Treasury Bench

“ To lock up the surplus in the Treasury and withhold it from circulation would lead to such a contraction of the currency as to cripple trade and seriously affect the prosperity of the country. Under these circumstances the Secretary of the Treasury and myself heartily concurred in the propriety of using all the surplus currency in the Treasury in the purchase of Government bonds, thus reducing the interest-bearing indebtedness of the country, and of submitting to Congress the question of the disposition to be made of the bonds so purchased. ”

“ All your strength of purpose will be needed to prevent still further complications being woven into your existence. To inherit a hundred thousand pounds was your misfortune. But deliberately to increase the sum to a quarter of a million was your fault. You were happier at the Treasury. You left the Treasury on account of illness. You are not ill any more. Will you go back to the Treasury? No. You will never go back, because your powerful commonsense tells you that to return to the Treasury with an income of twenty thousand a year would be grotesque. ”

“ He took the treasury at a period when it was little more than a great national bank of discount, with rates varying from day to day; the coin standard a commodity of speculation on Wall street; the credit of the government a football in the markets of the world; and our bonds begging favor of European capitalists. He leaves it what it ought to be—a treasury pure and simple, making no discounts, offering no concessions, asking no favors ”

“ If loss of confidence in the bank notes should ever lead people to demand their wholesale redemption, the Treasury would have to meet the demand in gold. But the moment it tried to sell the bonds, it would find there was no market for them except at a discount of perhaps 30 or 40 per cent. It is true that the Treasury would still be able to recoup itself for this loss in the value of the bonds by exercising its prior lien on the assets of the banks. ”

“ In intimate connection with the question of revenue, is that which makes provision for a suitable fiscal agent, capable of adding increased facilities in the collection and disbursement of the public revenues, rendering more secure their custody, and consulting a true economy in the great multiplied and delicate operations of the Treasury department. Upon such an agent depends in an eminent degree, the establishment of a currency of uniform value, which is of so great importance to all the essential interests of society ”

“ Who else objects to either feature of the sub-treasury—the hard-money feature, or the deposit of our own moneys with our own officers? Make the inquiry—pursue it through its details—examine the community by classes, and see who objects. The hard-money feature is in full force. It took full effect at once in the South and West, because there were no bank-notes in those quarters of the Union of the receivable description: it took full effect in New York and New England, because, having preserved specie payments, specie was just as plenty in that quarter as paper money ”

“ Congress can only require a branch, in any State, after two contingencies have happened in the State; neither of them having the slightest reference to the necessities, or even convenience, of the federal government.
"Here, then, said Mr. B., is the Treasury established for the United States! A Treasury which is to have an existence but at the will of the bank, or the will of a State legislature, and a few of its citizens, enough to own 2,000 shares of stock worth $100 a share! A Treasury which Congress has no hand in establishing, and cannot preserve after it is established ”

“ The gold which comes to them in the course of banking operations will be added thereto; and almost imperceptibly the country banks will arrive at the condition of the city banks, whose reserves in coin and legal-tender notes are now far beyond the requirements of law. In the mean time, and without derangement of business, the Treasury may strengthen its reserve,—while, on the other hand, the quiet reduction of its liabilities advances the percentage of the reserve to the whole amount of liabilities in almost a compound ratio. ”

“ Other influences, such as changes in the public's currency holdings, may persist for longer periods of time.
Still other variations in bank reserves result solely from the mechanics of institutional arrangements among the Treasury, the Federal Reserve Banks, and the depository institutions. The Treasury, for example, keeps part of its operating cash balance on deposit with banks. ”

“ There need be no fear that we can not pay our current expenses with such money as we have. There is now in the Treasury a comfortable surplus of more than $63,000,000, but it is not in gold, and therefore does not meet our difficulty. ”

“ I maintain that it is neither a paper-money bill, nor a bill to lay the foundation for a new national debt; and will briefly give my reasons for believing as I do on both points.
"There are certainly two classes of treasury notes—one for investment, and one for circulation; and both classes are known to our laws, and possess distinctive features, which define their respective characters, and confine them to their respective uses.
"The notes for investment bear an interest sufficient to induce capitalists to exchange gold and silver for them, and to lay them by as a productive fund. ”

“ This reserve must bear a proportion to the aggregate of liabilities so large as to remove mistrust, and this can be accomplished only by presenting as in the vaults of the Treasury an amount of coin nearly equal to the sum of liabilities.
If during the last three years we had retained the surplus of coin that has reached the Treasury, we should now have enough; but, as a consequence of such accumulation, speculation would have run riot,—and I fear, if we should now by legislative enactment decree that course for the future, we should aggravate the situation. ”

“ Thus, at the end of the year 1820, one of the greatest depression, and when demands pressed most rapidly upon the treasury, there was a balance of above two millions of dollars in the treasury—to be precise, $2,076,607 14, being one-tenth of the annual revenue. In prosperous years the balance is still larger, sometimes amounting to the fourth, or the fifth of the annual revenue ”

“ Notwithstanding a continued revenue arising from taxation and the interest on our United States bonds, has flowed in a continued stream into the Treasury, the money has gone out in a ceaseless stream, until, instead of seeking, as has formerly been the case, for modes of emptying the public Treasury, we have to seek for modes of replenishing it. Added to the revenue of the fiscal year, the balance in the Treasury on the ist of August, 1859, will but little more than meet the ordinary expenses of Government; and to make it do this, economy is necessary. ”

