VII. BEGINNINGS OF THE BANK WAR

In 1836 the charter of the Second Bank of the United States was to expire. This institution was not in the later sense a national bank. It was a banking corporation, located in Philadelphia, privately controlled, but possessing unique and profitable relations with the government. To its capital of thirty-five million dollars, the government had subscribed one fifth. It served as repository of the public funds, which it could use for its own banking purposes without payment of interest. I could issue bank notes up to the physical ability of the president and cashier to sign them; after 1827 it evaded this limitation by the invention of "branch drafts," which looked and circulated like notes but were actually bills of exchange. The Bank was not to be taxed by the states and no similar institution was to be chartered by Congress. In return for these privileges the Bank paid a bonus of one and a half million dollars, transferred public funds and made public payments without charge, and allowed the government to appoint five out of the twenty-five directors. The Secretary of the Treasury could remove the government deposits provided he laid the reasons before Congress.

Even advocates of the Bank conceded that this charter bestowed too much power. That staunch conservative Husk Niles, writing in the heat of the fight for renewal, declared he "would not have the present bank rechartered, with its present powerÉ for the reason that the bank has more power than we would grant to any set of men, unless responsible to the people" (though he ultimately supported the Bank). Nathan Appleton, who had tried vainly to modify the charter in 1832, wrote carefully but emphatically in 1841: "A great central power, independent of the general or state governments, is an anomaly in our system. Such a power over the currency is the most tremendous which can be established. Without the assurance that it will be managed by men, free from the common imperfections of human nature, we are safer without it."

There could be no question about the reality of the Bank's power. It enjoyed a virtual monopoly of the currency and practically complete control over credit and the price level. Biddle's own testimony disclosed its extent:-

Q.3. Has the bank at any time oppressed any of the State banks?

A. Never. There are very few banks which might not have been destroyed by an exertion of the powers of the bank. None have ever been injured.

To radical Democrats like Taney, Biddle's tone implied that he thought himself entitled to credit for his forbearance. "It is this power concentrated in the hands of a few individuals," Taney declared,

"-exercised in secret and unseen although constantly felt- irresponsible and above the control of the people or the Government for the 20 years of its charter, that is sufficient to awaken any man in the country if the danger is brought distinctly to his view."

There could be no question either about the Bank's pretensions to complete independence of popular control. Biddle brooked no opposition from within, and the government representatives sat through the directors' meetings baffled and indignant. "I never saw such a Board of directors," raged Henry D. Gilpin, "-it is a misuse of terms of directedÉ. We know absolutely nothing. There is no consultation, no exchanges of sentiments, no production of correspondence, but merely a rapid, superficial, general statement, or a reference to a Committee which will probably never report." He added, "we are perfect cyphers."

Biddle not only suppressed all internal dissent but insisted flatly that the Bank was not accountable to the government or the people. In 1824 the president of the Washington branch had written Biddle, 1824 the president of the Washington branch had written Biddle, "AsÉthere are other interests to be attended to [besides those of the Bank], especially that of the Government =, I have deemed it proper to see and consult with the President, " Biddle hotly replied, "IfÉyou think that there are other interests to be attended to besides those with which you are charged by the administration of the bank, we deem it right to correct what is a total misapprehension . . . . The moment this appointment [of the five government directors] takes place the Executive has completely fulfilled its functions. The entire responsibility is thence forward in the directors, and no officer of the Government, from the President downwards, has the least right, the least authority, the least pretence, for interference in the concerns of the bank . . . . This invocation of the Government, therefore . . is totally inconsistent with the temper and spirit which belong to the officers of the bank, who should regard only the rights of the bank and the instructions of those who govern it, and who should be at all times prepared to execute the orders of the board, in direct opposition, to the personal interests and wishes of the President and every officer of the Government."

In Biddle's eyes the Bank was thus an independent corporation, on a level with the state, and not responsible to it except as the narrowest interpretation of the charter compelled. Biddle tried to strengthen this position by flourishing a theory that the Bank was beyond political good or evil, but Alexander Hamilton had written with far more candor that "such a bank is not a mere matter of private property, but a political machine of the greatest importance to the State." The Second Bank of the United States was, in fact, as Hamilton had intended such a bank should be, the keystone in the alliance between the government and the business community.

Though conservative Jeffersonians, led by Madison and Gallatin, had come to accept Hamilton's Bank as necessary, John Taylor's dialectics and Randolph's invective kept anti-Bank feeling alive, and men in the old radical tradition remained profoundly convinced of the evil of paper money. Jackson's hard-,money views prompted his opposition to the Tennessee relief system in 1820. "every one that knows me," as he told Polk in 1833, "does know, that I have been always opposed to the U. States Bank, nay all Banks." Benton, from talks with Macon and Randolph and his observations of the collapse of the paper system in 1819, similarly concluded that the only safe-guard against future disaster lay in restricting the system' and that, to this end, the government should deal only in gold and silver, thus withdrawing support from the issues of privately owned banks. Van Buren, Cambreleng, Taney and Polk more or less shared these views.

The ordinary follower of Jackson in the West also regarded the Bank with strong latent antagonism, but for very different reasons. Its policy in 1819 of recalling specie and checking the note issue of especially, the Relief War kept resentments alive. But this anti-Bank feeling owed little to reasoned distrust of paper money or to a Jeffersonian desire for specie. As a debtor section the West naturally preferred cheap money; and Kentucky, for example, which most vociferously opposed the United States Bank, also resorted most ardently to wildcat banking of its own. The crux of the Kentucky fight against the Bank was not the paper system, but outside control: the Bank's sin lay not in circulating paper money itself, but in restraining its circulation by Kentucky banks. Almost nowhere, apart from doctrinaires like Jackson and Benton, did Westerners object to state banks under local control.

Indeed during the eighteen-twenties, even the Philadelphia Bank to a considerable degree overcame the Western prejudices against it. 8 In Tennessee, for example, until 1829 "both [Governor William] Carroll and the legislature favored federal as well as state banks. nor does anything in the history of the state indicate that there was any general feeling against such institutions before Jackson became President"

Caleb Atwater a lusty Jackson man from Ohio and something of a professional Westerner, expressed a widespread feeling when he wrote in 1831, " Refuse to re-charter the bank, and Pittsburgh, Cincinnati, Louisville, St. Louis, Nashville, and New Orleans, will be crushed at one blow." Even Frank Blair's first large-scale blast against the Bank in the Argus of Western America after Jackson's election did not come until December 23, 1829, many months after Eastern groups had begun to agitate the question. This editorial- actually prefaced by an anti-Bank quote from a Van Buren paper in New York- appealed to the Kentucky fear of Eastern control; and all through 1830 the Argus continued to focus on the power and privileges of the Bank and the consequent peril to the Commonwealth Bank of Kentucky, never on the general implications of the paper system.

Some writers have talked of frontier life as if it bred traits of "individualism" and equality which made Westerners mystically opposed to banks. Actually, like all other groups in the he population, Westerners favored banks when they thought they could profit by them and fought them when they thought others were profiting at their expense. The Western enthusiasm for an assault on the Bank came, not from an intuitive democratic Weltschmerz born in the American forest, nor from a Jeffersonian dislike of banks, but from a farmer-debtor desire to throw off restraints on the local issue of paper money.

Similar objections to control from Philadelphia ranged many Easterners against the Bank. State institutions hoped, by falling heir to the government deposits, to enlarge their banking capita, at no expense to themselves. Special grievances multiplied the motives. The state banks of New York, for example, envied the United States Bank because its loan operations were not restricted by Van Buren's safety fund system. New York City had long resented the choice of Philadelphia as the nation's financial capital. Thus in a fight against the Bank Jackson could expect the backing of a decent minority of the local banking interests.

