand times the amount –of other people’s money– in the desperate chance of making ten thousand times as much more.  And yet, notwithstanding this astonishing difference, it does so happen that this insignificant class of people who think so much of forty dollars, do actually contribute more to the real riches and physical strength and happiness, of a country, than all the brokers, monopolizers, and speculators, that ever did, or do, or shall exist, in the world.

In time of peace they are the sources of all the comforts of the rich –every time they lift their arms, some requisite to the comfort of man is supplied– and in time of public danger, they are the defenders of our property, the vindicators of my rights.  I have cast about to find, in what rank of useful animals to class those by whom their happiness is thus sacrificed.  They add neither to the wealth, nor the strength of a nation –they neither administer to our wants, by doing any thing useful, nor do they afford the means to others to be useful –they are the drones of society, who consume the honey without either bringing any to the hive or guarding what is already there.  In short, I am at a loss to reconcile their existence to our ideas of a just Providence, except in the way we account for the existence of all the phenomena of moral evil, by supposing them instruments for the punishment of man’s transgressions –and thus classing them with plague, pestilence, famine and other sweeping avengers.  (But enough of the picture, I do not wish to disarm the indignation of the reader, by turning its object into a thing to excite pity.)

Without, therefore, entering upon an enquiry into the comparative rank either of these classes occupy in the scale of a nation, I will content myself with repeating that the laboring class amply deserves the protection of the government, as well as the paper aristocracy, and that it is now stinted in its enjoyments, and in a fair way of being beggared by the tax it pays to the support of the paper system.  While the active capital of the country is thus diverted from those objects that give employment to the industrious, to purposes of usury, monopoly, and speculation, the laborer is left without a necessary supply of work.  Hence arises a contest for employment, rather than for laborers, and the consequence is that the laborer, instead of being able to insist on an augmentation of wages, corresponding with the depreciation of money, and the consequent high price of the necessaries of life, is compelled by his wants, to work at any wages the rich may choose to give.  In every country, the means of the laboring class are so nearly on a par with their absolute wants, that they cannot refuse to work a length of time sufficient to gain an augmentation of wages, without starving.  They must work at incompetent wages –they possess no superfluities to live upon in the mean time, and whatever is taken from them is so much taken from their daily bread.  Hence it is that they first begin to feel the operation of any system injurious to the wholesome prosperity of a nation.  It is by them national distress is first felt, on them it bears hardest, for they have least to lose.  Following this upwards, we shall find the class of people next them, possessing the smallest portion of superfluity, becoming the victims, and so on until we come to the great privileged order, which has swallowed all, and is revelling in the spoils of all below.

This is a picture of what England now is and what we are every day becoming.  The laborers and small farmers, and capitalists, are ruined, while those who have incorporated themselves with the paper system, are revelling in inordinate wealth –the wealth of the present race of British paupers.  These were once the men who paid all the taxes of the paper system, and are now dependent on those who possess the fruits of their labor.  These poor victims have nothing now to pay, and the burthen has fallen on the next class above them: the farmers, who will soon, like them, become the victims of the same paper system.  Thus every order of man is approximating nearer to beggary;  and like the companions of Ulysses, each is waiting its turn to be devoured by this tremendous Cyclops.

In the mean time they are becoming more easy victims, by gradually waxing weaker and weaker every day from their proportion of the great paper tax, becoming greater by the total extinction of one of the orders of men who assisted in its payment.  Thus are we enabled clearly to perceive how the vital blood may be slowly drained from the right arm of a nation, and the wholesome vigor of the whole body destroyed, to foster the growth of some filthy excrescence, that grows with the decay of nature, and at length produces exhaustion and death.

There are two causes, however, that will retard the catastrophe in this country, although they cannot finally avert it.  Fortunately for our welfare, owing to the wide spread surface of our country, and to some little dissimilarity of habits and character in the different sections, we seldom find a mania raging equally in all parts, and at the same time.  The diseases of the mind under which we labor, are mostly caught from abroad, and make their first appearance like the Yellow Fever, about the sea ports.  Thence they spread by degrees, and before the whole body politic is completely infected, the first patients are in a fair way of recovery.  Thus it has happened with the bank mania.  It began in New England, but the good people there, always excepting little Rhode Island, having past the crisis, and the example afforded by their return to reason, will, I hope, be as extensively followed, as that of their losing it.  From thence it has passed into the middle and western states, which are now raving under the influence of this disease, which, however, has changed its character, from involuntary madness, to cool calculating, wilful delusion.  Virginia most narrowly escaped the session before the last;  and the other southern states along the Atlantic, seem, with the exception of Georgia, to be tolerably quiescent at present.  When the middle states have sufficiently burnt their fingers, to come to their senses, or to recover those principles which they seem to have forgotten, their neighbors of the south, may possibly seize the cast-off old fashioned coat, and strut about in it, until they are fairly clothed in rags.

The universal diffusion of this mischievous and ruinous paper system, may, therefore, be retarded for a while by this course;  and it is to be hoped, there will always be a considerable portion of the body politic sufficiently sound, to neutralize in some degree the folly or corruption of the rest.

The habit and the power of emigrating from the sphere of action, occupied by the paper system, to the new states and frontiers, not yet cursed with its baneful influence, is another cause that will retard the consummation of the paper system, in the total ruin of the lower and middle classes.  And here is the true secret of the unparalelled emigrations of the last three or four years.  The people of middling property, finding themselves incapable, in consequence of the high price of subsistence, and the tax to the paper aristocracy, of living in the enjoyments of their usual comforts, emigrate as far from the sphere of banks as possible.  They go where there is no bank tax to pay.  Formerly it was the people of no property that emigrated to the west –now it is the people of moderate independence, who cannot enjoy their usual comforts at home, and fly to the west, as an asylum.  But they will fly in vain if the mad, mischievous, or rather the unprincipled system, of banking continues to be adopted with such hungry avidity by the speculators of that region.  The system, will in time depopulate the new states, as it is now depopulating the old.  The emigrant will pass them by, and seek yet farther, in the recesses of the forest, or the boundless prairies, for a cheap country –the object of every poor man’s pilgrimage.  When the vacuum is filled up, then and not till then will our fate become the fate of England –splendid misery !

In the mean time, however, we are paying our twenty millions of taxes to the paper aristocracy –our laborers are impoverished –our farmers are driven from their homes to the west, and nobody prospers, but brokers, speculators, and bank directors.  The nation is enfeebled into a bloated mass, whose strongest limbs are crippled by the oppression of a system partial to one part, and ruinous to every other.  Its very appearance of wealth is nothing but splendid beggary –for in the absence of silver and gold, its enormous burthens of paper rags add nothing to the means of happiness –still less to its real strength.  The strength, and resources of every state, are those which can be brought into operation in time of public danger.  The paper monster turns traitor to the country when its services are most wanted.  It must be pampered with new immunities, and conciliated by the sacrifice of new victims;  and even then it will give its aid only at the price of the sacrifice of the public interest.  Have the people forgot the last war, its triumphs, its mortifications and its lessons ?  Have they forgot the gambols of the paper aristocracy which levied an usurious interest on the government, and repaid the authors of its existence by making a speculation on their necessities.

In assisting to put down, if possible, a system thus recommended by nothing but the mischiefs it produces, I seek to make myself agreeable to no particular class of men, except honest ones.  I know not what revolutions its downfall may produce in the different states, nor can I conceive of any, but such as must be salutary.  The writers who have connected it with the views, and interests of party, may have pure intentions, but they have not sought their accomplishment by means equally pure.  The banking system seems to have little to do with party, for both parties appear equally willing to partake its gains, and to assist most lovingly at the apotheosis of every new bank.  If we look at the votes of legislatures, we shall see all parties confounded together.  The subject appears to me to have nothing to do with the present political struggles, and if it should ever be made a party question, the truth will be buried in the rubbish of political altercation, and passion will decide this great question, instead of facts and reasonings.

My sole and only object in these letters is to destroy the paper system of banking, not by a change of one man for another, but by a change in the feelings and opinions of the people, who alone can, and will put it down, simply by withdrawing their confidence from (dishonored) paper money.  No revolution of parties, which relieves the people from a tax of twenty millions, and destroys a privileged order which revels in the spoils of industry, can be otherwise than salutary in its consequences, to the glory and happiness of this country.  But let us not confound things together that have no connection in nature, or in fact.  The present administration has no community of cause with the paper banking system.
[then, why was a grand central paper bank chartered ?]

