Thirty Years' View (Vol. II of 2)

"The immediate causes which thus compelled the banks of the city of New York to suspend specie payments on the 10th of May last, are well known. The simultaneous withdrawing of the large public deposits, and of excessive foreign credits, combined with the great and unexpected fall in the price of the principal article of our exports, with an import of corn and bread stuffs, such as had never before occurred, and with the consequent inability of the country, particularly in the south-western States, to make the usual and expected remittances, did, at one and the same time, fall principally and necessarily, on the greatest commercial emporium of the Union. After a long and most arduous struggle, during which the banks, though not altogether unsuccessfully, resisting the imperative foreign demand for the precious metals, were gradually deprived of a great portion of their specie; some unfortunate incidents of a local nature, operating in concert with other previous exciting causes, produced distrust and panic, and finally one of those general runs, which, if continued, no banks that issue paper money, payable on demand, can ever resist; and which soon put it out of the power of those of this city to sustain specie payments. The example was followed by the banks throughout the whole country, with as much rapidity as the news of the suspension in New York reached them, without waiting for an actual run; and principally, if not exclusively, on the alleged grounds of the effects to be apprehended from that suspension. Thus, whilst the New York city banks were almost drained of their specie, those in other places preserved the amount which they held before the final catastrophe."

These are the reasons! and what becomes now of the Philadelphia cry, re-echoed by politicians and subaltern banks, against the ruinous measures of the administration? Not a measure of the administration mentioned! not one alluded to! Not a word about the Treasury order; not a word about the veto of the National Bank charter; not a word about the removal of the deposits from the Bank of the United States; not a word about, the specie policy of the administration! Not one word about any act of the government, except that distribution act, disguised as a deposit law, which was a measure of Congress, and not of the administration, and the work of the opponents, and not the friends of the administration, and which encountered its only opposition in the ranks of those friends. I opposed it, with some half dozen others; and among my grounds of opposition, one was, that it would endanger the deposit banks, especially the New York city deposit banks, – that it would reduce them to the alternative of choosing between breaking their customers, and being broken themselves. This was the origin of that act – the work of the opposition on this floor; and now we find that very act to be the cause which is put at the head of all the causes which led to the suspension of specie payments. Thus, the administration is absolved. Truth has performed its office. A false accusation is rebuked and silenced. Censure falls where it is due; and the authors of the mischief stand exposed in the double malefaction of having done the mischief, and then charged it upon the heads of the innocent.

But, gentlemen of the opposition say, there can be no resumption until Congress "acts upon the currency." Until Congress acts upon the currency! that is the phrase! and it comes from Philadelphia; and the translation of it is, that there shall be no resumption until Congress submits to Mr. Biddle's bank, and recharters that institution. This is the language from Philadelphia, and the meaning of the language; but, happily, a different voice issues from the city of New York! The authentic notification is issued from the banks of that city, pledging themselves to resume by the 10th day of May. They declare their ability to resume, and to continue specie payments; and declare they have nothing to fear, except from "deliberate hostility" – an hostility for which they allege there can be no motive – but of which they delicately intimate there is danger. Philadelphia is distinctly unveiled as the seat of this danger. The resuming banks fear hostility – deliberate acts of hostility – from that quarter. They fear nothing from the hostility, or folly, or wickedness of this administration. They fear nothing from the Sub-Treasury bill. They fear Mr. Biddle's bank, and nothing else but his bank, with its confederates and subalterns. They mean to resume, and Mr. Biddle means that they shall not. Henceforth two flags will be seen, hoisted from two great cities. The New York flag will have the word resumption inscribed upon it; the Philadelphia flag will bear the inscription of non-resumption, and destruction to all resuming banks.

