rejoice to see this confidence confirmed by his undeviating course. I
have no fears of the Republic. The political tornado that has lately
spread over the State of New York must have a vivifying effect upon the
Republican cause. It will open the eyes of the people to the apostacy of
the Conservatives, and prevent them from having the power to deceive
hereafter, and will unite the Republicans from Maine to New Orleans.[60]
It has (with the exultations of the Whigs here and Mr. Bell’s speech at
Fanueil Hall) had a healing effect in Tennessee. The deluded White men
are just awakening from their delusion, and now say, although they
supported White, they can neither go for Webster nor Clay; that they
have always been Republicans. The election of Mr. Foster instead of Bell
to the Senate shows that Bell’s popularity with the legislature is gone;
and I am informed that the majority of the legislature regret the
premature election of the Senator. I have no doubt but our next
legislature will reverse the election of Senator, upon constitutional
grounds; that there was no vacancy to fill, and none that could happen
within the time for which the present legislature was elected to serve.
I hope the whole of the Republicans in Congress will rally with energy
and firmness, and pass the divorce or sub-treasury bill into a law;
there is no doubt of the fact that in the Senate the Republicans have a
vast superiority in the argument; would to God we had equal talent in
the House of Representatives. The great body of the people will support
this measure, and the Conservatives will have to return to the
Republican fold, or join the opposition; if they join the opposition,
they then become harmless, and can no longer delude the people by their
hypocrisy and apostacy. I am informed by a gentleman from Western
Virginia, that Mr. Rives has, by his attitude, lost his political
standing there, and Mr. Ritchie has lost his. I sincerely regret the
attitude these two gentlemen have placed themselves in; common sense
plainly proves that if the revenue is again placed in irresponsible
State banks, after their late treachery and faithlessness to the
Government, it will inevitably lead at last to the incorporation of a
national bank. Can any patriot again place our revenue, on which depends
our independence and safety in time of war, in the keeping of State or
any other banks, over whom the Government have no control, and when the
revenue might be most wanted to provide for defence, the banks might
suspend, and compel the Government to make a dishonorable peace? I
answer, no true patriot can advocate such a system, whatever might be
his professions.
I am proud to see that the Keystone State is preparing for the struggle
next October. I hope nothing may occur in the least to divide the
Republican party; the opposition and some professed friends, but real
apostates and hirelings of banks, will endeavor to divide the party, but
I hope and trust union and harmony will prevail.
My health is improved, but my vision has failed me much; I hope it may
improve. I write with great difficulty. My whole household joins me in
kind regards and good wishes for your happiness. I will be happy to hear
from you the prospects of the divorce passing in the Court House.
Your friend sincerely,
ANDREW JACKSON.
P.S.—We all present you with the joys of the season.
The bill to authorize the issue of treasury notes was passed at the
extra session of Congress in 1836. The bill to establish the
sub-treasury was passed in the Senate but failed in the House. The Bank
of the United States, unable to obtain from Congress a prolongation of
its charter, had procured a charter of incorporation from the
Legislature of Pennsylvania. This new corporation became the assignee of
the assets of the old one. It was now, therefore, in a singular and
unprecedented attitude. As a Pennsylvania corporation, it had power to
issue its own notes. As a trustee for winding up the affairs of the old
corporation, it had in its possession the notes of the old bank. It
re-issued these notes, without any authority to do so, used them in the
Southern States, in exchange for the depreciated local currency, with
which it bought cotton for exportation, or to pay its debts abroad, or
purchased specie to replenish its vaults at home. It had thus created an
obstacle to the resumption of specie payments. On the 23d of April,
1838, Mr. Buchanan made a very able speech in the Senate, in support of
a bill to prevent the Pennsylvania Bank from re-issuing and circulating
the notes of the old bank, giving the causes which produced the
suspension of specie payments, and those which might affect a
resumption.
Mr. Buchanan said there was but one consideration which could induce
him, at the present moment, to take any part in the discussion of the
bill now before the Senate. He felt it to be his duty to defend the
legislature of the State which he had, in part, the honor to represent,
from the charge which had been made against them by the Senator from New
Jersey [Mr. Wall] and other Senators, and by many of the public presses
throughout the country, that, in rechartering the Bank of the United
States, they had conferred upon it the powers of a great trading
company. This charge was wholly unfounded in point of fact. The charter
had not constituted it a trading company; and he felt himself bound to
make the most solemn and public denial of that charge. If this bank had
become the great cotton merchant which was represented, and he did not
doubt the fact, it had acted in express violation of its charter. He
therefore rose, not to criminate, but to defend the legislature of his
native State.
The Democratic party of Pennsylvania had been, unfortunately, divided in
1835; and the consequence was the recharter of the Bank of the United
States. Of the wisdom or policy of this measure (said Mr. B.) the Senate
of the United States are not constituted the judges. I shall never
discuss that question here. This is not the proper forum. I shall leave
it to the sovereign people of the State. To them, and to them alone, are
their representatives directly responsible for this recharter of the
bank. As a citizen of the State, I have on all suitable occasions, both
in public and in private, expressed my opinion boldly and freely upon
the subject. In a letter from this city, dated on the 30th June, 1836,
which was published throughout the State, I have presented my views in
detail upon this question; and I feel no disposition to retract or
recant a single sentiment which I then expressed. On the contrary,
experience has only served to confirm my first convictions.
My task is now much more agreeable. It is that of defending the very
legislature who renewed the charter of the bank, from the charge which
has been made and reïterated over and over again, here and throughout
the country, of having created a vast corporation, with power to deal in
cotton, or any other article of merchandise. A mere reference to the
charter, will, of itself, establish my position. It leaves no room for
argument or doubt. The rule of common reason, as well as of common law,
is, that a corporation can exercise no power, except what has been
expressly granted by its charter. The exercise of any other power is a
mere naked usurpation. On the present occasion, however, I need not
resort to this rule. The charter not only confers no such power of
trading, but it contains an express prohibition against it. It was
approved by the Governor on the 18th day of February, 1836, and the
fifth fundamental article contains the following provision: “_The said
corporation shall not, directly or indirectly, deal or trade in any
thing except bills of exchange, gold and silver bullion, or in the sale
of goods really and truly pledged for money lent and not redeemed in due
time, or goods which shall be the proceeds of its lands._” In this
particular, it is but a mere transcript from the charter granted to the
late bank by Congress on the 10th of April, 1816, which was itself
copied from the charter of the first Bank of the United States,
established in the year 1791. I have not recently had an opportunity of
examining the charter of the Bank of England, but I believe it contains
a similar provision. The Senate will, therefore, at once perceive there
is as little foundation for charging the legislature of Pennsylvania
with conferring upon the existing bank the enormous powers of a great
trading company, as there would have been for making a similar charge
against the first or the last Congress which chartered a Bank of the
United States. It is true that the bank, under its existing charter, can
deal much more extensively in stocks than it could have done formerly;
but this power does not touch the present question.
The bank, by becoming a merchant and dealing in cotton, has clearly
violated its charter, and that, too, in a most essential particular.
Either the legislature or the Governor may direct a _scire facias_ to
issue against it for this cause; and, if the fact be found by a jury,
the Supreme Court of the State can exercise no discretion on the
subject, but must, under the express terms of the act creating it,
adjudge its charter to be forfeited and annulled. Whether the
legislature or the Governor shall pursue this course, is for them, not
for me, to decide. This bank has already so completely entwined itself
around our system of internal improvements and common school education,
that it doubtless believes it may violate its charter with impunity. Be
this as it may, the sin of speculating in cotton lies at the door of the
bank, and not at that of the legislature.
Heaven knows the legislature have been sufficiently liberal in
conferring powers upon this institution; but I doubt whether a single
member of that body would have voted to create a trading company, with a
capital of $35,000,000, in union with banking privileges. Let us pause
and reflect for a moment upon the nature and consequences of these
combined powers. A bank of discount and circulation, with such an
enormous capital, and a trading company united! By expanding or
contracting its discounts and circulation, as a bank, it can render
money plenty or money scarce, at its pleasure. It can thus raise or
depress the price of cotton, or any other article, and make the market
to suit its speculating purposes. The more derangement that exists in
the domestic exchanges of the country, the larger will be its profits.
The period of a suspension of specie payments is its best harvest,
during which it can amass millions. It is clearly the interest of this
bank, whatever may be its inclination, that specie payments should
continue suspended, and the domestic exchanges should continue deranged
as long as possible. The ruin of the country thus becomes its most
abundant source of profit. Accordingly, what do we find to have been its
course of policy? I have heard it described by several gentlemen from
the South and Southwest, some of whom are members of this body. It has
gone into that region of the Union with these resurrection notes of the
old bank, the reissue of which this bill proposes to prohibit; and, in
some States, it has exchanged them, the one-half for the depreciated
local currency, and the other half for specie. With this local currency
it has purchased cotton, and sent it to England for the purpose of
paying its debts there, whilst with the specie it has replenished its
vaults at home. In other States it has exchanged these dead notes of the
old bank for the notes of the local banks, receiving a large premium on
the transaction, and with the latter has purchased cotton on
speculation. A general resumption of specie payments would at once put
an end to this profitable traffic. It has, then, first violated the
charter from Congress by reissuing the notes of the old bank, and then
violating the charter from Pennsylvania by speculating in cotton. During
the suspension of specie payments, these notes have been the only
universal paper circulation throughout the country; and thus, by
reissuing them, in defiance of the law, the present bank has been
enabled to accumulate extravagant profits.
This charge against the bank of speculating in cotton has never, to my
knowledge, been contradicted. We have heard it from the other side of
the Atlantic, as well as from the South and Southwest. The Whig press of
our country has commended, nay, almost glorified the bank for going into
the cotton market, when that article was depressed, and making large
purchases, and its friends in England have echoed these notes of praise.
Its example has produced a new era in banking. We find that the Southern
and Southwestern banks have also become cotton merchants; and, from
present appearances, the trade in this great staple of our country is no
longer to be conducted by private merchants, but by banking
corporations.
Under this system, what will be the fate of your private merchants? This
practice must be arrested, or they must all be ruined. The one or the
other alternative is inevitable. What private individual can enter the
cotton market in competition with the banks of the country? Individual
enterprise can accomplish nothing in such a struggle. It would be the
spear hurled by the feeble hand of the aged Priam, which scarce reached
the buckler of the son of Achilles. The Bank of the United States which,
according to the testimony of its president, might have destroyed, by an
exertion of its power, almost every bank in the country, could, with
much greater ease, destroy any private merchant who might dare to
interfere with its speculations. Such a contest would be that of
Hercules contending against an infant. It can acquire a monopoly against
individual merchants in any branch of mercantile business in which it
may engage; and, after having prostrated all competition, it can then
regulate the price of any article of commerce according to its pleasure.
I do not say that such is either its wish or its intention; but I mean
thus to illustrate the vast and dangerous power which it may exercise as
a merchant. The East India company monopolized the trade of Asia, but it
possessed no banking powers. It could not, therefore, by curtailing or
expanding its issues, make money scarce or make money plenty at
pleasure, and thereby raise or depress the price of the articles in
which it traded. In this respect its power as a merchant was inferior to
that now exercised by the Bank of the United States.
How vain, then, I might almost say how ridiculous, is it for people of
the South to make the attempt to establish merchants in the southern
seaports for the purpose of conducting a direct trade with Europe in
cotton and other articles of their production, in opposition to the Bank
of the United States and their own local banks. This effort must fail,
or the banks must cease to be merchants. I am glad to learn that, at the
late Southern convention, this alarming usurpation by the banks of the
appropriate business of the merchant has been viewed in its proper
light. The time, I trust, is not far distant when they will be confined,
by public opinion, to their appropriate sphere. What a fatal error it is
for any free people, tempted by present and partial gain, to encourage
and foster such institutions in a course which must, if pursued,
inevitably crush the merchants of the country who conduct its foreign
trade! As a class, these merchants are highly meritorious, and entitled
to our support and protection against a power which, if suffered to be
exerted, must inevitably destroy them.
