2. That it exercises a dangerous influence.

3. That it creates discontent with the people, and collisions with the

states.

4. That such a bank as is proposed in its place, is free from all these

objections.

1. On the constitutionality of the bank, we have little to add to the

remarks made on the subject in our last number. The arguments then urged

having received no answer, and being, as we conceive, unanswerable, we

must consider that the more the question is investigated, the more it

will be found that a power which has been recognised by every branch of

the government, and at some time or other, by every party that has

administered the affairs of the nation, will be found to be correct. We

cannot, however, forbear to add one other, because of its peculiar

fitness to the present occasion.

It is known, that the power of the general government to establish a

national bank, mainly turns on that clause of the Constitution of the

United States, which gives congress the power "to make all laws which

shall be _necessary and proper_ for carrying into execution" the powers

specifically granted--one party deducing the constitutionality of the

bank from a liberal interpretation of the word "necessary," and the

other drawing the opposite inference from their interpreting the same

word in a narrower sense; both reasoning justly from their respective

premises, and both agreeing, that on the true meaning of that term, rest

the merits of the controversy.

Whenever a doubt occurs about the meaning of a phrase in a written

instrument, it has always been considered a good rule of interpretation,

to refer to the use of the same phrase in other parts of the same

instrument, for the purpose of discovering the sense attached to it by

those who used it. Applying this rule, we find in the article concerning

the duties and powers of the president, (3d section) that "he shall,

from time to time, give to the congress information of the state of the

Union, and recommend to their consideration such measures as he shall

judge _necessary and_ expedient." It is by virtue of this power thus

granted, and of this alone, that the president has recommended the

creation of a new bank to the legislature. Now, it will not be pretended

that he could have judged this recommendation to be _necessary_, in the

strictest sense of the term, but at most, that it was highly useful and

important. It must then be admitted, either that the narrow

interpretation of the word "necessary," relied on by those who deny the

constitutionality of the bank, is erroneous, or that the president

himself has violated the constitution in the recommendation he has made.

If it be insisted, that he had the constitutional right to recommend a

measure, which both houses of congress had pronounced highly

inexpedient, because he believed it prudent, and politic, and

salutary--the ground on which he himself places it--then the same

liberal interpretation of the term "necessary," which we admit to be the

true one, will make the bank constitutional. We have resorted to this

rule, not so much because it furnishes an argument _ad hominem_ which is

irresistible, as for the higher purpose of throwing light on one of the

most controverted parts of the constitution.

But admitting, for the sake of argument, the constitutionality of the

bank to be one of those difficult and complicated questions about which

men's minds may always be divided, and that there are reasons on either

side, sufficient, if not to convince, to perplex and bewilder, and to

afford pretexts for those who seek some sinister or selfish ends--and of

such character are most constitutional questions--we would ask, if this

is never to have a termination? Are questions of this kind to be always

unsettled, so that no length of time, however sufficient to quiet

private controversies, shall put an end to those which most nearly

concern the tranquillity and permanence of the Union?

On this subject of constitutional questions generally, we would trespass

awhile on the patience of our readers. It involves far higher

considerations than whether this or that individual shall be

president--this party or that shall exert a transient sway over the

destinies of the country. Our remarks are independent of men, or times,

or circumstances; and they are addressed to men of no party--to the

intelligent and patriotic of all parties--to that fund of good sense

which has ever characterized this nation.

As every officer of the government takes an oath to support the

constitution, his conscience is appealed to, and that which he honestly

and truly believes to be the meaning of the obligation he has incurred,

must influence his votes and acts under the constitution. It is

seriously and earnestly maintained by many of our citizens, that every

man's own interpretation of the constitution must be his guide; and no

matter what the public tribunals have determined--no matter for what

length of time, or by what degree of unanimity a particular

interpretation may have prevailed, it is to weigh as nothing with him,

so far as it seems contrary to the conviction of his own mind. But is

this a true understanding of the character of a written constitution,

and of the oath which it enjoins? If so, would not the means devised to

secure its more faithful observance be the most likely to defeat its

provisions; and would it not make such a constitution the most

impracticable and absurd form of government that human folly ever

devised? Let us consider the consequences of this doctrine.

In the first place, let us call to mind the great number of

constitutional questions which have arisen during the short period of

little more than forty years, since the Federal government went into

operation. In General Washington's administration, the most prominent of

those questions were suggested by the establishment of a national

bank--by the carriage tax--the proclamation of neutrality--and the

appropriations to carry the British treaty into effect: in that of Mr.

Adams, the elder, the alien and sedition laws: in Mr. Jefferson's, the

repeal of the Judiciary law--the embargo for an indefinite period--the

purchase of Louisiana: in Mr. Madison's, the United States Bank again,

the power of the federal government over the militia of a state--the

right of that government to construct roads: in Mr. Monroe's, the right

in congress to pass the bankrupt law--to lay a duty on imports for the

encouragement of manufactures--to appropriate money for the relief of

the poor of the district of Columbia: and in Mr. John Quincy Adams's,

the Cherokee treaty--the nullification doctrine--the power of appointing

public officers, together with several of the others previously

mentioned.

To these questions we might add many of minor importance or interest,

and that multitude which have arisen and been decided in the Supreme

Court of the United States. But if the number is already so great, what

will it be a century or two hence? Let it be remembered, too, that each

of these legislative questions may give rise to many others connected

with them, and that each one may be multiplied to infinity in the courts

of justice. Thus, if protecting duties for the encouragement of

manufactures are unconstitutional, the duty claimed on every bale of

imported goods may be called in question.

Whenever, then, any of these constitutional questions can be made, it

would be competent for the party interested, by the doctrines of these

political puritans, to make them. So that in every controversy, public

or private, every conflict of right or interest, as the question of

constitutionality would be completely open to the judge, and in criminal

cases, to the jury, either party may take his chance of success by

urging that interpretation of the constitution which best suits him, and

the same question would, of course, be decided one way in one place, and

another way in another. One man would be convicted for an offence for

which another would go unpunished; and one citizen, or one state, be

subjected to taxes under the constitution, from which others would be

shielded by the same instrument.

Does any one doubt, that if a constitution is left to the unrestricted

interpretation of every one who swears to support it, there would be

this diversity? Let him look at the various commentaries on the same

text in the New Testament. Let him look at the various interpretations

of the same decrees of the Senate by the Edicts of the Pretors in Roman

jurisprudence--to say nothing of those countless decisions of the civil

law, by which, before the time of Justinian, it was buried beneath its

own rubbish. Let him look at the voluminous reports in our own language

on the written, as well as common law--on the infinite number of

questions that have arisen, and are yet arising on a single statute, or

even one of its sections,--let him consider these apposite examples, and

ask whether our constitution is likely to share a different fate? Such,

indeed, is the indefinite nature of language, the ever-varying character

of human concerns, and the subtlety of the human intellect, that it is

utterly impossible to pen a constitution on which numerous questions

would not arise, which no sagacity of man could foresee, and which his

language is too vague to provide for.

Constitutional questions then must arise, and the true point of inquiry

is, whether our constitution meant that they should be finally settled,

or whether they are to remain suspended between heaven and earth, until

they are compelled to make their appearance by the necromancy of legal

subtlety, or occasionally laid in the Red Sea.

But the evil would not stop with the federal government. We know that

each state has also its own constitution, and that if their legislatures

or executives transcend their powers, their acts, by the doctrines we

are considering, are utterly void. They cannot exceed the limits of

their charter, and those limits they have no exclusive right to define.

Who that has attended the deliberations of a state legislature, and

remarked the frequent recurrence of constitutional questions about their

powers, but must see that there is scarcely any law concerning property,

or office, or crime, on which ingenuity may not raise a doubt respecting

either the letter or spirit of the constitution? And the same

uncertainty and want of uniformity which would arise in the federal

government, would arise in a much greater ratio in that of a state; so

that no man could say certainly what were his duties or his rights. If

such a state of things may now ensue, how would it be when the

population of a single state should amount to several millions, and when

the spirit of litigation, united with the extension of legal science,

would give more than Norman acuteness to our constitutional lawyers?

When that era shall arrive, if this quibbling spirit that is now so

rife, shall not receive a timely check, where is the law, whose

authority may not be questioned? Now is the time to arrest it, before

our habits become indurated, and while our national character has that

ductility which the changes our country is ever undergoing, naturally

produces. Whoever is capable of taking a wide survey of human affairs,

and of comparing ages and nations, must perceive that every generation

of the civilized world is becoming more and more metaphysical--that the

understanding is more appealed to, and has greater sway than formerly,

and the imagination less. The age of magic, and witches, and ghosts, has

passed away. That of poetry is on the wane. Speculation has taken the

place of taste. What once passed unheeded, or was perceived only as it

was felt, must now be analyzed, and sifted, and decompounded, until we

have reached its elements, and a reason is required for every thing.

