To James Madison from William Jones, 13 January 1816
From William Jones
Philada. 13 Jan. 1816
Dear sir
The proofs I have had of your confidence and regard and the belief that the opinions which I have formed upon a deliberate view of the state of the national currency and its effects upon public and private property, will not be unacceptable to you in the present crisis of our affairs; I take the liberty of submitting to your inspection the copy of a letter which I had occasion to address to a friend in the Senate in answer to one from him on that subject.1 My letter was as you will perceive antecedent to the promulgation of the plan of the Bank submitted by the Secretary of the Treasury and of course can have no referrence to that plan.2
I am perfectly persuaded that the Secretary would not submit, nor Congress approve, any plan that does not under all circumstances promise to guard the national interests as effectually as the nature of the case will admit, and my confidence in the result, is fortified by reposing upon the executive deliberation after the subject shall have been enlightened by the discussions in both Houses. I have principally in view to invite your attention to the last proposition contained in the letter to my friend in the possible event of the failure of the plan for the establishment of a Bank, in which case some other expedient to enable the government to collect and distribute its monied resources in a currency which shall have equal value in general circulation appears to be imperatively demanded as well from commercial and social considerations as from fiscal necessity. With great respect & sincere regard I am Dear Sir your Obdt Servt
W Jones
RC and enclosure (DLC). For enclosure, see n. 1.
1. Jones enclosed a copy of his 1 Jan. 1816 letter (12 pp.; docketed by JM: “Capt. Wm Jones of Philada Project on failure of the Ba⟨nk⟩ Bill Jany. 13. 1816”; recipient identified as JM in the Index to the James Madison Papers), which began by stating his intention to “answer your enquiry ‘how a general circulating medium is to be obtained independently of a national Bank.’” The name of the “friend in the Senate” to whom Jones wrote is not indicated on the letter, but the addressee was evidently Nathaniel Macon, who had asked this question of Jones in a 19 Dec. 1815 letter (PHi: William Jones Papers). The copy of Jones’s reply enclosed here first argued for a specie-based currency standard, lamented the effects of the present system of state banks, and advocated the establishment of a national bank under strong government control. If, however, Congress refused to support such an institution, Jones recommended “a reorganization of the Loan office branch of the Treasury Department in order to provide the necessary agency & responsibility to conduct the whole of the monied operations of the Government as well of receipt as expenditure, in the manner of a Bank,” subject to “limitations and modifications” intended to promote the circulation of specie and government notes while not proscribing other bank paper. Acknowledging that such a system would be prone to failure under the financial demands of war, Jones suggested that Congress establish a $50 million war fund to avert such a scenario. On 10 Jan. 1816 Macon thanked Jones for “the letter you sent me on the 5. instant,” which had “confirmed” Macon’s idea that “the United states might circulate their own paper instead of that of the banks.” He assured Jones further on 17 Jan. that he would not publicize the proposal since it might “interfere with the plans of our friend Dallas,” which he assumed Jones did not wish to do (ibid.).
2. Filed with the RC is an undated, unsigned plan for a national bank (4 pp.), evidently drafted in order to address perceived problems with the bank bill introduced in the House of Representatives on 8 Jan. 1816 ( 14th Cong., 1st sess., 472, 494–505). The basis of that bill, an outline submitted to Congress by Alexander J. Dallas, was published in the Daily National Intelligencer on 9 Jan. 1816. Three “objections to the scheme proposed by Congress for the national Bank,” having to do with specie payments on subscription, the government’s right to subscribe in Treasury notes, and the selection of directors, were listed in the essay sent to JM. The writer recommended that the central bank be located in Philadelphia with branches in Boston, New York, Baltimore, Washington, and possibly Norfolk, Virginia; that its capital be “30 to 40 millions,” of which the government would be authorized to subscribe up to one-fourth in five percent stock; that the bank be allowed to suspend specie payments for the first two years of its existence and during any future war but pay claimants six percent interest for the period of suspension; that the directors be stockholders chosen by fellow stockholders and not by the federal or state governments, although the U.S. commissioners of the sinking fund and the collector at Philadelphia were to be “extra directors” of the central bank, and the collectors at respective cities and the comptroller of the Treasury at Washington, along with twelve stockholders chosen by the central bank, to be directors of any branch banks established; that the government patronize the national bank exclusively unless impracticable or ordered otherwise by Congress; that the notes of the bank be accepted in payment of all taxes and debts due the government, unless the secretary of the Treasury ordered that such payments be made only in specie; and that the bank be liable, at the order of the secretary of the Treasury, to perform the duties of the commissioner of loans offices in places where bank branches were established.