Thirty Years' View (Vol. I of 2)

"The minority of the Committee of Ways and Means had not disputed the ability of the bank to discharge its debts in its own convenient time; but had the bank promptly paid the public money deposited in its vaults when called for? As early as October, 1831, the bank had anticipated that during the course of 1832 it would not be allowed the undisturbed and permanent use of the public deposits. In the circular orders to the several branches which were then issued, the necessity was stated for collecting the means for refunding those deposits from the loans which were then outstanding. Efforts were made by the branches of the West to make collections for that object; but those efforts entirely failed. The debts due upon loans made by the Western branches had not been curtailed. It was found impossible to curtail them. As the list of discounts had gone down, the list of domestic bills of exchange had gone up. The application before alluded to was made in March to Mr. Ludlow, of New-York, who represented about 1,700,000 of the public debt to postpone its redemption. This expedient also failed. Then the president of the bank came to Washington for the purpose of procuring the postponement of the period of redemption, upon the ground that an extraordinary pressure existed, and the public interest would be promoted by enabling the bank to use the public money in affording facilities to the merchants of the commercial cities. And what next? In July, the president of the bank and the exchange committee, without the knowledge of the head of the treasury, or of the board of directors of the bank, instituted a secret mission to England, for the purpose of negotiating in effect a loan of five millions of dollars, for which the bank was to pay interest. The propriety or object of this mission was not laid before the board of directors, and no clue was afforded to the government. Mr. Cadwalader went to England upon this secret mission. On the 1st of October the bank was advised of the arrangement made by Mr. Cadwalader, by which it was agreed, in behalf of the bank, to purchase a part of the debt of the foreign holders, and to defer the redemption of a part. Now, it was well known to every one who had taken the trouble to read the charter of the bank, that it was expressly prohibited from purchasing public stock. On the 15th October it was discovered that Cadwalader had exceeded his instructions. This discovery by the bank took place immediately after the circular letter of Baring, Brothers, & Co., of London, announcing that the arrangement had been published in one of the New-York papers. This circular gave the first information to the government, or to any one in this country, as far as he was advised, excepting the exchange committee of the bank, of the object of Cadwalader's mission. In the limited time which could now be spared for this discussion, it was impossible to go through the particulars of this scheme. It would be seen, on examination of the transaction, that the bank had directly interfered with the redemption of the public debt, for the obvious reason that it was unable to refund the public deposits. The cholera was not the ground of the correspondence with Ludlow. It was not the cholera which brought the president of the bank to Washington, to request the postponement of the redemption of the debt; nor was it the cholera which led to the resolution of the exchange committee of the bank to send Cadwalader to England. The true disorder was, the impossibility in which the bank found itself to concentrate its funds and diminish its loans. It had been stated in the report of the majority of the committee, that the certificates of the greater portion of the three per cents had been surrendered. It had been said that there was now less than a million of this debt outstanding. In point of fact, it would seem, from the correspondence, that between one and two millions of the debts of which the certificates had been surrendered, had been paid by the bank becoming debtor to the foreign holder instead of the government. The directors appear to suppose this has not been the case, but the correspondence shows that the certificates have been sent home under this arrangement. After this brief explanation of the conduct of the bank in relation to the public deposits, he would ask whether it was necessary to sustain the credit of the bank by adopting this resolution."

