A History of Banking in the United States/Chapter 12
PERIOD IV.—1829 TO 1845.
CHAPTER XII.
The Bank War.
Jackson was inaugurated March 4, 1829. The campaign had been passionate and malignant on both sides, but there was peace and prosperity in spite of monetary stringency. "The currency of the country was as sound in the year 1829 as may probably be expected under any system which admits the substitution of paper for the precious metals."[1] The United States Bank had lived down its early bad behavior, and. was accepted as one of the fundamental institutions of the country. It is true that it was allowed to pass with reservations by many democratic politicians of the old school, who still denied its constitutionality, but only on dogmatic grounds. In the campaign of 1824 only the faintest suspicions of political influence exerted by it had found expression. When, however, in any arena a power is present which might be of decisive importance as an ally of one party or the other, it is inevitable that its alliance will be contended for by them. Its efforts to remain neutral will be vain, and will expose it to greater danger from both than an alliance with either. Either party which thinks that it has lost the chance of winning the alliance will turn against the intervening power with fierce animosity, and will try to destroy it or drive it from the arena. This is what happened in the case of the United States Bank. As an ally it might be of the utmost value to either political party; as the ally of an opponent it was dreaded and detested by either. The federalists had opposed the charter because the Bank was to be organized under democratic auspices. By the natural tendency of things, however, it had gravitated into the hands of the capitalist class. It was enough, therefore, for the democrats to know: It is not on our side.—Hence we find that the charges against it are prognostications. It is said that it is a dangerous power, that it may win control, decide elections, defeat the will of the people, etc., all of which means that it may defeat us. The conflict was therefore irrepressible, and the Bank war may be held to demonstrate that a national bank in this country is impossible, because it would be sure to become an object of conflict between political parties. During the fifteen years of political strife over banks, banking, and currency, which began in 1829, angry recriminations were often exchanged as to who dragged these subjects into politics. Priority depended on the question whether Jackson found the United States Bank, as he said, active in politics at his accession or not. The answer of history must be that he did not; that he and his followers provoked the conflict, and were responsible for it.
There was no new element in the Bank war of Jackson's time. It was only a revival of antagonisms which we have seen in play around the Bank of North America and the first Bank of the United States.
If Jackson intended to open a war on the Bank, it is strange that he should have chosen a Pennsylvanian, Samuel Ingham, as Secretary of the Treasury. It fell to the lot of that gentleman to open the war on the institution, of which all Pennsylvanians were especially proud. After the report of the Investigating Committee on the Bank of the United States, in 1832, he published an apology for his own action in the matters which are about to be narrated, in which he said that, soon after he entered on the duties of his office, he heard the President make frequent declarations in conversation which showed that "he had imbibed strong prejudices against the United States Bank and was distinctly opposed to the existence of that institution," and that he (Ingham) was "appealed to as the head of the department charged with official intercourse between the government and the Bank for protection against what was termed the political abuses of that establishment. It was often stated to me that the branches in Louisiana and Kentucky had greatly abused their power for political purposes, not only in elections for the general government, but in State elections, from whence it was inferred that other branches had done the same elsewhere." The specification under this last head was the above mentioned interference in Kentucky, in 1825,[2] which was asserted by Kendall, although, when he endeavored to obtain corroboration for it from his informant, he failed to do so.[3] The "Louisville Advertiser," speaking from an inside knowledge of the managemement of the old court campaign of that year, contradicted the assertion that any aid had been given by the Bank of the United States, and the president and seven out of eight surviving directors of the Lexington Branch published affidavits denying that their bank had ever contributed to the funds of any political party. This one disputed allegation of fact was made to bear a tremendous superstructure of assertion, inference and conviction.
Our narrative will now follow the order of events in time, although the facts were not known to the public until 1832.[4]
June 27, 1829, Levi Woodbury, Senator from New Hampshire, wrote to Ingham a confidential letter, in which he made complaints of Jeremiah Mason, the new president of the Portsmouth, New Hampshire, branch of the Bank of the United States; because, first, of the general brusqueness of his manner and, second, of his severity and partiality in the matter of loans and collections. He added that Mason was a friend of Webster. "His political character is doubtless known to you."[5] He added that the complaints were general, and while referring to the fact, as a matter of common notoriety, that all banks were political, he said that the complaints in this case were made by adherents of all political parties.
Ingham inclosed this letter to Biddle, writing: "The character of Mr. Woodbury justifies the belief that he would not make such a charge upon slight or insufficient grounds, and from some expressions in his letter it may be inferred that it is partly founded on a supposed application of the influence of the Bank with a view to political effect." He said that the administration wanted no favors from the Bank. Public opinion in the vicinity of a bank was the best test of the truth of such charges. Biddle replied that he would investigate.
In his apology "To the Public," in 1832, Ingham interpreted this first letter of his as follows: in transmitting Woodbury's letter he felt bound to let the Bank know "that some jealousy existed as to the integrity of some of their officers," in order to give them a chance to make a defense which he could use against those influential persons at Washington who were pushing him on to take action hostile to the Bank. This is only another way of saying that the purpose was to draw Biddle out. Whether it was from a deep and crafty calculation, or only from a fortunate chance with respect to the purpose in view, he certainly entrapped Biddie as if he had known the deepest weaknesses of the latter's character. After Biddle's troubles came, somebody said that he should never have been anything but a professor of belles lettres. He wrote with great facility and good literary skill, but his great weakness was to write too much. In his first reply to Ingham he wrote a long letter, without apparently imagining that he had to deal with any active hostility, opening points at which his enemies could attack him. He said that Mason had been appointed to a vacancy caused by the resignation, not by the removal, of his predecessor; that the salary of the position had not been increased for Mason; that after Mason's appointment Webster had been asked to persuade him to accept. He quoted a letter from Woodbury to himself in July in which Woodbury said that Mason was as unpopular with one party as the other, from which Biddle inferred, no doubt correctly, that Mason, as banker, had done his duty by the Bank without regard to politics. Biddle further explained that the branch had previously not been well managed and that Mason had been appointed as a competent banker and lawyer to bring about necessary reforms. It is easy to see that Mason, in this attempt to reform the bank, had to act in a manner which, in those days, was considered severe, and that he disappointed those who, on account of political sympathy, expected favors but did not get them.
Biddle had thus played directly into the hands of his enemies in his first letter. "I chose," says Ingham, "rather than leave suspicion to interpret my silence, to make a frank avowal of the principles which, it appeared to me, ought to regulate the actions of the Bank." Every one of the suggestions which he put in stung Biddle to controversy. The latter even was compelled to write a second letter, in which he recurred more fully to the point about politics, declaring that the bank had nothing to do with politics; that people were all the time trying to draw it into politics; but that it always resisted.
To this Ingham replied, July 23, insisting that there must be grounds of complaint and that exemption from party preference was impossible. He added that he represented the views of the administration. Ingham says that this letter unfortunately fell into the hands of General Cadwallader, the acting president, who, instead of strengthening the case of the Bank by furnishing Ingham with some reply by which he could silence its enemies, made it weaker by still more positive asseverations that the Bank had never meddled with politics, which, says Ingham, was far beyond what he could know, in view of the number of branches and officers scattered all over the country, while Ingham supposed that he had positive knowledge that at least one such case had occurred.
In the midst of this correspondence, in August, the Secretary of War ordered the pension agency transferred from the Portsmouth branch to the bank at Concord, of which Isaac Hill had been president. The parent Bank forbade the branch to comply with this order on the ground that it was illegal. The order was revoked.
Biddle had visited the Buffalo and Portsmouth branches during the summer. September 15, he wrote again to Ingham. He says that two memorials have been sent to him by Isaac Hill, Second Comptroller of the Treasury, one from the business men of Portsmouth, and the other from sixty members of the Legislature of New Hampshire, requesting Mason's removal, and nominating a new board of directors, "friends of General Jackson in New Hampshire." There is a co-ordination about these numerous petty attacks which makes them look as if they had been planned by the clique at Washington which was hostile to the Bank. If the purpose was to sting Biddle into imprudence, they met with complete success. The tone of his letter is sharp and independent. Ingham had not formulated any definite statements of fact or opinion. He had dealt in inuendo. Biddle formulated the issues which, as he perceived, lurked in the inuendo. He denies that public opinion in the community around a bank is any test of bank management, and declares that the reported opinion at Portsmouth upon examination "degenerated into the personal hostility of a very limited and for the most part very prejudiced circle." He then takes up three points which he finds suggested in Ingham's letters: first, that the Secretary, by virtue of the relations of the government to the Bank, has some supervision over the choice of officers of the Bank; second, that there is some action of the government on the Bank, which is not precisely defined, but of which the Secretary is the proper agent; third, that it is the right and duty of the Secretary to make known to the president of the Bank the views of the administration on the political opinions of the officers of the Bank. To these points he rejoined that the board of directors of the Bank acknowledge no responsibility whatever to the Secretary, in regard to the political opinions of the officers of the Bank; that the Bank is responsible to Congress only, and is carefully shielded by its charter from executive control. He indignantly denies that freedom from political bias is impossible; shows the folly of the notion of political "checks and counter-balances" between the officers of the Bank, and declares that the Bank ought to disregard all parties. He would have won a complete victory on the argument of his points, if he had been before an impartial tribunal, but he stung Ingham's vanity, and on the main issue he delivered himself into the hands of his enemies.
"It never occurred to me," says Ingham, in his apology of 1832, "that these [my] friendly intentions could be so misunderstood, or my expressions so perverted and misrepresented, as they were found to be in Mr. Biddle's letter of the 15 September." He calls Biddle's denial that the Bank ever made or withheld a loan for political reasons "too confident if not presumptuous;" and laments that his own "motives were misunderstood and his friendly purposes wholly disappointed." Instead of being furnished with a triumphant answer with which to defeat the enemies of the Bank, he found himself forced to defend himself from the charge of trying to "seduce" the Bank into political relations with the administration; hence his letter of October 5th.
