Thirty Years' View (Vol. I of 2)

"2. I take a second exception to these orders as a currency. It is this, that being once paid, they are done with. A note transferable by delivery, may be reissued, and its payment demanded again, and so on forever. But a bill of exchange, or any paper subject to the same law with a bill of exchange, is incapable of reissue, and is payable but once. The payment once made, extinguishes the debt; the paper which evidenced it is dead in law, and cannot be resuscitated by any act of the parties. That payment can be plead in bar to any future action. This law applies to checks and orders as well as to bills of exchange; it applies to bank checks and orders as well as to those of private persons, and this allegation alone would annihilate every pretension of these branch bank orders to the character of currency.

"The bank went into operation with the beginning of the year 1817; established eighteen branches, half a dozen of which in the South and West; issued its own notes freely, and made large issues of notes payable at all these branches. The course of trade carried the branch notes of the South and West to the Northeast; and nothing in the course of trade brought them back to the West. They were payable in all demands to the federal government; merchants in Philadelphia, New-York, and Boston received them in payment of goods, and gave them – not back again in payment of Southern and Western produce – but to the collectors of the customs. Become the money of the government, the bank had to treat them as cash. The fourteenth section of the charter made them receivable in all payments to the government, and another clause required the bank to transfer the moneys of the government to any point ordered; these two clauses (the transfer clause being harmless without the receiving one contained in the fourteenth section) laid the bank under the obligation to cash all the notes of all the branches wherever presented; for, if she did not do it, she would be ordered to transfer the notes to the place where they were payable, and then to transfer the silver to the place where it was wanted; and both these operations she had to perform at her own expense. The Southern and Western branch notes flowed to the Northeast; the gold and silver of the South and West were ordered to follow them; and, in a little while, the specie of the South and West was transferred to the Northeast; but the notes went faster on horses and in mail stages than the silver could go in wagons; and the parent bank in Philadelphia, and the branches in New-York and Boston, exhausted by the double operation of providing for their own, and for Southern and Western branch notes besides, were on the point of stopping payment at the end of two years. Mr. Cheves then came into the presidency; he stopped the issue of Southern and Western branch paper, and saved the bank from insolvency! Application was then made to Congress to repeal the fourteenth section of the charter, and thus relieve the bank from this obligation to cash its notes every where. Congress refused to do so. Application was made at the same time to repeal a part of the twelfth fundamental article of the constitution of the bank, for the purpose of relieving the president and principal cashier of the parent bank from the labor of signing the five and ten dollar notes. Congress refused that application also. And here every thing rested while Mr. Cheves continued president. The Southern and Western branches ceased to do business as banks; no bank notes or bills were seen but those bearing the signatures of the president and his principal cashier, and none of these payable at Southern and Western branches. The profits of the stockholders became inconsiderable, and the prospect of a renewed charter was lost in the actual view of the inactivity and uselessness of the bank in the South and West. Mr. Cheves retired. He withdrew from an institution he had saved from bankruptcy, but which he could not render useful to the South and West; and then ensued a set of operations for enabling the bank to do the things which Congress had refused to do for it; that is to say, to avoid the operation of the fourteenth section, and so much of the twelfth fundamental article as related to the signature of the notes and bills of the bank. These operations resulted in the invention of the branch bank orders. These orders, now flooding the country, circulating as notes, and considered every where as gold and silver (because they are voluntarily cashed at several branches, and erroneously received at every land office and custom-house), have given to the bank its present apparent prosperity, its temporary popularity, and its delusive cry of a sound and uniform currency. This is my narrative; an appalling one, it must be admitted; but let it stand for nothing if not sustained by the proof.

"I have now established, Mr. President, as I trust and believe, the truth of the first branch of my proposition, namely, that this currency of branch bank orders is unauthorized by the charter, and illegal. I will now say a few words in support of the second branch of the proposition, namely, that this currency ought to be suppressed.

"The mere fact of the illegality, sir, I should hold to be sufficient to justify this suppression. In a country of laws, the laws should be obeyed. No private individual should be allowed to trample them under foot; much less a public man, or public body; least of all, a great moneyed corporation wielding above one hundred millions of dollars per annum, and boldly contending with the federal government for the sceptre of political power —money is power! The Bank of the United States possesses more money than the federal government; and the question of power is now to be decided between them. That question is wrapped up in the case before you. It is a case of clear conviction of a violation of the laws by this great moneyed corporation; and that not of a single statute, and by inadvertence, and in a small matter, which concerns but few, but in one general, sweeping, studied, and systematic infraction of a whole code of laws – of an entire constitution, made for its sole government and restraint – and the pernicious effects of which enter into the revenues of the Union, and extend themselves to every moneyed transaction between man and man. This is the case of violated law which stands before you; and if it goes unpunished, then do I say, the question of political power is decided between the bank and the government. The question of supremacy is at an end. Let there be no more talk of restrictions or limitation in the charter. Grant a new one. Grant it upon the spot. Grant it without words! Grant it in blank! to save the directors from the labor of re-examination! the court from the labor of constructions! and yourselves from the radation of being publicly trampled under foot.

