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4ff7212f47c25 76.102.127.50 United States

THE

SECOND
UNITED

BANK STATES

OF

THE

BY

RALPH

C. H.

CATTERALL

THE

UNIVERSITY

OF

CHICAGO

PRESS

The The

University

of Chicago of
Toronto Press,

Press,

Chicago
5,

37
Canada

University

Toronto

Copyright

1902 New

by

The

University
1960
States

of

Chicago

Impression
the

Printed

in

United

of

America

CS?

PREFACE
IN this book of the effort has been made to write the history States in its various Bank of the United particular stress, however, upon its relations
an

Second

aspects, laying
to politics,and

bank. commercial Craig Biddle, of My thanks are due to the Honorable Philadelphia, the distinguished head of a distinguished family, upon
its operations
as a
a

for over a century and members in the annals of our country as bankers, and historians. With jurists,
whose honor
as

quarter
and

have

won

seamen a

soldiers,
as rare

generosity

it is grateful he

has

papers of his in Andalusia, home exist in their entirety at his summer Without this courtesy much of this history Pennsylvania. have been written. of the Bank of the United States could not
to the

permitted free and complete access Biddle, which father, Nicholas still

I wish

also to thank

Professor

J. Franklin
R.

Jameson

for

his aid and encouragement.

C. H.

C.

CHICAGO,

August

29, 1902.

ABBREVIATIONS
manuscript Nicholas Biddle, preserved at Andalusia, Pa. Ex. F.
:

B. P.:

Biddle

Papers.

The

correspondence

of

Doc.

Executive

Document.
Finance.

State Papers, folio edition.

:

H. R.

House
:

Report.
The letterbooks of President

P. L. B.

President's Letter Book.

Nicholas Biddle, kept at Andalusia, Pa.

S. D.
:

Senate Document.

TABLE
CHAPTEB CHAPTER CHAPTER CHAPTER CHAPTER CHAPTER CHAPTER CHAPTER CHAPTER
I.

OF

CONTENTS
of the Bank
Jones
-

Establishment The

II.
III.

Administration of William
to Save the Bank

22
51

The Attempt The

under Jones Cheves

-

IV.
V.

Administration of Langdon

68 93 114 132

Nicholas Biddle and His Policy, 1823-28

The

VI. VII. VIII.

IX.

Branch

Drafts

The The

Results of Biddle's System

Bank

and the Democracy

164

Attempts

to Secure Jackson's Assent

-

to

Re-Charter CHAPTER
CHAPTER X. XI. XII.
XIII.

186
215
-

The The The The The The The The

The

Struggle for the Charter Charges War

on

against the Bank

243 285
314 332

CHAPTER CHAPTER CHAPTER CHAPTER CHAPTER

CHAPTER CHAPTER

the Bank

Contraction and Panic of 1833-34

Defeat of the Bank
-

XIV. XV. XVI.

Last Days Branches

of the Bank

359
-

and Their Administration

-

376
404

XVII.
XVIII.

Issues of the Bank

Bank,

the State Banks, and

-

rency the Cur-

430
453

CHAPTER
APPENDICES
APPENDIX APPENDIX
"

XIX.

The

Bank

as

Government

Agency

I. II.

The The

Charter
Agreement

479

with the State Banks,

-

ruary Feb488

1, 1817
APPENDIX

III.

Rules

and Regulations United States

------

of the Bank

of the

490

TABLE
APPENDIX

OP

CONTENTS
the Bank in 1832 1817-36
498

IV. V. VI.

The

Bill to Re-Charter

APPENDIX APPENDIX
APPENDIX

General
Annual

Statement

of the Bank,

501
505

Totals of Inland
of Exchange Transactions

Bills of Exchange

VII. VIII.
IX.

The

Rates

505 507

APPENDIX APPENDIX APPENDIX

APPENDIX APPENDIX

Exchange

Distribution

of the Bank's

Stock

508
509

X. XI. XII. XIII.

Rules and Regulations

Prices of Branch Yearly Yearly Average Average Notes

for the Offices at Philadelphia

511
512

Circulation
Deposits

APPENDIX

512

BlBLIOGBAPHY
INDEX

513
527

MAP

"

The
"

Location of the Branches

and Agencies

facing

376

CHARTS

CHART

I.

Operations
1819

of the Bank,

February,

1817, to January, 31

CHART

II.

Movements
Business

culation, of Discounts, Other Loans, and Cirin the Face of an Attempt to Curtail 149

CHART

III.

Expansion

Southwestern at the Western and to Contract, Offices in the Face of an Attempt

September,

1831-32
of 1833-34

151 323
Items

CHART
CHART

IV. V.

Contraction
Movement the Bank

of Principal

When

Closing up
361

CHART

VI.

Issues and

Deposits

------

427

CHAPTER
ESTABLISHMENT
OF

I
THE BANK

of the United States owed its origin to the disasters of the war of 1812, its existence to the founded by Jefferson and party of strict construction Madison. A brief survey of the state of the finances resulting
THE

Second

Bank

from

that

war

will reveal the necessity which

to surrender
"

impelled

the Republicans

principles and create a In 1811 the charter of the First Bank of the United States expired, and Congress, imbued with constitutional by bitter hostility to Secretary scruples and actuated Gallatin, refused to renew of financial confusion and
it.

their cherished " bank. monster

constitutional

This

act

was

the beginning

ing financial shipwreck, and foreseethe result Gallatin fled from the treasury as soon as he do so. Thereupon William Jones, secrecould honorably tary
of the navy, became acting secretary of the treasury, l helpless inefficiency was and in his person placed in control finances. Surrendering the post in of the government

February,

1814, he

was

succeeded
the

by the equally inefficient

George
The

W.

Campbell.2
was

administration of the finances In addition, Congress, could not possibly have been worse. after refusing to re-charter the bank, failed to make proper being convinced that hostilities revenue, provision for a war result
that

could

be supported from the proceeds of the peace revenue by loans, in spite of the fact that in 1811 the supplemented
i"

During

the

disconsolate

interval,

from

May,

1813, till February, vital organ.""

1814, Mr.

Jones
The

imperfectly
War

Second
2

the routine duties of that performed with Great Britain, Vol. II, p. 252.

INGEBSOLL,

Ibid., p. 253.

THE

SECOND

BANE

OP

THE

UNITED

STATES

dishad been not more than adequate to charge ordinary revenue It was the ordinary expenses.1 that loans presumed though Congress failed to would be easily negotiated, even
take

any measures though the moneyed

to

A the government. The tariffdues dwindled

provide for their repayment,2 and men of the East refused assistance to ment. brief experience brought disillusionto almost nothing, while the
soon

of project borrowing
vain.

the necessary funds

proved

utterly

The first of raising loans were adopted. to increase the funded debt by the sale of bonds ; the was Congress authorized bond second, to issue treasury notes. methods
issues during the years 1812-14
to the amount

Two

of $61,000,000,3

but the administration procured only $45,172,581,* and of this only the sum of $7,860,000was negotiated at par, the
taken at rates varying from $88 to $80 in cash for $100 in stock.5 The direct loss to the government was over $6,000,000,nd there was an even more serious indirect a
rest being

loss resulting from the circumstance that much of the paper for its stock was depreciated money paid to the government from 20 to 30 per cent.6 An excellent example of the

stock loans were negotiated is presented by Secretary the failure of the $25,000,000 loan of 1814. Campbell, despite the most strenuous exertions, was able to
manner

in which

SEC. DALLAS,

Dec., 1815, Reports

on

the Finances,

Vol. II, p. 5.
on

2INGERSOLL,

Vol. II, p. 251; DALLAS,

Dec., 1815, Reports

the Finances,

Vol.

II, p. 6.
3

DALLAS, The

ibid., pp. 7-12. of Ways and

Ibid., p. 15.

ibid., p. 17.
"

"

Committee
during
the

Means

declared

in 1830 that

The

government

short period of the war, eighty millions of dollars, at an to eighty discount of fifteen per cent., giving certificates of stock, amounting average for sixty-eight millions of dollars, in such bank millions of dollars, in exchange But the sum as paper could be obtained of sixty-eight millions of dollars, in a depreciated than half as was currency, not more received by the government,

borrowed,

for it, has been and will be valuable as that in which the stock given in exchange Here, then, is another loss of thirty-four millions, with making, redeemed. lost by the discount, forty-six millions of dollars."" H. R. 358, 21st Cong., the sum 1st Sess., p. 12.
....

ESTABLISHMENT

OP

THE

BANK

secure

In July, in answer to only $10,400,000 of this sum. he received offers for $2,500,000, a request for $6,000,000, and was compelled to accept $80 in cash for $100 in stock. that the loan of $9,000,000, negotiated in the previous spring at $88 on the $100, had the $100, since also to be granted at the rate of $80 on had agreed to allow the takers of that sum Campbell the immediate

The

consequence

was

given on any part of the loan. Even then many The result had subscribers failed to fulfil their contracts.1 Webster's opinion that the loan for the year would justified
best terms
fail unless a bank could loans on any terms" were
"

be established.2 It seemed "that " totally at an end,"3 and that the entirely exploded, had been prepared
....

system

had

at

length

notwithstanding

the Government

to accept terms

" of the most extravagant and ruinous character. The reliance upon treasury notes had proved equally futile. Beginning with June 30, 1812, and ending with December

26, 1814, Congress

in in

authorized
at

treasury
one

notes,

5f

the emission of $35,500,000 per cent, interest, reimbursable

year from the date of issue, receivable in payment of all duties, taxes, and debts due to the United States, not a legal tender, and to be issued only at par.5 Of this amount issued, and but a small part of this only $17,227,280 were
sum was

in circulation at any

one

time,

since the
were was

notes,

though

legally not redeemable for one year, because the government redeemable at once
receive them
"

indirectly bound
to

in all payments

of debts
on

and

taxes

due

to it.

