Thirty Years' View (Vol. II of 2)

Mr. Benton, after sustaining Mr. King in his view of the rules and the practice, told him that he was deceived in his memory in supposing there had never been a one-sided committee in the Senate before: and remarked:

"That senator is very correct at all times; but he will not take it amiss if I shall suggest to him that he is in error now – that there has been one other occasion in which a one-sided committee was employed – and that in a very important case – concerning no less a power than Mr. Biddle's bank, and even Mr. Biddle himself. I speak of the committee which was sent by this Senate to examine the Bank of the United States in the summer of 1834, when charged with insolvency and criminality by General Jackson – charges which time have proved to be true – and when the whole committee were of one party, and that party opposed to General Jackson, and friendly to the bank. And what became then of the rule of British parliamentary law, which has just been read? It had no application then, though it would have cut off every member of the committee; for not one of them was favorable to the inquiry, but the contrary; and the thing ended as all expected. I mention this as an instance of a one-sided committee, which the senator from Alabama has overlooked, and which deserves to be particularly remembered on this occasion, for a reason which I will mention; and which is, that both these committees were appointed in the same case – for the same Bank of the United States – one to whitewash it – which it did; the other to smuggle it into existence under a charter in which it cannot be named. And thus, whenever that bank is concerned, we have to look out for tricks and frauds (to say no more), even on the high floors of national legislation."

Mr. Buchanan animadverted with justice and severity upon the tyranny with which the majority in the House of Representatives had forced the bill through, and marked the fact that not a single democratic member had succeeded in getting an opportunity to speak against it. This was an unprecedented event in the history of parties in America, or in England, and shows the length to which a bank party would go in stifling the right of speech. In all great measures, before or since, and in all countries possessing free institutions, the majority has always allowed to the adversary the privilege of speaking to the measures which were to be put upon them: here for the first time it was denied; and the denial was marked at the time, and carried at once into parliamentary history to receive the reprobation due to it. This was the animadversion of Mr. Buchanan:

"The present bill to establish a fiscal corporation was hurried through the House of Representatives with the celerity, and, so far as the democracy was concerned, with the silence of despotism. No democratic member had an opportunity of raising his voice against it. Under new rules in existence there, the majority had predetermined that it should pass that body within two days from the commencement of the discussion. At first, indeed, the determination was that it should pass the first day; but this was felt to be too great an outrage; and the mover was graciously pleased to extend the time one day longer. Whilst the bill was in Committee of the Whole, it so happened that, in the struggle for the floor, no democratic member succeeded in obtaining it; and at the destined hour of four in the afternoon of the second day, the committee rose, and all further debate was arrested by the previous question. The voice of that great party in this country to which I am proud to belong, was, therefore, never heard through any of its representatives in the House against this odious measure. Not even one brief hour, the limit prescribed by the majority to each speaker, was granted to any democratic member."

The bill went to the committee which had been appointed, without the additional two members which Mr. King had suggested; and which suggestion, not being taken up by the majority, was no further pressed. Mr. Berrien, chairman of that committee, soon reported it back to the Senate – without alteration; as had been foreseen. He spoke two hours in its favor – concluding with the expression that the President would give it his approval – founding that opinion on the President's message at the commencement of the session – on his veto message of the first fiscal bill – on the report of the Secretary of the Treasury – and on this Secretary's subsequent plan for a bank framed with the view to avoid his constitutional objections. Mr. Clay declared his intention to vote for the bill, not that it went as far as he could wish, but that it would go a good distance – would furnish a sound national currency, and regulate exchanges. Mr. Archer, who had voted against the first bank, and who was constitutionally opposed to a national bank, made a speech chiefly to justify his vote in favor of the present bill. It was well known that no alteration would be permitted in the bill – that it had been arranged out of doors, and was to stand as agreed upon: but some senators determined to offer amendments, merely to expose the character of the measure, to make attacks upon the most vulnerable points; and to develope the spirit which conducted it. In this sense Mr. Benton acted in presenting several amendments, deemed proper in themselves, and which a foreknowledge of their fate would not prevent him from offering. The whole idea of the institution was, that it was to be a treasury bank; and hence the pertinacity with which "fiscal," synonymous with treasury, was retained in all the titles, and conformed to in all its provisions: and upon this idea the offered amendments turned.