Such is the spirit of the age, and it is eminently favourable to

constitutional doubts and scruples.

We may already perceive the progress of this captious, inquisitive,

hair-splitting spirit, in the brief chronicle of the federal

government. When congress met, immediately after the formation of the

constitution, in laying an impost, they endeavoured so to lay it, as to

give encouragement to those species of industry for which the country

seemed best suited, and their successors continued the same policy for

about thirty years, when it was discovered, (we think by a member from

Maine) that the policy was contrary to the constitution. The discovery

was soon welcomed by many of the politicians of the South, and it has

since been so cordially embraced by them, that the opposite opinion is

now looked upon as downright political heresy.

A bankrupt law was passed during the first Mr. Adams's administration,

by virtue of the express power given to congress on that subject. When

Mr. Jefferson came into power, the law was repealed as inexpedient,

because it was believed to produce as much fraud and mischief in some

ways as it prevented in others. But nobody had then discovered that the

law was unconstitutional. Yet in 1822, that doctrine was broached and

zealously maintained by three or four members from the South, so as to

induce Mr. Lowndes, who was himself opposed to a bankrupt law, to

disavow the doctrines of his associates. That exemplary man, the

character of whose mind was sufficiently inclined to refined

speculation, if it had not been so tempered by candour and sound

practical sense, never lost sight of the end of government, in his view

of the means; and he believed that in interpreting the constitution, we

ought not to look at it through a microscope, for this plain reason, if

for no other, because those who are finally to decide on it look at it

with their ordinary eyes. Accordingly, in the first half of his speech,

he aimed to show that congress had the power to pass the law, and in the

last, that they ought not to exercise it.

Again: Mr. Jefferson gave his sanction to the Cumberland road, to be

made at the national expense, provided the states through which it would

pass gave their express assent to it. The states of Virginia, Maryland,

and Pennsylvania, did pass laws giving such consent. It was not then

considered that congress had not the power of appropriating the money in

the treasury to all purposes of general utility, provided they did not

assume any other power, in the exercise of this; and it is clear that

Mr. Jefferson did not think that the construction of a road, _with the

consent_ of the states through which it passed, was such an exercise of

power. Yet after the road was made, by this growing disposition to

strict construction, it was discovered that congress had no power to

make such appropriations, under the constitution, and if the power could

not be derived from that instrument, the consent of the states

interested could not give it. It is here worthy of remark, that many of

those who maintained that the general government possessed the power of

making roads, independently of the states, concurred in the preceding

position; and thus a majority was obtained who agreed that congress

could use the public money for no purpose, which they had not the

independent power of executing. Each party hoped to derive strength by

this decision. The one, because it advanced a step forward in strict

construction; and the other, looking to the influence of the practical

benefits to be derived from the exercise of the power of making roads

and canals, flattered themselves that many, when they found themselves

not able to attain their object by mere appropriations, would, rather

than forego the promised benefits altogether, support a still more

enlarged construction of the constitution; and the issue seems so far to

have justified their expectations.

We will give one more example. It had been supposed that the

vice-president, as presiding officer of the senate, had, by the force of

the term itself, the power of keeping order and regulating the debate;

yet three or four years ago, it was discovered by that officer, or some

of his friends, that he did not possess that power, in certain cases,

and he accordingly forbore to exercise it.

These remarks are made in no invidious spirit. We do not mean to give

any opinions on these questions. In some of them, indeed, we scarcely

know whether, in this age of nice discrimination, our impressions

deserve to be called opinions. But we merely meant to refer to facts

which are a part of the history of the country. They go to show, that

constitutional doubts and difficulties are continually increasing, not

only from the new positions and aspects of things in the endless

vicissitudes of human affairs, but also by the progress of refinement in

reasoning; because much is now considered unconstitutional that was not

deemed so formerly.

If this doubting, disputatious spirit--this habit of questioning every

thing whenever a quibble can be raised--should continue to advance,

where is the law, which, after fighting its way through both houses of

the legislature, and, perhaps, escaping the veto, may not be eventually

contested and defeated? We know that in many of the states there are

_Bills of Rights_, which are considered to have equal authority with

their constitutions. Some, indeed, regard them as settling the

principles of primordial law, which the constitution itself cannot

countervail. These, then, may also be appealed to for the purpose of

proving the unconstitutionality of a state law; and in the inferences

which ingenuity, or even stupidity, may draw from such broad and

indefinite principles, the clearest right may be disputed, and the most

atrocious crime defended. The right of a community to take the life of

any one of its citizens has been gravely denied, and the argument rests

for its support on the imprescriptible and immutable rights of man. If

the net-work of the laws shall be thus chafed and frittered away, little

fish, as well as big ones, may break through it when and where they

please.

We are aware, that, in the ordinary concerns of life, nature and reason

will often assert their empire. They cannot be altogether cheated out of

their rights by sophisms and quibbling. But the latter will but too

often prevail. They have prevailed, are yet prevailing; and, if a

barrier is to be presented to their further progress, it must be by the

common sense of the nation, frowning into contempt this constitutional

casuistry, which would degrade our legislative halls into schools of

sophists--would employ the best powers of the human mind, not in

clearing up doubts, but in creating them--which considers that the most

obvious and direct meaning of the constitution is always the wrong one,

and that what the convention made the people say by that instrument, can

be understood but by one man in ten thousand, who cannot show he is

right, but by a commentary a hundred times as large as the text. It must

be by going further, and saying that after a question has been fully

discussed and solemnly decided--after it has been recognised by every

department of the government--and acquiesced in by the people, it should

be considered as the best exposition the constitution is capable of, and

as no longer open to controversy: and if the decision was wrong,

according to a maxim of the common law, and which became common law only

because it was common sense, the universality of the error makes it

right.

Let it not be supposed, that if a false or inconvenient construction is

put on the constitution, or its meaning is considered doubtful and

uncertain, the evil may be corrected by an amendment. Supposing it to

take place, may we not, like bad tinkers, in stopping one hole, make

two? We can judge of the probable success of this course, by the various

laws passed to alter, or amend, or repeal, previous emendatory acts. But

if the remedy were effectual when attained, is it attainable? What

probability is there that three-fourths of the states will concur in any

amendment, or that motives of interest--of party sympathy--of delusive

argument--or the mere _nonchalance_ of men about evils which are not

immediately pressing, would not unite more than one-fourth of the

states? Besides, if the constitution were always to be changed whenever

a serious question of its construction arose, and amendments were as

practicable as they are difficult, the time required for the operation

would leave us nothing else to do. A century would scarcely suffice to

settle the questions which may occur in a single year.

There is another mischief, of no insignificant character, which results

from these excessive refinements in interpreting the constitution, and

from the doctrine that no length of time can settle its meaning. They

afford ready pretexts to cunning and timid politicians for screening

their real motives from the people. When they wish to evade

responsibility for their votes, they have nothing more to do than to

plead scruples of conscience, and the sacred obligation of an oath.

Where is the measure which a moderate degree of ingenuity may not

show--we may almost say--has not shown to be against the words, or the

meaning and spirit of the constitution? It is true, if the people

distrust the sincerity of this plea of conscience, or disapprove it,

they may remove their representative. But that remedy may come too late,

and may not always be applied. The people have always shown great

indulgence and forbearance towards this plea: besides, before the time

of re-election comes about, these inconvenient scruples may, in the din

of new contests, be forgotten, or remembered only to be forgiven, and,

by the hocus pocus of party, even metamorphosed into a recommendation.

When, then, it is so easy to take shelter behind the ark of the

constitution, ought we to enlarge the limits of this place of refuge for

cunning and cowardice?

One more argument in favour of a fair, liberal, manly construction of

the constitution. There would be a certain degree of inconvenience

incident to every written constitution, if there were no difficulties in

its interpretation, and its language was always understood in the same

sense by all men. In making that distribution of its various powers

which is deemed most likely to secure a safe and healthy action, the

hands of its functionaries must often be tied up from doing that which

particular circumstances may make highly expedient. Some imperative

claim of humanity, some yet more pressing emergency of state, may call

for powers which the constitution has withheld. Mr. Jefferson considered

the acquisition of Louisiana to be a case of that character. He

questioned the power of acquiring foreign territory under the

constitution. But when he reflected that France could not retain

possession of Louisiana, and that hither the constitution must be

stretched, (his letter to W. C. Nicholas might almost justify a stronger

expression,) or we must submit to having the greatest commercial nation

in Europe--our most active rival in peace, our most powerful enemy in

war--posted on our right and left flank, and, by and by, in our

rear,--he sacrificed his opinions to the safety of the republic. The

present president was no doubt actuated by similar considerations, when

he pursued the Seminoles into the Spanish territory, and made war on the

country in which they had taken refuge--the occasion not appearing to

him to admit of the delay of a formal declaration by congress. Commodore

Porter may be presumed to have acted on the same principle in Cuba. No

one regards these as fit cases for precedents. All agree, that if we

have a constitution, its mandates should be obeyed, and that we must be

content to put up with its partial inconvenience, for the sake of its

general benefits. But surely we ought not to go to the other extreme,

and so fetter the constituted authorities of the nation, by a spirit of

interpretation which will deprive them of all salutary power, except by

usurping it. Let us not lose sight of "the expedient," in discussing

"the right;" but rather, as the common sense of mankind dictates in

ordinary cases of conscience or morality, be liberal in construing the

constitution, when its power is to be used for the good of the people,

and captious and astute only when its exercise may be pernicious.

