Thirty Years' View (Vol. I of 2)

"I hold myself justified, Mr. President, upon the reasons given, for proceeding in my present application; but, as example is sometimes more authoritative than reason, I will take the liberty to produce one, which is as high in point of authority as it is appropriate in point of application, and which happens to fit the case before the Senate as completely as if it had been made for it. I speak of what has lately been done in the Parliament of Great Britain. It so happens, that the charter of the Bank of England is to expire, upon its own limitation, nearly about the same time with the charter of the Bank of the United States, namely, in the year 1833; and as far back as 1824, no less than nine years before its expiration, the question of its renewal was debated, and that with great freedom, in the British House of Commons. I will read some extracts from that debate, as the fairest way of presenting the example to the Senate, and the most effectual mode of securing to myself the advantage of the sentiments expressed by British statesman.

The Extracts

"'Sir Henry Parnell. – The House should no longer delay to turn its attention to the expediency of renewing the charter of the Bank of England. Heretofore, it had been the regular custom to renew the charter several years before the existing charter had expired. The last renewal was made when the existing charter had eleven years to run: the present charter had nine years only to continue, and he felt very anxious to prevent the making of any agreement between the government and the bank for a renewal, without a full examination of the policy of again conferring upon the Bank of England any exclusive privilege. The practice had been for government to make a secret arrangement with the bank; to submit it immediately to the proprietors of the bank for their approbation, and to call upon the House the next day to confirm it, without affording any opportunity of fair deliberation. So much information had been obtained upon the banking trade, and upon the nature of currency in the last fifteen years, that it was particularly necessary to enter upon a full investigation of the policy of renewing the bank charter before any negotiation should be entered upon between the government and the bank; and he trusted the government would not commence any such negotiation until the sense of Parliament had been taken on this important subject.'

"'Mr. Hume said it was of very great importance that his majesty's ministers should take immediate steps to free themselves from the trammels in which they had long been held by the bank. As the interest of money was now nearly on a level with what it was when the bank lent a large sum to government, he hoped the Chancellor of the Exchequer would not listen to any application for a renewal of the bank charter, but would pay off every shilling that had been borrowed from the bank. * * * * * Let the country gentlemen recollect that the bank was now acting as pawn-broker on a large scale, and lending money on estates, a system entirely contrary to the original intention of that institution. * * * * * * He hoped, before the expiration of the charter, that a regular inquiry would be made into the whole subject.'

"'Mr. Edward Ellice. It (the Bank of England) is a great monopolizing body, enjoying privileges which belonged to no other corporation, and no other class of his majesty's subjects. * * * * * * * He hoped that the exclusive charter would never again be granted; and that the conduct of the bank during the last ten or twelve years would make government very cautious how they entertained any such propositions. The right honorable Chancellor of the Exchequer [Mr. Robinson] had protested against the idea of straining any point to the prejudice of the bank; he thought, however, that the bank had very little to complain of, when their stock, after all their past profits, was at 238.'

"'The Chancellor of the Exchequer deprecated the discussion, as leading to no practical result.'

"'Mr. Alexander Baring objected to it as premature and unnecessary.'

"'Sir William Pulteney (in another debate). The prejudices in favor of the present bank have proceeded from the long habit of considering it as a sort of pillar which nothing can shake. * * * * * * * The bank has been supported, and is still supported, by the fear and terror which, by means of its monopoly, it has had the power to inspire. It is well known, that there is hardly an extensive trader, a manufacturer, or a banker, either in London, or at a distance from it, to whom the bank could not do a serious injury, and could often bring on even insolvency. * * * * * I consider the power given by the monopoly to be of the nature of all other despotic power, which corrupts the despot as much as it corrupts the slave. * * * * * * It is in the nature of man, that a monopoly must necessarily be ill-conducted. * * * * * * * Whatever language the [private] bankers may feel themselves obliged to hold, yet no one can believe that they have any satisfaction in being, and continuing, under a dominion which has proved so grievous and so disastrous. * * * * * * I can never believe that the merchants and bankers of this country will prove unwilling to emancipate themselves, if they can do it without risking the resentment of the bank. No man in France was heard to complain, openly, of the Bastile while it existed. The merchants and bankers of this country have the blood of Englishmen, and will be happy to relieve themselves from a situation of perpetual terror, if they could do it consistently with a due regard to their own interest.'

