SELECTED SPEECHES AND WRITINGS.

I. ON BANKS AND BANKING.

SPEECH IN THE INDIANA CONSTITUTIONAL CONVENTION.

Masonic Temple, Indianapolis, January 7, 1850.

It is not necessary for me to detain the Convention by giving my opinion on the general subject of banking, though before discussing to any extent the systems of banking proposed I will say that I indorse the sentiments of the gentleman from Monroe as abstract truths. The whole system of paper money is a tax upon labor, produce and commerce. The man who by his labor causes the earth to produce, and the man who by his labor make those products more useful to man, may be termed a public benefactor. He adds to the wealth of the world. But can you say the same of a man who issues a bank bill?

Upon every dollar of paper money that is in circulation, labor and commerce pay six per cent. per annum, amounting in the course of about sixteen years to a sum equal to the whole paper currency-an annual tax upon labor and commerce of one-sixteenth of their proceeds, paid to a class who produce nothing, only for the use of a paper currency. This is not so direct, but it is none the less an imposition, an artificial burthen upon the producing classes, than the system of tithes in England.

I have no doubt that the time will yet come when the (417)

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world will look back upon the system of paper currency as a monstrous imposition and strange delusion, as we now look back upon the efforts of the tyrants of the East and the monarchs of England to increase the wealth of their empires and kingdoms by debasing the coin.

But when the question is propounded in Indiana whether we shall have banks or no banks, other and dif

ferent considerations should govern us. We are surrounded by States which have banks of every description, good, bad and indifferent, some of them based upon specie, some upon mortgages, and others upon stocks of States or the United States; and if we have no banks of our own we must look to the banks of other States to furnish us our currency. If we have banks of our own, we can know something about them. Our State officers. would have the right to inspect their affairs, and the people could know their condition.

Again, the business of banking is profitable; and if we are to have paper money in our midst, is it not right that our own citizens should have the profit of the business? Suppose that we use six millions of dollars in the State; there is made upon that an annual profit of nearly $360,000. Then, sir, are we to rely upon other States to furnish this currency? Must we depend upon Ohio, New York, Kentucky and Michigan? Shall we pay per annum to these four States the sum of $360,000 for the use of their paper money? If paper money is nothing, and if for the use of this nothing, compelled by the custom of trade, we have to pay a percentage, would we not better pay it to our own citizens and retain the per cent. within our borders, as a part of our currency? Gentlemen say "no bank." Let them go further and propound the question of no paper money distinctly before us. If the question is "no bank" and no bank money, let them state it to the Convention. The proposition of the gentleman from Wells, supported by the gentleman from Allen (Mr. Borden), only went half

way. They propose that there shall be no banking in this State; but one-half of our present paper currency comes from other States. And will the gentlemen put their mark right here, and say that in Indiana we shall have no paper currency either issued within the State or coming from abroad, and that such currency shall not be circulated here? Let them propose such a section as this -"the Legislature shall not establish any bank in the State, but by penal laws prevent the circulation in this State of the money of banks or other States." How would that leave us? Four-fifths of our currency is paper, and if that be suddenly withdrawn, we would be left with but one-fifth our present currency; the price of all the property in the State would be reduced to one-fifth of its present amount, and the wages of the laborer would be reduced in the same proportion. Sir, by reducing the currency, the farm that now has a market value of one thousand dollars would be reduced to two hundred and fifty dollars, and the laborer who now gets one dollar per day would get but twenty cents. And, sir, while labor and property would be so reduced in price within our State, the price of everything which we would require from without the State would remain unchanged, being measured by the foreign standard of value; and we would continue in this condition, until the holders of gold and silver from abroad, induced by the cheapness of our property, should come and purchase it at its reduced price and so bring money into the State.

If gentlemen desire to bring about this result, let them take that stand, and not simply say that we shall have no currency of our own, but go further and say that no bank bills shall circulate as money in the State.

But, sir, my own opinions in reference to banking would not govern me if I knew that they differed from the opinions of those whom I represent. I propose to offer an amendment to the original section-an amendment which

does not contain all the necessary restrictions upon banking, but only such as should be secured by constitutional provision, and which I think expresses the views of my constituents upon the subject of banking. It is as follows:

The business of issuing bills or notes as money shall not be allowed unless the same be provided by law, containing the following provisions:

1. The branches of any bank that may be established shall be mutually responsible for each other's liabilities upon bills and notes issued as money.

2. The General Assembly shall retain the right of establishing such additional branches, under the provisions of such law, at such times and places as the business of the country may require.

3. The General Assembly shall retain the power of limiting the issues of any bank established in the State. 4. The State shall not be a stockholder, partner or depositor in any bank or branch.

5. Each stockholder in any branch shall be responsible for the liabilities thereof incurred while he continued a stockholder therein, in the proportion that his stock bears to the whole stock of the branch.

6. A suspension of specie payments shall work a forfeiture of the charter of the bank or branch so suspending. 7. No bank or branch shall, either directly or indirectly, charge or receive any more interest upon moneys loaned than the law for the time being shall allow individuals to charge or receive.

8. No notes or bills shall be issued as money except on a specie basis, which shall be paid in by the stockholders before any issues are made.”

This proposes that there should be but one system of banks in the State. It first proposes that the branches of the bank shall be mutually responsible, not for all the debts of the bank, but only for the issues of each other.