SEC. CAMPBELL, Webster SAMUEL

THOMAS "The

Sept. 23, 1814, Reports March

the Finances,

Vol. I, p. 528. Vol. I, p. 243.

p. 592.

2 3
*

to E. Webster,

28, 1814, Correspondence,

INGHAM,

Nov.

17, 1814, A.

of C., 13th Cong.,

Vol. Ill,

OAKLEY,

Oct. 21, 1814, ibid., p. 421.

was

says:

plan which expenses of the war extraordinary inoperative."" Reports on the Finances, the
5

of finance,

speaking of April, 1814, the theory of defraying upon predicated loans, had by successive become already

Dallas,

Vol. II, pp. 11, 12.

30, 1812, $5,000,000;ibid., p. 801, Feb. 25, 4, 1814, $10,000,000; ibid., p. 161, Dec. 26,

Statutes at Large, Vol. II, p. 766, June 1813, $10,000,000;ibid., Vol. Ill, p. 100, March

1814, $10,500,000.

THE

SECOND

BANK

OF

THE

UNITED

STATES

Moreover,
was

ones

the period of issue was so brief that the treasury kept busy redeeming old issues almost as rapidly as new Secretary Campbell calculated that it was were made.1
over

not possible to keep in circulation

ury $6,000,000of treas-

notes.2

convinced that some fixed provision for the payment of loans must be made, and had begun "to lay the foundation of a system of internal
revenue."

By

May,

1813, Congress

had become

Later

it largely increased the taxes

now

then

laid.3

But

events

had
was

the treasury

progressed desperate. The

so

far that the condition of banks of the country, with

the exception of those in New England, suspended specie in August and September, 1814,4 and the result payments immediate and upon the finances of the United States was

destructive.

there existed a national bank, suspension, to though injuriousthe country, might have been beneficial to the government;5 but without the bank, since the state

Had

banks would neither pay specie nor accept each other's notes left without any common at par, the country was medium of forced to receive was exchange, and hence the government
its in state-bank paper and treasury notes of all degrees of depreciation.6 Notes at par in one section of the
revenues
i

Amount

of treasury

$4,907,300;Jan. Vol. II, p. 50.

2 3
*

notes outstanding D 1, 1815, $10,646,480."ALLAS,

Jan.
Dec.

1, 1813, $2,835,500; Jan. 1, 1814, 1815, Reports

on

the Finances,

CAMPBELL,
DALLAS, The

Dec., 1814, ibid., Vol. I, p. 529.

Dec., 1815, ibid., Vol. II, pp. 8, 12.

suspended

The banks of the District capture of Washington precipitated suspension. sylvania, Pennfirst, and were followed in rapid succession by those of Maryland, England New York, New Jersey, Virginia, Ohio, and Kentucky. The New sixteen
as a or

did not suspend, though some the suspension the nation used of directed." NILES, Vol. VII, Appendix, banks
5
"

pretext p. 175.

banks in that part eighteen country to pay or not, as circumstances

bank been ADAMS, in existence, the History of the

Suspension mattered little,and have failure might been an advantage United States, Vol. VIII, p. 214.
6

had

the

national

to the government.""

York, 10 per 20 per cent, discount; New Sept., 1814, at Boston, Baltimore paper, ADAMS, Ill, p. 363. Jan. 19, 1815, New York paper, Vol. Gallatin's Writings. cent." 22 per cent. ; Baltimore, 25 per cent. ; Feb. 1, at 19-20 per cent, discount; Philadelphia,
Boston,

New

York

paper,

20-24 per

cent, discount

; Philadelphia,

24 per

cent. ; Balti-

ESTABLISHMENT

OF

THE

BANK

Union

were

at

heavy

discount

" not only from time varied from state to state, and in the same state from place to found itself that the government place."1 The result was

in another, and the rate to time, but at the same time

burdened

mass rent of depreciated paper curwith an enormous charge vicinity of its issue. To disonly in the immediate it must offer specie or New England a debt in New England notes, since nothing else was current there ; while

in New

would accept anything of less value In England York notes. than specie, New notes, or New Pennsylvania, again, New York notes would not be received York nor at par, and in the rest of the country neither New
no one

York

Pennsylvania
not

notes

authorized in such cases,

one

Since Congress had acceptable. count the treasury to make any allowance for diswere

the government
state ;2
nor

of

state in another

could not employ treasury would

issues
notes

be suffice to discharge the debt, for by the law they must depreciated in the open market, issued at par, and yet were Hence no one often to a greater extent than bank notes.3
would
more,

receive

them

unless forced

to do

so.*

Meanwhile,

States 6 per cents, 40 per cent. ; treasury notes, from 24 to 25 30 per cent. ; United 20 per cent, p. 176. July, 1815, specie premium, cent." NILES, Vol. VII, Appendix, in Baltimore; 14 per York." ADAMS, 11 per cent, in Philadelphia; cent, in New GallatMs Writings, Vol. Ill, p. 363.
per
1

ADAMS,
"

ibid., p. 331.
....

From

differences

the suspension of specie payments and from various other causes in the rate of exchange between arose the several states ; and the embarrassments increased, since Congress had not the treasury were more more of and
....

on the any allowance account wherever sanctioned of the rate of exchange local currency, it failed also in making failed in procuring treasury a a stipulated Vol. II, p. 25. Eppes Dec., 1815, Reports on the Finances, DALLAS, payment."" said :
"

The

notes

Baltimore,

and Philadelphia will not be received in Boston ; the notes of for payments District of Columbia, in Philadelphia."" or of the will not answer A. C., 13th Cong., Vol. Ill, p. 378, Report, Oct. 10, 1814. of
of New

York

3 were

Note

2, supra

; also

NILES,

universally preferred Vol. II, p. 25. the Finances,

*"
or

Vol. VIII, pp. 422, 423. during that period."" DALLAS,

"

Payments
Dec.,

in bank

paper
on

1815, Reports

Treasury

notes, which

none

but

seemed

quartermasters, commissaries, DALLAS, to accept."" willing

tress, necessitous creditors, or contractors, in disagents, acting, as it were and navy officially, A. of C., 13th Cong., Vol. Ill, p. 652 Nov. 27,

1814.

6 large

THE

SECOND

BANK

OP

THE

UNITED

STATES

sums

western not

deposit for the government in southern or banks were almost utterly useless, because they could
on

be transferred to the places where they were payable ; since the taxes were and the future promised no relief, paid, in specie, but in treasury notes, which, " almost as soon not
issued, reached the hands of the collectors, in payment of debts, duties, and taxes ; thus disappointing and defeating the only remaining expectations of productive
as

they

were

revenue."1

The

effect upon

the finances

was

literallyannihilating.

Such being
threatened

the situation, the machinery to come to a disastrous stop.

was

of government In November,
to the

1814, Secretary Dallas

holders of government that the the national treasury could no longer pay the interest on debt held in that section, having neither specie nor New bank notes with which England to pay.3 At the same
the administration failed to redeem treasury notes York ;3 it actually paid at Boston, Philadelphia, and New some not receivable of its soldiers in bank notes which were
moment

to announce compelled securities in Massachusetts

in discharge of taxes ;4 it could not obtain funds

"

to defray

the current ordinary expenses of the different departments." The State Department was unable to discharge its stationery bill; " the treasury was obliged to borrow pitiful sums, which in tolerable credit to ask for;" it would disgrace a merchant

pay a bill for $3,500 ; "the for paltry amounts paymaster was unable to meet demands for $30 ;" 5 the deficit for the coming year would not even
the War

Department

could

not

"

probably reach
1 2 3

$40,000,000.' Meanwhile,
p. 652.

the government
Vol. VII, p. 270.
Vol. Ill, pp.

DALLAS, Dallas

A.

of C., 13th Cong., Vol. Ill,

to commissioner

of loans at Boston,

Nov.

9, NILES,

Dallas to Eppes, Dec. 2, 1814, Schedule 767, 768. The amount was $1,902,680.80.
*

A, A.

of

C., 13th Cong.,

Dallas HANSON,

to Eppes,

Nov.

23, 1814, ibid., p. 717. Nov.

28, 1814, ibid., pp. 636, 657.

of Maryland,
to E. Webster,

"Webster

Jan. 22, 1815, Correspondence,

Vol. I, p. 250.

ESTABLISHMENT
"was

OF

THE

BANK

subsisting upon the drainings of unchartered banks in l the District," and on the proceeds of temporary loans procured from various state banks, as a matter of grace on their
the events which compelled the Republicans Yet long before their culmination to establish a bank. attempts had been made to pass a bank bill.3 The history of the various efforts naturally falls into three periods : (1)the
were

part.2 These

attempt while the (2)during the war, 1. During

the

war

was

in progress, before suspension ;

;

after suspension
war
"

(3)after the
"

war.

before suspension.

On January

4,

1814, Mr. Lefferts, of New York, presented the petition of " hundred one and fifty citizens of that state praying for Bank, with a capital of the incorporation of a National

$30,000,000." This petition

referred in the House to the Committee was of Ways and Means, whose chairman John W. Eppes, son-in-law of Thomas Jefferson, and the leader in Congress of the Virginia party, which adhered
was

tenaciously to the

doctrine

firmly in the

of strict construction adequacy of treasury notes

and

lieved be-

to meet

the existing conditions.5 The committee shared these views, and on the 10th Eppes reported against the proposition it was because unconstitutional to "create corporations limits of the States, without the within the territorial
consent
6 of the States." real leader of the bank

that the constitutional objection the bank in the District of Columbia,

i 3 new

proved himself the party in Congress, now suggested might be obviated by establishing
who

Calhoun,

and

moved

HANSON,

loc. cit.
on

DALLAS,

Dec., 1815, Reports

in May,
1813, had

on

the Finances,

Vol. II, p. 19.

charter Madison, of a Vol.

