James Madison Papers

To James Madison from Albert Gallatin, 26 February 1811

From Albert Gallatin

Treasury Departmt. Feby. 26th 1811


As the Charter of the Bank of the United States will expire on the 3d of March,1 it became necessary, until permanent arrangements should be made, to provide immediately for the collection of the revenue bonds falling due after that day. The object of primary consideration being at this critical moment to ensure as far as practicable punctuality of payment of such bonds, the only condition, annexed for the present to the deposits arising therefrom, has been that the Bank thus selected should give facilities to the collection, by discounting in favor of persons indebted to Govt. on acct. of such bonds. And for that purpose the letter, of which copy is enclosed, has been written to the principal collectors. Other officers of Government having public monies in their hands & who are under the superintendence of the Treasury have also been instructed to withdraw their deposits from the Bank of the United States and its branches and to place such monies in the Bank which shall have thus been selected by the Collector. The object of that instruction is to afford to Such Bank additional inducements to afford the facilities required for ensuring punctuality in the payment of revenue bonds. That consideration is at this moment of such vital importance, that I feel it my duty to submit to your consideration the propriety of a similar instruction being given to those agents who, by the 4th Section of the Act of March 3d 1809 (9th vol. page 265)2 are directed to keep the public monies in their hands in a bank to be designated by the President of the United States. The instruction may be suspended in relation to the paymaster general of the army & to the pursers & other agents residing at the seat of Government until a general arrangement shall have been made with the Banks here. But it would be very desirable that all such agents as keep the public monies at either of the ports of Boston, New York, Philada., Baltimore, Norfolk, Charleston & New Orleans should immediately be directed to place for the present all public monies coming into their hands after the 3d of March, in the same Bank with the collector of the port. As to any balance in their hands on 3d of March, it may be left optional to the officers to transfer the balance from the Bank (or Branch) of the U. States to the other Bank, or to leave that balance in the Branch or Bank of the U. States, drawing on it as usual until said balance be exhausted. I have the honor to be with the highest respect Sir Your obedient Servant

Albert Gallatin

RC and enclosure (DLC). RC docketed by JM. Enclosure (2 pp.) is a copy of a 25 Feb. 1811 letter from Gallatin to David Gelston with instructions on how to handle the financial transactions of the customhouse after 3 Mar. 1811.

1The third session of the Eleventh Congress, after a lengthy debate supplemented by a lobbying campaign that began on 18 Dec. 1810, failed to make any provision for renewing the charter of the Bank of the United States. On 24 Jan. 1811 the House of Representatives had voted, by a margin of one, to postpone indefinitely a bill to extend the charter, while the Senate, on 20 Feb., divided evenly on the same issue. Vice President George Clinton then used his casting vote to defeat the measure on the grounds that Congress lacked the constitutional authority to create corporations. Following the decision in the Senate, the House, on 21 Feb., took up a bill to repeal the section of the act that had incorporated the bank’s stockholders (Annals of Congress description begins Debates and Proceedings in the Congress of the United States … (42 vols.; Washington, 1834–56). description ends , 11th Cong., 3d sess., 21, 329–47, 431, 791–826, 982).

2Section 4 of “An Act further to amend the several acts for the establishment and regulation of the Treasury, War and Navy Departments” directed that “the paymaster of the army, the military agents, the purveyor of public supplies, the pursers of the navy, and the agents appointed by [the president], shall, whenever practicable, keep the public monies in their hands, in some incorporated bank, to be designated for the purpose by the President” (U.S. Statutes at Large description begins The Public Statutes at Large of the United States of America … (17 vols.; Boston, 1848–73). description ends , 2:535–37).

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