who had examined this bill in all its details, and who is charged with the administration of the Treasury Department, approved of it heartily; and that I also believed it had the hearty assent of every member of the Cabinet, and also that it had the assent of a great body of the people; that it was assented to by a large number of the banks whose interests might be affected by it, and that it was assented to by the great body of the people in the portion of the country from which I come. I merely alluded to them as a part of the people of the United States. The honorable Senator, however, seems, from the whole course of his argument, to have had only in view the interests of local banks and bankers. If he can refer to their interests, and appeal to us in eloquent terms to protect them from the doom that the sons of Jacob believed was about to fall upon Benjamin, and almost excite our sympathy to tears in view of the afflictions we are about to put upon them; if he can cite the opinions of those who have charge of them, surely I may cite the opinions of grave and honorable men who are charged with the responsibilities of administering the Executive Departments of the Government. It was not done with any view to influence our feelings, but simply to show that those men who had fully considered the subject gave this bill their hearty approbation.

The honorable Senator also tries to prove that under this system the banks cannot make any money. If that is so, the whole system will fall to the ground.

Mr. Collamer: I said they could not make money in my section. Mr. Sherman: I think I could prove to the honorable Senator, if I should take the time to do so-but I will not-that they can make money. But if his argument is true, what then? This mammoth scheme, which is going to carry distress into the mountains and valleys of Vermont, will fall dead and harmless, impotent from the outset. That bankers can make a reasonable profit under this bill I have no doubt. They have the benefit of four per cent. on the bonds deposited by them. They have the benefit of interest on the notes given them for circulation. They have the benefit of exchange-not the rates of exchange formerly paid, but that incidental exchange which every bank charges in drawing a draft, probably a quarter or a half of one per cent. They have the profits they can make from deposits. They have other profits from the ordinary incidents of banking. I have no doubt that from all these various profits they will make what banks in ordinary times under specie payments could make-that is, seven or eight per cent. a year. The banks of the State of New York last year made twelve per cent. I have produced the official table to show it. They did it under the suspension of specie payments; and one half of the additional profits made by the banks during the suspension of specie payments would pay the onerous tax about which the honorable Senator complains. I say, therefore, if his argument is true, this whole banking system will fall to the ground, and no harm will be done; but I do not believe it to be true.

I will not now discuss the question of the taxation of the existing banks. That, the honorable Senator states, is the real objection he has to this whole scheme. He stated in the outset that but for that he

would not speak on the bill. That proposition to tax the existing banks is in another bill. We have two propositions, one coming to us from the House of Representatives, to which the Senator does not object; but the Committee on Finance thought it proper to propose as an amendment to that bill that a tax should be imposed on the old banks the same as is provided for the new. If the Senate deem that tax onerous, as a matter of course they will change it; but that bill is not now under consideration. I believe the tax of two per cent. is light enough; but that is for the Senate to determine. It has, however, no connection with this bill.

But, sir, the principal point made by the honorable Senator, and one most likely to influence the judgment of Senators, is this: he asks what benefit the United States derives from this arrangement, and he endeavors by argument to show that the United States derives no benefit. I would put to him this simple proposition: There are now $167,000,000 of local bank circulation in the country. Suppose we can induce through their interests-I do not propose to do it by any arbitrary mode-the retirement of $100,000,000 of this circulation, taking the smallest sum that will probably be used in the course of a year; suppose we can induce the banks to withdraw $100,000,000 of their circulation, is it no benefit to the United States? Now, the United States get no benefit whatever from their circulation. The United States cannot receive it in their ordinary business transactions. It fills the channels of circulation to the exclusion of the greenbacks. Suppose we can induce the banks to withdraw $100,000,000 of their circulation, and invest that much money in our bonds, and receive United States circulation, does not the honorable Senator see that we should derive a great advantage from it? That is the object of this bill. The object is, by appealing to the patriotism and the interests of the people and the banks, to induce the banks to withdraw their local circulation and convert it into a national circulation. If it fails, as a matter of course it does no harm. But suppose it succeeds, does not the United States derive a benefit from it? Certainly; because at once a demand is created for the purchase of $100,000,000 of United States bonds. We are anxious to sell these bonds. They are now below par. The creation of a demand for $100,000,000 will, as I showed yesterday, by the well-known and recognized laws of trade, probably create a demand for $500,000,000. There is the benefit, there is the advantage we seek to derive. We shall make a market at once for the sale of $100,000,000 of our bonds, and the additional market which is always created by making a demand for a particular commodity, which is equivalent at least to five times the amount of the real demand. The Government of the United States is willing to borrow money from the honorable Senator at six per cent., and pay the interest in gold coin. Any person who desires to loan money to the United States may receive six per cent. interest on it, and we are very glad to sell our bonds at that rate in this time of war; but to those who avail themselves of the privileges of this law we only pay four per cent., so that we save one third of the interest on the amount of our bonds used for banking; and more than that, we get a circulation which, by the laws of the

