Read the book: «Abridgement of the Debates of Congress, from 1789 to 1856 (4 of 16 vol.)», page 62

"To erect a corporation, is to substitute a legal or artificial for a natural person; and, where a number are concerned, to give them individuality. To that legal or artificial person, once created, the common law of every State, of itself, annexes all those incidents and attributes which are represented as a prostration of the main pillars of their jurisprudence. It is certainly not accurate to say, that the erection of a corporation is against those different heads of the State laws; because it is rather to create a kind of person, or entity, to which they are inapplicable, and to which the general rule of those laws assigns a different regimen. The laws of alienage cannot apply to an artificial person, because it can have no country. Those of descent cannot apply to it, because it can have no heirs. Those of escheat are foreign from it, for the same reason. Those of forfeiture, because it cannot commit a crime. Those of distribution, because, though it may be dissolved, it cannot die." Sir, I beg leave to add a few explanations. By the laws of most, perhaps of all the States, aliens are not permitted to hold real estate; but in all they are free to hold personal property of every kind, and particularly bank stock. The law of escheat relates to the property of a citizen who dies without heirs, near or remote, and without a will. In such case his property falls to the State. But instances of escheat do not occur perhaps twice in a century in any State, and, consequently, is of trifling moment. Although a corporation cannot commit a crime, it may violate the rules prescribed in the law for its establishment, and thus incur an immediate forfeiture of its charter. Or, if for such a violation of its fundamental law, or any mismanagement of the institution to the public injury, its charter be not forthwith taken away, the State may refuse to renew it. As to the law of distribution, that operates when a person dies intestate. But though a corporation cannot die, yet the individuals to whom its property belongs will die; and their bank property, equally with their other property, becomes liable to the law of distribution.

One of the injurious consequences of destroying the Bank of the United States has been stated to be, the withdrawing of seven millions of dollars from the active capital of the United States, and transmitting it to Europe, where that portion of the bank stock is owned. To this it has been answered, by the opposers of the bank, that these millions will not be withdrawn, but transferred from the United States' Bank to banks of the several States. How then, sir, shall we get rid of that dangerous influence of foreign stockholders which the same gentlemen urge as a reason for not renewing the charter of the Bank of the United States? Sir, it is well known that money in Europe is less valuable than in the United States. That moneyed men there are glad to loan their money at an interest of five per cent, or less, while in these States the legal interest is six per cent. And a multitude of our citizens find their account in employing that foreign capital, paying an interest of six per cent., by which, in the course of trade, they gain ten, fifteen, or twenty per cent.; that foreign capital, in the hands of our merchants, has resembled the five and the ten talents, wherewith they have gained other five and other ten talents.

The distresses which will follow the dissolution of the Bank of the United States, especially in the great commercial cities, have been forcibly described in the plain testimonies of the committee of mechanics and manufacturers from Philadelphia – a committee selected wholly from the democratic party; distresses which were sufficient to move a heart of stone. And why should this bank be dissolved? It has been said that the State banks are competent to all the necessary operations of the general bank. If the contrary had not been shown, it might be answered, that the Bank of the United States was incorporated when there were only three banks in the United States; one in Philadelphia, one in New York, and one in Boston. These were inadequate to the necessities and accommodation of the General Government and of the citizens. To supply this deficiency, it was necessary to erect the National Bank; and the dignity, honor, good faith, and credit of the United States stand pledged for the renewal of its charter. The institution having been well conducted, and found in the highest degree useful and beneficial to Government, and to the citizens at large, it ought to be continued. Individual citizens and foreigners became stockholders on a well-grounded expectation of the stability of the Government. It was in this just expectation that foreigners, Englishmen, purchased of our Government, itself, its remaining shares of the public stock in the Bank of the United States, and at an advance of forty-five per cent.; so that, for every hundred dollars laid out by the Government in the purchase of bank shares, the United States received of these foreigners one hundred and forty-five dollars. And how was it possible for these foreigners to conceive the Government capable of destroying the work of its own hands, and of reducing their property to one hundred dollars a share, for which, but eight years before, they had paid the same Government one hundred and forty-five dollars?