That letter is smooth, courteous, and plausible; but with a knowledge of the ideas and sentiments which were behind it in the administration circle, it is full of menace and deep hostility. Ingham discusses the points implied by him, but in form raised by Biddle, as if they had been brought forward by the latter. He says that if the Bank should abuse its powers, the Secretary is authorized to remove the deposits. Hence the three points which Biddle found in his former letter are good. It does not appear that Biddle, up to that time, had ever thought of this power as within the range of the discussion, or of the exercise of it as amongst the possibilities. Ingham says that there are two theories of the Bank: first, that it is exclusively for national purposes and for the common benefit of all, and that the "employment of private interest is only an incident—perhaps an evil,—founded in mere convenience for care and management." Second, that it is intended "to strengthen the arm of wealth, and counterpoise the influence of extended suffrage in the disposition of public affairs," and that the public deposits are one of its means for performing this function. He says that there are two means of resisting the latter theory: the power to remove the deposits, and the power to appoint five of the directors. He adds that if the Bank should exercise political influence, that would afford him the strongest motive for removing the deposits.
Biddle's reply of October 9th is still gay and good-natured. He recedes from the controversy, only maintaining that it is the policy of the Bank to keep out of politics.[6] Ingham in his reminiscences of 1832 says that this letter showed a disposition to do him justice.
In Ingham's letters of July 23 and October 5 is to be found the key to the Bank war. In the first place the Bank is viewed as a political engine. The Secretary argues that the Bank cannot keep out of politics; that its officers ought to be taken from both parties; and that if it meddles with politics, he will punish it by removing the deposits. The only escape from the situation thus created is to go into politics on his side. If the Bank does not do so, it is an enemy and must be treated as such. In the second place, the most important point in the whole correspondence is Ingham's attempt to define the issue between two different theories of the political philosophy of a national bank. The second proposition which he formulated expounds the notion which the Kentucky relief men had developed about the Bank, and which they attributed to it as the theory and purpose of its existence. It was indeed ridiculous to allege that the stockholders of the Bank had subscribed $28,000,000 in order to go crusading against democracy and universal suffrage; but we must bear in mind also that there was, as there always had been, a very large party all over the Union, who believed that, as a matter of fact, the Bank in its practical operation was inimical to democracy. After all, this was only a hostile, invidious, and exaggerated construction of the purpose which Hamilton had put forward as the political philosophy of the first Bank.[7]
The public deposits, including the amount to the credit of disbursing officers, increased suddenly in 1824, being $7.7 millions. They fluctuated between $6 millions and $10 millions from that time until the time of this correspondence. They were sure to increase. They were $10 millions or $12 millions during the following years.
The ultimate agents in bringing on the Bank war were Amos Kendall and Isaac Hill. The origin of Kendall's eager hostility to the Bank can oniy be inferred.[8] Jackson is not known to have had any opinion about the Bank when he came to Washington; nor is it known that he had had any collision with the Bank, except that, when he was on his way to Florida as Governor, the branch at New Orleans refused his request that it would advance money to him on his draft on the Secretary of State at its face value.[9] His only public act, in connection with matters at all related to banking and finance, had been in opposition to paper issues and relief.[10] Isaac Hill contributed the element of local bank jealousy and party rancor. These two men, either by telling Jackson that the Bank had worked against him in the election, or by other means, infused into his mind the hostility to it which had long rankled in theirs. They were soon reinforced by Blair.
In November, just before Congress met, an editorial appeared in the New York "Courier and Inquirer," containing a series of questions, among which were the following: "'Will sundry banks throughout the Union take measures to satisfy the general government of their safety in receiving deposits of the revenue, and transacting the banking concerns of the United States? Will the Legislatures of the several States adopt resolutions on the subject, and instruct their Senators how to vote? Will a proposition be made to authorize the government to issue exchequer bills to the amount of the annual revenue, redeemable at pleasure, to constitute a circulating medium equivalent to the notes issued by the United States Bank?" This editorial was based upon a letter from Amos Kendall.[11] It contains a premonition of the "pet bank" system and also of the scheme of a Treasury note issue,—two alternative projects which recur often in the following years. The article caused some vague wonder, but attracted no serious attention. After the message of the year was published, the retrospect gave it greater importance. Niles republished it, Jan. 30, 1830.
Jackson's first annual message contained a paragraph on the Bank, which struck the whole country with astonishment. "We had seen," says Niles, "one or two dark paragraphs in certain of the newspapers which led to a belief that the administration was not friendly to this great moneyed institution, but few had any suspicion that it would form one of the topics of the first message."[12] After mentioning the fact that the charter would expire in 1836, and that a renewal would no doubt be asked for, the message said that such an important question could not too soon be brought before Congress and the people. "Both the constitutionality and the expediency of the law creating this Bank are well questioned by a large portion of our fellow citizens, and it must be admitted by all that it has failed in the great end of establishing a uniform and sound currency. Under these circumstances, if such an institution is deemed essential to the fiscal operations of the government, I submit to the wisdom of the Legislature whether a national one, founded upon the credit of the government and its revenues might not be devised, which would avoid all constitutional difficulties, and at the same time secure all the advantages to the government and country that were expected to result from the present Bank."
Statistics exist which show the value of the currency in different parts of the country for every year from 1814. These show that the currency had steadily grown toward uniformity at par of specie from 1819 to 1829. No person living could remember when the currency had been as good as it then was, including that of the new States. So much as to the matter of fact; as to the matter of opinion, the correctness of which is open to doubt, there was scarcely anybody amongst the classes conversant with affairs who did not believe that the Bank of the United States was to be credited with having brought about this state of things. The vague and confused proposition of the President about a bank "founded upon the credit of the government and its revenues" caused alarm. What did he mean by it? It sounded like, what it undoubtedly was, a bank on the southwestern Bank of the State plan, or a Bank of the Commonwealth of Kentucky. The stock of the United States Bank declined from 125 to 116, on account of the message. It was supposed that the President of the United States must have knowledge of some facts injurious to the credit of the Bank.
In the House this part of the message was referred to the Committee on Ways and Means, from which a report was made by McDuffie, April 13, 1830. He defended the constitutionality of the Bank and its expediency at every point, and declared the Bank proposed by the President to be very dangerous and inexpedient, both financially and politically—the latter because it would increase the power of the Executive. In the Senate, Smith, of Maryland, reported from the Committee on Finance in favor of the Bank at every point. His topic was the expediency of establishing a uniform national currency. He declared that the notes of the United States Bank were such a currency, and that funds were transferred from Philadelphia to St. Louis, New Orleans, and other extreme points for one-half of one per cent.
When a word of order is given out to a party, the partisans, eager to distinguish themselves by their zeal, hasten to push it to extravagance. It must therefore be regarded as one of the strongest proofs that the attack on the Bank responded to no strong feeling in the popular mind, that it hung fire for two or three years. The leading politicians in the Jackson party were so committed to the Bank that it was awkward for them to turn against it, and it was at least three years before the local banks, seeing the opportunity which was offered to them, began to join in the war on the Bank. Politically this last effect was the most important of all. It was the formation of the bank democrats, as a wing of the Jackson party, which gave that party its strength and accounted for its great victories.[13] The bank democrats were all won from amongst those who would otherwise have been whigs. The distribution of the deposits in 1836 weakened them, and the independent treasury alienated them from the democratic party, and brought about the great defeat of the latter in 1840.
The House, May 10, 1830, tabled by 89 to 66, resolutions that the House would not consent to renew the charter, and on May 29th it tabled, 95 to 67, a series of resolutions calling for a comprehensive report of the proceedings of the Bank. As yet there were no allegations against the management of the Bank. The stock rose to 130.
In the message for 1830 Jackson again inserted a paragraph about the Bank, and proposed a new Bank, as a "branch of the Treasury Department." The outline was very vague. It has been interpreted by different writers as approximating to the sub-treasury idea or to the exchequers and fiscal agencies of 1841.
Wayne of Georgia distinguished himself in the effort to sustain the message, which is an interesting fact in view of his subsequent appointment to the bench of the Supreme Court, and his share in the decision of Briscoe's case. He only asked that the message might be referred to a special committee, instead of to the already hostile Committee on Ways and Means. He thought that such a bank as was suggested could be devised, and he wanted it considered by an unprejudiced committee. The House refused, 108 to 76, to grant even this much. Benton offered a resolution in the Senate, February 2, 1831, "that the charter of the Bank of the United States ought not to be renewed." The Senate refused leave, 23 to 20, to introduce it. In July, the Secretary of War ordered the pension funds for the State of New York to be removed from the New York branch. Biddle remonstrated, because there was no authority of law for the order and the Auditor had refused to accept such an order as a voucher in a previous case. Secretary Cass revoked the order March 1, 1832.
The message of the next year was much more tame in regard to the Bank. The President referred to it as a subject on which he had discharged his responsibility. The Secretary of the Treasury, McLane, in his annual report, made a long and strong argument in favor of the Bank. From this it appears that the response to the suspicions aimed at the Bank by the President had been so faint that the administration was ready to give up the Bank war. Perhaps this encouraged the opposition to think that it would be good policy for them to take up the Bank issue. It was in this same month of December, 1831, that Clay was nominated candidate for the presidency in the campaign of the following year. At a conference of his supporters at Washington, he assumed control of the campaign, and claimed a right to make the platform, in a very dictatorial manner.[14] The chief point of interest then was the tariff, but, for the fight out of doors, he thought that the recharter of the Bank was the strongest issue that could be made. The Clay convention, in its address to the public, said: the President "is fully and three times over pledged to the people to negative any bill that may be passed for rechartering the Bank, and there is little doubt that the additional influence which he would gain by a re-election would be employed to carry through Congress the extraordinary substitute which he has repeatedly proposed."
If we believe that the administration had receded from its attack on the Bank, then there would be a color of truth in Benton's assertion that the Bank attacked Jackson. The friends of the Bank were later accustomed to say that its disinterested friends in both parties had strongly dissuaded Biddle from allowing the question of recharter to be brought into the campaign.[15] Clay's advisers tried in vain to dissuade him. The Bank could not oppose the public man on whom it depended most, and the party leaders deferred at last to their chief. Adams, however, who had as little passion as any politician of the time, told the Secretary of the Treasury, early in January, that he had "prepared a resolution for bringing to issue, in the House of Representatives, the question of rechartering the Bank."