But there was still another and more reliable source of support. In March, 1829, after the grim depression winter, a group of Philadelphia workingmen, under the very shadow of the Bank, called a meeting "opposed to the chartering of any more new banks." The hard times were blamed upon the "too great extension of paper credit," and the gathering concluded by appointing a committee, "without confining ourselves to the working classes," to draw up a report on the banking system, The committee, which was dominated by intellectuals. included two leading economists, William M. Gouge. editor of the Philadelphia Gazette, and Condy Raguet, editor of the Free Trade Advocate, as well as William Duane, the famous old Jeffersonian journalist, his son William J. Duane, a lawyer, Roberts Vaux, the philanthropist, Reuben M. Whitney, a disgruntled businessman and former director of the Bank, and William English and James Ronaldson, two trade-union leaders. A week later the committee pronounced its verdict on the paper system:-

That banks are useful as offices of deposit and transfer, we readily admit; but we cannot see that the benefits they confer in this way are so great as to compensate for the evils they produce, in É laying the foundation of artificial inequality of wealth, and, thereby, of artificial inequality of powerÉ If the present system of banking and paper money be extended and perpetuated, the great body of the working people must give over all hopes of ever acquiring any property.

This view was spreading rapidly through the Middle and Northern states of the East in the late eighteen-twenties. The working class was no more affected by an instinctive antipathy toward banking than the backwoodsmen beyond the Alleghenies; but they never enjoyed the Western opportunity of having banks under their own control. Their opposition, instead of remaining fitful and capricious, began slowly to harden into formal anti-banking principle. Their bitter collective experience with paper money brought them to the same doctrines which Jackson and Benton gained from the Jeffersonian inheritance.

The war against the Bank thus enlisted the enthusiastic support of two basically antagonistic groups: on the one hand, debtor interests of the West and local banking interests of the East; on the other, Eastern workingmen and champions of the radical Jeffersonian tradition. The essential incompatibility between cheap money and hard could be somewhat concealed in the clamor of the crusade. Yet that incompatibility remained, and it came to represent increasingly a difference between the Western and Eastern wings of the party, as the state banking group gradually abandoned the Jackson ranks. It was, indeed, a new form of the distinction between Western and Eastern readings of "equality." The West, in its quest for political democracy and home rule, did not object to paper money under local control. while the submerged classes of the East, seeking economic democracy, fought the whole banking swindle, as it seemed to them, root and branch.

The administration took care not to offend its cheap-money adherents by openly avowing hard-money ideas. Yet, the drift was unmistakable, and it rendered ineffective some of Jackson's Western followers for whom the battle was being pressed on lines they could not understand. Richard M Johnson, for example, a staunch relief man and ancient foe of the Bank, served on the House committee which investigated the Bank in 1832; but he could take no real part in a hearing dominated by Cambreleng's hard-money views, and, though he signed Cambreleng's report, he confessed later that he had not asked a question or looked at a Bank book. In general, the Western politicians, torn between the hard-money leanings of the White House and the cheap-money preferences of the folks back home, tended to pursue an erratic course.

Only the intellectuals, who did not have to think about re-election, effected a quick adjustment. Amos Kendall, who had been originally a hard-money man, perhaps from his Eastern upbringing, found no difficulty in reverting to his earlier opinions. Frank Blair also rapidly shifted his ground after coming to Washington. These were not basic reversals of position,. Their allegiance, after all, had been primarily to a social class, not to a set of financial theories. The experience of the Kentucky relief system taught that salvation was not to be bought so cheaply: however much inflation might temporarily benefit a frontier state with a large debtor element, it was at best a risky expedient, imposed by political necessity; it never could serve as the basis of a national economic policy. Kendall and Blair, liberated from their local obligations, naturally turned to hard-money ideas as affording the only permanent solutions for the financial problems in favor of the non-business classes.

Thomas Hart Benton had long awaited the opportunity to fight for this solution. In the eighteen-twenties, when he fumed about the paper system, Nathaniel Macon would remark that it was useless to attempt reform unless the administration was with you. Now, at last, the administration secured to be with him. Jackson's first message had expressed grave doubts about the constitutionality and expediency of the Bank. In 1830 the President continued to make ominous allusions to the subject of recharter. But the administration position was still not clear. Jackson's views were widely regarded as the expressions of private prejudice, not of party policy. Few people interpreted the Maysville veto as opening a campaign which might end by involving the Bank. Even now, the Bank was confidently conducting backstairs negotiations with Secretary McLane to work out a formula for recharter, and it had inspired an effective press campaign to counteract Jackson's pronouncements. Benton, watching impatiently, concluded that someone (who else but Benton?) would have to set forth the hard-money case.

He tried several times to get the floor in the Senate, but the friends of the Bank succeeded always in silencing him by parliamentary technicalities. Finally, on February 2, 1831 he outmaneuvered the opposition and launched his comprehensive indictment:-

First: Mr. President, I object to the renewal of the charterÉbecause I look upon the bank as an institution too great and powerful to be tolerated in a Government of free and equal laws....Secondly, I object Ébecause its tendencies are dangerous and pernicious to the Government and the people É It tends to aggravate the inequality of fortunes; to make the rich richer, and ...the poor poorer; to multiply nabobs and pauper ÉThirdly. I object on account of the exclusive privileges, and anti-republican monopoly, which it gives to the stockholders.

And his own policy? "Gold and silver is the best currency for a republic," he thundered; "it suits the men of middle property and the working people best; and if I was going to establish a working man's party, it should be on the basis of hard money; a hard money party against a paper party." The words reverberated through the hall "a hard money party against a paper party"-as Mr. Webster of Massachusetts hastily rose to call for a vote which defeated Benton's resolution against recharter.

But the words also reverberated through the country. The Globe speedily reprinted the speech, the party press took it up, and pamphlets carried it through the land, to be read excitedly by oil lamp and candlelight, talked over heatedly in taverns and around fireplaces, on steamboats and stagecoaches, along the crooked ways of Boston and the busy streets of New York and on isolated farms in New Hampshire, Missouri, Iowa, Michigan, Arkansas. Nathaniel Macon red it with deep pleasure in North Carolina. "You deserve the thanks of every man, who lives by the sweat of is face," he told Benton, adding with sturdy candor, " É I observe some bad grammar, -you must pardon my freedom."

Nicholas Biddle, in his fine offices on Chestnut Street, was disturbed by much more than Benton's grammar. This able, suave and cosmopolitan Philadelphian was only thirty-seven when he became president of the Bank in 1823. He had been known mainly as a literary man- and early training which instilled a weakness for writing public letters that would often prove embarrassing. One English traveler pronounced him "the most perfect specimen of an American gentleman that I had yet seen" and commended his "exemption from national characteristics."

As head of the Bank , he inclined to pursue an active policy; but up to 1830 all his ventures had succeeded, he had taken no unnecessary risks (except perhaps for the "branch draft" device), and his judgment was universally respected. Yet, for all his ability, he suffered from a fatal self-confidence, a disposition to underrate his opponents and a lack of political imagination. He sought now to make a deal with the administration, while working on public opinion by newspaper articles, loans to editors and personal contacts. But his ultimate reliance was on two of the nation's giants, Henry Clay and Daniel Webster.

Henry Clay was the beloved politician of the day. He was tall and a little stooped, with a sandy complexion, gray, twinkling eyes, and a sardonic and somewhat sensual mouth, cut straight across the face. In conversation he was swift and sparkling, full of anecdote and swearing freely. Reclining lazily on a sofa, surrounded by friends, snuffbox in hand, he would talk on for hours with a long, drawling intonation and significant taps on the snuffbox as he cracked his jokes. John Quincy Adams called him only half-educated, but added, "His public and private, are loose, but he has all the virtues indispensable to a popular man."