"Here is authority added to reason – the force of a great example added to the weight of unanswerable reasons, in favor of early discussion; so that, I trust, I have effectually put aside that old and convenient objection to the 'time,' that most flexible and accommodating objection, which applies to all seasons, and all subjects, and is just as available for cutting off a late debate, because it is too late, as it is for stifling an early one, because it is too early.

"But, it is said that the debate will injure the stockholders; that it depreciates the value of their property, and that it is wrong to sport with the vested rights of individuals. This complaint, supposing it to come from the stockholders themselves, is both absurd and ungrateful. It is absurd, because the stockholders, at least so many of them as are not foreigners, must have known when they accepted a charter of limited duration, that the approach of its expiration would renew the debate upon the propriety of its existence; that every citizen had a right, and every public man was under an obligation, to declare his sentiments freely; that there was nothing in the charter, numerous as its peculiar privileges were, to exempt the bank from that freedom of speech and writing, which extends to all our public affairs; and that the charter was not to be renewed here, as the Bank of England charter had formerly been renewed, by a private arrangement among its friends, suddenly produced in Congress, and galloped through without the knowledge of the country. The American part of the stockholders (for I would not reply to the complaints of the foreigners) must have known all this; and known it when they accepted the charter. They adapted it, subject to this known consequence; and, therefore, the complaint about injuring their property is absurd. That it is ungrateful, must be apparent to all who will reflect upon the great privileges which these stockholders will have enjoyed for twenty years, and the large profits they have already derived from their charter. They have been dividing seven per cent. per annum, unless when prevented by their own mismanagement; and have laid up a real estate of three millions of dollars for future division; and the money which has done these handsome things, instead of being diminished or impaired in the process, is still worth largely upwards of one hundred cents to the dollar: say, one hundred and twenty-five cents. For the peculiar privileges which enabled them to make these profits, the stockholders ought to be grateful: but, like all persons who have been highly favored with undue benefits, they mistake a privilege for a right – a favor for a duty – and resent, as an attack upon their property, a refusal to prolong their undue advantages. There is no ground for these complaints, but for thanks and benedictions rather, for permitting the bank to live out its numbered days! That institution has forfeited its charter. It may be shut up at any hour. It lives from day to day by the indulgence of those whom it daily attacks; and, if any one is ignorant of this fact, let him look at the case of the Bank of the United States against Owens and others, decided in the Supreme Court, and reported in the 2d Peters.

"[Here Mr. B. read a part of this case, showing that it was a case of usury at the rate of forty-six per cent. and that Mr. Sergeant, counsel for the bank, resisted the decision of the Supreme Court, upon the ground that it would expose the charter of the bank to forfeiture; and that the decision was, nevertheless, given upon that ground; so that the bank, being convicted of taking usury, in violation of its charter, was liable to be deprived of its charter, at any time that a scire facias should issue against it.]

"Mr. B. resumed. Before I proceed to the consideration of the resolution, I wish to be indulged in adverting to a rule or principle of parliamentary practice, which it is only necessary to read now in order to avoid the possibility of any necessity for recurring to it hereafter. It is the rule which forbids any member to be present – which, in fact, requires him to withdraw – during the discussion of any question in which his private interest may be concerned; and authorizes the expurgation from the Journal of any vote which may have been given under the predicament of an interested motive. I demand that the Secretary of the Senate may read the rule to which I allude.

"[The Secretary read the following rule:]

"'Where the private interests of a member are concerned in a bill or question, he is to withdraw. And where such an interest has appeared, his voice has been disallowed, even after a division. In a case so contrary, not only to the laws of decency, but to the fundamental principles of the social compact, which denies to any man to be a judge in his own cause, it is for the honor of the House that this rule, of immemorial observance, should be strictly adhered to.'

