[MR. CLAY here explains to the electors of the congressional
district of Kentucky which he represented, the grounds of his
change of opinion on the subject of a national bank. We have
seen, by his speech delivered in the senate of the United States,
in 1811, that he had opposed the renewal of the charter of
the first bank of the United States, and now, in 1816, he had
advocated the bill brought in by Mr. Calhoun, of South Carolina,
for incorporating a similar institution, which bill passed both
houses of congress, and received the signature of president
Madison.[7] A perusal of the following address will, it is
believed, satisfy all candid persons of the sincerity and
patriotism of Mr. Clay, on both occasions. As one of his
biographers remarks, ‘there is no other instance, in the whole
history of his life, where he has changed his opinions, on an
important subject. His ingenuousness is evinced by his having
changed _once_, but his firmness by his having done so _but_
once. And what was it that wrought this single revolution in his
sentiments? A mighty event, whose consequences could be learned
only from experience――the occurrence of a war with Great Britain,
which changed, not only his views of the policy of a bank, but
those of almost every other leading politician in the country.’]
ON one subject, that of the bank of the United States, to which at
the late session of congress he gave his humble support, Mr. Clay felt
particularly anxious to explain the grounds on which he had acted.
This explanation, if not due to his own character, the state, and
the district to which he belonged, had a right to demand. It would
have been unnecessary, if his observations, addressed to the house
of representatives, pending the measure, had been published; but they
were not published, and why they were not published he was unadvised.
When he was a member of the senate of the United States, he was
induced to oppose the renewal of the charter to the old bank of the
United States by three general considerations. The first was, that
he was instructed to oppose it by the legislature of the state. What
were the reasons that operated with the legislature, in giving the
instruction, he did not know. He has understood from members of that
body, at the time it was given, that a clause, declaring that congress
had no power to grant the charter, was stricken out; from which it
might be inferred, either that the legislature did not believe a
bank to be unconstitutional, or that it had formed no opinion on that
point. This inference derives additional strength from the fact, that,
although the two late senators from this state, as well as the present
senators, voted for a national bank, the legislature, which must have
been well apprized that such a measure was in contemplation, did not
again interpose, either to protest against the measure itself, or to
censure the conduct of those senators. From this silence on the part
of a body which has ever fixed a watchful eye upon the proceedings of
the general government, he had a right to believe, that the legislature
of Kentucky saw, without dissatisfaction, the proposal to establish
a national bank; and that its opposition to the former one was upon
grounds of expediency, applicable to that corporation alone, or no
longer existing. But when, at the last session, the question came up
as to the establishment of a national bank, being a member of the house
of representatives, the point of inquiry with him, was, not so much
what was the opinion of the legislature, although undoubtedly the
opinion of a body so respectable would have great weight with him
under any circumstances, as, what were the sentiments of his immediate
constituents. These he believed to be in favor of such an institution,
from the following circumstances. In the first place, his predecessor
(Mr. Hawkins) voted for a national bank, without the slightest murmur
of discontent. Secondly, during the last fall, when he was in his
district, he conversed freely with many of his constituents upon that
subject, then the most common topic of conversation, and all, without
a single exception, as far as he recollected, agreed that it was a
desirable if not the only efficient remedy for the alarming evils
in the currency of the country. And, lastly, during the session, he
received many letters from his constituents, prior to the passage
of the bill, all of which concurred, he believed without a solitary
exception, in advising the measure. So far then from being instructed
by his district to oppose the bank, he had what was perhaps tantamount
to an instruction to support it――the acquiescence of his constituents
in the vote of their former representative, and the communications,
oral and written, of the opinions of many of them in favor of a bank.
The next consideration which induced him to oppose the renewal of
the old charter, was, that he believed the corporation had, during
a portion of the period of its existence, abused its powers, and
had sought to subserve the views of a political party. Instances
of its oppression, for that purpose, were asserted to have occurred
at Philadelphia and at Charleston; and, although denied in congress
by the friends of the institution, during the discussions on the
application for the renewal of the charter, they were, in his judgment,
satisfactorily made out. This oppression, indeed, was admitted in
the house of representatives, in the debate on the present bank, by
a distinguished member of that party which had so warmly espoused the
renewal of the old charter. It may be said, what security is there,
that the new bank will not imitate this example of oppression? He
answered, the fate of the old bank, warning all similar institutions
to shun politics, with which they ought not to have any concern;
the existence of abundant competition, arising from the great
multiplication of banks; and the precautions which are to be found in
the details of the present bill.
