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Gerrit Smith Broadside and Pamphlet Collection

Mr. Gerrit Smith on the President's message : the currency and the hard times.

Smith, Gerrit, 1797-1874.

Digital Edition.

This digitization project was supported by Regional Bibliographic Databases and Interlibrary Resources Sharing Program funds, awarded by the New York State Library.

Call number: Smith 509

FROM THE NEW YORK TRIBUNE.

MR. GERRIT SMITH ON THE PRESIDENT'S MESSAGE.

THE CURRENCY AND THE HARD TIMES.

SIR: On reading the President's Message I felt, as I but too often have had occasion to feel, that certain views of civil government, which a few minds have so long regarded as vital to the welfare of the human family, will not soon prevail. Only in a distant future will their truth and value be realized. The President is but like nearly all other statesmen in his adherence to the old theories of government. I refer especially to those which accord so wide a province to Government, and leave so narrow a one to the people. The people should own their Government. But, under the influence and operation of those theories, Government has everywhere become the owner of the people.

The Message says:

"It is one of the highest and most responsible duties of Government to insure the people a sound circulating medium," &c.

And again:

"In the mean time it is the duty of the Government, by all proper means within its power, to aid in alleviating the sufferings of the people occasioned by the suspension of the banks, and to provide against a recurrence of the same calamity."

But in the day when juster views of its functions shall obtain, it will be admitted that civil government is under no such obligation. Neither our Federal nor State Governments owe any such duty.

Government is but to protect the rights of person and property. In going further it becomes a usurpation. One of these rights is the personal liberty of every innocent person. Hence, Government should forbid Slavery. It is also bound to protect its subjects from maniacs ; for maniacs put in the greatest peril both person and property. Hence, it is bound to suppress the dram-shop - that being the chief manufacturer of maniacs as well as of paupers.

Far better - far more in the line of his official duty - would it have been for the President to call on Congress to forbid the sale of intoxicating drinks in the City of Washington, than to call on it to attend to the currency. Congress might listen to such a call from such a source; though, I well remember, it would not condescend to listen to my speech in behalf of this same object. Hitherto, a Temperance speech on the floor of Congress, save a brief one from the same lips, had not been known. Would that it might henceforth become a common thing!

By the way, the nation would not have been deprived of the services of Charles Sumner, had Congress, before Brooks fell upon him, been willing to be moved by a Temperance speech or by any other cause to put a stop to the sale of intoxicating drinks in the City of Washington. Poor Brooks! I became acquainted with him in Congress, and found him to be a frank, pleasant man. He allowed me to speak freely to him of his habit of drinking liquor. He promptly confessed his sorrow for it, and added that he would be glad to subscribe a Congressional Temperance pledge. But for liquor he would never have committed his enormous crime. But for liquor, how small would be the proportion of the great crimes in our land!

Since the much-mooted subject of the currency has come up in my quotations from the Message, I will make that the chief subject of my letter. I will but glance at my hews of it, as these are the first lines I have written for the press since a very severe illness, from which I have not yet entirely recovered.

Let me say, in the outset, that notwithstanding my political theories are all very democratic, I am nevertheless not among the advocates of an exclusive metallic currency. Paper money cannot circulate among a barbarous people; for such a people lack confidence. But a civilized people have confidence, and such a people - most emphatically if highly commercial, and withal so young as but to have begun the development of their resources - will not consent to dispense with the immense convenience and advantage of paper money. A civilized people can afford to repose confidence, for such a people have intelligence to guide the exercise of their confidence.

There is nothing in the nature of civil government, and there is nothing in the Constitution, to justify the Federal Government in banking, or in undertaking to authorize it in others. Moreover, all its Constitutional power in the matter of the currency is simply to coin your bullion or mine, or any other man's. Nor has a State Government anything to do with banking; and it has nothing whatever to do with the currency. This does not, however, result from any prohibition in the Constitution. The Constitution but forbids the coining of money by a State. Perfect uniformity in coinage was held to be indispensable. Hence this service could not be intrusted to a multiplicity of agents. But to say, as the prominent statesmen of the country are saying, that the Constitution forbids a State to engage in banking, has no justification whatever. That it may not engage in banking, nor assume the right of authorizing persons to do so, results solely from the natural limitations of the powers of civil government.

What, however, if the Constitution did, and even in express terms, too, forbid a State to engage in banking ? That would not make it forbid the people of the State from engaging in it. It does not follow that the people of a State are to be barred from manufacturing because the State itself is.

I add, that not only are the people of the State not forbidden, under any just theory of government, to be bankers, but that for the State to forbid them is a violation of rights so gross as to justify revolution. Every man has the right to become a banker; and any number of men have the right to associate themselves for banking.

