Of all the cities of the Union, the peaceful Philadelphia is the most
disturbed by the Bank question, because it is the seat of the mother
bank. The State of Pennsylvania also, of all the States, suffers the
most from the financial crisis, because it is the most deeply in
debt, and is obliged to borrow more, either to finish its canals and
railroads, or to pay the interest on its existing debt. Conceive of
the situation of a State, whose population amounts to only 1,500,000
souls, loaded with a debt of twenty and a half millions, whose ordinary
expenditures are less than 600,000 dollars, but which must raise one
million to pay interest already accrued, and nearly two millions and
a half, for the next summer, under penalty of seeing her great works,
executed at an enormous expense, go to ruin, and who knows not whither
to turn. This is not all; some old loans must be reimbursed next
May, or in three months, and, to crown the whole, the capitalists who
contracted last year for a loan of three millions, to be employed on
the public works, are, in consequence of the present crisis, unable
to fulfil their contracts. The local banks, which are bound by their
charters to lend the State at the rate of 5 per cent., rather stand
in need of assistance themselves. To these public embarrassments is
added the private distress, and thus this country, which Cobbett,
who always shows talent, and occasionally gleams of good sense,
dubs the _Anti-Malthusian_, exhibits for the present the spectacle
of a superabundance of labourers. In the manufacturing districts of
Pennsylvania, many of the operatives are without work.
The condition of the rest of the country is not, in general, any more
favorable. I am very ready to believe that the Anti-Jackson newspapers,
for so they call themselves, exaggerate the distress; but making
all due allowance for rhetorical flourishes, it is still undeniable
that there is much distress, especially among the commercial class.
Bare figures are more eloquent than the best advocates of the Bank,
and it is a notorious fact, that excellent paper has been discounted
at the rate of 18 per cent. per annum, and at even higher rates, in
New York, Philadelphia, and Baltimore. The price currents and the
state of the stock-market, show a general fall in prices of 15, 20,
30, and even 40 per cent. Thus far the efforts of the President to
fell the hydra of the moneyed aristocracy, the Mammoth, the Monster,
have had no other effect than to blast credit and the commercial
prosperity of the country; for the Bank has been administered with so
much ability, especially since the presidency of Mr Biddle, one of
the most distinguished men in the country, that notwithstanding the
abrupt removal of the public deposits, notwithstanding the unexpected
and unfair assaults upon some of the branches, particularly that of
Savannah[M], it is beyond comparison the most solvent and safe of all
the financial institutions in the Union. At this critical moment it
has as much specie (ten millions) as all the other 500 banks taken
together, and I know from good authority, that many Jackson men (this
is the epithet adopted by themselves), have been very glad to be
sprinkled with a few drops of the _venom_ of this dangerous _reptile_.
If what is now taking place in this country were to occur in any
European monarchy, those persons who insist upon all nations having a
government cast in the republican mould, whatever may be the condition
of their territory and population, their wealth and knowledge, their
character and manners, would not fail to make it the text of their
harangues against monarchical governments; holding up to view the
picture of an unparallelled commercial prosperity, checked of a sudden
by the caprice of the sovereign, they would prove that such is one of
the unavoidable consequences of an opposition between the interest of
the ruler and the welfare of the nation; they would demonstrate by
geometrical syllogisms, that it is the essence of monarchy to place
authority in the hands of the weak and the foolish, who, to gratify
their personal malice, would not hesitate to hazard the happiness of
millions. They would raise the cry of secret influence, of intrigue,
which, according to them, is one of the attributes of monarchies.
Unluckily for this theory, it is belied by facts under my own eyes,
in the most thorough and flourishing republic that has ever existed.