"First: Mr. President, I object to the renewal of the charter of the Bank of the United States, because I look upon the bank as an institution too great and powerful to be tolerated in a government of free and equal laws. Its power is that of the purse; a power more potent than that of the sword; and this power it possesses to a degree and extent that will enable this bank to draw to itself too much of the political power of this Union; and too much of the individual property of the citizens of these States. The money power of the bank is both direct and indirect.

"[The Vice-President here intimated to Mr. Benton that he was out of order, and had not a right to go into the merits of the bank upon the motion which he had made. Mr. Benton begged pardon of the Vice-President, and respectfully insisted that he was in order, and had a right to proceed. He said he was proceeding upon the parliamentary rule of asking leave to bring in a joint resolution, and, in doing which, he had a right to state his reasons, which reasons constituted his speech; that the motion was debatable, and the whole Senate might answer him. The Vice-President then directed Mr. Benton to proceed.]

"Mr. B. resumed. The direct power of the bank is now prodigious, and in the event of the renewal of the charter, must speedily become boundless and uncontrollable. The bank is now authorized to own effects, lands inclusive, to the amount of fifty-five millions of dollars, and to issue notes to the amount of thirty-five millions more. This makes ninety millions; and, in addition to this vast sum, there is an opening for an unlimited increase: for there is a dispensation in the charter to issue as many more notes as Congress, by law, may permit. This opens the door to boundless emissions; for what can be more unbounded than the will and pleasure of successive Congresses? The indirect power of the bank cannot be stated in figures; but it can be shown to be immense. In the first place, it has the keeping of the public moneys, now amounting to twenty-six millions per annum (the Post Office Department included), and the gratuitous use of the undrawn balances, large enough to constitute, in themselves, the capital of a great State bank. In the next place, its promissory notes are receivable, by law, in purchase of all property owned by the United States, and in payment of all debts due them; and this may increase its power to the amount of the annual revenue, by creating a demand for its notes to that amount. In the third place, it wears the name of the United States, and has the federal government for a partner; and this name, and this partnership, identifies the credit of the bank with the credit of the Union. In the fourth place, it is armed with authority to disparage and discredit the notes of other banks, by excluding them from all payments to the United States; and this, added to all its other powers, direct and indirect, makes this institution the uncontrollable monarch of the moneyed system of the Union. To whom is all this power granted? To a company of private individuals, many of them foreigners, and the mass of them residing in a remote and narrow corner of the Union, unconnected by any sympathy with the fertile regions of the Great Valley, in which the natural power of this Union – the power of numbers – will be found to reside long before the renewed term of a second charter would expire. By whom is all this power to be exercised? By a directory of seven (it may be), governed by a majority, of four (it may be); and none of these elected by the people, or responsible to them. Where is it to be exercised? At a single city, distant a thousand miles from some of the States, receiving the produce of none of them (except one); no interest in the welfare of any of them (except one); no commerce with the people; with branches in every State; and every branch subject to the secret and absolute orders of the supreme central head: thus constituting a system of centralism, hostile to the federative principle of our Union, encroaching upon the wealth and power of the States, and organized upon a principle to give the highest effect to the greatest power. This mass of power, thus concentrated, thus ramified, and thus directed, must necessarily become, under a prolonged existence, the absolute monopolist of American money, the sole manufacturer of paper currency, and the sole authority (for authority it will be) to which the federal government, the State governments, the great cities, corporate bodies, merchants, traders, and every private citizen, must, of necessity apply, for every loan which their exigencies may demand. 'The rich ruleth the poor, and the borrower is the servant of the lender.' Such are the words of Holy Writ; and if the authority of the Bible admitted of corroboration, the history of the world is at hand to give it. But I will not cite the history of the world, but one eminent example only, and that of a nature so high and commanding, as to include all others; and so near and recent, as to be directly applicable to our own situation. I speak of what happened in Great Britain, in the year 1795, when the Bank of England, by a brief and unceremonious letter to Mr. Pitt, such as a miser would write to a prodigal in a pinch, gave the proof of what a great moneyed power could do, and would do, to promote its own interest, in a crisis of national alarm and difficulty. I will read the letter. It is exceedingly short; for after the compliments are omitted, there are but three lines of it. It is, in fact, about as long as a sentence of execution, leaving out the prayer of the judge. It runs thus:

"'It is the wish of the Court of Directors that the Chancellor of the Exchequer would settle his arrangements of finances for the present year, in such manner as not to depend upon any further assistance from them, beyond what is already agreed for.'

"Such were the words of this memorable note, sufficiently explicit and intelligible; but to appreciate it fully, we must know what was the condition of Great Britain at that time? Remember it was the year 1795, and the beginning of that year, than which a more portentous one never opened upon the British empire. The war with the French republic had been raging for two years; Spain had just declared war against Great Britain; Ireland was bursting into rebellion; the fleet in the Nore was in open mutiny; and a cry for the reform of abuses, and the reduction of taxes, resounded through the land. It was a season of alarm and consternation, and of imminent actual danger to Great Britain; and this was the moment which the Bank selected to notify the minister that no more loans were to be expected! What was the effect of this notification? It was to paralyze the government, and to subdue the minister to the purposes of the bank. From that day forth Mr. Pitt became the minister of the bank; and, before two years were out, he had succeeded in bringing all the departments of government, King, Lords, and Commons, and the Privy Council, to his own slavish condition. He stopped the specie payments of the bank, and made its notes the lawful currency of the land. In 1797 he obtained an order in council for this purpose; in the same year an act of parliament to confirm the order for a month, and afterwards a series of acts to continue it for twenty years. This was the reign of the bank. For twenty years it was a dominant power in England; and, during that disastrous period, the public debt was increased about £400,000,000 sterling, equal nearly to two thousand millions of dollars, and that by paper loans from a bank which, according to its own declarations, had not a shilling to lend at the commencement of the period! I omit the rest. I say nothing of the general subjugation of the country banks, the rise in the price of food, the decline in wages, the increase of crimes and taxes, the multiplication of lords and beggars, and the frightful demoralization of society. I omit all this. I only seize the prominent figure in the picture, that of a government arrested in the midst of war and danger by the veto of a moneyed corporation; and only permitted to go on upon condition of assuming the odium of stopping specie payments, and sustaining the promissory notes of an insolvent bank, as the lawful currency of the land. This single feature suffices to fix the character of the times; for when the government becomes the 'servant of the lender,' the people themselves become its slaves. Cannot the Bank of the United States, if re-chartered, act in the same way? It certainly can, and just as certainly will, when time and opportunity shall serve, and interest may prompt. It is to no purpose that gentlemen may come forward, and vaunt the character of the United States Bank, and proclaim it too just and merciful to oppress the state. I must be permitted to repudiate both the pledge and the praise. The security is insufficient, and the encomium belongs to Constantinople. There were enough such in the British Parliament the year before, nay, the day before the bank stopped; yet their pledges and praises neither prevented the stoppage, nor made good the damage that ensued. There were gentlemen in our Congress to pledge themselves in 1810 for the then expiring bank, of which the one now existing is a second and deteriorated edition; and if their securityship had been accepted, and the old bank re-chartered, we should have seen this government greeted with a note, about August, 1814 – about the time the British were burning this capitol – of the same tenor with the one received by the younger Pitt in the year 1795; for, it is incontestable, that that bank was owned by men who would have glorified in arresting the government, and the war itself, for want of money. Happily, the wisdom and patriotism of Jefferson, under the providence of God, prevented that infamy and ruin, by preventing the renewal of the old bank charter.

"Secondly. I object to the continuance of this bank, because its tendencies are dangerous and pernicious to the government and the people.