Gallatin,
"

leaving: the treasury

History

drawn

up

the

bank.

ADAMS,

of

the

Administrations

of Jefferson and
was

VII, pp. 45, 46.

*

A.

of C., 13th Cong., Vol. I, p. 844. The

Philadelphia Sept. 11, 1813, Works,

petition
was

dated

Dec.

18, 1813." Ibid.,

p. 874. A similar petition from

5

presented

Jan. 20, 1814." Ibid., p. 1058.

Jefferson to Eppes,

Vol. VI, p. 199.

64.

of C., 13th Cong., Vol. I, p. 873.

THE

SECOND

BANK

OP

THE

UNITED

STATES

the reference of this suggestion to the consideration of the His motion Committee and Means.1 of Ways prevailed. As Eppes could not be persuaded to support any bank bill,''' John Taylor, of New York, reported from the committee a

bill to erect
years and
a

bank

in the District, with

charter for twenty

to subthe government capital of $30,000,000, scribe one-fifth of the stock and appoint one-fifth of the

directors.

There

were

to be

no

branches.3

the proposed bank no strict constructionists, but also incapable

rendered

This last provision longer obnoxious to the

of providing

national currency, and consequently unsatisfactory to all who " desired to meet the existing emergency. Everyone," said
Fisk, of New

York,

"
.

...

must

perceive that

billcontaining

less, Neverthesuch provisions would not, could not, pass." his motion to refer the matter to a select committee "with instructions to report a bill to establish a National Bank, with provisions for branches," * was decidedly negatived.5 ended the firstattempt to establish a bank. On the 2d of April the came subject up again, Felix Grundy, of Tennessee, the recognized spokesman of the administration in the House, submitting a resolution for the appointment of
a a
"

Thus

committee

to inquire into the expediency

6

of establishing

National put

Bank."
a new

The
on

face
The

tration putative support of the administhe matter, and the House rallied
were

to the

project.

strict constructionists

completely

routed, a motion but thirty-two votes and Grundy 's resolution being carried.7 On the committee were appointed Grundy, Calhoun, William Lowndes,
i

to confine the bank

to the District receiving

and

six others.8

Only

one

of the number
2

was

A.

of C., 13th Cong., Vol. I, p. 1235, Feb. 4, 1814.

4/Md.,
p. 1860.
^

Ibid., Vol. II, p. 1861.

Ibid., p. 1579.

ibid., p. 1862.

Only 36 ayes.

*Ibid., p. 1942. 8/6td.

ibid., p. 1956.

Vote, 76 to 69. Carolina;

Thomas William

Felix South Artemas

Grundy, Carolina;
Ward,
;

Tennessee; Samuel

Lowndes, New York;

ton, North

South John C. Calhoun, Pennsylvania; Q. Ingham,

J. Oakley, William

Massachusetts;

Jonathan

Fisk, New

York;

Gas-

Carolina

John

G. Jackson,

Virginia.

ESTABLISHMENT opposed to the session

bank, and that

OP

THE

BANK

constitutional grounds.1 But too nearly ended to permit the necessary discussion, was the committee and four days after its appointment
a
on on

was
"

discharged

the motion

indefinitely postponed,"
a

The bill was of its chairman.2 and thus ended the second attempt

to establish

bank.
the
war
"

2.
recess

During

after suspension.

"

During

the

the capture of Washington pension and the susbrought the Union to the verge of specie payments in extra session September met of dissolution. Congress 19, 1814, and immediately took up the discussion of a bank

of Congress

bill,

absolutely necessary. considered Speaker Cheves, though allowing Eppes to retain the chairmanship and Means, appointed of the Committee of Ways all of his associates from the ranks of the bank party,3 and petition from New York city praying for the establishment at once of a bank was referred to the committee. The overwhelming distress of the preceding months had
a

bank

being

now

at last shaken

loose Campbell's
He
was

incompetent

treasury department.

J. succeeded President Dallas, of Philadelphia,* a capable lawyer, whom Madison had wished to appoint earlier in the year, but had sylvania been restrained from so doing by the hostility of the Pennsenators.

grip upon by Alexander

the

The

away all opposition.5 by everyone to mean

needs of the hour, however, swept Dallas's appointment was understood Eppes, who a still national bank.

desired to pour out untold millions of almost worthless treas1

Jackson,
question

He was of Virginia. perfectly willing to have a bank INGEKSOLL, Vol. II, p. 250. could be avoided.
"

if the constitutional

2 A.

of C., 13th Cong., Vol. Ill,

Vol.
; Jonathan

p. 2002, April 8.

3INGEBSOLL,

Maryland
ton, North A.

Fisk, New
; Samuel

II, p. 253. Members: York ; Thomas

D. Ingham,
p. 303, Sept.

Eppes,

Virginia;
New
; William

Stevenson York Creighton,

Archer, Gas"

J. Oakley,

; William

Carolina

Pennsylvania
21.
s

Ohio.

of C., 13th Cong., Vol. Ill,

*Oct. 5, 1814.

INGEBSOLL,

Vol. II, p. 253.

10

THE

SECOND

BANK

OP

THE

UNITED

STATES

ury notes,1 addressed a letter to Dallas, asking him to express his opinion to the Committee on the and Means of Ways claring of the finances.2 Dallas immediately replied, de-

subject

bluntly

that

treasury

notes

painting in the most emergency, of the government, and ending by asserting that a national " bank was the only efficientremedy for the disordered condition
8

the not meet would lively colors the distress

of our circulating medium." This reply was decisive. On

Committee
that it
was

of Ways
"

and Means

the 24th of October the reported a resolution declaring

expedient to establish a National Bank, with * The House agreed to the branches in the several States." days and without debate.5 Four resolution immediately later it refused to strike out the words the several States," by the decisive vote
with branches in of 138 to 14, and bill.6 the
out
"

leave to bring in a gave the committee On the 7th of November Jonathan Fisk reported as 7 bill drawn up on lines marked measure a committee's

by

Secretary

Dallas.

The

capital

was

to be

$50,000,000,

$6,000,000of the

in specie, the rest in government The United States was to subscribe stock issued during the war. $20,000,000. The bank could not sell government
amount

stock,
as soon

was as

to be bound

to loan the United States

$30,000,000

United

it went States was

into operation, and the president of the to suspend specie payments empowered

when such suspension seemed necessary.8 This plan did not contemplate a bank which would restore
issues, saying that " Treasury in favor of new than the one heretofore extended notes, combined with a system of taxation, more to be a it is believed, in the present credit, be found state of bank adopted, will C., 13th Cong., Vol. Ill, p. 378. better resource e., [i. than loans]."" A. much
i

On Oct. 10 Eppes

had

reported

of

a *
e

Ibid., p. 401. Ibid., p. 457.

Ibid., pp. 401-9, Oct. 17, 1814.

5

Report

brought
"

in

on

the 21st.
was

Ibid., p. 458.

II, p. 255.
i

State sovereignty Ibid., pp. 498, 499, Oct. 28. Vote to bring in the bill, 93 to 54.
A.

laid low.""

INGERSOLL,

Vol.

of C., 13th Cong., Vol. Ill, pp. 534, 535.

SDallas's outline, ibid., pp. 404-6, Oct. 17, 1814.

ESTABLISHMENT

OF

THE

BANK

11

one that would itselfpay specie.1 specie payments, nor even What the administration wished was a machine which should assist in restoring the credit of the government, and make it Hence the possible to raise funds to carry on the war.2

stock to that provision confining subscriptions in government issued during the war the clause allowing sus;8 hence pension, loan the United States that binding the bank to

$30,000,000, and the

stock.

In

section prohibiting it from selling government word, nothing spoke in this plan but

the necessities of the government, and these necessities a specie-paying bank deserving the name was of a bank
"
"

in accordance with tion indeed, any instituan

impossibility.

It is not

was savscheme agely surprising that this monstrous Opposition came from three quarters : from attacked. a

alists, meager band ; from the Federable, noisy, persistent, and bitterly aggrieved by the stock ;* and provision to limit stock subscriptions to war
the strict constructionists,

from

of the Republican party who were acter. willing to charter a bank, but wished one of a different charThis party was respectable in size, most ably led by Calhoun and Lowndes, and supported by Speaker Cheves.
those members

Calhoun
to champion
1

had

at first been

its bill. He

selected by the administration had thereupon devoted much time

Madison's
thing
A.

556, 557. Webster

such

head, Messages Vol. I, pp. Papers, and veto, Jan. 30, 1815, second " It will be utterly impossible for the bank to pay its notes. No : said first note is expected it. The it issues will be dishonored its on of

return.""
2
"

of

C., 13th Cong., Vol. Ill, p. 1016, Jan. 2, 1815.

are
a

The

objects of the Government

foundation;
to provide and to remove

to place

and
of
a

durable
war

revenue

"Dallas
3

to Eppes,

from expenditure, Oct. 17, 1814, A. of C., 13th Cong.,

commensurate the Treasury an

a solid upon the demands with immediate pressure." Vol. Ill, p. 403.

the

public

credit

Intended

held very

also to reward little of this stock.

says:

Republicans

and

punish

Federalists,

since the latter

*Ingersoll
not of the bank,

scheme ultimately II, p. 256. " The

the whole the capital."" Vol. Secretary of the Treasury was lated calcuproject brought in by the new for the benefit of the holders of the stock, created ster Webonly since the war." to E. Webster, Nov. 24, 1814, Correspondence, Vol. I, p. 247.
"

but

1814, the 13th and 14th of November, The prevailing of the stocks : controversy, fell a victim, was what stocks should compose

"On

came

on

the battle

"

to which

12

THE

SECOND

BANK

OF

THE

UNITED

STATES

and study to the

but, project, to

president and secretary, had totally unsuited to the crisis and extremely mischievous.1 On the 16th of November, therefore, he introduced an opposition bill, which opponents
to the
was

the anger and dismay of the soon that it was concluded

designed

to meet

Dallas plan.