The position then was that Jackson had made a challenge, had receded from it, and his opponents had taken it up and turned it as a challenge against him. What would he do? It seems that no one who knew the facts of his career could doubt what he would do. He would return to the issue and would fight it out, regardless of all considerations whatsoever, to a definite and conclusive victory or defeat. That is what he did do.
On the 9th of January, 1832, in prosecution of the Clay program, the memorial of the Bank for a renewal of its charter was presented in the Senate by Dallas and in the House by McDuffie, both of whom were democrats but in favor of the Bank. The Bank wanted Webster or some such unequivocal friend to present the memorial, but Dallas claimed the duty as belonging to a Senator from Pennsylvania.[16] There was great dissatisfaction with him for the way in which he managed the business. He intimated a doubt whether the application was not premature, and a doubt about the policy of the memorial, lest "it might be drawn into a real or imaginary conflict with some higher, some more favorite, some more immediate wish or purpose of the American people." In both Houses the reports were favorable. The proposition to recharter had called out a number of wild and extragavant propositions, and it was thought expedient to close the matter up as soon as possible, in order to put a stop to such schemes.
The issue having thus been made up, Jackson's supporters in Congress determined to fight the charter at every point and to bring the Bank into odium as much as possible.[17] Benton organized the movement in the House. He incited Clayton of Georgia to demand an investigation of the Bank, and furnished him with seven important and fifteen minor charges and specifications on which to base that demand. Clayton presented them and moved for the investigation February 23d. The Committee reported April 30th. This is the great investigation of the Bank in 1832. There were three reports. The one which was called the majority report was signed by R. M. Johnson, out of good nature. He rose in his place in Congress and said that he had not looked at a document at Philadelphia. This report recommended that the Bank should not be rechartered until the debt was all paid and the revenue adjusted. The minority reported that the Bank ought to be rechartered; that it was sound and useful. John Quincy Adams made a third report, in which he discussed with great discrimination all the points raised in the attack on the Bank. It is to his report that we are indebted for a knowledge of the correspondence of 1829 between Biddle and Ingham, and of the controversy over the Portsmouth branch.
The charges against the Bank and the truth about them, so far as we can discover it, were as follows:
1.—Usury. The bank sold Bank of Kentucky notes to certain persons on long credit, and afterwards granted an allowance for depreciation. In one case these contracts got into court, but the decision went off on technicalities which were claimed to amount to a confession by the Bank that it had made an unlawful contract.[18] The Bank had also charged discount and exchange for domestic bills when these two together amounted to more than six per cent., the rate to which it was restrained by its charter. This charge was no doubt true. All banks employed these means more or less to evade the usury law.
2.—Branch drafts issued as currency. The amount of these outstanding was $7.4 millions. The majority of the Committee doubted the lawfulness of the branch drafts, but said nothing about the danger from them as instruments of credit. Adams said that they were useful but likely to do mischief. Their operation will appear sufficiently in the course of this history. When Biddle was asked how the branch draft arrangement differed from an obligation of a Philadelphia bank to redeem all the notes of all the banks of Pennsylvania, he answered that the Bank of the United States controlled all the branches which issued drafts on it. That was indeed the assumption, but it was by no means true in fact, as the experience of the previous winter had taught him.
3.—Sales of coin, especially American coin. The Bank had bought and sold foreign coin by weight, and had sold $84,734.44 of American gold coin. The majority held that the foreign coins were not bullion because Congress had fixed their value by law. Adams easily controverted this. All gold coins at that time, American included, were a commodity, not money.
4.—Sales of public stocks. The Bank was forbidden by its charter to sell public stocks. In 1824, upon a refunding of the public debt, the Bank subscribed for a new issue. It had special permission by act of Congress to sell them. Nevertheless the majority disapproved of the sale.
5.—Gifts to roads, canals, etc. The Bank had made two subscriptions of $1,500 each to the stock of turnpike companies. The other cases were all petty gifts to fire companies, etc. The majority argued that since the administration had pronounced against internal improvements, the Bank ought not to have assisted any such works. Adams said that the administration had opposed internal improvements on the ground that they were unconstitutional when undertaken by the federal government; but he asked what argument that furnished against such works when undertaken by anybody else. The petty gifts were such as it was thought for the interest of the Bank to make, as douceurs, etc. As it was an expenditure of the stockholders' money, it seemed to belong to them alone to complain of it.
6.—Building houses to rent or sell. The Bank had been obliged in some cases to take real estate for debts. When it could not sell, it had in a few cases improved. The amount was trivial and the cases such as involved no intentional violation of the charter.
These points were the alleged violations of the charter. The charge of non-user in failing to issue notes in the South and West for seven years Biddle met with a point blank denial. Adams pointed out that these charges would only afford ground for a scire facias to go before the jury on the facts.
The charges of mismanagement and the truth about them, so far as we can ascertain, were as follows:
1.—Subsidizing the press. Webb and Noah of the "Courier and Inquirer" (administration organ until April, 1831, when it went into opposition on the Bank question) were borrowers from the Bank. Noah got a loan from it through Silas Burrows, with which to buy half the paper. When two New York banks refused discounts to Webb and Noah, they got long and large loans from the United States Bank. If these transactions had been openly avowed, they would have had no importance, but the attempt was made to cover them over by excuses and explanations which produced a bad effect. Gales and Seaton of the "National Intelligencer" (independent opposition), Duff Green of the "Telegraph" (Calhoun's organ and therefore administration, until the spring of 1831) and Thomas Ritchie of the "Richmond Inquirer" (administration) were on the books of the Bank as borrowers. The change of party by the "Courier and Inquirer" was regarded as very significant. Adams said that there was no law against subsidizing the press, and that the phrase meant nothing. If State banks could punish those who favored the United States Bank, why should not the United States Bank help them? Should editors be allowed no bank accommodation? If the Bank discounted a note for an administration editor, it was said to subsidize him. If for an opposition editor, it was said to bribe him.
2.—Favoritism to Thomas Biddle, second cousin of the president of the Bank, and its broker. N. Biddle admitted that the Bank had allowed a usage adopted by other banks of allowing cash in the drawer to be loaned out to particular persons and replaced by memorandum checks which were passed as cash for a few days. He said that the practice had been discontinued. Reuben M. Whitney made a very circumstantial charge that T. Biddle had been allowed to do this and that he had paid no interest for the funds of the Bank of which he thus got the use. The loans to him were very large. October 15, 1830, he had $1,131,672 at five per cent. N. Biddle proved that he was in Washington at a time when Whitney's statement implied that he was in Philadelphia. Adams said that Whitney lied. It was certainly true, and was admitted, that T. Biddle had had enormous confidential transactions with the Bank, but Whitney was placed in respect to all the important part of his evidence in the position of a convicted calumniator. We shall hear of him again below. In 1837 he published an address to the American people, in which he reiterated all his charges against Biddle.[19]
3.—Exporting specie, and drawing specie from the South and West. From 1820 to 1832, $22.5 millions were drawn from the South and West to New York. This was charged to the Bank. Silver was, however, regularly imported from Mexico to New Orleans, whence it passed up the river to the North and East, and was exported from there to China. The paper issues in the Mississippi Valley prevented it from staying there. So far as the branch drafts after 1827 helped to produce this result, the Bank had some share in it, but, as there were then very few banks of issue in the Valley,[20] a greater amount of specie was probably retained at that time than ever before. The Bank was also charged with exporting specie as a result of its exchange operations. It sold drafts on London for use in China, payable six months after sight. They were sold for the note of the buyer at one year, so that the goods could be imported and sold to meet the draft. In this way they produced an inflation of credit, but the charge of causing an export of specie was only an expression of ignorant popular prejudice.
4.—The improper increase of branches. No doubt there were too many. Cheves in his time thought some of them disadvantageous to the Bank, but it had been importuned to establish them; there was complaint if a branch was lacking where the government or influential individuals wanted one, and there would have been a great outcry if a proposition had been made to abolish one. How then could their excessive number be made a charge against the Bank?
5.—Expansion of the circulation by $1.3 millions between September 1, 1831, and April 1, 1832, although the discounts had been reduced during the winter. The Bank was struggling already with the branch drafts, and this struggle produced the facts which were alleged. The majority found that the bank had only $9,640,000 in cash and cash securities to meet $42.6 millions in cash liabilities. Very few banks of the period could have made so good a showing.
6.—Failure of the Bank to serve the nation. The majority argued that as the duties were paid at New York and Philadelphia, and as drafts on those cities were always at a premium, the Bank gained by transferring these funds inland for the government. The minority ridiculed this as an annihilation of space, a means of making a thing worth more the further it was from where it was wanted.
7.—Mismanagement of the public deposits. The majority declare that the Bank ought to use its capital as a permanent fund and loan the public deposits on time, so that they would be repaid near the time when they would be required by government for the debt payment. How to manage the government deposits was already becoming a question of the first importance to the Bank and the public, but if the Bank had done what was here proposed, it would have carried to a maximum the disturbances in the money market which were actually produced by the semi-annual payments on the debt. Biddle's fashion of banking, consisting in adroit tactics, adjustments, and offsets, won its only important triumphs in smoothing over the effects on the money market of the public debt payments.[21]
8.—Postponement of the payment of the three per cents. These bonds were issued in 1792 for the accrued interest on the revolutionary debt, and were to be paid at 100. The Secretary informed the Bank, March 24th, just before the Bank Committee was raised, that he should pay half the three per cents in July. Biddle hastened to Washington to secure a postponement, not, as he affirmed, for the sake of the Bank, but for three other reasons: first, nine million dollars duty bonds would be payable July 1, so that the merchants would be put to inconvenience if the debt payment fell at that time; second, a visitation of cholera was to be feared, which would derange industry, and the payment of the debt, with the recall of so much capital loaned to merchants, would add to the distress; third, a large amount of specie would go out of the country if these bonds were paid. This last argument the Committee criticised correctly, showing that no export of specie worth noticing would be occasioned. The most probable result would be that the capital would be re-invested in American securities. Louisiana was then contracting with the Barings a loan of seven million dollars. Nobody understood this better than Biddle. The readier is often amazed that Biddle should have dared to put out his plausible " explanations." They were always apparently reckoned for the uninitiated public alone. It seems that his pen ought to have been arrested by the thought of this and that competent banker and financier who might also read the publication, see through it, and lower Biddle's credit on account of it. We have found no cases in which such effects were produced, but on this occasion the headstrong old man at Washington saw that Biddle's reasons were only pretexts. He made up his mind that the truth which they covered was that the bank was in great distress. He never altered that conviction afterwards, and his opinion was fateful for the Bank.