“ We should not collect revenue for the purpose of anticipating our bonds beyond the requirements of the sinking fund, but any unappropriated surplus in the Treasury should be so used, as there is no other lawful way of returning the money to circulation, and the profit realized by the Government offers a substantial advantage. ”

“ Either the surplus must lie idle in the Treasury or the Government will be forced to buy at market rates its bonds not then redeemable, and which under such circumstances can not fail to command an enormous premium, or the swollen revenues will be devoted to extravagant expenditure, which, as experience has taught, is ever the bane of an overflowing treasury. ”

“ The new tariff act, called revenue—was changed within a year. The sub-treasury system, believed to have been put to death, came to life again. Gold and silver, intended to have been ignored as a national currency, had become that currency—both for the national coffers, and the people's pockets. Of all the measures of that extraordinary session, opening with so much hope, nothing now remains to recall the idea of its existence, but, first—The Home Squadron! keeping idle watch on our safe coasts, at the cost of a million per annum. ”

“ First, it is said that the national banks enjoy privileges which are oppressive to the people; that for every $100 in bonds they deposit in the Treasury they are permitted to issue $90 in notes; that they draw interest upon the bonds, and then lend out their notes and draw interest on them also, which makes double interest ”

“ While the present system continues, we are poor. The payment of the national debt and the accumulation of coin in the Treasury are the signs of unparalleled national wealth, but our financial condition is not in harmony with these signs. The latest figures from the Treasury are such as no other nation can exhibit. From these it appears that the amount of bonds purchased since March 1, 1869, for the sinking fund was $22,000,000, and the amount purchased subject to Congress $64,000,000, being in all $86,000,000. ”

“ Tile vaults of the banks are stifled with money. Our national credit is so high that on but day before yesterday the bid for the bonds of the Nation in a new Treasury finance exceeded by 15 times the necessity. ”

“ In response to questions propounded by the Chamber of Commerce Committee I would say that, as the Sub-Treasury system is a disturbing factor in the money market, provision should be made by Congress for the regular deposit in national banks of surplus Government money above its regular working balance of fifty millions, the banks to pay interest at 2 per cent per annum thereon. ”

“ The treasury notes for currency are distinguished by features and qualities the reverse of those which have been mentioned. They bear little or no interest. They are payable to bearer—transferable by delivery—re-issuable—of low denominations—and frequently reimbursable at the pleasure of the government. They are, in fact, paper money, and possess all the qualities which forbid investment, and invite to circulation. The treasury notes of 1815 were of that character, except for the optional clause to enable the holder to fund them at the interest which commanded loans—at seven per cent. ”

“ And what is it that successfully discourages us from direct steps toward specie payments?
In the first place, it is the mistrust of the people in our ability to resume, and to maintain resumption. In the next place, the monthly publication of the Treasury discloses precisely our weakness as well as our strength; and the great element of our weakness is the volume of our past-due and demand obligations. In ordinary times,—that is, when the people have confidence in the ability of the banks to redeem their demand obligations in coin,—a reserve of twenty to twenty-five per cent. ”

“ Its duties as such, besides the normal relation between a bank and a customer, consist chiefly in making advances to the Treasury in the shape of "deficiency advances" when the government balances are too low to admit of the payment of the quarterly interest on the British debt without replenishment, or against "ways and means" advances at times when the revenue is coming in more slowly than government expenditure is proceeding. ”

“ Schuyler.
[Sitting l. c.] People who come to borrow money, eh?
Hamilton.
[Giving Schuyler's hat to Zekiel.] Exactly. That's why I have to be "out, out, out." You see there is still a large section of the public who regard the Treasury as a sort of savings-bank, from which they can withdraw money without the preliminary inconvenience of depositing it.
[Helping Schuyler off with his cloak and giving it to Zekiel. Schuyler.
[Having risen to take off cloak, sits again.] Well, the people are slow to understand. It's only the last few years that we've had a Treasury. ”

“ Others may regret that the exigencies of the country were not promptly met by taxation,—or that at the beginning a different system was not organized by the Treasury, through which the national securities might have found a readier market,—or that the national credit was not sustained, at the period of bank suspension, by the resolute redemption of the Government securities in coin at any present sacrifice. ”

“ On the contrary those moneys have been safely kept, and the public prosperity never as great as under the Independent Treasury and the gold and silver currency of the federal government: and long has it been since any politician has allowed himself to be supposed to be against them. Up to the date of that message then—up to the first day of the extra session, 1841—Mr. Tyler may be considered as in favor of a national bank, with its paper currency, and opposed to the gold and silver currency, and the sub-treasury. ”

“ Treasury bills, bottomed on taxes, bearing or not bearing interest, as may be found necessary, thrown into circulation will take the place of so much gold and silver, which last, when crowded, will find an efflux into other countries, and thus keep the quantum of medium at its salutary level. Let banks continue if they please, but let them discount for cash alone or for treasury notes. They discount for cash alone in every other country on earth except Great Britain, and her too often unfortunate copyist, the United States. ”

“ It is their volume that puts them beyond control, and it is our want of control that causes them to be depreciated. Thus, Sir, I would offer inducements to fund them, or part of them, in bonds that would be sought after because of their valuable uses beyond a mere investment, and to neutralize the evils of contraction of Treasury liabilities by authorizing their assumption, with the consent of the people, by various parties in different sections of the country, each one of whom would be fully equal to the task thus voluntarily assumed. ”