Wednesday, February 20

Bank of the United States

The Senate resumed, as in Committee of the Whole, the bill to amend and continue in force an act, entitled "An act to incorporate the subscribers to the Bank of the United States," passed on the 25th day of February, 1791.

Mr. Crawford said he regretted extremely, that at so late an hour, he was constrained to throw himself upon the indulgence of the Senate, especially as the subject was so much exhausted by the able and animated discussions which had for so many days attracted their attention. Before I enter upon the few remarks which I feel it my duty to make in reply to the numerous comments which have been made upon the observations which I had the honor to submit to the consideration of the Senate, at the commencement of this discussion, permit me, sir, to acknowledge the liberality and indulgence with which those observations have been generally treated. In the course of the few observations to which I intend to confine myself, it shall be my endeavor to exercise that indulgence towards others which has been extended to me. The gentleman from Kentucky (Mr. Clay) complains of the committee, because they have listened to the representations of two delegations from the city of Philadelphia who presented memorials to the Senate, who referred them to the committee; and because the committee have, in his opinion, given an adventitious importance to their representations, by the minuteness and by the pomp and parade with which they have been detailed to the Senate. It will be recollected that the committee did not seek the post which has been assigned them by the Senate, nor did they desert it after it was assigned to them. The object of referring petitions to committees is to collect that information which the Senate ought to have before it acts, and which in its collective capacity it cannot obtain. It has always been the practice of committees to permit the petitioners to be present at their meetings, to make such explanations, and to give such information touching the subject of their petition, as they think connected with it. It is the duty of committees to detail to the Senate the information which they collect, to enable the members to take a full view of the subject upon which they are called upon to act. The committee in the present case has done all this, and it has done nothing more. Had it pursued a different course it would have justly subjected itself to the animadversions of the Senate. To the information collected by the committee from these delegations, and laid before the Senate, my friend from Maryland (Mr. Smith) has opposed a statement of facts, and his opinion founded upon those facts. As the situation and talents of that gentleman entitle his statements and opinions to great weight; as it is more than probable that the votes of several members will ultimately rest upon the weight of his authority, my honorable friend from Maryland (Mr. Smith) will pardon me if I should examine his observations rather according to the rules of evidence, than those of logic. In making this declaration I wish to be explicitly understood, as excluding every idea of charging that gentleman with having made statements which he did not believe, or with having given opinions he did not entertain. I have no doubt but that he sincerely believes in the correctness of his statements, and in the accuracy of his opinions; but if, in the course of my observations, I shall prove incontestably that he is mistaken in some of his statements and opinions, it will teach the Senate the necessity of weighing the remainder of them with great circumspection. If I shall be able to show that he is mistaken in a case, the evidence of which is matter of record, that circumstance alone will induce the Senate to reject all idea of receiving his statements and opinions with implicit confidence.