"What are the tendencies of a great moneyed power, connected with the government, and controlling its fiscal operations? Are they not dangerous to every interest, public and private – political as well as pecuniary? I say they are; and briefly enumerate the heads of each mischief.

"1. Such a bank tends to subjugate the government, as I have already shown in the history of what happened to the British minister in the year 1795.

"2. It tends to collusions between the government and the bank in the terms of the loans, as has been fully experienced in England in those frauds upon the people, and insults upon the understating, called three per cent. loans, in which the government, for about £50 borrowed, became liable to pay £100.

"3. It tends to create public debt, by facilitating public loans, and substituting unlimited supplies of paper, for limited supplies of coin. The British debt is born of the Bank of England. That bank was chartered in 1694, and was nothing more nor less in the beginning, than an act of Parliament for the incorporation of a company of subscribers to a government loan. The loan was £1,200,000; the interest £80,000; and the expenses of management £4,000. And this is the birth and origin, the germ and nucleus of that debt, which is now £900,000,000 (the unfunded items included), which bears an interest of £30,000,000, and costs £260,000 for annual management.

"4. It tends to beget and prolong unnecessary wars, by furnishing the means of carrying them on without recurrence to the people. England is the ready example for this calamity. Her wars for the restoration of the Capet Bourbons were kept up by loans and subsidies created out of bank paper. The people of England had no interest in these wars, which cost them about £600,000,000 of debt in twenty-five years, in addition to the supplies raised within the year. The kings she put back upon the French throne were not able to sit on it. Twice she put them on; twice they tumbled off in the mud; and all that now remains of so much sacrifice of life and money is, the debt, which is eternal, the taxes, which are intolerable, the pensions and titles of some warriors, and the keeping of the Capet Bourbons, who are returned upon their hands.

"5. It tends to aggravate the inequality of fortunes; to make the rich richer, and the poor poorer; to multiply nabobs and paupers; and to deepen and widen the gulf which separates Dives from Lazarus. A great moneyed power is favorable to great capitalists; for it is the principle of money to favor money. It is unfavorable to small capitalists; for it is the principle of money to eschew the needy and unfortunate. It is injurious to the laboring classes; because they receive no favors, and have the price of the property they wish to acquire raised to the paper maximum, while wages remain at the silver minimum.

"6. It tends to make and to break fortunes, by the flux and reflux of paper. Profuse issues, and sudden contractions, perform this operation, which can be repeated, like planetary and pestilential visitations, in every cycle of so many years; at every periodical return, transferring millions from the actual possessors of property to the Neptunes who preside over the flux and reflux of paper. The last operation of this kind performed by the Bank of England, about five years ago, was described by Mr. Alexander Baring, in the House of Commons, in terms which are entitled to the knowledge and remembrance of American citizens. I will read his description, which is brief, but impressive. After describing the profuse issues of 1823-24, he painted the reaction in the following terms:

"'They, therefore, all at once, gave a sudden jerk to the horse on whose neck they had before suffered the reins to hang loose. They contracted their issues to a considerable extent. The change was at once felt throughout the country. A few days before that, no one knew what to do with his money; now, no one knew where to get it. * * * * The London bankers found it necessary to follow the same course towards their country correspondents, and these again towards their customers, and each individual towards his debtor. The consequence was obvious in the late panic. Every one, desirous to obtain what was due to him, ran to his banker, or to any other on whom he had a claim; and even those who had no immediate use for their money, took it back, and let it lie unemployed in their pockets, thinking it unsafe in others' hands. The effect of this alarm was, that houses which were weak went immediately. Then went second rate houses; and, lastly, houses which were solvent went, because their securities were unavailable. The daily calls to which each individual was subject put it out of his power to assist his neighbor. Men were known to seek for assistance, and that, too, without finding it, who, on examination of their affairs, were proved to be worth 200,000 pounds, – men, too, who held themselves so secure, that, if asked six months before whether they could contemplate such an event, they would have said it would be impossible, unless the sky should fall, or some other event equally improbable should occur.'