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Subject Area: Economics
Subject Area: Political Theory

GALLATIN TO ROBERT POTTER, 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 ROBERT POTTER, M.C.

New York, 3d December, 1830.

Dear Sir,—

I duly received your letter of 19th June last, and was a little startled by the request to aid you in your intended attack on the Bank of the United States, as I thought you could not have been unacquainted with the fact that I had openly and officially advocated the renewal of the charter of the former bank, and that, although there were many opponents on constitutional grounds, the question would not have then been lost had it not been for the hostility of a portion of the Republican party either to Mr. Madison or to myself. Mr. Crawford was our principal support in defence of the renewal; and, without entering into details, it is known to all that the Clinton party was extremely dissatisfied with the preference given to Mr. Madison to the exclusion of Governor Clinton, and that De Witt was in 1812 the candidate of the opposition. This has nothing to do with the present question, but may explain why the tenor of your letter surprised me. But this was not the cause of the delay in answering your queries; and, although I was not ready to do it before this time, I ought to have acknowledged the receipt of your letter, and pray you to excuse the omission.

I had engaged in researches respecting the metallic currency of the United States, which led to a conviction that the circulation of gold coins ought not to be prevented, as it now is by our mint regulations, and that they ought to be rated according to their real market value as compared with silver. I could hardly avoid in the discussion some allusion to our paper currency, but had not properly investigated a subject of which I had lost sight since 1816, when I went to France. I received simultaneously your letter and one from Mr. Walsh requesting that I would prepare an article for his Review in relation to the reports of the two committees of the last session of Congress. It was impossible to answer without writing a book, and, having some leisure and no sufficient conception of the labor the scattered materials would require in order to an analysis and condensed form, I unwittingly promised to furnish the article. It has cost me three months of tedious labor, and, as it would not have been written but for your letter, I must ask your permission to inflict on you the task of reading it, and have accordingly written to the editor to send you a copy. I had not time to revise all the calculations myself, and the person I employed made several mistakes. Although there is none that can affect the argument, I have always felt conscientious with respect to facts, and particularly statements of numbers which readers have no means to verify, and I am now employed in revising and correcting those myself, with a view to a publication in a pamphlet form, which I will transmit to you when published.

You are quite right in believing that I would feel very averse to any interference or connection with the party politics of the day; and you will easily perceive from the general tenor of my essay that I am no friend either to our banking system generally or to a paper currency of any kind. Had I my choice, I would prefer a pure metallic currency and private banking-houses, as in London and on the Continent of Europe, who might with perfect freedom receive money on deposit, discount notes, and deal in exchange, but not issue bank-notes or in any respect interfere with the currency; and I would wish that government should neither restrain them in other respects nor grant them any privilege whatever. But I am equally averse to any issues of paper money by government, and still more so to its converting the Treasury into a banking, trading company. This I think the very worst plan, in every view of the subject, that could be devised, and the remedy worse than any evils, great as they are, that may flow not only from the existing system, but from letting again the State banks run wild and suspend their payments. I have viewed the subject with a single eye to a sound currency, which to provide for appears to me a constitutional and a moral duty. Independent of every temporary party consideration, there are questions of right and wrong, of what is just or unjust, which must be settled on that principle alone. Such is the question of currency. With a debased coinage or a fluctuating depreciated paper you subvert every private and public engagement, impair the performance of every contract, make invariably the ignorant and the weak dupes of the shrewd and wary, and demoralize the whole community. What are the means to prevent this under existing circumstances? Can Congress subvert the whole of the deep-rooted banking system, sustained as it is by almost every State in the Union, and revert at this day to a metallic currency? I have no doubt of the constitutional power in that respect, and have suggested the means; but I feel equally certain that the power will not be exercised. And in that case I will congratulate you and the country if you can discover any safe means of attaining the object otherwise than through a bank of the United States organized on principles in substance similar to those of the existing institution. Certain it is that none has as yet been suggested, and, perceiving no other myself, my conclusions are in favor of the renewal of the charter. For my arguments in support of the constitutionality of the measure I must refer you to the article in the Review. With me they are conclusive, and I have no doubt on the subject; but of that all are competent to judge, and provided I shall have succeeded in bringing the facts fairly and correctly before the public, I will be satisfied that it has been a useful task. I may be allowed to add that I am no otherwise concerned in the Bank of the United States than as owner of ten shares, and that from it or any other bank I have never asked or received any favor whatever, not having even had a single note discounted in the whole course of my life.

I am, &c.