Thirty Years' View (Vol. I of 2)

"This is what was done in England five years ago, it is what may be done here in every five years to come, if the bank charter is renewed. Sole dispenser of money, it cannot omit the oldest and most obvious means of amassing wealth by the flux and reflux of paper. The game will be in its own hands, and the only answer to be given is that to which I have alluded: 'The Sultan is too just and merciful to abuse his power.'

"Thirdly. I object to the renewal of the charter, on account of the exclusive privileges, and anti-republican monopoly, which it gives to the stockholders. It gives, and that by an act of Congress, to a company of individuals, the exclusive legal privileges:

"1. To carry on the trade of banking upon the revenue and credit, and in the name, of the United States of America.

"2. To pay the revenues of the Union in their own promissory notes.

"3. To hold the moneys of the United States in deposit, without making compensation for the undrawn balances.

"4. To discredit and disparage the notes of other banks, by excluding them from the collection of the federal revenue.

"5. To hold real estate, receive rents, and retain a body of tenantry.

"6. To deal in pawns, merchandise, and bills of exchange.

"7. To establish branches in the States without their consent.

"8. To be exempt from liability on the failure of the bank.

"9. To have the United States for a partner.

"10. To have foreigners for partners.

"11. To be exempt from the regular administration of justice for the violations of their charter.

"12. To have all these exclusive privileges secured to them as a monopoly, in a pledge of the public faith not to grant the like privileges to any other company.

"These are the privileges, and this the monopoly of the bank. Now, let us examine them, and ascertain their effect and bearing. Let us contemplate the magnitude of the power which they create; and ascertain the compatibility of this power with the safety of this republican government, and the rights and interests of its free and equal constituents.

"1. The name, the credit, and the revenues of the United States are given up to the use of this company, and constitute in themselves an immense capital to bank upon. The name of the United States, like that of the King, is a tower of strength; and this strong tower is now an outwork to defend the citadel of a moneyed corporation. The credit of the Union is incalculable; and, of this credit, as going with the name, and being in partnership with the United States, the same corporation now has possession. The revenues of the Union are twenty-six millions of dollars, including the post-office; and all this is so much capital in the hands of the bank, because the revenue is received by it, and is payable in its promissory notes.

"2. To pay the revenues of the United States in their own notes, until Congress, by law, shall otherwise direct. This is a part of the charter, incredible and extraordinary as it may appear. The promissory notes of the bank are to be received in payment of every thing the United States may have to sell – in discharge of every debt due to her, until Congress, by law, shall otherwise direct; so that, if this bank, like its prototype in England, should stop payment, its promissory notes would still be receivable at every custom-house, land-office, post-office, and by every collector of public moneys, throughout the Union, until Congress shall meet, pass a repealing law, and promulgate the repeal. Other banks depend upon their credit for the receivability of their notes; but this favored institution has law on its side, and a chartered right to compel the reception of its paper by the federal government. The immediate consequence of this extraordinary privilege is, that the United States becomes virtually bound to stand security for the bank, as much so as if she had signed a bond to that effect; and must stand forward to sustain the institution in all emergencies, in order to save her own revenue. This is what has already happened, some ten years ago, in the early progress of the bank, and when the immense aid given it by the federal government enabled it to survive the crisis of its own overwhelming mismanagement.

"3. To hold the moneys of the United States in deposit, without making compensation for the use of the undrawn balances. – This is a right which I deny; but, as the bank claims it, and, what is more material, enjoys it; and as the people of the United States have suffered to a vast extent in consequence of this claim and enjoyment, I shall not hesitate to set it down to the account of the bank. Let us then examine the value of this privilege, and its effect upon the interest of the community; and, in the first place, let us have a full and accurate view of the amount of these undrawn balances, from the establishment of the bank to the present day. Here it is! Look! Read!