The gentleman from Maryland has stated several cases in which the State banks, and the banks of this Territory have accommodated the Government where the United States had refused. The cases stated prove nothing, and ought to have no influence with this Government in establishing a permanent system of revenue. If the State and Territorial banks have upon several occasions received the bills of other State banks to accommodate the Government, it was because it suited their convenience at the time. It was a mere temporary transaction, and forms an exception to the general rule. The charter of no bank in the United States compels them to take the paper of other banks, and whether they do receive them or not will depend upon contingent circumstances, or upon whim and caprice. No reliance, therefore, ought to be placed upon the duration of any regulation which is not enforced by their charters. The gentleman from Maryland thinks that the United States will have the same influence over the State banks that it has had, and will have over that of the United States. If he is correct as to the extent of that influence, his conclusion may be correctly drawn. But, sir, is it true that the National Government has no other influence over this bank than that which can be produced by withdrawing of its deposits? If it is so, then it must be admitted that the United States will have the same influence over the State banks that they will have over one of their own creation, because they can as easily withdraw their deposits from the one as the other. But, sir, the United States have an influence over the Bank of the United States, which is wholly independent of, and unconnected with, the right of withdrawing their deposits from its vaults. The bank is dependent on them for its existence. By renewing the charter for short periods of time you create a state of dependency upon the Government, which will at all times make the bank completely subservient to all the legitimate objects for which it was created. How, sir, is it with the State banks? Upon whom are they dependent for legal existence and for length of days? Upon the State Governments. Suppose the authority from which they derive their existence should place itself in opposition to the Government of the United States; and suppose that this state of hostility should happen a year, or two before the time at which their charters were to expire, and the State Legislature should direct them to hold the deposit of public moneys against the demand of the National Government, what course would they pursue under such circumstances? Sir, the case which I have stated is not a mere possible case. The history of several of the large influential States proves that this state of hostility, which I have supposed, is not an imaginary one. Make yourselves dependent upon the State banks for the collection and transmission of your revenue, and that opposition, which has but seldom happened, will become more frequent. Their disposition to control the operations of the National Government will increase with every increase of the means of annoyance, which the folly and improvidence of Congress may throw into their hands. For whose benefit, sir, is the Government to strip itself of this right, so essential for the due administration of its finances? Is it for the benefit of the great mass of the American people? No; not one in a hundred of them have any interest in the State banks. They feel no interest in the question; their true interest is more effectually subserved by the operations of the Bank of the United States than it can possibly be by the State banks. This bank affords them a portable currency which is of equal value in every part of the United States, while the credit and currency of the State banks is local.

It is impossible to resist the conviction that the prompt and secure collection of our revenue is principally owing to the influence of the bank. But, sir, the bank has another direct influence upon the collection of your revenue. By the rules established in the bank at Philadelphia, every person whose bond to the Government is deposited there, has a right, upon getting an additional endorser, to claim a discount for half of the amount of his bond, and the part so discounted is immediately carried to the credit of the United States, and the bank takes upon itself the risk of the ultimate collection. In this way, sir, one-half of the bond is collected at the sole risk of the bank, without any possibility of loss on the part of Government. And yet, sir, it is contended that the bank has nothing to do with the collection of the public revenue. The gentleman from Maryland says that the scarcity of money, and the alarm and dismay which the delegation of mechanics had represented as existing in Philadelphia, could not be the effect of the contraction of discounts by the Bank of the United States, because that bank, as well as the State banks, are going on with their ordinary discounts. This is true, but the gentleman from Maryland has forgotten that this delegation stated that the bank, upon the rejection of their memorial by the House of Representatives, had contracted their discounts, and that a correspondent contraction had taken place in the discounts of the State banks which had produced the pressure; and that the pressure had spread alarm and dismay through the city. That before they left the city, the directors of the Bank of the United States had come to an understanding with the directors of the State banks, all of whom had determined to resume and continue their ordinary discounts until the last hour. Notwithstanding the banks had resumed their discounts, the panic which had been produced did not cease, and the scarcity of money, and the distrust which had taken place, still continue to exist in Philadelphia.

The gentleman from Maryland admits expressly that the transmission of your public money for the payment of the Army and Navy must be effected through the agency of banks, but contends that that object can be effected as well by the State banks as by a Bank of the United States. My friend from Kentucky (Mr. Pope) said, that the great characteristic difference between the present Government and that which existed under the old articles of confederation, is, that the present Government has within itself the means of executing its own measures, without relying upon the State governments; whereas the old Congress had to rely upon the States for the execution of the measures which it had previously devised and adopted.