Philadelphia is a city devoted to the interests of the bank; but even in
that city, if it should undertake to speculate in flour, in coal, or in
any other article which is poured into her market from the rich
abundance of the State, such conduct would not be submitted to for a
moment. The legislature of the State would at once interpose to protect
our merchants. Such an attempt would at once break the spell of bank
influence. And yet it possesses no more power to deal in southern cotton
than it does in Pennsylvania flour. It will remain a banker at home;
whilst its mercantile speculations will be confined to the southern and
southwestern provinces of its empire.
The reason will now, I think, appear manifest why the Parliament of
Great Britain, the Congress of the United States, and the Legislature of
Pennsylvania, have so strictly prohibited their banking institutions
from dealing in any thing except bills of exchange and gold and silver
bullion. If the Bank of England should dare to invade the province of
the merchants and manufacturers of that country in a similar manner, the
attempt would instantly be put down. Every man acquainted with the
history and character of the people of England, knows that such would be
the inevitable consequence. And yet this violation of law, on the part
of the Bank of the United States, has been lauded in our free Republic.
As I am upon the floor, I shall proceed briefly to discuss the merits of
the bill now before the Senate. It proposes to inflict a fine not
exceeding ten thousand dollars, or imprisonment not less than one nor
more than five years, or both such fine and imprisonment, at the
discretion of the court, upon those who shall be convicted under its
provisions. Against whom does it denounce these penalties? Against
directors, officers, trustees, or agents of any corporation created by
Congress, who, after its term of existence is ended, shall reissue the
dead notes of the defunct corporation, and push them into the
circulation of the country, in violation of its original charter. The
bill embraces no person, acts upon no person, interferes with no person,
except those whose duty it is, under the charter of the old bank, to
redeem and cancel the old notes as they are presented for payment, and
who, in violation of this duty, send them again into circulation.
This bill inflicts severe penalties, and, before we pass it, we ought to
be entirely satisfied, first, that the guilt of the individuals who
shall violate its provisions is sufficiently aggravated to justify the
punishment; second, that the law will be politic in itself; and, third,
that we possess the constitutional power to enact it.
First, then, as to the nature and aggravation of the offence. The
charter of the late Bank of the United States expired, by its own
limitation, on the 3d of March, 1836. After that day, it could issue no
notes, discount no new paper, and exercise none of the usual functions
of a bank. For two years thereafter, until the 3d of March, 1838, it was
merely permitted to use its corporate name and capacity “for the purpose
of suits for the final settlement and liquidation of the affairs and
accounts of the corporation, and for the sale and disposition of their
estate, real, personal, and mixed; _but not for any other purpose, or in
any other manner, whatsoever_.” Congress had granted the bank no power
to make a voluntary assignment of its property to any corporation or any
individual. On the contrary, the plain meaning of the charter was, that
all the affairs of the institution should be wound up by its own
president and directors. It received no authority to delegate this
important trust to others; and yet what has it done? On the 2d day of
March, 1836, one day before the charter had expired, this very president
and these directors assigned all the property and effects of the old
corporation to the Pennsylvania Bank of the United States. On this same
day, this latter bank accepted the assignment, and agreed to “pay,
satisfy and discharge all debts, contracts, and engagements, owing,
entered into, or made by this [the old] bank, as the same shall become
due and payable, _and fulfil and execute all trusts and obligations
whatsoever arising from its transactions, or from any of them_, so that
every creditor or rightful claimant shall be fully satisfied.” By its
own agreement, it has thus expressly created itself a trustee of the old
bank. But this was not necessary to confer upon it that character. By
the bare act of accepting the assignment, it became responsible, under
the laws of the land, for the performance of all the duties and trusts
required by the old charter. Under the circumstances, it cannot make the
slightest pretence of want of notice.
Having assumed this responsibility, the duty of the new bank was so
plain that it could not have been mistaken. It had a double character to
sustain. Under the charter from Pennsylvania, it became a new banking
corporation; whilst, under the assignment from the old bank, it became a
trustee to wind up the concerns of that institution. These two
characters were in their nature separate and distinct, and never ought
to have been blended. For each of these purposes it ought to have kept a
separate set of books. Above all, as the privilege of circulating bank
notes, and thus creating a paper currency, is that function of a bank
which most deeply and vitally affects the community, the new bank ought
to have canceled or destroyed all the notes of the old bank which it
found in its possession on the 4th of March, 1836, and ought to have
redeemed the remainder, at its counter, as they were demanded by the
holders, and then destroyed them. This obligation no Senator has
attempted to doubt, or to deny. But what was the course of the bank? It
has grossly violated both the old and the new charter. It at once
declared independence of both, and appropriated to itself all the notes
of the old bank, not only those which were then still in circulation,
but those which had been redeemed before it accepted the assignment, and
were then lying dead in its vaults. I have now before me the first
monthly statement which was ever made by the bank to the auditor general
of Pennsylvania. It is dated on the 2d of April, 1836, and signed J.
Cowperthwaite, acting cashier. In this statement the bank charges itself
with “notes issued,” $36,620,420.16; whilst in its cash account, along
with its specie and the notes of State banks, it credits itself with
“notes of the Bank of the United States and offices,” on hand,
$16,794,713.71. It thus seized these dead notes to the amount of
$16,794,713.71, and transferred them into cash; whilst the difference
between those on hand and those issued, equal to $19,854,706.45, was the
circulation which the new bank boasted it had inherited from the old. It
thus, in an instant, appropriated to itself, and adopted as its own
circulation, all the notes and all the illegal branch drafts of the old
bank which were then in existence. Its boldness was equal to its utter
disregard of law. In this first return, it not only proclaimed to the
legislature and people of Pennsylvania that it had disregarded its trust
as assignee of the old bank, by seizing upon the whole of the old
circulation and converting it to its own use, but that it had violated
one of the fundamental provisions of its new charter.
In Pennsylvania we have, for many years past, deemed it wise to increase
the specie basis of our paper circulation. We know that, under the
universal law of currency, small notes and gold and silver coin of the
same denomination cannot circulate together. The one will expel the
other. Accordingly, it is now long since we prohibited our banks from
issuing notes of a less denomination than five dollars. The legislature
which rechartered the Bank of the United States, deemed it wise to
proceed one step further in regard to this mammoth institution; and in
that opinion I entirely concur. Accordingly, by the sixth fundamental
article of its charter, they declare that “the notes and bills which
shall be issued by order of said corporation, or under its authority,
shall be binding upon it; and those made payable to order shall be
assignable by endorsement, _but none shall be issued of a denomination
less than ten dollars_.”
Now, it is well known to every Senator within the sound of my voice,
that a large proportion of these resurrection notes, as they have been
aptly called, which have been issued and reissued by order of the new
bank, are of the denomination of five dollars. Here, then, is a plain,
palpable violation, not only of the spirit, but of the very letter of
its charter. The Senate will perceive that the bank, as if to meet the
very case, is not merely prohibited from issuing its own notes, signed
by its own president and cashier, of a denomination less than ten
dollars, but this prohibition is extended to the notes or bills which
shall be issued by its order, or under its authority. If I should even
be mistaken in this construction of the law, and I believe I am not, it
would only follow that its conduct has not amounted to a legal
forfeiture of its charter. In both cases the violation of the spirit of
its charter, and the contravention of the wise policy of the
legislature, are equally glaring. So entirely did the bank make these
dead notes its own peculiar circulation, that until July last, in its
monthly returns to the Auditor General of Pennsylvania, the new and the
old notes are blended together, without any distinction. In that return
we were, for the first time, officially informed that the bank had ever
issued any notes of its own.
And here an incident occurs to me which will be an additional proof how
lawless is this bank, whenever obedience to its charter interferes in
the least degree with its policy. By the tenth fundamental article of
that charter, it is required to “make to the Auditor General monthly
returns of its condition, showing the details of its operations
according to the forms of the returns the Bank of the United States now
makes to the Secretary of the Treasury of the United States, or
according to such form as may be established by law.” From no idle
curiosity, but from a desire to ascertain, as far as possible, the
condition of the banks of the country, and the amount of their
circulation, I requested the Auditor General, during the late special
session of Congress in September, to send me the return of the bank for
that month. In answer, he informed me, under date of the 22d of
September, that the bank had not made any return to his office since the
15th of the preceding May. Thus, from the date of the suspension of
specie payments until some time after the 22d of September last, how
long I do not know, a period during which the public mind was most
anxious on the subject, the bank put this provision of its charter at
defiance. Whether it thus omitted its duty because at the date of the
suspension of specie payments it had less than a million and a half of
specie in its vaults, I shall not pretend to determine. If this were the
reason, I have no doubt that it sent to the Auditor General all the
intermediate monthly returns on the 2d of October, 1837, because at that
period it had increased its gold and silver to more than three millions
of dollars.
In order to illustrate the enormity of the offence now proposed to be
punished, Senators have instituted several comparisons. No case which
they have imagined equals the offence as it actually exists. Would it
not, says one gentleman, be a flagrant breach of trust for an executor,
entrusted with the settlement of his testator’s estate, to reissue, and
again put in circulation for his own benefit, the bills of exchange or
promissory notes which he had found among the papers of the deceased,
and which had been paid and extinguished in his lifetime? I answer, that
it would. But, in that case, the imposition upon the community would
necessarily be limited, whilst the means of detection would be ample.
The same may be observed in regard to the case of the trustee, which has
been suggested. What comparison do these cases bear to that of the
conduct of the bank? The amount of its reissues of these dead notes of
its testator is many millions. Their circulation is coextensive with the
Union, and there is no possible means of detection. No man who receives
this paper can tell whether it belongs to that class which the new bank
originally found dead in its vaults, or to that which it has since
redeemed and reissued, in violation of law; or to that which has
remained circulating _lawfully_ in the community, and has never been
redeemed since the old charter expired. There is no earmark upon these
notes. It is impossible to distinguish those which have been illegally
reissued from the remainder.
I can imagine but one case which would present any thing like a parallel
to the conduct of the bank. In October last, we authorized the issue of
$10,000,000 of Treasury notes, and directed that when they were received
in payment of the public dues, they should not be reissued, but be
canceled. Now, suppose the Secretary of the Treasury had happened to be
the president of a bank in this District, and, in that character, had
reissued these dead treasury notes, which he ought to have canceled, and
again put them into circulation, in violation of the law, then a case
would exist which might be compared with that now before the Senate. If
such a case should ever occur, would not the Secretary at once be
impeached; and is there a Senator upon this floor, who would not
pronounce him guilty? The pecuniary injury to the United States might be
greater in the supposed than in the actual case; but the degree of moral
guilt would be the same.
Whether it be politic to pass this law is a more doubtful question.
Judging from past experience, the bank may openly violate its provisions
with impunity. It can easily evade them by sending packages of these old
notes to the South and Southwest, by its agents, there to be reissued by
banks or individuals in its confidence. There is one fact, however, from
which I am encouraged to hope that this law may prove effectual. No man
on this floor has attempted to justify, or even to palliate, the conduct
of the bank. Its best friends have not dared to utter a single word in
its defence against this charge. The moral influence of their silence,
and the open condemnation of its conduct by some of them, may induce the
bank to obey the law.
I now approach the question—do Congress possess the power under the
Constitution to pass this bill? In other words, have we power to
restrain the trustees of our own bank from reissuing the old notes of
that institution which have already been redeemed and ought to be
destroyed? Can there be a doubt of the existence of this power? The bare
statement of the question seems to me sufficient to remove every
difficulty. It is almost too plain for argument. I should be glad if any
gentleman would even prove this power to be doubtful. In that event I
should refrain from its exercise. I am a State rights man, and in favor
of a strict construction of the Constitution. The older I grow, and the
more experience I acquire, the more deeply rooted does this doctrine
become in my mind. I consider a strict construction of the Constitution
necessary not only to the harmony which ought to exist between the
Federal and State Governments, but to the perpetuation of the Union. I
shall exercise no power which I do not consider clear. I call upon
gentlemen, therefore, to break their determined silence upon this
subject, and convince me even that the existence of the power is
doubtful. If they do, I pledge myself to vote against the passage of the
bill.