On these grounds, we earnestly beseech those who are friendly to our

political institutions--who believe that no other than the complex

government we have adopted can unite the adaptation of laws to local

circumstances with the strength and security of a great empire, to

discountenance the pestilent and absurd doctrine that the constitution

is to be on all points forever unsettled. We beseech them to save this

monument of our country's wisdom--this instrument of its safety, its

liberty, and its future greatness, from the peril and reproach to which

it is thus exposed. It is in their power to protect it from an evil

which would convert a government intended to secure domestic peace, into

one of perpetual civil strife, and which would confide the destinies of

the country to sophists, and quibblers, and casuists--or rather to those

political managers who would use them as tools to persuade the people

that a good measure was unconstitutional, that they might pursue a bad

one with impunity.

2. The next objection is, that the bank possesses a "formidable"

influence on the community. It must be admitted, that this complaint of

bank influence is not now brought forward for the first time. It was a

favourite theme of the demagogue, from the time the first Bank of the

United States was established, until its charter expired, when it

appeared that its influence was not equal to its own preservation.

If, indeed, no other corporation had the right to issue notes of

circulation, then the power of enlarging or contracting the common

currency at pleasure would be a very great one--greater than ought to be

put into the hands of any others than persons chosen by the people, or

their representatives, and responsible to them. But as the bank and its

offices are every where surrounded by competitors, some of which have a

yet larger capital than themselves, they have no such exclusive control

over the amount of money in circulation, and their influence, whatever

it may be, can be exerted only as to its quality. It is precisely on

this last influence that the friends of the bank mainly rely for the

public favour.

Let us inquire a little further into the extent of the bank's influence.

The principal functions of this institution, except the services it

renders the government, consist in discounting promissory notes, selling

or buying bills of exchange, and receiving deposits of coin, or of its

own notes, for safe keeping. It has no exclusive privilege of doing

either of these acts, as every state bank may do, and actually does the

same. But by means of its superior capital, and consequently its

superior credit and resources, it can, in some of its operations, either

undersell the other banks, or command a preference in the market;--aye,

there's the rub. The banks in some of the large cities have persuaded

themselves that if this "formidable" rival was out of the way, they

would be able to buy and sell more bills, and upon better terms than at

present. But if this consideration should make them an object of dread

and dislike to the state banks, it should also recommend them to the

favour of the public. Their notes, too, are generally preferred by

travellers, and for distant remittances. But neither does this fact

furnish any ground of dread to the community, whatever it may to their

rivals.

It thus appears that they have the same advantage over other banks,

which one tradesman or mechanic occasionally has over others of the same

calling. He who does his work best, and sells it cheapest, will always

get the most and best custom; and it would be just as reasonable for his

rivals in business to complain of his making better wares, of being more

accommodating, and of underselling them, as for the other banks to

complain of the Bank of the United States. It is clear, that if the

rival banks are losers, the public is a gainer, unless they can succeed

in persuading the people, that competition, which is so salutary and

beneficial to the public in every other business, should be mischievous

only in this. The argument thus used against the Bank of the United

States, is precisely that which might have been used, and, we presume,

was used, by the owners of the Albany sloops against steam-boats; and

which might be used against canals and rail-roads, by those who would

find employment for their wagons in the former more expensive modes of

conveyance.

But by an influence which is supposed to be so "formidable," is meant,

perhaps, a political and corrupt influence. If there be such a one, it

must be seen and felt; and we would ask in what way does it exert

itself? Does the bank use its money in the elections? If so, its

accounts must show it; and as there are men of all parties who own, or

may own, shares in the stock, let those who suspect this abuse

scrutinize those accounts for the purpose of detecting it. But those who

manage the banks, know very well, and so do those who accuse them, that

nine-tenths, or rather ninety-nine hundredths of the stockholders, would

not have given a five dollar note to get the president elected, or to

get him turned out. Your office-seekers, indeed, might pay pretty

liberally for such service, but they are seldom stockholders. These are,

for the most part, thrifty, cautious men, who choose to vest their money

in some fund which gives them regular returns; and they are content that

they shall be small, provided they be certain. The rest are widows,

guardians of orphan children, trustees of public institutions, and

merchants who have more capital than they can safely and profitably

employ. Now, who of these would allow a president and directors to

squander their money in a matter in which they felt little interest, and

that probably a divided one. No body believes this, and yet it is not

easy to say in what other mode they could exercise a corrupt influence.

But if the stockholders were disposed to spend their money in

electioneering, can they be prevented from acting so foolishly by

putting down the bank? If the charter is not renewed, their money will

be returned to them, and they would then have both the power and the

inducement to use it for political purposes, which they cannot have

while it is supplying a currency to the country, and invigorating its

industry and commerce. But, in truth, it is well known, that those

persons do not make ducks and drakes of their money now, and are not

likely to do it then.

It is true, that in case of an extraordinary demand for money, beyond

the means of supply by the state banks, the Bank of the United States

may sometimes prefer discounting the note of one man to that of

another--the paper of A to that of B; and that some of the directors

might have given the preference to A, because he was a neighbour--others

by his being a friend or relative, and others again by mere party

sympathies. But we believe that none of these things go very far at

bank. The object of its directors being to make money, they prefer the

paper of a rich man they hate, to that of a poor friend. Nor do they

widely differ from the rest of the world in this particular. But

granting that moral and political considerations do influence the bank

in its loans, who does not see that they could have no effect, except

when the supply of money for loan was not equal to the demand, and that

the mischief would be increased by putting down the richest and most

substantial bank in the country?

Upon the whole, this cry against the influence of the bank, resolves

itself into that of wealth and property. These do exert a certain

influence in the community on some occasions, and it is more than

counteracted on others, by the jealousy and ill will it engenders.

Whatever influence wealth may have, it is inseparable from our present

condition, as we presume the United States are not yet prepared for the

Agrarian system, and every man will be permitted to enjoy the fruits of

his own industry, or that of his ancestors; but be it little or much, we

cannot reasonably expect to see it exerted more harmlessly or more

beneficially than in a solid, well managed bank. If, however, in spite

of all these considerations, the power of these institutions be thought

too great, and too liable to abuse, then there is no more effectual way

of weakening it than by diffusion. As most of the state banks are more

or less under the control of the state authorities, who may use the

influence of these banks for political purposes, it must be desirable to

all those who wish the public mind as free and unbiassed as possible, to

see this influence weakened, if not neutralized; and there seems no more

effectual mode of doing this than establishing a rival bank, over which

the state politicians could exercise no sort of authority. Let us, for

example, suppose that a system of banking was adopted for a state, by

which, under the colour of guarding the public against their insolvency,

those institutions were subjected to a _surveillance_ and control which

were calculated to make them feel their dependence on the state

government, and when the plan was matured, to make them obsequious to

its will. Would not every friend to the political purity of the state,

and the independent spirit of its citizens, wish to see a scheme of this

character frustrated? and what means so conducive to this end as the

Bank of the United States, which, in the first place, by bringing so

much capital into the market for loans, lessens the influence of all

banks, and, in the next, may perform its several functions without

regard to the smiles or frowns of any politicians whatever.

This is probably the influence which is really objected to in the Bank

of the United States, that of disenthralling the people from an utter

dependence on the state banks for the various accommodations those

institutions afford--an influence which it appears to us no true friend

to his country should wish to see diminished, however inconvenient it

may be to those who would make banks and every thing else subservient to

their purposes.

3. But the Bank of the United States, it seems, must be brought into

collision with the local authorities, and occasion perpetual

apprehensions and discontent on the part of the states and the people.

We know not upon what facts the president or his advisers have made this

statement. It is in direct contradiction to that made by the committee

of ways and means, who say--

"It is due to the persons, who for the last ten years, have

been concerned in the administration of the bank, to state,

that they have performed the delicate and difficult trust

committed to them, in such a manner as, at the same time, to

accomplish the great national ends for which it was

established, and promote the permanent interest of the

stockholders, with the least practicable pressure upon the

local banks. As far as the committee are enabled to form an

opinion, from careful inquiry, the bank has been liberal and

indulgent in its dealings with these institutions, and, with

scarcely an exception, now stands in the most amicable relation

to them. Some of those institutions have borne the most

disinterested and unequivocal testimony in favour of the bank.