"See, Mr. President, what masses of money, and always on hand. The paper is covered all over with millions: and yet, for all these vast sums, no interest is allowed; no compensation is made to the United States. The Bank of England, for the undrawn balances of the public money, has made an equitable compensation to the British government; namely, a permanent loan of half a million sterling, and a temporary loan of three millions for twenty years, without interest. Yet, when I moved for a like compensation to the United States, the proposition was utterly rejected by the Finance Committee, and treated as an attempt to violate the charter of the bank. At the same time it is incontestable, that the United States have been borrowing these undrawn balances from the bank, and paying an interest upon their own money. I think we can identify one of these loans. Let us try. In May, 1824, Congress authorized a loan of five millions of dollars to pay the awards under the treaty with Spain, commonly called the Florida treaty. The bank of the United States took that loan, and paid the money for the United States in January and March, 1825. In looking over the statement of undrawn balances, it will be seen that they amounted to near four millions at the end of the first, and six millions at the end of the second quarter of that year. The inference is irresistible, and I leave every senator to make it; only adding, that we have paid $1,469,375 in interest upon that loan, either to the bank or its transferrees. This is a strong case; but I have a stronger one. It is known to every body, that the United States subscribed seven millions to the capital stock of the bank, for which she gave her stock note, bearing an interest of five per cent. per annum. I have a statement from the Register of the Treasury, from which it appears that, up to the 30th day of June last, the United States had paid four millions seven hundred and twenty-five thousand dollars in interest upon that note; when it is proved by the statement of balances exhibited, that the United States, for the whole period in which that interest was accruing, had the half, or the whole, and once the double, of these seven millions in the hands of the bank. This is a stronger case than that of the five million loan, but it is not the strongest. The strongest case is this: in the year 1817, when the bank went into operation, the United States owed, among other debts, a sum of about fourteen millions and three-quarters, bearing an interest of three per cent. In the same year, the commissioners of the sinking fund were authorized by an act of Congress to purchase that stock at sixty-five per cent., which was then its market price. Under this authority, the amount of about one million and a half was purchased; the remainder, amounting to about thirteen millions and a quarter, has continued unpurchased to this day; and, after costing the United States about six millions in interest since 1817, the stock has risen about four millions in value; that is to say, from sixty-five to nearly ninety-five. Now, here is a clear loss of ten millions of dollars to the United States. In 1817 she could have paid off thirteen millions and a quarter of debt, with eight millions and a half of dollars: now, after paying six millions of interest, it would require twelve millions and a half to pay off the same debt. By referring to the statement of undrawn balances, it will be seen that the United States had, during the whole year 1817, an average sum of above ten millions of dollars in the hands of the bank, being a million and a half more than enough to have bought in the whole of the three per cent. stock. The question, therefore, naturally comes up, why was it not applied to the redemption of these thirteen millions and a quarter, according to the authority contained in the act of Congress of that year? Certainly the bank needed the money; for it was just getting into operation, and was as hard run to escape bankruptcy about that time, as any bank that ever was saved from the brink of destruction. This is the largest injury which we have sustained, on account of accommodating the bank with the gratuitous use of these vast deposits. But, to show myself impartial, I will now state the smallest case of injury that has come within my knowledge: it is the case of the bonus of fifteen hundred thousand dollars which the bank was to pay to the United States, in three equal instalments, for the purchase of its charter. Nominally, this bonus has been paid, but out of what moneys? Certainly out of our own; for the statement shows our money was there, and further, shows that it is still there; for, on the 30th day of June last, which is the latest return, there was still $2,550,664 in the hands of the bank, which is above $750,000 more than the amount of the bonus.