The gentleman from Maryland, in speaking of the means which had been resorted to, to procure the renewal of the charter, says that we have not procured memorials to be presented to Congress praying that the charter might not be renewed – we have not procured pamphlets to be written, published, and laid upon the tables of members, proving the unconstitutionality and inutility of the bank – we have not imposed upon the credulity of honest mechanics and manufacturers, and by that means procured delegations to be sent to pray for the rejection of the bank memorial. Surely, sir, the gentleman did not by these declarations mean to insinuate that any one of those gentlemen who support the bill upon your table, have had any agency in procuring any application to be made in favor of the bank. I know that gentleman's respect for himself; his respect for the Senate; his respect for the individual members of this body, as well as his respect for the general rules of propriety, exclude the possibility of his making such an insinuation. [Mr. Smith explained, by saying, I exclude every idea of such an insinuation.] Sir, I will tell the honorable gentleman from Maryland, what has been done by those who are opposed to the renewal of the charter. I do not mean the members of the Senate who are opposed to it, but those who have attempted to inflame public opinion upon this question. Letters, sir, have been written from this place to induce the State Legislatures to instruct their members to oppose the renewal of the charter of the bank. I will ask the honorable gentleman from Maryland whether he does not know that letters have been written for that purpose?

The gentleman from Maryland has said, and I am extremely sorry that he has, that the Bank of the United States had their agents in this city for two sessions, intriguing with members of Congress to obtain a renewal of their charter. I can assure that gentleman that I have had as little to do with the agents of the bank as he has had. If, sir, I was disposed to retort upon those who are opposed to the renewal of the charter, I would ask, if they have not seen published in the democratic papers of Pennsylvania, Maryland, and Virginia, extracts of letters said to be written in the City of Washington, charging the members of Congress who are in favor of it with being bribed and corrupted, and with being disposed to sell the sovereignty of the nation to British capitalists? Have they not seen, in the same papers, conversations detailed with great minuteness, which it is pretended have passed between members of Congress, calculated to excite public odium and indignation against the friends of the bill now under consideration? Sir, I will not for a moment indulge an idea that these letters have been written or these conversations detailed by any member of this body. The idea that such has been the fact is too humiliating, too degrading, not only to this honorable body, but to human nature itself; to be entertained but for a moment. And yet, sir, the author of a charge, as base as it is false, against my honorable friend from Kentucky, (Mr. Pope,) has, day after day, occupied a seat in a gallery of the Senate, to which no person has a right of access, but by an introduction of one of the members of this body. Sir, the highway robber, when compared with the infamous fabricator of this base attempt to assassinate the reputation of this honorable member, becomes a virtuous and estimable character. Such, sir, has been the warfare which has been waged against the renewal of the charter. Denunciations and charges of political apostacy are the measures by which we have been assailed from without and from within. Sir, I have shown that the bank question was no party question in its origin – that it was a question upon which an honest difference of opinion always has existed, and does now exist. And, shall I be charged with deserting the standard of the people, while I am treading in the footsteps of the great Father of his Country?

The gentleman from Maryland (Mr. Smith) has said that he understood that a proposition was made in the Federal Convention to vest Congress with power to create corporations generally and without limitation. Had I been a member of that convention, I should most certainly have voted against the proposition, because it would have been unreasonable. Why should such a power have been delegated? Not certainly as necessary to execute the delegated powers, because they are very limited – a general power to create corporations would have enabled Congress to have created them ad libitum where there was no possible relation between them and any one of the delegated powers. The vote upon the incorporating the bank proves that if such a proposition had been submitted, it must have been rejected under a conviction that the power to create corporations is incident to such of the general powers as might require an act of incorporation completely to execute them, and fairly vested by the constitution in Congress; because ten of the members of that convention were in Congress, and voted for that bill – because General Washington signed that bill, because the only member of that convention now in Congress voted for the bill and is now in favor of renewing the charter; and because there were but eight members of that convention in Congress who voted against it.