"It is but strict justice also to remark, that the direction of

the mother bank appears to have abstained, with scrupulous

care, from bringing the power and influence of the bank to bear

upon political questions, and to have selected, for the

direction of the various branches, business men in no way

connected with party politics. The Committee advert to this

part of the conduct of the directors, not only with a view to

its commendation, but for the purpose of expressing their

strong and decided conviction that the usefulness and stability

of such an institution will materially depend upon a steady and

undeviating adherence to the policy of excluding party politics

and political partisans from all participation in its

management. It is gratifying to conclude this branch of the

subject by stating, that the affairs of the present bank, under

the able, efficient, and faithful guidance of its two last

presidents and their associates, have been brought from a state

of great embarrassment into a condition of the highest

prosperity. Having succeeded in restoring the paper of the

local banks to a sound state, its resources are now such as to

justify the directors in extending the issue and circulation of

this paper so as to satisfy the wants of the community, both as

it regards bank accommodations and a circulating medium."

The committee, coming immediately from the people, are somewhat more

likely to have accurate information on this subject than the president.

We have heard of no recent collisions between any state and the bank;

and those which formerly took place with the states of Ohio and

Maryland, respectively, have been long since settled in the Supreme

Court. The people of Tennessee, too, once objected, through their

representatives, to the location of a branch bank in that state; but a

subsequent legislature, believing that they better understood the

interests or wishes of their constituents, withdrew their opposition,

and the branch bank which was therefore established, is now in

successful operation. The legislature of Mississippi, in like manner,

has, within a few months, repealed a hostile act passed two years ago,

and invited the establishment of a branch. The executive council of

Florida, has recently requested a branch, and we understand that there

are numerous applications for branches from all parts of the Western and

Southern states. Surely the people of these and the neighbouring states

cannot seriously object, that a portion of the moneyed capital which has

been accumulated in the Atlantic states should be brought among them, to

encourage their industry and facilitate their trade--to enable their own

merchants to give them ready money, and a somewhat higher price for

their cotton--to furnish one man with the means of building a

mill--another a manufactory--and a third a steam-boat. We cannot believe

that they are such novices in political economy. If their citizens do

not want the money, they need not borrow it; and if they do, it is

better to find it at home, than to be dependant on New-York,

Philadelphia, or Boston, for it. In the state of Alabama, if we are to

believe the public prints, the United States Bank there has afforded

great and most seasonable aid to the state bank. Nor do we know of a

single state, in which there are any manifestations of popular

discontent with the bank, notwithstanding the pains taken by some of the

friends of the president to excite them.

Perhaps the apprehensions mentioned in the message may refer to the

state banks rather than the people; and the president has presumed,

that, as some of the states are interested in the stock of these

institutions, and as their interests may conflict with those of the Bank

of the United States, the people would be likely to side with their own

institutions. The presumption is far from being unfounded. The

sympathies of the people will always be with the states, rather than the

general government, when the two are in conflict--a fact of which

politicians are sufficiently apt to avail themselves. Thus, when the

present Bank of the United States first went into operation, fears were

entertained by the state banks and their friends, that the United States

Bank and its branches would prove troublesome and dangerous neighbours.

Their strength to oppress, and even crush, a rival, was supposed to be

in proportion to their capital; and, comparing them with things with

which they had no sort of analogy, it was argued, that a state bank, in

the neighbourhood of a branch of the national bank, would be not more

likely to thrive, than a delicate shrub under the shade of a spreading

oak, or to find safety, than a light armed brig under the battery of a

seventy-four. These arguments prevailed for a season in some of the

states; but at length the experiment was made, in spite of these gloomy

predictions, and it was found, as well it might be, that a small

capital, _if prudently managed_, is as independent of the attacks of a

rival, in banking, as in any other business. And why should there be a

difference? A tailor or shoemaker who employs but two or three

journeymen, may do as safe, though not so profitable a business, as he

who employs twenty or thirty--in the same way as a small vessel may

navigate the ocean as safely as a large one, and may be even less likely

to overset in a storm, if it carry less sail in proportion to its

ballast.

We do not mean to deny, that a bank with a superior capital, if it were

disposed to injure a rival at all hazards, might prove an inconvenient

neighbour, and greatly curtail its business. If it were to put itself to

the trouble of procuring the paper of the other, as soon as it was

issued, and convert it immediately into specie, the loans of that other

might be restricted to the amount of its specie capital. But this could

not be effected without a degree of trouble and expense which would make

it impracticable. What means does such a bank possess of drawing in the

paper of the other bank, except so far as the debtors of the one

institution chance to be the debtors of the other, or it choose to give

a premium for the notes of its rival? It is not likely, that the same

individuals would be the debtors to both banks, to a great extent; and

as to a premium, such sacrifices seldom take place in individual

competition, much less in that of banks. Besides, as soon as the bank

which was thus assailed found that a premium was given for its paper, it

would issue notes for the purpose of obtaining it, and the faster its

notes were bought up and returned for specie, the more would be found in

the market--a new swarm being attracted by the premium as soon as the

first disappeared--until in a few months its hostile rival would share

the fate of those who attempt to break another sort of banks--its own

coffers would be exhausted.

The means then which a bank possesses of narrowing the sphere of

circulation of a rival's paper, are much more limited than is commonly

imagined; and such as they are, it will be cautious of exerting, lest

the same game should be played on itself. A combination of the state

banks, or even a single one of respectable capital, may practise the

same means of annoyance against a Bank of the United States, as that

could put in operation against them. But if both parties were wise, or

rather not utterly foolish, they would each pursue their own business;

and one not otherwise interfere with the other, than by occasionally

exchanging notes, and receiving the difference in specie. This course

might indeed prove a check to extravagant issues by either, but it is

precisely that check which the public is interested in maintaining.

There is a further security against the wanton and bootless mischief

which fear or design has imputed to the Bank of the United States.

Public opinion would cry out against its illiberal course, and would

fully avenge the wrong. Some of their best customers would desert them.

They would lose most of their deposits. Their notes would be

industriously collected and prematurely returned to them, and they would

thus not only lessen their present profits, but furnish their enemies

with arguments against the renewal of their charter. The supposition of

such a course presumes the bank to be utterly regardless of

their own interests, as well as of all sense of fairness and

liberality--considerations which still have some weight with some

men--and it is at variance with all that we have ever heard of the

officers of that institution. As a proof that no fears or jealousies

against the Bank of the United States are entertained by safe and

substantial banks, we may remind our readers, that Mr. Girard, the

greatest banker we have, was one of the most efficient supporters of the

present national bank. No other individual in the United States would be

so much affected as he, if its competition and neighbourhood were

pernicious, and yet no one subscribed so largely to its stock, and no

one, we have reason to believe, deplores more strongly the confusion in

the moneyed concerns of the country, which he thinks would be inevitable

on the destruction of the bank.

It is probable enough, that although these alleged causes of jealousy

and alarm are known to be groundless by the state banks, the proposition

against re-chartering the bank addresses itself to those institutions in

another way. They have been led to believe that the benefits of the

business now done by the bank, and of the government deposits, would be

apportioned among them. But let them not flatter themselves with

profiting by a division of this spoil. That great void in the

circulation which the withdrawal of the capital of the bank would

occasion, would immediately and imperatively call for new banks, which

the states would be sure to establish; and when once they began to meet

the demand, it would not be strange if the supply sometimes exceeded it,

according to the common occurrence of a scarcity being followed by a

glut. In that event, the present state banks might find too late that

they had exchanged one old and liberal rival for two or more new ones,

of a different character, who would be their competitors not only for

the profits of banking, but also for the favour or forbearance of the

state politicians. What the community at large is likely to regret or to

wish after the change, it is not difficult to conjecture.

One of the complaints against the Bank of the United States has been,

that the notes issued by any one of its offices were not payable at

every other indiscriminately; and to this the president must have

referred, when, in his first message, he said that the bank "had failed

in the great end of establishing a uniform and sound currency." As the

same objection is not repeated in the last message, we are left at a

loss to decide whether he has been convinced, by the very lucid and

satisfactory views of Mr. Lowndes and Mr. M'Duffie, that the complaint

was unfounded, or whether he means to comprehend this among the causes

of discontent on the part of the states and the people.

As this subject has received so thorough an investigation in the report

of the committee, and in our last number, it cannot be necessary to say

more on it. It is there shown, as we think conclusively, that the Bank

of the United States has done in this matter all that a bank can

do--more, indeed, than could have been reasonably expected of

it--towards furnishing the community with a sound and uniform currency:

that its notes, at the places where they are issued, are, for all

purposes, worth as much as gold and silver, and for distant payments

something more: that if its notes are sometimes worth, in one place, a

trifle less than specie, it is because they have been worth, at another

place, more than specie, since no one would transfer them to a great

distance from the place of emission, unless he found them more

convenient than specie: that as every bank has a direct interest in

giving its notes as great a credit and as wide a circulation as it can,

this institution will, for its own sake, redeem its notes at par,

wherever issued, when it can safely do so; and that in most cases, it

has actually done this; but that to make this obligatory would not only

be unjust to the bank, but would be highly impolitic, by counteracting

the natural and most efficient corrective of the over issues of banks,

and the overtrading of individuals; and would be moreover impracticable.