"One word more upon the subject of these balances. It is now two years since I made an effort to repeal the 4th section of the Sinking Fund act of 1817; a section which was intended to limit the amount of surplus money which might be kept in the treasury, to two millions of dollars; but, by the power of construction, was made to authorize the keeping of two millions in addition to the surplus. I wished to repeal this section, which had thus been construed into the reverse of its intention, and to revive the first section of the Sinking Fund act of 1790, which directed the whole of the surplus on hand to be applied, at the end of each year, to the payment of the public debt. My argument was this: that there was no necessity to keep any surplus; that the revenue, coming in as fast as it went out, was like a perennial fountain, which you might drain to the last drop, and not exhaust; for the place of the last drop would be supplied the instant it was out. And I supported this reasoning by a reference to the annual treasury reports, which always exhibit a surplus of four or five millions; and which were equally in the treasury the whole year round, as on the last day of every year. This was the argument, which in fact availed nothing; but now I have mathematical proof of the truth of my position. Look at this statement of balances; look for the year 1819, and you will find but three hundred thousand dollars on hand for that year; look still lower for 1821, and you will find this balance but one hundred and eighty-two thousand dollars. And what was the consequence? Did the Government stop? Did the wheels of the State chariot cease to turn round in those years for want of treasury oil? Not at all. Every thing went on as well as before; the operations of the treasury were as perfect and regular in those two years of insignificant balances, as in 1817 and 1818, when five and ten millions were on hand. This is proof; this is demonstration; it is the indubitable evidence of the senses which concludes argument, and dispels uncertainty; and, as my proposal for the repeal of the 4th Section of the Sinking Fund act of 1817 was enacted into a law at the last session of Congress, upon the recommendation of the Secretary of the Treasury, a vigilant and exemplary officer, I trust that the repeal will be acted upon, and that the bank platter will be wiped as clean of federal money in 1831, as it was in 1821. Such clean-taking from that dish will allow two or three millions more to go to the reduction of the public debt; and there can be no danger in taking the last dollar, as reason and experience both prove. But, to quiet every apprehension on this point, to silence the last suggestion of a possibility of any temporary deficit, I recur to a provision contained in two different clauses in the bank charter, copied from an amendment in the charter of the Bank of England, and expressly made, at the instance of the ministry, to meet the contingency of a temporary deficiency in the annual revenue. The English provision is this: that the government may borrow of the bank half a million sterling, at any time, without a special act of parliament to authorize it. The provision in our charter is the same, with the single substitution of dollars for pounds. It is, in words and intention, a standing authority to borrow that limited sum, for the obvious purpose of preventing a constant keeping of a sum of money in hand as a reserve, to meet contingencies which hardly ever occur. This contingent authority to effect a small loan has often been used in England – in the United States, never; possibly, because there has been no occasion for it; probably, because the clause was copied mechanically from the English charter, and without the perception of its practical bearing. Be this as it may, it is certainly a wise and prudent provision, such as all governments should, at all times be clothed with.

"If any senator thinks that I have exaggerated the injury suffered by the United States, on account of the uncompensated masses of public money in the hands of the bank, I am now going to convince him that he is wrong. I am going to prove to him that I have understated the case; that I have purposely kept back a large part of it; and that justice requires a further development. The fact is, that there are two different deposits of public money in the bank; one in the name of the Treasurer of the United States, the other in the name of disbursing officers. The annual average of the former has been about three and a half millions of dollars, and of this I have said not a word. But the essential character of both deposits is the same; they are both the property of the United States; both permanent; both available as so much capital to the bank; and both uncompensated.

"I have not ascertained the average of these deposits since 1817, but presume it may equal the amount of that bonus of one million five hundred thousand dollars for which we sold the charter, and which the Finance Committee of the Senate compliments the bank for paying in three, instead of seventeen, annual instalments; and shows how much interest they lost by doing so. Certainly, this was a disadvantage to the bank.

"Mr. President, it does seem to me that there is something ominous to the bank in this contest for compensation on the undrawn balances. It is the very way in which the struggle began in the British Parliament which has ended in the overthrow of the Bank of England. It is the way in which the struggle is beginning here. My resolutions of two and three years ago are the causes of the speech which you now hear; and, as I have reason to believe, some others more worthy of your hearing, which will come at the proper time. The question of compensation for balances is now mixing itself up here, as in England, with the question of renewing the charter; and the two, acting together, will fall with combined weight upon the public mind, and certainly eventuate here as they did there.

