James Madison Papers

From James Madison to Alexander J. Dallas, 25 August 1816

Montpellier Aug. 25. 1816

Dear Sir

Since the rect. of your several letters relating to the Treasury proposition, and the decision of Bank Deputies at Philadelphia, my thoughts have been duly turned to the important and perplexing subject.

Altho’ there may be no propriety in recalling the proposition, it seems now certain that it will fail of its effect. Should the Banks not represented at Philada. come into the measure, the refusal of those represented would be fatal. The want of a medium for taxes in a single State would be a serious difficulty. So extensive a want would forbid at once an enforcement of the proposition.

The Banks feel their present importance and seem more disposed to turn it to their own profit, than to the public good, and the views of the Govt. Without their co-operation, it does not appear that any immediate relief can be applied to the embarrassments of the Treasury or of the Currency. This co-operation they refuse. Can they be co-erced?

Should the State Legislatures unite in the means within their power, the object may be attained. But this is scarcely to be expected; and in point of time is too remote.

The national Bank must for a time at least, be on the defensive.

The interposition of Congress remains. And we may hope the best as to a vigorous use of it. But there is danger that the influence of the local Banks, may reach even that resource. Should this not be the case, the remedy is future not immediate.

The question then before us is whether any and what further expedients lie with the Executive.

Altho’ we have satisfied by what has been already attempted our legal responsibility, it would be still incumbent on us to make further experiments, if any promising ones can be devised. If there be such, I have full confidence, that they will enter into your views of the subject.

One only occurs to me, and I mention it because no other does; not because I regard it as free from objections which may be deemed conclusive.

The notes in the Treasury might be presented to the Banks respectively with a demand of the specie due on the face of them. On refusal suits might be immediately instituted not with a view to proceed to execution, but to establish a claim to interest from the date of the demand. The notes thus bearing interest being kept in hand, treasury notes bearing interest, might be issued in payments from the Treasury; and so far injustice to the several classes of Creditors might be lessened, whilst a check would be given to the unjust career of the Banks.

Such a proceeding ought to be supported by the Stockholders, the army, the navy, and all the disinterested and well informed part of the Community. The clamor agst. it would be from the Banks and those having interested connections with them, supported by the honest part of the Community misled by their fallacies. And the probability is but too great that the clamor would be overwhelming.

I do not take into view the expedient of requiring a payment of the Impost, in specie in part at least, because it could not be extended to the other taxes, and wd. in that respect as well as otherwise, be a measure too delicate for the Ex. Authy: Nor cd. its effect be in time for any very early purpose.

I have been led by the tenor of your letters to put on paper these observations. The report you are preparing will doubtless enlighten my view of the whole subject. Friendly respects

James Madison


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