To these irrefragable positions we may add, that the public has quite as

much interest as the bank in keeping this matter on its present footing.

One of the greatest benefits which a community derives from banking

institutions, is the substitution for a part of its currency of the

cheap article of paper for the costly one of specie, by which the

capital that would otherwise have been used as money, may be employed

for other useful purposes. But if the Bank of the United States, and

each of its offices, were obliged, as a matter of right, to redeem the

notes of every other, it would require an increase of specie which would

deprive the country of the benefits of this substitution, as well as the

bank of its profits. The same remark applies to their demanding a small

premium for their drafts on each other. For each of the offices to be

prepared not only to redeem its own paper, but to meet the drafts which

others may draw on it, it is obliged to keep on hand an extra supply of

specie; but if the check of the premium were removed, and it was no

longer a matter of discretion, a much larger amount would be necessary,

and nothing but experience could determine whether any thing short of

the whole capital of the bank, or even that, would be sufficient for the

purpose, under extraordinary circumstances, and great fluctuations of

trade. So that upon the whole this complaint against the bank seems to

be pretty much of the same character as these--that rivers do not run

upwards as well as downwards--or that the same season which gives us ice

does not also give us melons and peaches--or that a rail-road or a

canal, which reduces the expense of carriage to one-tenth, does not

reduce it to nothing.

4. Having thus noticed all the objections which the president has made

to the bank, let us now turn our attention to the substitute that he has

proposed. This is a national bank, at the seat of government, which is

to be a branch of the treasury department, and which is, we presume, to

have subordinate offices distributed among the several states. Its

business will be to receive the public revenue from the collectors of

the customs, receivers of the land offices, and postmasters, together

with such deposits as individuals choose to make, and to give drafts,

from time to time, on distant offices, for a premium.

According to this project, the funds of the treasury, instead of being,

as now, deposited in the several banks convenient to the receiving

offices, are to be in the immediate keeping of the new corps of the

treasury to be levied for the purpose, by which means the public is to

lose one of its present checks on the malversation of its agents. It is

known that there are in most banks various officers, each with his

appropriate duty--as--one or more to keep accounts--another to receive

money--another to pay it away--another to be its general depositary--and

that they are all placed under the superintendence of a president, whose

character and station in society give assurance for the faithful

discharge of his duty. That there is, moreover, a board of directors,

who hold their offices only for a year, and who, once a month or

oftener, appoint a committee to examine the affairs of the bank, and

especially to ascertain whether the amount of notes, securities, and

specie, correspond with the accounts of the institution. Yet, with all

these safeguards, it is found, now and then, that men who had previously

been above all suspicion, have not been able to withstand the temptation

to use the money thus placed in their charge, and that, occasionally,

these frauds and peculations are practised a long time without

detection. If this is the case, when there is such strict

accountability, and unremitted vigilance, how would it be when there was

neither, and when those who received the public money, instead of being

compelled to deposit it in a bank, as soon as they received it, and to

check for it when they paid it over, might use it as they pleased,

provided they were always ready to meet the drafts of the government. At

many places they might do this, and yet, in consequence of the large sum

which is always lying idle, or rather unappropriated in the treasury,

they might have the use of the excess, to a considerable amount, as long

as they remained in office. For several years the amount in the treasury

has never been less than five millions, and sometimes considerably more;

and of this, according to the ordinary current of business, one-third or

upwards would commonly be in the city of New-York, if it were not

transferred to Washington; and this money, which is now invigorating

industry and trade, it is proposed to consign either to utter idleness,

or to the exclusive use of the officers of the treasury. In addition to

that aversion to change which is felt by all office-holders, this plan

might furnish them with no ordinary means of effecting their object.

But if for the sake of guarding against such strong temptation to

speculate with the public funds, and against such an encouragement to

corruption, by affording materials for it, the public money were

required, as now, to be deposited in the banks; though that plan would

be free from the objection we have just made, it would be liable to

another quite as great--the very one of influence which the president

has made to the bank of the United States--with this difference,

however, that the influence derived from the government funds is now

exercised by the Bank of the United States, and is a salutary check upon

that exercised by the state banks, but _then_, it would be added to that

patronage which is already thought sufficiently great for every

desirable purpose, and sometimes for purposes not desirable. The large

receipts of public money in our chief importing cities, would be

distributed among those banks which were most in favour with the

government, by which is always meant those that were its most zealous

and efficient supporters; and thus the revenue of the nation, that is,

the use of it, would be set up at auction, to be purchased by the

obsequious devotion of the state banks to the existing administration.

In a division of parties, not more equal than that we often witness in

our country, the vote of a single state may decide that of the Union,

and the vote of its principal city may decide that of the state. All

this is perfectly well known to some of the friends of the scheme, but

it is not so to those who are to pay for it, and who are less familiar

with the workings of the political wires.

There is another part of this notable scheme, (we mean no pun,) which

merits our attention. This new bank and its offices are to sell drafts

on each other for a premium, and as the bank itself is to issue no

paper, the drafts may be paid for in the notes of the state banks, "only

so long as they continue to be redeemed in specie,"--such are the

President's words. But suppose the very common case of a bank paying

specie to-day, and not paying it, and not being able to pay it,

to-morrow, what becomes of the public revenue then? To be placed no

doubt first to the account of "unavailable funds," and then, to the

credit of the treasury. When these new bureaux of finance are

distributed over the Union, and having no paper of their own, must carry

on their operations altogether in gold and silver, and the paper of the

banks in their vicinity, it is impossible that, with the highest degree

of vigilance, prudence, impartiality, and firmness, united, they would

always avoid loss. But does any one believe that this delicate and

important trust would always be exercised with impartiality and

firmness? To believe it, would be to disregard all experience, and to

shut our eyes to what is passing before them every day. When the

officers of the government--themselves dependant more or less directly

on popular favour--were to have the power of discriminating between what

paper they would take and what refuse, how many motives would be for

ever presenting themselves for exercising it improperly? To reject the

paper of a substantial bank, that was hostile to the administration, if

there were any such, and to take that of a tottering one, which was

friendly. Let us suppose, by way of illustration, that some orator, or

political manager, no matter which, being about to set out for congress,

should apply to one of the treasury banks for a draft on Washington for

a few thousand dollars, and should offer in payment of it the paper, not

of a substantial bank, but of one which though poorer, was more

patriotic,--this being the best he could get--is it probable that his

application would be rejected? or that the officer would do more than

inquire whether the bank then paid specie, without troubling his head to

ascertain whether it merely made a show of paying it, and whether it

would not be insolvent in a month. Let it not be said, that if doubts

were entertained of the solidity of the bank, its paper might be

immediately converted into specie; for, in the first place, the bank may

be some hundreds of miles distant; and though it were in the immediate

vicinity, payment of specie would not always be demanded before it was

too late. Besides, the very demand of specie may, like a new weight

breaking down an overloaded packhorse, make it stop payment at once. The

bill now before congress, for allowing the treasury credit for certain

"unavailable funds," received some years since, would form an excellent

precedent for such occurrences, and it is one to which there would be

frequent occasions of appealing. And this mode of managing the public

revenue is proposed to take the place of that which now exists through

the Bank of the United States, by which the government has not lost a

dollar; and it is next to impossible can lose one. Verily, if the nation

were to suffer itself to be gulled by such a scheme as this, they would

deserve to suffer the loss they would be sure to incur.

But pecuniary loss may be but a small part of the price which the nation

would pay for this new treasury bank. It may be made to pay, in

addition, the richest jewel it possesses--its political purity. The

influence which the national executive exercises over the present Bank

of the United States, is moderate, and not more than is salutary. It

annually appoints a part of its directors, and, at stated periods, may,

moreover, exercise its right, of having the government funds transferred

from one part of the Union to the other, in a more or less accommodating

way. But here its influence stops. The law, in pursuance of the charter,

directs that the public money shall be deposited in the Bank of the

United States or its branches, and in these it must be deposited,

whether the president or his secretaries have good will or ill will to

the bank, or whether the bank is willing to give any thing in return for

their favour or not. These public deposits are valuable to the bank;

and, for the benefit, they have paid, and we presume are yet willing to

pay, a fair price. But the compensation is not paid to any officer of

the government; it goes into the national treasury, and it consists of

gold and silver, and not in the base metal of political influence.