Brilliant, reckless, fascinating, indolent, Clay was irresistibly attractive. Exhilarated by his sense of personal power, he loved to dominate his human environment everywhere, in Congress and at party councils, at dinner and in conversation; but he was not meanly ambitious. If he possessed few settled principles and small analytical curiosity, he had broad an exciting visions, which took the place of ideas.

t was these rapt visions which made him so thrilling an orator. His rich and musical voice could make drama out of a motion for adjournment, and Clay took care that it ordinarily had much more to occupy itself with. His brilliance of gesture- the sharp nods of the head, the stamp of the foot, the pointed finger, open palm, the tight-clenched fist-made the emotion visible as well as audible. He carried all, not by logic, not by knowledge, but by storm, by charm and courage and fire. His rhetoric was often tasteless and inflated, his matter often inconsequential. "The time is fast approaching," someone remarked in 1843, "when the wonder will be as great, how his speeches could have been so thrilling, as it now is, how Mr. Burke's could have been so dull." Yet he transfixed the American imagination as few public figures ever have. The country may not have trusted him, but it loved him.

Daniel Webster lacked precisely that talent for stirring the popular imagination. He was an awe-inspiring figure, solid as granite, with strong shoulders and an iron frame. His dark, craggy head was unforgettable; strangers always recognized the jet-black hair, the jutting brow, the large smoldering eyes, and the "mastiff-mouth," as Carlyle saw it, "accurately closed." Yet, he inclined to be taciturn in public, except when he worked up, with the aid of brandy, a heavy geniality for social purposes. He loved his comfort too much: liquor and rest, duck-shooting at Marshfield and adulation in Boston. His intellectual ability was great, but he used it only under the spur of booming voice, and he would shake the world. Then he was, as Emerson remembered him, "the great cannon loaded to the lips." But when inspiration lagged he became simply pompous.

The nation never gave its heart to Webster. The merchants of Boston did, along with a share of their purses, and also the speculators of Wall Street and rich men everywhere. But the plain man did not much respond to, except for a few Yankee farmers in New Hampshire, who liked to hobnob with statesmen. "He gives the idea of great power," said one English observer, "but does not inspire 'abandon.'" The people, who trusted Jackson and loved Clay, could neither trust nor love Webster. He never won the people simply because he never gave himself to the, He had, as Francis Lieber said, "no instinct for the massive movements."

Clay fought for Biddle and his Bank because it fitted in with his superb vision of America, but Webster fought for it in great part because it was a dependable source of private revenue. "I believe my retainer has not been renewed or refreshed as usual," he wrote at one point when the Bank had its back to the wall. "If it be wished that my relation to the Bank should be continued, it may be well to send me the usual retainers." How could Daniel Webster expect the American people to follow him through hell and high water when he would not lead unless someone mad up a purse for him?

In the House, Biddle could count on aid almost as formidable. John Quincy Adams, the ex-President, had come out of retirement to defend the American System in this moment of its peril. Adams, as Emerson noted, was no gentleman of the old school, "but a bruiser É an old roué who cannot live on slops but must have sulfuric acid in his tea!" He loved the rough-and-tumble of debate and neither asked quarter nor gave any. Sometimes he would lash himself into a rage, his body swaying with anger, his voice breaking, and the top of his head, usually white as alabaster, flushing a passionate red. Old age made him majestic and terrifying, with that bald and noble head, the cracked voice, the heavy figure clad in a faded frock coat. "Alone, unspoken to, unconsulted, never consulting with others, he sits apart, wrapped in his reveries," reported a Washington correspondent in 1837, "É looks enfeebled, but yet he is never tired; worn out, but ever ready for combat; melancholy, but let a witty thing fall from any member, and that old man's face is wreathed in smiles."

Adams's protégé, Edward Everett, the great rhetorician, could also be relied on to embellish Biddle's case with splendid exordiums and perorations; and George McDuffie, an experienced politician from South Carolina, was entrusted with the actual charge of the bill in the House. To strengthen the Bank forces, Biddle induced Horace Binney, the noted Philadelphia lawyer, to run for Congress. Binney had served as Bank lobbyist in Washington in the spring of 1832, and the next year took his seat as legislator.

In Clay, Webster, Adams, Everett, McDuffie and Binney, Biddle had a team whose personal following, abilities and oratory promised to overwhelm the best efforts of the administration. As the skirmishes began, he might be pardoned if he failed to regard Jackson, Benton and the Kitchen Cabinet as constituting a serious threat.

In the spring of 1830 a House committee, directed by George McDuffie, had brought in a report clearing the Bank of the charges made by Jackson in his first message to Congress. Jackson returned to the subject in more detail in his second message, and Benton's speech in 1831 thrust the question vigorously to the fore.

Biddle would have much preferred to keep the Bank out of politics altogether. His one interest was in renewing the charter. this he would do wit Jackson's help, if possible; with Clay's if necessary. Thus, during 1830 and 1831 he carefully explored the chances of winning over the President. The active co-operation of McLane and Livingston and the evident division in Jackson's party raised Biddle's hopes. The President, in the meantime, while saying quietly that his views had not changed, allowed McLane to recommend recharter in his Treasury report and barely mentioned the Bank question in his message of 1831.

But for all his amiability Jackson remained unyielding, while the Ban Buten group seemed irrevocably hostile. Henry Clay, fearful lest so good an issue slip through his fingers, kept pressing Biddle to let him make recharter a party question. Biddle hesitated, considered, stalled, watched the National Republican convention nominate Clay, with John Sergeant, a lawyer for the Bank, as running mate, read the party address denouncing Jackson's views on the Bank-and on January 9, 1832, petitions for recharter were presented in each House of Congress.

Benton, certain that the Bank could carry Congress, realized that the administration's only hope lay in postponement. Accordingly he had a good many obstructionist amendments prepared for the Senate, and in the House he set in motion plans for an investigating committee. Late in February, A.S. Clayton of Georgia moved the appointment of such a committee, defending the proposal from unexpectedly hot attacks by reading from hasty notes provided by Benton, twisting the paper around his finger so that no one would recognize the handwriting.

The Bank forces could hardly refuse this request without raising strange suspicions. Yet, they first resisted it, then tried to keep it in their own hands, then tried to restrict its scope- overruling McDuffie who understood perfectly the futility of these tactics- with the result that by the time the committee was appointed the Bank had lost considerable prestige though the country. McDuffie, John Quincy Adams and J.G. Watmough, Biddle's vestpocket representative, served on the committee as friends of the Bank, with Cambreleng, Clayton, Richard M. Johnson and Francis Thomas of Maryland as opponents. After six weeks in Philadelphia, examining records and questioning witnesses, it issued three reports: a majority report against the Bank, and two minority dissents, one by Adams.

In May the fight began in earnest. Biddle had already sent an advance guard of crack lobbyists. but, with the crucial struggle about to start, he took personal command. By now he was growing drunk with power. When Nathan Appleton, Massachusetts mill owner and member of the House, proposed the charter be modified, Biddle scorned the suggestion, and Clay interceded with Appleton, begging him to vote for the measure as it stood. "Should Jackson veto it." exclaimed Clay with an oath, "I shall veto him!"

On June 11 the bill passed the Senate, 28-20, and on July 3 it passed the House, 107-85. When Biddle made a smiling appearance on the floor after the passage, members crowded round to shake his hand. A riotous party in his lodgings celebrated the victory late into the night.

VIII. VETO

JESSIE BENTON knew she must keep still and not fidget or squirm, even when General Jackson twisted his fingers too tightly in her curls. The old man, who loved children liked to have Benton bring his enchanting daughter to the White House. Jessie, clinging to her father's hand, trying to match his strides, would climb breathlessly up the long stairs to the upper room where, with sunshine flooding in through tall south windows, they would find the General in his big rocking chair close to the roaring wood fire. The child instinctively responded to the lonely old man's desire for "a bright unconscious affectionate little life near him," and would sit by his side while his hand rested on her head. Sometimes, in the heat of discussion, his long bony fingers took a grip that made Jessie look at her father but give no other sign. Soon Benton would contrive to send her off to play with the children of Andrew Jackson Donelson, the President's private secretary. Then the talk would resume. In the latter days of 1831 the discussions grew particularly long and tense.