The friends of the Bank said that the explanations given under this head were good and sufficient: its enemies said that they were only specious pretexts; that the Bank was so weak as to need government support, the reason being that its receipts were in branch drafts while the payments on the debt must be made in current money. The Secretary agreed to defer payment of five million dollars of the three per cents, until October 1st, the Bank agreeing to pay the interest during the extension.
9.—Incomplete number of directors. Biddle was both government director and elected director, so that there were only twenty-four in all. This was because the appointment of government directors was often delayed in the Senate, or because the government director might be reappointed indefinitely while the others rotated. The stockholders elected him also, in order that he might always be eligible to the Presidency.[22]
10.—Large expenditures for printing; $6,700 in 1830, $9,100 in 1831. From 1829, the date of Jackson's first attack, the Bank spent money on pamphlets and newspapers to influence public opinion in its favor.
11.—Large contingent expenditures. There was a contingent fund, the footings of which in 1832 were six million dollars, to sink the losses of the first few years, the bonus, premiums on public stocks bought, banking house, etc., etc. The suggestion was that this was a convenient place in which to hide corrupt expenditures, and that the fund was so large as to raise a suspicion that such were included in it.
12.—Loans to members of Congress in advance of appropriations. Adams objected to this as an evil practice. He said afterwards that the investigation into this point was dropped because it was found that a large number of Congressmen of both parties had had loans.
13.—Refusal to give a list of stockholders resident in Connecticut to the authorities of that State, so that it might collect taxes from them on their stock.
14.—Usurpation of the control of the Bank by the Exchange Committee of the Board of Directors to the exclusion of the other directors. This charge was denied.
In all this tedious catalogue of charges we find nothing but frivolous complaint and ignorant criticism successfully refuted, except when we touch the branch drafts. If we sum up all the points made by the majority of the Committee, they appear to maintain that the Bank ought to lend the public deposits liberally, and draw them in promptly, when needed, in order to pay the public debt, yet refuse no accommodation (especially to any one who was embarrassed), not sell its public stocks, not increase its circulation, not draw in its loans, not part with its specie, not draw on the debtor branches in the West, not press the debtor local banks, and not contract any temporary loan. The student of the evidence and reports of 1832, if he believes the Bank's statements in the evidence, will say that it was triumphantly vindicated. Such was the verdict of the reading and thinking public of the day, almost without exception, if persons with a political bias are left out of account. The verdict of the investing public was unanimous and enthusiastic. If this was all that malevolence, armed with the most powerful means of attack, could bring out to the injury of the Bank, it was exactly the investment which they were all seeking. They fixed their confidence on it with a tenacity which in the end became one of the most notable facts in the history of credit; for neither incidental evidence, which should have awakened their alarm, nor positive events, which should have given them warning, availed to do so.
We are forced to distrust the apparent result of the investigation of 1832, because of the light which is thrown back upon it by the history of the last years of the Bank. The very things which it was charged with doing in 1832, and of which it seemed to be acquitted, were the things which it did do, between 1836 and 1840, and which produced its ruin. These were the things mentioned under the second charge, involving Whitney's veracity, and the fourteenth charge, which the bank denied. Was it not guilty on these points in 1832, and did it not successfully conceal the facts?
Furthermore we know that in the matter of the three per cents Biddle was guilty of a plausible perversion of the truth. He wanted to defer the payment for the sake of the Bank, and for no other reason, and he had recourse to his masterly skill in decking out plausible pretexts in fine rhetoric, in order to make it appear that the Bank was acting only from benevolence to the merchants and loyalty to the government. The position in which the Bank found itself was a result of the working of the branch drafts. Their effect was just beginning to tell seriously, and it was cumulative in a high ratio.
We have already seen that there was a great movement of free capital in the form of specie to this country in 1830,[23] and that in that and the following year the United States paid its stock note in the capital of the Bank. Capital was easy to borrow until October, when a certain stringency set in. The branch drafts were transferring the capital of the Bank to the western branches, and locking it up there in accommodation paper indefinitely extended by drawing and re-drawing. Curtailments were ordered in the Mississippi Valley October 7, 1831. They were interpreted by Benton as arbitrary inflictions for political effect. All through the winter, Biddle was writing to the southern and western branches to contract their loans and pay to New York and Philadelphia, so as to strengthen the Bank for a payment on the public debt which was to be made in April. He could not succeed in making the western branches pay, and was therefore forced to impose a curtailment on the eastern branches. The following table shows this relation of things:
Total due the Bank.Due the Bank in the Miss. Valley.
January, 1829 $11.0 millions
December 31, 1829 $40.2 millions 13.3 millions„
1830 42.4 millions„ 23.2 millions„
1831 63.0 millions„ 31.2 millions„
May, 1832 70.4 millions„ 37.5 millions„
In such a state of things it was impossible for Biddle to see with equanimity a debt which bore only three per cent. interest paid off at one hundred when the market rate was seven or eight per cent. Even before he received notice that the three per cents were to be paid, he tried to negotiate with Ludlow, the representative of a large number of English holders of the three per cents for the purchase of the same. Ludlow had not power to sell. Having obtained a postponement until October, under the conditions above mentioned, the Bank sent Gen. Cadwallader to England to negotiate a postponement for a year. The bondholders were to take the Bank as their debtor instead of the United States. The Barings negotiated this extension with such of the bondholders as were willing, but the administration raised loud objection to an arrangement by which the securities of the United States would remain outstanding after they had been paid.
On the 11th of October a New York newspaper published an account of the arrangement which the Bank had made with the Barings in regard to the three per cents, which was to have been kept secret. The Barings had bought $1,798,597, and had extended $2,376,481. October 15th Biddle repudiated the contract, because under it the Bank would become a purchaser of public stocks. He proposed to credit the extended stock to its holders on the books of the Bank, and to pay for that which the Barings had bought when government should redeem it, or to hold the sum to the credit of the Barings at four per cent.
In fact the sinking fund was not made as good on the first of October as it would have been if the three per cents had been paid on July 1st, although the Bank had promised that it should be made so, as one of the stipulations when they were extended.
These matters and their complications were what weakened the Bank in its defense against its enemies, and gave them the opening for further attacks upon it. They also entailed one difficulty upon another in the next years. In a letter intended as an apology for the Bank and a reply to the Committe of 1832, Biddle wrote, "Undoubtedly if the Bank had chosen to adopt such a course, it would have been easy, by an immediate diminution of its loans, to place itself out of the reach of all inconvenience; but it would at the same time have inflicted very deep wounds on the community, and seriously endangered the revenue of government. These exertions of mere power have no attraction, and it was deemed a far wiser policy to deal with the utmost gentleness to the commercial community; to avoid all shocks; to abstain from countenancing all exaggerations and alarm; but to stand quietly by and assist, if necessary, the operations of nature, and the laws of trade, which can always correct their own transient excesses. Accordingly the whole policy of the Bank, for the last six months, has been exclusively protective and conservative, calculated to mitigate suffering and yet avert danger."[24]
The facts above narrated in regard to the attempted curtailments, etc., also account for the heats and chills of the money market, which the anti-Bank men interpreted either as attempts of the Bank to make its power felt and dreaded, or to curry favor. No such explanations are called for. We have already seen ample evidence that such recurrent heats and chills were incident to the "credit system." The momentum of the movements which had been started in the affairs of the Bank since 1823 fully suffice to account for all the phenomena that are presented. A candid student of the history of the Bank cannot say that it was above panic-mongering or popularityhunting, but it was quite fully occupied, in 1831 and 1832, in mitigating its own sufferings and averting its own dangers, and had no freedom to do anything for effect.
Gallatin says[25] that the Bank of the United States ceased to regulate the currency in 1832 and 1833, when it expanded its discounts and stock investments to 185 per cent. of its capital, while sound city banks did not carry their profit-bringing investments beyond 160 per cent. of their capital. It was, he argues, only by keeping this proportion lower than that of the city banks that the Bank of the United States could keep them debtors, and so exert its regulating power. From this point of time also dates another very important fact, namely, the complete predominance of Biddle's personal authority in the Bank. He was flattered and caressed, was encouraged to consider himself the prince of financiers, was allowed almost free control of the Bank, and his authority was accepted as decisive in many of the great financial enterprises allied with it.
During the spring and summer of 1832, he took quarters at the city of Washington, from which he directed the congressional campaign on behalf of the recharter, which was a part of the presidential campaign which was then agitating the whole country. He and Jackson were personally pitted against each other. If Biddle had succeeded in defeating Jackson, what would he himself have become? As it was, he was talked of for President of the United States.[26] He was not absolutely sanguine of victory, and he must have felt what a tremendous stake he had risked, for he put a letter in Livingston's hands saying that he would accept any charter to which Jackson would consent.[27] Jackson never fought for compromises, and nothing was heard of this letter. Jackson drew up a queer plan of a bank which he thought constitutional and suitable, but it remained in his drawer.[28] The anti-Bank men affirmed that Biddle was corrupting Congress, but no positive or serious assertion of this kind ever was made.
The charter passed the Senate June 11, twenty-eight to twenty. It had a few new features which were obviously suggested by the experience of the past. The renewal was for fifteen years. The directors might appoint officers to sign notes for less than a hundred dollars; no notes or drafts for less than $50 might be issued which were not payable at the bank where issued, and the Bank must receive from other banks at any branch the notes issued at any branch; it was to pay $200,000 a year to the United States for the benefits of the charter; Congress might at any time forbid it to issue notes of a less denomination than $20; a list of stockholders was to be reported to the Secretary of the Treasury annually, and a list of the stockholders in any State was to be furnished to the Treasurer of that State upon his request. It was expected that the Bank would be forbidden to issue notes under $20 in order to leave the small note circulation to the local banks.