If this power could only be maintained by some of the arguments advanced
by the friends of the bill, in the early part of this discussion, it
never should receive my vote. Principles were then avowed scarcely less
dangerous and unsound than the principle on which the Senator from
Vermont (Mr. Prentiss) insists that the friends of the bill must claim
this power. He contends that it does not exist at all, unless it be
under that construction of the Constitution advocated by his friend from
Massachusetts (Mr. Webster), which would give to Congress power over the
whole paper currency of the country under the coining and commercial
powers of the Constitution. The Senator from Connecticut (Mr. Niles) was
the first in this debate who presented in bold relief the principle on
which this bill can securely rest.
Neither shall I dodge this question, as some Senators have done, by
taking shelter under the pretext that it is a question for the judiciary
to decide, whether the general language of the bill be applicable to the
officers of the Bank of the United States under the Pennsylvania
charter. We all know that it was intended to embrace them. Indeed, it
was their conduct, and that alone, which called this bill into
existence. It is true that the provisions of the bill extend to all
corporations created by Congress; but it is equally certain, that had it
not been intended to apply to the Bank of the United States, it would
have been confined in express terms to the District of Columbia, where
alone corporations now exist under the authority of Congress. Away with
all such subterfuges! I will have none of them.
Suppose, sir, that at any time within the period of two years thus
allowed by the charter to the president and directors of the bank to
wind up its affairs, these officers, created under your own authority,
had attempted to throw thirty millions of dollars of their dead paper
again into circulation, would you have had no power to pass a law to
prevent and to punish such an atrocious fraud? Would you have been
compelled to look on and patiently submit to such a violation of the
charter which you had granted? Have you created an institution, and
expressly limited its term of existence, which you cannot destroy after
that term has expired? This would indeed be a political Hydra which must
exist forever, without any Hercules to destroy it. If you possess no
power to restrain the circulation of the notes of the old bank, they may
continue to circulate forever in defiance of the power which called them
into existence. You have created that which you have no power to
destroy, although the law which gave it birth limited the term of its
existence. Will any Senator contend that during these two years allowed
by the charter for winding up the concerns of the bank, we possessed no
power to restrain its president and directors from reissuing these old
notes? There is no man on this floor bold enough to advance such a
doctrine. This point being conceded, the power to pass the present bill
follows as a necessary consequence.
If the president and directors of the old bank could not evade our
authority, the next question is, whether, by assigning the property of
the corporation to a trustee the day before the charter expired, and
delivering up to him the old notes which ought to have been canceled,
they were able to cut this trustee loose from the obligations which had
been imposed upon them by the charter, and from the authority of
Congress. Vain and impotent, indeed, would this Government be, if its
authority could be set at nought by such a shallow contrivance. No, sir,
the fountain cannot ascend beyond its source. The assignee in such a
case is not released from any obligation which the assignor assumed by
accepting the original charter. In regard to Congress, the trustee
stands in the same situation with the president and directors of the old
bank. We have the same power to compel him to wind up the concerns of
the bank, according to the charter, that we might have exercised against
those from whom he accepted the assignment. The question is too plain
for argument.
The present case is still stronger than the one which I have presented.
It is an assignment by the old Bank of the United States, not to
strangers, not to third persons, but to themselves, in the new character
conferred upon them by the legislature of Pennsylvania. This new charter
expressly incorporates all the stockholders of the old bank, except the
United States, so that the individuals composing both corporations were
identical. For the purpose of effecting this transfer from themselves to
themselves, they got up the machinery of one president and one board of
directors for the old bank, and another president and another board of
directors for the new bank. What kind of answer, then, would it be to
Congress for them to say: True, we accepted a charter under your
authority, by which we were bound to reissue none of our old notes after
the 3d March, 1836, but we have since assumed a new character; and under
our old character, we have transferred the bank which you created, to
ourselves in our new character; and we have thus released ourselves from
all our old obligations, and you have no constitutional power to enforce
them against us? No sir, no sir; we have the power, and it is our duty,
to compel the president and directors of the bank, which we established,
or their assignees, to close its concerns; and this power will continue
until the duty shall be finally accomplished. The one power is a
necessary implication from the other. If this duty has not been
performed within the two years which we have allowed for its fulfilment,
our power depends not upon any such limitation, but upon the fact
whether the concerns of the bank have been actually closed. If this were
not the case, then all the affairs of the bank left unfinished at the
end of these two years would be outlawed. This limitation was intended
not to abridge the power of Congress, but to hasten the action of the
president and directors in winding up the concerns of the bank. At this
very session, and since the two years have expired, Congress has passed
an act, without a shadow of opposition from any quarter, giving the
president and directors of the old bank authority to prosecute and
defend existing suits. I should be glad to see any Senator rise in his
place, and make even a plausible argument in opposition to these plain
and almost self-evident positions.
In this brief argument, I have not attempted to derive any power from
the fact that the United States were proprietors of one-fifth of the
stock of the old bank, and that they might be rendered responsible,
either legally or equitably, for the eventual redemption of these dead
notes. I disclaim any such source of power. To be a proprietor is one
thing, and to be a sovereign is another. The mere fact that we owned
stock can confer no power upon us, which we would not have possessed,
had we never been interested to the amount of a dollar. We should have
the same power to wind up a bank emanating from our sovereign authority
in the one case as in the other. We possess the same power to close the
concerns of all the banks in the District of Columbia after their
charters shall have expired, although we are not proprietors of any of
their stock, which we have to wind up the Bank of the United States, in
which we were so deeply interested.
I need scarcely observe that I do not contend for any power to punish
citizens of the United States, or even the officers of banking
institutions, except such of them only as the trustees of the bank
created by ourselves, for issuing these dead notes. We intend to punish
the trustees under our own law, and them alone, for the violation of
that law. These notes may circulate from hand to hand without rendering
those who receive or those who pay them obnoxious to any punishment.
Even if we possessed the power, it would be highly unjust to attempt its
exercise. As I observed before, these notes have no earmarks, and no man
can tell whether any one of them has been illegally reissued by the bank
since the 3d March, 1836, or whether it was issued before that date, and
has continued legally to circulate in the community ever since.
I repeat, I should be glad to see any Senator, and especially any one
who believes that Congress possesses the constitutional power to charter
a Bank of the United States, rise in his place, and make even a
plausible argument in opposition to the plain and almost self-evident
positions which I have taken in support of the power to pass this bill.
Those Senators who doubt or deny our power to create such a bank are
placed in a different situation, because their vote in favor of this
bill might at first view seem, by implication, to concede that power.
This objection does not appear to me to be sound. That question cannot
be fairly raised by this bill. Whether the charter of the late bank was
constitutional is no longer a fair subject of consideration. It was
adopted by Congress, approved by the President, and afterwards
pronounced to be constitutional by the highest judicial tribunal of the
land. It thus received every sanction necessary to make it binding on
the people of the United States. The question was thus settled beyond
the control of any individual, and it was the duty of every good citizen
to submit. Under every government there must be a time when such
controversies shall cease; and you might now as well attempt to exclude
Louisiana from the Union, because you may believe her admission was
unconstitutional, as to act upon the principle, in the present case,
that Congress had no power to charter the late bank. No man on this
floor had ever avowed that he would vote to repeal the charter of the
late bank, during the twenty years of its existence, because he might
have thought it was originally unconstitutional. During this period all
were obliged to submit. Under such circumstances, it would be carrying
constitutional scruples very far, indeed, for any gentleman to contend
that, although the bank has existed under the sanction of a law which we
were all bound to obey, we cannot now execute that law and close its
concerns, because as individuals we may have deemed it to be originally
unconstitutional. If it had been so, the obligation upon us would only
be the stronger to wind it up finally, and thus terminate its existence.
I most cheerfully admit that if an attempt should ever be made to
charter another bank, the question of constitutional power would then
again be referred to each individual member of Congress, to be decided
according to the dictates of his own judgment and his own conscience.
Before I take my seat, I intend to make some remarks on the causes of
the suspension of specie payments by the banks of the country, and the
causes equally powerful which must, and that ere long, compel a
resumption.
The late manifesto issued by the present Bank of the United States
displays, upon its face, that it has inherited from the old bank an
unconquerable disposition to interfere in the politics of the country.
This has been its curse, its original sin, to which it owes all its
calamities and all its misfortunes. It has not yet learned wisdom from
its severe experience. Would that it might, and confine itself to its
appropriate sphere! As a citizen of Pennsylvania, I most ardently and
devoutly express this wish. It has now set itself up, as the primary
power, against the resumption of specie payments, and has attempted to
enlist in the same cause all the other banks of the country. Its
language to them is, that “the Bank of the United States makes common
cause with the other banks.” And again: “They (the banks) are now safe
and strong, and they should not venture beyond their entrenchments,
while the enemy is in the plain before them.” “The American banks should
do, in short, what the American army did at New Orleans, stand fast
behind their cotton bales, until the enemy has left the country.”
Thus whilst every eye and every heart was directed to the banks,
expecting anxiously from them a speedy resumption of specie payments,
this grand regulator of the currency has proclaimed to the country that
all its vast power will be exerted to prevent the accomplishment of our
wishes.
The bank does not even attempt to conceal the fact that, in pursuing
this course, it has been actuated by political hostility against the
present administration. It has been boldly avowed that “if the banks
resume, and are able, by sacrificing the community, to continue for a
few months, _it will be conclusively employed at the next elections to
show that the schemes of the executive are not as destructive as they
will prove hereafter_.” In plain language, the banks must not resume
before the next elections; they must not open their vaults, pay their
honest debts, and thus redeem the country from the curse of an
irredeemable paper currency; because, if they should, this may operate
in favor of the present administration, and place its opponents in a
minority. And such is the conduct of the bank whilst it vaunts its own
ability to resume immediately.
The bank proceeds still further, and complains that “bank notes are
proscribed not merely from the land offices, but from all payments of
every description to the Government.” I would ask, has any Senator upon
this floor, has any statesman of any party in the country, ever raised
his voice in favor of the receipt by the Government of irredeemable bank
paper? I beg their pardon; two Senators have proposed such a measure,
[Messrs. Preston and Clay]; but I will do them the justice to say, that
although I considered their proposition most unwise and impolitic, and
resisted it as such at the time, yet they intended by this means to
enable the banks the sooner to resume specie payments.
Mr. Preston. It was exclusively limited to that consideration.
Mr. Buchanan. Although the proposition was limited to the first of
August, the Senators themselves upon reflection, thought it so improper
that they abandoned it, and we have heard nothing of it since.
What would have been the condition of the country, at the present
moment, had we received irredeemable bank notes in payments of the
public dues? The banks, by our conduct, would have been encouraged to
increase their discounts and expand their issues, and we should have
gone from bad to worse, until, at this moment, we should have had no
prospect of the resumption of specie payments. Mr. Cheves has informed
us that if the Government had not stood firm in 1819 against the receipt
of irredeemable notes, the banks would at that period have suspended.
Much more necessary is it that we should now maintain the same ground,
in order to secure a resumption. Had we pursued any other course, it is
true we should have but one currency for the Government and the people;
but it would have been currency of irredeemable bank rags, without the
hope of a better. And yet the Bank of the United States complains that
the Government does not receive such paper. In order to have done so, we
must have repealed the existing laws upon the subject; and who has
ventured to propose any such measure?
The Bank of the United States has succeeded, at the late bank convention
in New York, in keeping its forces behind their cotton bales. The banks
of only two States in the Union have voted against the resolution to
suspend the resumption of specie payments until the first day of January
next. These were New York and Mississippi; and whether the latter voted
thus because their banks are ready now to resume, or desired to postpone
resumption until a still more distant day, I shall not pretend to
determine. After this display of power, no one will question the ability
of the bank to keep its forces behind their entrenchments, unless they
should be driven into the plain by the resistless power of public
opinion.
Several weeks ago I attempted to imitate the illustrious examples which
had been set before me on this floor, and became a political prophet. I
then predicted that, before the close of the present year, commerce and
manufactures would revive and flourish, and the country would be
restored to its former prosperity. The signs of the times have already
confirmed the truth of this prophecy. Encouraged by past experience, I
shall venture to make another prediction: There is not a sound and
solvent bank in any of the Atlantic States of this Union, including the
Bank of the United States, which will not have resumed specie payments
long before the first of January. All the opposition of the banks
themselves cannot prevent this result. In the very nature of things it
must come to pass. The power of public opinion is yet still greater in
this country than that of the banks. The Bank of the United States will
not be able to keep its forces behind their cotton bags until so late a
period.