Jackson's rim calm during that year cloaked no basic wavering of purpose. With characteristic political tact he presented an irresolute and amenable face to the worlds in order to hold the party together. Benton and Kendall were in his confidence, but very few other. His apparent moderation deceived not only Biddle but many of the Bank's enemies. James . Hamilton considered making a hurried trip to London to discuss Jackson's vacillations with Van Buren; and William Dunlap, the artist, voiced the misgivings of many liberals in his remark to Fenimore Cooper that Jackson had" proved weaker than could have been anticipated; yet those who hold under him will hold to him and strive to hold him up."

In particular, Jackson's cabinet misinterpreted his pose. McLane, Livingston and Taney were all convinced that compromise was possible, greatly to the relief of the two and the despair of the third. Taney was coming to believe that he stood alone in the cabinet and almost in the country in opposing recharter. In the meantime, the Bank's alacrity in opening new offices and making long-term loans, though its charter was soon to expire, seemed "conclusive evidence of its determination to fasten itself by means of its money so firmly on the country that it will be impossibleÉ to shake it off without producing the most severe and extensive public suffering. - And this very attempt," he cried, "calls for prompt resistance- for future resistance will be in vain if the charter is renewed."

But who would lead the resistance? He watched the debates drag on and the votes pile up through the spring of 1832 with mounting apprehension. In the late spring, having to attend the Maryland court of Appeals, he decided to prepare a memorandum, setting forth his conviction that recharter should be vetoed. He finished it the night before his departure and notified the President that the opinion would be delivered as soon as the bill was passed.

On July 3 Jackson received the bill. Hearing the news, Martin Van Buren, just back from England, went straight on to Washington, arriving at midnight. The General, still awake, stretched on a sickbed, pale and haggard and propped up by pillows, grasped his friend's hand. Passing his other hand though his snow-white hair, he said firmly but without passion, "The bank, Mr. Van Buren, is truing to kill me, but I will kill it!"

A day or two later, Taney, busy in Annapolis, received word to hurry back to Washington. He found the President out of bed and eager for action, He had read Taney's memorandum with emphatic agreement and then had heard the arguments of the rest of the cabinet. While disapproving the bill, they wanted him to place his rejection on grounds which would allow the question to be reopened in the future. Jackson, unwilling to compromise, then turned to Amos Kendall for a first draft of the veto message. Andrew J. Donelson was now revising Kendall's draft in the room across the hall. would Taney help ? The lean, determined face of the Attorney General expressed no reservations.

It took three days to finish the document. The first day Taney and Donelson worked alone, except for Jackson and Ralph Earl, an artist who lived at the White House and used this room as a studio, painting away, oblivious of the tense consultations, the hasty scribbles, the words crossed out, the phrases laboriously worked over, the notes torn up and discarded. On the second day Levi Woodbury, having decided to change his stand, made an unabashed appearance and assisted till the job was done, Jackson meanwhile passed in and out of the room, listening to the different parts, weighing the various suggestions and directing what should be inserted or altered.

The message, dated July 10, burst like a thunderclap over the nation. Its core was ringing statement of Jackson's belief in the essential rights of the common man. "It is to be regretted, that the rich and powerful too often bend the acts of government to their selfish purposes, " Jackson declared. "Distinctions in society will always exist under just government. Equality of talents, of education , or of wealth can not be produced by human institutions. In the full enjoyment of the gifts of Heaven and the fruits of superior industry, economy, and virtue, every man is equally entitled to protection by law; but when the laws undertake to add to these natural and just advantages artificial distinctions É to make the rich richer and the potent more powerful, the humble members of society- the farmers, mechanics, and laborers- who have neither the time nor the means of securing like favors to themselves, have a right to complain of the injustice of their Government."

But the case against the Bank could not rest simply on generalities. Jackson's real opposition, of course, and that of Benton, Taney and Kendall arose from their hard-money views. Yet, a great part of their backing came from cheap- money men. Thus powerful hard-money arguments- the economic argument that the paper system caused periodic depression, and the social argument that it built up an aristocracy- were unavailable because they were as fatal to the debtor and state banking positions as to the Bank itself.

The veto message was brilliantly successful in meeting this dilemma. It diverted attention from the basic contradiction by its passages of resounding and demagogic language; it played down the strictly economic analysis; and it particularly sought to lull Western fears by dwelling on the hardships worked by the long arm of the Bank in the Mississippi Valley. Its main emphasis fell, first, on the case against the Bank as unconstitutional, and then on the political argument that the Bank represented too great a centralization of power under private control. The stress on the "great evils to our country and its institutions [which] might flow from such a concentration of power in the hands of a few men irresponsible to the people" sounded good to the state banks and to the West, both of which had chafed long enough at the ascendancy of Chestnut Street. The message thus thrust to the foreground the issues on which all enemies of the Bank could unite, while the special aims of the hard-money school remained safely under cover.

The distinction between "the humble members of society" and "the rich and powerful" drew quick reactions from both classes. The common man through the land responded enthusiastically to his leader's appeal. "The veto words well everywhere," Jackson could report from the Hermitage in August; "it has put down the Bank instead of prostrating me."

But men who believed that the political power of the business community should increase with its wealth were deeply alarmed. When Jackson said, "It is not conceivable how the present stockholders can have any claim to the special favor of the Government," did he mean that the common man had the same rights as the rich and well born to control of the state? The Bank of the United States, according to the plan of Hamilton, would serve as the indispensable make-weight for property against the sway of numbers. Did not the veto message attack the very premises of Federalism, rejecting its axioms, destroying its keystone and rallying the groups in society bent on its annihilation?

No wonder Nicholas Biddle roared to Henry Clay, "It has all the fury of a chained panther. biting the bars of his cage. It is really a manifesto of anarchy, such as Marat or Robespierre might have issued to the mob of the Faubourg St. Antoine." Or, as Alexander H. Everett wrote in Boston's conservative daily, the Advertiser, "For the first time, perhaps, in the history of civilized communities, the Chief Magistrate of a great nation É is found appealing to the worst passions of the uninformed part of the people, and endeavoring to stir up the poor against the rich." Webster, rising gravely in the Senate, summed up the indictment: "It manifestly seeks to influence the poor against the rich. It wantonly attacks whole classes of the people, for the purpose of turning against them the prejudices and resentments of other classes. It is a State paper which finds no topic too exciting for its use, no passion too inflammable for its address and its solicitation." For Webster, as for Jackson, it was becoming a battle between antagonistic philosophies of government: one declaring, like Webster at the Massachusetts convention, that property should control the state; the other denying that property had a superior claim to governmental privileges and benefits.

The veto struck consternation through some parts of the Democratic party. The summer and fall of 1832 saw a hasty recasting of party lines. In Boston, the ex-Federalist silk-stocking Democrats scurried back to their natural political allegiances, even at the cost of associating once again with John Quincy Adams. In New York, conservative politicians like G.C. Verplanck and businessmen like Moses H. Grinnell abandoned the radicals. Almost every city had its meeting of "original Jackson men" to disown the administration and renounce its works.

Two thirds of the press, largely perhaps because of advertising pressure, supported the Bank. Even such a theoretically unpolitical family magazine as the Saturday Evening Post had opinions which led the Washington Globe to denounce it, in terms which would appeal to later generations, for conveying "its stealthy political influence into the bosom of such families as avoided the contests of politics. Biddle also hired such august journals as Robert Walsh's American Quarterly Review to print pro-Bank articles.