The vote on the resolution was taken, and resulted in a large majority for it – 109 to 46. Those who voted in the negative were: John Anderson of Maine; William G. Angel of New-York; William S. Archer of Virginia; James Bates of Maine; Samuel Beardsley of New-York; John T. Bergen of New-York; Laughlin Bethune of North Carolina; John Blair of Tennessee; Joseph Bouck of New-York; John C. Brodhead of New-York; John Carr of Indiana; Clement C. Clay of Alabama; Henry W. Connor of North Carolina; Charles Dayan of New-York; Thomas Davenport of Virginia; William Fitzgerald of Tennessee; – Clayton of Georgia; Nathan Gaither of Kentucky; William F. Gordon of Virginia; Thomas H. Hall of North Carolina; Joseph W. Harper of New Hampshire; – Hawkins; Michael Hoffman of New-York; Henry Horn of Pennsylvania; Henry Hubbard of New Hampshire; Adam King of Pennsylvania; Joseph Lecompte of Kentucky; Chittenden Lyon of Kentucky; Joel K. Mann of Kentucky; Samuel W. Mardis of Alabama; John Y. Mason of Virginia; Jonathan McCarty of Indiana; Thomas R. Mitchell of South Carolina; Job Pierson of New-York; James K. Polk of Tennessee; Edward C. Reed of New-York; Nathan Soule of New-York; Jesse Speight of North Carolina; Jas. Standifer of Tennessee; Francis Thomas of Maryland; Wiley Thompson of Georgia; Daniel Wardwell of New-York; James M. Wayne of Georgia; John W. Weeks of New Hampshire; Campbell P. White of New-York: J. T. H. Worthington of Maryland. And thus the bank not only escaped without censure, but received high commendation; while its conduct in relation to the three per cents placed it unequivocally in the category of an unfaithful and prevaricating agent; and only left open the inquiry whether its conduct was the result of inability to pay the sum required, or a disposition to make something for itself or to favor its debtors – the most innocent of these motives being negatived by the sinister concealment of the whole transaction from the government (after getting delay from it), its concealment from the public, its concealment even from its own board of directors – its entire secrecy from beginning to end – until accidentally discovered through a London letter published in New-York. These are the same three per cents, the redemption of which through an enlargement of the powers of the sinking fund commissioners I had endeavored to effect some years before, when they could have been bought at about sixty-six cents in the dollar, and when my attempt was defeated by the friends of the bank. They were now paid at the rate of one hundred cents to the dollar, losing all the time the interest on the deposits, in bank, and about four millions for the appreciation of the stock. The attempt to get this stock redeemed, or interest on the deposits, was one of my first financial movements after I came into the Senate; and the ease with which the bank defeated me, preventing both the extinction of the debt and the payment of interest on the deposits, convinced me how futile it was to attempt any legislation unfavorable to the bank in a case which concerned itself.

CHAPTER LXXVI.

ABOLITION OF IMPRISONMENT FOR DEBT

The philanthropic Col. R. M. Johnson, of Kentucky, had labored for years at this humane consummation; and finally saw his labors successful. An act of Congress was passed abolishing all imprisonment for debt, under process from the courts of the United States: the only extent to which an act of Congress could go, by force of its enactments; but it could go much further, and did, in the force of example and influence; and has led to the cessation of the practice of imprisoning the debtors, in all, or nearly all, of the States and Territories of the Union; and without the evil consequences which had been dreaded from the loss of this remedy over the person. It led to a great many oppressions while it existed, and was often relied upon in extending credit, or inducing improvident people to incur debt, where there was no means to pay it, or property to meet it, in the hands of the debtor himself; but reliance wholly placed upon the sympathies of third persons, to save a friend or relative from confinement in a prison. The dower of wives, and the purses of fathers, brothers, sisters, friends, were thus laid under contribution by heartless creditors; and scenes of cruel oppression were witnessed in every State. Insolvent laws and bankrupt laws were invented to cover the evil, and to separate the unfortunate from the fraudulent debtor; but they were slow and imperfect in operation, and did not reach the cases in which a cold and cruel calculation was made upon the sympathies of friends and relatives, or upon the chances of catching the debtor in some strange and unbefriended place. A broader remedy was wanted, and it was found in the total abolition of the practice, leaving in full force all the remedies against fraudulent evasions of debt. In one of his reports on the subject, Col. Johnson thus deduced the history of this custom, called "barbarous," but only to be found in civilized countries:

"In ancient Greece, the power of creditors over the persons of their debtors was absolute; and, as in all cases where despotic control is tolerated, their rapacity was boundless. They compelled the insolvent debtors to cultivate their lands like cattle, to perform the service of beasts of burden, and to transfer to them their sons and daughters, whom they exported as slaves to foreign countries.