There

was

the wishes of all to be no suspension

no of specie payments; forced loan. The capital was in specie and the remainder new

government partnership; no to be $50,000,000, $6,000,000

in specie or treasury notes, a issue of which should be made for the purpose of supplying bank stock.2 In this manner the govpurchasers of ernment would provide itself with a loan of $44,000,000,

the advocates of treasury notes would be appeased, and the Federalist attack based on war-loan subscriptions avoided. Calhoun, and " generally voted for The Federalists joined
in preference to the firstplan." 3 The adminthe amendment istration Republicans, led by Ingham, Fisk, and Forsyth, by the influence of the administration, backed "supported

by

the

money
*

Means,"

and power, and the Committee of Ways for the treasury plan, especially for the contended

of specie payments.5 provision authorizing a suspension But the South Carolinians swept all before them, and on the day after its introduction Calhoun's plan was substituted for
that of Dallas by No sooner was
"a
6

about sixty votes." found that Calhoun's this done than it was of majority

for his measure. by no means unanimous supporters were "The opposition, the adherents of the administration, and " those who had constitutional scruples combined against it,7
i

CALHOUN,
A.

Works,

Vol. Ill, p. 126;

pp.

or

C. D., Vol. XIV,

Part I, pp. 481, 482.

^ 3 *
5

of C., 13th Cong., Vol. Ill,

to E. Webster, Works,

587, 588, 594.

Webster

Nov. 21, 1814, Correspondence,

Vol. I, p. 247.
Part I, p. 482.

CALHOUN,
See
"

Vol. Ill, p. 127; C. D., Vol. XIV, Nov.

17, A.

declares
seems
" a

speech, for suspension that provision frantic enthusiasm." species of

Ingham's

of C., 13th Cong., Vol. Ill, p. 601. Here ought. to be made, and that not to make Vol. H, p. 256. Also INGEESOLL,

he
it

A.

of C., 13th Cong., Vol. Ill,

Works,

p. 613.

CALHOUN,

Vol. Ill, p. 127; C. D., Vol. XIV,

Part

I, p. 482.

ESTABLISHMENT while Lowndes, and moved

"

or

THE

BANK

13

his ablest lieutenant, desired a smaller capital, to $35,000,000.* Calhoun to reduce the sum

much attempt failed, zeal," and Lowndes's followed motion, amendment motion amendment, features forcing back into the bill many of the

opposed though

with

objectionable

of the treasury plan, while leaving the nature of the capital So numerous the changes that when were stock untouched.2 from the committee the bill was of reported to the House the whole, it
....

them

or

interleaved and interlined with amendments that the clerk himself could scarcely arrange 3 the Speaker state them to the House."
was so a

"

week of arduous and acrimonious declared that in his opinion there was no
final passage of the bill"
as

After

debate, Lowndes
"

it stood, and The House to a select committee. agreed with him, * " The Federalists without a division." and the bill was referred had consistently supported Lowndes's attack on Cal-

prospect of the its refermoved ence

houn's

plan, Dallas. They

as just

they
a

had voted

with

Calhoun
a

against
capital

advocated

specie-paying bank with

of

$20,000,000."
The

select committee chairman, consisted of Lowndes, Gaston, and Oakley,6 and Calhoun, Fisk, Forsyth, Ingham, all favorable to a bank and representing the different shades Lowndes of favorable sentiment. appealed to Dallas for an the advisability of having a capital composed opinion on

of treasury notes.
returned
an answer

This

asserting that

his

Dallas's opportunity, and he which annihilated Calhoun's position, plan could not succeed, and that to
was

attempt it would involve the loss of the necessary loan for 1815 and the failure to restore the nation's credit.7 The disheartening. Lowndes result was reported the bill back
to the House
i 3

precisely
*

as

it stood when
19.

it
5

was
2

referred to his
ibid., p. 622. ibid., pp. 642, 043.

A.

of C., 13th Cong., Vol. Ill, pp. 621, 622, Nov.

Ibid., pp.
7

Ibid.

643, 644.

WEBSTER,

"

Ibid., p. 644.

Dallas to Lowndes,

Nov.

27, 1814., ibid., pp. 652-4.

14

THE

SECOND

BANK

OF

THE

UNITED
"

STATES
been

committee,

subject."
was

cover able to disof uniting the conflicting opinions on the any means 1 His motion to reduce the capital to $30,000,000

declaring that they had

not

ing then adopted,2 the Federalists supporting it. But, havfarther. When the go no gone so far, they would speaker put the motion to read the bill for the third time, it
was

lost by

vote

a attempt to secure having The House

of 104 bank.

to 49 ; and

so

ended

the third

took up the task. On the 2d of December a bill was reported there substantially incorporating the provisions desired by Dallas.* The Federalist senators offered a feeble opposition, in the face of

failed, the

Senate

ments amendrelentlessly forward, no being permitted, and in one week's time it passed the Senate 5 and went to the House. Here on the 23d and was continued the debate began
which the bill was

pushed

lines as before. Slight amendments were along the same that the Republicans, fearing to risk made, but it seemed the bill,had decided to waive their individual preferences.6
The Federalists, under the lead of Webster North Carolina, exhausted all parliamentary the bill, but
were

and
means

Gaston, of to defeat

of December, " bank day of the session," 7 says Ingersoll, was over the fight being waged the nature of the government this stock to be subscribed to the bank's capital. When determined matter was against the Federalists by a vote of
unsuccessful. the stormiest The

29th

73 to 72," the passage of the bill seemed inevitable, and the alarmed Federalists made a bid for the support of the Calhoun wing of the Republican party by declaring themselves
1

A.

of C., 13th Cong., Vol. Ill,

3

p. 651, Nov.

28, 1814.
*

2
5

Ibid., p. 655.
Ibid., p. 126.
"

ibid., p. 686.
14.

Ibid., p. 119.

Vote

yeas,

17 ; nays,

"

The

reported
7

details of the bill being nearly the same as those of the bill originally in this House, were Ibid., p. 988. be changed." to not proposed
"

Ibid., Vol. II, p. 259.

"

Ibid., Vol. Ill, p. 998.

ESTABLISHMENT
in favor of
a

OP

THE

BANK Webster

15

bank, though

not of this bank.1

posed pro-

the Federalist idea of a plan which, he asserted, was bank, saying that for an institution of this nature he should " " his " support." a The at any time be willing to give

put to a vote, Calhoun against it,and the result voting for the bill, Cheves, the speaker, had not being 81 ayes to 80 noes. declared his conviction " that the bill provoted. He arose, posed he might almost say, a dangerous, unexampled, a and,
motion Lowndes
on

the

Dallas

measure

was

then

desperate

bill was
enact
"

his vote in the negative. The lost.8 For the fourth time the House had failed to
resort," and
cast

Dallas was so charter. his determination to withdraw

a

incensed
from

that he expressed

the treasury."

But
sooner
was

the bank
was

Republicans

the vote and, on 6 to 54.

made
votes

107

No refused to be thwarted. than a motion to reconsider announced 1815, carried by the 3d of January, The bill was to a then recommitted

select committee,8 which reported on the 6th of January. The Calhoun-Lowndes-Federalist measure compromise peared. reapThe capital was to be $30,000,000, composed of

$5,000,000 in

stock, $15,000,specie, $10,000,000in war There 000 in treasury notes. to be no was compulsory loan; no no suspension; government partnership, though
to vote " themselves and Stockton pledged " a and believed that majority of their political friends 1031, Jan. 3.
1

Oakley

"

for
"

modified
do
so.
"

bank

bill,

would

Ibid., p.

Ibid., p. 1014, Jan. 2, 1815.

to subscribe $5,000,000ore m at some loan to government. (4) Bank or forfeit its charter. (5) A certain paid
any

(1)Capital, $25,000,000, with privilege to government future time. (2) No suspension. (3) No obligatory
to
commence

in specie
6 per
"

on

demand.

operations within a specified time on cent, penalty to be exacted all notes not (6) Capital to consist of $5,000,000 ; $20,000,000 in specie
per

cent, stock, or treasury notes. Ibid., p. 1012, or first speech, stock.

A.

(7) Bank
Works,

to be

permitted

to sell government

Vol. I.

3 *

of C., 13th Cong., Vol. HI,

pp.

1025, 1026, Jan. 2.

5

DALLAS,

Life of Dallas,

pp. 138, 139.

A.

of C., 13th Cong., Vol. Ill,

Wm. Findlay,
; John

p. 1030.

Stockton, Alfred

*Ibid., p. 1031; Samuel McKee, New Jersey ; Timothy

Kentucky;
Yancey,

Pennsylvania; W. Taylor,
Ibid., p. New 1032.

ard RichYork
;

Pitkin, Connecticut

Cuthbert,
men."

Georgia;

Bartlett

North

Carolina."

All

bank

INGEESOLL,

Vol. II, p. 260.