It is now too late in the day for us any longer to doubt what was the
cause of the suspension of specie payments. That question has been
settled on the other side as well as on this side of the Atlantic.
Abundance of light has been shed upon this subject, and no two
sound-judging men, at all acquainted with the facts, can arrive at
different conclusions. It has already become history. And yet the bank,
in its manifesto, has not once alluded to this cause. What was it? In
the perpetual fluctuations which must ever be produced by our present
banking system, unless it should be regulated by State legislation, of
which I now almost despair, it was expanded in the commencement of the
year 1837 almost to the point of explosion. The bubble is created, it
expands, and reflects the most brilliant colors. Its admirers gaze upon
it with hope and ecstasy, when, suddenly, it bursts, and leaves them in
ruin and despair. Such has been the history of the past, and such will
be that of the future. This expansion had produced, as it must ever
produce, enormous speculation and over-trading. The commercial debt
which we then owed to England for foreign merchandise was immense. We
must have suffered the fatal collapse sooner or later, but a
circumstance then occurred in England which at once produced the
explosion. It was the spark applied to the magazine of gunpowder.
A similar state of expansion then existed in England. They were
threatened with similar evils from extravagant bank credits, and their
inevitable consequence—enormous speculation and over-trading. The Bank
of England had in vain attempted to control the joint-stock banks, and
confine them within reasonable limits. She at last became alarmed for
her own safety. In the beginning of 1837 her stock of specie was reduced
to about four millions of pounds sterling, or one-sixth of her
circulation and deposits. This was not more than one-half of the
proportion which, it is believed, she ought to have in order to render
her secure. The state of the foreign exchanges was gradually withdrawing
the remaining bullion from her vaults. At this crisis, under the
influence of a panic, she withdrew her credits from the American houses
in England, and ruined them. The price of cotton, in consequence,
suddenly fell from nineteen and twenty cents to seven and eight cents
per pound; and thus, according to the best and most discreet estimate
which I have seen, we lost at least thirty million of dollars. The sum
was thus, as it were in a single moment, abstracted from our means of
paying the immense commercial balance against us. At the close of this
disastrous operation, that balance was estimated at forty millions of
dollars. What was the immediate consequence? A drain of specie then
commenced from our banks for exportation, in order to pay this debt, and
they were thus compelled to suspend or be ruined. Another circumstance
existed to increase our embarrassments. Our merchants had drawn heavy
bills upon England, predicated upon the cotton which they had shipped
there, expecting to receive the old prices. In consequence of the sudden
fall of prices, these bills were dishonored, and came back protested.
Thus many of our largest mercantile houses were ruined.
The catastrophe proceeded from the same causes, and was similar in both
countries, except that in England the banks were not compelled to
suspend specie payments. The revenue of both has been insufficient to
meet the current expenses of the Government, and each will be obliged to
borrow nearly the same sum to supply the deficiency.
This is now history, which can neither be changed nor perverted. On both
sides of the Atlantic all men of business and practical statesmen have
come to the same conclusion. Away, then, with your Specie Circular, your
mismanagement of the deposits, and your clamor raised by the executive
against bank notes, as the causes of the suspension of specie payments.
The bank calculates too much upon the political credulity of the people,
when, at this late day, after the subject is perfectly understood, it
attempts to palm off upon them such exploded reasons for the suspension.
A convulsion which has shaken the commercial world to its centre, and
has extended over three-quarters of the globe, could never spring from
such trivial causes.
If the executive has been carrying on a war against the credit system of
the country, and in favor of an exclusive metallic currency for the
people of the United States, I am ignorant of the fact. I have never
even suspected it. I believe this is a mere phantom which has been
conjured up to alarm the fears of the timid. If the President ever
should wage any such war, I shall not fight under his banner. The only
pretext upon which this charge has been founded is, that he and his
political friends desire to separate the business of the Treasury from
that of the banks, not to render them hostile to each other. Until that
propitious day shall arrive, we shall be forever agitated by the
connection of the currency with our miserable party politics. Political
panics, political pressures, charges against the Government for
exercising an improper influence over the banks, and charges against the
banks for interfering with the politics of the country; all, all which
have kept us in a state of constant agitation for the last seven years
will continue to exist, and will be brought into action upon every
successive election for President and Vice President. We shall thus
continue in a state of perpetual commotion; and the great interests of
the country will be sacrificed. Let the Treasury and the banks part in
peace, and whilst they are mutually independent, let them wage no war
against each other; and I solemnly believe it would be the greatest
blessing which could be conferred upon both parties. To this extent, I
should go with the President if I had the power; but when I determine to
obey instructions, I shall do it honestly and fairly. I shall,
therefore, say no more on this subject.
It is true that at the special session I did endeavor to prove that the
present banking system, under its existing regulations, was one of the
very worst which the art of man could devise. Under it, ruinous
expansions and revulsions must continue to succeed each other at stated
periods, and many of the best and most enterprising men of the country
must become its victims. I then expressed a hope, not unmingled with
fear, that the State legislatures at their next session might impose
wholesome restrictions upon their banking institutions—restrictions
which would prove equally advantageous to the banks and the people.
These legislatures have all now risen without prescribing any such
regulations, and we are destined again and again to pass through the
same vicissitudes which we have so often already witnessed.
The Whigs have always been exceedingly unlucky in regard to the time of
these periodical revulsions, occasioned by excessive banking. They have
either come too soon or too late to answer their political purposes. Had
the suspension of specie payments occurred one year sooner than it did,
the hero of Tippecanoe might have been the successor of the hero of New
Orleans. But the revulsion came again at the wrong time; and long before
the Presidential election of 1840, the country will again be prosperous.
The effects of the suspension will have passed away, like the baseless
fabric of a vision, without leaving a trace behind. Our late experience
has been so severe, that the next bank explosion may possibly be
postponed until the year 1844. Whom it may then benefit I know not, nor
do I much care. One thing is certain, that these revulsions can never do
anything but injury to the party in power. It is the nature of man to
accuse the Government, or anything else, except his own misconduct, for
his misfortunes.
I now approach a much more agreeable part of my subject; and that is, to
prove that the banks must and will speedily resume specie payments. I
shall attempt to establish that now is the very time, the accepted time,
the best time, and, within the period of a few months, the only time,
when they can resume, without the least embarrassment. Some of the
causes which will speedily effect this happy result, I shall enumerate.
In the first place, I shall do the banks of the country generally the
justice to say, that since the suspension of specie payments they have
curtailed their circulation and their loans to a great extent, and have
done everything they reasonably could to atone for their past
extravagance. The banks of Pennsylvania, including that of the United
States, during a period of ten months, commencing in January, and ending
in November, 1837, had reduced their circulation from twenty-five
millions and a quarter to almost seventeen millions, and their discounts
from eighty-six millions and a half to nearly seventy-one millions,
whilst, during the same period, they had increased their specie from
five millions and three-quarters to upwards of seven millions. From all
I can learn, they have been since progressing at nearly the same rate,
though I have not seen their official returns. The banks of other States
have been generally pursuing the same course. The consequence is, that
the confidence of the country in their banking institutions has been, in
a great degree, restored. I feel convinced that if they should resume
specie payments to-morrow, in the interior of Pennsylvania, at least,
there would be no run upon them, except for as much silver change as
might be required to supply the place of the miserable trash now in
circulation under the denomination of shinplasters. Besides they would
soon receive on deposit a greater amount from those who have been
hoarding specie, under the belief that it would be safer at home than in
the banks, and in the hope that they might hereafter use it to great
advantage. No foreign demand now exists to drain the banks of their
specie; on the contrary, the reflux tide has set in strongly, and is now
wafting immense sums of gold and silver to our shores.
But, sir, another powerful cause of resumption exists. Our exports of
cotton have, many months ago, paid our foreign commercial debt. Whilst
that has been extinguished, the disastrous condition of our currency has
reduced almost to nothing the orders of our merchants for foreign goods.
Our imports are of small comparative value. In the mean time, our cotton
crop of 1837 has been regularly and steadily seeking its accustomed
markets in England and France. We have sold much, and bought little, and
the balance in our favor is nearly all returning in specie. From the
last English accounts which I have seen, the exports of specie from that
country to this were still on the increase; and now, by almost every
vessel from abroad which reaches our shores, we are receiving gold and
silver. Specie, by the latest advices, was the most profitable means of
remittance from England to the United States, yielding a profit of four
per cent. When Congress met in September last, the rate of exchange
against us on England was upwards of twenty per cent. It is now reduced
to six per cent., which is three or four per cent. below the specie par.
A great revolution in so short a period! It proves how vast are the
resources of our country.
This great revolution has been effected by means of our cotton. The
English manufacturers must have this article, or be ruined. This
necessity has reversed the ordinary laws of trade, and the foreign
market for it has remained firm and steady, although we bring home
scarcely any equivalent, except in specie.
If a large portion of our cotton crop still remains unsold, so much the
better. The golden tide will continue so much the longer to flow into
our country. It is the policy of our banks to take it at the flood, and
go on to fortune. If the banks do but seize the present golden
opportunity, they will have completely fortified themselves before a
reverse can come. This state of things cannot always continue. A
reaction must occur. If the banks wait for the ebbing tide, and postpone
a resumption until our merchants shall make heavy purchases abroad, and
specie shall begin to be exported, they will then encounter difficulties
which they need not now dread. I again repeat that this moment is the
accepted time for the banks to resume.
But it is not only the ordinary laws of trade which are now bringing
vast amounts of specie to our country. Two other causes are operating
powerfully to produce this result.
The conduct of the Bank of England, in arresting its credits to the
American houses, which was the immediate cause of the suspension of
specie payments, has been loudly condemned by men of all parties there.
This measure has done that country nearly as much injury as it has done
this, because England must always suffer from every derangement in our
currency. The Bank is now conscious of this truth, and is retracing her
steps. She has increased her stock of bullion between February, 1837,
and March, 1838, from £4,032,090 to upwards of ten millions sterling.
She is now strong, and it is her interest, as well as that of the people
of England, that she should use this strength in assisting us to resume
specie payments. Accordingly, she has, through the agency of one of our
most intelligent and enterprising citizens, made an arrangement to
furnish the banks of New York one million sterling in specie, to aid
them in resuming payments in gold and silver. This million is now
arriving, by instalments, in the United States. In resuming at the
present moment, our banks have everything to hope, and nothing to fear,
from England.
Again: The spirit of internal improvement is abroad throughout our land.
States and private companies have loans to make for the purpose of
erecting their public works. Money is now plenty in England, and is
everywhere seeking an investment. The derangement in the business of
that country has thrown capital out of employment. The rate of interest
has been reduced to three and three and a half per cent. Their
capitalists are anxious to make secure investments in loans to our
different State governments, and incorporated companies, at a higher
rate of interest than they can obtain at home. These loans are now being
disposed of in England to a very large amount; and the greater
proportion of their proceeds must return in specie to this country.
Everything is propitious to an immediate resumption by our banks.
Will the Bank of the United States resume? I confess I do not doubt the
fact. She has made a false movement, and it is the great prerogative of
strength to acknowledge and retrieve an error. Her late manifesto
against the resumption of specie payments has not found a single
advocate on this floor. It has struck dumb all her friends. But
yesterday she might have stood against the world. To-day there is none
so poor as to do her reverence. Even those who must politically suffer
by the resumption, because “it will be conclusively employed at the next
elections, to show that the schemes of the executive are not so
destructive as they will prove hereafter,” have not dared to break a
lance in her defence. This was not wont to be the case in days of yore,
for hitherto her champions have been always ready to do battle in her
cause. Notwithstanding all which has been said upon the subject, I am
not one of those who believe that the Bank of the United States is not
able to resume. Although the statement of her condition, as recently
published, is not very flattering, yet her resources are vast. She is
able if she were willing. Of this I cannot entertain a doubt.