"These acts of cruelty were tolerated in Athens, during her more barbarous state, and in perfect consonance with the character of a people who could elevate a Draco, and bow to his mandates, registered in blood. But the wisdom of Solon corrected the evil. Athens felt the benefit of the reform; and the pen of the historian has recorded the name of her lawgiver as the benefactor of man. In ancient Rome, the condition of the unfortunate poor was still more abject. The cruelty of the Twelve Tables against insolvent debtors should be held up as a beacon of warning to all modern nations. After judgment was obtained, thirty days of grace were allowed before a Roman was delivered into the power of his creditor. After this period, he was retained in a private prison, with twelve ounces of rice for his daily sustenance. He might be bound with a chain of fifteen pounds weight; and his misery was three times exposed in the market-place, to excite the compassion of his friends. At the expiration of sixty days, the debt was discharged by the loss of liberty or life. The insolvent debtor was either put to death or sold in foreign slavery beyond the Tiber. But, if several creditors were alike obstinate and unrelenting, they might legally dismember his body, and satiate their revenge by this horrid partition. Though the refinements of modern criticisms have endeavored to divest this ancient cruelty of its horrors, the faithful Gibbon, who is not remarkable for his partiality to the poorer class, preferring the liberal sense of antiquity, draws this dark picture of the effect of giving the creditor power over the person of the debtor. No sooner was the Roman empire subverted than the delusion of Roman perfection began to vanish, and then the absurdity and cruelty of this system began to be exploded – a system which convulsed Greece and Rome, and filled the world with misery, and, without one redeeming benefit, could no longer be endured – and, to the honor of humanity, for about one thousand years, during the middle ages, imprisonment for debt was generally abolished. They seemed to have understood what, in more modern times, we are less ready to comprehend, that power, in any degree, over the person of the debtor, is the same in principle, varying only in degree, whether it be to imprison, to enslave, to brand, to dismember, or to divide his body. But, as the lapse of time removed to a greater distance the cruelties which had been suffered, the cupidity of the affluent found means again to introduce the system; but by such slow gradations, that the unsuspecting poor were scarcely conscious of the change.

"The history of English jurisprudence furnishes the remarkable fact, that, for many centuries, personal liberty could not be violated for debt. Property alone could be taken to satisfy a pecuniary demand. It was not until the reign of Henry III., in the thirteenth century, that the principle of imprisonment for debt was recognized in the land of our ancestors, and that was in favor of the barons alone; the nobility against their bailiffs, who had received their rents and had appropriated them to their own use. Here was the shadow of a pretext. The great objection to the punishment was, that it was inflicted at the pleasure of the baron, without a trial: an evil incident to aristocracies, but obnoxious to republics. The courts, under the pretext of imputed crime, or constructive violence, on the part of the debtor, soon began to extend the principle, but without legislative sanction. In the eleventh year of the reign of Edward I., the immediate successor of Henry, the right of imprisoning debtors was extended to merchants – Jewish merchants excepted, on account of their heterodoxy in religion – and was exercised with great severity. This extension was an act of policy on the part of the monarch. The ascendency obtained by the barons menaced the power of the throne; and, to counteract their influence, the merchants, a numerous and wealthy class, were selected by the monarch, and invested with the same authority over their debtors.