16

THE

SECOND
to

BANK

OP

THE

UNITED

STATES

the right to allow the government to subscribe $5,000,000later.1 The committee's report was passed on the 7th of January by accepted, and the bill was
was

Congress

reserve

a vote of 128 to 38, most

Their
as a

having lacked only one vote of passing a measure utterly at variance with the present defeated a similar bill, one, after having overwhelmingly
the House,
now,

escape from lesson to them.3 Thus

narrow

of the Federalists supporting it. the Dallas Senate bill had served

by
The

more

overwhelming
at
once

vote, adopted

this

measure.

bill went

to the

The House, amendments.* of them, the Federalists declaring that the bill
was a

Senate, which attempted however, refused to agree to any

as

it stood

not

beyond which they could not and would compromise go.5 The Senate receded in every particular, and the
to the president, who kept it for ten days and then it to the Senate with his veto. In doing so he

bill went
returned

explicitly waived the constitutional question. The proposed bank, he asserted, would not fulfilthe purposes for which a bank
was

then

needed;
a

it would

not

enhance

the

credit, provide

circulating medium, anticipations of the public revenue For the sixth time everything was
....

"furnish during

public loans, or
"
'

the

war.

Republicans

which meeting to the president's wishes.7 This meeting conform would " " Calhoun to especially invited and his supporters were attend.

held

recommenced. to determine on a bank

The

They plan

did
and

between the adminiscompromise tration Calhoun's was still suggested, but it was
so.
pp.

A.

of C., 13th Cong., Vol. Ill,

1039, 1040.

ibid., p. 1044.
"

"We

Webster,
*

let Dallas's a bank or were obliged to make Jan. 22, 1815, Correspondence, Vol. I, p. 250. increased
to $35,000,000; shares

plan go."

Webster

to E.

Capital

allowed" 1815.
5 6 7

these

the most

important."

A.

to be of $400 instead of $100; suspension C., 13th Cong., Vol. Ill, p. 166, Jan. 13, of
p. 1081.

Stockton, of New
Messages

York, Jan. 18, 1815, ibid.,

Vol. I, pp. 555 f
.

and

Papers,

JOHNSON,

of Virginia, A. of C., 15th Cong., 2d Sess., Vol. IV, p. 1248.

ESTABLISHMENT

OP

THE

BANK

17

unsatisfactory to the South Carolinian and his adherents. " He thereupon were required further concessions, which refused," the administration Republicans asserting that they
the could carry the bill without his assistance.1 Against tor determined opposition of this littleknot of the party, SenaBarbour, on February 6, introduced the new measure

mostly along the lines of the original Dallas bill.2 in its passage by the Senate A few days' debate ended cussion substantially unaltered.3 Two days later it came up for disin the House, but the news of peace, promising an drawn end to the most urgent necessities of the government, gave On the motion of Lowndes the whole question pause. the bill was indefinitely postponed.* 3.

After the

war.

"

bank for the purpose of procuring loans. The prime necessity now to settle the currency, was which remained in the utmost disorder, and to resume specie Had it been possible to persuade the state banks payments.
a

the opposition between longer necessary to erect

close of the war Dallas and Calhoun,

The

put an end to for it was no

to take steps looking to resumption,

it is conceivable that the

administration's advocacy of a national bank would have But this was Dallas, therefore, again not possible. ceased.5 proposed that a national bank be established, and President Madison broke silence and in his annual message now gested sugsuch
i

an

institution.6
Vol. Ill, p. 127;
C. D., Vol. XIV,

CALHOUN,

Works,

Part I, p. 482.

*A.ofC., 13th Cong., Vol. Ill,

notes ; i $15,000,000n 6
per

p. 226.

$50,000,000 capital; $20,000,000in treasury

in specie ; $10,000,000 to be subscribed cent, stock ; $5,000,000 by the United States ; specie payments by Congress ; during and be suspended might for one to borrow to be empowered $30,000,000 was year government after the war
from

the bank

at 6 per

cent, interest.

The

bank

was

not to pay

specie

until the first

Monday
3

in April, 1816.
By
a

strict party

vote."

Ibid., p. 232, Feb. 11.

Ibid., p. 1168.
pp.

"'

Dallas

of Feb.
6
"

to the state banks, 20, 1815, ibid., p. 273.

March

13, 1815, DALLAS,

Dallas,

285-7.

Also letter

If the operation
of
a

of the State banks

medium of
Messages

cannot

produce

this result

e., [i. the

a

general

exchange],
and

the

Bank

will merit consideration.""

operation probable of Vol. I, p. 566, Dec. Papers,

lishment estabNational

5, 1815.

18

THE When

SECOND
Congress

BANK

OF

THE

UNITED
Clay

STATES Calhoun

met,

Speaker

appointed

to consider " so much chairman of a select committee of the President's message rency." as relates to an Uniform National Cur-

on

applied to Dallas for the treasury's views letter of December 24 the secrethe and tary subject, in a It was on outlined the plan of the future bank. cisely prethe
same

Calhoun

of the United States, with additions and modifications, and it left the Federalists no opportunity for offering an ingenuous and effectiveopposition.2 On the 8th of January, 1816, Calhoun brought in
as

lines

the old Bank

the bill,3 and His argument

on

the 26th of February

opened

the discussion.
was

was

to the effect that resumption

absolutely

necessary, and comparatively easy, yet impossible without a national bank, since the state banks found too great a profit in the unsettled condition of the currency ever to resume.
"

Those

ever

who believe that the present state of things would itself,"he asserted, " must believe what is impossible cure before they will ; banks must change their nature,
....

* aid in doing what it is not their interest to do." The Federalists and the irreconcilables among the strict ing constructionists fought the bill pertinaciously, Webster head-

The attack of the other party. and John Randolph the Federalists was concentrated on two points: the size of
one
J

Committee:
Hopkinson,

Calhoun;

N. Macon, Pickering,

North

Carolina;
B. Robertson,

James
A.

Pleasants, H.

Virginia;
St. George
1st Sess.,

Joseph Tucker,
p. 377.

Pennsylvania;

Thomas

Louisiana;

Virginia ; Timothy

Massachusetts."

of C., 14th Cong.,

for twenty-one

21. Principal

provisions:

(1) An
that

might capital, $35,000,000, with a proviso United States to subscribe one-fifth of the capital; fourths of funded debt, one-fourth of specie.

exclusive Congress

charter

years;

(2)

increase

it to $50,000,000 (3) ;
to

(4) capital

consist

three-

(2) (1) To be at Philadelphia and have branches; of bank: directors, with thirteen for each branch; twenty-five (3) president of the United States to appoint five of the twenty-five directors; (8) the resident stockholders, to be furnished being citizens, alone to vote for directors ; (10)frequent statements
II. Government
to the treasury.

III. Privileges

(3)government
IV. Bonus
3

and duties: (2) Notes receivable transfers to be made without charge Ibid., pp. 512 f. $1,500,000."
*

in all payments to government.

to government;

Ibid., p. 494.

Ibid., p. 1064.

ESTABLISHMENT

OF

THE

BANK

19

the capital1 and the connection The power of the bank bank.2 3 " almost irresistible."
assertion that it
"

of the government
was

with the

was

strous, also represented as monCalhoun answered with the desirable to have a capital large enough
"

to profit," yet small enough prevent a loss to the stockholders," and held that a capital of $35,000,000 met these conditions.* The connection government's

to prevent undue

was

considered

intito be mately essential because the bank was to keep the public associated with the finances, was

deposits

and The

to transfer the

and

to receive

public funds, dues the government

was

to pay pensions

from

the

held power of appointing directors was peculiarly fitting,because only so could an upright administration of the bank be assured.5 There was The state banks a variety of other

lectors. colto be

objections:
to adopt
was

found

some

defenders,6 but the abuses of these

were
an

so

gross

that their supporters were compelled The tone. constitutional question everyone there was

apologetic hardly touched,

seeming nothing

could waive it further to be said, while the rights of the

to

think that if Madison

states passed almost in silence. The Federalists struggled in vain.

1

On

the 28th of Feb-

They

wished

reduction

SERGEANT, to $20,000,000."
3

ibid., p. 1066.
p. 1111.

HOPKINSON,

ibid., p. 1099.

Ibid., p. 1101, and

RANDOLPH,

*Ibid., pp. 1066, 1067.

5 " The National Bank bank. simply as a commercial ought not to be regarded It will not operate upon the funds of the stockholders more upon alone, but much Its conduct, the funds of the nation. good or bad, will not affect the corporate ment. the credit and resources more credit and resources of the Governalone, but much In fine, it is not an institution created for the purposes of commerce and

for the purposes more profit alone, but much of national policy, as an auxiliary in Under the exercise of some of the highest powers of the Government. stances such circumThe be too cautiously the public interests cannot guarded, right to inspect the general accounts to detect the evils of a be employed may of the bank interior agency in the direction of its affairs will best ; but an mal-administration
....

serve

to prevent Dallas Dec. 24, 1815, ibid., p. 508. This quotato Calhoun, them."" tion is of interest as throwing light on the conception ment of the position of the governdirectors, which was disputed so much under Biddle. afterward
6

HOPKINSON,

ibid., p. 1101 ; FOESYTH,

ibid., p. 1143.

20

THE

SECOND

BANK

OP

THE

UNITED

STATES

decided not to reduce the capital;1 in March, ruary it was that the government should hold stock in the bank,2 and that the president and the Senate of the United States should appoint a number of the directors.3 On the other
hand, the power of Congress
to order
a

suspension

recalled,4as was also the power the president of the president of the United States to name bank,5 that allowing the increase of the capital to $50,payments
was

of specie permitting the

000,000,* and the right of subscription to the capital in treasury So much in the way of concession was notes.7 granted,
and properly granted, but in regard to those details of the bill which the Federalists were pleased to consider vital defects the Republicans iota. They would not yield an
to stand firm by the dissension which encouraged Webster was apparently in existed in the Federalist ranks. irreconcilable opposition, but many members of his party
were

from the middle and southern states, where the evils of the financial situation appealed even to the dullest, refused to follow him, and
keen and galling exchange and recriminations between these two wings debate in the House.8
a

of criminations closed the final

On
7 1.9
there and

the 14th of March the bill passed by a vote of 80 to debated It went to the Senate the next day and was
on

the 25th.