Again: Will not the bank take compassion on the good city of
Philadelphia, which has ever been devoted to its interest? Boston has
been called the Athens of America; New York, the great Commercial
Emporium; and Baltimore, the Monumental City; whilst Philadelphia has
been distinguished by the name of the City of the Bank or marble palace;
and well have her citizens earned this distinction by their loyalty.
Will the bank now consent to see her commerce and trade languish, and
her star wane before that of New York, rather than retrace its steps and
resume specie payments? No, never. Forbid it, gratitude!
That this must be the effect, who can doubt? Merchants who come from a
distance to purchase goods with money in hand will go where they can buy
the cheapest; and goods at a specie standard must always be cheaper than
in a depreciated currency. Those who have produce to sell, especially if
the sale is to be made upon credit, will select that market where they
will receive its price in a sound currency. Already the prospect of
resumption in New York has made Philadelphia bank notes worth less by
five per cent. than those of that city. What will this difference become
when the one city shall have resumed, and the circulation of the other
shall be irredeemable paper? Who that has money to remit or deposit will
send it to Philadelphia, to be returned in notes depreciated to an
extent which cannot be foreseen, when they can send it to New York with
a perfect confidence that it will be returned to them according to the
specie standard? Under such a state of things, the trade of New York
must increase and flourish at the expense of that of Philadelphia. I
have not time, at present, to enter into further particulars on this
branch of the subject.
The people of Pennsylvania have submitted patiently to the suspension of
specie payments by their banks. They have bowed to the necessity which
existed, and have treated them with kindness and generosity. The Bank of
the United States has proclaimed its ability to resume, and our other
banks are in the same situation. The necessity for a further suspension
no longer exists. Pay your honest debts when you are able, is a maxim
dear to the people of Pennsylvania. This duty has now become a question
of morality, far transcending any question of policy. If these
privileged corporations now any longer refuse to pay their honest debts,
either for the sake of their own advantage, or from a desire to elevate
one political party and depress another, the indignation of honest men,
of all parties, will be roused against them. There will be a burst of
popular feeling from our mountains and our valleys, which they will be
compelled to respect. Thank God! public opinion in the interior of
Pennsylvania is yet stronger than the money power. Our people will never
submit to the degradation that their banks shall furnish them no
currency but that of irredeemable paper; whilst, throughout the State of
New York, the banks shall have resumed specie payments. Nothing could be
more wounding to my own pride, as a Pennsylvanian.
If our banks should hold out, under the command of their great leader,
until the first day of January next, many of them will never be able to
resume. The public confidence, which their conduct since the suspension
has hitherto inspired, will long ere that distant day cease to exist. No
run would now be made on them in case they resume; but if they are
forced into the measure by public opinion, after resisting as long as
they can, the days of many of them will then be numbered. Honesty, duty,
policy, all conspire to dictate to them a speedy resumption.
In conclusion, permit me to remark, that the people of the United States
have abundant cause for the deepest gratitude towards that great and
glorious man now in retirement for preventing the recharter of the Bank
of the United States. He is emphatically the man of the age, and has
left a deeper and more enduring impress upon it than any individual of
our country. Still, in regard to the bank, he performed but half his
work. For its completion we are indebted to the president of the bank.
Had the bank confined itself, after it accepted the charter from
Pennsylvania, to its mere banking and financial operations—had it
exerted its power to regulate the domestic exchanges of the country—and,
above all, had it taken the lead in the resumption of specie payments, a
new bank, Phœnix-like, might have arisen from the ashes of the old. That
danger, from present appearances, has now passed away. The open defiance
of Congress by the bank—the laws of the country over and over again
violated—its repeated attempts to interfere in the party politics of the
day—all, all have taught the people the danger of such a vast moneyed
corporation. Mr. Biddle has finished the work which General Jackson only
commenced.
Not one particle of personal hostility towards that gentleman has been
mingled in my discussion of the question. On the contrary, as a private
gentleman, I respect him; and my personal intercourse with him, though
not frequent, has been of the most agreeable character. I am always
ready to do justice to his great and varied talents. I have spoken of
the public conduct of the bank over which he presides with the freedom
and boldness which I shall always exercise in the performance of my
public duties. It is the president of the bank, not the man, that I have
assailed. It is the nature of the institution over which he presides
that has made him what he is. Like all other men, he must yield to his
destiny. The possession of such vast and unlimited power, continued for
a long period of years, would have turned the head of almost any other
man, and have driven him to as great excesses.
In vain you may talk to me about paper restrictions in the charter of a
bank of sufficient magnitude to be able to crush the other banks of the
country. When did a vast moneyed monopoly ever regard the law, if any
great interest of its own stood in the way? It will then violate its
charter, and its own power will secure it impunity. It well knows that
in its destruction the ruin of hundreds and thousands would be involved,
and therefore it can do almost what it pleases. The history of the bank
for several years past has been one continued history of violated laws,
and of attempts to interfere in the politics of the country. Create
another bank, and place any other man at its head, and the result will
be the same. Such an institution will always hereafter prove too strong
for the Government; because we cannot again expect to see, at least in
our day, another Andrew Jackson in the Presidential chair. On the other
hand, should such a bank, wielding the moneyed power of the country,
form an alliance with the political power, and that is the natural
position of the parties, their combined influence would govern the
Union, and liberty might become an empty name.
MR. BUCHANAN’S REPLY TO MR. CLAY, ON THE SAME DAY.
Mr. Buchanan said he had never enjoyed many triumphs, and therefore he
prized the more highly the one which he had won this day. He had forced
the honorable Senator from Kentucky [Mr. Clay] to break that determined
silence which had hitherto sealed his lips on the subject of this bill.
Thus, said Mr. B., I have adorned my brow with a solitary sprig of
laurel. Not one word was he to utter upon the present occasion. This he
had announced publicly.
[Here Mr. Clay dissented.]
Mr. Buchanan. I thought he had announced the other day his determination
not to debate the question, and stated this as the reason why he
propounded to the Senator from New Jersey [Mr. Wall] the question
whether, in his opinion, John Brockenbrough and Albert Gallatin could be
constitutionally punished by Congress for re-issuing the old notes of
the Bank of the United States.
[Mr. Clay again explained.]
Well, said Mr. Buchanan, the Senator did intend to address the Senate on
this subject, and the only sprig of laurel which I ever expected to win
from him has already withered. Yet still there was an evident reluctance
on his part, which all must have observed, to enter into this contest.
The Senator from Vermont [Mr. Prentiss] had made an able constitutional
argument in opposition to the bill. With the exception of that
gentleman, and the Senator from South Carolina (Mr. Preston), a profound
silence had reigned on this (the Whig) side of the house. The question
had been propounded by the Vice President, and the vote was about to be
taken, when I rose and addressed the Senate. Immediately after I had
taken my seat, the Senator from Kentucky sprang to his feet, and made
one of his best speeches, for it belongs to the character of his mind to
make the ablest efforts with the least preparation. I will venture to
say he had not intended to make that speech when he entered the Senate
chamber this morning.
[Mr. Clay admitted this to be the fact.]
Then, said Mr. Buchanan, I have succeeded, and my sprig of laurel is
again green.
The gentleman says I may hang Nick Biddle, if I please; but I please to
do no such thing. I would be sorry to subject him even to the punishment
of imprisonment denounced by this bill; and if he should ever be
convicted under its provisions, I hope the court may content itself with
the infliction of a mere pecuniary fine. Hang Nick Biddle, indeed! I
wish to keep him for the service of the Whig party, should they ever
come into power. The Senator from South Carolina [Mr. Preston] had said,
at the extra session, that Mr. Biddle, if appointed Secretary of the
Treasury, would, in thirty or sixty days, I forget which, heal all the
disorders in the currency, and remove all the financial embarrassments
of the Government. His appointment would prove a sovereign panacea for
all existing evils. Now I go for this administration both from principle
and inclination, and shall support the re-election of the present
President; but if I were a Whig, the Senator from Kentucky would be my
first choice. I should, therefore, be very sorry to deprive him of the
services of Mr. Biddle, who will make, in the opinion of the Senator’s
friend from South Carolina, the very best Secretary of the Treasury in
the whole country.
The Senator from Kentucky asks me why I do not defend Mr. Biddle, a
distinguished citizen of my own State. My answer is at hand. I cannot
defend his conduct as president of the bank, because I believe it to be
wholly indefensible; and he has been attacked in no other character. I
should have been proud and happy to undertake this task, could I have
performed it consistently with my conscience. But why does the Senator
propound such a question to me? I confidently expected Mr. Biddle would
have been defended by a much more eloquent tongue. I defend him! when
the eloquent gentlemen all around me are his own peculiar friends; and
yet, strange to tell, not one of them has attempted to justify his
conduct. “But yesterday he might have stood against the world.” “He has
fallen, fallen from his high estate.” Whence this ominous silence? I
wished to hear him defended, if it could be done, by gentlemen of his
own political party, who have never hitherto shrunk from such a
responsibility.
The Senator asserts that the Bank of the United States is no longer in
existence. But are not the president, directors, and officers, the same
that they were under the old charter? Has it not branch banks in at
least two States—Louisiana and Georgia—and branch agencies scattered
over the rest of the Union? And to render its continued existence still
more palpable, has it not seized all the notes of the old bank, good,
bad, and indifferent, and converted them to its own use? Why, sir,
according to its very last return, it has but little more than three
hundred thousand dollars of new notes in circulation, whilst the
circulation of its old notes exceeds six millions. Is it not still
diffusing its blessings and its benefits everywhere, in the opinion of
its friends and admirers? Why has it not, then, proved to be the grand
regulator of the currency, and prevented a suspension of specie
payments? If that were impossible, why is it not, at least, the first
among the banks to urge their resumption? Had it acted thus, it is
possible it might have obtained another charter from Congress. But when
we find not only that it could not save itself from the general crash,
but that it is now the great leader in opposing a resumption of specie
payments, we must lose our confidence in its power as a grand regulator.
But this bank, says the Senator, is a mere domestic institution of
Pennsylvania. With one of its arms stretched across the Atlantic, for
the purpose of loaning money, buying bills, and regulating exchanges
there, whilst, with the other, it conducts immense banking and trading
operations here, co-extensive with the Union, how can it be called a
mere domestic institution of a single State? Nay, more: it seems, by its
last manifesto, to have taken “the great commercial and pecuniary
interests” of the Union into its keeping, both at home and abroad. Sir,
a single State cannot furnish employment for its immense capital. It
would starve within such narrow limits. It is no more a State
institution now than it was under the old charter, except that its
existence as the same identical corporation has been continued by an act
of the legislature of Pennsylvania, instead of an act of Congress; and
that, too, with much greater powers than it formerly possessed. It never
ventured to plant itself in England under the old charter. No, sir, let
not gentlemen delude themselves. The old Bank of the United States still
lives, and moves, and has its being, without even having changed its
name.
The Senator from Kentucky asks, why pass this bill? He says it is wholly
unnecessary; and whilst he admits that the present bank had no legal
power to reissue these old notes, he thinks it ought not to be prevented
from acting thus, because these notes furnish the best and only
universal currency in the Union. The Senator reminds me of the ancient
heretics which existed in the Church, mentioned and condemned by the
Apostle Paul. Their doctrine was, that it was lawful to do evil that
good might come. It seems we are now to have a similar sect of political
heretics, whose doctrine is, violate the law, if you can thereby furnish
a good currency for the people. But there was not the least necessity
for any such violation. As the old notes came in, the bank might have
supplied their place by circulating its own new notes. They are a better
currency in every respect; because the present bank is under a legal
obligation to redeem them on demand. Not so in regard to the old notes.
Their immediate redemption depends upon the honor of the bank, and
nothing more. I have no doubt Mr. Biddle intends to redeem them, but he
may be succeeded by another and a different man. Besides, the bank may,
in the course of time, become insolvent; and in that event the payment
of its own notes and debts must be preferred to that of these
resurrection notes. It is certain that no direct remedy can be had upon
them against the present bank.
The Senator denounces the present bill not only as unconstitutional, but
as the most enormous stretch of power he has ever known to be attempted.