A third consideration upon which he acted in 1811, was, that as the
power to create a corporation, such as was proposed to be continued,
was not specifically granted in the constitution, and did not then
appear to him to be necessary to carry into effect any of the powers
which were specifically granted, congress was not authorized to
continue the bank. The constitution, he said, contained powers
delegated and prohibitory, powers expressed and constructive. It vests
in congress all powers _necessary_ to give effect to the enumerated
powers――all that may be necessary to put into motion and activity
the machine of government which it constructs. The powers that may be
so necessary are deducible by construction. They are not defined in
the constitution. They are, from their nature, indefinable. When the
question is in relation to one of these powers, the point of inquiry
should be, is its exertion necessary to carry into effect any of the
enumerated powers and objects of the general government? With regard to
the _degree_ of necessity, various rules have been, at different times,
laid down; but, perhaps, at last, there is no other than a sound and
honest judgment exercised, under the checks and control which belong
to the constitution and to the people.
The constructive powers being auxiliary to the specifically granted
powers, and depending for their sanction and existence upon a necessity
to give effect to the latter, which necessity is to be sought for and
ascertained by a sound and honest discretion, it is manifest that this
necessity may not be perceived, at one time, under one state of things,
when it is perceived at another time, under a different state of things.
The constitution, it is true, never changes; it is always the same; but
the force of circumstances and the lights of experience may evolve to
the fallible persons charged with its administration, the fitness and
necessity of a particular exercise of constructive power to-day, which
they did not see at a former period.
Mr. Clay proceeded to remark, that when the application was made
to renew the old charter of the bank of the United States, such an
institution did not appear to him to be so necessary to the fulfilment
of any of the objects specifically enumerated in the constitution, as
to justify congress in assuming, by construction, a power to establish
it. It was supported mainly upon the ground that it was indispensable
to the treasury operations. But the local institutions in the several
states were at that time in prosperous existence, confided in by
the community, having a confidence in each other, and maintaining
an intercourse and connection the most intimate. Many of them were
actually employed by the treasury to aid that department, in a part of
its fiscal arrangements; and they appeared to him to be fully capable
of affording to it all the facility that it ought to desire in all of
them. They superseded, in his judgment, the necessity of a national
institution. But how stood the case in 1816, when he was called upon
again to examine the power of the general government to incorporate a
national bank? A total change of circumstances was presented; events of
the utmost magnitude had intervened.
A general suspension of specie payments had taken place, and
this had led to a train of consequences of the most alarming nature.
He beheld, dispersed over the immense extent of the United States,
about three hundred banking institutions, enjoying in different
degrees the confidence of the public, shaken as to them all, under
no direct control of the general government, and subject to no
actual responsibility to the state authorities. These institutions
were emitting the actual currency of the United States; a currency
consisting of a paper, on which they neither paid interest nor
principal, whilst it was exchanged for the paper of the community,
on which both were paid. He saw these institutions in fact exercising
what had been considered, at all times and in all countries, one of the
highest attributes of sovereignty, the regulation of the current medium
of the country. They were no longer competent to assist the treasury in
either of the great operations of collection, deposit, or distribution,
of the public revenues. In fact, the paper which they emitted, and
which the treasury, from the force of events, found itself constrained
to receive, was constantly obstructing the operations of that
department. For it would accumulate where it was not wanted, and could
not be used where it was wanted for the purposes of government, without
a ruinous and arbitrary brokerage. Every man who paid or received from
the government, paid or received as much less than he ought to have
done as was the difference between the medium in which the payment
was effected and specie. Taxes were no longer uniform. In New England,
where specie payments have not been suspended, the people were called
upon to pay larger contributions than where they were suspended. In
Kentucky as much more was paid by the people in their taxes than was
paid, for example, in the state of Ohio, as Kentucky paper was worth
more than Ohio paper.
