The minority of the Committee on Finance, to which was referred that part of the Governor’s Inaugural address relating to the currency, beg leave to report:
That in an investigation of the matter, they were compelled to differ with the majority of the committee. This difference, however, they are willing to concede as an honest one on the part of the majority, as they wish to have the same accorded to them in the minority.
The committee having decided that it is neither necessary nor proper to establish a National Bank, this inquiry must therefore be limited to the two remaining propositions, which are, substantially, whether the Government shall renew a connection with the State Banks—a connection dissolved by the acts of the banks themselves—or whether some plan cannot be adopted better for the banks, the Government, and the people.
The first inquire that naturally presents itself is, whether our paper-money banks possess any peculiar right to be the depositories of the General Government. The history of our banking institutions shows, conclusively, that they are established, for the most part, by those who wish to borrow, and not by those who wish to lend; and that their loans, so far from being extended alike to all responsible persons, are confined
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to a favorite and monopolising few. This remark is made for the purpose of showing that banks have no right to be considered institutions established for the general good of all; on the contrary, that all the good they produce is confined to the directors, stockholders and their favorite friends; while all the evils they engender are distributed, with insidious art, among the rest of the community.
In their strictures on banking, generally, your committee would not be understood as expressing an opinion in relation to our own State institutions, which are constituted differently from most other banking institutions, and to aid the State in particular emergencies; but they cannot say they were created as a rightful receptacle of the funds of the General Government. In elucidation of this part of the subject, the committee would call attention to the following abstract from the discount sheet of the principal bank at Philadelphia, on the 9th of April, 1832:
“The whole amount of notes discounted, was $7,939,679[.]52; of which more than two-thirds was loaned to ninety persons; more than three millions of dollars were in the hands of seventeen individuals, and nearly one-seventeenth part in the hands of one individual, leaving only $529,974[.]26 to be divided among the rest of the community.” And this by an institution called National.
If we had the same means of getting at what are called State banks, we should probably find that their loans were somewhat in the same proportion, and narrowed down to the smallest circle. Instances have occurred of bank presidents obtaining loans, from the institutions over which they presided, to three times the amount of their capital; and numerous instances are on record, where the whole loanable capital of the bank has been absorbed by two, three, or perhaps a dozen individuals.
A forcible reason for the Government refusing to receive paper money, or to deposite her funds in the vaults of the bank, is to be found in the fact that a number of these institutions have not yet resumed specie payments, and the reasonable doubt that exists as to the ability of many which have resumed to continue. The claim therefore which these institutions set up, of being established and conducted for the public good, is not borne out by the facts; and it follows that they have no particular right to the favor of the General Government.
The next consideration that presents itself is, the safety of these institutions as depositories of the General Government. From the tables of Mr. Gallatin, it would appear that one hundred and sixty-five banks failed from the 1st of January, 1811, to the 1st of January, 1830.2 At that time there were three hundred and thirty banks in operation; and as no alteration has been made in the system—as the principles on which they are founded and conducted are the same now as then—we must naturally look for like results; and that of the eight hundred or more banks now in existence, a third, or perhaps more, will be found in the course of the next fifteen or twenty years recorded in the list of broken banks.
Experience should teach wisdom; and the fact that the General Government was twice thrown on the verge of bankruptcy, through a connection with the State banks, should of itself be sufficient to deter us from adventuring on such an expedient again.
In 1816, the Government, with twenty-two millions of paper money in her vaults, was forced to borrow money to pay the interest on the Na-
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tional debt; and in 1837, with upwards of thirty millions of money in the State banks, the Government was compelled to resort to the doubtful expedient of issuing Treasury notes in order to meet ordinary demands. Had this money been deposited with individuals, and had they proved as recreant to their trust as the banks have, no one would have thought of employing them again. The misfortune is, that the public mind makes a distinction between the acts of corporations and the acts of individuals; and that which would drive an individual from the public service with disgrace, is looked upon as an additional claim to pubic favor when committed by a corporation.
The conclusion then of the committee is, that the banks having twice proved recreant to their trust, added to the certainty that more or less of them will, in the course of time, fail to meet their engagements, warrant the assertion that they are not safe depositories of the public revenue.
Another consideration connected with this part of the subject is, the availability of the fund so deposited. It will be admitted, it is presumed, that the principal object the banks have in wishing to be the depositories of the nation, is for the purpose of increasing their loanable capital. The money deposited with them would form the basis on which they could extend their discounts; and so long as the Government has no use for the moneys, so long the banks become liberal—in other words, expand; but if the Government call on them for payment, they must immediately contract their discounts, and thus cause distress in the money market. The alternative that presents itself is, either delay to the Government or embarrassment to their customers.
After the passage of the law distributing the surplus revenue among the States, it became the duty of the Secretary of the Treasury to draw on the banks in New York, where the greater part of the revenue is collected, for a large amount of funds. As these funds had been used for the purpose of discounting, they could not be made available without distressing that commercial community; and a deputation visited Washington for the purpose of procuring a delay in the time of payment of their just debts.
The paramount interest of the country demands that whatever money is collected from the people for the use of the Government, should be so kept as to be always available without producing any alteration in the monetary affairs of the people.