We are well aware that many of the state banks are under the management

of high-minded and honourable men, who would not be bidders at this

auction, and who would scorn to purchase a share of the public deposits,

at the price of their independence. But such might not prove to be the

character of the greater number. Besides, in some of these cases, a

majority of the stockholders might not sit idly by, and see the bank

deprived of its share of government favour by the squeamishness of its

officers, and might therefore either coerce them into compliance, or

remove them.

If so much has been said about the influence attached to the office of

the secretary of state, arising from the paltry patronage of printing

the laws of the United States, what should be thought of that privilege

of giving the permanent and uncompensated use of many millions of

dollars to such powerful corporations as the state banks--embracing some

thousands of directors, and some tens, nay, hundreds of thousands of

stockholders and borrowers? We would appeal to that intelligent class of

our citizens, who are quietly pursuing their occupations or professions

at home, by which they secure to themselves independence and

respectability, and who see, in the purity of our political

institutions, their country's present happiness and future greatness, to

take these things into consideration, and say whether they are willing

to give to any administration such powerful means of exercising an

influence of the worst sort over the minds of the people--whether they

will take the money now gained or saved to the nation by means of the

Bank of the United States, to enable a president and his cabinet to buy

golden opinions of that numerous class who have them to sell.

The president lays some stress on the circumstance that his proposed

treasury bank would not be a corporation, as is the Bank of the United

States. But the lawyers tell us that there are two kinds of

corporations--aggregate and sole--and the question is, whether influence

is likely to be less extensive, or less dangerous, when it is

transferred from the corporation aggregate, (the bank) to the

corporation sole, (the executive). In the first case, the influence of

the bank has checks from its charter--from its stockholders--from its

directors--from public opinion--and, lastly, from the legislature. In

the last, the influence would be added to that which is already deemed

by many too great for the public tranquillity or safety. Whatever means

the Bank of the United States possesses, of operating "on the hopes,

fears, or interests of large masses of the community," the state banks

possess, to a far greater extent; and it would always be in the power

of the government to act on these corporations, either by the treasury

bank "checking their issues," as the president proposes; or, in case

that monstrous scheme should be rejected, by means of the public

deposits; so that, in any event, if the charter of the present bank is

not renewed, the influence of the executive will receive a most

formidable increase.

Nor could the proposed national bank answer the same useful purposes to

the commercial world, as the present Bank of the United States. And,

first, as to transmitting values from one part of the Union to another,

by means of bills of exchange. The president informs us the new bank

might sell these at a moderate premium. But its means of doing so would

be evidently far more limited than those of the present bank, since the

latter, in addition to all the means possessed by the treasury bank, has

its own large capital and credit. In the year 1829, the amount of drafts

on each other which the bank and its offices sold, was upwards of

twenty-four millions, and the amount of its transfers of public money,

by means of treasury drafts, amounted to upwards of nine millions;

making, in all, more than thirty-three millions. Now, although the

annual public revenue is about twenty-four millions, yet as the

expenditures of the nation are going on at the same time as its

receipts, the money on hand, at any one time, seldom exceeds six or

seven millions. According to the monthly statement of the bank, for the

1st of January of the present year, the amount of deposits on account of

the treasury of the United States, was, after deducting over drafts,

6,940,628 dollars. But as this sum would be distributed very unequally

over the United States, there would be in some places more money than

the government had occasion for, and in others less, so that it would be

compelled to draw on the former, to meet the public exigencies, without

regard to the state of the exchange market, by reason of which, it would

not only not be able to afford the public that general accommodation

which the Bank of the United States now does, but be sometimes obliged

to sell its drafts for a _discount_, instead of a premium. Thus, suppose

the government has a large sum lying in New-York, (it sometimes has more

than two millions there,) and it has occasion for 200,000 dollars in

Maine, as much in Missouri, &c. Although it might have found a ready

sale in these places for its drafts, for a small amount, at par, or even

at a premium, yet the amount offered exceeding the demands of the

market, the government must either sell its drafts at a discount, or be

at the expense of transmitting the specie. In the mean while, the drafts

which are thus sold at one place at a loss, might be in demand at

another, but that demand the government cannot meet, because it must

give its money another direction. We therefore think that this part of

the scheme cannot be of much utility to the public, or of profit to the

treasury.

It must be recollected, too, that the Bank of the United States is a

buyer as well as a seller of bills of exchange, to the great advantage

of the commercial community. Its purchases, during the same year, 1829,

amounted to upwards of twenty-nine millions of dollars; and that in this

business, the treasury bank, according to the president's programme,

could not engage.

But besides the want of the accommodation now afforded by the purchase

or sale of inland bills to all parts of the Union, there is a large

further arrear of utility which the treasury bank would owe to the

public. In what way would it make amends for the immense amount of

currency withdrawn from circulation? The notes of the United States Bank

in actual circulation, commonly amount to fourteen or fifteen millions,

exclusive of its drafts, which, to a certain extent, perform the office

of currency. As the new bank is to issue no paper, the chasm must be

filled, either with the paper of the state banks, or not filled at all.

If with the former, whence are they to derive their increased means of

circulation, seeing that nearly all of them have carried their issues to

the extreme verge of safety, and some of them, perhaps, beyond it? It

will, however, be said, that there will be new banks established--the

capital that is vested in the Bank of the United States will not be

annihilated by the termination of that establishment, but will seek

employment in new banks. Let it be so. In that case what becomes of the

increased profits of which many of the state banks have been dreaming,

and the hope of obtaining which has been so artfully appealed to?

But an addition to the state banks would fall far short of filling the

void. Much of the capital of the present bank was obtained from Europe.

We are told in the report of the committee, that foreigners own stock to

the amount of seven millions. Is it probable that these capitalists will

be as ready to venture their money in the state banks, as in one

chartered by the general government? Would they even venture it again in

a national bank, after we had shown so vacillating a policy? We

establish a bank of that description in 1791--we put it down in 1811, as

unconstitutional--we charter another, five years afterwards, 1816, and

discontinue that in 1836. Assuredly, after this experience, they would

prefer a somewhat smaller interest nearer home, rather than risk their

money in a country exhibiting so little stability, and where what had

been long determined to be legal by the highest authorities of the

country, is liable to be revoked on the first revolution of parties.

There are persons who will consider the withdrawal of seven millions

from our circulation, as no source of regret; and who think the money

paid for the use of foreign capital, is so much lost to the country;

for the truths of political economy are not obvious to all. But no one

who is acquainted with the elements of that science, will doubt, that a

nation, not having as much capital as it can advantageously employ, may

be improved and enriched by foreign capital as well as its own; and the

benefit of these seven millions in stimulating the productive industry

of the country--in building ships, and wharves, and mills, and

manufactories, and steam-boats, is precisely the same as if they were

domestic capital, with the single difference of the interest. Ask the

owner of a thriving manufactory of woollens in Cincinnati, or of iron in

Pittsburg, if he had been assisted in his enterprise by a loan of

10,000, or 20,000 dollars from the Bank of the United States--and he

might answer, that, by the use of the money, in a few years, he had,

besides paying the interest, realized the sum borrowed. Ask him further

whether he would gain more by keeping the money longer, or returning it

to the European stockholder, and he would laugh at you, thinking your

question conveyed its own answer, as he had not chosen to return the

money.

The president's project then of a treasury bank, seems to be liable to

all the objections he makes to the present Bank of the United States, in

a tenfold degree, as to influence, by adding so enormously to the

executive patronage. It offers a far inferior substitute for the safety,

and the easy transmission of the revenue; and no substitute at all for

much of the accommodation now afforded to commerce, and the large amount

of active capital it would throw out of circulation.

In making this comparison, we have had no reference to the former

services of the Bank of the United States in restoring the currency of

the country to a sound state, or to its power of so preserving it, if

the country should be again involved in war. We have contented ourselves

with refuting the objections which have been brought forward against

that institution, under the sanction of the chief magistrate of the

country, and with pointing out to the unprejudiced mind the

inconveniences and serious mischiefs attendant on the scheme which has

been proposed in its stead. In our last number, we asserted that the

resumption of specie payments by the state banks, in 1817, was to be

probably attributed to the establishment of the Bank of the United

States, and we stated the facts upon which that opinion was founded. It

was, then, with some surprise, that we saw the position roundly denied

in a quarter (the North American Review) where we have been accustomed

to look for just views on all commercial affairs; and the resumption of

cash payments imputed to the resolution of congress, forbidding the

officers of the government from receiving the notes of any banks which

were not redeemable in specie. The question is not one of primary

importance, yet as it may affect our future policy, and concerns our

present justice, we will add a few remarks on the subject. When we see

that the measure of the government alluded to was not immediately

followed by the desired effect, but that as soon as the Bank of the

United States was about to go into operation, an arrangement was

voluntarily entered into with it by the banks of New-York, Philadelphia,

Baltimore, and Virginia, by which they all agreed to resume cash

payments at the same time, it seems to afford _prima facie_ evidence,

that it is to the Bank of the United States, and not to the legislature,

that the resumption is directly attributable. Whether the state banks

might not, at some subsequent time, have paid specie, and at what time,

must now remain a matter of conjecture; but we think it quite as likely,

that the banks, making extraordinary profits as they were, so long as

they were not compelled to redeem their notes in specie, would have

procured a repeal of the resolution of congress, as that that measure

would have operated coercively on them. In some of the states, the

resumption of specie payments was discountenanced by the state

legislatures; and in Virginia, if we mistake not, after the measure had

been enjoined on the banks by the legislature, it afterwards retraced

its steps, on the ground, that if they ventured to pay specie, the Bank

of the United States, then about to go into operation, would immediately

draw every dollar from their vaults. The banks of that state thus had

the express sanction of its legislature for continuing the suspension;

nor was it until after the meeting of the convention, mentioned in our

last number, that they paid specie.