Mr. President, I will now proceed to examine the objections which have been offered to the construction which I have given to several clauses of the constitution. In the observations which I made upon this part of the question when I was up before, I endeavored to prove that every construction that had been given to this instrument, upon the idea of its being perfect, was likely to be erroneous. The gentleman from Virginia (Mr. Giles) and the gentleman from Tennessee (Mr. Whiteside) still view it as a model of perfection. They are certainly at liberty still to entertain that opinion. Every man has a right to erect his idol in this land of liberty, and to fall down and worship it according to the dictates of his own conscience. I endeavored also to prove, that if we applied the same rule of construction to that clause of the constitution from which we endeavor to derive the right to create a bank, which has been applied to that from which the power to erect a light-house has been derived, the constitutional difficulty at once disappears. Until my friend from Virginia (Mr. Giles) and my friend from Tennessee (Mr. Anderson) had otherwise declared, I had always understood the right to erect light-houses had been exercised as incidental to the power to regulate commerce. It seems, however, that I am mistaken, and that this right is incidental to that clause which gives Congress the right to exercise exclusive legislation in certain places. The clause reads in the following words:

"To exercise exclusive legislation in all cases whatsoever, over such district (not exceeding ten miles square) as may, by cession of particular States, and the acceptance of Congress, become the seat of the Government of the United States, and to exercise like authority over all places purchased by the consent of the Legislature of the State in which the same shall be, for the erection of forts, magazines, arsenals, dockyards, and other needful buildings," &c.

Now, says my friend from Tennessee, this clause gives the right to erect dockyards; and as dockyards must be on the seacoast, therefore Congress has the right to erect light-houses, because they must also be on the seacoast. This argument is extremely logical, nay, syllogistical, in form, but it is extremely illogical in substance. The conclusion drawn from the premises, is as necessary, as though I were to say, that because two and two makes four, therefore five and five makes twelve. The conclusion in the latter case is as necessary as in the former. But my honorable friend from Virginia (Mr. Giles) derives it from the authority given in this clause, to erect other needful buildings. But the question recurs, needful for what? Why, certainly, for the purposes before specified. What are they? Forts, magazines, arsenals, and dockyards. If this clause gives any authority to erect forts, magazines, arsenals, and dockyards, the other needful buildings spoken of must be needful for the specified purposes. I should suppose that no man, who spends only a few days in this city, can be at a loss to determine what is comprehended under the term "other needful buildings." Let him go to the dockyard, nicknamed a navy-yard in this city, and he will there find a little town of "other needful buildings" in the words of the constitution. But, sir, I deny that this clause of the constitution expressly gives any right, but that of exercising exclusive legislation in the places to be accepted or purchased for the purpose therein specified. The right to erect forts, magazines, and arsenals, is fairly incidental to the right of declaring war, and of raising armies; and the right to erect dockyards is fairly incidental to the right of providing and maintaining a navy. But if for the sake of argument I should admit that the right to erect forts, &c., is given in this clause, how can it be proved that the right to erect a light-house is also given? Forts, magazines, arsenals, and dockyards, are enumerated, and as the constitution says that all powers not expressly given are retained, if the right to erect forts, magazines, &c., is given in this clause, most clearly the right to erect light-houses is retained by the States, because it is not to be found in the enumeration contained in the clause. When I had the honor of addressing the Senate before I questioned the authority of the State governments to create banks; I then stated, and I again explicitly state, that it is with reluctance that I have felt it my duty to make any inquiry into the constitutional right of the State governments to incorporate banks. The State Legislatures ought to have recollected the Spanish proverb, which says that those who live in glass-houses ought not to throw stones. Before they undertook to question the constitutional authority of Congress, they ought to have thoroughly examined the foundation upon which their own right rested. The honorable gentleman from Virginia (Mr. Giles) says that the construction which I have given to that part of the constitution which prohibits the States from emitting bills of credit, would apply equally to promissory notes given by one individual to another under the laws of a State, as to a bank bill. Permit me to inquire of that gentleman whether he ever saw a law authorizing one man to give another his promissory note? He may search the pandects of Justinian; he may turn over the leaves of the musty volumes written upon the common law, from the days of Bracton and Fleta down to the present day, and his search will be in vain. For the right to make contracts, the right to give promissory notes, is antecedent to, and independent of all municipal law. The gentleman will find laws and decisions in abundance, regulating the effect of endorsements and other collateral circumstances, and prescribing the manner of enforcing the payment of promissory notes, but he will never find a law giving the right to execute the promissory note. But it is said that the bills of credit, which the States are prohibited from emitting, must be bills of credit emitted on the credit of the State. If this distinction should be well founded, many of the State banks are still subject to the charge of unconstitutionality, because in many of them the States are directly interested, and wherever that is the case, their bank bills are bills of credit emitted on the credit of the State. But the correctness of this distinction may well be denied, because the restriction is as general as it could possibly be made. But it is said that this restriction applies only to bills of credit which are made a legal tender in the payment of debts; that bills of credit, designated in the constitution, are ex vi termini a legal tender. For the correctness of this exposition, an appeal is made to the restriction which immediately follows it, which restrains the right of the States to make anything but gold and silver a legal tender in the payment of debts. It appears to me that the latter restriction excludes most emphatically the construction contended for. If the States are prohibited from emitting bills of credit, it would have been, to say the least of it, wholly nugatory to say they should not make them a legal tender. If the bills are not emitted, it is impossible that they can be made a legal tender. To suppose that the restriction upon the right of the States to make any thing but gold and silver legal tender has any connection with or influence upon the restriction to emit bills of credit, is as absurd as to suppose that the Decalogue, after having declared that "thou shalt do no murder," should have added, but, if you will murder, you shall not rob and strike the dead. The construction of the restraint upon the right to make any thing but gold or silver a tender, is that they shall not make specific articles, as tobacco or cotton, a tender, as was the case in some of the States.