In case of a war with any foreign power, the panic in the commercial market would be a signal for the banks to suspend specie payments; and no matter what amount of Government funds might be in their vaults, the war would have to be carried on with an irredeemable currency, or our country left a prey to the enemy. Another danger to be apprehended is, that having the means of war under their control, they might withold those means and compel the Government to resort to such measures as they might choose to dictate.
The committee, therefore, do not concede that placing the funds of the Government in the State banks is putting them where they will be most available in time of emergency. The expansions and contractions of the banks are not one of the least evils of the banking system, as at present organized; and this evil has been, and will be, greatly increased by the banks being made the depository of the General Government.
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When the revenue has accumulated to any considerable amount, the banks feel themselves free to enlarge their discounts, in other words, expand; money becomes plenty, the price of every thing increases in value, with the exception of labor, and an artificial stimulus is given to every department of trade known to our country; but, if the Government draw largely on them, they are forced to contract their discounts; money becomes scarce; panic and pressures are the order of the day; laborers, whose cost of living has been doubled by the expansion of prices, are now thrown entirely out of employment, and reduced to want—find shelter in the almshouse, or, perchance, acquire a precarious living by violation of law. Happily for the people of Illinois, they know not what real poverty is. Here, labor and economy will soon render a man partially independent of the mutations and changes that occur so frequently in the other parts of the Union. The ease with which land can be acquired; the small amount of labor necessary to make the earth produce her fruits, give to the industrious and laboring inhabitants of our State, advantages not possessed by similar inhabitants of the older States. It is asserted, and it is believed on good authority, that upwards of ten thousand people were thrown out of employment in the city of New York alone, by the suspension of specie payments. As the price of labor had not increased with the price of the necessaries of life, these people had no means of earning more than a bare subsistence, and, consequently, when thrown out of employment, were cast pennyless on the world.
The great incentive to industry, economy, and rectitude of conduct, is the rational prospect that the labor of our youth will support the feebleness of age; but, by the ever changing value of our currency, which, in its turn, affects the value of every thing else, that income, which would at one time enable the decrepid and the aged to live in ease and comfort, will not at another time procure the necessaries of life. These frequent contractions and expansions are felt by the poor in a greater or less degree, as well as by all classes of society, leading to over-trading, speculation and ultimate ruin.
To check this evil, nothing would have so great an effect as for the Government to refuse receiving bank paper in payment for the public dues. The union of the purse and the sword have, in all countries, and at all times, been considered dangerous; and a union of this kind, cemented by an unnatural and unholy alliance between the General Government and the State banks, would, in the opinion of your committee, be productive of incalculable mischief, and ultimate bankruptcy to the Government.
There are at this time about eight hundred State banks in existence; and, allowing that the average number of persons immediately interested in each of them is five hundred, we then have an army of four hundred thousand persons directly interested in promoting the prosperity of the banks, and consisting of that class of the community who possess the greatest influence in society. Amongst them may be found the restless politician, the heartless speculator, and all those who subsist upon the unordered results of chance—the precarious favors of ever varying providence—who centre around the banks as the only source of hope against that which they call degradation of honest labor. If, to the number which we have already named, we add the number of official agents which an adminis-
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tration might bring into the field, there is no party, no matter how honest their intentions—how holy their cause—but would be annihilated in a contest with such an allied power as this.
The outlines of the Independent Treasury system were first suggested by Mr. Jefferson, in a letter to Mr. Gallatin, thirty-six years since, and, so far from its being a new and untried experiment, its features are in the main the same as those which have governed the United States’ Mint—almost the only fiscal agent of the Government which has been conducted without loss to the Government, or injury to the people.3
The most prominent principles of the system are, that the Government shall gradually disconnect itself from the State banks, by requiring, on the commencement of the system, one-sixth part of the revenue to be paid in gold and silver, another sixth part to be added from year to year, until the time shall arrive when no other currency shall be received or disbursed, but that known to the constitution—“a gold and silver currency” being, in the words of Daniel Webster, “the law of the land at home, and the law of the world abroad.”4 The Treasurer of the United States, the Treasurer of the Mint at Philadelphia and New Orleans, public receivers at Boston, New York, Charleston, and St. Louis; collectors of the customs at the remaining sea port towns, and the receivers of the land offices, constitute the fiscal agents of the Government.
In order to prevent fraud and defalcation, many salutary checks and guards are provided, and the use or embezzlement of the public funds, by any of the receivers, is declared felony, and subjects the offender to imprisonment. But six additional officers are required to put the system in operation, at the expense of sixteen thousand five hundred dollars per annum. Such are the plain and practicable provisions of the Independent Treasury system; a system that has been in partial operation, but without the proper checks and guards, from the commencement of the Government; a system that places in the hands of the Government officers no new or dangerous powers; a system founded on the sound principle, that the Government should keep its money in its own hands, for its own use, collecting no more from the people than is necessary for a wise and economical administration of its affairs. The safety of the funds, and the certainty that they would always be available, are much greater than in banks. The officers of the Government and the officers of the banks are, or should be, selected for their probity and intelligence; and there is no reason to suppose that one is more liable to stray from the paths of honesty than the other. A temptation to commit robberies on the exchequer of the nation is no greater than the temptation to filch from the vaults of the banks—the advantages, even in this respect, being on the side of the Independent Treasury system; the accounts being so few and simple as scarcely to admit of false entries without the certainty of detection. The dangers from fire and robbery are less, as the precious metals, though melted, would still retain their intrinsic value; and the difficulties of carrying off and concealing gold and silver are much greater than purloining and secreting paper money.