"Mr. Benton said he had an amendment to offer, which the Senate would presently see was of great importance. It was, to strike out from the ninth line of the first section the word 'States.' It was in that provision assigning seventy thousand shares to individual companies, corporations, or States. This was a new kind of stockholders: a new description of co-partners with stockjobbers in a banking corporation. States had no right to be seduced into such company; he would therefore move to have them struck out: let the word "States" be taken out of that line. To comprehend the full force and bearing of this amendment it would be necessary to keep in view that the sixteenth section of this charter designates the Fiscal Corporation the Treasury of the United States. It expressly says that —

"'All public moneys in deposit in said corporation, or standing on its books to the credit of the Treasurer, shall be taken and deemed to be in the Treasury of the United States, and all payments made by the Treasurer shall be in checks drawn on said corporation.'

"Yes, sir! this Fisc is to be the Treasury of the United States; and the Treasury of the United States is to be converted into a corporation, and not only forced into partnership with individuals, companies, and corporations, but into joint stock co-partnership with the States. The general government is to appoint three directors, and the rest of the partners will have the appointment of the other six. The corporators will be two to one against the general government, and they will of course have the control of the Treasury of this Union in their hands. Now he was for sticking to the constitution, not only in spirit and meaning, but to the letter; and the constitution gives no authority to individuals, companies, corporations, and States, to take the public Treasury of the Union out of the hands of the general government. The general government alone, and acting independently of any such control, is required by the constitution to manage its own fiscal affairs. Here it is proposed to retain only one-third of the control of this Treasury in the hands of the general government – the other two-thirds may fall exclusively into the hands of the States, and thus the Treasury of the whole Union may be at the disposal of such States as can contrive to possess themselves of the two-thirds of the stock they are authorized to take. If it is the object to let those States have the funds of the Treasury to apply to their own use, the scheme is well contrived to attain that end. He, however, was determined not to let that plan be carried without letting the people know who were its supporters; he should, therefore, demand the yeas and nays on his amendment."

"Mr. Berrien explained that the objection raised against the sixteenth section was merely technical. The words did not convert the bank into the United States Treasury; they merely provided for a conformity with laws regulating the lodgment and withdrawal of Treasury funds. The question was then taken on the amendment, which was rejected as follows: Yeas – Messrs. Allen, Benton, Buchanan, Clay of Alabama, King, Linn, McRoberts, Mouton, Nicholson, Pierce, Sevier, Smith of Connecticut, Sturgeon, Tappan, Walker, Woodbury, Wright, and Young – 18. Nays – Messrs. Archer, Barrow, Bates, Berrien, Choate, Clay of Kentucky, Clayton, Dixon, Evans, Graham, Henderson, Huntington, Kerr, Mangum, Merrick, Miller, Morehead, Phelps, Porter, Prentiss, Preston, Rives, Simmons, Smith of Indiana, Southard, Tallmadge, White, and Woodbridge – 28."

Mr. Benton then moved to strike out "corporations" from the enumeration of persons and powers which should possess the faculty of becoming stockholders in this institution, with the special view of keeping out the Pennsylvania Bank of the United States, and whose name could not be presented openly for a charter, or re-charter:

"The late United States Bank had means yet to keep a cohort of lawyers, agents, cashiers, and directors, who would not lose sight of the hint, and who were panting to plunge their hands into Uncle Sam's pocket. There was nothing to prevent the corporators of the late United States Bank becoming the sole owners of these two-thirds of the stock in the new Fiscality. The sixteenth fundamental rule of the eleventh section is the point where we are to find the constitutionality of this Fiscality. The little pet banks of every State may be employed as agents. This is a tempting bait for every insolvent institution in want of Treasury funds to strain every nerve and resort to every possible scheme for possessing themselves of the control of the funds of the United States. This object was to defeat such machinations. On this amendment he would demand the yeas and nays. The question was then taken on the amendment, and decided in the negative as follows: Yeas – Messrs. Allen, Benton, Buchanan, Calhoun, Clay of Alabama, Fulton, King, Linn, McRoberts, Mouton, Nicholson, Pierce, Rives, Sevier, Smith of Connecticut, Sturgeon, Tappan, Walker, Woodbury, Wright, and Young – 21. Nays – Messrs. Archer, Barrow, Bates, Berrien, Choate, Clay of Kentucky, Clayton, Dixon, Evans, Graham, Henderson, Huntington, Kerr, Mangum, Merrick, Miller, Morehead, Phelps, Porter, Prentiss, Preston, Simmons, Smith of Indiana, Tallmadge, White, and Woodbridge – 26."