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But it will be urged that if all men are left free to turn bankers, the public will be visited with frequent and great losses. If, however, this should certainly prove to be so, nevertheless Government is not to violate the rights of the people - no, not even to save the people from frequent and great losses. But would there be such losses?

Abolish the present system of banking ; leave any person or association of persons entirely free to issue as many notes for circulation as they please. This is their natural and perfect right; and I apprehend that its exercise would but rarely be attended with loss to the public, if so be that adequate penalties for the abuse of the right were provided and enforced. What would be adequate penalties? The State Prison for a couple of years in case of failure to redeem, at all times, notes of a less denomination than twenty dollars. In case of failure to redeem other notes, or to pay deposits, let the penalty be the obligation to pay threefold the legal rate of interest from the time of refusing payment until the time of actual payment; and the further penalty of being disabled, after one year's delinquency, from ever again issuing notes for circulation, or keeping an office of deposit.

But why have the penalty in the former case so much severer than in the latter? Because failure in the former would generally be so much more disastrous, and occasion so much more suffering than in the latter. It is small bank-notes that are in the hands of the poor. It is the failure to redeem such that sends distress among the poor. A loss of five dollars with them might be more in its effects than the loss of five thousand falling elsewhere. It might be the all of some poor man, while the loser of the large sum might still be left in the midst of his comforts and abundance.

It will be said that no person would risk the State Prison penalty, and hence that no notes of a less denomination than $20 would be put in circulation. Happy, thrice happy, if there would not. For then the losses from unredeemed notes would be comparatively rare. The poor would have their little store in specie; and as to those who receive notes of $20 and upward, they would see to it more carefully than now what they receive, since the habit of taking small notes without proper caution induces the habit of taking all notes without proper caution.

Notes of less than $20 should be neither received nor disbursed by the State nor corporations. The corporations would have no ground for complaining of this disability. It would be a part of their bargain with the State - a bargain in which they get privileges from the State. Are they deprived of a natural right ? They surrender it in exchange for legislative grants and advantages. Again, any person or association that issues notes for circulation should be required to state at the close of each year the maximum amount of their circulation in each month of the year. Let the average of these maximums be the sum to be assessed with taxes. Further, let the statement (and it should be a full one, and made under oath, to be punished very severely if found to be false) be published for the information, in many respects, of the whole people.

I referred to the losses of the public in case all men were allowed to turn bankers. But would they all turn bankers in the face of the hindrances which I have proposed, and even issue small notes? Very rare indeed, and very well known, must be the integrity and responsibility of those who, notwithstanding the State Prison penalty; could succeed in putting small notes into circulation. Moreover, such persons would not be so defiant of the public sentiment, nor so careless of the possible infliction of the penalty even in their own case, as to attempt to put them in circulation.

And would all turn bankers in case no notes of a less denomination than twenty dollars could gain circulation ? I well remember that upward of forty years ago, the country was for a time flooded with notes. The irresponsible and obscure contributed to this flood by issuing their notes for a dollar, and for smaller sums, even down to one cent. They could not have got their ten or even five dollar notes into circulation. But how well known for honesty and for great and sure wealth must they be, who could succeed in swelling the currency of the country with their twenty and fifty dollar notes!

No, if the circulating paper shall consist of notes no lower than twenty dollars, then men of well ascertained and entirely undoubted responsibility will, in the end, alone supply it. In that state of things, the losses of even noteholders would be fewer and lighter than under the extolled banking system of our State. But how immeasurably better off would depositors be in that state of things than under this system? Under this the private property of the banker is liable to only a very limited extent. But under that which I am commending, the whole indebtedness would be the only limit of the responsibility. Under the present system, too, no disgraceful disability, and, indeed, no punishment whatever awaits delinquency. But under that which I would have take its place, not only is the failure to redeem small notes made felony, but the failure to redeem large ones and pay deposits is made good cause for an ignominious disability.

The security of the creditors of our banks is greatly overrated, and the delusion at this point needs to be dispelled. A certificate of deposit signed by W. B. Astor would, in point of fact, be surer than if, in his stead, half the banks in New-York were jointly pledged to pay it. So, too, the obligation of Erastus Corning to pay would be backed by a greater amount of money to pay than if possessed by half the banks in Albany put together. From the nature of his property, the obligation of James S. Wadsworth would perhaps be still surer than that of Mr. Corning. What a sound and welcome share of the currency of this State it would be in the power of each of those gentlemen to furnish! And if all their names were to each note, might I not add that the currency they would furnish would be honored in every part of the nation ? What I have said of these gentlemen I might, to every needed extent of the occasion, have said of not a few others. Sufficient to say that among them all there would be enough to step forth and supply the public with a safe currency, were once the present unnatural and absurd system displaced by one that is natural and reasonable.