There is still one great and important point in favor of this system; it is, that the General Government can always draw for its funds to meet any exigency that may arise, without interfering with monetary affairs of the people—neither causing an expansion of money at one time,
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or contraction at another—leaving the regulation of the paper money to the banks, and to the States who have assumed the responsibility of authorizing such issues. If it be asserted that a number of the prominent men of the nation, who have heretofore expressed opinions favorable to the State bank deposite system, are now opposed to it, the answer is, that the system had not been fully tried; and that, when it was found to be utterly defective and wanting in all the requisites necessary for the safe keeping of the public funds, they at once abandoned it. But by a strange inconsistency in the human character, many of our public men who had denounced and prophesied all manner of evil of what they termed the pet bank system, only became convinced of its worth and value, when these depositories of the public money proved fraudulent to their trust, and spread ruin and desolation through the land. Among the names that stand out in bold relief, we find those of Henry Clay, John Quincy Adams, and Daniel Webster.
If it be asserted that our country has, during the whole period of her connection with the State banks, prospered beyond example, the answer is, that our prosperity is owing to far different causes, and that our natural resources are such as to cause us to flourish, despite of that connection. It would be hard to show that the failure of 160 banks, between 1811 and 1830, added any thing to the wealth of the country; and equally difficult would it be to prove that the recent failure or suspension of every bank in the Union was a measure calculated to advance the prosperity of the people.
It may be said that, if it be proper for the State to receive paper money in payment of taxes, the like reasons would apply to the General Government; but there is no analogy in the cases. For the State Government to refuse the notes of banks in which she has so large an interest, and over which she has a direct control, would be to discredit her own paper, and injure her own resources, and might be likened to the General Government refusing to take Treasury Notes in payment of the public dues. A recent defalcation of a collector of the customs is adduced as an argument showing the dangers of the Independent Treasury system. That defalcation commenced while the Bank of the United States was the fiscal agent of the Government—was extended under the State bank deposite system—and was finally detected under the present temporary Independent Treasury system.
The unconstitutionality and danger of a National Bank are sufficient to warrant your committee in an unqualified opposition to such an institution; and if evidence of its unconstitutionality, danger, and inutility is asked for by its friends, they are respectfully referred to the speech of Henry Clay, delivered in Congress in 1811.5
Your committee, therefore, concur in so much of Governor Carlin’s inaugural address as has reference to the currency; and, in conclusion, report the following resolution:
Resolved, That our Senators be instructed, and our Representatives requested, to vote for any bill having for its object the disconnection of the Bank and State.
1On December 7, newly elected Governor Thomas Carlin delivered his inaugural message to the General Assembly. On December 11, the House of Representatives referred the portions that related to currency to the Committee on Finance, of which Abraham Lincoln was a member. On December 18, the majority of the committee (including Lincoln) presented their report to the House. The same day, Isaac P. Walker presented to the House the dissenting report of the minority of the committee. The House tabled both reports and ordered the printing of 500 copies.
Illinois House Journal, 11th G.A., 1st sess., 26-30, 56, 98-103, 103-109.
2Albert Gallatin, Considerations on the Currency and Banking System of the United States (Philadelphia: Carey & Lea, 1831), 97-106.
3Jefferson later published his 1802 letter to Gallatin in The Debate Over the Recharter of the Bank Bill (1809).
Daniel Webster’s “Speech on the National Bank Bill,” U.S. House of Representatives, 28 February 1816, transcribed in The Writings and Speeches of Daniel Webster, 18 vols. (Boston: Little, Brown & Co., 1903), 14:71.
5In 1811, Clay had opposed the recharter of the National Bank, because the American economy was stable. But then came the War of 1812 and economic difficulties, so Clay opposed the charter in 1816.
Henry Clay’s “Speech on Renewing the Charter of the First Bank of the United States,” in the U.S. Senate, 1811, transcribed in Calvin Colton, ed., The Speeches of Henry Clay, 2 vols., (New York: A. S. Barnes & Co., 1857), 1:22-33.
6The split in the Finance Committee over this issue was mostly along party lines. Of the Finance Committee members who submitted this minority report, three of the four were Democrats. Of those who submitted the majority report, four were Whigs and one was a “conservative.”
Theodore Calvin Pease, ed., Illinois Election Returns (Springfield: Illinois State Historical Library, 1923), 490, 494, 534, 561, 574, 584, 586, 590.

Printed Transcription, 6 page(s), Journal of the House of Representatives of the Eleventh General Assembly of the State of Illinois at their First Session (Vandalia, IL: William Walters, 1838), 103-08