"4. To discredit and disparage the notes of all other banks, by excluding them from the collection of the federal revenue. This results from the collection – no, not the collection, but the receipt of the revenue having been communicated to the bank, and along with it the virtual execution of the joint resolution of 1816, to regulate the collection of the federal revenue. The execution of that resolution was intended to be vested in the Secretary of the Treasury – a disinterested arbiter between rival banks; but it may be considered as virtually devolved upon the Bank of the United States, and powerfully increases the capacity of that institution to destroy, or subjugate, all other banks. This power to disparage the notes of all other banks, is a power to injure them; and, added to all the other privileges of the Bank of the United States, is a power to destroy them! If any one doubts this assertion, let him read the answers of the president of the bank to the questions put to him by the chairman of the Finance Committee. These answers are appended to the committee's report of the last session in favor of the bank, and expressly declare the capacity of the federal bank to destroy the State banks. The worthy chairman [Mr. Smith, of Md.] puts this question; 'Has the bank at any time oppressed any of the State banks.' The president [Mr. Biddle] answers, as the whole world would answer to a question of oppression, that it never had; and this response was as much as the interrogatory required. But it did not content the president of the bank; he chose to go further, and to do honor to the institution over which he presided, by showing that it was as just and generous as it was rich and powerful. He, therefore, adds the following words, for which, as a seeker after evidence, to show the alarming and dangerous character of the bank, I return him my unfeigned thanks: 'There are very few banks which might not have been destroyed by an exertion of the power of the bank.'

"This is enough! proof enough! not for me alone, but for all who are unwilling to see a moneyed domination set up – a moneyed oligarchy established in this land, and the entire Union subjected to its sovereign will. The power to destroy all other banks is admitted and declared; the inclination to do so is known to all rational beings to reside with the power! Policy may restrain the destroying faculties for the present; but they exist; and will come forth when interest prompts and policy permits. They have been exercised; and the general prostration of the Southern and Western banks attest the fact. They will be exercised (the charter being renewed), and the remaining State banks will be swept with the besom of destruction. Not that all will have their signs knocked down, and their doers closed up. Far worse than that to many of them. Subjugation, in preference to destruction, will be the fate of many. Every planet must have its satellites; every tyranny must have its instruments; every knight is followed by his squire; even the king of beasts, the royal quadruped, whose roar subdues the forest, must have a small, subservient animal to spring his prey. Just so of this imperial bank, when installed anew in its formidable and lasting power. The State banks, spared by the sword, will be passed under the yoke. They will become subordinate parts in the great machine. Their place in the scale of subordination will be one degree below the rank of the legitimate branches; their business, to perform the work which it would be too disreputable for the legitimate branches to perform. This will be the fate of the State banks which are allowed to keep up their signs, and to set open their doors; and thus the entire moneyed power of the Union would fall into the hands of one single institution, whose inexorable and invisible mandates, emanating from a centre, would pervade the Union, giving or withholding money according to its own sovereign will and absolute pleasure. To a favored State, to an individual, or a class of individuals, favored by the central power, the golden stream of Pactolus would flow direct. To all such the munificent mandates of the High Directory would come, as the fabled god made his terrestrial visit of love and desire, enveloped in a shower of gold. But to others – to those not favored – and to those hated – the mandates of this same directory would be as 'the planetary plague which hangs its poison in the sick air;' death to them! death to all who minister to their wants! What a state of things! What a condition for a confederacy of States! What grounds for alarm and terrible apprehension, when in a confederacy of such vast extent, so many independent States, so many rival commercial cities, so much sectional jealousy, such violent political parties, such fierce contests for power, there should be but one moneyed tribunal, before which all the rival and contending elements must appear! but one single dispenser of money, to which every citizen, every trader, every merchant, every manufacturer, every planter, every corporation, every city, every State, and the federal government itself, must apply, in every emergency, for the most indispensable loan! and this, in the face of the fact, that, in every contest for human rights, the great moneyed institutions of the world have uniformly been found on the side of kings and nobles, against the lives and liberties of the people;