The selfishness of royalty, or more correctly speaking of courts, has
hitherto begot much mischief and will continue to do so in future; but
it has met with its match in the bosom of republics, and above all
under a system of _absolute_ equality, which distributes political
power in _absolutely_ equal quantities to the intelligent and the
ignorant, to the most eminent merchant and author, and the brutal
and drunken peasant of Ireland, who is but just enrolled in the list
of citizens. An _absolute_ people, as well as an _absolute_ king,
may reject for a time the lessons of experience and the councils of
wisdom; a people as well as a king, may have its courtiers. A people on
the throne, whose authority is limited by no checks, may blindly and
recklessly espouse the quarrels of the minions of the day; let those
who doubt it come here and see it. Ignorance of the true interests
of the country is not the exclusive prerogative of monarchies. The
official papers of the Federal Executive in the affair of the Bank,
so far as concerns a knowledge of the principles of government and
the springs of the public welfare, are on a level with the measures
of the government of Spain or Rome. And yet this Executive is the
creature of the popular choice in the largest sense. It is not merely
in monarchies, that a dancer is to be seen in the post that belongs
to a mathematician. The camarilla! Never have I heard it so much
talked about, as since I have been in this country. It is here called
the _Kitchen Cabinet_, and admitting a fourth of what is said by
the opposition to be true, it is difficult not to believe that its
influence upon public affairs is greater than that of the ministerial
cabinet.
But to return to the Bank. Congress met on the 3d of December; and most
of the State Legislatures are now in session. Every where, and above
all in Congress, the great, not to say the only question agitated, is
that of the Bank. The subject of the discussions is the removal of the
public deposits, which the President has withdrawn from the Bank after
a military fashion, having previously, in the same spirit, removed from
office the Secretary of the Treasury, Mr Duane, who, although opposed
to the Bank, considered the President's course illegal and rash.
Thus far, the manifestations of public opinion and the deliberative
assemblies are extremely various and discordant. In New Jersey, a small
and unimportant State, the Assembly has adopted, by a large majority,
resolutions approving the acts of the administration, and instructing
its delegates in Congress to support the President; notwithstanding
which, Mr Southard, one of the Senators from that State, has made an
excellent speech on the other side of the question. The Assembly of New
York, the first State in wealth and population, has adopted similar
resolutions by a vote of 118 to 9. Some persons to be sure, assert that
this is because New York would like to have the Mother Bank.[N] The
youthful State of Ohio, whose growth borders on the miraculous (it now
contains eleven hundred thousand inhabitants, although but 50 years
ago it had not six thousand), Ohio, the Benjamin of the democracy, has
strongly expressed the same wishes. The little State of Maine has done
the same. The administration party lately had a brilliant opportunity
of displaying its sympathies and its hatred. The 8th of January, the
anniversary of the battle of New Orleans, was celebrated by innumerable
public dinners, at each of which numerous toasts were drank. President
Jackson was the hero, and the Bank was the scape-goat, of the day. It
would be impossible to imagine the flood of accusations, insults, and
threats, which was poured upon it, mingled with jests in the taste of
the country upon Mr Biddle; thus, at one of these dinners, the Bank was
toasted, as being _governed by Young Nick according to the principles
of Old Nick_.
But the population of New England, particularly that of Massachusetts,
is opposed to the administration. In Virginia the same opinions seems
to prevail, and it is the same with several of the old Southern States.
The merchants and manufacturers of New York, Philadelphia, Baltimore,
Boston, and a hundred other places, have held meetings and adopted
resolutions, strongly censuring the conduct of the government towards
the Bank, and accusing it of having caused the present crisis. Most of
the Philadelphia Banks have petitioned in favor of the Bank. Several
Banks at Boston and in Virginia have refused to take the public money
in deposit; those of Charleston have been unanimous in this measure.
The majority of persons of intelligence, experience, and moderation,
and most of the merchants and manufacturers, are in favour of the Bank.
The country, particularly in the Middle and Western States, and the
operatives in the towns, go for General Jackson.