Mr. Rives objected to the exchange dealings which this fiscal corporation was to engage in, as being discounts when the exchange had some time to run. He referred to his former opinions, and corrected a misapprehension of Mr. Berrien. He was opposed to discounts in every form; while this bill authorizes discounts to any amount on bills of exchange. He offered no amendment, but wished to correct the misunderstanding of Mr. Berrien, who held that this bill, in this particular, was identical with the amendment offered to the first bill by Mr. Rives, and that it was in strict conformity with the President's message.

"Mr. Benton fully concurred with the senator from Virginia [Mr. Rives], that cashing bills of exchange was just as much a discounting operation as discounting promissory notes; it was, in fact, infinitely worse. It was the greatest absurdity in the world, to suppose that the flimsy humbug of calling the discounting of bills of exchange – gamblers' kites, and race-horse bills of exchange – a 'dealing in exchanges' within the meaning of the terms used in the President's veto message. As if the President could be bamboozled by such a shallow artifice. Only look at the operation under this bill. A needy adventurer goes to one of these agencies, and offers his promissory note with securities, in the old-fashioned way, but is told it cannot be discounted – the law is against it. The law, however, may be evaded if he put his note into another shape, making one of his sureties the drawer, and making the other, who lives beyond the State line, his drawee, in favor of himself, as endorser; and in that shape the kite will be cashed, deducting the interest and a per centage besides in the shape of exchange. Here is discount added to usury; and is not that worse than discounting promissory notes?"

The President had dwelt much upon "local discounts," confining the meaning of that phrase to loans obtained on promissory notes. He did not consider money obtained upon a bill of exchange as coming under that idea – nor did it when it was an exchange of money – when it was the giving of money in one place for money in another place. But that true idea of a bill of exchange was greatly departed from when the drawer of the bill had no money at the place drawn on, and drew upon time, and depended upon getting funds there in time; or taking up the bill with damages when it returned protested. Money obtained that way was a discount obtained, and on far worse terms for the borrower, and better for the bank, than on a fair promissory note: and the rapacious banks forced their loans, as much as possible into this channel. So that this fiscal bank was limited to do the very thing it wished to do, and which was so profitable to itself and so oppressive to the borrower. This, Mr. Tappan, of Ohio, showed in a concise speech.

"Mr. Tappan said, when senators on the other side declare that this bank bill is intended to withhold from the corporation created by it the power of making loans and discounts, he felt himself bound to believe that such was their honest construction of it. He was, however, surprised that any man, in the slightest degree acquainted with the banking business of the country, who had read this bill, should suppose that, under its provisions, the company incorporated by it would not have unlimited power to loan their paper and to discount the paper of their customers. The ninth fundamental article says, that 'the said corporation shall not, directly or indirectly, deal or trade in any thing except foreign bills of exchange, including bills or drafts drawn in one State or Territory and payable in another.' This bill, in this last clause, sanctioned a mode of discounting paper, and making loans common in the Western country. He spoke of a mode of doing business which he had full knowledge of, and he asked senators, therefore, to look at it. A man who wants a loan from a bank applies to the directors, and is told, we can lend you the money, but we do not take notes for our loans – you must give us a draft; but, says the applicant, I have no funds any where to draw upon; no matter, say the bankers, if your draft is not met, or expected to be met, because you have no funds, that need make no difference; you may pay it here, with the exchange, when the time it has to run is out; so the borrower signs a draft or bill of exchange on somebody in New York, Philadelphia, or Baltimore, and pays the discount for the time it has to run; when that time comes round, the borrower pays into the bank the amount of his draft, with two, four, six, or ten per cent., whatever the rate of exchange may be, and the affair is settled, and he gets a renewal for sixty days, by further paying the discount on the sum borrowed; and if it is an accommodation loan, it it renewed from time to time by paying the discount and exchange. Very few of the Western banks, he believed, discounted notes; they found it much more profitable to deal in exchange, as it is called; but this dealing in exchange enables the banks to discount as much paper, and to loan as much of their own notes, as the old-fashioned mode of discounting; it is a difference in form merely, with this advantage to the banks, that it enables them to get from their customers ten or twelve per cent. on their loans, instead of six, to which, in discounting notes, they are usually restricted. How then, he asked, could senators say that this bill did not give the power to make loans and discounts? He had shown them how, under this law, both loans and discounts will be made without limitation."

