The difficulties experienced by the mercantile interest
in meeting their engagements induced them to apply to me
previously to the actual suspension of specie payments
for indulgence upon their bonds for duties, and all the
relief authorized by law was promptly and cheerfully
granted. The dependence of the Treasury upon the avails
of these bonds to enable it to make the deposits with
the States required by law led me in the outset to limit
this indulgence to the 1st of September, but it has
since been extended to the 1st of October, that the
matter might be submitted to your further direction.
Questions were also expected to arise in the recess in
respect to the October installment of those deposits
requiring the interposition of Congress.
A provision of another act, passed about the same
time, and intended to secure a faithful compliance with
the obligation of the United States to satisfy all
demands upon them in specie or its equivalent,
prohibited the offer of any bank note not convertible on
the spot into gold or silver at the will of the holder;
and the ability of the Government, with millions on
deposit, to meet its engagements in the manner thus
required by law was rendered very doubtful by the event
to which I have referred.
Sensible that adequate provisions for these unexpected
exigencies could only be made by Congress; convinced
that some of them would be indispensably necessary to
the public service before the regular period of your
meeting, and desirous also to enable you to exercise at
the earliest moment your full constitutional powers for
the relief of the country, I could not with propriety
avoid subjecting you to the inconvenience of assembling
at as early a day as the state of the popular
representation would permit. I am sure that I have done
but justice to your feelings in believing that this
inconvenience will be cheerfully encountered in the hope
of rendering your
meeting conducive to the good of the country.
During the earlier stages of the revulsion through
which we have just passed much acrimonious discussion
arose and great diversity of opinion existed as to its
real causes. This was not surprising. The operations of
credit are so diversified and the influences which
affect them so numerous, and often so subtle, that even
impartial and well-informed persons are seldom found to
agree in respect to them. To inherent difficulties were
also added other tendencies which were by no means
favorable to the discovery of truth. It was hardly to be
expected that those who disapproved the policy of the
Government in relation to the currency would, in the
excited state of public feeling produced by the occasion, fail to attribute
to that policy any extensive embarrassment in the
monetary affairs of the country. The matter thus
became connected with the passions and conflicts of
party; opinions were more or less affected by political
considerations, and differences were prolonged which
might otherwise have been determined by an appeal to
facts, by the exercise of reason, or by mutual
concession. It is, however, a cheering reflection that
circumstances of this nature can not prevent a
community so intelligent as ours from ultimately
arriving at correct conclusions. Encouraged by the firm
belief of this truth, I proceed to state my views, so
far as may be necessary to a clear understanding of the
remedies I feel it my duty to propose and of the reasons
by which I have been led to recommend them.
The history of trade in the United States for the
last three or four years affords the convincing evidence
that our present condition is chiefly to be attributed
to over-action in all the departments of business, an
over-action deriving, perhaps, its first impulses from
antecedent causes, but stimulated to its destructive
consequences by excessive issues of bank paper and by
other facilities for the acquisition and enlargement of
credit. At the commencement of the year 1834 the banking
capital of the United States, including that of the
national bank, then existing, amounted to $200,000,000,
the bank notes then in circulation to about ninety-five
millions, and the loans and discounts of the banks to
three hundred and twenty-four millions.
Between that time and the 1st of January, 1836,
being the latest period to which accurate accounts have
been received, our banking capital was increased to more
than two hundred and fifty-one millions, our paper
circulation to more than one hundred and forty millions,
and the loans and discounts to more than four hundred
and fifty-seven millions. To this vast increase are to
be added the many millions of credit acquired by means
of foreign loans, contracted by the States and State
institutions, and above all, by the lavish
accommodations. extended by foreign dealers to our
merchants.
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