I have carefully observed the conduct of the leading banks in the United States. The New York banks, and the principal deposit banks, had a cause for stopping which no others can plead, or did plead. I announced that cause, not once, but many times, on this floor; not only during the passage of the distribution law, but during the discussion of those famous land bills, which passed this chamber; and one of which ordered a peremptory distribution of sixty-four millions, by not only taking what was in the Treasury, but by reaching back, and taking all the proceeds of the land sales for years preceding. I then declared in my place, and that repeatedly, that the banks, having lent this money under our instigation, if called upon to reimburse it in this manner, must be reduced to the alternative of breaking their customers, or of being broken themselves. When the New York banks stopped, I made great allowances for them, but I could not justify others for the rapidity with which they followed their example; and still less can I justify them for their tardiness in following the example of the same banks in resuming. Now that the New York banks have come forward to redeem their obligations, and have shown that sensibility to their own honor, and that regard for the punctual performance of their promises, which once formed the pride and glory of the merchant's and the banker's character, I feel the deepest anxiety for their success in the great contest which is to ensue. Their enemy is a cunning and a powerful one, and as wicked and unscrupulous as it is cunning and strong. Twelve years ago, the president of that bank which now forbids other banks to resume, declared in an official communication to the Finance Committee of this body, "that there were but few State banks which the Bank of the United States could not DESTROY by an exertion of its POWER." Since that time it has become more powerful; and, besides its political strength, and its allied institutions, and its exhaustless mine of resurrection notes, it is computed by its friends to wield a power of one hundred and fifty millions of dollars! all at the beck and nod of one single man! for his automaton directors are not even thought of! The wielding of this immense power, and its fatal direction to the destruction of the resuming banks, presents the prospect of a fearful conflict ahead. Many of the local banks will doubtless perish in it; many individuals will be ruined; much mischief will be done to the commerce and to the business of different places; and all the destruction that is accomplished will be charged upon some act of the administration – no matter what – for whatever is given out from the Philadelphia head is incontinently repeated by all the obsequious followers, until the signal is given to open upon some new cry.

Sir, the honest commercial banks have resumed, or mean to resume. They have resumed, not upon the fictitious and delusive credit of legislative enactments, but upon the solid basis of gold and silver. The hundred millions of specie which we have accumulated in the country has done the business. To that hundred millions the country is indebted for this early, easy, proud and glorious resumption! – and here let us do justice to the men of this day – to the policy of General Jackson – and to the success of the experiments – to which we are indebted for these one hundred millions. Let us contrast the events and effects of the stoppages in 1814, and in 1819, with the events and effects of the stoppage in 1837, and let us see the difference between them, and the causes of that difference. The stoppage of 1814 compelled the government to use depreciated bank notes during the remainder of the war, and up to the year 1817. Treasury notes, even bearing a large interest, were depreciated ten, twenty, thirty per cent. Bank notes were at an equal depreciation. The losses to the government from depreciated paper in loans alone, during the war, were computed by a committee of the House of Representatives at eighty millions of dollars. Individuals suffered in the same proportion; and every transaction of life bore the impress of the general calamity. Specie was not to be had. There was, nationally speaking, none in the country. The specie standard was gone; the measure of values was lost; a fluctuating paper money, ruinously depreciated, was the medium of all exchanges. To extricate itself from this deplorable condition, the expedient of a National Bank was resorted to – that measure of so much humiliation, and of so much misfortune to the republican party. For the moment it seemed to give relief, and to restore national prosperity; but treacherous and delusive was the seeming boon. The banks resumed – relapsed – and every evil of the previous suspension returned upon the country with increased and aggravated force.

Politicians alone have taken up this matter and have proposed, for the first time since the foundation of the government – for the first time in 48 years – to compel the government to receive paper money for its dues. The pretext is, to aid the banks in resuming! This, indeed, is a marvellous pretty conception! Aid the banks to resume! Why, sir, we cannot prevent them from resuming. Every solvent, commercial bank in the United States either has resumed, or has declared its determination to do so in the course of the year. The insolvent, and the political banks, which did not mean to resume, will have to follow the New York example, or die! Mr. Biddle's bank must follow the New York lead, or die! The good banks are with the country: the rest we defy. The political banks may resume or not, as they please, or as they dare. If they do not, they die! Public opinion, and the laws of the land, will exterminate them. If the president of the miscalled Bank of the United States has made a mistake in recommending indefinite non-resumption, and in proposing to establish a confederation of broken banks, and has found out his mistake, and wants a pretext for retreating, let him invent one. There is no difficulty in the case. Any thing that the government does, or does not – any thing that has happened, will happen, or can happen – will answer the purpose. Let the president of the Bank of the United States give out a tune: incontinently it will be sung by every bank man in the United States; and no matter how ridiculous the ditty may be, it will be celebrated as superhuman music.

But an enemy lies in wait for them! one that foretells their destruction, is able to destroy them, and which looks for its own success in their ruin. The report of the committee of the New York banks expressly refers to "acts of deliberate hostility" from a neighboring institution as a danger which the resuming banks might have to dread. The reference was plain to the miscalled Bank of the United States as the source of this danger. Since that time an insolent and daring threat has issued from Philadelphia, bearing the marks of its bank paternity, openly threatening the resuming banks of New York with destruction. This is the threat: "Let the banks of the Empire State come up from their Elba, and enjoy their hundred days of resumption; a Waterloo awaits them, and a St. Helena is prepared for them." Here is a direct menace, and coming from a source which is able to make good what it threatens. Without hostile attacks, the resuming banks have a perilous process to go through. The business of resumption is always critical. It is a case of impaired credit, and a slight circumstance may excite a panic which may be fatal to the whole. The public having seen them stop payment, can readily believe in the mortality of their nature, and that another stoppage is as easy as the former. On the slightest alarm – on the stoppage of a few inconsiderable banks, or on the noise of a groundless rumor – a general panic may break out. Sauve qui peut – save himself who can – becomes the cry with the public; and almost every bank may be run down. So it was in England after the long suspension there from 1797 to 1823; so it was in the United States after the suspension from 1814 to 1817; in each country a second stoppage ensued in two years after resumption; and these second stoppages are like relapses to an individual after a spell of sickness: the relapse is more easily brought on than the original disease, and is far more dangerous.