I am glad to find that the Senator has become the advocate of a strict
construction of the Constitution, and an enemy to the exercise of
doubtful powers. In this particular we agree. And I am much pleased to
learn from himself that he does not concur with the Senator from
Massachusetts [Mr. Webster] in deriving power over the paper currency of
the country from the clauses in the Constitution authorizing Congress to
coin money and regulate commerce. By abandoning this latitudinarian
construction, however, he virtually surrenders up the power to create a
national bank. The Senator shakes his head, but I shall endeavor to
prove that this is the dilemma in which he has placed himself. On what
ground did the Supreme Court decide the bank to be constitutional? It
was because Congress, possessing the express power to levy and collect
taxes for the purpose of paying the debts of the United States, might
create a bank by implication, if they believed it to be a necessary
agent in the execution of this taxing power. Now will any man, at this
day, pretend that the taxes of the Government cannot be collected, and
its debts paid, without the agency of such a bank? I think not. It must
have been for the purpose of extricating himself from this dilemma, and
finding a power somewhere else to establish a bank, that the Senator
from Massachusetts asserted a general power in Congress to create and
regulate the paper currency of the country, and derived it from the
coining and commercial clauses in the Constitution. I should be pleased
always to agree with the Senator from Kentucky, and I am glad that we
unite in denying the power claimed by the Senator from Massachusetts.
In regard to the power to pass this bill, I shall state the proposition
of the Senator from Kentucky as fairly as I can. He says that the Bank
of the United States is a corporation created by a sovereign State, and
that this bill, intended to operate upon such a corporation, is wholly
unconstitutional and subversive of State rights. Now, sir, if the bill
were intended to act upon the bank, as a Pennsylvania corporation, I
should abandon the argument. The president and directors of this bank
sustain two characters, totally separate and distinct from each other.
They are officers of the Pennsylvania Bank; and in that character they
are beyond our control. But they have voluntarily assumed another
character, by becoming assignees and trustees of the old bank chartered
by Congress, for the purpose of winding up its concerns; and it is in
this character, and this alone, that we have any jurisdiction over them.
We do not attempt to interfere with the bank as a corporation of the
State of Pennsylvania. No, sir; we only undertake to operate upon it as
the assignee of our old bank. The gentleman asked if the old bank had
assigned its property to individual trustees, could we pass any law to
compel these trustees to wind up its concerns? Most certainly we could;
because, no matter into whose hands the duty of winding up our bank may
have passed, we should possess the power to compel a performance of that
duty. This power of Congress can never be evaded or destroyed by any
transfer to trustees made by officers created by our own law, whether
the transfer be legal or illegal. Our power attaches to such trustees,
and will continue until they shall have closed the concerns of the bank.
The gentleman says that the power to create a bank is one implication,
and that to wind it up is a second implication, and to pass this bill
would be piling implication upon implication, like Pelion upon Ossa,
which cannot be done under the Constitution. Now, sir, to what
absurdities does not this argument lead? By implication you can create a
bank for a limited period, which you cannot destroy after that period
has expired. Your creature, the term of whose existence you have
foreordained, becomes eternal in defiance of your power. And this
because you cannot add implication to implication. The gentleman asks
where do you find this winding up power in the Constitution? I answer,
wherever he finds the creating power. The one necessarily results from
the other. If not, when you call a bank into existence, its charter,
although limited to a few years, becomes in fact perpetual. You cannot
create that which you cannot destroy, after it has lived its appointed
time.
As to Mr. Gallatin and Mr. Brockenbrough—nobody pretends you can touch
them or their banks by your law. The bill is confined to your own
agents, acting under your own law, and therefore subject to your own
jurisdiction. These agents are as much yours for the purpose proposed by
the bill, as the president and directors of the old bank would have
been. There is a perfect privity, as the lawyers would say, between the
two; nay, there is a perfect identity. It is no argument to say that the
old bank is dead; but even this is not the fact. We have extended its
existence at the present session, without a dissenting voice, in either
House, for the purpose of prosecuting and defending its suits, and it
has always continued to elect a president and board of directors.
The Senator has asked, if the Bank of England or any of the banks in
Canada had ceased to exist, and their agents in this country should
reissue their old notes, whether we would claim the power of punishing
them for that cause. This question, in my opinion, presents the only
instance of haste and want of sufficient reflection in the gentleman’s
speech. There is no analogy between the two cases. Congress never
created the Bank of England, nor any bank in Canada, and therefore
Congress can never claim any power to close their concerns. We assert no
power except over our own bank and its trustees. We cannot interfere
with the banks of the several States, much less with those of a foreign
country.
The Senator thinks he has caught me in a palpable inconsistency. He says
I first condemned the expansion of the banks in this country, and
afterwards condemned the contraction of the Bank of England. I might
have done so, in the special case of the refusal of that bank to extend
its accustomed credits to the American houses, without any
inconsistency; but I expressed no opinion of my own upon the subject. In
stating the causes which produced the suspension of specie payments in
the United States, I said that this act of the Bank of England had been
condemned in that country both by their statesmen and men of business. I
passed no censure whatever on the conduct of that bank, and the
gentleman, therefore, need not have reminded me that it would but little
regard my censure. I am content to confine my humble exertions to our
own institutions at home, leaving to other gentlemen the glory of having
South America on one side of the Atlantic and Greece on the other,
shouting hosannas in their praise.
The gentleman asks, with a triumphant air, where are England and France
at the present moment? Are they not prosperous, whilst we are
embarrassed? In regard to England, I answer that money there is plenty
and cheap; and this simply because business has been paralyzed by the
great convulsion under which we have both suffered; and it is the
capital which has been thrown out of active employment, from this very
cause, which is now seeking investment at a low rate of interest. The
commerce and trade of England have fallen off to such an extent that
Parliament has been obliged to borrow two millions sterling to meet the
current expenses of the Government. In this particular they are placed
in a similar situation with ourselves. And yet after all the light which
has been shed upon this subject, the gentleman still attributes that
convulsion which has shaken the commercial world to its centre, to the
removal of the deposits, the Specie Circular, and General Jackson.
I have but lately turned prophet; and there has been such poor success
in that line on this side of the House, that I have almost determined to
abandon the trade forever. In one respect I resemble the false prophets
of old, because they prophesied nothing but good. This may probably
result from my sanguine temperament, and my desire to look upon the
bright side of human affairs. In my prophetic vision I have therefore
never, like the gentleman, denounced war, pestilence, and famine against
the country.
The gentleman strongly condemns the members of the present cabinet. I am
willing to accord to the President the privilege of selecting his own
agents and advisers, without any interference on my part. When he, or
they, shall recommend measures of which I disapprove, I shall exercise
my right of opposing them as an independent Senator. I do not believe
that any evidence can be produced that the President and his cabinet are
opposed to the credit system of the country. If this should ever appear,
it will then be time enough for me to denounce such a policy. My
instructions have prevented me from expressing my views at length upon
this subject. They contain nothing, however, which forbid me from
saying, nay I am only expressing their sentiment when I assert, that a
separation of the business of the Government from that of the banks
would be one of the greatest blessings which could be conferred on the
country. In releasing the banks from the Government, and the Government
from the banks, the interests of both parties would be promoted, mutual
jealousies and recriminations would be ended, and the currency and
business of the country would cease to be involved in the perpetual
struggles which exist for political power.
I might say much more in reply to the gentleman, but I forbear.
Through the session of 1839–40 the financial policy of Mr. Van Buren
continued to be the same. Still the plan of the “Independent Treasury,”
as it was called, continued to occupy the attention of the Senate, and
still Mr. Buchanan was among the ablest and steadiest of its supporters.
On the 12th of January, 1840, and again at the same session, on the 3d
of March, he took a leading part in the discussion of these subjects.
These seven years of political warfare on the relations of the General
Government to the currency, commencing in 1833 and extending into the
year 1840, were a period of unexampled commercial distress; and when the
two parties arrayed their forces and named their candidates for the next
election of a President, the Democrats, although in possession of
official power, were in a position in which the prevailing public and
private embarrassments could be charged by their adversaries as the
direct consequence of their measures. A great political revolution was
at hand. That victorious party which claimed to have been founded by
Jefferson, which nearly thirty years before its present precarious
situation had carried Madison through a war with England, which had by
its forbearance made for Monroe “the era of good feeling,” which had
beaten the administration of the second Adams into the dust, which had
twice elected Jackson and would have elected him a third time but for a
sacred tradition of the Republic, which had enabled Jackson to name his
successor, which filled the important offices and wielded the whole
patronage of the Government, was now to be swept out of power by a
popular tempest, such as the country had never known in a time of peace.
It was broken in New York, it was broken in Pennsylvania, it was broken
in many other States which for twelve years had been among its
strongholds.
The summer and autumn of 1840 saw a popular excitement, in which there
was much that history might condemn, but which the sober wisdom of
history can both account for as natural, and regard as not unwholesome.
There had come to be a feeling that the public men who had so long been
entrusted with the Government of the country, and been sustained with so
large a share of the popular confidence, who had been the peculiar
friends of the people, whose party designation implied a democracy of a
purer type, and a wider regard for the welfare of the masses, had grown
indifferent to the general suffering.
At first, the course of General Jackson towards the Bank of the United
States, his vast popularity and the influence which it gave him, enabled
him and his followers to maintain their power. Hardly had there ever
been a popular confidence greater than that which was reposed in
Jackson, through the whole of his conflict with a moneyed institution,
which a great majority of the people of the United States regarded, with
him, as a dangerous instrument. But when year after year passed away and
nothing was done for the relief of the prevailing embarrassment, when
thousands had become bankrupt, when labor was unemployed or was
remunerated in a depreciated and discredited currency, when the
mercantile, the manufacturing, the agricultural classes were involved in
a common distress, elements of political excitement, scarcely ever
before combined, were united in a vague longing for a great political
change. Then were to be seen the highest statesmen discussing before
huge masses of the people the most profound questions of public finance
and constitutional construction, and stump orators of all degrees,
sounding the depths of popular agitation. The songs, the mottoes, the
cries, the emblems of the party which had adopted the name of Whigs, a
name which, both in English history and in our own, had represented
popular interests against the prerogatives of government, were at once
puerile and effective. They convey a scarcely intelligible meaning to
the present generation, but to those who listened to and looked upon
them, they expressed feelings and passions which stirred the popular
heart.[61] For once, the Whigs had laid hold of a string, coarse indeed
and rude, but which vibrated to every touch throughout the land with
singular force. The divorce of the Government from all connection with
the currency, the disclaimer of all responsibility about the circulating
medium which must be used by the people, the exclusive regard for the
monetary concerns of the Government as distinguished from the monetary
interests of the community, were arrayed by the Whigs as the favorite
and pernicious doctrines of the party in power. In all this there was
some injustice, but when does not popular suffering produce injustice?
The result of this upheaving of society was the election of General
William Henry Harrison, of Ohio, as President, and of John Tyler, of
Virginia, as Vice President, by a majority of 114 electoral votes. Never
was a political defeat more overwhelming than the defeat of Mr. Van
Buren. He obtained but 60 out of the 234 electoral votes. Of the larger
States, he held only Virginia.[62]
Mr. Buchanan’s personal position was unaffected by this political
change. He had been re-elected to the Senate in January, 1837, by a very
large vote, and for a full term, which would not terminate until the 3d
of March, 1843.[63] When the political “campaign” of 1840 came on, he
did his part, and did it valiantly, for the success of his party and the
re-election of Mr. Van Buren. The detail of his exertions would not be
interesting now. It is enough to say that in the arrangements of the
public meetings held by his political associates in various States, he
was much relied upon as an antagonist to the great Whig leaders, and was
often in one sense pitted against Mr. Webster and Mr. Clay, although it
was not the habit of the time for public men on opposite sides to
encounter each other on the same platform. As a popular orator, there
was no one on the Democratic side who was listened to with more respect
than Mr. Buchanan. But popular eloquence was not his forte. On the
platform, as in the Senate, he was grave, earnest, perspicuous and
impressive: but he did not kindle the passions or arouse the enthusiasm
of audiences: nor indeed was there much enthusiasm to be evoked in the
defence of a cause against which almost all the elements of ardent
popular feeling were at the command of its adversaries.