In the House no debate was allowed. Nathan Appleton complained of this because he wanted to propose an amendment; but he says that at that time every one took Biddle's ipse dixit, and that politics forced the bill through just as it was. "My faith in Mr. Biddle," says Appleton, "had at that time been materially shaken."[29] The charter passed the House July 3, one hundred and seven to eighty five, and was sent to the President, July 4. The Senate voted to adjourn July 16. It was a clever device of theirs to force Jackson to sign or veto by giving him more than ten days. They wanted to force him to a direct issue. Niles says that a week before the bill passed the best informed were "as six to half a dozen" whether the bill if passed would be vetoed; but that for the two or three days before the bill was sent up a veto was confidently expected.[30] Appleton quotes Clay as having said: "Should Jackson veto it, I will veto him." History does not record that this threat ever was fulfilled.
The veto was sent in July 10. The reasons given for it were: 1.—the Bank would have a monopoly for which the bonus was no equivalent; 2.—one-fifth of the stockholders were foreigners; 3.—banks were to be allowed to pay the Bank of the United States in branch drafts, which individuals could not do; 4.—the States were allowed to tax the stock of the Bank owned by their citizens, which would cause the stock to go out of the country; 5.—the few stockholders here would then control it; 6.—the charter was unconstitutional; 7.—the business of the Bank would be exempt from taxation; 8.—there were strong suspicions of mismanagement in the Bank; 9.—the President could have given a better plan; 10.—the bank would increase the distinction between rich and poor. Especial stress was laid upon the second, fourth, and tenth, with an appeal to popular prejudice against foreigners and the drain of specie. The operation of the Bank was also represented as a constant oppression of the people of the West by the people of the East and of Europe. This is all an echo of the arguments and notions of the Kentucky relief contest.
The bill was put to vote in the Senate July 13th, but failed of two-thirds (22 to 19). If the Bank was to continue to exist it was necessary to defeat Jackson's re-election. The local bank interest, however, had now awakened to the great gain it would make if the Bank of the United States should be overthrown. The safety fund banks in New York were bound into a solid phalanx by their system, and they constituted a great political power. The chief crime alleged against the Bank of the United States was meddling with politics. It denied it, and defended itself with such success as to leave the matter at most very doubtful. There was no doubt whatever that the safety fund banks of New York were an active political power under Van Buren's control. They went into this election animated by the hope of a share in the deposits.[31] The great Bank also distributed pamphlets and subsidized newspapers in the campaign, fighting for its existence. The Jackson men always denounced this action of the Bank as corrupt and as a proof of the truth of the charges that it had done so before. They unquestionably measured by two standards, one for themselves and their allies and the other for the Bank.
Jackson's success in the election meant that the fate of the Bank was sealed. Its charter would expire one year before the term for which he had been elected, but he and those followers who had been the chief agents in the Bank war were by no means disposed to allow it to run peacefully to the allotted term of its existence. They wanted to crush it; to win a brilliant and noisy victory over it; to punish it for its audacity in resisting the will of the popular hero; and to vindicate the positions which they had adopted in respect to it. The message of 1832 was temperate in tone but very severe against the Bank. As above stated, the eagerness of the Bank to get possession of the three per cents, had established a conviction in Jackson's own mind that it was weak and unsound, and with his characteristic disposition to exaggerate any conviction which he had once adopted, he declared that it was bankrupt. "An inquiry into the transactions of the institution, embracing the branches as well as the principal Bank, seems called for by the credit which is given throughout the country to many serious charges impeaching its character, and which, if true, may justly excite the apprehension that it is no longer a safe depository of the money of the people."
Here was a new and startling suggestion, different from anything which had gone before. The corporation had been arraigned for violating its charter. The financial institution was now arraigned as to its financial integrity. This was the second stage of the Bank war. Behind both of these, predominating over them, but never brought to trial, was the arraignment of the plutocratic engine for hostility to democracy.
At the present stage, however, the arraignment was positive, and if there were grounds for it, it was proper to make it. It is only a pity, if the administration had means of knowing how bad the Bank was, that it did not also see how bad the local banks were, and how much more mischief they were capable of doing, with the same opportunities, than the big Bank had done.
This charge by the President produced considerable alarm for a time and runs on the branches occurred at some places.[32] That effect speedily passed away, however, and what Jackson had said was regarded, by all but his strongest adherents, as an exaggeration of malignant animosity.
An agent, Henry Toland, was appointed to investigate the Bank on behalf of the Treasury, with especial reference to the point whether it was financially sound enough to make the public deposits safe. He reported that it was.
The Committee on Ways and Means, in the winter of 1832-3 also investigated the Bank with respect to the points raised in the message. February 13, 1833, Polk reported a bill from this Committee to sell the stock owned by the nation in the Bank. It was rejected, 102 to 91. The report of this Committee on its investigations is another of the great documents about the Bank.[33] The majority (Verplank's Report) declared that the Bank was sound and that the deposits were safe. On January 1, 1833, the assets were $80.8 millions, the liabilities $37.8 millions, leaving $43 millions to pay $35 millions of capital. The circulation was $17.5 millions, specie $9.0 millions. The State banks were estimated to have $68 millions circulation, and $10 millions or $11 millions specie. The minority (Polk's Report) doubted if the assets were all good. They said that they had not been able to find out clearly what was the final arrangement made by the Bank with respect to the three per cents, but it appeared that the certificate obligations of the United States had been surrendered, and that the Bank had, by means of the transaction, obtained a loan in Europe. The majority said that the Bank had receded from the project, and that there was, therefore, nothing more to be said about it. In a supplementary report, the minority showed that they had succeeded in probing deeper into the actual condition of the Bank, especially with respect to the western debt. The facts revealed by their investigation were as follows:
As early as October 4, 1832, Biddle informed the directors that the Bank was strong enough to relax the orders given to the western branches a year before, to contract their loans and remit eastward. He then supposed that the arrangement with the Barings about the three per cents had been concluded, so that he had obtained a new resource on that side and need not further insist upon the curtailment. He succeeded in meeting all the inquiries of the Committee on Ways and Means in such a way as to satisfy the majority that the debt in the Mississippi Valley was perfectly sound, and that there was no re-drawing going on there. Polk's supplementary report, however, contains conclusive evidence that the western branches were in a very critical condition, that there had been drawing and re-drawing between the branches, and that Biddle knew it. September 11, 1832, the cashier of the branch at Lexington, Ky., wrote that he was enduring a run. Two hundred and seventy thousand dollars was sent to him from Philadelphia and the branches nearest to him. A letter from Biddle to the president of the Nashville branch, November 20th, shows plainly that he knew that re-drawing was going on. In a letter from the president of the Nashville branch November 22d, it is said: "We will not be able to get the debts due this office paid. Indeed if any, it will be a small part. The means are not in the country." The letter of the same officer of November 24th reveals the operation distinctly. "The parent bank and the offices at New York, Baltimore, Washington, Richmond, Pittsburgh, Cincinnati, Louisville, and Lexington have been and still continue the practice of discounting bills and notes made payable at this office and forwarding them for collection. This has been done this season to, I would say, three times the amount of any previous year, and to add to our difficulties last season we had a very short crop of cotton, so that our own drafts predicated on the crop and payable at New Orleans could not be paid out of the crop, in consequence of which drafts to a very large amount have been drawn by the commission merchants of New Orleans on their funds here and made payable at this office. These drafts cannot be met when due at this office by the payment of cash on account of its scarcity, and no other means could be resorted to but drafts again on New Orleans which our directors thought right to purchase." From this it is very plain that the drafts in question were not created by shipments of produce down to New Orleans, but consisted very largely of accommodation paper. Again, on the 26th of November, the same officer states that he had, within a year, collected drafts for a million dollars, for the Bank and branches, "which with small exceptions have been paid through our bill operations." The majority of the Committee of 1833 had interpreted the fluctuations in the amount of bills at Nashville as proof that when the crops came in the debts were cancelled. The minority showed that these fluctuations were due to the presence of the "racers" at one or the other end of the course. It is quite beyond question that a mass of accommodation bills were chasing each other from branch to branch in the years 1832 and 1833 and that they formed a mass of debt which the Bank could not, for the time, control.
On the same day on which Polk's supplementary report was presented, and without giving any consideration to it, the House adopted a resolution, 109 to 46, that the deposits might safely be continued in the Bank. The Bank question was now a party question, and men voted on it according to party, not according to evidence. Whatever force might be attributed to any of the facts brought out by Polk in the minority report, it does not appear that anybody in Congress really thought that the Bank was insolvent and the deposits in danger. Polk himself did not propose to withdraw the deposits. He wanted to avoid any positive action for the time being, and have a still more searching investigation. "Nothing short of a personal, impartial, and thorough examination of the books and papers of the principal Bank and many of its branches can develop its policy and management, the security of its debt, and the soundness of its condition." McDuffy objected that if Congress took no action before it adjourned, Jackson would remove the deposits on the principle that silence gives consent.[34]
Although the House of Representatives had thus answered the exhortation of the President to find out whether the deposits were safe by categorically declaring that they were, the wish and purpose to remove them was not checked in the least. On the contrary a new line of attack was opened in April by obtaining a report from the government directors of the Bank. Three of them complained that they were excluded from a knowledge of what was being done. They declared that the Exchange Committee had taken control of the Bank, and they reported especially large loans to Gales and Seaton. In August, four of them joined in a second report in which further stress was laid on the large expenditures for printing, that is, for what the antiBank men construed as corrupt efforts to win political influence. They considered the inference direct that the public money, which was, perhaps, what was being used for this purpose, should be removed from the Bank. Everything which touches upon the history of the Exchange Committee demands our attention on account of the great part which that organization played in the final catastrophe of the Bank. The government directors, in the former of the above reports, say that the directors had condemned this arrangement, and that, by votes of October 31, 1823, and February 20, 1830, they had forbidden the branches to make use of it.