United States, may be used in the collection of our dues; and, in the ordinary operations of our Government, these banking agencies may be made useful and beneficial as depositories.

I have already stated the benefits to the Government; I stated them more fully yesterday, and will not enlarge on them now. The benefit derived to the Government is by making a market for its bonds, by having fiscal agencies throughout the United States, so that it may the more readily collect its debts, and by saving one third of the interest on the payment of its bonds, and by securing to the people of the country a uniform national currency which can be passed from hand to hand in all parts of the country without loss by exchange, deterioration, or al

teration.

But the honorable Senator says that the power granted by this bill would render the Secretary of the Treasury a very dangerous person, or a very powerful person; probably that is the meaning. He says that this bill would create a dangerous political power. According to all experience, if you invest in any particular person the power to appoint men to office, or the power to manage banks or control a scheme of this kind, it rather weakens him by the well-known law that he disappoints more than he benefits. Sir, it will be a dangerous power in one sense-not to the American people, but it will be dangerous to the individual who exercises the power. If you confer upon the Secretary of War or the Secretary of the Treasury the power to appoint twenty clerks, as we did the other day, there are five hundred applicants at once; and you disappoint four hundred and eighty and make them enemies for the sake of gaining twenty friends. No, sir; the administration of patronage, the power to select depositories, all the power conferred by this bill, the power of visitation-all these are powers which tend rather to decrease the influence of the Secretary of the Treasury, because they are more likely to make him enemies than friends. But the Senator says that the Secretary of the Treasury has power by distributing the stock to exercise great influence.

It is true that the bill is not so specific as it might be. One half must be distributed according to population, the other half according to bank capital and resources. I have before me now a table showing the distribution that is made to each State by the terms of the bill as it is understood and construed. There is no discretion about it, and the clause was put in for the purpose of taking away from the Secretary of the Treasury discretionary power. Under the bill as it originally stood there was no limit; the $300,000,000 could be assigned to any State or to any portion of the country; but in order to secure to every State and to every Territory and to this District its fair and just allotment of this banking capital, if there is any benefit to be derived from it, the principle was introduced by the Committee on Finance that one half was to be apportioned according to population, and the other half according to the present banking capital and resources. Why was this done? In a new State, or even in a State so old as Ohio, our capital is far less, in proportion to our population, than the capital of the New England States; they are older and richer. The accumulation of ages has gathered wealth in New England, and has not yet gathered it in

Ohio. Therefore we did not apportion this banking capital among the States according to population merely, but one half according to population, so as to secure all something, and one half according to the present banking capital. It was done for the very purpose of placing it in the power of the local banks, about which so much complaint has been made, to absorb a portion of this capital and convert their State agencies gradually into national agencies.

