University of Virginia Library

TO CHARLES J. INGERSOLL.

Dear Sir,—I have recd. your letter of Jany. 21,
asking—

1.

• Is there any State power to make Banks?

2.

• Is the Federal power as it has been exercised,
  or as proposed to be exercised by President Jackson
  preferable?

The evil which produced the prohibitory clause in
the Constitution of the U. S. was the practice of the

States in making bills of credit, and in some instances
appraised property, "a legal tender." If the notes
of the State Banks therefore, whether chartered or
unchartered be made a legal tender, they are prohibited;
if not made a legal tender, they do not fall
within the prohibitory clause. The No. of the
"Federalist" [No. XLIV.] referred to was written
with that view of the subject; and this, with probably
other contemporary expositions, and the uninterrupted
practice of the States in creating and permitting
Banks, without, making their notes a legal
tender, would seem to be a bar to the question, if
it were not inexpedient now to agitate it.

A virtual and incidental enforcement of the depreciated
notes of the State Banks, by their crowding
out a sound medium, tho' a great evil, was not
foreseen; and if it had been apprehended, it is questionable
whether the Constitution of the U. S.
which had so many obstacles to encounter would
have ventured to guard against it by an additional
obstacle. A virtual and it is hoped an adequate
remedy, may hereafter be found in the refusal of
State paper, when debased, in any of the Federal
transactions; and in the controul of the Federal
Bank, this being itself controuled from suspending
its specie payments by the public authority.

On the other question I readily decide against the
project recommended by the President. Reasons
more than sufficient appear to have been presented
to the public in the Reviews and other comments
which it has called forth. How far a hint for it may

have been taken from Mr. Jefferson I know not. The
kindred ideas of the latter may be seen in his Memoirs
&c. vol. 4. page 196, 207, 526 and his view of the
State Banks vol. 4, p. 199 & 220.[130]

There are sundry statutes of Virga. prohibiting
the circulation of notes payable to bearer, whether
issued by individuals, or unchartered banks.

These observations little new or important as they
may be, would have been more promptly furnished,
but for an indisposition in which your letter found
me, and which has not yet entirely left me. I hope
this will find you in good health, and you have my
best wishes for its continuance, and the addition
of every other blessing.