Mr. Buchanan might have escaped from the Senate into the Cabinet of Mr.
Van Buren, if he had wished to do so. It was Mr. Van Buren’s desire, in
1839, that Mr. Buchanan should become Attorney-General in his
administration, to fill the vacancy caused by the resignation of Mr.
Grundy. The correspondence between them discloses that Mr. Buchanan
preferred to remain in the Senate.
[MR. VAN BUREN TO MR. BUCHANAN.]
WASHINGTON, Dec. 27th, 1839.
DEAR SIR:—
The office of Attorney-General of the United States has become vacant by
the resignation of Mr. Grundy. Although I have no reason to suppose that
it would be desirable to you to change your present position in the
public service, I have nevertheless felt it to be my duty to offer the
seat in my cabinet, which has thus been placed at my disposal, for your
acceptance, and to assure you that it will afford me sincere pleasure to
hear that it will be agreeable to you to accept it, a sentiment in which
those who would be your associates, will, I am confident, cordially
participate.
Should you decide otherwise, the occasion will have been presented, and
cheerfully embraced, to express the high sense I entertain of your
talents, and also my confidence in your patriotism and friendship for
the administration.
Please to let me hear from you at your earliest convenience, and believe
me to be very respectfully and truly your friend and obedient servant,
M. VAN BUREN.
[MR. BUCHANAN TO MR. VAN BUREN.]
WASHINGTON, Dec. 28th, 1839.
DEAR SIR:—
I have received your note of yesterday evening, tendering to me the
office of Attorney-General. Whilst I regard it, with grateful
sensibility, as a distinguished mark of your kindness and confidence,
yet I prefer my position as a Senator from Pennsylvania to the
Attorney-Generalship, high and honorable as it is justly considered.
Nothing could induce me to waive this preference, except a sense of
public duty; and happily upon the present occasion, this presents no
obstacle to the indulgence of my own inclination. Devotedly attached, as
I am, to the great principles upon which your administration has been
conducted, I feel that I can render a more efficient support to these
principles on the floor of the Senate than I could in an executive
office, which, from its nature, would necessarily withdraw me, in a
great degree, from the general politics of the country, and again
subject me to the labors of the profession.
Permit me to embrace this occasion of again respectfully reiterating my
earnest desire that you would confer this appointment upon Judge Porter.
I believe him to be eminently qualified to discharge the duties of the
station; and that it would be highly gratifying to the Democracy of
Pennsylvania to be represented in your cabinet by a gentleman who enjoys
so large a portion of their confidence.
With the highest esteem, I remain very respectfully your friend,
JAMES BUCHANAN.
[TO GENERAL PORTER.]
WASHINGTON, May 30th, 1840.
MY DEAR SIR:—
I have received yours of the 28th inst., and it afforded me much
pleasure.
I have had a long and free conversation with Mr. Van Buren this morning
on the subject of Pennsylvania politics. It was the first of the kind
for some time. In the course of it I took occasion to read your letter
to him, with which he was much gratified.
I impressed upon him, in the same terms I used to yourself, the absolute
necessity of union and harmony between the State and national
administration. I told him that if one portion of the party in
Pennsylvania said they were for Paul, and another for Apollos, the great
cause with which both Paul and Apollos were identified might be ruined.
He expressed, as he ever has done, a great regard for you, and said he
had given conclusive evidence of it by the appointment of Judge Blythe,
and that he never had concealed the fact that this appointment was made
to gratify your wishes. Upon a suggestion of mine, that an opportunity
might probably be presented, on the 4th of July, to manifest his regard
for you by giving a toast in your favor, he said he doubted the policy
of that course, both in regard to you and himself. That the better mode
was for both to evince their feelings by their conduct. He spoke freely
of certain politicians in Philadelphia, and I have no doubt from what he
said, that he will exert his influence in some manner to prevent them
from any longer treating you unfairly. Upon the whole, I left him more
convinced than I ever was before, that he is your friend. He made the
very observation to me which I had made to you, that in the progress of
the Presidential canvass, when the party became excited, the feeling
which now existed against you in a few places would be entirely
forgotten. Of this I am perfectly convinced, _especially if the hill
should pass imposing the restrictions on the banks recommended in your
January message_. There is no man in the State who more ardently desires
this result than myself, and none who will more endeavor to accomplish
it. Devoted as I am to bank reform, from a conviction of its absolute
necessity, and having always expressed the same opinion on this subject,
publicly and privately, this bill would place a powerful weapon in my
hand. I shall have to visit Westmoreland County, on the business of my
late brother-in-law’s estate, very soon after the adjournment of
Congress, and I am under the impression that I can do much good there. I
shall be very much rejoiced indeed to hear of the passage of this bill.
I have had a long and a strong talk with —— ——. I am confident his
feelings towards you are not unkind.
The resolution of the Senate, expressing their opinion in favor of the
bankrupt system will place me in an embarrassing position, should it
pass the House. Had the legislature instructed me, I should obey with
pleasure, because all my sympathies are in favor of the suffering
debtors. If left to myself, my judgment is so much opposed to my
feelings, that I believe I should vote against the bill without making
any speech. The expression of a legislative opinion would probably
compel me to give my reasons for dissenting from their opinion. If there
be a majority of the House in favor of the measure, why not change the
expression of their opinion into instructions, and then I shall be
relieved from all responsibility on the subject. I made a long speech in
opposition to the bankrupt bill during the first session of my service
in Congress, 1821–2; and I have yet heard nothing materially to shake my
ancient opinions, though I am still open to conviction. I have not yet
heard from Mr. Espy.
Ever your friend,
Very respectfully,
JAMES BUCHANAN.
[TO GENERAL PORTER.]
SENATE CHAMBER, WASHINGTON, February 9, 1841.
MY DEAR SIR:—
The third crash of the Bank of the United States so soon after its
resumption has taken us all by surprise. I sincerely hope that it has
made its last struggle, and may now go into final liquidation. Whilst I
regret the sufferings to which its stockholders may be exposed, I yet
believe that its dissolution is necessary to the prosperity of the
country. As long as it shall continue to exist, it will continue to
derange the business of the country, and produce again and again those
revulsions to which we have been subjected. It has ever been a lawless
institution, and has done what it pleased, knowing that to destroy it
would subject the people to evils which they would be unwilling to
encounter. We ought to rejoice that it has now destroyed itself. I most
sincerely hope that you may take this view of the subject; and adhere
strictly, as I have no doubt you will, to your opposition to permitting
the banks to issue notes under five dollars.
As a sincere friend, both personally and politically, I have deemed it
to be my duty to make these suggestions, and I have no doubt you will
receive them as they are intended.
From your friend, sincerely,
JAMES BUCHANAN.
[TO GENERAL PORTER.]
WASHINGTON, February 17, 1841.
MY DEAR SIR:—
Sitting “solitary and alone” in my private room, the thought has just
struck me that I would address you a few lines. If I were capable of
envying any man, I should envy the position in which you are now placed.
The eyes of the Democracy of the whole Union are now directed towards
you with intense anxiety; and all you have to do to render yourself an
object of their respect and admiration is to adhere firmly to your
avowed principles. That you will adopt this course, I have not the
shadow of a doubt.
To put down the Bank of the United States will be a measure of the
greatest relief to the State. It has not strength enough to assist the
people; but must exist by borrowing money and crippling other
institutions. If it were out of the way, the other State institutions
might safely be left to the people of the State. And I firmly believe
there would be no serious attempt to forfeit their charters. The Bank of
the United States makes a merit of having loaned large sums to the State
government, when, by this means, it has preserved its existence this
long. It exchanged its own paper for what would command specie, and
enable it to raise money abroad. Whilst, therefore, I feel for the
distress of those whom it has ruined, I believe its going into
liquidation would be the best relief measure which could be adopted. It
may occasion much suffering for the present; but this will soon be over,
and all may then again hope to see settled times.
When I sat down, I wanted to say a word against small notes; but I am
interrupted and must stop.
Ever sincerely your friend,
JAMES BUCHANAN.
[MR. BUCHANAN TO GEORGE G. LEIPER, ESQ.]
LANCASTER, October 23, 1841.
MY DEAR SIR:—
I most sincerely sympathize with you in your domestic afflictions, and
trust that He who tempers the wind to the shorn lamb may comfort and
sustain your daughter in her distress.
I reciprocate your congratulations on our recent victory with all my
heart. It is a great moral triumph. After the late Presidential election
many, who had formerly felt an abiding confidence in the integrity and
intelligence of the people, began to waver. The ridiculous mummeries
which apparently had an effect upon them were insults to their
understanding. But nobly have they redeemed themselves, and have proved
to the world that if they can be made to slumber over their rights for a
moment, they are certain to awake with a firmer determination than ever
to maintain them. Governor Porter has now a fine opportunity of
distinguishing himself; and most ardently do I hope that he may embrace
it. By doing his duty fearlessly, he will make a name for himself, which
no other governor of Pennsylvania has ever yet enjoyed. On the other
hand, should he falter, we shall lose the State, if not at the next
election, at the next gubernatorial contest. He must devote himself to
reforming the administration of our internal improvements, and rendering
them productive; he must firmly resist any increase of the State debt.
And if he does no more, he must veto every bill to create a new bank or
renew the charter of an old one. These are principles on which the
Democracy will insist. Besides, he ought to recommend and urge a
thorough investigation of the Bank of the United States, and the
Pennsylvania and other banks. The time has passed for consulting mere
expediency; and the Democratic party has risen again upon its
principles, and it will continue to stand no longer than it maintains
them. I do not think that the Presidential question to which you allude
will occasion any serious embarrassment to the party. Throughout the
Union, with the exception of Philadelphia, they all appear to be alive
to the necessity of forbearance. When the proper time shall arrive, the
choice of a candidate will be made without serious difficulty; because I
believe that the candidates who will be the most prominent are all
willing to yield their pretensions, if that should be found necessary to
promote the success of the great causes.
Please to remember me, in the kindest terms, to your family, and believe
me to be your friend sincerely,
JAMES BUCHANAN.
[TO MR. WILLIAM FLINN, JR.]
WASHINGTON, September 5th, 1841.
MY DEAR SIR:—
I thank you for your kind and acceptable letter, and feel much gratified
that the honest and incorruptible farmers of your county have expressed
their approbation of my political course. To live in their esteem would
be a high reward.
The second bank bill, or “kite-flying fiscality,” is now before
President Tyler, and I have no doubt but that it will share the fate of
its predecessor. Should the second veto be of a firm and manly
character, precluding all hope of the establishment of a national bank
during the present Presidential term, it will be, as it ought to be,
hailed with enthusiasm by the Democratic party. In Congress we shall
pursue the straight line of political duty, and shall yield the measures
of the President, so far as they may be in accordance with our
principles, a cheerful and hearty support. As to President-making, we
shall leave that to the people, where it ought to be left.
I should be pleased to see you established as the editor of a Democratic
paper. That is a much more honorable and independent vocation than to be
hanging about the public offices here as a subordinate clerk. Should you
become the editor of the _Mercury_, however, whilst I am deeply sensible
of your kindness, I would not wish you to bring out my name as a
candidate for the Presidency. It is yet too soon to agitate this
question in the public journals; and any premature movement would only
injure the individual it was intended to benefit. Besides, I have no
ambitious longings on this subject. Let events take their course; and my
only desire is, that at the proper time, the individual may be selected
as our candidate, who will best promote the success of the party and its
principles.
I am rejoiced at our flattering prospects in Pennsylvania. Should the
Keystone State come “booming” into the Democratic line in October next,
by a handsome majority, this auspicious event will do much to prostrate
the present Whig party.
With sentiments of regard, I remain your friend,
JAMES BUCHANAN.
-----
Footnote 60:
The persons here referred to as “Conservatives,” were a class of
Democrats or Republicans, who stood aloof for a time from their party.
Footnote 61:
Subsequent generations will need a key to the “log cabin” and the
barrel of “hard cider,” the shouts of “Tippecanoe and Tyler too,” the
long processions of trades, the enormous multitudes that gathered at
the great open-air meetings. _Omnia quæ vidi_, the writer might say,
and he might add with a variation, _quorum pars minima fui_.
