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Subject Area: Political Theory

GALLATIN TO G. C. VERPLANCK, M.C. - Albert Gallatin, The Writings of Albert Gallatin, vol. 2 [1879]

Edition used:

The Writings of Albert Gallatin, ed. Henry Adams (Philadelphia: J.B. Lippincott, 1879). 3 vols.

Part of: The Writings of Albert Gallatin, 3 vols.

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GALLATIN TO G. C. VERPLANCK, M.C.

New York, 22d May, 1830.

Dear Sir,—

I have been much gratified by the report of the Committee of Ways and Means on the Bank of the United States, which I think to be the ablest paper that has issued from any committee of either House. The constitutional question is treated with great ability, and placed on the most solid ground that could have been selected. I would, indeed, be inclined to go farther than the committee, and to insist that the term “bills of credit,” in the Constitution, embraces every species of paper currency, and therefore precludes the issuing of bank-notes under State authority. That a purely metallic currency would be preferable to one hundred independent local paper currencies is indisputable; and, considering the perpetual tendency manifested everywhere, by every government or public institution, to abuse the power of issuing paper, it is at least doubtful whether it would not be safer to abstain altogether from using that dangerous instrument as currency. Admitting this to be impracticable, I cannot, though aware of the objections to a powerful moneyed institution, perceive any better check against over-issues, or any other security for preserving a proper standard of value, than the Bank of the United States, or at least one founded on the same principles.

There are, however, some positions in the report to which, as now informed, I cannot yield an unqualified assent. I was at the time of opinion that specie payments might have been restored in 1815, without the establishment of the bank, although that institution gave the best practicable security against a recurrence of the evil. I also think that the depreciation of a paper currency does not exclusively depend on, or always correspond with, its excess, and that this depreciation does not occasion that of a simultaneously circulating metallic currency; and, although I am an ultra-bullionist, it seems to me that the loss arising from the suspension of specie payments, which was incurred by government during the war, is overrated in the report. But on those and on some other points connected with the general question of currency to which I have paid great attention, I only wish to be enlightened; and the principal object of this letter is to request you to have the goodness to supply me, if in your power, with such further documents as may throw light on the subject. I can at present only point out the following, to which you may add such other as you may think useful and are within your reach:

1. The report itself, with the annexed tables.

2. Mr. Crawford’s report of 1820, therein alluded to.

3. The report of the committee of the Senate of this session on the Bank of the United States.

4. The reports (dates not recollected, 1813 to 1817) showing the amount respectively subscribed in the several States, &c., to the loans obtained during the war.

5. The report or reports showing the amount of Treasury notes issued during the war, their redemption by funding or payment, with the dates of such issues and redemption.

6. The late report of the Secretary of the Treasury to the Senate respecting the relative value of gold and silver.

I think that the immediate causes which produced the suspension of specie payments are not sufficiently investigated in the report. Excessive issues of bank-notes, and, perhaps, withdrawing of specie, will be the answer. But what was the cause of those excessive issues prior to the suspension of specie payments, which had not operated for the three years immediately following the dissolution of the first Bank of the United States? This is an important question, as connected with the degree of security afforded by the present bank against another suspension in time of war, and with the extent to which it may at such time afford or promote the loans wanted by government. A knowledge of the precise situation of the principal banks in June, 1812, and when they stopped paying in specie, would materially assist in discovering the immediate causes of that event.