But in what way, it may be asked, could the Bank of the United States

have compelled the state banks to resume specie payments, if they had

not been so disposed? We answer, by giving the public the option of a

better currency than theirs, and presenting an easy and ready standard

in every part of the Union, by which the depreciation of their notes

would have been manifest. As soon as the paper of the national bank had

been put into circulation, it would command, by its convertibility into

specie, a preference in the market over the paper of the state banks,

and the difference would have been shown by the reduced rate at which

the latter would have passed. The public then having such a standard of

comparison, could no longer be deceived, and every one would have seen

the depreciation, and known the extent of it. What would have been the

natural consequence? The paper of the state banks, thus depreciated in

the market, would have been bought up by their more prudent and

substantial borrowers, and returned to them in discharge of their debts;

and thus they would have had no notes in circulation except what was

represented by the paper of their most straitened and doubtful

customers, nor would any others have continued to borrow of them. Thus,

with a business decreased in amount and impaired in character, they

would have found it impossible to make a profit equal to defraying their

expenses and yielding a dividend to the stockholders.

All this the state banks distinctly foresaw, and not wishing to be

compelled to resume specie payments, by which their profits would be

diminished, they generally opposed the establishment of a national bank.

But when they found that all opposition had been ineffectual, and that

the bank was about to go into operation, and to pay specie, they

immediately saw that they must follow the example, or that their gains

were at an end--that the public, which took their paper, during the war

and immediately after the peace, when there was no other currency, would

not continue to take it, when they had the choice of a better--and thus

the compact which has been mentioned was formed.

It is said, however, that the depreciated paper of the Baltimore banks

would have circulated so long as the government received it at the

custom-house, and that it was only after the government decided to

receive it no longer, that those banks found themselves compelled to pay

specie. But would this measure have been effectual without a national

bank? We have already intimated that we thought not. It would have been

vehemently attacked in congress and out, and all the states, except

perhaps Massachusetts, might have instructed their representatives that

the measure was premature, oppressive, and detrimental to the public

interests. But after the Bank of the United States went into operation,

the question was at an end. The government, whether the resolution of

congress had been passed or not, could not with decency have taken, or

been asked to take, any more than an individual, depreciated paper for

its dues, when there was good paper and specie in circulation; and the

Baltimore banks, as well as all others, must have followed suit, or

given up the game.

For these reasons we must continue to think, that the claim urged by the

friends of the Bank of the United States, that it operated, by its

example, a salutary coercion on the state banks in their return to

specie payments, is as well established as a question of its character

can be, and that the same means by which it proved that remedy for the

mischiefs of an unsound currency--its solid capital--unquestionable

credit--and practical skill in business--would operate, on future

occasions, as a preventive of similar mischiefs.

The same distinguished critic differs from the chairman of the committee

of ways and means, as to the effect of an increase of money in producing

depreciation. The proposition controverted is thus stated by Mr.

M'Duffie in the Report.

"No proposition is better established than that the value of

money, whether it consists of specie or paper, is depreciated

in exact proportion to the increase of its quantity, in any

given state of the demand for it. If, for example, the banks,

in 1816, doubled the quantity of the circulating medium by

their excessive issues, they produced a general degradation of

the entire mass of the currency, including gold and silver,

proportioned to the redundancy of the issues, and wholly

independent of the relative depreciation of bank paper at

different places as compared with specie. The nominal money

price of every article was of course one hundred per cent.

higher than it would have been, but for the duplication of the

quantity of the circulating medium. Money is nothing more nor

less than the measure by which the relative value of all

articles of merchandise is ascertained. If, when the

circulating medium is fifty millions, an article should cost

one dollar, it would certainly cost two, if, without any

increase of the uses of a circulating medium, its quantity

should be increased to one hundred millions. This rise in the

price of commodities, or depreciation in the value of money, as

compared with them, would not be owing to the want of credit in

the bank bills, of which the currency happened to be composed.

It would exist, though these bills were of undoubted credit,

and convertible into specie at the pleasure of the holder, and

would result simply from the redundancy of their quantity. It

is important to a just understanding of the subject, that the

relative depreciation of bank paper at different places, as

compared with specie, should not be confounded with this

general depreciation of the entire mass of the circulating

medium, including specie."

Although the principle appears to us to be laid down somewhat too

broadly by Mr. M'Duffie, as we shall presently state, yet he is

supported in his position, to the letter, by Hume, by Mr. Jefferson, and

virtually by Adam Smith, if we suppose that from any cause the excess of

gold and silver, which causes the depreciation, cannot be exported. They

all agree in this, that the amount of money which can circulate, and

which does in fact circulate in any country, depends upon the number and

value of its exchanges, and that, as its quantity increases, its value

diminishes. But Hume and Smith, concurring in this general principle,

drew very different inferences from it as to the paper currency of

banks. Hume thought that the equilibrium between the money required for

the country and that in circulation, was effected by depreciation; while

Smith considered, that it was maintained by an exportation of the

precious metals in proportion to the increase of paper. And the general

principle thus ably supported by authority, was all, no doubt, that Mr.

M'Duffie meant to assert. There is then probably no real difference

between him and his reviewer in the North American.

We conceive that Mr. M'Duffie, in his application of the principle to

our own situation, twelve or fifteen years since, has not greatly

overrated the depreciation, if we regard the effect of the increase of

money on every species of exchangeable value; but that it was very

different with the different kinds. This difference requires

explanation; but first, of the general principle itself, which, it seems

to us, must be received with some qualification.

The effect of an increase of money is certainly to diminish its value;

but the extent of the diminution is one of those nice problems in

political economy which has never been accurately settled. It has not

yet been adjusted to a formula which will explain all the facts

attending such increase. Although the quantity of money required in a

country mainly depends upon the number and value of its purchases in a

given time, yet with the same amount of these, much less money may be in

circulation at one time than another. There are various expedients and

substitutes for supplying a temporary deficiency of currency, which make

the quantity of money in a commercial country a variable one, capable of

considerable contraction or expansion. The actual money can be more or

less aided by credit. A farmer, a horse-dealer, a shopkeeper, a

mechanic--will all wait with a substantial purchaser for their money,

rather than lose the sale of their commodities; and a sudden rise in the

price of the staples of the country, such as our own often experience,

while it increases the demand for money, proportionally improves the

credit of individuals, and fits it as a substitute for cash. Money too

may be much more active at one time than another; and when there has

been a considerable increase of it, the greater comparative idleness of

a part of it, in the strong boxes or pocket-books of individuals, may

prevent or lessen its depreciation. These circumstances, and others

which might be added, all inappreciable except by approximations,

prevent the value of money from either rising or falling, in exact

proportion to its increase or decrease in quantity.

To this qualification of the general principle, we would add another.

When the money of a country has been considerably increased, and the

excess cannot be exported, as was the case with our paper currency

during the suspension of cash payments, the depreciation is much greater

upon some articles than others. Its effect is least upon those

commodities which find a market abroad, because the price there

regulates the price here. It is by reason of this irregularity that

depreciation is often so disguised as not to be perceptible to all, and

that sometimes it is a matter of dispute whether it exists or not; as

was the case in England in the controversy between the bullionists and

their opponents, concerning the fact of the depreciation of their bank

paper during the suspension of cash payments.

But if the increase of the currency has little effect on the prices of

some articles, it has the greater on those for the estimation of which

there is no such definite standard--as lands, town lots, and houses--and

those domestic products which look exclusively to domestic consumption

for a market, as butchers' meat, game, &c. All these took a prodigious

rise in all parts of the Union, and most men mistaking the effect of a

redundancy of money for a real rise of price consequent on our

increased population and capital, believed that real estate was the

best investment they could make of their money, and purchased it

accordingly--looking for remuneration, not to the rent or immediate

profit, but to that future rise in value which was inferred from the

past. This erroneous opinion brought capitalists into the market for

real estate, and the competition created by their money, and that which

others borrowed from the banks, raised the price extravagantly high. A

natural though singular result of this state of things was, that those

who had sold lands or lots at these factitious prices, could have made

no use of their money that would have been so profitable as not using it

at all; and the policy of hoarding, usually as unwise as it is odious,

would have been, on this occasion, the most rational and gainful that

could have been pursued.