Footnote 62:
The sixty electoral votes obtained by Mr. Van Buren were given by the
States of New Hampshire, Virginia, South Carolina, Illinois, Alabama,
Missouri and Arkansas.
Footnote 63:
In a letter from one of his friends, which lies before me, written at
the time of his re-election, it is said that he was the first person
who had been elected a second time to the Senate of the United States
by the legislature of Pennsylvania.
-----
CHAPTER XVI.
1841–1842.
DEATH OF PRESIDENT HARRISON—BREACH BETWEEN PRESIDENT TYLER AND THE
WHIGS—TYLER’S VETOES—BUCHANAN’S REPLY TO CLAY ON THE VETO POWER—HIS
OPPOSITION TO THE BANKRUPT ACT OF 1841.
Rarely has a party in a constitutional government come into power with
apparently a better prospect of doing good to their country, and
retaining their hold upon it, than did the Whigs under President
Harrison. This worthy man, who was by no means a statesman of the first
or even of the second order, was a person of fair intelligence, of
entire honesty of character, and was moderately well taught in the
principles of the Constitution. Almost his first act, after his
election, was to tender the chief place in his cabinet to Mr. Webster.
This was done with the concurrence of Mr. Clay, whom it suited to remain
in the Senate, as its leader, and who expected to carry a new national
bank, as a remedy for the existing disordered condition of the currency.
But General Harrison died on the day which completed the first month of
his official term.[64] His successor, John Tyler, of Virginia, had been
chosen as Vice President, with very little attention to his political
opinions on the part of those who selected him for that position, or of
those who voted for him. When he assumed the duties of the Presidency,
he requested the members of General Harrison’s cabinet to remain in
office. They were all of that political school which regarded a national
bank of some kind as a necessity, and held it to be an instrument of
Government which Congress might constitutionally create.[65] President
Harrison and his official advisers had deemed it necessary to convene an
extra session of Congress; and his proclamation had summoned it for the
31st of May. When that day arrived, it began to be remembered that Mr.
Tyler had theretofore been among those who denied the power of Congress
to establish a national bank, and that as a Senator he had voted against
one. Here, then, the long-cherished policy of the leading Whigs, which
they claimed had been affirmed by the people in the late election, was
in peril of encountering the opposition of the President. In July, a
bill for a bank, with power to establish offices of discount and deposit
in the several States, either with or without their consent, was passed
by both Houses and sent to the President. He returned it on the 16th of
August, with his objections, from which it appeared that he held such a
bank to be unconstitutional. In the Senate, Mr. Clay made a bitter
attack upon the President; the Whigs in the House of Representatives
burst into a fury of indignation. But the Whig majority was not large
enough to pass the bill over the President’s “veto.” A new bill to
create a “Fiscal Corporation of the United States” was brought in. In
the mean time the President was denounced in the press by persons who
stood in close relations with Mr. Clay, as a man faithless to the party
which had made him Vice President. In the debate on the new bill, Mr.
Clay again assailed the President with great violence, expecting by that
means to prevent a second “veto.” Mr. Tyler remained firm to his own
convictions; the second “veto” came; an irreparable breach between the
Whigs and the President ensued; four of the members of the cabinet
appointed by President Harrison resigned their places, without previous
conference with Mr. Webster, who remained in office.[66] Thus within six
months after the death of General Harrison, the Whigs lost the power of
shaping the financial legislation of the country, which their triumphant
success in the late election appeared to have given them.
Mr. Buchanan, if not now the leader of the opposition in the Senate, was
one of its most prominent debaters. It has already been said that he was
not an orator, in the highest sense of that term. But in all the
polemics of debate he was exceedingly efficient. He could mingle logic
with humor; and although in discussions which were largely occupied with
party topics and with grave constitutional questions, he was not sparing
in his thrusts, there was a gentleman-like manner in his wielding of the
rapier, as well as force in handling the weightier weapon of argument.
On both of the bills which were prepared with a good deal of design to
encounter the anticipated opposition of Mr. Tyler, and the last of which
was almost avowedly gotten up as a means of “heading him off” from a
union with the democratic opposition, Mr. Buchanan spoke at the extra
session with remarkable energy and effect. His most elaborate speech on
the first bill was delivered on the 7th of July. It related partly to
the old question of the constitutional power of Congress to create a
national bank of any kind; and in the course of this discussion he
treated the topic of the binding authority of the Supreme Court of the
United States, in reference to the legislative department, with new and
forcible illustrations, contending that upon any new bank, Senators were
bound to follow their conscientious convictions. The residue of the
speech was a severe criticism upon the details of the bill, which he
contended would establish a dangerous connection between a moneyed
institution and the executive of the United States, far worse than that
which had existed in the case of either of the former banks. Such a
speech was well calculated to produce a strong impression at once upon
the mind of the President before whom the bill was likely to come, and
upon the country. Mr. Buchanan looked forward to the time when all
question about a national bank, as a fiscal agent of the Government in
the collection and disbursement of its revenues, would be at an end, and
the “Independent Treasury” system would be resorted to as the
substitute.[67]
Upon the second bill he spoke on the 2d of September, in reply to Mr.
Clay. This scheme of a “Fiscal Corporation of the United States,” which
was to have the power of dealing in bills of exchange drawn between
different States, or on foreign countries, but was not to be allowed to
discount promissory notes, was assailed by Mr. Buchanan with great
vigor. His speech placed the advocates of the bill in a somewhat
ridiculous position, for it did not appear whether they concurred in
founding it on the power to regulate commerce, or on the power to
collect and disburse the public revenue: and in the practical operation
of the scheme, he made it very plain that it would become a mere
“kite-flying” machine. Mr. Clay thought that Mr. Buchanan did not
succeed in “attempts at wit.” Buchanan retorted that this was true, and
that his opponent as rarely succeeded in argument. An impartial reader
would now say that Buchanan had the argument on his side, and a very
respectable share of what was certainly a telling species of humor, if
it was not wit. His description of the heterogeneous political materials
that made up the famous “Harrisburg Convention,”—the body which
nominated Harrison and Tyler, with such an entire disregard of the
opinions of the candidates that it became afterwards a disputed question
whether they were “bank” or “anti-bank” men,—was not an unhappy hit.[68]
Under the advice of Mr. Webster, the Whigs postponed the subject of a
bank to the next regular session of Congress. But some important
measures were passed at the extra session, and approved by the
President, among which was a Bankrupt Act. Mr. Buchanan opposed it in
the following speech, delivered on the 24th of July, 1841:
The question being on the passage of the bill—
Mr. Buchanan said, that when he entered the Senate chamber this morning,
he had not intended to say one word on the subject of the bankrupt bill.
He was content that the question should have been taken silently on its
final passage, and decided in its favor, as all knew it would be, from
the vote yesterday upon its engrossment. The able remarks of the Senator
from New York (Mr. Tallmadge) had induced him to change his purpose, and
endeavor to place himself in a proper position before the public in
relation to this important measure.
He trusted that he felt as much sympathy for the unfortunate as any
Senator on this floor. It would, therefore, have afforded him heartfelt
pleasure to be able to vote for this bill. He was sorry, very sorry,
that from a deep sense of public duty, he should be compelled to vote
against it. Would to Heaven that this were not the case!
It had been asserted over and over again, that there were five hundred
thousand bankrupts in the United States anxiously awaiting relief from
the passage of this bill. Now, from the very nature of the case, this
must be a monstrous exaggeration of the number of these unfortunate men.
Less than two millions and a half of votes had been given at the late
Presidential election; and, if you add to this number five hundred
thousand, the aggregate of three millions would exceed the number of all
the male inhabitants of the United States who could by possibility
become bankrupts. Could any man believe that half a million of this
number were in a state of bankruptcy? That every sixth man in the United
States was in this wretched condition? The experience of us all must
demonstrate that this was impossible. There were several States in the
Union where this bill would be almost a dead letter for want of subjects
on which it could operate. Although we had suffered much from the spirit
of wild speculation, which had been excited to madness by our
unrestricted banking system, yet he did not believe there were more than
one hundred thousand bankrupts in the United States who would apply for
relief under this bill.
Now, sir, what was the nature of this bill? Whom did it embrace in its
provisions? He would answer, every individual in the United States who
was an insolvent debtor. There was no limitation, no restriction
whatever. It would discharge all the insolvent debtors now in existence
throughout the Union, from all the debts which they had ever contracted,
on the easiest terms possible. It was said that the bill contained
provisions both for voluntary and involuntary bankruptcy; and so it did
nominally: but in truth and in fact, it would prove to be almost
exclusively a voluntary bankrupt bill.
The involuntary clause would scarcely ever be resorted to, unless it
might be by a severe and vindictive creditor, for the purpose of
unjustly oppressing his unfortunate debtor. And why would this prove in
practice to be a voluntary bankrupt bill, and that alone? The compulsory
clause applied only to merchants—wholesale and retail, to bankers,
factors, brokers, underwriters, and marine insurers. These were objects
of compulsory bankruptcy, provided they owed debts to the amount of two
thousand dollars. In order to enable their creditors to prosecute
petitions against them, for the purpose of having them declared
bankrupt, they must have committed one of the acts of bankruptcy
specified by the bill. What were they? The debtor must either have
departed from the State of his residence, with intent to defraud his
creditors;—or concealed himself to avoid being arrested;—or fraudulently
procured himself to be arrested or his goods or lands to be attached,
distrained, sequestered, or taken in execution;—or removed and concealed
his goods and chattels to prevent them from being levied upon or taken
in execution;—or made a fraudulent conveyance or assignment of his
lands, goods, or credits. These were the five acts of bankruptcy
specified in the bill; and could it be supposed that any merchant or man
of business, in insolvent circumstances, would wait and subject himself
to this compulsory process by committing any of these acts; whilst the
bill threw the door wide open to him, in common with all other persons,
to become a voluntary bankrupt, at any time he might think proper? He
would select the most convenient time for himself to be discharged from
his debts; and would cautiously avoid any one of these acts of
bankruptcy, which might restrain the freedom of his own will, and place
him in some degree within the power of his creditors. He would “swear
out” when it suited him best, and would not subject himself to their
pleasure. This bill, then, although in name compulsory as well as
voluntary, was in fact, from the beginning to end, neither more nor less
than a voluntary bankrupt law.
Now it might be wise, on a subject of such great importance, to consult
the experience of the past. In 1817, the British Parliament had
appointed a commission on the subject of their bankrupt laws. The
testimony taken by the commissioners was decidedly against these laws;
and the Lord Chancellor declared that the abuses under them were a
disgrace to the country; that it would be better to repeal them at once
than to submit to such abuses; and that there was no mercy to the
bankrupt’s estate nor to the creditors. Mr. B. spoke from memory; but he
felt confident he was substantially correct in the facts stated. This
was the experience of England, and that, too, notwithstanding their
bankrupt laws had interposed many more guards against fraud than the
present bill contained, and were executed with an arbitrary severity,
wholly unsuited to the genius of our institutions. In that country,
however, these laws had existed for so long a period of time, and were
so interwoven with the business habits of the people, that it was found
impossible to abolish them altogether.
We have had some experience on this subject in our own country. Congress
passed a bankrupt law in April, 1800. It was confined to traders, and
was exclusively compulsory in its character. The period of its existence
was limited to five years and until the end of the next session of
Congress thereafter. It so entirely failed to accomplish the objects for
which it was created, and was the source of so many frauds, that it was
permitted to live out but little more than half its appointed days. It
was repealed in December, 1803; and a previous resolution, declaring
that it ought to be repealed, passed the House of Representatives by a
vote of 77 to 12.
The State of Pennsylvania had furnished another important lesson on this
subject. In March, 1812, the legislature of that State passed a bankrupt
or insolvent law absolving all those who chose to take advantage of it
from the payment of their debts. It was confined to the city and county
of Philadelphia; but within these limits, like the present bill, it
offered relief to everybody who desired to be relieved. This act was
repealed, almost by acclamation, at the commencement of the very next
session after its passage. Its baneful effects were so fully
demonstrated during this short intervening period, that the
representatives from the city and county who had, but a few months
before, strained every nerve to procure its passage, were the most
active and zealous in urging its repeal.