"5. To hold real estate, receive rents, and retain a body of tenantry. This privilege is hostile to the nature of our republican government, and inconsistent with the nature and design of a banking institution. Republics want freeholders, not landlords and tenants; and, except the corporators in this bank, and in the British East India Company, there is not an incorporated body of landlords in any country upon the face of the earth whose laws emanate from a legislative body. Banks are instituted to promote trade and industry, and to aid the government and its citizens with loans of money. The whole argument in favor of banking – every argument in favor of this bank – rests upon that idea. No one, when this charter was granted, presumed to speak in favor of incorporating a society of landlords, especially foreign landlords, to buy lands, build houses, rent tenements, and retain tenantry. Loans of money was the object in view, and the purchase of real estate is incompatible with that object. Instead of remaining bankers, the corporators may turn land speculators: instead of having money to lend, they may turn you out tenants to vote. To an application for a loan, they may answer, and answer truly, that they have no money on hand; and the reason may be, that they have laid it out in land. This seems to be the case at present. A committee of the legislature of Pennsylvania has just applied for a loan; the president of the bank, nothing loth to make a loan to that great State, for twenty years longer than the charter has to exist, expresses his regret that he cannot lend but a limited and inadequate sum. The funds of the institution, he says, will not permit it to advance more than eight millions of dollars. And why? because it has invested three millions in real estate! To this power to hold real estate, is superadded the means to acquire it. The bank is now the greatest moneyed power in the Union; in the event of the renewal of its charter, it will soon be the sole one. Sole dispenser of money, it will soon be the chief owner of property. To unlimited means of acquisition, would be united perpetuity of tenure; for a corporation never dies, and is free from the operation of the laws which govern the descent and distribution of real estate in the hands of individuals. The limitations in the charter are vain and illusory. They insult the understanding, and mock the credulity of foolish believers. The bank is first limited to such acquisitions of real estate as are necessary to its own accommodation; then comes a proviso to undo the limitation, so far as it concerns purchases upon its own mortgages and executions! This is the limitation upon the capacity of such an institution to acquire real estate. As if it had any thing to do but to make loans upon mortgages, and push executions upon judgments! Having all the money, it would be the sole lender; mortgages being the road to loans, all borrowers must travel that road. When birds enough are in the net, the fowler draws his string, and the heads are wrung off. So when mortgages enough are taken, the loans are called in; discounts cease; curtailments are made; failures to pay ensue; writs issue; judgments and executions follow; all the mortgaged premises are for sale at once; and the attorney of the bank appears at the elbow of the marshal, sole bidder and sole purchaser.

"What is the legal effect of this vast capacity to acquire, and this legal power to retain, real estate? Is it not the creation of a new species of mortmain? And of a kind more odious and dangerous than that mortmain of the church which it baffled the English Parliament so many ages to abolish. The mortmain of the church was a power in an ecclesiastical corporation to hold real estate, independent of the laws of distribution and descent: the mortmain of the bank is a power in a lay corporation to do the same thing. The evil of the two tenures is identical; the difference between the two corporations is no more than the difference between parsons and money-changers; the capacity to do mischief incomparably the greatest on the part of the lay corporators. The church could only operate upon the few who were thinking of the other world; the bank, upon all who are immersed in the business or the pleasures of this. The means of the church were nothing but prayers; the means of the bank is money! The church received what it could beg from dying sinners; the bank may extort what it pleases from the whole living generation of the just and unjust. Such is the parallel between the mortmain of the two corporations. They both end in monopoly of estates and perpetuity of succession; and the bank is the greatest monopolizer of the two. Monopolies and perpetual succession are the bane of republics. Our ancestors took care to provide against them, by abolishing entails and primogeniture. Even the glebes of the church, lean and few as they were in most of the States, fell under the republican principle of limited tenures. All the States abolished the anti-republican tenures; but Congress re-establishes them, and in a manner more dangerous and offensive than before the Revolution. They are now given, not generally, but to few; not to natives only, but to foreigners also; for foreigners are large owners of this bank. And thus, the principles of the Revolution sink before the privileges of an incorporated company. The laws of the States fall before the mandates of a central directory in Philadelphia. Foreigners become the landlords of free-born Americans; and the young and flourishing towns of the United States are verging to the fate of the family boroughs which belong to the great aristocracy of England.