XXXVII.

1837.

was appointed by the constitution to be tried, if charged CHAP. with malversation in office. So determined were the senators in their condemnation of the measures of the President, that they refused to receive, or put upon their journals, a protest and explanatory memoir, which he drew up and published in defence of his proceedings. A similar division was observed in all the States, among whose inhabitants meetings took place everywhere, to consider the all-engrossing topic. Generally speaking, the States on the coast coincided with the Senate, those beyond the Alleghany Mountains and in the Far West with the House of Representatives. The weight of intellect was decidedly with the former: Mr Clay, Mr Webster, and Mr Calhoun, made powerful speeches in favour of the Bank. But what the democratic orators wanted in argument they made up in violence, which was more powerful with the unthinking multitude. To find a parallel to the vehemence of their harangues, we must go back to the ardent declamations of the French Republicans in 1791 and 1792. The topics, the ideas, were the same; the objects of the animosity only were different. It was not the landed "aristocrats," but the "commercial aristocracy," which was the object of ceaseless obloquy. The corruption, selfishness, seduction, and despotic views of the monied class, were the subject of incessant declamation, and not a few declared that Mr Biddle would end 468. by making himself king.1

1

Chev.

79, 80;

Ann. Reg.

1834, 467,

crash in the

In the mean time the general shake given to commercial 20. credit by the open war, declared by a numerical majority General in the Union, with the President at its head, against the Union. United States Bank, produced the most disastrous effects, far exceeding in intensity anything which the promoters of the war contemplated. Mr Cobbett addressed a long letter to General Jackson, congratulating him on the success of his efforts to destroy the United States Bank; the first step, it was to be hoped, to the destruction of all other banks. The whole banks throughout the Union,

XXXVII.

1837.

CHAP. Seeing the violence of the storm which was brewing against them, adopted the most stringent measures in their own defence; they rapidly contracted their issues, and made the most strenuous efforts to augment their metallic reserves. The consequence was, that gold rose so much in value in the Union, that it flowed into the country to an unprecedented extent; and the excess imported over that exported, from 1st January 1833 to 1st July 1834, amounted to £5,501,000. In the chief States of the Union the result was, that a metallic was in a great degree substituted for a paper currency; but as its amount was not a third of what the bank-notes had been, the utmost distress and anxiety pervaded the Union, and in the State of New 1 Ann. Reg. York it rose to such a pitch, that the local legislature 469; Chev authorised a State loan, to the banks in the province, of £1,500,000, to enable them to continue the most necessary advances.1

1834, 468,

i. 81-83, 9596, 103.

21.

pe

titions in favour of the Bank.

Struck with consternation at this succession of comNew York mercial disasters, the merchants and bankers of New York had a meeting, at which a petition to the President was agreed to, which soon received ten thousand signatures, embracing the whole wealth and intelligence of the place, in favour of the Bank. General Jackson received it, and coolly answered, that he believed "the petition expressed the sentiments of Wall Street and Pearl Street, but that Wall Street and Pearl Street were not the people of America."* He was right; for although New York was the chief commercial city of the Union, and had increased tenfold in population and an hundredfold in riches within the last fifty years, and converted the wilderness, an hundred leagues around, into fruitful fields, yet there can be no doubt that a majority of the Union, told by head, was on the opposite side, and cordially supported the President in his crusade-not only in his crusade against the United States Bank, but almost all the banks in the

*The Regent Street and Lombard Street of New York, where the chief banking houses and most splendid shops are to be found.

СНАР. XXXVII.

1837.

country. It was generally believed, and it was generally CHAP. told, that the banks were a set of infamous usurers, determined to starve the noble soldiers of independence; and 1 Chev. i. the cry was general with the populace in all parts of the 103-108. Union, "Hurrah for Jackson! down with the Bank."1

22.

hostility of

the Bank.