The question naturally presents itself: who were the prime movers in the desperate and useless enterprise of the removal? William B. Lewis[35] said that he did not know who first proposed the removal of the deposits, but that it began to be talked about in the inner administration circles soon after Jackson's second election. In the cabinet, McLane and Cass were so earnestly opposed to the project that it was feared that they would resign. McLane sent for Kendall to know why it was desired to execute such a project. He had told Adams a year before that the Treasury could not go on without the Bank.[36] Kendall endeavored to persuade McLane to execute the removal. Cass finally said that he did not understand the question, and withdrew from any share in it. Woodbury was neutlral. Barry assented to the proceeding but had no active share in it. Taney warmly favored it and became Jackson's most trusted adviser at this time. Van Buren was at first strongly opposed, but yielded to Kendall's persuasion. He wavered afterward but Kendall succeeded in keeping him to it. Benton approved of the proceeding but was not active in bringing it about. Blair's chief point was that the Bank would corrupt Congress.[37] Lewis gives a report of a conversation with Jackson in which he tried to persuade Jackson to desist from the project. The latter's points were "I have no confidence in Congress." "If the Bank is permitted to have the public money, there is no power that can prevent it from obtaining a charter. It will have it if it has to buy up all Congress; and the public funds would enable it to do so." "If we leave the means of corruption in its hands, the presidential veto will avail nothing." The statements in Kendall's Autobiography are in perfect accord with these. They seem to indicate that the anti-Bank men saw one chance yet remaining to the Bank, namely, to get a two-thirds majority in both Houses of Congress within the next three years, using corrupt means for this purpose, and so to pass a charter over the veto. One must have Jackson's relentless determination to pursue an enemy to the point of extermination before one could spend great energy to render such a chance impossible.
It appears therefore that the removal of the deposits was due first of all to Jackson himself. He "took the responsibility," and history must leave it with him. It is not at all impossible that he originated the purpose to make the removal. The moving spirits, who had first animated him with a hatred to the Bank, and who now were his ministers, although it is very possible that his zeal outstripped their impulses, were Blair and Kendall, with Whitney as their tool.[38]
As McLane persisted in his refusal to be the agent of removal, he was transferred to the State Department, and William J. Duane, of Pennsylvania, was appointed to the Treasury. Jackson assumed that Duane was a man like his father, the editor of the "Aurora," and he expected to find in him one who would sympathize with all the motives of the removal. Duane was a lawyer. He had never been a politician or office-holder, and his temper and opinions were quite different from those of his father. On the first day of his official life, June 1, Whitney called on him and made known to him the project to remove the deposits from the Bank and to use local banks as depositories and fiscal agents. Instead of accepting the role for which he had been selected, Duane objected and refused. Jackson sent to him from Boston, where he then was, a long argument to try to persuade him to concur in the project. Upon Jackson's return, in July, he urged Duane to consent, but in vain, and an arrangement appears to have been made with Taney to take the Treasury if Duane should still refuse.
In August, Duane wrote, "It is true that there is an irresponsible cabal that has more power than the people are aware of. * * * What I object to is that there is an undercurrent, a sly, whispering, slandering system pursued."[39] October 23, he wrote: "I had not been twenty-four hours in office when I felt, as I wrote my father, my vessel on the breakers. I found that the President was in the hands of men whom I would not trust, personally or politically. A contest at once began, the object of which was to drive me out of office, as the "Globe" called me 'a refractory subordinate.'"[40] In his history of the matter, written five years later, he says: "I had heard rumors of the existence of an influence at Washington unknown to the Constitution and to the country; and the conviction that they were well founded now became irresistible. I knew that four of the six members of the last cabinet, and that four of the six members of the present cabinet, opposed a removal of the deposits, and yet their exertions were nullified by individuals whose intercourse with the President was clandestine. During his absence [in New England] several of those individuals called on me and made many of the identical observations in the identical language used by himself. They represented Congress as corruptible, and the new members as in need of special guidance. * * * In short, I felt satisfied from all that I saw and heard that factious and selfish views alone guided those who had influence with the Executive, and that the true welfare and honor of the country constituted no part of their objects."
In July occurred an incident which increased very much the animosity which was felt against the Bank. The line of action which it adopted was blamed by many of its friends.
July 4, 1831, a treaty was made with France by which she agreed to pay certain claims for spoliations during the Napoleonic wars. According to the treaty, the first installment was due February 2, 1833, but on account of the unpopularity of the treaty in France no appropriation had been made to pay it. The Secretary of the Treasury drew a draft for it on the 7th of February, as for a commercial debt, which draft he sold to the Bank for $961,240.30. Congress passed an act, March 2, ordering the Secretary to loan this sum at interest. The draft when presented at the French Treasury could not be paid. It was protested and was taken up by Hottinguer for the Bank as endorser. The Bank had put the money to the credit of the Treasury, and it claimed to prove, by quoting the account, that the purchase money had actually been drawn. Hence it declared that it was out of funds for twice the amount of the bill.[41] It demanded 15 per cent. damages under an old law of Maryland which was the law of the District of Columbia. The Treasury repaid the purchase money and offered to pay the actual damage incurred, but no more. July 8, 1834, Biddle informed the Secretary of the Treasury that the sum of $170,041 would be retained out of a three and one-half per cent. dividend, payable July 17, on the stock owned by the United States. March 2, 1838, the United States brought suit against the Bank in the federal Circuit Court of Pennsylvania to recover the sum so withheld. It got judgment for $251,243.54. The Bank appealed to the Supreme Court, which, in 1844, reversed the judgment, finding that the Bank was the true holder of the bill and entitled to damages. On a new trial the Circuit Court gave judgment for the Bank. The United States then appealed, on the ground that a bill drawn by a government on a government was not subject to the law merchant. The Supreme Court sustained this view in 1847, and again reversed the decision of the Circuit Court.[42] No further action was taken. We must accept the decision as proving that the Bank was unwarranted in its action in paying itself.
In July rumors became current that the President intended to remove the deposits. On the 17th, Jacob Barker insured the non-removal until the meeting of Congress for 25 per cent. premium.[43] In August Kendall was appointed by the Secretary of the Treasury as agent to negotiate with the local banks of the Middle and Eastern States, so as to find out whether they would undertake the fiscal operations of the government. His first project seems to have been to group the selected deposit banks into a combined responsibility analogous to the New York safety fund system. He got no encouragement for this; but he obtained a number of favorable replies to more general inquiries as to a willingness to enter into some arrangement.[44] This errand of Kendall of course became known through the newspapers, although it was made as secret and confidential as possible.[45] Rives published an article in the "Washington Globe," June 23, 1856, in which he stated that Kendall was so disappointed at the result of his mission that he wrote to Jackson, who was then at the Rip Raps, that the deposits could not be removed. Blair was there with Jackson, and was much influenced by Kendall's report. Jackson, however, maintained against Blair that the Bank was broken. The proof was that Biddle came to Washington to beg that the payment on the United States loan might be deferred. He said that Biddie was proud and brave and never would have humbled himself to this step but under necessity. Kendall, however, denied that he had ever written that the deposits could not be removed.[46] Commenting on the results of Kendall's mission, Duane said: "It was into this chaos that I was asked to plunge the fiscal concerns of the country at a moment when they were conducted by the legitimate agent with the utmost simplicity, safety, and dispatch."
The Bank had warning of what was intended from the public rumors, if in no other way. August 13, strict orders were issued to restrict discounts and to cut off extensions, buying only short bills, especially at the western offices, and also to restrict purchases to bills which would throw funds into the Atlantic cities. These orders were repeated and made more stringent October 3. Ninety days was too short a time for the "racers," considering the difficulty of communication. It appears that they had also been reduced by steady pressure during the last twelve months. The cry now was that the great Bank was making the stringency in order to show its power. The threat of removal affected the money market.
The wording of the Bank charter was that the Secretary of the Treasury might remove the deposits, and the laws constituting the Treasury Department give to the Secretary a certain independent authority and responsibility, although this is inconsistent with his position as a subordinate who may be peremptorily removed. Jackson now said to Duane: "I take the responsibility," a phrase which became current in the political slang of the next ten years. On the 18th of September, he read in the meeting of his cabinet a paper prepared by Taney,[47] in which he argued that the deposits ought to be removed, the grounds being the three per cents, the French bill, the political activity of the Bank, and its unconstitutionality. He would not dictate to the Secretary, but he took all the responsibility of deciding that, after October 1, no more public money should be deposited in the Bank, and that the current drafts should withdraw all money then in it. The "Globe" announced this decision September 20. Duane refused to give the order and refused to resign. He was dismissed September 23. In a letter which he wrote in 1837, he complained that he had been politically outlawed on all sides for having had the courage to do right, but rebelling against party discipline.[48] Immediately upon his dismissal he published the final correspondence between the President and himself, in which he gave fifteen reasons why the deposits ought not to be removed. One of them was: "I believe that the efforts made in various quarters to hasten the removal of the deposits did not originate with patriots or statesmen, but in schemes to promote factious and selfish purposes." He ascribed it chiefly to vindictiveness. The administration press immediately turned upon Duane with fierce abuse. Taney was transferred to the Treasury Department and gave the order for the removal. He told Kendall that he was not a politician, and that, in taking a political office, he sacrificed his ambition, which was to be a Judge of the Supreme Court.[49]
No political act before the civil war created such intense excitement as the removal of the deposits. We may pass over the political aspects of it; but very exaggerated financial importance was attached to it, and for that generation it continued to be the point from which the subsequent vicissitudes of banking and currency were reckoned. No one, however, ever told why this act had such great importance. It produced a panic perhaps because the alarm was not rational.[50] The stock of the Bank fell one or two points at New York, but it recovered as soon as the paper read in the cabinet was published, because the grounds were only the old charges, which, as we have said, the investing public considered to be entirely refuted. We find it suggested that the politicians were short of the stock and were in great trouble because it did not fall.[51] The Bank replied to the President's paper by a long statement, no doubt written by Biddle, in which he took up seriatim the points raised by Jackson.