If, then, we take the prices of every species of merchandise among us,

together with that of real estate, we believe it will be found that such

average of prices then, is very near double of what it is now; and

consequently that Mr. M'Duffie's estimate of the late depreciation of

our currency was not extravagant. But granting that it was exaggerated,

he appears to us to have taken juster views than his critic, of its

pernicious effects, as well as of the agency of the bank in arresting

them; and we must think that he is the safer physician, who merely

overrates the danger of a disease, than he, who, though he rightly

judges it not mortal, mistakes both its cause and its remedy.

We think, too, that the report of the committee was correct in

supposing, that the depreciation would not have taken place, if the Bank

of the United States had then been in existence. At any rate it would

have been postponed, and if not prevented altogether, under the

disadvantages of having neither a navy to protect our commerce, nor

manufactures to supply its place, it would have been greatly mitigated.

It is probable that the suspension of cash payments would not have taken

place at all, if the bank had followed the prudent course of the banks

of Boston, and not lent its money to the government; but though it had,

its paper would have been more nearly at par and more uniform than that

of the state banks, which varied in value according to the public

opinion of their prudence and solidity, as well as of the varying

quantity of notes thrown into circulation in different places. It is

possible that the national bank, being conducted with greater skill and

knowledge of banking, would have seen that they could not safely

accommodate the government with any large loan, and that when they were

reduced to the dilemma of either suspending cash payments and having a

depreciated currency, or of maintaining the currency sound, by

withholding assistance to the government, they would have preferred the

latter; and that the government would have been thereby induced to

resort sooner than they did to a system of taxation to support the war.

It is indeed impossible to say, at this time, what would have been the

precise result if we had possessed a national bank, but we think that

this much may be affirmed with confidence, that the depreciation of its

notes would have been far less, would have been uniform, and would have

taken the place of much paper which had no solid foundation for the

short-lived credit it obtained.

It remains for us now to see what will be the extent of the immediate

pecuniary cost to the nation for pulling down the Bank of the United

States, and building up the Treasury Bank on its ruins. This view is

intelligible to all, and there are minds who will give more weight to

this objection than that of increasing executive influence.

We know that it is an important function of every government to regulate

its money, weights, and measures, not from any mystical notions of

sovereignty, but because uniformity in these several standards is of the

greatest utility in saving time and trouble, and in preventing frauds

and disputes, and there is no effectual way of attaining uniformity

except by the legislative power. It is, therefore, that these subjects

were placed under the control of the general government, by the

constitution, and it is in the exercise of the powers thus granted that

it coins money of gold and silver, and determines their relative value.

But as among the inventions of commerce, it is found that such metallic

money can be, to a considerable extent, substituted by paper, and thus a

measure of value which costs nothing, can be made and is made to answer

the same, and even a better purpose, than that which would cost a great

deal, the same reasons which made the regulation of the coin by the

government, necessary and proper, apply to the regulation of its

substitute. The government thus having control over the subject, is

furnished with the ready means of making a great profit by the

substitution; and this it may do in two ways. It may either become a

banker itself, and issue notes of circulation, having currency as money,

in return for the notes of individuals bearing interest, or it may

transfer the right of doing this to such a set of men as it deems worthy

of the trust, and make them pay a fair price for the valuable privilege

thus conferred.

Of these two modes of profiting by the substitution of paper for specie,

the last is by far the best, for the same reason that it is best for the

government to sell its public lands, rather than to cultivate them. It

is incapable of commanding agents who will practise the same economy,

industry, and skill, in the management of the public concerns, as their

own. It must always pay higher than individuals for the same work, and

the various peculations to which it is exposed, besides the costly

apparatus of superintendents, would make banking, carried on by itself,

a bad measure of economy, to say nothing of the objections arising from

its disturbing the distribution of political power, by affording the

means of influence, patronage, and corruption.

But the scheme which the president has been persuaded to recommend,

proposes, that the government should give up the advantages of both

plans: that it should forego both the profit of issuing paper itself,

and that of disposing of it to a corporate body, in which the community

had entire confidence, and which has proved, by its previous unexampled

success, its fitness for the duty--and in lieu of these plans, to let

the valuable privilege evaporate into a sort of electioneering material,

for whomsoever may hold the office of president, or may rule his

cabinet. And what is it which the people of the United States are thus

asked to surrender? Let us estimate it.

According to the bank charter, the government takes stock to the amount

of seven millions of dollars, on which it pays to the bank an interest

of 5 per cent., and it now receives on this stock an interest of 7 per

cent, making a clear profit of 140,000 dollars a year, equal to a gross

capital of 2,800,000 dollars, all of which must be lost on the proposed

plan. But this is not all. The bank keeps the money of the

government--keeps its accounts--keeps its officers out of

temptation--and transfers the money from one part of the Union to

another with promptitude and certainty, without the loss of a single

dollar. We have seen that for some of these operations the treasury bank

would be obliged to pay.

We do not mean to say that these various services of the bank are

gratuitous. On the contrary, it is fairly remunerated for them by the

privileges it enjoys, and by the public deposits; but still they are

valuable services, and in this way the government obtains a fair

equivalent for what it surrenders. Nor let it be supposed that as good a

bargain could be made with the state banks. The general government could

not be interested in their stock, nor could they afford to give as much

for the privileges, because they would be more local. Being connected

only by voluntary compacts, they could not do the business of the

government to the same advantage as a single corporation. They could not

circulate as much paper with the same safety, nor could they sell or buy

bills at as small a profit. The superior advantages which the Bank of

the United States enjoys in capital, in banking skill, and in the

greater credit and wider circulation of its notes, enables it to give a

liberal price for its charter, and the government would be false to the

people to surrender this benefit.

But it would not become the government to attempt to extort, or to be

illiberal, but to act on the principle of justice to the public and the

bank. The legislature should not furnish the bank with either the

temptation or excuse of an Irish middle man, who grinds his sub-tenants

in proportion as his landlord has pressed him. Upon these principles, we

think the government should, by way of bonus, charge the bank a moderate

interest on its deposits, and pay a small commission for the services of

the bank. An adjustment of these several claims, by some general

estimate, might leave to the nation the clear annual gain of perhaps

200,000 dollars, or a gross capital of four millions, instead of giving

it away for the improvement of the machinery of our political

wire-workers.

There is yet another mode by which the government might derive a profit

from the bank, and which has this further recommendation, that it would

not be at the expense of the stockholders, and it would be a value saved

to the nation that would be otherwise lost. It is now a favourite object

both with the people and the government to pay off the national debt;

and from the novelty of the phenomenon it will give great eclat to the

administration in which it takes place. It is known that upwards of

thirteen millions of this debt bears an interest of but 3 per cent. This

part of the public funds is held chiefly in Europe by large capitalists,

it being preferred by them, because it could not be redeemed but at par,

unless with the consent of the holders, and it was hardly expected that

the government would choose to redeem it at par rather than pay so low

an interest on it. They thus thought that the owners of the stock had

the means of postponing its redemption in their own hands. For these

reasons this stock has always been something higher in the market than

any other, and it now sells at 93 dollars a share of 100 dollars, which

is about 3-1/4 per cent. At the price at which the commissioners of the

sinking fund are limited, they cannot buy this stock; but when all the

rest of the debt is paid, this must come next, and as soon as the

government offers to purchase, it will rise still higher, perhaps to

par. In that event, the government will have to pay upwards of thirteen

millions of dollars, drawn from the pockets of the poor as well as the

rich, which they might keep for ever, by paying an annual interest of 3

per cent, or 390,000 dollars.

Now the use of this money, has been of immense advantage to this

country, and may continue to be so, considering how inadequately many

parts of it are supplied with real capital. It will build ships--erect

mills and manufactories--salt works and iron works--and help to make

rail roads and canals, by which our free and industrious population will

be able to improve the condition of the country in bettering their own.

This money, too, does not consist of paper which we can create at will,

but of gold and silver, or their equivalents, which we must send out of

the country. Had it not better remain here? Every good economist will

say yes. It will be not difficult, we should presume, for the government

to make an arrangement with the bank to pay this 390,000 dollars, and

release us from our obligations, and to receive a less sum than the

thirteen millions. Their capital may be enlarged, and the rapid growth

of our country will soon require its enlargement. The holders of this

stock will indeed have a right to look to the United States for their

money, but that would make only a nominal difference, and they might be

offered stock of the bank in exchange on advantageous terms. Thus the

money which would be appropriated to the payment of this debt, might be

kept in the country and be vested in banking capital, by which it would

give vigour to commerce, manufactures, and navigation, and, through

them, render benefit to the whole nation.