The banks in England suspended in 1797 – they broke in 1825; in the United States it was a suspension during the war, and a breaking in 1819-20. So it may be again with us. There is imminent danger to the resuming banks, without the pressure of premeditated hostility; but, with that hostility, their prostration is almost certain. The Bank of the United States can crush hundreds on any day that it pleases. It can send out its agents into every State of the Union, with sealed orders to be opened on a given day, like captains sent into different seas; and can break hundreds of local banks within the same hour, and over an extent of thousands of miles. It can do this with perfect ease – the more easily with resurrection notes – and thus excite a universal panic, crush the resuming banks, and then charge the whole upon the government. This is what it can do; this is what it has threatened; and stupid is the bank, and doomed to destruction, that does not look out for the danger, and fortify against it. In addition to all these dangers, the senator from Kentucky, the author of the resolution himself, tells you that these banks must fail again! he tells you they will fail! and in the very same moment he presses the compulsory reception of all the notes on all these banks upon the federal treasury! What is this but a proposition to ruin the finances – to bankrupt the Treasury – to disgrace the administration – to demonstrate the incapacity of the State banks to serve as the fiscal agents of the government, and to gain a new argument for the creation of a national bank, and the elevation of the bank party to power? This is the clear inference from the proposition; and viewing it in this light, I feel it to be my duty to expose, and to repel it, as a proposition to inflict mischief and disgrace upon the country.

But to return to the point, the contrast between the effects and events of former bank stoppages, and the effects and events of the present one. The effects of the former were to sink the price of labor and of property to the lowest point, to fill the States with stop laws, relief laws, property laws, and tender laws; to ruin nearly all debtors, and to make property change hands at fatal rates; to compel the federal government to witness the heavy depreciation of its treasury notes, to receive its revenues in depreciated paper; and, finally, to submit to the establishment of a national bank as the means of getting it out of its deplorable condition – that bank, the establishment of which was followed by the seven years of the greatest calamity which ever afflicted the country; and from which calamity we then had to seek relief from the tariff, and not from more banks. How different the events of the present time! The banks stopped in May, 1837; they resume in May, 1838. Their paper depreciated but little; property, except in a few places, was but slightly affected; the price of produce continued good; people paid their debts without sacrifices; treasury notes, in defiance of political and moneyed combinations to depress them, kept at or near par; in many places above it; the government was never brought to receive its revenues in depreciated paper; and finally all good banks are resuming in the brief space of a year; and no national bank has been created. Such is the contrast between the two periods; and now, sir, what is all this owing to? what is the cause of this great difference in two similar periods of bank stoppages? It is owing to our gold bill of 1834, by which we corrected the erroneous standard of gold, and which is now giving us an avalanche of that metal; it is owing to our silver bill of the same year, by which we repealed the disastrous act of 1819, against the circulation of foreign silver, and which is now spreading the Mexican dollars all over the country; it is owing to our movements against small notes under twenty dollars; to our branch mints, and the increased activity of the mother mint; to our determination to revive the currency of the constitution, and to our determination not to fall back upon the local paper currencies of the States for a national currency. It was owing to these measures that we have passed through this bank stoppage in a style so different from what has been done heretofore. It is owing to our "experiments" on the currency – to our "humbug" of a gold and silver currency – to our "tampering" with the monetary system – it is owing to these that we have had this signal success in this last stoppage, and are now victorious over all the prophets of woe, and over all the architects of mischief. These experiments, this humbugging, and this tampering, has increased our specie in six years from twenty millions to one hundred millions; and it is these one hundred millions of gold and silver which have sustained the country and the government under the shock of the stoppage – has enabled the honest solvent banks to resume, and will leave the insolvent and political banks without excuse or justification for not resuming. Our experiments – I love the word, and am sorry that gentlemen of the opposition have ceased to repeat it – have brought an avalanche of gold and silver into the country; it is saturating us with the precious metals, it has relieved and sustained the country; and now when these experiments have been successful – have triumphed over all opposition – gentlemen cease their ridicule, and go to work with their paper-money resolutions to force the government to use paper, and thereby to drive off the gold and silver which our policy has brought into the country, destroy the specie basis of the banks, give us an exclusive paper currency again, and produce a new expansion and a new explosion.