The average monthly balance in the Bank to the credit of the Treasury, from 1818 to 1833, was $6.7 millions. In 1832 it was $11.3 millions, and in 1833, $8.5 millions. In September of the latter year it was $9.1 millions.[52] It should, however, be noted that the deposits on the 1st of January, 1833, excluding the credits of public officers, were less than eight hundred thousand dollars, and that the amount in October had been deposited within the preceding nine months, having accumulated gradually. Nothing was drawn from the Bank by the removal. It was not compelled to call any of its loans at the time that step was announced. The amount on the 1st of January, 1834, was nearly $850,000, and it was not reduced to zero until the end of 1835.[53] It is difficult to see how this transaction could have had any great financial effect.
There was, however, another and far more serious ground of anxiety than the undefined panic on account of the removal of the deposits. Those who could remember 1817, and who recalled what they supposed to be the absolute demonstration of that period,[54] were alarmed at the prospect that its evils were to be renewed. This alarm was best expressed by Binney: "It is here that we find the pregnant source of the present agony—it is in the clearly avowed design to bring a second time upon this land the curse of an unregulated, uncontrolled State bank paper currency. We are again to see the drama, which, already in the course of the present century, has passed before us and closed in ruin. If the project shall be successful, we are again to see these paper missiles shooting in every direction through the country—a derangement of values—a depreciated circulation—a suspension of specie payments—then a further extension of the same detestable paper, with failures of trade and failures of banks in its train—to arrive at last at the same point from which we departed in 1817."
The removal of the deposits is the date of, and in some sense the cause of, the multiplication of local banks,[55] and the beginning of the series of financial errors and disasters which marked the next ten years.
Kendall reported to the cabinet the result of his negotiations with the banks. One bank was objected to on "political grounds."[56] Twenty-three were selected before the end of the year.
The contract between the Treasury and the deposit banks, in September, 1833, provided that each bank should receive all deposits offered by the Treasury, whether in coin, notes of the Bank of the United States or its branches, notes of any neighboring bank convertible into coin, or notes of any bank which the deposit bank is for the time being in the habit of receiving. If the deposit exceeds half of the capital of the bank, or for any other reason the Secretary thinks it necessary, the bank is to give collateral security for the deposit. It is to report to the Secretary weekly and submit its books to him or his agent whenever he shall require. It is to transfer the deposits upon the drafts of the Secretary to any other deposit bank without any charge of any kind whatsoever, but it is to have reasonable notice when this transfer will be required. It is also to furnish the Secretary with exchange on London at the current market price, and to guarantee the bills without any charge whatever. The Secretary may discharge the bank from the service of the government whenever the public interest may require.
January 30, 1834, Silas Wright made a statement on the deposit system which was understood to be authoritative. He said that the Executive had resumed the control of the public money, which belonged to him before the national bank was chartered; that the administration would bring forward no law to regulate the deposits, but that the Executive would proceed with the experiment of using State banks. March 18th, Webster proposed a bill to extend the charter of the Bank of the United States for six years, without monopoly, the public money to be deposited in it, it to pay to the Treasury two hundred thousand dollars annually, and none of its notes to be for less than twenty dollars. The Bank men would not agree to support it. April 15, Taney sent to the Committee on Ways and Means a plan for the organization of the deposit bank system; but it was a mere vague outline. December 15, Woodbury sent in a long essay on currency and banking, but no positive scheme or arrangement. It was not until June, 1836, that the deposit system was regulated by law. The administration, however, had some definite ideas about what it ought to require of the deposit banks. Taney, in his communication of April 15, proposed rules by which a broader specie basis could be obtained. Monthly reports were to be required; no deposit bank was to deal in any stocks except those of the United States and of the State in which it was. After March 3, 1836, no bank was to be a depository which issued notes under $5, nor were the notes of any such to be received in payments to the United States. The banks treated these regulations with the same indifference with which they had treated those of the States.
Taney desired that Kendall should be president of the Bank of the Metropolis and organize the system, but he declined. The Bank of the Metropolis was then asked to admit Whitney as agent and correspondent of the deposit banks. The bank refused to do this, and the plan of making that bank the head of the system was given up.[57] The deposit banks were recommended to employ Whitney as agent and correspondent at Washington for their dealings with the Treasury. He did not escape the charge of abusing the power which this position gave him, and an investigation in 1837 produced evidence very adverse to his character. From the correspondence between him and the banks which was then published, it is plain that the chief argument which was used to support an application for a share of the deposits or other favor was political; above all, devotion to Jackson and hatred of the Bank of the United States.
Taney assumed that the Bank of the United States would make a spiteful attempt to injure the deposit banks by calling on them to pay balances promptly. He therefore placed some large drafts on the Bank of the United States in the hands of officers of the deposit banks at New York, Philadelphia, and Baltimore, so that they might offset any such malicious demand. Otherwise the drafts were not to be used. The Bank took no steps which afforded even a pretext for using these drafts, but the president of the Union Bank of Maryland cashed one of them for one hundred thousand dollars a few days after he got it, and used the money in stock speculations.[58] For fear of scandal this act was passed over by the Executive, but it led to an investigation by Congress. Taney was a stockholder in the Union Bank. [59] The Manhattan Company also used one of these drafts for five hundred thousand dollars. Here, then, at the very outset, experience was made of the reliance which could be placed on the "pet banks" in confidential dealings with them.
Taney claimed the right to give these transfer drafts, by way of arbitration between the banks, by virtue of the precedent set by Crawford. Here we have a full-fledged administrative abuse, the steps of whose growth we have noticed all the way down from its beginning by Alexander Hamilton.[60]
By a resolution of the House of Representatives of Pennsylvania, December 20, 1833, the Committee on Ways and Means were directed "to inquire how far the public interests might be promoted by the continuation of the operations of the Bank of the United States under a charter from this Commonwealth, should its present charter not be renewed by the United States." In their report on this resolution the Committee expressed the opinion that the Bank, under a State charter, would speedily run down into a mere State bank, as the Bank of North America had done. They thought that it was essential to a national bank that it should be under the federal courts, which a State bank would not be; that it should be charged with the collection of the revenue, because otherwise it could not regulate the local banks; and that it should have branches. While they did not report against the proposal, they gave the weight of argument against it.
The session of 1833 and 1834 was the most excited that took place before the civil war. Of course the President's message and the report of the Secretary of the Treasury must justify what had been done. The President threw the justification of it chiefly on the report of the government directors of the Bank, which showed, as he said, that the Bank had been turned into an electioneering engine. This referred to the documents which it had distributed in the campaign. The Secretary said that, although he alone had the power to remove the deposits, and Congress could not order it to be done, yet that the Secretary must discharge any duties laid upon him under the supervision of the President. He put the removal which had been accomplished on the ground of public interest. The people had shown in the election that they did not want the Bank rechartered. It was not best to remove the deposits suddenly when the charter should expire. He tried to show from the statistics of the Bank that it had operated inflations and contractions, and he suggested that this had been done for political effect. He reiterated the charges of improper expenditures. "Some of the items accounted for sufficiently show in what manner it was endeavoring to defend its interests. It had entered the field of political warfare, and as a political partisan was endeavoring to defeat the election of those who were opposed to its use. It was striving by means of its money to control the course of the government by driving from power those who were obnoxious to its resentment."
All the debates and proceedings of this session were passionate and violent. The Senate refused, 25 to 20, to confirm the reappointment of the government directors, who were said to have acted as the President's spies. Jackson sent the names in again, with a long message, and they were again rejected, 30 to 11. Taney's appointment as Secretary of the Treasury was rejected. He was then nominated for Judge of the Supreme Court and again rejected. In January, Jackson sent in a message complaining that the Bank still kept the books, papers, and funds belonging to the pension agency, with which it had hitherto been charged. The Senate voted, May 26th, 26 to 17, that the Secretary of War had no authority to remove the pension funds from the Bank.
December 11th, Clay moved a call for a copy of the paper read in the cabinet. Jackson refused it, on the ground that Congress had no business with the paper. Clay introduced resolutions which finally took this shape: "Resolved—First, That the President, in the late executive proceedings in relation to the public revenue, has assumed upon himself authority and power not conferred by the Constitution and the laws, but in derogation of both. Second, That the reasons assigned by the Secretary for the removal are unsatisfactory and insufficient." January 7th, Benton offered a counter-resolution that Biddle should be called to the bar of the Senate to give the reasons for the recent curtailments of the Bank, and to answer for the use of its funds in electioneering. February 5th, Webster reported from the Committee on Finance, on the subject of the removal and on Clay's resolutions. The second of these was at once adopted, 28 to 18. March 28th, the first resolution was adopted, 26 to 20. April 15th, Jackson replied to the latter resolution with a protest, construing it as an invasion of Executive rights and independence. The Senate refused to receive this protest, 27 to 16, declaring it a breach of privilege. The administration press next directed its attacks against the Senate as an institution. This attack was organized in support of Benton's proposition to expunge the resolution of censure on the President from the records of the Senate; so that one of the bitterest purely political struggles in the history of the country, before the civil war, grew out of the removal of the deposits. Jackson's supporters won control of the Senate in 1836, and the resolution was expunged, January 16, 1837.
In the House, Polk reported from the Committee on Ways and Means, March 4, 1834, supporting Jackson and Taney in all their positions about the removal. He offered four resolutions, which were passed, April 4th, as follows:—First, That the Bank ought not to be rechartered, 132 to 82; second, that the deposits ought not to be restored, 118 to 103; third, that the State banks ought to be depositories of the public funds, 117 to 105; fourth, that a select committee should be raised on the Bank and the commercial crisis, 171 to 42. The committee last mentioned was appointed, and endowed with inquisitorial power, which J. Q. Adams thought was unjust and un-American. They reported, May 22d, that the Bank had resisted all their attempts to investigate, which was so far true that the Bank had drawn the line beyond which they would not allow the committee to go. The majority proposed that the directors should be arrested and brought to the bar of the House. The minority of the committee justified the Bank in the position which it had taken, and while they were very careful to ascribe only the purest motives to the majority, yet showed strong disapproval of the line of examination which had been attempted; that was, to find evidence to support the charges against the Bank and its officers in the books and in an inquisitorial examination of the officers themselves.