But it is said that the history of the States will show that the bills of credit specified in the constitution were those only which were a legal tender in the payment of debts. Let us examine this point, according to the rule of construction applied to another clause in the constitution by a large majority of both Houses of Congress during the present session. Another clause in the constitution gives Congress the power to admit new States into the Union under two limitations: 1st. That no new State shall be formed within the limits of any State without the consent of the State; and, 2d. That no new State should be formed by the junction of two or more States without the consent of such States, and also of Congress. These limitations prove that the formation of new States, within the limits of the United States, was in view of the convention at the time that this clause was adopted; and the subsequent clause, which gives Congress the power to make rules for the government of its Territories, proves that these Territories were at that moment under consideration. In addition to these reasons for believing that the framers of the constitution had no idea of forming new States, beyond the limits of the United States, those who were opposed to the admission of Orleans as a State contended that the history of the United States proves that the power to erect new States and admit them into the Union was intended to be confined to new States within the limits of the United States at the formation of the constitution, and that a different construction would disparage the rights of the original States, and, of course, be a violation of the constitution. What reply did the majority of Congress give to this train of reasoning? They said that the right to admit new States cannot be subject to any other limitations or restrictions than those which are contained in the clause which gives the right, and as there is no restriction upon the right to erect new States without the then limits of the United States, Congress have an unlimited right to erect and admit them into the Union. Let us apply the same rule of construction to the restriction of the right of the States to emit bills of credit. The restriction is a general one; it has no exceptions; and every attempt to make exceptions ought to be repelled by the answer which was given to those who opposed the right of Congress to admit the Territory of Orleans into the Union as a State. The construction I have contended for gains additional weight when we consider the restriction which immediately precedes that under consideration. No State shall coin money, emit bills of credit, &c. Bills of credit are but the representatives of money. The constitution gives Congress the right to coin money, and to regulate its value. It takes from the States the right to coin money and to emit bills of credit. Why give to Congress the right to coin money and regulate its value? Because the interest of the nation requires that the current coin of the nation should be uniform both as to its species and value. If this is the true reason why the right of coining money and fixing its value was given to Congress, does not the right to issue that which is to be the representative of this coin; which, in fact, is to usurp its place; which is to be the real currency of the nation, necessarily belong to Congress? Does not the right to create a bank, which shall issue this representative of money, come within the same reason? I think it does.