A part of the business community stuck by Jackson. Some merchants opposed the concentration of power in the Bank. Some distrusted Biddle. Some hoped the Bank would be replaced by a Democratic Bank of the United States in which they might hold stock. Some were investors of officers in state banks with an eye on the government deposits. But they made up a small part of the whole. "Since landing in America," noted young Tocqueville, "I have practically acquired proof that all the enlightened classes are opposed to General Jackson."

As the day of election drew near, the universal debate went on with increasing acrimony, from the shacks of Maine fishermen to the parlors of Philadelphia the plantations of Alabama. An epidemic of cholera swept though the North in the first months of summer. "If it could only carry off Jackson and a few other of our politicians by trade," wrote Henry C. Carey, Philadelphia publisher and economist, "I would submit to all the inconveniences of it for a month or tow." The din of politics, filling the cabin of a ship bound for America, wearied a charming British actress: "Oh, hang General Jackson!" cried Fanny Kemble.

August gave way to September, September to October, and the clamor grew increasingly furious. Jackson men paraded the streets in the glare of torches,m singing campaign songs, carrying hickory poles, gathering around huge bonfires blazing high into the night. Late in October, Horace Binney solemnly told a Philadelphia audience that "the preservation of the Constitution itself" depends on the defeat of Jackson, congratulation them that the right of a free election could still be exercised with safety." How long it will continue so, or how long the enjoyment of it will be of any value to you, are questions upon which the short remainder of the present year will probably furnish materials for a decisive judgment." Fanny Kemble, resting in Philadelphia after her successes in Washington (where she had dazzled Chief Justice Marshall and Justice Story as well as Frank Blair of the Globe) was assured by her friends that Henry Clay, "the leader of the aristocratic party," was already certain of election.

But the people had not spoken. Soon their time came: "The news from the voting States," Rufus Choate wrote to Edward Everett "blows over us like a great cold storm." The results rolled in: Jackson, 219, Clay 49, John Floyd, 11, William Wirt, 7. The bitterness with which conservatism faced the future flared up briefly in a post-election editorial in Joseph T. Buckingham's Boston Courier. "Yet there is one comfort left: God has promised that the days of the wicked shall be short; the wicked is old and feeble, and he may die before he can be elected. It is the duty of every good Christian to pray to our Maker to have pity on us.

Mr. McDuffie was addressing the House. He stammered, he shouted and screamed, he banged his desk and stamped the floor . The crowded galleries listened with fascination.

Sir, [ a thump on desk upon a quire of paper heavy enough to echo over the whole hall] sir, South Carolina is oppressed, [a thump.] A tyrant majority sucks her life blood from her, [ a dreadful thump]. Yes, sir, [a pause] yes, sir, a tyrant [a thump] majority unappeased, [arms aloft] unappeasable, [horrid scream] has persecuted and persecutes us, [a stamp on the floor.] We appeal to them, [low and quick,] but we appeal in vain, [loud and quick.] We turn to our brethren of the north, [low with a shaking of the head]and pray them to protect us, [a thump] but we t-u-r-n in v-a-i-n, [prolonged and a thump.] They heap coals of fire in our heads, [with immense rapidity] - they give us burden on burden; they tax us more and more[very rapid, slam-bang, slam-a hideous noise] We turn to our brethren of the south, [ slow with a solemn, thoughtful air.] We work with them; we fight with them; we vote with them; we petition with them; [common voice and manner] but the tyrant majority has no ears, no eyes, no form, [quick] deaf, [long pause] sightless, [pause] inexorable, [slow, slow.] Despairing, [a thump] we resort to the rights [a pause] which God [a pause] and nature has given us, [thump, thump], thump] É

They listened to more than just the ferocity of McDuffie: behind his hot periods raged the anger of a whole state, and behind his violent gesticulations stood the cold, consecrated figure of Calhoun, no longer Vice- President, now Senator from South Carolina. In July, 1832, Jackson had signed a new tariff bill, lowering the duties but leaving them still clearly protective. South Carolina, unsatisfied, prepared to object. The complex abstractions of the Exposition of 1828 were now seen to be tipped with steel, and nullification marched out of the study into the battlefield. Late in November, a state convention declared the tariffs of 1828 and 1832 void within the state after February 1, 1833.

Jackson met the South Carolina ordinance with a ringing proclamation on the nature of the Union, drawn up in large part by Edward Livingston. As the crisis approached, a "force bill," authorizing the President to use force to execute the laws, was introduced in the Senate. At the same time, however, the President acted to abate the actual grievance by furthering a compromise on the tariff. Late in December friends of Van Buren sponsored a much lower tariff bill into the House. Henry Clay, aware of the nation's peril but reluctant to enhance Van Buren's prestige or to reduce rates unduly, countered with a somewhat more protectionist compromise. By some parliamentary sleight-of-hand the Clay bill replaced the first bill in the House; and it also quickly passed the Senate with the support of Calhoun, who thought higher duties a small price to pay for the pleasure of thwarting Ban Buren and the administration.

With compromise achieved, South Carolina now rescinded the ordinance nullifying the tariff, but, to score a final victory for its logic, it passed another, nullifying the now unnecessary force bill. This was a hollow triumph, for the episode had shown that in practice nullification was indistinguishable from rebellion and would call down the force of the government. Though nullification had paid its way this time, everyone knew it never would again.

By his masterly statesmanship Jackson had maintained the supremacy of the Union. But, in so doing, he had committed himself to doctrines on the nature of the Union which frightened the State-rights fundamentalists among his supporters. The spectacle of Daniel Webster and John Quincy Adams defending Jackson in Congress, and of Justice Story remarking that he and Marshall had become the President's "warmest supporters," deepened Jeffersonian misgiving. Van Buren, ever cautious, was gravely concerned. C.C. Cambeleng objected to "the metaphysics of the Montesquieu of the Cabinet" as he labeled Livingston, but consoled himself that "happily the mass of the the people sleep over such parts of it and dwell only on those which make them think and feel like men." Benton was without enthusiasm. Many years later, after guns had boomed over Sumter, Taney declared that he had not seen the proclamation until it was in print and that he disapproved some of its principles. Young Theodore Sedgwick, Jr., of Massachusetts asked the essential question: could Jeffersonians "endure from any other man the profession of the same sentiments which they received with acclamation from General Jackson? Would these Doctrines be as safe in any other hands as they are in his?'

Yet only a few politicians and intellectuals worried about constitutional hairsplitting. The mass of the people, as Cambreleng observed, slept over such passages while responding unreservedly to the central appeal- the preservation of the Union. Party lines faded as men who had cursed Jackson a few months before now rushed to praise him. "It is amusing to witness the unanimity of public opinion at this moment," commented the popular novelist, Catharine Maria Sedgwick, "- to hear the old sober standard anti Jackson men, who tho't the republic was lost if he were reelected say 'well: I really believe it is all for the best that Jackson is is president.'" It would not be the last time that conservatism, scared by national crisis, would shelter itself gratefully behind the vigorous leadership of a Democratic President it had previously denounced.

Jackson became for the moment the country's hero. It was whispered that even Daniel Webster, dissatisfied with a junior partnership in the opposition, would join the administration. Webster himself was reported to regard Jackson's anti-Bank attitude as the only obstacle- which led Louis McLane to remark, "I consider this only the last qualm of a frail lady who notwithstanding, finally falls into the arms of the seducer." But why, in any case, should Jackson not forget the Bank? As McLane added, "If he devote the remainder of his term to tranquilize the public mind, he will go into retirement with greater fame than any other man in our history."