"I do insist, Mr. President, that this currency ought to be suppressed for illegality alone, even if no pernicious consequences could result from its circulation. But pernicious consequences do result. The substituted currency is not the equivalent of the branch bank notes, whose place it has usurped: it is inferior to those notes in vital particulars, and to the manifest danger and loss of the people.

"In the first place, these branch bank orders are not payable in the States in which they are issued. Look at them! they are nominally payable in Philadelphia! Look at the law! It gives the holder no right to demand their contents at the branch bank, until the order has been to Philadelphia, and returned. I lay no stress upon the insidious circumstance that these orders are now paid at the branch where issued, and at other branches. That voluntary, delusive payment may satisfy those who are willing to swallow a gilded hook; it may satisfy those who are willing to hold their property at the will of the bank. For my part, I want law for my rights. I look at the law, to the legal rights of the holder, and say that he has no right to demand payment at the branch which issued the order. The present custom of paying is voluntary, not compulsory; it depends upon the will of the bank, not upon law; and none but tyrants can require, or slaves submit to, a tenure at will. These orders, even admitting them to be legal, are only payable in Philadelphia and to demand payment there, is a delusive and impracticable right. For the body of the citizens cannot go to Philadelphia to get the change for the small orders; merchants will not remit them; they would as soon carry up the fires of hell to Philadelphia; for the bank would consign them to ruin if they did. These orders are for the frontiers; and it is made the interest and the policy of merchants to leave them at home, and take a bill of exchange at a nominal premium. Brokers alone will ever carry them, and that as their own, after buying them out of the hands of the people at a discount fixed by themselves.

"This contrivance, Mr. President, of issuing bank paper at one place, payable at another and a distant place, is not a new thing under the sun; but its success, if it succeeds here, will be a new thing in the history of banking. This contrivance, sir, is of European origin. It began in Scotland some years ago, with a banker in Aberdeen, who issued promissory notes payable in London. Then the Bank of Ireland set her branches in Sligo, Cork, and Belfast, at the same work; and they made their branch notes payable in Dublin. The English country bankers took the hint, and put out their notes payable in London. The mass of these notes were of the smaller denominations, one or two pounds sterling, corresponding with our five and ten dollar orders; such as were handled by the laboring classes, and who could never carry them to London and Dublin to demand their contents. At this point the British Imperial Parliament took cognizance of the matter; treated the issue of such notes as a vicious practice, violative of the very first idea of a sound currency, and particularly dangerous to the laboring classes. The parliament suppressed the practice. This all happened in the year 1826; and now this practice, thus suppressed in England, Scotland, and Ireland, is in full operation in our America! and the directors of the Bank of the United States are celebrated, as the greatest of financiers, for picking up an illegal practice of Scottish origin, and putting it into operation in the United States, and that, too, in the very year in which it was suppressed in Great Britain!"

Leave was not given to introduce the joint resolution. The friends of the bank being a majority in the Senate, refused the motion, but felt themselves bound to make defence for a currency so illegal and vicious. Further discussion was stopped for that time; but afterwards, on the question of the recharter, the illegality of this kind of currency was fully established, and a clause put into the new charter to suppress it. The veto message put an end to the charter, and for the necessity of the remedy in that quarter; but the practice has been taken up by local institutions and private bankers in the States, and become an abuse which requires extirpation.

CHAPTER LXI.

ERROR OF MONS. DE TOCQUEVILLE IN RELATION TO THE BANK OF THE UNITED STATES, THE PRESIDENT, AND THE PEOPLE

The first message of President Jackson, delivered at the commencement of the session of 1829-30, confirmed the hopes which the democracy had placed in him. It was a message of the Jeffersonian school, and re-established the land-marks of party, as parties were when founded on principle. Its salient point was the Bank of the United States, and the non-renewal of its charter. He was opposed to the renewal, both on grounds of constitutionality and expediency; and took this early opportunity of so declaring, both for the information of the people, and of the institution, that each might know what they had to rely upon with respect to him. He said:

"The charter of the Bank of the United States expires in 1836, and its stockholders will probably apply for a renewal of their privileges. In order to avoid the evils resulting from precipitancy in a measure involving such important principles, and such deep pecuniary interests, I feel that I cannot, in justice to the parties interested, too soon present it to the deliberate consideration of the legislature and the people. Both the constitutionality and the expediency of the law creating this bank are well questioned by a large portion of our fellow-citizens; and it must be admitted by all that it has failed in the great end of establishing a uniform and sound currency."