Such was the effect of this cry, with which the United States were so convulsed that the people entirely lost Increased their senses, and ran headlong, despite all the warnings General of Mr Webster and Mr Clay, on their own destruction. Jackson, By the elections in the autumn of 1834, the majority of General Jackson was increased in the House of Representatives by twenty votes. Strengthened by this accession of numbers, the President continued with increased vehemence his hostility to the Bank, and early in the session of 1835 recommended, in his Message to the Congress, that its notes should not be received in payment of taxes, and that all laws connecting the Bank, directly or indirectly, with the Government should be repealed. How strongly soever the Bank party was intrenched in the upper house, they felt it in vain to continue the contest any longer, for their charter would expire next year, and it could only be renewed by an act of both houses, which could not now be looked for, as the last election had made the majority of the President in the lower beyond the reach of resistance. They therefore bent to the storm which they could not resist, and took steps to wind up their affairs with as little detriment to the community as possible. This was immediately set about, and the Bank disposed of its debts at and closed twenty-one out of its twenty-seven branches. The winding-up of its affairs which then took place proved its credit beyond a doubt; for its assets were 49,313,000 dollars, and its liabilities only 27,656,000; and to meet 2 Ann. Reg. 22,113,000 in notes, it had 8,749,000 in specie in its 505. coffers! 2

Cut off from their connection with the State, and deprived of all hope of a renewal of their charter from the

1835, 504,

XXXVII.

CHAP. legislature, the directors of the United States Bank obtained a charter from the local legislature of Pennsylvania, 1837. to which they paid a bonus of 2,000,000 dollars; and Increased though they experienced great opposition from the banks mania in in the western States, which at first refused to take their the West. notes, they succeeded, in spite of all the opposition of the

23.

banking

President, in establishing an extensive business. But now appeared the fatal effects of the measures adopted by Government to destroy the United States Bank. The States in the valley of the Mississippi, encouraged by the support of Government, and strong in the possession, through their banks, of the public deposits, rushed, as it were, with inconsiderate fury into the void created by the contraction of the business of the United States Bank, which had been conducted with comparative prudence. It was soon seen what free trade in banking will speedily become. The President had sought to destroy one bank, of which he was jealous, on the coast: he did so; but in so doing he reared up an hundred far more perilous in the Far West. Indiana, Ohio, Massachusetts, Alabama, Maine, created new banks with surprising rapidity, which instantly began issuing notes, on the security of the title-deeds of lots of purchased lands. New York, in three days, erected banks with six millions of dollars as capital. Money was freely advanced, but such was the demand for it that 2 per cent a-month was usually asked and given. The law against issuing notes below £1 was generally evaded in the frontier States. Land in the back settlements was sold and resold in lots to such an extent that it became a mere stock-jobbing concern, without any intention, on the part of most of the purchasers, of any settlement. The effect 1 Ann. Reg. of his own measures cannot be better described than by the President himself, in his Message to the Congress at the end of 1835.1

1836, 442444.

"The effect," said he, "of the over-extension of bank

XXXVII.

24.

dent's ac

credits and over-issue of paper have been strikingly exem- CHAP. plified in the sales of the public lands. From the returns made by the receivers in the early part of last summer, 1837. it appeared that the receipts arising from the sale of the The Presi public lands were increasing to an unprecedented amount. count of the In effect, however, these receipts amounted to nothing of the westoperations more than credits in bank. The banks lent out their eru banks. notes to speculators; they were paid to the receivers, and immediately returned to the banks to be lent out again and again, being mere instruments to transfer to speculators the most valuable public land, and pay the Government by a credit on the books of a bank. These credits on the books of some of the western banks were already beyond their immediate means of payment, and were rapidly increasing. Indeed, each speculation furnished means for another; for no sooner had one individual or company paid in the notes than they were immediately lent to another for a like purpose; and the banks were extending their business and their issues so largely as to alarm considerate men, and render it doubtful whether these bank credits, if allowed to accumulate, would be of the least value to the Government. The spirit of expansion and speculation was not confined to the deposit banks, but pervaded the whole multitude of General banks throughout the Union, and was giving rise to new Message, institutions to aggravate the evil.” Such is General 1835; Ann. Jackson's own account of the first effect of his crusade 444. against the United States Bank.1

Jackson's

Dec. 20,

Reg. 1836,

25.

order re

garding cash pay

Independently of the obvious dangers of such a system of rash speculation, fed by imprudent advances by Treasury irresponsible banks, as is here described, there were other de and still more pressing reasons which rendered it pecu- can for liarly alarming to the democratic party in the United public States. The Far West had hitherto been their main support, but by means of these banks a monied interest was arising in these, which would speedily by its influ

lands.