But these calculations omitted General Jackson, who cared less for his popularity than for his program. Early in December, Amos Kendall mad one of his rare public speeches to the Central Hickory Club. "In all civilized as well as barbarous countries," he declared, "a few rich and intelligent men have built up Nobility systems; by which, under some name, and by some contrivance, the few are enabled to live upon the labor of the many." These ruling classes, he said, have had many names- kings, lords, priests, fundholders, but all "are founded on deception, and maintained by power. The people are persuaded to permit their introduction, under the plea of public good and public necessity. As soon as they are firmly established, they turn upon the people, tax and control them by the influence of monopolies, the declamation of priest craft and government-craft, and in the last resort by military fore." Was America immune form this universal pattern? "The United States,' said Kendall ominously, "have their young Nobility System. Its head is the Bank of the United States; its right arm, a protecting Tariff and Manufacturing Monopolies; its left, growing State debts and States incorporations." The friends of Daniel Webster might well ponder these quiet words.

Jackson's re-election and the popular acclaim following the nullification crisis only reinforced the administration's resolve to press the offensive against the American "Nobility System." The first necessity was to destroy its "head," the Bank. But the charter still had well over three years to run. The Bank was still backed by the National Republican party, most of the press and many leading citizens. And the custody of the government deposits, the radicals feared, provided the Bank with campaign funds for recharter. Generous loans subsidies and retainers, strategically distributed, might substantially change public opinion before 1836. Moreover, the government deposits, by enabling the Bank to take most of the specie out of circulation in exchange for its bank notes, might place Biddle in a position, just before the election of 1836, to create a financial panic and insure the success of Bank candidates and the recharter of the Bank.

The solution lay in withdrawing the deposits. This would cripple the Bank's attempt to convulse the money market and probably provoke it into an all-out fight against the only man who could whip it, thus foreclosing the issue once and for all. Jackson seems to have decided on this course shortly after his re-election. It was his own plan, "conceived by him," as Benton later wrote, "carried out by him, defended by him, and its fate dependent upon him." Taney, Kendall and Blair actively supported him while Barry added his crumbling influence. Benton, vastly pleased, for some reason played little part in working out the details. Woodbury remained inscrutable, with McLane, Livingston and Cass all hostile.

McLane and Biddle, indeed, went quickly to work to forestall the President. A special Treasury investigator reported early in 1833 that the Banks was sound, and in March the House upheld a majority report of the ways and Means Committee declaring the funds perfectly safe in the Bank's custody. These incidents only confirmed the radicals' conviction of the extent of Biddle's power.

The campaign for removal slowed down in May and June, during the President's trip to New York and New England. No overt act had yet destroyed his almost universal popularity and the tour proved a long triumphal procession, marked by the thunder of cannon, the cheering of crowds, pompous reception committees and interminable banquets. General Jackson, though tormented by a throbbing pain in his side and the bleeding of his lungs, remained resolute and erect through it all.

As he rode through the streets of New York on a fragrant summer morning , a boy in the crowd turned devoted eyes on the President. The fine old man, with his weatherbeaten face, snow-white hair and penetrating eyes, waving his big-brimmed beaver hat gravely the throng, formed a picture fixed indelibly in the mind of young Walter Whitman. (From such experiences, endlessly mulled, meditated, distilled, sinking deep into the reflexes of consciousness, and rising again to liberate language for the new spaciousness of democratic living, there would emerge Walt Whitman, free and unconquerable, poet and seer of democracy.) Jackson carried Manhattan by storm. Philip Hone, poorly ex-auctioneer, pillar of New York's parvenu society, commented ruefully the the President was "certainly the most popular man we have ever know. Washington was not so much so . . . He has a kind expression for each- the same to all, no doubt, but each thinks it intended for himself. His manners are certainly good and he makes the most of them ... Adams is the wisest man, the best scholar, the most accomplished statesman but Jackson has most tact. So huzza for Jackson!"

So huzza for Jackson, and on to New England, ancient stronghold of Federalism, and to Boston citadel of Mr.Webster- everywhere, huzza for Jackson! At the Massachusetts border the General was greeted by young Josiah Quincy, a relative of ex-President Adams, bred on Boston notions of Jackson, and to his dismay appointed official escort for the President, But a single day converted Mr. Quincy: this Tennessean was no ignorant savage, but "a knightly personage," a man worthy to be President, in fact, even worthy of a Harvard degree. The elder Josiah Quincy, president of the college, called a sudden meeting of the overseers of that very purpose. Thus Jackson, his health growing steadily worse, found himself a Doctor of Laws (a courtesy which infuriated John Quincy Adams). Dr. Jackson moved on , to Charlestown, Lynn and up the North Shore. Outside Salem the dim figure of Nathaniel Hawthorne, watched eagerly through the falling dusk for a glimpse of the old her. That night, Jackson was prostrated by a hemorrhage of his lungs, but the next day he continued indomitably toward New Hampshire. At Concord he finally collapsed and was hurried back to Washington.

In the meantime the transfer of Livingston to the French ministry and of McLane to the State Department had created a vacancy in the Treasury for which McLane proposed William J. Duane, the Philadelphia lawyer who had signed the anti-Bank report of the working-men's meeting in March, 1829. Jackson approved, and Duane took office on June 1. This appointment raised fresh difficulties. Though Duane could hardly have been much surprised on learning Jackson's sentiments about removal, he played an equivocal part neither accepting nor opposing the President's views, but stalling and obstructing. Kendall and Reuben M. Whitney, another veteran of the working,en's meeting in 1829, were working out the details of a system of deposit in selected state banks, and Duane finally agreed to resign if, after Kendall's report, he still found himself unable to take the desired action.

July, as usual, was unbearable in Washington. Jackson, sick and weary, prepared to go to Ripraps in Virginia for a rest. Where, in this moment of loneliness, stood the Vice-President? Van Buren, at first had opposed immediate removal. The imminence of 1836, and his role as heir-apparent, had probably intensified his natural caution. Sometime in the spring, during a heated discussion with Van Buren, Amos Kendall, rising from his seat in excitement, warned that a Bank Victory in 1836 was certain unless it were stripped of the power it gained form managing the public money: " I can live under a corrupt despotism, as well as another man, by keeping out of its way, which I shall certainly do." Impressed by Kendall's vehemence, Van Buren changed his attitude, though he never allowed himself to become identified with the measure. His own private council, the Albany Regency, was divided, Silas Wright favoring delay, while A.C. Flagg and John A. Dix supported the President. During August and September Van Buren traveled around New York, first to Saratoga, then, with Washington Irving, taking a four-week tour of the Dutch settlements on Long Island and the North River, always one step ahead of the Washington mail. For once he was living up to his reputation.

Frank Blair accompanied Jackson to the seaside, where the two households spent a pleasant month, the invigorating salt air restoring Jackson's appetite and improving his health. Letters bombarded the President, pleading with him not to disturb the deposits. What seemed an organized campaign only strengthened his purpose: "Mr. Blair, Providence may change me but it is not in the power of man to do it." In spare moments, he shaped= his note into a militant and uncompromising document. Returned to the White House late in August, he resolved to end the matter before Congress convened.

On September 10 he presented Kendall's report on the state banks to the cabinet. Taney and Woodbury backed the proposal to discontinue placing funds with the Bank on October 1, while McLane, Cass and Duane vigorously opposed it. Duane's assent as Secretary of the Treasury was necessary for the action. By September 14 Jackson, having tortuously overcome his scruples against discharging persons who disagreed with him, suggested to Duane that he resign; perhaps he might be named Minister to Russia. Duane refused. The next day Jackson handed Taney for revision the fiery paper he had dictated at Ripraps. On the eighteenth he read this paper to the cabinet. Two days later the Globe announced the plan to cease deposits in the Bank after October 1. Duane continued in frightened obstinacy, agreeing to the removal of neither the deposits nor himself. "He is either the weakest mortal, or the most strange composition I have ever met with," Jackson wrote in exasperation. The next five days exhausted even the President's patience. He dismissed Duane and appointed Taney to the place.