Before I conclude this letter, let me not forget to express my surprise at the profound silence of the public papers, so obstinately preserved on this momentous question.  It cannot assuredly be from a mistaken idea that the subject is of no manner of consequence.  The paper system must either be a blessing or a curse.  If the first, it certainly ought to be vindicated from the charges brought against it;  if the second, it is the duty of a Free press to appear in behalf of the people.  Let not this dead silence be mistaken, sir, it is not the silence of contempt, but of cowardice.  Yet if these watchful guardians of the lowly, deceived and oppressed, find it worth their while to be silent, they certainly might find it still more profitable, to appear in defence of this grateful paper order of nobility, and their paper system.  Or perhaps, as both parties are equally deep in the sin of the system, they don’t just now perceive any party purpose to be gained by their interference.  Or perhaps the powerful influence that has thus muzzled the press, in its prospective wisdom, hopes that by bending down in the acquiescence of silent humility, the storm will soon blow over, and they may hold their heads higher than ever.  Let them not believe, let them not ever hope it.  The destroying angel of truth is gone forth against them, the spirit of enquiry which will yet in spite of the silence of the press, pervade all classes on this, the most important subject which has been brought before the people since the adoption of the constitution, must, and will eventually lead to a final decision.  It can not die a natural death, it must either be deposed and strangled, or it will become our tyrant.

As it respects myself, I for one, “while I live and move, and have a being” will never let it rest.  I devote myself to watching its progress, exposing its effects, and denouncing its mischiefs, until the system shall have arrived at its consummation, in the total subjection and abject pauperism of the people;  or until they rise in their might, and put it down never to rise again.

[The editor takes the liberty to add, that the time is believed to be at hand when a liberated press will thunder awful truth into the hearts of the guilty, and rouse the people to an emancipation of themselves.  As yet, with one or two exceptions, the city newspapers tremble at the very mention of a stand against a system, acknowledged wrong in itself and ruinous in its consequences –for the core of the polluted excrescence is in them, and the idea of annihilation fetters the will to essay its extraction.  But we shall do better after a little while, many enlightened editors in country places have nobly stepped forward, a wholesome reaction will be produced, and truth shall prevail.  Such has been the animation caused by the essays on banking in this paper, that, by republications and otherwise, I am convinced they are considered by at least fifty thousand, perhaps by an hundred thousand men.  I know that in various parts of the country the neighbors regularly collect by dozens to hear the Register read.]

History of Banks in the United States.

Sir— I enter on this part of my subject with unfeigned reluctance, because it involves the solemn duty of exposing scenes of management, intrigue, and imbecility, disgraceful to the character of those entrusted with the highest power that can be exercised by human beings –the power of legislating for the happiness of millions of freemen.  But I hold it treason to my fellow citizens to be now silent;  and no apprehension of the consequences shall any longer prevent my pointing out to them firmly and distinctly the source of the evil, and the means of preventing its further progress.  In so doing I shall be careful not to implicate the dupe with the tempter –or the simple and unwary, with the crafty, designing and unprincipled.  Above all, I shall studiously abstain from unwarrantable personalities –and while I tell the truth, in the severe language of honest simplicity, disguising nothing that I know –and asserting nothing but what is well known, or can be proved to the conviction of all– I mean so to perform the task that the most unblushing advocate of a corrupt system shall not dare to accuse me of any other but an honest motive, or of using any language unbecoming my own character, and the subject of which I treat.

The banking system, in its origin among us, was the legitimate offspring of the funding system, a measure of party policy, deemed by many of the best men of that day dangerous in its principle, and in its consequences injurious to the welfare of this nation.  It is generally understood to have been adopted principally through the influence of the late Gen. Hamilton, a man whose reputation has suffered more from the injudicious praises of his admirers, than the detractions of his enemies.  Both, his friends and his enemies, will probably long contrive to differ as to the tendency of his political conduct, and the decision of the question respecting the wisdom, or folly, of his measures must be left to time, which will finally develope their consequences.

The first banks were also the children of the same system.  They were granted to the wishes of certain wealthy and influential persons of the party, and speculation continued gradually to extend itself, by slow degrees, and with consequences comparatively unimportant to the general welfare, until the period when the banks took advantage of the patriotism of the people, to stop payment at a time of great public danger.  Since then the evil has grown with a most alarming extension, and from causes which I shall proceed to explain.

This suspension of specie payments opened to moneyless speculators a prospect of establishing banks without the very disagreeable necessity of having a real capital –it accustomed the people to put confidence in banks that would not or could not pay their debts, and consequently it gave an opportunity for bankrupts to become bankers.

There exists no lie, except the necessity of rendering notes with specie, of sufficient force and strength to secure the people against the abuses of the banking system, nor can the most wary legislator devise any expedient other than that to prevent the multiplication of paper money without bounds.  The moment banks can do business without specie –that moment they get rid of the necessity of having a real capital –since they can pay their debts with mere rags of their own, or they can easily exchange them for the rags of other banks, and thus relieve one rag with another.

The moment, therefore, the system was relieved from this inconvenient stumbling block of specie payments, it spread like wildfire.  Banks grew up like mushrooms, some with charters, some without, and all destitute of that solid basis of specie which alone can and ought to furnish the foundation of institutions which are to afford its equivalent in paper.  To furnish a more convenient and portable currency is the only proper and legitimate end of banks, which were never intended as means of increasing the quantity of a circulating medium, although they have been bountifully indulged by the munificent legislative bodies, in the privilege of issuing notes to thrice the amount of their nominal capitals.  How these institutions have multiplied, and from what motives, and by what means, they are still multiplied, I will now proceed to explain.
[You are sadly/sorely mistaken:  banks have no business furnishing currency !!!  Banks, if they are allowed to exist at all, must discount for legal tender alone.   If “more convenient and portable” currency is needed, the Treasury can provide it just as the Mint provides coin.]

It is one of the precious blessings of this system that those who are not accomplices must, of necessity, become victims, as I have explained in the preceding letters.  It was natural therefore that every person of the least pretensions, should wish rather to share in the gains of the privileged order, than herd among its vassals, and pay tribute.  Hence the different legislative bodies were besieged at every sitting, by hungry expectants, and clamourous petitioners to extend the benefits of this monied monopoly;  and as it was obviously and on the face of it unjust to confine the immense gains and advantages of this monopoly to a few, they perhaps, from the best motives, extended the privilege of banking from time to time.  For this I do not sit in judgment on them.  They did not at that moment see the dangerous consequences of this extension, and in all probability were influenced by the motives I have ascribed to them.
[In every case there were in the legislatures opponents of these charters who explained to the allegedly ignorants what they were doing;  no, they were not ignorant dupes, they were corrupt]

It perhaps did not occur to them that they were multiplying the evils of this monopoly by extending it, and thus increasing its pressure upon all those who were excluded from a participation in its advantages.  But it is sometime since this excuse has ceased to be availing and the effects of the paper system have become too glaring to escape the notice or elude the investigation of the most superficial observer.  For more than four or five years past, a great portion of the bank charters have been obtained by means and combinations, of which the people, who suffer by their consequences, ought no longer to remain ignorant.  It is high time they should know to what idols they have been sacrificed.  The first process to which I shall call their attention, is that of a combination of persons in a particular town, possessing political influence, or the means of exciting this influence to aid their purposes.  These petition the legislature of the state for a charter, and make this political influence the means of obtaining it.  Persons are named for directors in the original charter, very frequently as cat’s-paws, because they are influential with the people, who believe and hope that through their means, they will be admitted to a share in the favors of this new Plutus.  These friends of the poor, however, having answered the end they were intended for, are generally voted out of the directory the next term of election, to make way for others, belonging to a more dignified order, too elevated to think any thing of the laboring classes –except just about the time of a contested election– and too eager to appropriate discounts to themselves and their dependents, to pay any regard to the general wants of society.

The bank, which was thus sanctioned by the legislature in compliance with the wishes of the people who expected to derive benefit from it, by these means fails to answer the desired object, and the next session the same people are again gulled into the support of another application, because they cannot see that monied institution must and will inevitably be converted into a tool for monied men –instead of an instrument for lending to the poor. —[why should the poor borrow? especially from a bank?  can they borrow themselves out of poverty?]