Jeremiah

Mason,

of New

Hampshire,

But the of New York, led the opposition. Senate, in those days a body of much speedier action than touching the the House, would not suffer any amendments Rufus King,
essentials of the bill,though
1 A.
2

slight and unimportant

Motion
to reduce" not

changes

of C., 14th Cong., 1st Sess., p. 1108.

Motion that
government

vote, 49 to 74.

March
3

Ibid., p. 1119. 1. Ibid., p. 1139.

should

hold

stock"

vote, 38 to 61.

Motion
"

against
very

power

to appoint"

vote

64 to 79.

March

5.

*Ibid., p. 1158.
5 1

By

large majority." March

"

March

7.
"

Ibid., p. 1152. Ibid., p. 1136.

Vote, 80 to 46. March

4.

6.

Ibid., p. 1109.
"

Feb. 29.

Ibid., pp. 1339-43.

Ibid., p. 1219.

ESTABLISHMENT

OP

THE

BANK

21

The Republicans feared that the measure made. would done.1 The Senate passed be lost if anything further was the bill on the 3d of April;2 the House, with littledebate,
were

concurred

in all the

president, who

amendments3 the signed it on than

was

it to the and forwarded Thus, after seven 10th.

attempts, after more the bank endeavor, resembling before.*

i/6td.,p.238.
*

the

which project

old Bank Madison had vetoed

of almost constant established, in its final form of the United States and that
years
a

two

littlemore

than

year

Bibb, of Georgia.
the
owes

2J6Jd.,p.281. in securing
me
as

Vote, 22 to 12.
"

ibid., p. 1344.

Calhoun

was

decisive
as

truth, that and I might

the bank
even

agent to much

to any

add

that, had

chartered."" See Appendix

Calhoun

in the Senate,

it not been 1834 ; BENTON,

I might say with the charter : in the country individual ; other for my efforts, it would not have been
Thirty
Years,

Vol. I, p. 414.

I for the charter.

CHAPTER
THE

II
OF WILLIAM

ADMINISTRATION

JONES

ON

the first Monday

the capital stock began for twenty days. No particular the Union and continued the stock was the shown,1 and when eagerness to secure it was found that over $3,000,000were returns were made Hereupon Stephen Girard, much to the stillunsubscribed. relief of the president and the secretary of the treasury, subscribed for the entire amount.2

of July, 1816, the subscriptions to at twenty different places throughout

Organization
expectation

immediately
bank

followed.

would be Accordingly, President administration hoped to make it so.3 directors from his own Madison named all the government party,4 and both Madison and Dallas strove for the election of that the
a

the general Republican, and the

was

It

This was politician as president of the bank. William Jones, recently secretary of the navy and secretary pro tempore of the treasury.5 The stockholders, less partisan ten Federalists and ten than the administration, named Republican

Republicans.6
1

Jones

was

then

elected president, and JonaDallas,

p. 459.
paper

Dallas NILES,

to Madison,

July 7, 1816, DALLAS,

a

Vol. XI,
same

to Madison, general

p. 16, quoting date, says : " The

Philadelphia bank

returns

was ($3,000,000)

taken

subscription by Mr. Girard in

of Aug. 27. Dallas writing is filled. The deficit of the

DALLAS,
3

of the brokers Dallas, p. 471.

and

speculators.

appointmen disa single line, to the great I congratulate this event." upon you
"

"There

is little doubt

friendly to the government.""

*

of the organization of the bank being Republican, Dallas to Madison, Aug. 27, 1816, ibid.

and

They

were

A. Buchanan,
198; Dallas

Wm. Jones, Stephen Girard, and Pierce Butler, of Philadelphia, Jas. Astor, of New York." NILES, Vol. X, p. of Baltimore, and John Jacob to Madison, July 7, 1816, DALLAS, Dallas, to Dallas, p. 459; Madison

July 18, 1816, ibid., p. 462.

5

Dallas

to Madison,
. .

July 23, 1816, ibid.,

,
.

p. 464; same

to

same,

Aug.

3, p. 466.

"

am very glad to learn had become favorable."" e

that his prospect of being at the head Madison to Dallas, Aug. 7, ibid., p. 468.

of the institution

NILES,

Vol. XI, p. 176.

ADMINISTRATION

OF

WILLIAM

JONES

23

than Smith, of Philadelphia, cashier.1 By the 7th of December, 1816, directors were appointed for offices at Boston, New York, Baltimore, Charleston, and New Orleans,2 and by March
sixteen cities had been selected addition to Philadelphia.3
as

sites for officesin

The

bank's immediate

At of specie payments. itselfcapable of compelling the state banks to 1816, Dallas had made to early as March,
proposals, which
were

the resumption first the government had believed

was secure resume.

task

to

As banks

these

to them4 but very advantageous The establishment of were nevertheless promptly declined. the bank and the passage of Webster's jointesolution of r 20th of the succeedApril 30, 1816, requiring that after the ing
to the United States should be all payments "or in treasury notes, or in made either in gold and silver, the notes of the Bank of the United States, or in notes of in specie,"5 gave the banks payable and paid on demand

February

government

sequently of making its will effective. Conon the 22d of July, Dallas issued a new circular proposing that the state banks, beginning with October, should to the extent of paying specie for all their notes of a resume
than $5.6 The banks again refused, smaller denomination declaring that they would not resume until July 1, 1817.7 Dallas despaired, writing to Madison that the success of the "not a littleto be state banks in postponing resumption was

further hope

Crawford, who succeeded Dallas in October, apprehended."8 made a final attempt, issuing a circular to the banks on
i
3

Ibid.

ibid.

pp.

238, 239.

Besides

Richmond, Savannah, those named above, Washington, N. H., Providence, Middletown, Ky., Cincinnati, Portsmouth, Pittsburg.
Dallas,
p. 285, March

Norfolk,

ington, Lex-

Conn., Chilli-

cothe, O., and

* 5 7

DALLAS,
A.

13, 1815.

of

C., 14th Cong., 1st Sess., Vol. I, pp.

1440, 1919.

NILES,

Vol. X, p. 376.

The Aug., 1816, ibid., p. 423, quoting National Intelligencer, stating the action The other banks York, Philadelphia, Baltimore. took New banks and of Secretary Dallas's Report, Dec. 3, 1816,F., Vol. Ill, p. 132. discouraging equally action."

of the

"

DALLAS,

Dallas,

p. 472, Sept. 6, 1816.

24

THE

SECOND

BANK

OF

THE

UNITED

STATES

the 20th of December, proposing by February they would resume

proposition was could not compel the concluded that the government by the 20th of February, and therefore banks to resume
remitted the undertaking to the bank.3 The situation was extremely critical for both the government Without the consent of the state banks and the bank.

if substantial inducements 20, 1817.1 "This advantageous " 2 declined without hesitation. ford Craw-

the government could not possibly collect its revenues after February 20,* because it could not evade the joint resolution ; effect in securing and yet that resolution would be of no The bank for its part was specie or specie-paying paper. to incur legally bound considerable risk, since it was necessitated, under penalty of forfeiting its charter, to go
into operation by the firstMonday in April, 18 17.5 Between this date and July 1 it was quite possible that the state

banks

would draw from it so much specie as to embarrass It was necesthe bank and thwart the policy of resumption. sary, to the state therefore, to make substantial concessions
to be carried out. plans were 1817, at the invitation of the Bank United States, the representatives of the associated

banks, if the government's On the 1st of February,

of the banks of Philadelphia, New York, Baltimore, and Richmond met in convention with its agents and discussed the subject. The result was day these representatives that on the same to their directorates to resume on the agreed to recommend
1

At

this time
see

circular
2

held state banks F., Vol. IV, p. 283.

over

in $11,000,000 public

deposits.

For

ford's Craw-

Crawford
the that

to the Senate,

by
meant
3

state the banks

banks,

to the proposiFeb. 25, 1823, ibid., p. 266. See answers tion ibid., pp. 974-80, passim. Crawford this refusal thought did not intend to resume. To Jones, Jan. 6, 1817, ibid., p. 496.
"

Crawford
"

to Jones, Jan. 16, 1817, ibid.

It is manifest that, without the State banks can be brought into an arrangement by which be received in payment can their paper of taxes, there will be no be paid." ford Crawthe 20th of February those dues can upon next in which medium to Jones, Jan. 24, 1817, ibid., p. 497; see also ibid., p. 767.
"

Section

22 of charter, Appendix

I.

ADMINISTRATION

OP

WILLIAM

JONES

25

20th of February in return for the following inducements on the part of the Bank of the United States : 1. Any of these banks indebted to the Bank of the United States might liquidate the indebtedness by checks on other
banks, parties to the agreement. 2. The Bank of the United States would be responsible to for the public deposits held by the state the government
banks, but the actual transfer of the funds, over $8,800,000, was not to be made until July 1, when the state banks should pay them with interest.

3. Other balances
were

had

against the state banks accumulating not to be called for until the Bank of the United States discounted for individuals ("other than those having

and Philadelphia, $2,000,000 each; in Baltimore, $1,500,000; in Virginia, $500,000. 4. The amount als of these discounts not taken by individu-

duties to

pay"),

in New

York

might be taken by the banks of the respective places. 5. The Bank of the United States and the state banks would mutually support each other in any emergency.1
was agreement gladly sanctioned by the secretary to furnish a was of the treasury, since its principal object to pay taxes. In so far as the state currency in which

The

banks

were

concerned, them
time

the articles
to reduce

were

also very satisfactory,

giving

funds whose immediate For the Bank of the

were

not

so
on

favorable.

in order to pay public payment might have ruined them.2 United States, however, the articles They bound it to meet government

funds stillheld by the state banks, and not to collect balances arising in the ordinary course of business until it had loaned $6,000,000 to individuals, not having
demands

duties to pay, or to the state banks. This stipulation forced it was in the bank to make large loans, whether justified
1

Appendix President

II. State

President

City Bank

Bank of New

Jan. 25, 1817, F." Vol. IV, p. 982; of Boston to Crawford, York to same, Feb. 19, 1817, ibid., p. 987.