Justice to the men of this day requires these things to be stated. They have avoided the errors of 1811. They have avoided the pit into which they saw their predecessors fall. Those who prevented the renewal of the bank charter in 1811, did nothing else but prevent its renewal; they provided no substitute for the notes of the bank; did nothing to restore the currency of the constitution; nothing to revive the gold currency; nothing to increase the specie of the country. They fell back upon the exclusive use of local bank notes, without even doing any thing to strengthen the local banks, by discarding their paper under twenty dollars. They fell back upon the local banks; and the consequence was, the total prostration, the utter helplessness, the deplorable inability of the government to take care of itself, or to relieve and restore the country, when the banks failed. Those who prevented the recharter of the second Bank of the United States had seen all this; and they determined to avoid such error and calamity. They set out to revive the national gold currency, to increase the silver currency, and to reform and strengthen the banking system. They set out to do these things; and they have done them. Against a powerful combined political and moneyed confederation, they have succeeded; and the one hundred millions of gold and silver now in the country attests the greatness of their victory, and insures the prosperity of the country against the machinations of the wicked and the factious.

CHAPTER XXII.

MR. CLAY'S RESOLUTION IN FAVOR OF RESUMING BANKS, AND MR. BENTON'S REMARKS UPON IT

After the New York banks had resolved to recommence specie payments, and before the day arrived for doing so, Mr. Clay submitted a resolution in the Senate to promote resumption by making the notes of the resuming banks receivable in payment of all dues to the federal government. It was clearly a movement in behalf of the delinquent banks, as those of New York, and others, had resolved to return to specie payments without requiring any such condition. Nevertheless he placed the banks of the State of New York in the front rank for the benefits to be received under his proposed measure. They had undertaken to recommence payments, he said, not from any ability to do so, but from compulsion under a law of the State. The receivability of their notes in payment of all federal dues would give them a credit and circulation which would prevent their too rapid return for redemption. So of others. It would be a help to all in getting through the critical process of resumption; and in helping them would benefit the business and prosperity of the country. He thought it wise to give that assistance; but reiterated his opinion that, nothing but the establishment of a national bank would effectually remedy the evils of a disordered currency, and permanently cure the wounds under which the country was now suffering. Mr. Benton replied to Mr. Clay, and said:

This resolution of the senator from Kentucky [Mr. Clay], is to aid the banks to resume – to aid, encourage, and enable them to resume. This is its object, as declared by its mover; and it is offered here after the leading banks have resumed, and when no power can even prevent the remaining solvent banks from resuming. Doubtless, immortal glory will be acquired by this resolution! It can be heralded to all corners of the country, and celebrated in all manner of speeches and editorials, as the miraculous cause of an event which had already occurred! Yes, sir – already occurred! for the solvent banks have resumed, are resuming, and will resume. Every solvent bank in the United States will have resumed in a few months, and no efforts of the insolvents and their political confederates can prevent it. In New York the resumption is general; in Massachusetts, Rhode Island, Maine, and New Jersey, it is partial; and every where the solvent banks are preparing to redeem the pledge which they gave when they stopped – that of resuming whenever New York did. The insolvent and political banks will not resume at all, or, except for a few weeks, to fail again, make a panic and a new run upon the resuming banks – stop them, if possible, then charge it upon the administration, and recommence their lugubrious cry for a National Bank.

The resumption will take place. The masses of gold and silver pouring into the country under the beneficent effects of General Jackson's hard-money policy, will enable every solvent bank to resume; a moral sense, and a fear of consequences, will compel them to do it. The importations of specie are now enormous, and equalling every demand, if it was not suppressed. There can be no doubt but that the quantity of specie in the country is equal to the amount of bank notes in circulation – that they are dollar for dollar – that the country is better off for money at this day than it ever was before, though shamefully deprived of the use of gold and silver by the political and insolvent part of the banks and their confederate politicians.

The solvent banks will resume, and Congress cannot prevent them if it tried. They have received the aid which they need in the $100,000,000 of gold and silver which now relieves the country, and distresses the politicians who predicted no relief, until a national bank was created. Of the nine hundred banks in the country, there are many which never can resume, and which should not attempt it, except to wind up their affairs. Many of these are rotten to the core, and will fall to pieces the instant they are put to the specie test. Some of them even fail now for rags; several have so failed in Massachusetts and Ohio, to say nothing of those called wild cats – the progeny of a general banking law in Michigan. We want a resumption to discriminate between banks, and to save the community from impositions.