From my soul I am glad it is so –I rejoice that this tremendous influence of two hundred millions of paper money is employed for the purpose of individual gain, rather than in bringing the wholesome population of our country into an abject subjection to a privileged order by means of largesses, in the shape of discounts.  I rejoice that it is employed in picking their pockets rather than bribing their suffrages.  When the period shall arrive in which this great paper capital becomes an instrument of ambition rather than of avarice, woe to our country –for its freedom will be annihilated.  All distinctions of party will then be merged in one common interest, and the members of the paper aristocracy will forget their federal and republican sympathies, in a combined effort to render their dignities, and immunities perpetual, by enslaving the people.  All experience sanctions this conclusion, nor is there any principle in human nature more invariable, than that which combines a privileged order, in one common effort, to one common end.

Another mode of forming bank charters succeeded.  This was by connecting a bank bill with some popular object with which it naturally had no connexion whatever.  A bridge or turnpike, for instance, was petitioned for by the people of a particular district, and a bargain made by certain members, to support the application, provided the bank was included in the same act: Thus, in effect, the members of a legislative body barter their votes with each other, and a species of bribery is introduced of the most pernicious character.

A third mode is that of getting up a litter of banks, so distributed in every portion of the states as to act as a sweeping bribe to a majority of the the members and their most influential constituents, who expect to become presidents, cashiers and directors, or to receive a direct, or collateral advantage, understood or specified.  Such was the example set not long ago by the state of Pennsylvania –resisted by the virtuous and respectable Snyder, and persisted in by its legislative guardians, to its great consummation.  Such has lately been the conduct of Kentucky and Rhode Island, and every friend of this country must regret to see two states, one distinguished by its gallant patriotism, the other ennobled as the birth place of Perry, following so pernicious an example.  A similar plan was laid in Virginia, during the last session of the legislature but one, and failed, I think, by the virtuous resistance of the senate.  If Virginia is to have any other influence in the union, than that of her numbers and talents, I hope it will be the influence derived from such examples of political virtue.  The example first set by Pennsylvania, was the laughing stock of the nation.  The Litter of Banks, as it was called, became the theme of common jest and ridicule, and it has passed into a proverbial phrase, forever incorporated with our language.
[On March 19, 1813 the Pennsylvania legislature passed a law (an act to establish a general system of banking) to charter 25 new banks.  Governor Snyder vetoed it.  In March, 1814, the legislature passed another bill, authorizing the charter of 41 banks.  On March 19 Governor Snyder vetoed it, too, but the legislature overrode the veto.]

Legislature of Pennsylvania.
To the senate and house of representatives of the commonwealth of Pennsylvania.

Nothing less than the most perfect conviction of my understanding and the strongest urgings of duty could induce me to return for re-consideration, a bill presented to me by the legislature of Pennsylvania with whom it has been my happiness to act in unison, and with whom even to differ in opinion gives me pain.  I have, with an anxiety portioned to its importance and with the difference justly due to the constituted authorities which have passed it, read and carefully examined, the provisions, tendencies, and probable consequences, of the bill entitled “An act to establish a general system or banking” and cannot approve of it: I have accordingly directed the secretary of the commonwealth, to return it to the house of representatives where it originated, with the following objections :

First.  Because, corporations are privileged orders, vested with certain rights and immunities, not enjoyed, nor, without penalties, to be exercised by the great body of the people.  And whenever an association of individuals are legally vested with such peculiar powers and privileges, it ought to be either called for by the general voice of the people, or be so manifestly for the promotion of the public veal, and beyond the accomplishment of individual enterprize and ability, as to satisfy the judgment, and thus secure the votes of an indisputable, majority of the whole legislative assembly.  This objection is founded on that equality of rights, which is the vital principle that pervades our constitution, gives it all its excellence, and dispenses the blessings which pre-eminently distinguish the citizens of the United States.

Second.  Because, every objection which can be urged against corporations generally, gathers weight and strength when directed against monies institutions;  the undue influence of which has often been the subject of well founded complaint.  To wrestle with and put down this influence, new associations have been formed;  applications for new charters for similar establishments have multiplied;  and in proportion as they have been granted, has been the multiplication of new applications.  These facts apply with peculiar force to the city of Philadelphia, where those institutions had their origin, in this country;  but should the system be enlarged, as contemplated by the bill under consideration, evil will overspread the whole state, and it is much to be feared, will taint the purity of elections, and eventually prostrate the equal rights of the people.

Third.  Because, it is questionable whether too much has not already been done in granting to corporations the privilege to coin money — a money which, not answering the purposes of foreign commerce, drains the country of its precious metals, and in their lieu substitutes a currency which is without any value, except what is stamped by public confidence.  The granting such an inherent right of sovereignty to individuals, avowedly associated to promote their pecuniary interests, is putting it in their power to increase the circulating paper medium of the country to such an extent as will result in the depreciation of, or a total want of confidence in bank paper;  events too deplorable not to be deprecated by every good citizen.

Fourth.  Because the most diligent inquires, and information from the best sources, have satisfied me that the present banking capital of Pennsylvania is equal to the discounting all the good paper, which for many months has been offered, or will be offered during the continuance of the war in which we are engaged;  and therefore the establishment of 25 new banks, dispersed all over the state, with a capital of $9,525,000, would, by the readiness to give credit, invite to visionary speculations;  divert men from useful pursuits;  damp the ardor of industrious enterprise and consequently demoralize the community.

Fifth.  Because as banks are multiplied, so will be increased the the difficulty of distinguishing real from counterfeit bank notes;  thus facilitating the means of imposition upon the ignorant and unwary, and by the hope of impunity, tempting more to join in committing the crimes, already too prevalent, of counterfeiting and passing counterfeit notes.  At present then variety of designs and signatures to our bank notes are not diversified, but what an attentive observer may, with tolerable certainty, discriminate between a genuine and a counterfeit bank note;  but if 25 new institutions be privileged to issue paper money, each one selecting its own device, mode of execution, kind of paper on which it shall be printed, and each having its own officers to sign and countersign them, how almost impossible will it be, for our citizens to know when a piece of paper purporting to be worth five, ten or one hundred dollars, be in fact worth any of those sums, or not worth one cent.

Sixth.  Because, although petitions have been presented, asking the incorporation of banks in some counties of the state, yet upon enquiry I have not learned that any application for the establishment of a system so novel and extensive, has been made to the legislature;  nor has this want of expression of the public wishes in favor of such a system been made unequivocal by the votes of the legislature.  This bill was carried, as appears from the journals, by a majority of one in each house:  in neither branch of the legislature had this bill a majority of the whole number of its members.

Seventh.  Because, the history of all nations that have authorized an extensive paper currency, and the experience of our own country, have furnished melancholy examples of the disastrous consequences which flow from such a system.

Eighth.  Because, at time of war is an unpropitious era to try experiments, particularly when those experiments may seriously affect the finances of the commonwealth, which now draws a revenue more than equal to all its current expenses, from the bank stock which it owns in the banks already incorporated.

Ninth.  Because, under all the circumstances, no material injury can result from an arrestation of the bill, until the next session of the legislature;  whereas, if it were now to pass into a law, it might produce evils not in the power of a subsequent legislature to correct:  because an act incorporating a company for the purposes of banking partakes of the nature of a contract, against the impairing of which there is a constitutional prohibition;  and because a provision wisely introduced into several laws lately passed, vesting associated individuals with corporate powers and exclusive privileges, authorising a subsequent legislature to repeal and annul such law if the privileges thereby granted should at any time prove injurious to the community, happens, very unfortunately, not to have been introduced into this novel and important bill.  At all events, if I am mistaken, misinformed, or in error, the representatives of the people, upon review of the bill, can, if they think proper give it effect, independently of executive sanction, by such a majority as would unequivocally express the public opinion, and designate it the law of the land.

Simon Snyder,
Harrisburg, March 19, 1813.

Legislature of Pennsylvania.
To the senate and house of representatives of the commonwealth of Pennsylvania.