What makes the "hard times?" There is no need of this incessant question. A people so morally insane as to number Slavery among their "institutions" - so infatuated and wicked as to confound the pre-eminent piracy of the whole world with real and sacred and obligatory law, and so ignorant of political economy, and so lacking in common sense, as to count up in human bodies one or two thousand millions of their wealth, and to make that vast sum, which is but a sheer fiction and a ridiculous fancy, an essential part of the basis of public and national credit-have surely no need to wonder at the frequent recurrence of "hard times" By the way, why do our economists, in counting bodies as a part of our national wealth, count slaves only? Men are means of acquiring property. If for that reason they may be counted at the South as property itself, why not at the North also? But that, as it would show the comparative poverty of the South, would not suit the policy of the day.

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The abolition of Slavery would contribute to prevent the frequent and distressful derangement in the commerce of the country. Still more would the abolition of land monopoly. Indeed, to allow every man his natural right of access to the soil would be to remedy no small share of the greatest ills which the world suffers. Abolish land monopoly, and the great mass of poverty would speedily disappear.

What makes the "hard times?" Extravagant living is, doubtless, among the most efficient causes. In this folly the masses of the American surpass the masses of every other people. Just here let me say that the frightful waste of property, strength, health, life, morals, in the use of tobacco and intoxicating liquors is an immense drawback on the prosperity of our country. How lamentable that even the warmest friends of temperance - the most earnest advocates of total abstinence should shrink from taking the ground that such liquors, when offered for sale for a drink, are not invested with the sacred rights of property, but are to be known and treated simply as a nuisance!

Our enormous imports go far to account for our "hard times." The tariff men are right in saying that no country can be prospering greatly which imports much more than it exports. I cannot, however, fall in with their plan for reducing the excessive imports Better to let the evil continue than to invade the natural right of men to buy and sell freely where they please. If we allow our regards for all portions of the human family to be impartial, we shall see no more fitness in restricting the commerce between nations than between counties and townships.

The wasteful expenditures of the national Government help largely to account for the "hard times." These expenditures are several fold as great as they should be: and I add that they are several fold as great as they would be, were the cost of administering it defrayed by direct taxation. Never shall we have an honest, economical, and cheap Government, until the people bring themselves to consent to pay the expense of it in direct taxes. For Government well knows that it will never be held to a strict account by the people, and never be faithfully and effectually watched by the people, so long as its extravagance, be it ever so great and ruinous, is paid for only indirectly. When its expense shall come to be a conscious, because a direct burden on the people, that expense will no longer be sixty or seventy millions a year, nor a quarter as much. A very small navy will then suffice; and a comparatively unexpensive armed police will then take the place of armies.

Again, for so young a people, we have multiplied railroads too rapidly, and invested far too much capital in that direction. Moreover, the moneys to build them have, in very many instances, been obtained at excessive and even ruinous rates of interest. The facts that most of the roads have been built in too great a hurry to be well built, and that most of them have been mismanaged, are further explanations of the waste of capital.

I will add still another to my enumeration of the causes of "hard times," "pressures for money," and kindred evils. This is, the usury laws. These laws are among the superstitions that still linger in the political and economical world - for there are superstitions there as well as in the religious world. Let every man who has money to lend, be left entirely free to bring it to the common market, and to receive for the use of it whatever may be the ruling price.

But, after giving due weight to all other causes of our commercial revulsions and "hard times," it must be admitted that we shall never be exempt from these evils so long as our system of corporate banks continues. They, more than any other one cause, contribute to those frequent universal expansions and contractions of credit that are fraught with such wide-spread distress and ruin.

I made the supposition that Mr. Astor, Mr. Corning, and Mr. Wadsworth might become bankers in the event of the sweeping aside of the present artificial banking arrangements, and of the adoption in their stead of arrangements in harmony with natural rights and with common sense. Steady would be their issues - for on the one hand their great wealth would save the necessity of hastily and irregularly contracting them, while on the other their great caution, growing out of their unlimited liability for the redemption of their issues, would prevent the undue expansion of those issues.

I close my letter with saying that no evil is to be apprehended from leaving the people to the free exercise of their natural, rights, provided only that Government will wield, faithfully and unsparingly, its ample penalties for the abuse of those rights.

GERRIT SMITH.

PETERBORO, Dec. 21, 1857.