He now faced the threatened resignations of McLane and Cass. A friend of the Secretary of War told Blair that Cass would remain if a paragraph in the President's statement would exempt him form responsibility. Jackson amused at the suggestion that Cass might be held responsible, said, " I am very willing to let the public know that I take the whole responsibility," and conceded the point. The amended message went off to the Globe for publication, and the next morning Blair took Taney the proofs. Taney, black cigar in mouth and feet on table, listened as Andrew J. Donelson read the message aloud. "How under heaven did that get in?" exclaimed Taney on hearing the inserted passage. When Blair explained, Taney observed, "This has served Cass and McLane; but for it they would have gone out and have been ruined- as it is, they well remain and do us much mischief.:

The radical Jacksonians exulted at the removal. "This is the crown-

________________________
Source : Schlesinger, Arthur. "Veto," The Age of Jackson. (Little, Brown, and Co. 1945), pp. 89-114

 

More than forty years have passed since Catterall's monograph on the second Bank of the United States was published, and, though that account has never been superseded, it antedates all recent literature on central banking and therefore presents inadequately the public purposes of the bank. Furthermore, it includes nothing about the bank's Pennsylvania successor, which failed, and thus omits the denouement of Biddle's conflict with Jackson. The inevitable effect of the failure, in the rough justice of history, was to make Jackson seem right and Biddle wrong; and this impression, especially in the absence of attention to the purpose and functions of the bank, seems in recent years to have been strengthened. 1 think it needs correction.

[1]

The Bank of the United States-the B.U.S. as Biddle and others often called it-was a national institution of complex beginnings, for its establishment in 1816 derived from the extreme fiscal needs of the federal government, the disorder of an unregulated currency, and the promotional ambitions of businessmen. The bank had an immense amount of private business-as all central banks then had and as many still have-yet it was even more definitely a government bank than was the Bank of England, the Bank of France, or any other similar institution at the time. The federal government owned one fifth of its capital and was its largest single stockholder, whereas the capital of other central banks was wholly private. Government ownership of central-bank stock has become common only in very recent years. Five of the bank's twenty-five directors, under the terms of its charter, were appointed by the President of the United States, and no one of these five might be a director of any other bank. Two of its three successive presidents-William Jones and Nicholas Biddle-were chosen from among these government directors. The charter made the bank depository of the government and accountable to Congress and the Secretary of the Treasury.

On this depository relation hinged control over the extension of credit by banks in general, which is the essential function of a central bank. The government's receipts arose principally from taxes paid by importers to customs collectors; these tax payments were in bank notes, the use of checks not then being the rule; the bank notes were mostly those of private banks, which were numerous and provided the bulk of the money in circulation; the B.U.S. received these notes on deposit from the customs collectors and, becoming thereby creditor of the private banks that issued them, presented them to the latter for payment. Banks that extended credit properly and maintained adequate gold and silver reserves were able to pay their obligations promptly on demand. Those that overextended themselves were not. The pressure of the central bank upon the private banks was constant, and its effect was to restrict their lending and their issue of notes. In this fashion, it curbed the tendency of the banks to lend too much and so depreciate their circulation.' Its regulatory powers were dependent on the private banks' falling currently into debt to it. The regulatory powers now in effect under the Federal Reserve Act depend upon the opposite relation-that is, upon the private banks' maintaining balances with the Federal Reserve Banks. The private banks were then debtors to the central bank; they are now creditors. The regulatory powers of the United States Bank were simpler, more direct, and perhaps more effective than those of the Federal Reserve Banks, though they would not be so under present-day conditions.

It was notorious that large and influential numbers of the private banks and official state banks resented this regulation of their lending power. All but the more conservative found it intolerable to be let and hindered by the dunning of the B.U.S. and forced to reduce their debts instead of enlarging their loans. Many of them had the effrontery to insist as a matter of right that they be allowed to pay the central bank if and when they pleased. The effort of various states, especially Maryland and Ohio, to levy prohibitory taxes on the United States Bank's branches reflects this desire of the private banks to escape regulation quite as much as it reflects the states' jealousy of their -invaded- sovereignty; the efforts were economic as well as political.

In 183 1, Gallatin commended the bank for its conduct during the twenties; it had -effectually checked excessive issues" by the state banks; "that very purpose" for which it had been established had been fulfilled. On the regulatory operation of the bank, "which requires particular attention and vigilance and must be carried on with great firmness and due forbearance, depends almost exclusively the stability of the currency. . . ." The country's "reliance for a sound currency and, therefore, for a just performance of contracts rests on that institution.- In 1833 he wrote to Horsley Palmer, of the Bank of England, that "the Bank of the United States must not be considered as affording a complete remedy," for the ills of overexpansion, "but as the best and most practicable which can be applied"; and its action "had been irreproachable- in maintaining a proper reserve position---as late as November 1830." Though Gallatin did not say so, this was in effect praise of Nicholas Biddle's administration of the bank.

The powerful expansion of the economy in the nineteenth century made it necessary for the regulatory action of the bank to be mostly one of restraint, but there was occasion also for it to afford ease as holder of the ultimate reserves and lender of last resort. One of the first things it did was to end the general suspension that the country had been enduring for more than two years; and a crucial factor in the willingness and ability of the private banks to resume payment of their obligations was the pledge of the United States Bank that it would support them. This, Vera Smith writes, was---a very early declaration of the view that it is the duty of the central bank to act as lender of last resort."

The regulatory functions of the bank were not always well performed. Its first president, William Jones, was a politician who extended credit recklessly, rendered the bank impotent to keep the private banks in line, and nearly bankrupted it-all in a matter of three years. Langdon Cheves put the bank back in a sound condition by stern procedures that were unavoidably unpopular. When Nicholas Biddle succeeded Cheves in 1823, the bank was strong in every respect but good will. Biddle repressed the desires of the stockholders for larger dividends, keeping the rate down and accumulating reserves. The art of central banking was not so clearly recognized then as it has since become, but Biddle advanced it, and with better luck he might well be memorable for having developed means of mitigating the tendency to disastrous, periodic crises characteristic of the nineteenth century in the United States.

But Biddle, with all his superior talents, was not very discreet. He had an airy way of speaking that shocked his more credulous enemies and did him irreparable harm; and, when he described the functions of the bank, he contrived to give a livelier impression of its power than of its usefulness. Once when asked by a Senate committee if the B.U.S. ever oppressed the state banks, he said, "never": although nearly all of them might have been destroyed, many had been saved and still more had been relieved. This was ineffable in a man of Biddle's exceptional abilities. It put a normal situation in a sinister and uncouth light. A wanton abuse of regulatory powers is always possible, and abstention from it is not to be boasted of-any more than a decent man would boast of not choosing to be a burglar. By talking so, Biddle made his opponents feel sure he had let the cat out of the bag. For Thomas Hart Benton he had proved entirely too much-that he had a dangerous power "over the business and fortunes of nearly all the people." Jackson referred in his veto to Biddle's remark, and Roger Taney was still shuddering at the disclosure many years later. He believed then and he believed still, he wrote, that there was a scheme to close every state bank in the Union. He believed ---that the matter had been thought of, and that the manner in which it could be done was well understood." That people believed such things, Biddle had his own jauntiness, naivete, and political ineptitude to thank.

[ II ]

When Jackson became president in 1829, the B.U.S. had survived what then seemed its most crucial difficulties. The Supreme Court had affirmed and reaffirmed its constitutionality and ended the attempts of unfriendly states to interfere with it. The Treasury had long recognized its efficient services as official depository. The currency was in excellent condition. Yet in his first annual message, Jackson told Congress that "both the constitutionality and the expediency of the law creating the bank were 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."