"But England was not yet prepared for the yoke. She could endure an hereditary nobility; she could tolerate a monarchy; but she could not yet resign her unfortunate sons, indiscriminately, to the prison. The barons and the merchants had gained the power over their victims; yet more than sixty years elapsed before Parliament dared to venture another act recognizing the principle. During this period, imprisonment for debt had, in some degree, lost its novelty. The incarceration of the debtor began to make the impression that fraud, and not misfortune, had brought on his catastrophe, and that he was, therefore, unworthy of the protection of the law, and too degraded for the society of the world. Parliament then ventured, in the reign of Edward III., in the fourteenth century, to extend the principle to two other cases – debt and detinue. This measure opened the door for the impositions which were gradually introduced by judicial usurpation, and have resulted in the most cruel oppression. Parliament, for one hundred and fifty years afterwards, did not venture to outrage the sentiments of an injured and indignant people, by extending the power to ordinary creditors. But they had laid the foundation, and an irresponsible judiciary reared the superstructure. From the twenty-fourth year of the reign of Edward III., to the nineteenth of Henry VIII., the subject slumbered in Parliament. In the mean time, all the ingenuity of the courts was employed, by the introduction of artificial forms and legal fictions, to extend the power of imprisonment for debt in cases not provided for by statute. The jurisdiction of the court called the King's Bench, extended to all crimes or disturbances against the peace. Under this court of criminal jurisdiction, the debtor was arrested by what was called the writ of Middlesex, upon a supposed trespass or outrage against the peace and dignity of the crown. Thus, by a fictitious construction, the person who owed his neighbor was supposed to be, what every one knew him not to be, a violator of the peace, and an offender against the dignity of the crown; and while his body was held in custody for this crime, he was proceeded against in a civil action, for which he was not liable to arrest under statute. The jurisdiction of the court of common pleas extended to civil actions arising between individuals upon private transactions. To sustain its importance upon a scale equal with that of its rival, this court also adopted its fictions, and extended its power upon artificial construction, quite as far beyond its statutory prerogative; and upon the fictitious plea of trespass, constituting a legal supposition of outrage against the peace of the kingdom, authorized the writ of capias, and subsequent imprisonment, in cases where a summons only was warranted by law. The court of exchequer was designed to protect the king's revenue, and had no legal jurisdiction, except in cases of debtors to the public. The ingenuity of this court found means to extend its jurisdiction to all cases of debt between individuals, upon the fictitious plea that the plaintiff, who instituted the suit, was a debtor to the king, and rendered the less able to discharge the debt by the default of the defendant. Upon this artificial pretext, that the defendant was debtor to the king's debtor, the court of exchequer, to secure the king's revenue, usurped the power of arraigning and imprisoning debtors of every description. Thus, these rival courts, each ambitious to sustain its relative importance, and extend its jurisdiction, introduced, as legal facts, the most palpable fictions, and sustained the most absurd solecisms as legal syllogisms.

"Where the person of the debtor was, by statute, held sacred, the courts devised the means of construing the demand of a debt into the supposition of a crime, for which he was subject to arrest on mesne process; and the evidence of debt, into the conviction of a crime against the peace of the kingdom, for which he was deprived of his liberty at the pleasure of the offended party. These practices of the courts obtained by regular gradation. Each act of usurpation was a precedent for similar outrages, until the system became general, and at length received the sanction of Parliament. The spirit of avarice finally gained a complete triumph over personal liberty. The sacred claims of misfortune were disregarded, and, to the iron grasp of poverty, were added the degradation of infamy, and the misery of the dungeon.

"While imprisonment for debt is sanctioned, the threats of the creditor are a source of perpetual distress to the dependent, friendless debtor, holding his liberty by sufferance alone. Temptations to oppression are constantly in view. The means of injustice are always at hand; and even helpless females are not exempted from the barbarous practice. In a land of liberty, enjoying, in all other respects, the freest and happiest government with which the world was ever blessed, it is matter of astonishment that this cruel custom, so anomalous to all our institutions, inflicting so much misery upon society, should have been so long endured."

The act was passed soon after this masterly report was made, followed by similar acts in most of the States; and has been attended every where with the beneficial effect resulting from the suppression of any false and vicious principle in legislation. It is a false and vicious principle in the system of credit to admit a calculation for the chance of payment, founded on the sympathy and alarms of third parties, or on the degradation and incarceration of the debtor himself. Such a principle is morally wrong, and practically unjust; and there is no excuse for it in the plea of fraud. The idea of fraud does not enter into the contract at its original formation; and if occurring afterwards, and the debtor undertakes to defraud his creditor, there is a code of law made for the case; and every case should rest upon its own circumstances. As an element of credit, imprisonment for debt is condemned by morality, by humanity, and by the science of political economy; and its abolition has worked well in reducing the elements of credit to their legitimate derivation in the personal character, visible means, and present securities of the contracting debtor. And, if in that way, it has diminished in any degree the wide circle of credit, that is an additional advantage gained to the good order of society and to the solidity of the social edifice. And thus, as in so many other instances, American legislation has ameliorated the law derived from our English ancestors, and given an example which British legislation may some day follow. – In addition to the honor of seeing this humane act passed during his administration, General Jackson had the further and higher honor of having twice recommended it to the favorable consideration of Congress.

