Complete Works. Hamilton Alexander
be obliged to make monthly returns to the President of War, who should instruct him what proportion to deliver to the Quartermaster-General. It may be necessary that the superintendents should sometimes have power to dispose of the articles in their possession, on public account; for it would happen that the contributions in places remote from the army could not be transported to the theatre of operations without too great expense, in which case it would be eligible to dispose of them, and purchase, with the money so raised, in the countries near the immediate scene of war.
I know the objections which may be raised to this plan,—its tendency to discourage industry, and the like. But necessity calls for it. We cannot proceed without it; and less evils must give place to greater. It is, besides, practiced with success in other countries, and why not in this? It may be said, the examples cited are from nations under despotic governments, and that the same would not be practicable with us. But I contend, where the public good is evidently the object more may be effected in governments like ours, than in any other. It has been a constant remark that free countries have ever paid the heaviest taxes. The obedience of a free people to general laws, however hard they bear, is ever more perfect than that of slaves to the arbitrary will of a prince. To this may be added, that Sweden was always a free government, and is so now, in a great degree, notwithstanding the late revolution.
How far it may be practicable to erect a bank on the joint credit of the public and of individuals can only be certainly determined by the experiment. But it is of so much importance, that the experiment ought to be fully tried. When I saw the subscriptions going on to the bank established for supplying the army, I was in hopes it was only the embryo of a more permanent and extensive establishment. But I have reason to believe I shall be disappointed. It does not seem to be at all conducted on the true principles of a bank.
The directors of it are purchasing with their stock instead of bank-notes, as I expected, in consequence of which it must turn out to be a mere subscription of a particular sum of money for a particular purpose.
Paper credit never was long supported in any country, on a national scale, where it was not founded on a joint basis of public and private credit. An attempt to establish it on public credit alone in France, under the auspices of Mr. Law, had nearly ruined the kingdom. We have seen the effects of it in America, and every successive experiment proves the futility of the attempt. Our new money is depreciating almost as fast as the old, though it has, in some States, as real funds as paper-money ever had. The reason is that the moneyed men have not an immediate interest to uphold its credit. They may even, in many ways, find it their interest to undermine it. The only certain manner to obtain a permanent paper credit is to engage the moneyed interest immediately in it, by making them contribute the whole or part of the stock, and giving them the whole or part of the profits.
The invention of banks on the modern principle, originated in Venice. There the public and a company of moneyed men are mutually concerned. The Bank of England unites public authority and faith with private credit, and hence we see what a vast fabric of paper credit is raised on a visionary basis. Had it not been for this, England would never have found sufficient funds to carry on her wars; but with the help of this, she has done, and is doing, wonders. The Bank of Amsterdam is on a similar foundation.
And why can we not have an American Bank? Are our moneyed men less enlightened to their own interest, or less enterprising in the pursuit? I believe the fault is in government, which does not exert itself to engage them in such a scheme. It is true the individuals in America are not very rich, but this would not prevent their instituting a bank; it would only prevent its being done with such ample funds as in other countries. Have they not sufficient confidence in the government, and in the issue of the cause? Let the government endeavor to inspire that confidence, by adopting the measures I have recommended, or others equivalent to them. Let it exert itself to procure a solid confederation; to establish a good plan of executive administration; to form a permanent military force; to obtain, at all events, a foreign loan. If these things were in a train of vigorous execution, it would give a new spring to our affairs; government would recover its respectability, and individuals would renounce their diffidence.
The object I should propose to myself, in the first instance, from a bank, would be an auxiliary mode of supplies, for which purpose contracts should be made between government and the bank, on terms liberal and advantageous to the latter. Every thing should be done, in the first instance, to encourage the bank. After it gets well established it will take care of itself, and government may make the best terms it can for itself.
The first step to establishing the bank will be to engage a number of moneyed men of influence to relish the project and make it a business. The subscribers to that lately established are the fittest persons that can be found, and their plan may be interwoven.
The outlines of my plan would be to open subscriptions in all the States, for the stock, which we will suppose to be one million of pounds. Real property of every kind, as well as specie, should be deemed good stock, but at least a fourth part of the subscription should be in specie or plate. There should be one great company, in three divisions: in Virginia, Philadelphia, and at Boston; or two, at Philadelphia and Boston. The Bank should have a right to issue bank-notes, bearing two per cent. interest, for the whole of their stock, but not to exceed it. These notes may be payable every three months or oftener, and the faith of government must be pledged for the support of the bank. It must therefore have a right, from time to time, to inspect its operations, and must appoint inspectors for the purpose.
The advantages of the bank may consist in this: in the profits of the contracts made with government, which should bear interest to be annually paid in specie; in the loan of money at interest, say six per cent.; in purchasing lives by annuities, as practised in England, etc. The benefit resulting to the company is evident from the consideration, that they may employ in circulation a great deal more money than they have specie in stock, on the credit of the real property which they will have in other use. This money will be employed either in fulfilling their contracts with the public, by which also they will gain a profit, or in loans at an advantageous interest, or in annuities.
The bank may be allowed to purchase plate and bullion, and coin money, allowing government a part of the profit. I should make the bank-notes bear interest, in order to obtain a readier currency, and to induce the holders to prefer them to specie, so as to prevent too great a run upon the bank, at any time, beyond its ability to pay.
If government can obtain a foreign loan, it should lend to the bank, on easy terms, to extend its influence and facilitate a compliance with its engagements. If government could engage the States to raise a sum of money in specie, to be deposited in bank in the same manner, it would be of the greatest consequence. If government could prevail on the enthusiasm of the people to make a contribution in plate for the same purpose, it would be a masterstroke. Things of this kind sometimes succeed in popular contests, and if undertaken with address I should not despair of its success, but I should not be sanguine.
The bank may be instituted for a term of years by way of trial, and the particular privilege of coining money be for a term still shorter. A temporary transfer of it to a particular company can have no inconvenience, as the government are in no condition to improve this resource, nor could it in our circumstances be an object to them, though with the industry of a knot of individuals it might be a valuable one to them.
A bank of this kind, even in its commencement, would answer the most valuable purposes to government and to the proprietors; in its progress, the advantages will exceed calculation. It will promote commerce by furnishing a more extensive medium, which we greatly want in our circumstances. I mean a more extensive valuable medium. We have an enormous nominal one at this time, but it is only a name.
In the present unsettled state of things in this country we can hardly draw inferences from what has happened in others, otherwise I should be certain of the success of this scheme, but I think it has enough in its favor to be worthy of trial.
I have only skimmed the surface of the different subjects I have introduced. Should the plans recommended come into contemplation in earnest, and you desire my further thoughts, I will endeavor to give them more form and particularity. I am persuaded a solid confederation, a permanent army, and a reasonable prospect of subsisting it,