The Senate also undertook another investigation. It instructed the Committee on Finance, June 30th, to investigate all the allegations against the Bank made by Jackson and Taney in justification of the removal. This produced Tyler's report of December 18, 1834, which is very valuable for the history, but was very little heeded at the time. Its conclusions were all favorable to the Bank.[61] Tyler appended to his report statistical statements of the condition of the Bank, which show what its internal history had been during the last years. It had drawn back from the perilous position into which it was drifting under the western debt, and the operation of the branch drafts, in the spring of 1832, and had improved its whole status down to October, 1833, when it was extremely strong.
We have already noticed the panic which was occasioned by the removal of the deposits and which may properly be so called, if we are correct in the opinion that there was no rational ground for commercial distress in that proceeding. During the winter of 1833-4, there was a stringent money market, and commercial distress due to other causes, which were indeed incidental to, or contingent on, the removal. The State banks were trying to strengthen themselves and to put themselves on the level of the Treasury requirements, in the hope of getting a share of the deposits. It was they who operated a bank contraction during the winter. It was more than a year before the new system began to operate in place of the old. Stocks fell from 20 per cent. to 50 per cent. In February, 1834, sterling exchange was down to 98, par being 108. There was a great fall in prices, and commercial paper rose to two per cent. or three per cent. per month.[62] A great number of banks failed on account of the shrinkage in securities. In New York, State stocks were loaned to the banks to ward off an apprehended suspension of specie payments. Hammond says that this frustrated the desire of the Bank of the United States to force a suspension.[63] Nathan Appleton ascribed the commercial crisis to Biddle. "No one can doubt that his contractions in 1834, so distressing to the community, were pushed beyond reasonable measure, for the purpose, by that means, of effecting the renewal of the charter, under the pretense of the necessity of preparing for winding up its concerns, whilst his subsequent expansion had a full share in producing the mad and wild speculations of 1835-6."[64] In another letter, in 1857, Appleton said that, in March, 1834, a committee of New York merchants and bankers told Biddle that, unless the Bank desisted for thirty days from any calls on the other banks, he would be denounced on the Merchants' Exchange for "flagitiously endeavoring to force Congress to grant him a charter." When the thirty days were up he renewed the pressure and kept it up until July, when Congress adjourned. The "pressure was wholly owing to the unprincipled action of Mr. Biddle."[65] If this story is correct, it seems that the merchants and bankers unwarrantably intimidated Biddle from collecting debts justly due to the Bank for a period of thirty days.
The anti-Bank men pointed to the statements of the Bank as obvious proof of panic-making and popularity-hunting. In eighteen months from January, 1831, to July, 1832, when it was working for the renewal, its loans increased $23.4 millions; in the next eighteen months they were reduced $21.9 millions; as was said, out of spite and revenge, to show its power; in the next six months they were increased again $19.6 millions.
Benton and others denied that there was any distress, and said that the petitions presented to Congress were gotten up for effect, to frighten Jackson into restoring the deposits. Delegations went to Washington to represent to Jackson the state of the country. He became violent; told the delegations to go to Biddle, that he had all the money; that the Bank was a monster, to which all the trouble was due. In answer to a delegation from Philadelphia, February 11, 1834, Jackson sketched out the bullionist program, which the administration pursued from this time on. Up to this time it had been supposed that Jackson rather leaned to that class of paper money notions represented by the big banks of the States of the Southwest. He now proposed, as an "experiment," to persuade the local banks, by the inducement of the deposits, to come up to a higher and higher standard, until there should be no bank notes under $20, and a large part of the circulation should consist of coin. For the next ten years there were, therefore, four schools of opinion and four systems of currency contending for the mastery: the national bank system, the local deposit bank system, the bullionist system, and a government inconvertible treasury note system.
For a short time in the summer of 1834, the currency was in a very sound condition. The Bank of the United States was, by the necessity of its position, under strong precautions. The local banks, by their efforts to meet the Treasury requirements, were stronger than ever before. In May it was said that there was more specie in the United States than ever before.[66] Silver was imported during the fiscal year to the valueof $3.7 millions. A statement which pretended to give the ratio of circulating paper to specie in the different States showed that, with the exception of Tennessee, Mississippi, Maine, Connecticut, Massachusetts, and South Carolina, the ratio was under 7 to 1.[67]
This, however, was a mere transition. As we shall see in the next chapter, the effect of the transfer of the government money to the local banks was that their number was greatly increased and a bank inflation was produced.[68] The state of things which existed in the summer of 1834 passed as mere phenomena of transition.
November 5, 1834, Secretary Woodbury informed the Bank of the United States that the Treasury would not receive branch drafts after January 1, 1835. This led to a spirited correspondence with Biddle in which the latter defended the drafts as good, both in law and in finance.[69]
In the message of Jackson recapitulated all the old complaints against the Bank and recommended that its notes should no longer be received by the Treasury, and that the stock owned by the nation should be sold. January 10, 1835, Polk introduced a bill to forbid the receipt of notes of the Bank of the United States at the Treasury, unless the Bank would pay at once the dividend which had been withheld in 1833. Bills were also proposed for regulating the deposits in the deposit banks, but no action was taken on any of these matters, and the session was fruitless as to banking and currency. The Committee on Finance of the Senate was, however, ordered to investigate the specie transactions of the Bank.
In the message of 1835, Jackson referred to the war which, as he said, the Bank had waged on the government for four years as a proof of the evil effects of such an institution. He declared that the Bank belonged to a system of distrust of the popular will, as a regulator of political power, and to a policy which would supplant our federal system by a consolidated government. Thus at the end of the Bank war we meet again with that allegation in regard to the constitution and purpose of the Bank as a plutocratic engine, which Ingham had formulated in his letter to Biddle, October 5, 1829.
- ↑ Gallatin's Writings, 390. (1841.)
- ↑ See page 133.
- ↑ 42 Niles, 315.
- ↑ Adam's Report with Documents, 22nd Cong., 1st Sess., Reports IV., No. 460, p. 438.
- ↑ In 1816, as Senator from New Hampshire, Mason opposed the charter of the national bank.
- ↑ The State Rights Party in South Carolina having declared that the local branch of the Bank had actively interfered against them In the State election of 1830, Biddle wrote to the president of the branch that it was one of the principles of the Bank not to interfere in politics at all, and that, while leaving to all their rights and liberties as citizens, it expected its employees to act in conformity with the policy of the Bank in this respect. He called for information which he could lay before the directors to reassure them that the rules of the Bank were not being broken. This letter was not published until 1832. (41 Niles, 478.)
- ↑ See page 25.
- ↑ See page 133.
- ↑ 2 Parton's Jackson, 596.
- ↑ See page 148.
- ↑ Memoirs of Bennett, 111.
- ↑ 37 Niles, 257.
- ↑ The term "bank democrat" at this time is ambiguous. It is often used for those Jackson men who were friendly to the Bank of the United States, but also for those recruits of the Jackson party who were brought in by the local bank interest.
- ↑ 8 Adam's Diary, 445.
- ↑ Ingersoll, Second War, 268.
- ↑ 1 Sargent, 215.
- ↑ 1 Benton, 236.
- ↑ Bank of the United States vs. Owens; 2 Peters, 527.
- ↑ 52 Nile, 106.
- ↑ See page 166.
- ↑ See page 190.
- ↑ Biddle was a government director in 1819, 1820, and 1821. In 1822 he was not a director; from 1823 to 1829 he was government director and president; in 1829 he was also elected stockholders' director, and held the double qualification in 1830, 1831 and 1832. After that he was not government director.
- ↑ See page 181.
- ↑ Compare the extract on page 188, where he justifies by equally high sounding argument a policy exactly opposite.
- ↑ 3 Writings, 394. (1841.)
- ↑ Ingersoll, Second War, 268.
- ↑ Ingersoll, 268. Livingston was on the side of the Bank (Hunt's Livingston, 353.)
- ↑ Ingersoll, 283.
- ↑ 5 Proceedings of the Mass. Hist. Soc., 279.
- ↑ 42 Niles, 337.
- ↑ See Collier's Speech in the House, March 13, 1832, and 8 Adams's Diary, 493.
- ↑ 43 Niles, 315.
- ↑ 22 Congress, 2 Session, Reports, No. 121.
- ↑ 44 Niles, 108.
- ↑ 3 Parton's Jackson, 503.
- ↑ 8 Adams's Diary, 457.
- ↑ 3 Parton's Jackson, 405.
- ↑ Kendall's Autobiography, 375; 10 Adams's Diary, 115.
- ↑ Duane, 130.
- ↑ 45 Niles, 272.
- ↑ Report of a Committee of Directors of the Bank on a Paper read in the Cabinet.
- ↑ 2 Howard, 711. 5 Howard, 382.
- ↑ 44 Niles, 353.
- ↑ 23 Cong., 1 Sess., Sen. Doc., No. 17.
- ↑ 44 Niles, 375.
- ↑ Hudson's Journalism, 250.
- ↑ Tyler's Taney, 204.
- ↑ New York "Times," May 13, 1894.
- ↑ Kendall's Autobiography, 386.
- ↑ 45 Niles, 65.
- ↑ 45 Niles, 130.
- ↑ 23 Cong., 1 Sess., 1 Senate, No. 16.
- ↑ 24 Cong., 2 Sess., 2 Exec., No. 77.
- ↑ See page 69.
- ↑ See Chap. 13, § 2.
- ↑ Kendall's Autobiography, 387.
- ↑ Kendall's Autobiography, 388.
- ↑ Kendalls Autobiography, 389; 23 Cong., 1 Sess., 1 Sen. No. 16, p. 339.
- ↑ Quincy's Adams, 227. He sold his stock February 18, 1834. 23 Cong., 1 Sess., Sen. Doc. 238.
- ↑ See pages 33, 35, 102.
- ↑ 23 Cong., 2 Sess., 1 Sen. Doc. No. 17.
- ↑ Raguet; Currency and Banking, 196.
- ↑ 2 Hammond, 440.
- ↑ Appleton; Currency. 27. (1841.)
- ↑ 12 Banker's Magazine, 410.
- ↑ 46 Niles 188.
- ↑ 47 Niles, 20.
- ↑ Chapter XIII., § 2.
- ↑ 23 Cong., 2 Sess., 2 Sen. Doc. No. 13.