In Congress the majority of the Senate is friendly to the Bank, and
the majority of the House is on the side of the Administration. The
superiority in debate belongs to the defenders of the Bank. In the
Senate, the three greatest statesmen in the country, Messrs Clay,
Webster, and Calhoun, are on this side of the question, and the
speeches of Messrs Clay and Calhoun have made a strong impression. In
the House Mr Binney, of Philadelphia, and Mr McDuffie have pleaded
the same cause with ability. On the other side there has been more
highflown declamation than reasoning. I have been struck with the
resemblance between most of the speeches and newspaper essays directed
against the Bank, and our republican tirades of 1791 and 1792. There
are the same declamatory tone, the same swollen style, the same appeal
to the popular passions, with this difference, that the allegations
made here are vague, empty, and indefinite, while with us fifty years
ago the grievances were real. Most generally the pictures presented
in these declamations, are fantastical delineations of the moneyed
aristocracy overrunning the country with seduction, corruption, and
slavery in its train; or of Mr Biddle aiming at the crown. Amidst
this swarm of speeches and essays, one hardly ever meets with any
indications of serious study or a tolerable knowledge of the subject;
but I have been struck with the speech of Mr Cambreleng, who has
put forth some prudent suggestions as to the reforms required in
the present system of banking. For it must be confessed, that this
animosity of the President and the body of the people against the Bank
of the United States, blind and unreasonable as it is, is founded on
a real necessity, namely, that of a complete reorganization of the
banking system. When Congress renewed the charter of the Bank of the
United States without modification, in 1832, it committed an error.
It should have seized this opportunity to place the currency of the
country on a more solid basis; and if General Jackson had abode by
the terms of his veto message, in which he declared that he was not
opposed in principle to the establishment of a National Bank, but that
the present Bank could not be retained without some modification, he
might have become the benefactor of his country. He would not, indeed,
have received Cobbett's congratulations, but he would have obtained
the approbation of all statesmen and men of sense in the Old and the
New World. However, whatever his friends may say, as the President did
not foresee the distress, which has befallen American commerce, and as
nobody can doubt his patriotism, we need need not yet despair of seeing
him adopt this wise course.
The present crisis abundantly proves the wretched condition of the
currency, for the original cause of it was quite slight; it was merely
the transfer from the vaults of one bank to those of another of ten
millions, an inconsiderable sum relatively to the amount of the
business of the country. If the local banks, in spite of the control
exercised by the Bank of the United States, had not previously passed
all bounds, they would have been able, when the Bank of the United
States was obliged to contract its discounts by the withdrawing of the
public money, to have enlarged their own in the same proportion, since
those same funds were transferred to their vaults. But the framework of
these banks is so badly put together, that it shakes at the slightest
breath. The slight motion in the political and commercial atmosphere
caused by the President's blow at the Bank, in removing the public
deposits, was enough to make them totter. They are like a colossus with
clay feet, which should have feet of gold, or in other words, specie in
their vaults.
The proportion of metals, of which we have an excess in France, is
here extremely small. In many States, among others New York, there
is an enormous quantity of bills of one, two, and three dollars. In
South Carolina there are 25 cent, and even 12 1-2 cent bills. In
Pennsylvania, Virginia, and some other States, there are none of less
than five dollars. The Bank of the United States emits none of less
than that sum; but this minimum is too low. Most political economists,
and particularly the English, lay it down as an axiom, that the most
perfect money is paper; this is true, if we suppose a nation in which
any disturbance of industry, in consequence or apprehension of war,
from foolish speculations, from glut or panic, is impossible. In such a
land of cockayne, such a terrestrial paradise, an unshaken confidence
would prevail in all transactions, and consolidate all interests. The
metals would only serve to strike medals and to preserve inscriptions
intended to commemorate this ineffable bliss. Paper would there be on a
par with gold, and even higher, as some English writers have maintained
it should be. I do not know if there will ever be a nation in such a
state of heavenly happiness; but I doubt it, because in the world of
finance, as well as in the world of passion, I consider the Tender
River a fable, and pastorals a sport of fancy; but it is very evident
that no such people exists now, or will for some time to come. Now in
the United States, the present banking system, like that of England
from 1797 to 1821, or even 1825, is founded on this theory of the most
perfect money. It is provided, indeed, that the banks shall pay gold
for their paper on demand; but by the side of this clause, which tends
to keep a certain quantity of the metals in the country, is inserted
another, which neutralises it; it is the power of emitting bills in any
number, and of the sum of 1, 2, 3, or 5 dollars. In prosperous times,
the emission of paper is abundant, indefinite; as the necessity of a
metallic standard ceases to be felt, in proportion to the confidence
which prevails, the metals disappear before the excess of paper; there
is scarcely any left in the country. Since I have been in the United
States, I have not seen a piece of gold except in the mint. No sooner
is it struck off, than the gold is exported to Europe and melted down.