26

THE

SECOND
or

BANK
at the

OF

THE

UNITED

STATES

doing

ing from the state banks, while giving to them the specie power to draw specie from it, since a large amount of its notes would be put in circulation in discounting $6,000,000.
The article guaranteeing mutual protection would have precisely the same effect; for, since the Bank of the United States was strong and the state banks weak, the clause simply meant that the national bank should support them. It is obvious, in short, that the entire agreement might prove extremely embarrassing to the bank, no matter how pleasing
it
was

so

not, and

same

time estopped it from

secur-

to the treasury and state banks.

The
"

bank, however,

had secured what

resume one

the treasury could not an agreement to February 20, and this was its on specie payments notable service to the country in its firstyears. The

resumption of the banks in the large cities,and the pressure of the treasury and the Bank of the United States, forced as well ; and thus resumpthe banks of the interior to resume tion
was

general.
most

that of pressing question after resumption was deposits. The arrangement the transfer of the government of the 1st of February had fixed the 1st of July as the date which the transfer should take place from the banks along felt that in the case the Atlantic coast, but it was of the leniency was interior banks more necessary, if numerous
on

The

failures were

not to result.1 The bank therefore proposed to the state institutions of the interior to be itself responsible

States for the public deposits held by them, on condition that they would pay these off on the 1st of August, interest to be charged from the firstday of April, 1817. Or
to the United

the banks

I.2
1 2

ning monthly instalments, beginmight pay in seven with the month of May, 1817, with interest from April A number of the banks willingly accepted these condito Jones, March 17, 1817, F., Vol. IV, p. 509. to Committee of western April 3, 1817, ibid., pp. 788, 789.

Crawford
J. Smith

Pennsylvania,

Virginia, and

eastern

Ohio

Banks,

ADMINISTRATION
tions. western

OF

WILLIAM

JONES

27

Some,
parts them

however,

in the eastern

perceive "that any of that portion of the advantages could result to the banks A refusal so impudent Union.1 purely a favor of what was

rejected

and of Pennsylvania because they did not

"

part of Ohio and the Virginia, scornfully

on

ficultie the part of the Bank of the United States exhibits its difand the boundless claims of these petty institutions.2 The success of the bank in the agreement of the 1st of

and in its dealings with most of the banks of the interior was intensely gratifying to Secretary Crawford, who

February

At last the government expressed his pleasure to President Jones. in which had common the people a medium " might discharge their taxes," in which to collect its dues in possession of a and pay its debts, while the country was sound It was that the course now currency.3 of presumed public finance and of business enterprise would be easy and to show that the bank was still plain. Yet there was much difficulties.The business situation confronted with enormous
was

not

one

to beget

resulting from had led to enormous

with importations of English goods, to overtrading in all lines, to excessive issues of bank paper, and to

The confidence. the cessation of the war

changed

conditions Great Britain

consequent inflation of prices. Conservative was therefore absolutely necessary.

a
1

management

vania, PennsylApril 30, 1817, ibid., p. 787 ; Committee Jones to Crawford, of western Ohio Banks to Smith, Virginia, April 14, 1817, ibid., p. 788. eastern and been made Some of to have banks. Various arrangements seem with the western interest on did not pay the balances the 1st of July. "The them western until from the payment interest from the 20th banks, which have enjoyed an immunity of
of February p. 544.
2

to the 1st instant.""

Crawford

to Chillicothe

Bank,

July 23, 1817, ibid.,

Most

of the public money

even

Boston,
3
"

occurred ibid., p. 770, and

was understand with the banks of the middle states. Slight misof the State Bank of with eastern banks, as in the case Bank of Maine, ibid., p. 813. the Kennebec

from the supporters of the bank charter expected has The vitiated state of the currency that institution have already realized. has been equalized in every been restored, the rate of exchange part of the nation,

The

great

objects which

been

the great interests of July 3, 1817, ibid., p. 539.

and

commerce

substantially

promoted."

"

Crawford

to Jones,

28

THE

SECOND

BANK

OP

THE

UNITED

STATES

In these circumstances the directorate showed littlediscretion. It is true the government pation urged as early a particiin business as possible, sanctioned the agreement of the 1st of February, and itself secured the first of all the
bank's loans in December,1
were

accommodated must share the responsibility with the bank. government March discounts were $9,436,000, while the circulation

viduals while, largely for its benefit, indiIn so far the early in January.2 In
was

$4,565,398.3 The
effect,but demanded by

1 of February agreement the figures prove loans far in excess

that agreement. in fact, started on

was

now

in

The
a

Bank

of what was of the United

of rapid expansion, urged thereto by the government, and by the briskness of In trade and the opportunities for favorable investment. April, with six branches in operation, its productive funds
amounted
to

States had,

career

half of which, however, $46,879,679,

the discounts were stock. Though in July led to a extended, the action of the government further expansion, for in that month the treasury redeemed over $13,000,000of the public stock in the possession of the

in government undoubtedly too

was

bank.4
thus

directors complained bitterly that they were forced to grant further discounts, apparently being of
were

The

the opinion that they

a

bound

to

secure

large dividends,

ness remarkable criterion by which to regulate the busiof a bank.5 in the bank's situation There were several circumstances at this moment which should have warned all concerned that The amount it was not running a safe course. of specie in
most

its vaults
1

was

excessively meager.

Yet

at
The

no
sum

other
was

period
A.

Smith

to Crawford,

Jan. 4, 1817, F., Vol. IV, p. 764.

of committee

$500,000.

Jan. 7, 1817, ibid., Vol. Ill, p. 307; report C., 15th Cong., 2d Sess., Vol. IV, p. 1298.
2

of 1819; LOWNDES,

of

3^., Vol. Ill, p. 319.

* 5

$13,043,767.13.Report
"

of the treasurer

of the United

States, ibid., pp. 228, 229. The

rate
was

In July

the bank
380, 381.

paid

its first semi-annual

dividend.

2.6 per

cent." Ibid., pp.

ADMINISTRATION

OF

WILLIAM

JONES

29

of its existence was by the situation

"

by the exigencies of the over-issues of the state banks, by the inflation of the currency, by the almost total lack of coin to keep on hand a large stock of the vaults outside its own
it more

bound

"

precious metals.
was

Nevertheless, in April, 1817, the amount while as late as July, after the payment only $1,811,839, of the third instalment to its capital, it aggregated
the

of $2,129,368. At this pitiably inadequate sum the bank should have held at least twice the amount.1 moment At no time, however, during the firsttwo years of its existence only
2 did its specie holdings reach $3,000,000. The location of its loans ought also to have caused suspicion. Although doing business in July, 1817, three-fifths twelve officeswere

made at Philadelphia and Baltimore,3 and of the loans were the same state of affairsexisted in October, when these two discounted over $21,000,000 out of a total of $33,000,offices

If the other thirteen officesthen in active operation had discounted to anything like this extent, the loans of the

000.*

bank

would have Nevertheless,

its first year

of $100,000,000. no attempted, and the close of check was apparently left the bank in a very flourishing
been

far in

excess

dividend of 4 per cent, being condition, a semi-annual declared in January, 18 18.5 In March the investments were
1 Under the charter $7,000,000 of the capital should have been in specie, and at least $4,500,000hould have been in its possession in January, 1817, before beginning s

active operations.
2

Specie held (cents omitted) January April October December

-

1817
-

1818

1819

$1,160,072
1,811,839 2,129,368 2,271,611

$2,184,088 $2,357,137
2,666,696
-F.,

Vol. Ill, p. 345.

Total
New

discounts,

discounted $25,770,120;
p. 352.

at

Philadelphia,

more, $10,533,120;at Baltiwere

I $5,224,041."bid.,

York, Baltimore,

offices then in operation Richmond, Boston, Washington, The

and

those

Savannah,

delphia, at PhilaNorfolk,

New

Orleans, Cincinnati, Lexington,

*At Philadelphia,

Charleston.

had
town,

been

added Conn.

$8,405,902." Ibid., p. 353. Offices $12,686,601;at Baltimore, R. I. ; and MiddleN. H. ; Providence, July at Portsmouth, since

5/6id., p. 382.

30

THE

SECOND

BANK

OP

THE

UNITED

STATES

stillmounting,

being then
of

over $50,657,683.64,

$41,000,000

of which

consisted

loans and

number of active officeswas had increased to $52,078,203.58; the circulation to 216.35.

At

In July the exchange. nineteen,1 and the "total loans"

$9,045,-

the forward was movement point, however, checked, the bank's business began to diminish, and it was In November the total wrong. evident that something was this less were $44,115,078.59, about $8,000,000 accommodations than in July, while circulation had fallen to $7,286,069.49, The bank was, in almost two millions less than in July.

fact, plunged struggling

to

into the most

save

serious embarrassments, situation

was

and

was

the result of certain causes which had been steadily at work from the first. Three of these were of prime importance : mismanagement, the state of the currency in 1817-19, and speculation

itself. The

and fraud at Philadelphia and Baltimore. Blind ignorance was probably the chief factor in putting the bank in peril. President Jones's conception of the bank's
he rightly Though was essentially mistaken. management regarded the bank and its branches as one system, to be administered as a unit, he did not think it necessary to fix the capitals

for the branches

and

keep them

offices to settle their accounts funds by bills of exchange or transfer of specie when they drew for funds by the issue of bank notes or the selling of

fixed, compelling the periodically and to furnish

drafts.2 The
1

attempt to manage
N. C., Chillicothe,

the institution in accordance

Ky., and Pittsburg, Pa., had

Fayetteville,

O., Louisville,

been added."
2

F., Vol. Ill, p. 354.

in its interests.

of the United States is integral in its organization, but indivisible Its offices,although distantly located, have tions no analogy to instituby local authority, and the apparent interest of any established particular nah Jones to the Savanto the general interest." office must necessarily be subordinate

"The

Bank

"

Branch,
"

Dec.

