MESSAGE
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MESSAGE


From The PRESIDENT of the United States, to


both Houses OF Congress, at the Commence


ment of the First Session Of the Twenty-sixth


Congress.


FeLLOo-citizenS of the Senate,


and House of Representatives.


TConcIuded from our last


have heretofore assigned to Congress my
reasons for believing that the establishment OF
an independent National Treasury, contem
plated by the Constitution, is necessary TO the
safe action of the Federal Government. The
suspension of specie payments in 1887, by the
banks having the custody of the public money,
showed in so alarming degree our dependence
on those institutions for the performance OF duties
required by law, that [ then recommended the
entire dissolution of that connexion. This re-
commentator has been subjected, as desired it
shonld be, to severe scrutiny and animated dis
cussion; and l allow myself to believe that, not
withstanding the natural diversiIies of opinion
which NAV be anticipated on all sub jects inVOlV-
ing such important considerations, it has secured
in its favor as general concurrence OF public
sentiment as could be expected on one OF such
magnitude.


Recent events have also continued 10 devel-
ope new objections to such a connexion. Sell
dom is any bank, under the existing system and
practice, able to meet demand, all its Liabilities





tains specie payments, and transacts profitable
business only by the confidence of the public In
its solvency; and whenever this is destroyed,
the demands ofits depostors and noteholders-
pressed more rapidly than it can make collec-
tons from lis debtors-force it 10 stop payment.
This loss of confidence with its consequences
occurred in 1887 and afforded the apology of the
banks for their suspension. The public then ac-
quesced in the validity ofthe excuse and while
the State Legislatures did not exact from them
their forfeited charters, Congress, In accordance
with the recommendation of the Executive, al
lowed them time TO pay over the public money
they held, although compelled 10 issue Treasury
notes to supply the deficiency thus created.


1t now appears that there are other motives
than want OF public confidence under which
the banks seek to justify themselves in a refusal
to meet their obligations. Scarcely were the
country and Government relieved In a degree,
from the difficulties occasioned by the general
suspension of 1887, when partial one, occur
ring within thirty months OF the lormer. produc-
ed new and serious embarrassments though 1t
had no palliation in such circumstances as were
alleged in justification of that which had pre-
viousy taken place. There was nothing in the
condition of the country to endanger we'll man
aged banking institution commerce was derang-
ed by no foreign war; every branch OF manu-
featuring industry was crowned with rich re-
wards; and the more than usual abundance OF
our harvess after supplying our domestic wants,
had left our granaries and store-houses hlled
with a surplus for expectation. 1t is In the
midst of this, that an irredeemable and deprecat
ed paper currency is entaiIed upon the people by
a large portion of the banks. They are not
driven to it by the exhibition of a loss OF public
confidence, or of a sudden pressure from their
depositors or note holders, but they excuse them
selves by alleging that the current of business,
and exchange with foreign countries, which
draws the precious metals from their vaults,
would require, in order to meet it, larger curtail-
ment of their loans TO a comparatively small
portion of the community, than it will be con-
Venient for them to bear. or perhaps sale for the
banks to exact The plea has ceased to be one
of necessity. Convenience and policy are now
deemed sufficient to warrant these institutions In
disregarding their solemn obligations. Such
conduct is not merely an injury to individual
creditors, but it is wrong to the whole CON-
munity, from, whose liberahty they hold most
valuable priviIeges-wh rights they violate.
whose business they derange, and the value OF
whose property they render unstable & insecure
1t must be evident that this new ground for
bank suspensions, in reference to which their
action is not only disconnected with, but wholly
independent of that of the public, gives charac-
ter to their suspensions more alarming than any
which they exhibited before, and greatly increa-
ses the i'm propriety of relying on the banks in
the transactions of the Government.


A large and highly respectable portion of our
banking institutions are, it affords me unfelgned
pleasure to state, exempted from all blame on ac-
count of this second delinquency. They have,
to their great credit, not only continued to
meet their engagements but have even repudiated
the grounds of suspension now resorted to. 1t is
only by such a course that the confidence and
good will of the community can be preserved,
and, in the sequel, the best interests of the insti
tutions themselves promoted.


New dangers to the banks are also daily dis
closed from the extension of that system of ex
travagant credit of which they are the pillars
Formerly our foreign commerce was principally
founded on an exchange of commodities, in
cluding the precious metals, and leaving in its
transactions but little foreign debt Such is not
now the case Aided bY the facilities afforded