When a crisis comes on, the demand for the precious metals increases
rapidly, because every one attaches more value to a positive standard
than to paper, and the later the application of the remedy for the
scarcity of metals, the longer does the crisis last, and the more
serious does it become.
In a new country, where capital cannot, of course, be abundant,
for capital of all kinds, whether of articles of food or precious
metals, is the accumulated produce of labour, it is natural, that the
proportion of paper money should equal and surpass that of metallic
money. The existence of paper money is even a great benefit to any
country. In France we have the enormous sum of 600 million dollars in
specie; (see _Note_ 10, at the end of the volume); in the United States
40 millions are sufficient for all the transactions of a commerce
nearly as extensive as our own. In England the amount of specie at
present does not exceed 220 millions, mostly in gold. Bank notes in
circulation, which constitute the rest of the currency, amount at this
time, in the United States, to 100 million, that is, two and a half
times the amount of specie; in England to about the same as the specie,
which gives for the whole circulation of
The United States, 140 millions--
Of England, 440 millions.
If we had in France the industrial habits of the English and
Anglo-Americans, 200 millions of circulating medium, half in paper
and half in specie, would probably be sufficient for our operations;
but considering our commercial inferiority, suppose that we should
require 300 millions, of which two thirds should be metallic, and one
third paper, it would follow that we might advantageously employ 400
millions, which are now unproductive in the form of specie, and which
add nothing to our pleasures, our comfort, or our industrial capacity.
But if we might expect great benefit from banks of circulation and the
paper which they would issue, it is evident that the Americans, in the
present stage of their wealth, and considering their actual capital,
would find their advantage in putting some check upon themselves in
this matter. It might then be proper to raise the minimum of bills of
the Bank of the United States to 10, 15, or 20 dollars, as in England
there is no paper less than the five pound note. The National Bank, if
it were powerful enough, would keep the local banks in check, and for
this reason it is expedient to increase the capital. There would then
be specie enough in the country for all purposes less than the paper
minimum, and in case of any disturbance, the currency would be less
readily deranged.
Nor is this the only point in which the charter of the Bank of the
United States requires modification; its relations with the Federal
government, as well as with the State governments, need to be modified;
and some projects worthy of consideration, in this view, have been
broached. It would also, probably, be expedient, as Mr Cambreleng has
remarked, to change the rules and regulations relating to private
and public deposits, and to provide that in future they should bear
interest as they do in the Scotch banks. If this system were adopted
by all the American banks, they would gain in solidity, and they would
embrace the interest of all classes, and become provident institutions
for the general good; while at present, their direct profits, the
dividends, fall exclusively to the share-holders, who belong to the
wealthier classes; a fact which contributes not a little to their
unpopularity. Finally, it would be proper to consider to what degree
the immediate advantages of credit might be extended to mechanics and
farmers. In this respect the banks are yet absolutely aristocratical
institutions, the Americans having preserved in banking almost all the
usages of their ancestors, the English. The American banks are now
chiefly devoted to the use of speculators and merchants.
In the midst of so many contradictions, it is difficult to foresee what
will be the issue of the struggle. The friends of the Administration
maintain that President Jackson and Vice President Van Buren are not
only opposed to the Bank as it is, but to any National Bank, and that
they will never yield. The Globe, the avowed organ of the President,
has told Mr Clay, that unless he _can find a Brutus_ (to assassinate
General Jackson,) the Bank will neither have the deposits nor a new
charter. We may doubt, however, whether the President's mind is so
decisively made up, and after all a majority of both houses can set at
nought the _veto_. As to the Vice President, whom his opponents call
the cunning Van Buren, as he aspires to succeed the President, many
persons declare that his object is to gain the vote of the powerful
State of New York, by transferring thither the seat of the Mother Bank,
but that he is too enlightened seriously to wish the destruction of an
institution fraught with so much good to the country.