This passage was the grand feature of the message, rising above precedent and judicial decisions going back to the constitution and the foundation of party on principle; and risking a contest at the commencement of his administration, which a mere politician would have put off to the last. The Supreme Court had decided in favor of the constitutionality of the institution; a democratic Congress, in chartering a second bank, had yielded the question, both of constitutionality and expediency. Mr. Madison, in signing the bank charter in 1816, yielded to the authorities without surrendering his convictions. But the effect was the same in behalf of the institution, and against the constitution, and against the integrity of party founded on principle. It threw down the greatest landmark of party, and yielded a power of construction which nullified the limitations of the constitution, and left Congress at liberty to pass any law which it deemed necessary to carry into effect any granted power. The whole argument for the bank turned upon the word "necessary" at the end of the enumerated powers granted to Congress; and gave rise to the first great division of parties in Washington's time – the federal party being for the construction which would authorize a national bank; the democratic party (republican, as then called,) being against it.

It was not merely the bank which the democracy opposed, but the latitudinarian construction which would authorize it, and which would enable Congress to substitute its own will in other cases for the words of the constitution, and do what it pleased under the plea of "necessary" – a plea under which they would be left as much to their own will as under the "general welfare" clause. It was the turning point between a strong and splendid government on one side, doing what it pleased, and a plain economical government on the other, limited by a written constitution. The construction was the main point, because it made a gap in the constitution through which Congress could pass any other measures which it deemed to be "necessary: " still there were great objections to the bank itself. Experience had shown such an institution to be a political machine, adverse to free government, mingling in the elections and legislation of the country, corrupting the press; and exerting its influence in the only way known to the moneyed power – by corruption. General Jackson's objections reached both heads of the case – the unconstitutionality of the bank, and its inexpediency. It was a return to the Jeffersonian and Hamiltonian times of the early administration of General Washington, and went to the words of the constitution, and not to the interpretations of its administrators, for its meaning.

Such a message, from such a man – a man not apt to look back when he had set his face forward – electrified the democratic spirit of the country. The old democracy felt as if they were to see the constitution restored before they died – the young, as if they were summoned to the reconstruction of the work of their fathers. It was evident that a great contest was coming on, and the odds entirely against the President. On the one side, the undivided phalanx of the federal party (for they had not then taken the name of whig); a large part of the democratic party, yielding to precedent and judicial decision; the bank itself, with its colossal money power – its arms in every State by means of branches – its power over the State banks – its power over the business community – over public men who should become its debtors or retainers – its organization under a single head, issuing its orders in secret, to be obeyed in all places and by all subordinates at the same moment. Such was the formidable array on one side: on the other side a divided democratic party, disheartened by division, with nothing to rely upon but the goodness of their cause, the prestige of Jackson's name, and the presidential power; – good against any thing less than two-thirds of Congress on the final question of the re-charter; but the risk to run of his non-election before the final question came on.

Under such circumstances it required a strong sense of duty in the new President to commence his career by risking such a contest; but he believed the institution to be unconstitutional and dangerous, and that it ought to cease to exist; and there was a clause in the constitution – that constitution which he had sworn to support – which commanded him to recommend to Congress, for its consideration, such measures as he should deem expedient and proper. Under this sense of duty, and under the obligation of this oath, President Jackson had recommended to Congress the non-renewal of the bank charter, and the substitution of a different fiscal agent for the operations of the government – if any such agent was required. And with his accustomed frankness, and the fairness of a man who has nothing but the public good in view, and with a disregard of self which permits no personal consideration to stand in the way of a discharge of a public duty, he made the recommendation six years before the expiration of the charter, and in the first message of his first term; thereby taking upon his hands such an enemy as the Bank of the United States, at the very commencement of his administration. That such a recommendation against such an institution should bring upon the President and his supporters, violent attacks, both personal and political, with arraignment of motives as well as of reasons, was naturally to be expected; and that expectation was by no means disappointed. Both he and they, during the seven years that the back contest (in different forms) prevailed, received from it – from the newspaper and periodical press in its interest, and from the public speakers in its favor of every grade – an accumulation of obloquy, and even of accusation, only lavished upon the oppressors and plunderers of nations – a Verres, or a Hastings. This was natural in such an institution. But President Jackson and his friends had a right to expect fair treatment from history – from disinterested history – which should aspire to truth, and which has no right to be ignorant or careless. He and they had a right to expect justice from such history; but this is what they have not received. A writer, whose book takes him out of that class of European travellers who requite the hospitality of Americans by disparagement of their institutions, their country, and their character – one whose general intelligence and candor entitle his errors to the honor of correction – in brief, M. de Tocqueville – writes thus of President Jackson and the Bank of the United States:

"When the President attacked the bank, the country was excited and parties were formed; the well-informed classes rallied round the bank, the common people round the President. But it must not be imagined that the people had formed a rational opinion upon a question which offers so many difficulties to the most experienced statesman. The bank is a great establishment, which enjoys an independent existence, and the people, accustomed to make and unmake whatever it pleases, is startled to meet with this obstacle to its authority. In the midst of the perpetual fluctuation of society, the community is irritated by so permanent an institution, and is led to attack in order to see whether it can be shaken or controlled, like all other institutions of the country." – (Chapter 10.)