Mr. Benton then went on with offering his amendments, and offered one requiring all the stockholders in this corporation Fisc (which was to be the Treasury of the United States), to be citizens of the United States, for the obvious reason of preventing the national treasury from falling under the control of foreigners. M. Berrien considered the amendment unnecessary, as there was already a provision that none but citizens of the United States should take the original stock; and the only effect of the provision would be to lessen the value of the stock. Mr. Benton considered this provision as a fraudulent contrivance to have the appearance of excluding foreigners from being stockholders while not doing so. The prohibition upon them as original subscribers was nothing, when they were allowed to become stockholders by purchase. His amendment was intended to make the charter what it fraudulently pretended to be – a bank owned by American citizens. The word "original" would be a fraud unless the prohibition was extended to assignees. And he argued that the senator from Georgia (Mr. Berrien), had admitted the design of selling to foreigners by saying that the value of the stock would be diminished by excluding foreigners from its purchase. He considered the answer of the senator double, inconsistent, and contradictory. He first considered the amendment unnecessary, as the charter already confined original subscriptions to our own citizens; and then considered it would injure the price of the stock to be so limited. That was a contradiction. The fact was, he said, that this bill was to resurrect, by smuggling, the old United States Bank, which was a British concern; and that the effect would be to make the British the governors and masters of our treasury: and he asked the yeas and nays on his motion, which was granted, and they stood – 19 to 26, and were: Yeas – Messrs. Allen, Benton, Buchanan, Clay of Alabama, Cuthbert, Fulton, King, Linn, McRoberts, Mouton, Nicholson, Pierce, Sevier, Sturgeon, Tappan, Walker, Woodbury, Wright, and Young – 19. Nays – Messrs. Archer, Barrow, Bates, Berrien, Clay of Kentucky, Clayton, Dixon, Evans, Graham, Henderson, Huntington, Kerr, Mangum, Merrick, Miller, Morehead, Phelps, Porter, Prentiss, Preston, Rives, Simmons, Smith of Indiana, Tallmadge, White, and Woodbridge – 26. Considering this a vital question, and one on which no room should be left for the majority to escape the responsibility of putting the United States Treasury in the hands of foreigners – even alien enemies in time of war, as well as rival commercial competitors in time of peace – Mr. Benton moved the same prohibition in a different form. It was to affix it to the eleventh fundamental rule of the eleventh section of the bill, which clothes the corporation with power to make rules to govern the assignment of stock: his amendment was to limit these assignments to American citizens. That was different from his first proposed amendment, which included both original subscribers and assignees. The senator from Georgia objected to that amendment as unnecessary, because it included a class already prohibited as well as one that was not. Certainly it was unnecessary with respect to one class, but necessary with respect to the other – necessary in the estimation of all who were not willing to see the United States Treasury owned and managed by foreigners. He wished now to hear what the senator from Georgia could say against the proposed amendment in this form. Mr. Berrien answered: "He hoped the amendment would not prevail. The original subscribers would be citizens of the United States. To debar them from transferring their stock, would be to lessen the value of the stock, which they rendered valuable by becoming the purchasers of it." Mr. Benton rejoined, that his amendment did not propose to prevent the original subscribers from selling their stock, or any assignee from selling; the only design of the amendment was to limit all these sales to American citizens; and that would be its only effect if adopted. And as to the second objection, a second time given, that it would injure the value of the stock, he said it was a strange argument, that the paltry difference of value in shares to the stockholders should outweigh the danger of confiding the Treasury of the United States to foreigners – subjects of foreign potentates. He asked the yeas, which were granted – and stood – 21 to 27: the same as before, with the addition of some senators who had come in. These several proposed amendments, and the manner in which they were rejected, completed the exposure of the design to resuscitate the defunct Bank of the United States, just as it had been, with its foreign stockholders, and extraordinary privileges. It was to be the old bank revived, disguised, and smuggled in. It was to have the same capital as the old one – thirty-five millions: for while it said the capital was to be twenty-one millions, there was a clause enabling Congress to add on fourteen millions – which it would do as soon as the bill passed. Like the old bank, it was to have the United States for a partner, owning seven millions of the stock. The stock was all to go to the old Bank of the United States; for the subscriptions were to be made with commissioners appointed by the Secretary of the Treasury – who, it was known, would appoint the friends of the old bank; so that the whole subscription would be in her hands; and a charter for her fraudulently and deceptiously obtained. The title of the bill was fraudulent, being limited to the management of the "public" moneys, while the body of it conferred all the privileges known to the three distinct kinds of banks: – 1. Circulation. 2. Exchange. 3. Discount and deposit – the discount being in the most oppressive and usurious form on inland and mere neighborhood bills of exchange, declared by the charter to be foreign bills for the mere purpose of covering these local loans.