CHAPTER LXXVII.

SALE OF UNITED STATES STOCK IN THE NATIONAL BANK

The President in his annual message had recommended the sale of this stock, and all other stock held by the United States in corporate companies, with the view to disconnecting the government from such corporations, and from all pursuits properly belonging to individuals. And he made the recommendation upon the political principle which condemns the partnership of the government with a corporation; and upon the economical principle which condemns the national pursuit of any branch of industry and leaves the profit, or loss of all such pursuits to individual enterprise; and upon the belief, in this instance, that the partnership was unsafe – that the firm would fail – and the stockholders lose their investment. In conformity to this recommendation, a bill was brought into the House of Representatives to sell the public stock held in the Bank of the United States, being seven millions of dollars in amount, and consisting of a national stock bearing five per centum interest. The bill was met at the threshold by the parliamentary motion which implies the unworthiness of the subject to be considered; namely, the motion to reject the bill at the first reading. That reading is never for consideration, but for information only; and, although debatable, carries the implication of unfitness for debate, and of some flagrant enormity which requires rejection, without the honor of the usual forms of legislation. That motion was made by a friend of the bank, and seconded by the member (Mr. Watmough) supposed to be familiar with the wishes of the bank directory. The speakers on each side gave vent to expressions which showed that they felt the indignity that was offered to the bill, one side in promoting – the other in opposing the motion. Mr. Wickliffe, the mover, said: "He was impelled, by a sense of duty to his constituents and to his country, to do in this case, what he had never done before – to move the rejection of a bill at its first reading. There are cases in which courtesy should yield to the demands of justice and public duty; and this, in my humble opinion, is one of them. It is a bill fraught with ruin to all private interests, except the interest of the stockjobbers of Wall-street." Mr. Watmough expressed his indignation and amazement at the appearance of such a bill, and even fell upon the committee which reported it with so much personality as drew a call to order from the Speaker of the House. "He expressed his sincere regret at the necessity which compelled him to intrude upon the House, and to express his opinion on the bill, and his indignation against this persecution of a national institution. He was at a loss to say which feeling predominated in his bosom – amazement, at the want of financial skill in the supporters of the bill – or detestation of the unrelenting spirit of the administration persecution on that floor of an institution admitted by the wisest and the best men of the times to be absolutely essential to the existence and safety of this Union, and almost to that of the constitution itself which formed its basis. He said, he was amazed that such a bill, at such a crisis, could emanate from any committee of this House; but his amazement was diminished when he recalled to mind the source from which it came. It came from the Committee of Ways and Means, and was under the parental care of the gentleman from Tennessee. Need he say more?"

Now, the member thus referred to, and who, after being pointed out as the guardian of the bill required nothing more to be said, was Mr. Polk, afterwards President of the United States. But parliamentary law is no respecter of persons, and would consider the indecorum and outrage of the allusion equally reprehensible in the case of the youngest and least considerable member; and the language is noted here to show the indignities to which members were subjected in the House for presuming to take any step concerning the bank which militated against that corporation. The sale of the government stock was no injury to the capital of the bank: it was no extinction of seven millions of capital but a mere transfer of that amount to private stockholders – such transfer as took place daily among the private stockholders. The only injury could be to the market price of the stock in the possible decline involved in the withdrawal of a large stockholder; but that was a damage, in the eye of the law and of morality, without injury; that is, without injustice – the stockholder having a right to do so without the assignment of reasons to be judged of by the corporation; and consequently a right to sell out and withdraw when he judged his money to be unsafe, or unprofitably placed, and susceptible of a better investment.