The bill entitled “an act to regulate banks” was presented to me for my approbation on the 9th inst., I have given to its consideration all the faculties of my mind and the feelings of my heart, and regret to say that my conviction of duty to the community will not permit to approve of its passage into a law.  In returning the bill as I do for reconsideration, I respectfully refer the legislature to the objections transmitted March the 19th, 1813, against the bill entitled “an act to establish a general system of banking.”  These objections apply to the present bill with additional force, because it contemplates the establishment of a much greater number of money-coining institutions, thus spreading further and wider the baleful effects which I cannot but think inevitable from such an establishment.  In addition to the objections on the journals of the last session, I will briefly remark that although the system has been a year before our fellow-citizens, yet have none of them requested that it should become the law of the state.  And I cannot divest myself of the fear, that if it were to become a law, it would tend only to enrich the wealthy and the speculator, while it would in various forms heap burthens on the poor and the industrious.

Permit me to hazard an opinion that changes of law have a great effect on popular government to weaken its force by preventing, or destroying habits;  a steady operation gives force to laws and the government acquires dignity and respect in proportion to its uniformity of proceeding.  This bill, I presume, will produce in society an unhappy effect.  It legalises the acts of illegal associations and proves the weakness of the government:— Nay, it carries on its face a warrant for the infraction of the restrictive provision it contains, and, in my opinion, goes far to encourage the infraction of all law.

It is a fact well ascertained that immense sums of specie have been withdrawn from the banks in Pennsylvania and certain other States to pay balances for British goods which Eastern mercantile cupidity has smuggled into the United States.  The demand for specie has in consequence been and is still so great that the banks in Philadelphia and in some other parts have stopped discounting any new paper.  I ask a patriotic legislature, Is this an auspicious era to try so vast an experiment ?  Shall we indirectly aid our internal and external enemies to destroy our funds and embarrass the government by the creating of forty-one new banks which must have recourse for specie to that already much exhausted source ?  Is there at this time an intelligent man in Pennsylvania who believes that a bank-note of any description is the representative of specie ?  Is there not just ground for fear.  A knowledge that forty-one new banks, having a nominal capital of more than seventeen millions of dollars, upon the bare payment of one-fifth part, shall have the right (the inclination to do so cannot be doubted, under the predominant spirit of speculation) to throw into circulation an additional overwhelming flood of paper, and thus totally to destroy the remaining confidence in that medium;  and will not a hoarding of specie and a ruinous depreciation of bank notes be the natural consequence of such a state of things.

On the ground of principle generally I may confidently say that industry is the only permanent source of wealth, it secures subsistence and advances our interest by slow, yet sure and regular gains, and is the best preservative of morals.  Not so speculation, which this bill seems to invite.  It has the direct contrary effect, depending on no fixed principle: it opens a field for the exercise of ingenuity, ever on the alert to take advantage of the unwary in the accidental variations of things.  The success of the speculator by profession tempts the farmer and mechanic to forsake his accustomed honest pursuits, launched on the wild sea of speculation, ever exposed to deviations from rectitude;  his moral principles become weakened, and eventually all sense of commutative justice is destroyed.

Thus impressed, as to the probable consequence of the bill, if enacted into a law, I should betray the trust reposed in me by my fellow-citizens, if I were to approve of its passage.  To differ from the representatives of the people is painful to me, but to shrink from a responsibility which I consider myself in conscience bound to assume, would be criminal.  I decline stating any objections which may have arisen out of the fluctuations of opinion amongst the members of the general assembly during the pendency of the bill under consideration, and to refer to them only to show how the hopes and fears of the members themselves were raised and depressed, and, their opinions altered, by circumstances which would not at all influence others.  The bill is returned for reconsideration, under the most perfect convictions that my duty to our common constituents, to the state, and the union, requires me so to return it.  Duly respecting the judgment and motives of the legislature, and trusting to their liberality in viewing my conduct, I remain their fellow-citizen,

Simon Snyder.
Harrisburg, 19th March, 1814.

Harrisburg March 22, 1814.

Yesterday the house of representatives proceeded to re-consider the bank bill, and the votes being taken agreeably to the directions of the constitution, were as follows:—

For the bill:— Messrs. Allshouse, Bean, Bollinger, Burchfield, Clunn, Crum, Dechert, Dickerson, Dingman, Ellmanker, Feger, Ferguson, Forster, Graff, Grosch, Hart, J. Hays, S. Hays. Heaton, Herrington, Heston, Hudson, Hyde, Jordan, Kerr, Krebs, Kremer, Law, Lawrence, Lightner, D. Maclay, J. Maclay, W. Marks, G. Marx, Maxwell, M’Call, M’Comb, Metxgar, Miller, Milliken, Jacob Mitchell, James Mitchell, James S. Mitchell, Plumer, Potts, Pruner, P. Reed, Reigard, Rinker, Robinette, Rothrock, Seller, Sergeant, Slindel, Shreve, R. Smith, S. Smith, Sounder, Starne, Stevenson, Stoy, Wallace, Watson, Weston, Winters, and St. Clair (speaker.) –66.

Against the bill:— Messrs. Addams, Bond, Brooke, Cartner, Chessney, Connelly, Courtney, Darlington, Duane, Fackenthall, Frysinger, Harris, Heckert, Hindman, Holmes, M’Coy, Murray, Powell, J. Reed, Reiff, Rowland, Rupert, Sutherland and Thompson. –24.

Two-thirds having agreed to pass the bill, it was sent, together with the governor’s objection, to the senate, who immediately proceeded to reconsider and, on the question, shall the bill pass? the ayes and noes were as follows:—

Ayes.— Messrs. Beale, Brady, Burnside, Frailey, Graham, Hamilton, Jarrett, M’Farlane, M’Sherry, Poe, Rahm, Ralston, Ross, Shannon, Shearer, Shoemaker, Stroman, Watson, Weaver and Woller –20.

Noes.— Messrs. Baird, Barclay, Biddle, Erwin, Gross, Laird, Lowrie, Newbold, Tod and Lane, speaker –10.

So the bill passed.

There is yet another mode of procuring bank charters, which has been found highly successful in legislative bodies which have passed through the preparatory stages of corruption.– Agents are sent up to the high seat of legislative wisdom and purity –prime dealers in the service of corruption, hoary-headed professors of intrigue– with the power of disposing of some thirty or forty thousand dollars of the stock of the embryo bank.  They have a carte blanche, to do what they please with this, nor is any account ever required of them provided the charter is obtained.  I know not how it is disposed of –but this I know, I once happened to be at the seat of one of our state governments when a game of this kind was going on, and the common morning salutation of men, meeting in the streets, was– “well what is the price of a member to day ?”  “So many shares” –was the answer !  Yet there was a certain member always below par — and such was his well known purity, that he never rose to the market price during the whole session.

Do not understand me to say that there was any bribery in the case.  No sir! it was “If you are favourably disposed towards the bank, already, if you believe in your conscience that it ought to be chartered, there are shares at your disposal, provided the charter is obtained.”  These facts were notorious –they were talked of in open day –the thoughtless ridiculed and laughed –the corrupt chuckled at the success of their schemes, and the reflecting and virtuous looked on and sighed at the degradation of the people in the persons of their legislators.  Men were prosecuted for offering and accepting bribes –but as the only parties to such a business, are both equally guilty in the eye of the law, no testimony could be proved sufficiently strong to convict them.

I will go on sir– I have rent the veil and the whole monster shall be exposed to public view, in its own naked deformity.  There have been instances, at least one instance, where the executive of a state was obliged to check this mania –that is the polite phrase for the boundless virus of corruption, which is every day spreading and infecting the whole body politic– he was obliged to check this torrent of corruption, by proroguing the legislature –an act I believe without a parallel since the independence of this country was established.  He had, in his speech on the opening of the session, displayed in the most unanswerable argument, the evil consequences of further enlarging the system of paper banks, but finding that there was a determination to sacrifice the interests of the people to the gains of a few speculators, he prorogued the legislature, and sent the members home to learn lessons of virtue from their constituents.  That this high handed act of executive authority, was sanctioned by the people, and that the popularity of this excellent magistrate was increased by a measure which, in other circumstances would have destroyed it, is an unanswerable proof that it was proper –nay absolutely necessary to the public good.
[January 4, 1812.
The trusties of the late Bank of the United States have made an application to the legislature of Pennsylvania for a charter, with a capital of 7,500,000 dollars — and Theodorus Baily and others have given notice of their intention to apply to the legislature of New York for an act to incorporate a bank with a capital of six millions of dollars.  The title, in Pennsylvania, is proposed to be the American Bank, in New York, the Bank of America.  Though it is not avowed that the application to be made to the legislature of New York, is to be made on behalf of the late directors, or present trustees of the late Bank of the United States, there seems no reason to doubt, though two incorporation are desired, these banks will, in fact, be “one and jndivisible.”]

Address of Governor Tompkins to the New York Legislature, January 28, 1812:

Much of the time of the legislature has heretofore been engrossed with the concerns of incorporated institutions.  It is a question worthy of our serious meditation, whether corporations, other than those of literary, charitable or religious kind, have not already been multiplied to a dangerous and alarming extent, particularly those of them which are endowed with the power of conducting monied operations.

It has already been announced, that petitions for new banks, to the amount of eighteen and a half millions of capital, will be presented during the present session.  It will appear, by a report on your files of February last, and by an inspection of the laws passed since that, that our existing bank capital, including the stock to be subscribed by the state, amounts to nearly thirteen millions of dollars.  The debts which may now be legally contracted upon that capital, are thirty nine millions;  and if eighteen millions and an half of additional capital should be granted, the banks of this state alone, will then be enabled to contract debts, or in other words to issue their paper to the enormous sum of ninety-four millions of dollars, a sum at least sixteen times greater than the whole specie capital of the state.  A failure to discharge such a debt, will produce universal bankruptcy and ruin.

The fearful prospect presented to my imagination by the preceding facts, and by the infatuation which has hitherto occasionally prevailed, with respect to banks, demand of me, as a sacred, official duty, to submit to your consideration a few remarks upon that subject.

The intrigue and hollow pretences, which are frequently practised to draw the legislature into the views of applicants, by exciting expectations that particular local benefits will flow from the grant of the charter solicited;  or that particular classes of citizens, or politicians, will be peculiarly gratified by it, ought not to impose upon us at this late day;  for we know, that expectations, excited by such representations, have too often vanished in a subsequent selfish, speculating and demoralizing distribution of the stock.  Neither ought we to be unmindful, that not unfrequently, the prominent men who seek the incorporation of new banks, are the very same who have deeply participated in the original stock of most of the previously established banks.  Having disposed of that stock at a lucrative advance, and their avidity being sharpened by repeated gratification, they become more importunate and vehement in every fresh attempt to obtain an opportunity of renewing their speculations.  It is also worthy of preliminary notice, that the apparent unanimity in favor of a measure which often surrounds the capital when the legislature are beset with bank applications, is no real indication of the sentiments of the community at large.

One prominent objection which meets us at the threshold of an examination of this subject is, that the vaults of banks are the reservoirs into which the specie is collected, and where larger quantities of it are at all times accessible by those who may wish to send it out of the country, than would be the case were the specie left diffused, instead of the paper.

Bank stock is generally owned by the speculating, the wealthy, and the aspiring part of society.  An amount of their personal property, equal to that vested in stock, is withdrawn from other applications and appropriations of it, which would probably be more beneficial to the agricultural, manufacturing and laboring interests.  Hence arises the difficulty experienced by enterprizing farmers, manufacturers and mechanics, to raise money at lawful interest upon the best security;  and hence it follows, that the necessity of temporary pecuniary relief, frequently drives them into the embraces of unprincipled, avaricious usurers, who fertilize upon the wants and distresses of the needy and unfortunate.

The influence of the wealth amassed and concentrated in bank stock, wielded under the direction of a few persons not accountable or responsible to the community for their conduct, nor restrained by any official oath, may be devoted to a sway over individual passions, sentiments and exertions, alarming in a representative government.  A diligent observer will have already perceived one palpable operation of this influence on public sentiment, in the fashionable, erroneous opinion which prevails, that there is greater sanctity in corporate, than in individual property and rights, and that the one is less amenable than the other to governmental control, and less subservient to any paramount public good.

The multiplication of banks increases the facility of counterfeiters to make depredations on society, and their operations are almost exclusively prejudicial to the less wealthy part of the community, whose business does not familiarise them with the great variety of paper money which is put afloat.  The last mentioned part of society are generally the most moral, upright and useful members thereof, and are the main dependence of government in times of danger and of war.  Of them, therefore, the legislature ought to be the peculiar guardians.  A recent detection of immense quantities of false bills creates serious apprehension that the amount of forged paper already emitted, bears a great proportion to the quantity of genuine paper in circulation;  and if so, how will the country be deluged with the former, if the facilities for putting it off be multiplied ?

One of the baleful consequences of banks, is the facility with which credit may be obtained by certain descriptions of persons in and near cities and villages through the medium of a responsible endorser.  The fictitious capital thus acquired by a man, inspires confidence in all descriptions of dealers and mechanics, who consequently trust him.  Whenever adversity overtakes him, the property on hand is immediately transferred to the endorser to secure the bank demand.  This course is dictated by a sense of gratitude to the endorser, and by a desire to propitiate the good will and future patronage of the bank:  and it thus happens, that whilst the bank obtains full payment, more humble creditors, who have trusted the insolvent, in consequence of the imposing appearances, with which that very bank invested him, lose the utmost farthing of their dues.  Hence, and not from the defect of the insolvent law, as is generally imagined, proceeds the universal complaint, that the estates of insolvents yield no dividends to ordinary creditors.

The wound which the morals and reputation of neighboring states have experienced from a too great indulgence of the bank mania, and the present depreciated credit of bank currency, there and in England, furnishes a lesson of vast importance to patriotic and upright statesmen.  The paper of the late bank of the United States had an unbounded credit and circulation.  At its first creation, there were few rival institutions in the great mercantile cities, where its branches were established, and it therefore enjoyed the deposits and business of the first houses and characters in the union.  It was also patronised by the exclusive deposits of the general government, to the amount of near twenty millions annually, which added greatly to its ability for accommodation;  and if that bank with such unprecedented advantages, can neither make a dividend for the present year, nor redeem the original stock at par after payment of its debts, which is evident from the price of its stock, what would be the fate of many of our present banks, were their affairs brought to a close ?  And they will assuredly be brought to a close whenever a material shock shall be given to the credit and circulation of their paper.  The then disastrous consequences are incalculable, consequences which will not be confined to cities and villages, but will pervade in a more eminent degree, the agricultural parts of the state.

To facilitate commercial operations, is the ostensible pretest for soliciting bank charters, and is the only justification for granting them.  But at this moment, commerce is almost annihilated, and therefore there exists now no necessity ostensible or real for the multiplication of banks.

There is one other consideration of emphatical influence at the present period.  It is well known that stock is generally considered an unfit subject of taxation, and in fact is not included in the taxable fund, nor does it contribute to discharge the public burdens, nor is it liable to distress, or to seizure or sale upon execution.  To increase, therefore, the amount of that untangible kind of property at this moment of apprehended war, would be justly considered a partial exemption from contribution towards the public burdens of so many millions of the personal property of the rich.  With what indignation would the yeomanry, the great body of our constituents, receive the intelligence of measures directly calculated to increase their burdens by a partial indulgence to the property of the rich ?

Finally, we must be feelingly alive to every thing which has a tendency to impair confidence in the public functionaries.  If the interests and the sentiments of the great mass of our constituents are opposed to the further incorporation of banking associations:  if their institution will greatly facilitate forgers in passing false bills:  if the suspension of commerce takes away the only plausible and rational pretext for countenancing them:  if the wisdom taught us by the experience of neighboring states, of foreign countries, and by the supposed situation of the late United States bank, confirm and proclaim the danger to be anticipated from assenting to the increase of the number and capital of banks:  if they contribute to drain the country of specie and discourage agriculture and manufactures, by withdrawing from their uses and appropriations more beneficial to them, the money of the affluent:  if they have an influence which enables them to obtain the whole property of insolvent debtors, to the injury of other creditors:  if their tendency be to the subversion of our government, by vesting in the hands of the wealthy and aristocratic class, powerful engines to corrupt and subdue republican notions:  if the augmentation of bank capital, causes an equivalent curtailment of the taxable fund, and will thereby relieve the wealthy stockholders from their equal share of contribution to the public service, and proportionally enhance the tax on the hard earnings of the farmer, manufacturer, mechanic and laborer:  if the wisdom and example of the national government be worthy of respect or imitation:  and if we still persevere in multiplying banks, will there not be danger of infusing into the public mind a suspicion, either that we yield too pliantly to the management and pressure of external combinations, or that the unhallowed shrine of cupidity has its adorers within the very sanctuary of legislation ?  Such a suspicion will be the prelude to the downfall of republican government, for it is erected and supported upon the affections of the people at large, and upon their faith in the inviolable firmness, and probity of their public agents, and when once the foundation is removed the superstructure must fall of course.  Let us, therefore, conscientiously endeavor, so to dispose of the various bank applications with which we are to be assailed, as to promote the general welfare, and at the same time, to retain and confirm public confidence, not only in the wisdom, but also in the unbending independence and unsullied integrity of the legislature.

—[On March 27, 1812, Governor Daniel D. Tompkins (1774-1825) prorogued the Legislature until the 21st of May;  on account of corruption of members of the Legislature who applied for the charter of Bank of America.  When the legislature reconvened, the bill passed and the incorporation was granted.  In 1813 the legislature voted to relieve the bank from paying the promised $600,000 bonus to the State.]

And here, sir, I will indulge my respect for that Distinguished Magistrate, by this public avowal.  Every man that ever knew him can bear testimony to his talents and his worth –and every true friend to his country will feel grateful to him, that in a time when the knot which bound this great confederation together was almost untied by unhallowed hands, his situation enabled him to arrest the disunion of our country –to stand in the breach just opening to our enemies –to put back the rolling tide of unchastened ambition –and to confer an obligation on the people of the United States, that ought never to be forgotten.  To this he added an another benefaction –that of exhibiting an example which has not been imitated, of manly, dignified firmness, and energy without a parallel, in proroguing a powerful body, to preserve a people from their worst enemies: a mad, or mischievous legislature.

It is notorious to the people of the United States, that we have more bank capital, and have had for several years, than can be employed to any beneficial public purpose;  nobody denies this and nobody dare deny it.  Every pretext therefore of administering to the public good and every argument heretofore urged in favor of extending the paper system, falls to the ground.  I ask therefore confidently, what honest motive can govern legislative bodies, in granting every day, as they do, new charters ?  When, in canvassing the conduct of our rulers, we find that a measure cannot by any ingenuity of its advocates, be referred to any honorable motive, to any salutary end, we are authorised to believe that it proceeds from something directly the contrary –from some secret influence of which they are, or ought, to be heartily ashamed.  Such is the natural, such the just mode of reasoning on these subjects.  In applying this rule to the late conduct of legislative bodies, we shall feel ourselves fully justified in the conclusion, that to the various motives I have assigned, may be mainly ascribed the multiplicity of charters granted of late years by the munificence of so many of the state legislatures.  If it is not so, it is full time for the advocates of the paper system –the defenders of monopoly and corruption, of legislative wisdom and purity, to come forth, and instead of charging those who have dared to denounce them with being governed by unworthy motives, disprove what they have boldly advanced, and cover them with eternal shame.

For my part, I will be grateful to any man, that shall convince me I am wrong;  for I love my country and will be obliged to any one who will prove that she has not been thus dishonored.  Of such men, I would ask an explanation of the conduct of one of the state legislatures which, after a full and fair debate, refused to charter a bank, by a majority of nine votes, and the very next day, at the very last moment of its session, without the formality of discussion or debate, granted, by a majority of nineteen, what they had before thus unequivocally refused ?  I would enquire by what unknown, unutterable series of occult ratiocination this modern wonder was achieved –by what mysterious influence, this sudden change was wrought in the minds of men, that could thus prompt them so hastily to recede from a solemn expression of their will ?  Do they suppose they can play such pranks on the great theatre of legislation, without exciting wonder, or pity, or contempt ?  Do they believe that such things can be done in a corner, without the calm lookers on, of the surrounding states, believing in their hearts, that they were the offspring of intrigue or corruption, and that the legislature which thus acts, and the people who submit, have fallen from that high elevation they once occupied in the scale of the union ?  I speak of this state particularly, because the importance of its situation, and the rank it occupies, have called my attention more especially to that system of policy, by which it seems she expects to gain her true station in the union, where none more wishes to behold her than myself, when she shall exhibit a better example, and a better claim.**
[no, you are not speaking of a state;  you are speaking in generalities;  you have not named one bank, one banker, one member of legislations.  Who cares what other member states may think?  there is no shame, there is no embarrassment!  there is only money, which talks, and everybody else just walks or barks.   Two years ago a federal money corporation was chartered, how did that happen? how much money and what influence was used ?]

** The writer, doubtless, alludes to the incorporation of the Franklin bank by the state of New York, for such were the facts that occurred on its passage in the assembly.  This great state, rich, populous and patriotic, and possessing immense natural advantages, seems to be rent with party feuds that have existence no where else –the merits of which I never have taken the trouble to endeavor to understand, being out of my line;  and to the feelings of contending politicians, it appears, must be ascribed the establishment of the bank just named.  Whether it was right in itself that this bank should be instituted or not –it is most seriously to be regretted that political considerations induced or oppose it– as thereby a door is opened for the multiplication of those establishments not easily shut again, though the vacillations of parties.  If they who were in the minority on this occasion, should ever happen to be with the majority in a future legislature, we must expect that, to check the Franklin bank, they will immediately manufacture another new one, and seat it, if possible, in the same neighborhood, –and so on, until the “explosion” alluded to by the governor, takes place and demolishes the whole system.  Which, however, if reformation cannot be effected, is the only thing that will save the people from pauperism.

The people are sought to be reconciled to every new bank by a bonus –a sop in the pan– to be applied to some beneficial public purpose.  The gains of the banks proceed from a tax on the people, who are bribed with some of their own money, to submit to a new tax.  They sell their birthright, not for a substantial mess of pottage, but a bundle of rags –the money with which they are seduced into acquiescence, is their own hard earnings, a part of which is thus employed to cheat them out of their prosperity.

But let me not involve the legislative bodies in one indiscriminate censure.  The plain truth is, that, even if their views and intentions are never so virtuous, they are no match for the cunning ingenuity, and intricate sophistries of hungry speculators gasping for gain.  There were many of them too upright, and honest, and unsuspecting to cope with such wiley adversaries, and in more than one instance were cheated out of charters.  They else would never have so multiplied their favors, and they would have carefully guarded against the abuses of banking institutions thus authorised.  They would have taken care, if possible, to shield the people from banks without capital, by making it a condition of their charter, that they should have the whole of the amount of their capitals in bona fide specie;  they would have taken care at every session to ascertain by a committee of inspection, that this quantity actually remained undiminished from year to year;  and above all, they would have punished every breach or abuse of bank charters by the instant revocation of privileges thus abused.  They would moreover have declared a peremptory forfeiture of each share paid in, whenever the succeeding one was not paid according to the conditions of the charter –for an example was before them of the consequences of thus relinquishing the only tie that could bind interested men –a regard to their own interest.
[If they are this ignorant, they are unfit to be representatives.]

Every one remembers when the great contractor—[does he have a name?] for a loan, during the late war, was released from this tie –and every one knows, that being thus released he left the government in jeopardy, by declining to fulfill his bargain, except just as suited his own interests.  That distinguished personage has now a bank of his own, in a neighboring state —[does that state have a name?], God help us! –and, as a reward for his patriotism, I suppose, has been especially exempted, by an act of legislative grace, from a law forbidding private banking.  One might be puzzled at this invidious and unjust partiality to an individual, did we not recollect that he is a worthy member of the honorable body which granted this privilege of doing what was forbidden to every one else.

This sir, furnishes a striking example of the good effects of having a friend in the legislative councils of the nation, as well as of the consequences likely to result from the policy we see every where pursued, of associating political leaders, members of legislative bodies, judges &c. in the advantages of this great paper system.  The time may, and must come, at no distant period, when the legislative power will be called upon to restrain, if not to destroy, this great and master mischief.  The judicial authorities too, will be appealed to, for the purpose of deciding between the rights of individuals, and the wrongs of the paper aristocracy.  In such a case, the good of the public, and the ends of justice, will doubtless be marvelously forwarded by appealing to bank directors, in the persons of legislators and judges, who will be thus obliged to decide a question in which they are themselves parties.

When the interests of the legislative and judicial authorities shall become, as they are thus every day becoming, diametrically opposed to the interests and the rights of the people –the charms of freedom, and the hope of obtaining justice, by legislative wisdom, for the wrongs sanctioned by legislative folly, to say no worse of it, will beyond all question be exceedingly multiplied in favor of the aggrieved party !  Men may, and sometimes will, act justly, even to their own injury –but it is an elevation of virtue, which cannot be generally relied on, without the credulity of mankind being severely punished, in the end.

Men ought never to be placed in situations of great responsibility, whose prime interests are thus at war with their first and greatest duty.  It is sufficient, I trust, to have pointed out these things to public notice, leaving it to the good sense of the people to apply a remedy.
[the good sense of the people elected these legislative bodies and you expect them people to apply remedy….. just wait until the good sense of the people elects a president who sends federal troops (made up of people of good sense) against member states to make way for a federal paper system]

I have spoken plainly –perhaps too plainly– on this subject, —[no, you have not; you spoke in generalities] but feel myself justified to my own heart, and my own understanding, by the magnitude of the evils I have attempted to expose.  The particular examples I have alluded to, were selected solely because they were most notorious and alarming.  I war with no state, nor do I drag from the mass of corruption any particular object for the gratification of personal or party feelings, and I shall proceed to establish the principal positions I have maintained in this letter, by quoting a part of a most able report made by a committee of the house of assembly in the state of New York at their last session.  The whole of it discloses a scene of consummate iniquity, not peculiar to the state of New York, but extending in every direction through the United States, and I regret to see that it has not been more extensively disseminated by the newspapers.  It is not the work of a rhetorician, laboring to distinguish himself by fine phraseology, but of a plain honest man, telling the plain truth.  I know the chairman of that committee, Isaac Pierson –and I think it an honor to know such a man.  He is one of the most extensive iron manufacturers in the United States, he employs and gives bread to six or seven hundred laborers —[no, he does not give anything, they earn everything], who hear the word of God every Sunday in a church of his own erecting, and whose children go to school at stated intervals of labor in a school of his own endowing.  What such a man, gifted as he is, with a penetrating understanding, and an honest heart, says, ought to carry weight.

Legislature of New York,
in Assembly, February 24, 1818.

Report of the committee on the currency of this state.

The committee appointed on the currency of this state, and to whom was referred that part of the governor’s speech, respectfully report, in part—

That they find themselves compelled, as well from the nature of the subject, as from the sense they feel of their duties as a standing committee on currency, to take a general view of the operations of banks in this state;  as far as any deductions can be drawn from experience, that will throw any clear light on what your committee consider a subject of the highest and most vital importance to the public.

The committee are fully satisfied, that banking establishments are highly beneficial in a country like ours, with an extensive external and internal commerce, by affording facility in making remittances, and in transmitting large sums from one part of the country to another, and in the head market towns in affording temporary loans at particular seasons of the year, for the purchase of produce, and in seaport towns where large capital is vested in shipping engaged in foreign commerce, by enabling the proprietors with temporary loans, to purchase fresh cargoes and dispatch their vessels.

So far the committee believe they are warranted in saying, that experience has shown that banks have been very beneficial to this state.  And it would give the committee pleasure, if they could stop here, without violating their character as legislators and as guardians of the public welfare.  But as such, they must give it as their undivided opinion, that like medicine, when judiciously administered to the physical body, it removes obstructions, increases the circulation of its fluids, and invigorates the whole system;  but when administered by unskilful hands, too profusely, produces morbid affections and paralizes every nerve, so banking establishments, increased as they already have been, to a great extent in the interior of our state, counteract entirely all the beneficial effects expected from them;  and instead of facilitating exchange and the transmission of money from one part of the state to the other, it has rendered it impossible to be done without great loss;  in consequence of local banks having engrossed the whole circulation in their neighborhood, and the depreciation of their notes abroad, to the very great embarrassment of internal commerce.  But this is not the extent of the evil, nor, in the opinion of the committee, by any means the greatest;  but the effect it produces on society, immediately within their vicinity, is still more to be deplored.

They enable the designing, unprincipled speculator, who in fact has nothing to lose, to impose on the credulity of the honest, industrious, unsuspecting part of the community, by their specious flattery and misrepresentation, obtaining from them borrowed notes and endorsements, until the ruin is consummated, and their farms are sold by the sheriff.  Examples of this sort are too common and too notorious to need any illustrations from the committee.

In applying for their charters, they all profess to have the public good solely in view, but in too many instances, their conduct has shown, that they soon become blind to all other interests but their own.

By adopting a variety of schemes to get their notes into circulation, such as placing a partial fund in a distant bank to redeem their paper, and after the fact becomes generally known that their paper is at par in that quarter, issuing an emission of notes signed with ink of a different shade, at the same time giving secret orders to said bank not to pay the notes thus signed, and subjecting the owners of them to loss and disappointment, compelling them either to sell them for what they would fetch, or to return without accomplishing the business they went on.  This is done in more than one instance: thus, in open day, committing a barefaced fraud on the public.

Others, by a different stratagem, but no less contrary to the intent and meaning of their charter, have issued a species of paper called facility notes, purporting to be payable in neither money, country produce, or any thing else that has body or shape, and thereby rendering their name appropriate only but by facilitating the ruin of those who are so unfortunate as to hold them.  There are other practices which the committee are informed are very common, and they believe will not be doubted, which no less vitiate the first principles of their charter.  They give large accommodations to individuals conditionally;  to some, that they will keep in circulation a certain sum (which notes are designated by a private mark) for a specified time;  but in case they return sooner, he is again to be charged with the discount on such sum for the remainder of the time;  to avoid which he is compelled to make long journies into distant counties, to change the notes for those of other banks, thus squandering his time and his money for their benefit.  To others, on condition that they will pay their note when due, in what is called current money, (meaning notes of such of the banks as are current throughout the state, they not considering theirs as entitled to that appellation,) which compels the borrower, during the time his note is to run, to lay by him all the current money he can collect, which of necessity he must lose the use of, and for which he is obliged to pay for the sum he may be deficient of, as the time draws near a close, a premium of from seven to fourteen, and sometimes, as your committee have been informed, as high as twenty per cent. for one day, when his note is again renewed, and the same operation is commenced anew.

To others on condition they exchange with them, a sum equal to their note offered, of notes of other banks, (for which they are compelled to give a premium,) and receive their own in return.  To others, on condition one half the sum remains in the bank until the note is due, thereby receiving an usurious interest.

The committee feel themselves compelled to go still further into a detail of the abuses inflicted on the public by a misuse of banking privileges.

Of all aristocracies none more completely enslave a people than that of money;  and, in the opinion of your committee, no system was ever better devised so perfectly to enslave a community as the present mode of conducting banking establishments.  Like the Syren in the fable, they entice to destroy.

They hold the purse string of society, and by monopolizing the whole of the circulating medium of the country, they form a precarious standard, by which all the property in the country, houses, lands, debts and credits, personal and real estate of all descriptions, are valued, thus rendering the whole community dependent on them, and proscribing every man who dares oppose or expose their unlawful practices:  and if he happens to be out of their reach so as to require no favor from them, then his friends are made the victims, so that no one dares complain.

The merchant who has remittance to make abroad, is contented to pocket the loss, occasioned by the depreciation of their money, rather than hazard their resentment by asking them for specie or current notes;  and here the committee beg leave to state as a fact, an instance where the board of directors of a bank passed a resolution, declaring that no man should hold a seat at that board, or receive any discounts at the bank, who should trade at a certain store in the same village, in consequence of the owner having asked for a sum less than four thousand dollars in current money to remit to New-York, while at the same time he kept his account in said bank.

The committee, in taking a general view of our state, and comparing those parts where banks have been some years established, with those that have had none, they are astonished at the alarming disparity.  They see in the one case the desolations they have made in societies, that were before prosperous and happy;  the ruin they have brought on an innumerable number of the most wealthy farmers, and they and their families suddenly hurled from wealth and independence into the abyss of ruin and despair;  and here also the committee beg leave to state a fact to illustrate the manner in which such ruinous effects are produced.  An aged farmer, possessing a farm which rendered his condition comfortable and independent, wishing to raise the sum of one thousand dollars, to assist his children, was told by a director, he could get it out of the bank without any difficulty or hazard, and that he would endorse his note for him, and that he could continue it to suit his convenience, with which the farmer accordingly complied.  At the first renewal, he was told the note must be paid;  that the bank would press the payment, but as it was not in his power, the director told him, if he would give him one hundred dollar, besides the discount, he would obtain the renewal, which he did;  and at a subsequent renewal, the same operation was performed, but a judgment was required also in favor of said director, and the result was, his farm was soon after sold without his knowledge by the sheriff, and purchased by the said director for less than the judgment.

The committee are sensible, that all institutions are subject to abuses from the misuse of the powers granted to them, but they humbly conceive that when those abuses greatly overbalance all the benefits derived from them, it becomes the duty of a wise and discreet legislature to cease from granting those powers;  and here the committee cannot but notice the manner in which bank charters have hitherto been obtained.  But on this subject they would speak with all due deference to the honorable body to which they belong, as well as to their predecessors.

But the committee cannot refrain from remarking that hitherto liberal and extended encouragement given to banking operations beyond its legitimate object, has annually invited to our capitol skillful and experienced banking agents, professing general and not local objects, and who appear to have forgotten for the time their public trust (for which some of them are receiving a salary) as well as private avocations, for what they may consider of greater consequence to the community;  and in the present instance, from seeing notices in the state paper of eighteen new applications for banks intended to be made at the present session, have no doubt come up with high raised expectations of reaping a rich harvest, and by amalgamating banking bills with those of more importance and more salutary in their nature, and by asserting and canvassing the house with all the conflicting interests of individuals, until all distinction is lost between the fair and the honest petitioner, and the cunning designing speculator, and thus the man who asks in the simplicity of his heart for what he honestly conceives his right, is soon made to understand, that in order to obtain it he must become the instrument of designing men, and advocate that which his better judgment tells him is wrong.

And your committee are constrained to say, that this practice has hitherto been carried to such an extent, and has met with such success, as to encourage corporations as well as individuals, to assume banking powers where none were ever granted;  and after having put all law and authority to defiance, and creating themselves a fund, calculating on the encouragement and skill of these agents, have had the unexampled temerity to petition the legislature of this state and urge them, through the medium of these agents, to grant them a charter for banking, as a reward for the unwarrantable assumption of that right.

The committee humbly conceive, that it is high time a full stop was put to this kind of procedure:  and they know of no way of effecting it, but by every member of this as well as all future legislatures, collectively and individually, reflecting seriously on the subject as to its consequences to themselves and to the state, and suffer no abstract considerations to influence their judgments;  but to decide every question upon its own merits, and frown with indignation on every undue attempt to influence their opinions, and in that way restore to the legislature of this great state, what your committee conceives in a great degree (they name it with very great deference) its injured reputation.  The operation and influence of banks, their utility and effect on society, being necessarily of a public nature, they must be familiar to all.  Then, surely, this honorable body does not stand in need of instruction from any illegitimate source.

The committee will conclude this general report on the state of the currency, by examining briefly the foundation on which the present circulating medium is based.  The committee believe the present circulation in the state principally consists of the notes of those banks whose nominal capitals are small, and composed principally of the notes of the individual stockholders, called stock notes –so that the security of the public consists of the private fortunes of individual stockholders, and those fortunes, in a great measure, consist of the stock of the bank, for which they have given their notes, so that the bank is enriched by holding their notes, and they are enriched by holding the stock of the bank –and as these banks make large dividends, many rapid, and what are considered solid fortunes, are made.  Like a boy mounting a summit as the sun is setting, suddenly observes his shadow on the opposite precipice, regardless of the gulph between, is astonished to see how tall he has grown –when night ensues, ere he is aware, he is plunged, shadow, substance and all, in the abyss below, covered with darkness and despair.  Such, the committee extremely apprehend, will be the result of many of the present institutions, and bring ruin and distress on the country, unless they change their mode of business.

The committee take pleasure in stating, on the other hand, that there are a number of banks in this state with real and solid capitals, but whose circulation is small, and, consequently, their dividends;  whose affairs are conducted with prudence and care, and from whom the public have nothing to apprehend. —[banks that issue only three notes for each coin]

On the whole, the committee coincide fully in the opinion expressed by his excellency on the subject of banks, in his speech, delivered at the opening of tie session, where he says–

“The evils arising from the disordered state of our currency, have been aggravated by the banking operations of individuals, and the unauthorised emissions of small notes by corporations.  They require the immediate and correcting interposition of the legislature.  I also submit it to your serious consideration, whether the incorporation of banks in places where they are not required by the exigencies of commerce, trade or manufactures, ought to be countenanced.  Such institutions having but few deposits of money, must rely for their profits principally upon the circulation of their notes, and they are therefore tempted to extend it beyond their faculties.  These bills are diffused either in the shape of loans, or by appointing confidential agents to exchange them for those of other establishments.  But the former mode being conducive to profit is at first generally adopted;  and in the early stages of their operation, discounts are liberally dispensed.  This produces an apparent activity of business, and the indications of prosperity.  But it is all factitious and deceptive, resembling the hectic heat of consuming disease, not the genial warmth of substantial health;  a reaction soon takes place.  These bills are in turn collected by rival institutions, or passed to the banks of the great cities, and payment being required, the only resource left is to call in their debts, and exact partial or total returns of their loans.

“The continual struggle between conflicting establishments, to collect each other’s notes, occasions constant apprehension.  The sphere of their operations is narrowed.  Every new bank contracts the area of their paper circulation;  and after subjecting the communities within their respective spheres of operation to the pernicious vicissitudes of loans, at one period profusely granted, and at another parsimoniously withheld, they finally settle down into a state of torpid inaction, and become more conduits of accommodation to a few individuals.  The legislature are then solicited to apply a remedy by the incorporation of other banks, whereas, every new one of this description, unless attended by peculiar circumstances, paralizes a portion of capital and augments the general distress.  The banishment of metallic money, the loss of commercial confidence, the exhibition of fictitious capital, the increase of civil prosecutions, multiplication of crimes, the injurious enhancement of prices, and the dangerous extension of credit, are among the mischiefs which flow from this state of things.  And it is worthy of serious inquiry, whether a greater augmentation of such institutions may not, in course of time, produce an explosion that will demolish the whole system.  The slow and periodical returns of husbandry being incompetent to the exigencies of banking establishments, the agricultural interest is the principal sufferer by these proceedings.”

If the facts stated in the foregoing be true, and your committee have no doubt they are, together with others equally reprehensible and to be dreaded, such as, that their influence too frequently, nay, often, already begins to assume a species of dictation altogether alarming, and unless some judicious remedy is provided by legislative wisdom, we shall soon witness attempts to control all elections to office in our counties, nay, the elections to this very legislature.  Senators and members of assembly will be indebted to banks for their seats in this capital, and thus the wise ends of our civil institutions will be prostrated in the dust by corporations of their own creation.  It is, therefore, evident the deleterious poison has already taken deep root and requires immediate legislative interference with their utmost energy.

In order, therefore, that this legislature may have more full and substantial information on the subject, than it is possible for your committee to obtain, they beg leave to offer the following resolution.

Resolved, (if the honorable senate concur herein,) that a joint committee of the senate and assembly be appointed, to enquire into the mode and manner in which the several incorporated banks within this state have administered the trust granted to them, and whether any or either of the officers, agents or directors, or other persons by them authorized, have secretly or impliedly diverted any part of the funds thereof to any improper purposes –or have made use of any undue means or the purpose of forcing their paper into circulation, and whether they have, during the last eighteen months, promptly and willingly complied with all the demands made upon them for the payment of their notes in specie –and whether any or either of the said officers, agents or directors, have been guilty of any fraudulent or usurious practices as such –and whether either or any of them have used, or now do use, any of the funds of either of the said banks for covenous or oppressive purposes –that the said committee have power to send for persons and papers, and they report their proceedings herein to this legislature with all convenient speed.

Isaac Pierson, Chairman.

Having thus pointed out the evils and dangers resulting from the paper system, the committee proceeded to offer a resolution for the purpose of ascertaining among other things “by what means the charters of former banks had been obtained from the legislature” –This part of the resolution was after a long debate finally negatived !
[and the election of representatives, senators, governors by banks became a reality and a fixture]

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