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.[1] 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.[2] 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.[3] 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,[4] 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,[5] 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."[6] 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