It appeared to Mr. Clay, that, in this condition of things, the
general government could depend no longer upon these local institutions,
multiplied and multiplying daily; coming into existence by the breath
of eighteen state sovereignties, some of which by a single act of
volition had created twenty or thirty at a time. Even if the resumption
of specie payments could have been anticipated, the general government
remaining passive, it did not seem to him that the general government
ought longer to depend upon these local institutions exclusively for
aid in its operations. But he did not believe it could be justly so
anticipated. It was not the interest of all of them that the renewal of
specie payments should take place, and yet, without concert between all
or most of them it could not be effected. With regard to those disposed
to return to a regular state of things, great difficulties might arise,
as to the time of its commencement.
Considering, then, that the state of the currency was such that no
thinking man could contemplate it without the most serious alarm;
that it threatened general distress, if it did not ultimately lead to
convulsion and subversion of the government; it appeared to him to be
the duty of congress to apply a remedy, if a remedy could be devised.
A national bank, with other auxiliary measures, was proposed as that
remedy. Mr. Clay said, he determined to examine the question with
as little prejudice as possible arising from his former opinion. He
knew that the safest course to him, if he pursued a cold, calculating
prudence, was to adhere to that opinion, right or wrong. He was
perfectly aware, that if he changed, or seemed to change it, he should
expose himself to some censure. But, looking at the subject with
the light shed upon it by events happening since the commencement of
the war, he could no longer doubt. A bank appeared to him not only
necessary, but indispensably necessary, in connection with another
measure, to remedy the evils of which all were but too sensible. He
preferred to the suggestions of the pride of consistency, the evident
interests of the community, and determined to throw himself upon their
candor and justice. That which appeared to him in 1811, under the state
of things then existing, not to be necessary to the general government,
seemed now to be necessary, under the present state of things. Had he
then foreseen what now exists, and no objection had lain against the
renewal of the charter other than that derived from the constitution,
he should have voted for the renewal.
Other provisions of the constitution, but little noticed, if noticed
at all, on the discussions in congress in 1811, would seem to urge
that body to exert all its powers to restore to a sound state the money
of the country. That instrument confers upon congress the power to
coin money, and to regulate the value of foreign coins; and the states
are prohibited to coin money, to emit bills of credit, or to make any
thing but gold and silver coin a tender in payment of debts. The plain
inference is, that the subject of the general currency was intended to
be submitted exclusively to the general government. In point of fact,
however, the regulation of the general currency is in the hands of the
state governments, or, which is the same thing, of the banks created by
them. Their paper has every quality of money, except that of being made
a tender, and even this is imparted to it by some states, in the law
by which a creditor must receive it, or submit to a ruinous suspension
of the payment of his debt. It was incumbent upon congress to recover
the control which it had lost over the general currency. The remedy
called for, was one of caution and moderation, but of firmness. Whether
a remedy directly acting upon the banks and their paper thrown into
circulation, was in the power of the general government or not, neither
congress nor the community were prepared for the application of such
a remedy. An indirect remedy, of a milder character, seemed to be
furnished by a national bank. Going into operation, with the powerful
aid of the treasury of the United States, he believed it would be
highly instrumental in the renewal of specie payments. Coupled with
the other measure adopted by congress for that object, he believed the
remedy effectual. The local banks must follow the example which the
national bank would set them, of redeeming their notes by the payment
of specie, or their notes will be discredited and put down.
If the constitution, then, warranted the establishment of a bank,
other considerations, besides those already mentioned, strongly urged
it. The want of a general medium is every where felt. Exchange varies
continually, not only between different parts of the union, but between
different parts of the same city. If the paper of a national bank were
not redeemed in specie, it would be much better than the current paper,
since, although its value in comparison with specie might fluctuate, it
would afford an uniform standard.
If political power be incidental to banking corporations, there ought,
perhaps, to be in the general government some counterpoise to that
which is exerted by the states. Such a counterpoise might not indeed
be so necessary, if the states exercised the power to incorporate banks
equally, or in proportion to their respective populations. But that
is not the case. A single state has a banking capital equivalent, or
nearly so, to one-fifth of the whole banking capital of the United
States. Four states combined, have the major part of the banking
capital of the United States. In the event of any convulsion, in which
the distribution of banking institutions might be important, it may be
urged, that the mischief would not be alleviated by the creation of a
national bank, since its location must be within one of the states. But
in this respect the location of the bank is extremely favorable, being
in one of the middle states, not likely from its position, as well as
its loyalty, to concur in any scheme for subverting the government. And
a sufficient security against such contingency is to be found in the
distribution of branches in different states, acting and reacting upon
the parent institution, and upon each other.