To go back again-for I have answered nearly all the objections I desire to answer the honorable Senator says that this bill destroys the State banks, and he endeavors to excite our sympathies for them. It does not affect the right of a single bank. It does not impair its property; it does not affect it in the least. Under the provision offered by the honorable Senator from New York [Mr. Harris], and also under the amendment reported from the Committee on Finance, there is not the slightest difficulty to hinder any of the existing banks, without any collection of debts, from gradually putting themselves under the operations of this law; and, indeed, under the amendment offered by the Senator from New York, they can avail themselves of the benefit of this law without surrendering their State organization, if only the State will consent; but, even if they will not do that, they are perfectly free to go on in the banking business. The banks of the State of Vermont may yet aid her volunteers; they may do all they have done to the good people of that State; they may help to carry on the operations of the Government just as they have done, except this-that in consideration of the fact that during this time of war they do not pay specie for their notes, we think they should pay a portion of their excess of profits to the United States, and we propose to levy two per cent. If the honorable Senator can show to the Senate that that is too high, as a matter of course he will have his own way; it will be lowered; and if he makes many pathetic speeches-as pathetic as that he made to-day -perhaps he will carry his point. I think two per cent. is little enough under the circumstances, when banks do not pay their notes in gold and silver. It is believed that this two per cent. can be put on the new banks, because, as it is said, they derive privileges from the United States, and can afford to pay two per cent., and therefore I was in favor of imposing that tax on them. This does not destroy the State banks. I hope, however, that in the end all those banks will be induced, by the benefits conferred by this general system, by the national objects to be obtained by it, by the well-known patriotism of the people among whom the banks are located, to gradually change their local system, so that we may have one national currency, based on the public faith and on the security of private individuals. There are no compulsory features about this bill; it is nothing but a voluntary offer to any one who chooses to engage in banking.

But this is the first objection with which the honorable Senator starts out, and it is the last I will answer-he says the operation of this bill will withdraw capital from the operation of State taxation._So_it will; and to that extent it will be of great national service. By the present laws, and by the Constitution indeed, a State has no power to tax money invested in United States bonds. We have a right to

borrow money, and a State cannot interfere with that right by taxation. We have that clear right to borrow money, and a State cannot interfere with it. Under our laws, the State of Vermont cannot now levy a tax upon the capital in Vermont invested in the bonds of the United States. I cannot state how much, but I have no doubt that the very loyal people of Vermont have already purchased a large amount of these bonds; I do not know to what extent. The banks themselves and individuals, I have no doubt, are the holders of these very bonds. That capital is not taxable by the State of Vermont. We only propose that they shall hold a certain portion of it in proportion to their circulation, and deposit it with the Treasurer here, and upon it receive United States notes. The exemption of money invested in bonds of the United States from State taxation is one of the inducements we hold out to the people to buy the bonds, and is not an objection to the system. The bonds will be free from State taxation, whether they are deposited here or whether they are among the people. If they are deposited here, the United States takes two per cent. off. If they are among the people, we do not tax them at all. The operation of this bill is to bring the tax into the National Treasury without taking a dollar from the States.

Sir, I do not believe that there is anything in this scheme so mischievous and dangerous as the honorable Senator seems to think. It may, although I do not think it will, affect a little the operations of local banks, if they should attempt to come into it too hastily. The new associations may be, and probably will be, first organized in the large cities. I know, sir, from the position I have occupied in connection with the bill, that many capitalists who are now holders of the United States bonds, and who will purchase other bonds, will go into this scheme of banking in the large cities, in the State of Ohio, and in several other States. I have no doubt, and I venture my prediction with great diffidence against that of the honorable Senator, that within six months from this time, during which we are certainly not likely to have peace, fully $50,000,000 of the bonds will be withdrawn from market, and deposited here at the Treasury, thus making way for another $50,000,000; and to that extent United States notes will be issued, in place of the local bank currency. This currency will gradually, quietly supersede the local money, without effecting or deranging any of the ordinary operations of life.

The honorable Senator seems to think that the winding-up of these State banks will be a direful calamity. Every twenty years they are wound up. The experience of this country has shown that in twenty years the whole banking circulation is lost in the hands of the people; statistics show it. In 1815 nearly the whole of it was swept away. How many banks survived the panic in those times? They are wound up by the losses and by the incidents of the banking business and by bankruptcy; but ordinarily they are wound up by the States. In Ohio our banking laws extend to but twenty years. I do not know whether that is the case in New England or not; but in Pennsylvania, New York, and I believe in many of the States, the duration of a bank is but for twenty years. It cannot live longer. Here we provide a way by which these banks may, at their own pleasure, taking their own time