Of this paragraph, so derogatory to President Jackson and the people of the United States, every word is an error. Where a fact is alleged, it is an error; where an opinion is expressed, it is an error; where a theory is invented, it is fanciful and visionary. President Jackson did not attack the bank; the bank attacked him, and for political as well as pecuniary motives; and under the lead of politicians. When General Jackson, in his first message, of December, 1829, expressed his opinion to Congress against the renewal of the bank's charter, he attacked no right or interest which the bank possessed. It was an institution of limited existence, enjoying great privileges, – among others a monopoly of national banking, and had no right to any prolongation of existence or privilege after the termination of its charter – so far from it, if there was to be another bank, the doctrine of equal rights and no monopolies or perpetuities required it to be thrown open to the free competition of all the citizens. The reasons given by the President were no attack upon the bank. He impugned neither the integrity nor the skill of the institution, but repeated the objections of the political school to which he belonged, and which were as old as Mr. Jefferson's cabinet opinion to President Washington, in the year 1791, and Mr. Madison's great speech in the House of Representatives in the same year. He, therefore, made no attack upon the bank, either upon its existence, its character, or any one of its rights. On the other hand, the bank did attack President Jackson, under the lead of politicians, and for the purpose of breaking him down. The facts were these: President Jackson had communicated his opinion to Congress in December, 1829, against the renewal of the charter; near three years afterwards, on the 9th of January, 1832, while the charter had yet above three years to run, and a new Congress to be elected before its expiration, and the presidential election impending – (General Jackson and Mr. Clay the candidates) – the memorial of the president and directors of the bank was suddenly presented in the Senate of the United States, for the renewal of its charter.

Now, how came that memorial to be presented at a time so inopportune? so premature, so inevitably mixing itself with the presidential election, and so encroaching upon the rights of the people, in snatching the question out of their hands, and having it decided by a Congress not elected for the purpose – and to the usurpation of the rights of the Congress elected for the purpose? How came all these anomalies? all these violations of right, decency and propriety? They came thus, the bank and its leading anti-Jackson friends believed that the institution was stronger than the President – that it could beat him in the election – that it could beat him in Congress (as it then stood), and carry the charter, – driving him upon the veto power, and rendering him odious if he used it, and disgracing him if (after what he had said) he did not. This was the opinion of the leading politicians friendly to the bank, and inimical to the President. But the bank had a class of friends in Congress also friendly to Gen. Jackson; and between these two classes there was vehement opposition of opinion on the point of moving for the new charter. It was found impossible, in communications between Washington and Philadelphia, then slow and uncertain, in stage coach conveyances, over miry roads and frozen waters, to come to conclusions on the difficult point. Mr. Biddle and the directors were in doubt, for it would not do to move in the matter, unless all the friends of the bank in Congress acted together. In this state of uncertainty, General Cadwallader, of Philadelphia, friend and confidant of Mr. Biddle, and his usual envoy in all the delicate bank negotiations or troubles, was sent to Washington to obtain a result; and the union of both wings of the bank party in favor of the desired movement. He came, and the mode of operation was through the machinery of caucus– that contrivance by which a few govern many. The two wings being of different politics, sat separately, one headed by Mr. Clay, the other by Gen. Samuel Smith, of Maryland. The two caucuses disagreed, but the democratic being the smaller, and Mr. Clay's strong will dominating the other, the resolution was taken to proceed, and all bound to go together.

I had a friend in one of these councils who informed me regularly of the progress made, and eventually that the point was carried for the bank – that General Cadwallader had returned with the news, and with injunctions to have the memorial immediately at Washington, and by a given day. The day arrived, but not the memorial, and my friend came to inform me the reason why; which was, that the stage had got overturned in the bad roads and crippled Gen. Cadwallader in the shoulder, and detained him; but that the delay would only be of two days; and then the memorial would certainly arrive. It did so; and on Monday, the 9th of January, 1832, was presented in the Senate by Mr. Dallas, a senator from Pennsylvania, and resident of Philadelphia, where the bank was established. Mr. Dallas was democratic, and the friend of General Jackson, and on presenting the memorial, as good as told all that I have now written, bating only personal particulars. He said: