December 26 — January 1, 1839

Lincoln's Fiery 'Sub-Treasury' Speech Defends the National Bank

During the waning months of his Administration, President Martin Van Buren (1837-41) had sponsored legislation known as the Sub-Treasury Plan, which had so far failed to pass both Houses of Congress. The 1840 Presidential election was fast approaching, and the Whig Party, which supported the American System of economic development, was hopeful that the almost twelve years of disastrous policies sponsored by the previous two administrations could soon be reversed.

President Andrew Jackson had withdrawn the government's deposits from the U.S. National Bank, founded by Alexander Hamilton, and had placed them in "pet banks" owned by his cronies. To make matters worse, he had vetoed the Maysville Road Bill, which had allocated Federal funds for building a road in Kentucky. These two actions severely limited any Federal support of infrastructure projects, which most of Jackson's cohorts declared to be unconstitutional. This assault on America's productive capacity had been the strategy of the British Empire ever since the first colonists arrived in Massachusetts Bay, and the Whig Party recognized the implications for America's national security.

The State of Illinois, trying to develop its resources on what was then still the frontier, passed infrastructure legislation which included a canal that would link its ports on Lake Michigan to the Mississippi River. Because of the Federal strangulation of credit, Illinois had to issue its own bonds to finance the needed projects. The lack of a National Bank tied America's economy to the ups and downs of the London Markets, so that the Panic of 1837 wreaked havoc on the infrastructure projects of Illinois and many other states.

In that context, the Presidential election of 1840 loomed large. The Whig Party in Illinois decided to prepare for the coming opportunity by holding debates with the Democrats to highlight the differences in policies. Abraham Lincoln was then serving as a State Representative and a statewide Whig Committeeman, and he was chosen as one of the Whig spokesmen in the debates.

The series of debates began in November of 1839, and continued through December, with Whig and Democrat speakers alternating. Lincoln did very well in his first debate, but felt that he had not sufficiently answered Stephen A. Douglas in the second debate. Therefore, he scheduled a third appearance on December 26, and his presentation was a thorough discussion of the difference between placing government money in a National Bank or placing it in the proposed Sub-Treasury locations.

Lincoln's speech that day was highly effective, and it was published as a pamphlet for the Presidential campaign. After a few opening remarks, Lincoln stated that the Sub-Treasury proposal would "injuriously affect the community by its operation on the circulating medium." He also said that it would be a more expensive proposition than a National Bank, and that it would be a far less secure depository of the public money.

Getting into the meat of the matter, Lincoln said: "To show the truth of the first proposition, let us take a short review of our condition under the operation of a National Bank. It was the depository of the public revenues. Between the collection of those revenues and the disbursements of them by the government, the Bank was permitted to, and did actually loan them out to individuals, and hence the large amount of money annually collected for revenue purposes, which by any other plan would have been idle a great portion of time, was kept almost constantly in circulation. Any person who will reflect, that money is only valuable while in circulation, will readily perceive, that any device which will keep the government revenues in constant circulation, instead of being locked up in idleness, is no inconsiderable advantage."

Lincoln continued: "By the Sub-Treasury, the revenue is to be collected, and kept in iron boxes until the government wants it for disbursement; thus robbing the people of the use of it, while the government does not itself need it, and while the money is performing no nobler office than that of rusting in iron boxes, The natural effect of this change of policy, every one will see, is to reduce the quantity of money in circulation."

Then, too, President Van Buren had attempted to convince Congress that all revenue had to be collected in specie, telling them that, "It may be safely assumed, that no motive of convenience to the citizen, requires the reception of Bank paper." Lincoln told his audience they should "mark what the effect of this must be. By all estimates ever made, there are but between 60 and 80 millions of specie in the United States. The expenditures of the Government for the year 1838, the last for which we have had the report, were 40 millions. Thus it is seen, that if the whole revenue be collected in specie, it will take more than half of all the specie in the nation to do it. By this means, more than half of all the specie belonging to the fifteen million of souls, who compose the whole population of the country, is thrown into the hands of the public officeholders, and other public creditors, composing in number, perhaps not more than one quarter of a million; leaving the other fourteen millions and three quarters to get along as they best can, with less than one-half of the specie of the country, and whatever rags and shin-plasters they may be able to put, and keep, in circulation.

"By this means, every office-holder and public creditor, may, and most likely will, set up shaver; and a most glorious harvest will the specie men have of it; each specie man, upon a fair division, having to his share, the fleecing of about 59 rag men. In all candor, let me ask, was such a system for benefiting the few at the expense of the many, ever before devised? And was the sacred name of Democracy, ever before made to endorse such an enormity against the rights of the people?"

Lincoln then gave an example of what the effect would be: "The man who has purchased any article, say a horse, on credit, at 100 dollars, when there are 200 millions circulating in the country, if the quantity be reduced to 100 millions by the arrival of pay-day, will find the horse but sufficient to pay half the debt; and the other half must either be paid out of his other means, and thereby become a clear loss to him; or go unpaid, and thereby become a clear loss to his creditor."

Lincoln then answered the charge that the National Bank had caused contractions and expansions in the money supply. "Again, as to the contractions and expansions of a National Bank, I need only point to the period intervening between the time that the late Bank got into successful operation and that at which the Government commenced war upon it, to show that during that period, no such contractions or expansions took place. If before, or after that period, derangement occurred in the currency, it proves nothing. The Bank could not be expected to regulate the currency, either before it got into successful operation, or after it was crippled into death convulsions, by the removal of the deposits from it, and other hostile measures of the Government against it.

"We do not pretend, that a National Bank can establish and maintain a sound and uniform state of currency in the country, in spite of the National Government; but we do say, that it has established and maintained such a currency, and can do so again, by the aid of that Government; and we further say, that no duty is more imperative on that Government, than the duty it owes the people, of furnishing them a sound and uniform currency."

After demonstrating, through Government documents, that the Sub-Treasury scheme would cost $405,000 a year more than a National Bank, Lincoln moved on to a hilarious account of the corruption and outright thievery that had occurred in the government under Van Buren, whose Administration had rivaled that of Robert Walpole, the British Prime Minister who had proved the truth of his motto that "Every man has his price."

"I repeat then," said Lincoln, "that we know nothing of what will happen in future, but by the analogy of experience, and that the fair analogy of past experience fully proves that the Sub-Treasury would be a less safe depository of the public money than a National Bank. Examine it. By the Sub-Treasury scheme, the public money is to be kept, between the times of its collection and disbursement, by Treasurers of the Mint, Custom-house officers, Land officers, and some new officers to be appointed in the same way that those first enumerated are.

"Has a year passed since the organization of the Government, that numerous defalcations have not occurred among this class of officers? Look at Swartwout with his $1,200,000, Price with his $75,000, Harris with his $109,000, Hawkins with his $100,000, Linn with his $55,000, together with some twenty-five hundred lesser lights. Place the public money again in these same hands, and will it not again go the same way? Most assuredly it will.

"But turn to the history of the National Bank in this country, and we shall there see, that those Banks performed the fiscal operations of the Government thro' a period of 40 years, received, safely kept, transferred, disbursed, an aggregate of nearly five hundred millions of dollars; and that, in all that time, and with all that money, not one dollar, nor one cent, did the Government lose by them. Place the public money again in a similar depository, and will it not again be safe?"

Lincoln closed by citing the clamor going up from the Democrats that "every State in the Union will vote for Mr. Van Buren at the next Presidential election. Address that argument to cowards and to knaves; with the free and the brave it will effect nothing. It may be true, if it must, let it. Many free countries have lost their liberty; and ours may lose hers; but if she shall, be it my proudest plume, not that I was the last to desert, but that I never deserted her.

"I know that the great volcano at Washington, aroused and directed by the evil spirit that reigns there, is belching forth the lava of political corruption, in a current broad and deep, which is sweeping with frightful velocity over the whole length and breadth of the land, bidding fair to leave unscathed no green spot or living thing, while on its bosom are riding like demons on the waves of Hell, the imps of that evil spirit, and fiendishly taunting all those who dare resist its destroying course, with the hopelessness of their effort; and knowing this, I cannot deny that all may be swept away. Broken by it, I, too, may be; bow to it I never will. The probability that we may fall in the struggle ought not to deter us from the support of a cause we believe to be just; it shall not deter me."