"Mr. Walker moved an amendment, requiring that the bills in which the Bank should deal should be drawn at short dates, and on goods already actually shipped. It was negatived by yeas and nays, as follows: – Yeas – Messrs. Allen, Benton, Buchanan, Calhoun, Clay of Alabama, Fulton, King, Linn, McRoberts, Mouton, Nicholson, Pierce, Rives, Sevier, Smith of Connecticut, Sturgeon, Tappan, Walker, Woodbury, Wright, and Young – 21. Nays – Messrs. Archer, Barrow, Bates, Berrien, Choate, Clay of Kentucky, Clayton, Dixon, Evans, Graham, Henderson, Huntington, Kerr, Mangum, Merrick, Miller, Morehead, Phelps, Porter, Prentiss, Preston, Simmons, Smith of Indiana, Southard, Tallmadge, White, and Woodbridge – 27. Mr. Allen moved an amendment to make the directors, in case of suspension, personally liable for the debts of the bank. This was negatived as follows: Yeas – Messrs. Allen, Benton, Buchanan, Clay of Alabama, Cuthbert, Fulton, King, Linn, McRoberts, Mouton, Nicholson, Pierce, Sevier, Smith of Connecticut, Sturgeon, Tappan, Walker, Woodbury, Wright, and Young – 20. Nays – Messrs. Archer, Barrow, Bates, Berrien, Choate, Clay of Kentucky, Clayton, Dixon, Evans, Graham, Henderson, Huntington, Kerr, Mangum, Merrick, Miller, Morehead, Phelps, Porter, Prentiss, Preston, Rives, Simmons, Smith of Indiana, Southard, Tallmadge, White, and Woodbridge – 28."

The character of the bill having been shown by the amendments offered and rejected, there was no need to offer any more, and the democratic senators ceased opposition, that the vote might be taken on the bill: it was so; and the bill was passed by the standing majority. Concurred in by the Senate without alteration, it was returned to the House, and thence referred to the President for his approval, or disapproval. It was disapproved, and returned to the House, with a message stating his objections to it; where it gave rise to some violent speaking, more directed to the personal conduct of the President than to the objections to the bill stated in his message. In this debate Mr. Botts, of Virginia, was the chief speaker on one side, inculpating the President: Mr. Gilmer of Virginia, and Mr. Proffit of Indiana, on the other were the chief respondents in his favor. The vote being taken there appeared 103 for the bill, 80 against it – which not being a majority of two-thirds, the bill was rejected: and so ends the public and ostensible history of the second attempt to establish a national bank at this brief session under the guise, and disguise, of a misnomer: and a long one at that.