There is nothing remarkable about Jackson's doubts of the bank's constitutionality, for he did not defer his own judgment to John Marshall's nor, in general, had the Supreme Court's opinions attained their later prestige. His statement that the bank had failed in establishing a good currency is more difficult to understand, for it was plainly untrue in the usual sense of the words. But he was evidently using the words in the special sense of Locofoco hard-money doctrine, according to which the only good money was gold and silver; the Constitution authorized Congress to coin it and regulate its value; the states were forbidden to issue paper and the federal government was not empowered to do so. Jackson, wrote C. J. Ingersoll,"considers all the state banks unconstitutional and impolitic and thinks that there should be no currency but coin." There were practical considerations no less important than the legal. It was evident to the anti-bank people that banking was a means by which a relatively small number of persons enjoyed the privilege of creating money to be lent, for the money obtained by borrowers at banks was in the form of the banks' own notes. The fruits of the abuse were obvious: notes were over issued, their redemption was evaded, they lost their value, and the innocent husbandman and mechanic who were paid in them were cheated and pauperized. "It is absurd," wrote Taney, "to talk about a sound and stable paper currency." There was no such thing. So, in Jackson's opinion, if the United States Bank was not establishing a metallic currency, it was not establishing a constitutional or sound and uniform one. His words might seem wild to the contaminated, like Gallatin and Biddle, but they were plain gospel truth to his sturdy anti-bank, hard-money agrarians.

Hard money was a cardinal tenet of the left wing of the Democratic party. lt belonged with an idealism in which America was still a land of refuge and freedom rather than a place to make money. Its aim was to clip the wings of commerce and finance by restricting the credit that paper money enabled them to obtain. There would then be no vast debt, no inflation, no demoralizing price changes; there would be no fluctuant or disappearing values, no swollen fortunes, and no grinding poverty. The precious metals would impose an automatic and uncompromising limit on the volatile tendencies of trade. "When there was a gold and silver circulation," said an agrarian in the Iowa constitutional convention of 1844, -there were no fluctuations; everything moved on smoothly and harmoniously." The Jacksonians were even more devoted to the discipline of gold than the monetary conservatives of the present century.

There was also a pro-bank, -paper money wing," which harbored the Democratic party's less spiritual virtues. Its strength lay with free enterprise, that is, with the new generation of businessmen, promoters, and speculators, who found the old Hamiltonian order of the Federalists too stodgy and confining. These were -Democrats by trade," as distinguished from -Democrats in principle"; one of the latter wrote sarcastically in the Democratic Review in 1838, ---Being a good Democrat, that is to say, a Democrat by trade (Heaven fore fend that any son of mine should be a Democrat in principle)-being a good Democrat by trade, he got a snug slice of the public deposits." Fifty years before, business had fostered the erection of a strong federal government and inclined toward monopoly; in the early nineteenth century it began to appreciate the advantages offered by laissez faire and to feel that it had more to gain and less to fear from the states than from the federal government. This led it to take on the coloration and vocabulary of Jacksonian democracy and to exalt the rugged individualism of the entrepreneur and speculator along with that of the pioneer.

The private banks and their friends had helped to kill the first Bank of the United States twenty years before, but the strength they could muster against the second was much greater. Herein lies the principal difference between the situation of the old bank when Jefferson became president in 1801 and the situation of the second when Jackson became president in 1829. Both men disapproved of the national bank and yet were inhibited by its being accepted in their own party and performing well its evidently important functions. There were also the differences that Jefferson was more amenable to reason than Jackson, that he had in Gallatin a better adviser than any Jackson had, and that the bank was under a more passive management in his day than in Jackson's. But of most importance was the greater pressure the private banks were able to exert in Jackson's time than in Jefferson's. Between 1801 and 1829 their number had greatly increased, as had the volume of their business and the demand for credit. The records indicate that in 1801 there were 31 banks, in 1829 there were 329, and in 1837 there were 788-an increase of 140 percent during Jackson's administration alone. These banks were associated to a marked extent with the Democratic party, especially in New York. Their opposition to federal regulation was therefore far greater in 1829 than in 1801, and it did more for Jackson's victory over the national bank than did the zeal of his hard-money Locofocos. De Tocqueville wrote that "the slightest observation" enabled one to see the advantages of the B.U.S. to the country and mentioned as most striking the uniform value of the currency it furnished. But the private banks, he said, submitted with impatience to "this salutary control- exercised by the B.U.S. They bought over newspapers. "They roused the local passions and the blind democratic instinct of the country to aid their cause. . . ." Without them, it is doubtful if the Jacksonians could have destroyed the B.U.S.

The Jacksonian effort to realize the hard-money ideals was admirable, viewed as Quixotism. For however much good one may find in these ideals, nothing could have been more unsuited than they were to the American setting. In an austere land or among a contemplative and self-denying people they might have survived but not in one so amply endowed as the United States and so much dominated by an energetic and acquisitive European stock. Nowhere on earth was the spirit of enterprise to be more fierce, the urge for exploitation more restless, or the demand for credit more importunate. The rise of these reprobated forces spurred the agrarians, and as business itself grew they came to seek nothing less than complete prohibition of banking. Yet they chose to destroy first the institution which was curbing the ills they disapproved, and to that end they leagued with the perpetrators of those ills. Jackson made himself, as de Tocqueville observed, the instrument of the private banks. He took the government's funds out of the central bank, where they were less liable to speculative use and put them in the private banks, where they were fuel to the fire. He pressed the retirement of the public debt, and he acquiesced in distribution of the federal surplus. These things fomented the very evils he deplored and made the Jacksonian inflation one of the worst in American history. They quite outweighed the Maysville veto, which checked federal expenditures on internal improvements, and the specie circular, which crudely and belatedly paralyzed bank credit.

As a result, Jackson's presidency escaped by only two months from ending like Hoover's in 1933. Far from reaching the happy point where the private banks could be extirpated and the hands of the exploiters and speculators could be tied, Jackson succeeded only in leaving the house swept and garnished for them; and the last state of the economy was worse than the first. He professed to be the deliverer of his people from the oppressions of the mammoth-but instead he delivered the private banks from federal control and his people to speculation. No more striking example could be found of a leader fostering the very evil he was angrily wishing out of the way.

But this was the inevitable result of the agrarian effort to ride two horses bound in opposite directions: one being monetary policy and the other states' rights. Monetary policy must be national, as the Constitution doubly provides. The agrarians wanted the policy to be national, but they eschewed the practicable way of making it that, and, instead of strengthening the national authority over the monetary system, they destroyed it. Where they were unencumbered by this fatal aversion to centralized power, they accomplished considerable. In Indiana they set up an official State Bank, with branches, which from 1834 to 1853 was the only source of bank credit permitted and yet was ample for all but the most aggressive money-makers, who finally ended its monopoly. In Missouri, they established the Bank of Missouri, with branches, a state monopoly which lasted from 1837 to 1857, when it too succumbed to free enterprise. And in Iowa, another monopoly, the Bank of Iowa, with branches, was in operation from 1858 till 1865, when free banking penetrated the state under authority of the National Bank Act. These instances indicate that if the hard-money agrarians had had a conception of national government less incompatible with their social purposes, they might have tempered rather than worsened the rampant excesses of nineteenth-century expansion that so offended them.

But as it was, they helped an acquisitive democracy take over the conservative system of bank credit introduced by Hamilton and by the merchants of Philadelphia and New York and limber it up to suit the popular wish to get rich quick. Wringing their hands, they let bank credit become the convenient key to wealth-the means of making capital accessible in abundance to millions of go-getting Americans who otherwise could not have exploited their natural resources with such whirlwind energy. The excesses of that energy have forced the Jacksonian hard-money heroics to be slowly undone: the federal government's authority over money, the Treasury's close operating contact with the banking system, and the central-bank controls over credit have been haltingly restored. Credit itself, in the surviving American tradition, is not the virus the agrarians held it to be but the lifeblood of business and agriculture, and the Jacksonian hard-money philosophy has been completely forgotten, especially by Jackson's own political posterity.

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Source : Hammond, Bray. "Jackson, Biddle, and the Bank of the United States," Journal of Economic History, VII (May, 1947), 1-10.