However this may be, it would be surprising if the present crisis
were not followed, sooner or later, by a reaction in favour of the
Bank of the United States with suitable modifications, or of another
National Bank, which, as Mr Webster observed, would amount to the same
thing, if the share-holders of the present Bank are not sacrificed.
The jealous democracy of this country has this advantage over other
democracies, that in the main it has much good sense; the recollection
of old sufferings caused by the abuses of the banking system, and a
jealousy of all pretensions to superiority, have led it to give ear to
much noisy declamation about the aristocracy of money, particularly
when it has been mixed up with flattery of itself. It may have been
led astray for a moment, when its own prerogatives were the subject of
discussion, as those sovereigns who assert the divine right of kings,
take fire in respect to theirs. Proud of its gigantic labours, it may
have been tempted to believe, that to it everything was possible and
easy, that it had only to frown to cause the Bank to crumble into the
dust at its feet, without being itself shaken by the shock. But facts,
positive, inexorable facts now bear witness that it was mistaken, that
it has trusted too much to its powers and its star, that the agency
of the Bank of the United States is indispensable. The influence of
facts has spread step by step even to the country people, who no longer
find buyers of their produce. The argument is palpable and effectual;
passion cannot long blind men of sense to such facts, for men of sense
are those who do not give themselves up implicitly to abstractions, and
who admit that every theory which is point blank against fact, is false
or incomplete. This is the reason why good sense is worth to the full
as much in politics, as talents.
It is worth while to observe here, that all the political difficulties
in which the United States have become involved, and which have
threatened the existence of the Union itself, have been settled
by means of what are here called compromises, and in France
_justes-milieux_. Thus was ended the serious dispute on the Missouri
question, which had well nigh set the Union in a flame. It was made a
question whether Missouri should be received into the Confederacy with
a constitution sanctioning the institution of slavery. After a long
and ineffectual debate, Mr Clay moved that Missouri should be admitted
unconditionally, but that, at the same time, it should be declared
that in future no new State lying north of 36° 30´ of latitude, should
be admitted into the Union with this institution; this proposition
was received with general favour, and the admission of Missouri was
carried. In the next session, however, a new quarrel arose between
the North and the South, more violent and bitter than the former, in
relation to an article in the constitution of Missouri, prohibiting
any free man of colour from entering the State. Another compromise,
proposed by Mr Clay, finally settled the whole question in 1821, after
it had kept the country in a flame for three years. In 1833, another
compromise was made in respect to the tariff, the honour of which also
belongs to Mr Clay. This question will sooner or later be settled in
the same manner; the Union cannot do without a National Bank, and it
will have one.
There are some lucky persons who succeed in everything, and there are
some lucky nations with whom everything turns out well, even those
events which seemed about to bury them in ruins. The United States
is one of these privileged communities. When Villeroi came back to
Versailles, after his defeat, Louis XIV. said to him, "Marshal, nobody
is lucky at our time of life." Charles V. also, as he grew old, said
that fortune was like a woman, and preferred young men to old ones.
Louis and Charles were right so far as this, that when a man, young or
old, has finished his mission, foresight, ability, and perseverance
profit him little; he fails in whatever he undertakes, whilst he who
has a mission yet to fulfil, takes new strength from the most violent
blows. This is true of nations as well as of individuals. The American
people is a young people, which has a mission to perform; nothing less
than to redeem a world from savage forests, panthers, and bears. It
moves with mighty strides towards its object, for it has not, like
the nations of Europe, the burden of a heavy past on its shoulders.
It may be checked in its career for a time by the present crisis, but
it will come out of it safe and sound, and more healthy than when it
entered it. It will come out with increased resources, with a reformed
banking system, and according to all appearances, even with an improved
National Bank. May the nations of Europe not have to wait long for
institutions, which have so powerfully assisted England and America in
their progress!