5, 1817, ibid., p. 335.

of the part of the system will please observe, sir, that it is no for a definite capital to the respective offices,to be employed the benefit of their several districts ; but to extend or control their operations, as the the requisitions of the Government, exigencies of commerce, and the general interest
parent

Your

board

board

to give

ADMINISTRATION

OP

WILLIAM
I

JONES

31

CHART
Feb.

Oct.

March

July

Jan.

Total accommodations

$30,000,000

e.,

loani. dlsand
SUU"

coonts,

United

"toeki

45,000,000

40,000,000

Total deposits
and circulation

35,000,000

i. e.,

immediate
liabilitin

demand

30,000,000

25,000,000

Circulation

20,000,000

15,000,000

10,000,000

Specie

5,000,000

OPERATIONS

OP

THE

BANK,

FEBRUARY,

1817,

TO

JANUARY,

1819

32

THE

SECOND

BANK

OP

THE

UNITED

STATES

with this conception left the bank without a rational plan of 1 "a operations. There was perfect want of system." It need hardly be added that Jones did not stand alone in his ignorance, the directors both at Philadelphia and at

being his peers in this respect. Moreover, the officersand the boards of the southern and western branches incompetent were by All were and disobedient. swayed
local interests in making discounts 2 and did not understand the proper rules of safe banking, renewing notes over and " " over again,3 loaning on mortgages, inventing race-horse

the branches

bills,4 and issuing notes and drafts without furnishing the for their redemption. losses at the branches The means were enormous.5 resulting from improper management
A flagrant example of culpable ignorance or worse the system of stock loans. The board at Philadelphia
on

was

counted dis-

the bank's stock at 25 per cent, in advance of its par value.6 This was and the stock certainly objectionable, loans were reprehensible for several additional reasons:
of the institution shall from 6, 1818, F., Vol. in, p. 335.
1

time to time direct."" Jones to Charleston

Branch,

Feb.

James

C. Fisher to Ruf
p. 150.

us

King,

Jan. 11, 1819,

Life and
are

Correspondence

of Rufus

King,
2

Vol. VI,
"

We

individual
CHEVES,
3
renew
"

have too many branches, and the directors Cheves and lopal interests and feelings." Exposition, Oct., 1822, p. 73.
"

frequently

to Crawford,

by governed 27, 1819, May

"

It
a

was

proven

which 11 WHEATON,
note

that this note had been sent to the office at Chillicothe, to by the same had been five or six times previously renewed parties." " " from 433. See a similar case 60 days every of a note renewed
615.

Dec., 1817, to Feb. 1, 1820, 1 PETERS,

^

Thus

is, the payment by the purchase one. bill of exchange of a new of one New bill sent from Orleans to Nashville for collection would not be collected bill on ; but instead the Nashville office would allow the debtor to draw a new being paid, and hence to and fro without another office. The bills kept running " " " " bills. racers or were called race-horse
a

That

5"

A different management
more

saved

and gained president of the branches. at the and confidential men of gain the bank has sustained by the want of competent head of the branches."" Cheves to Crawford, May 27, 1819, Exposition, p. 73.
6

than

in the business of each have of several offices would dollars per year to each have paid five thousand would Nay there is no calculating the actual loss and the loss

It

was

necessary,

however,

to have

collateral

security for the

excess

of 25 per

cent."

F., Vol. Ill, pp. 341, 342.

ADMINISTRATION They

OP

WILLIAM

JONES

33

were

and directors not only granting this power, but placing the sum at of $2,000,000 the disposal of the executive officersfor the stock loans.2 The granting of such purpose of making new

by the presifrequently renewed,1 and renewed dent cashier without the intervention of the board, the

loans tied up the capital of the bank and placed it in peril in case of a fall in the price of the stock. counts Finally, the disto speculators and thus made were most commonly brokers,3 and were frequently being made to individuals for and
excessive
sums

in amount,

loans

of

$365,000, $400,000,
suffered to extend Jones's " system "

$1,800,000.*
The
western

and southern officeswere

at pleasure, since

their discounts

their capitals were not limit in that respect. This

without any bad enough ; but worse lowed, folwas for every restriction on their operations was removed by the adoption of a plan to regulate the currency, commendable in itself, but impossible of execution in the existing
state
notes
was

fixed, and

under they traded

This was of business. of all the branches wherever

a

the

attempt

to

pay

the

presented.
"

The
a

object

to establish

would not from its place of issue, because convertible wherever For a time this result was the bank had a branch. secured. Unfortunately a depreciated state-bank currency, universal
which

currency of uniform value be depreciated, no matter how

currency far it wandered

over-trading, and the course of exchange did not permit this The state of laudable measure to be successfully continued.
1 was Out of stock loans for $8,046,932.64 least $5,231,267.60 at

constantly

renewed.

"Ibid.,

p. 337.

from Aug. 12 to times for this purpose, voted at various from $9,913,277in Oct., 1817, The loans on bank stock ran For authority i to $10,335,211.46n Oct., 1818, when the resolutions were rescinded. to president and cashier to loan, see ibid., p. 341.
2 Sums of $500,000were Sept. 9, 1817." Ibid., p. 346.

STYLES, *TYLEE, these

....

A.

of C., 15th Cong., 2d Sess., Vol. IV,

Lowndes,
a

p. 1311.

ibid., p. 1316.

consistent
a

friend

of the
were,

bank,
many

large

loans

"

the discounts,
"

excessive

in amount."

with Ibid., p. 1292.

pledge

of stock,

condemned of them,

34
the

THE

SECOND

BANK

OP

THE

UNITED

STATES

currency and the business of the country determined that the course of exchange should be almost constantly in favor of the East and North, and against the West and South.1 Under these circumstances the notes of the southern and Hence would not be returned upon them. This they did,2 they could issue their paper without check. loans. The Cincinnati and consequently piled up enormous
western

branches

branch

$1,800,000 in June, 1818; that at Lexington, Ky., $1,619,000in the same month, and $1,712,discounted
over

000 in November
illustrate what
was

of that year.

These

cases

going on at every western bank.3 The discounts at Boston and New York larger than those at one of these comparatively
western

to will serve branch of the

were

scarcely insignificant

towns.

Like

of the
redeemed the course

southern

extravagance offices. But

ings characterized the dealtheir notes had to be

to namely, at the eastern offices, which The result was that of exchange carried them. the business of the eastern offices was almost destroyed,

somewhere,

discounts They
i
"

being

low

were

denuded

and the issues very inconsiderable. of the littlespecie left by speculators

always against the for one portion Report of Bank mittee, Comrun

The
....

former,

between the West exchanges and the Atlantic are between The exchanges the North and the Sonth
in its favor.""

of the year against the latter, and for another Dec. 7, 1820, F., Vol. Ill, p. 589.
2

" It was no said, Feb. 20, 1819 : the practical operation [of of the system of which he .was speaking of unfair account to the branches, where to paying the bank notes indiscriminately] say, that it gave the entire disposition of the specie of those branches was the exchange unfavorable,

See

Report, Aug. 26, 1818, ibid., p. 325.

Lowndes

where " The

favorable." A. of C., 15th Cong., 2d Sess., Vol. II, p. 1288. was the exchange into instead of circulating as currency, are bills of the corporation, converted a medium at sight, in any of the Eastern cities."" Report of equal exchange, payable Aug. 26, 1818, F., Vol. Ill, p. 325. of Bank Committee,
"

Discount

and

exchange

(cents omitted)

Cincinnati 1817

Lexington 1817

Chillicoth*

Louisville

July October

....

June

....

November
"Monthly

Statements

of the Bank,

F., Vol. IV, pp. 351-9.

ADMINISTBATION

OP

WILLIAM

JONES

35

and state banks,1 and finally the capital of the bank shifted to the South and West, and could not be recovered. The were such that, consequences of mismanagement
when
at last,in July, 1818,

consciousness

of

the

the central board awoke to a had become so situation, confusion

great that they No attention was

were

absolutely unable to check the offices. paid by the southern and western branches

that they should diminish their to the reiterated demands business. In spite of this disobedience, the parent board

of the offending directors, and took no effectual step to control them, until the adoption of the 2 general resolutions of August 28, 1818."
"

never

removed

one

Up

to July, 1818, the bank

permitted

over-trade and to inflate the currency Yet, even the loans of the branches.3
its own

the state banks by the extension had the bank

to

of

managed

officeswith foresight and according to correct principles, it could not have effected the principal purposes

for which it was established, in the southern and western states, because it lacked courage to insist upon the payment These had always of debts due to it from the state banks. large balances against them at the Bank of the United

States, constituting loans without interest to these amounts.* Not being called on for balances, they continually inflated
their issues and
1 To

expanded

their discounts.5

Moreover,

the end of December, $6,293,392." jF\,Vol. Ill, p. 331. periods, less than p. 589.
2
"

nothing.""

York, 1818, Boston ; received in specie $1,622,800 New Yet the capital of these offices " united was, at some Memorial, Bank of the United States, Dec. 7, 1820, ibid.,

And such was the want of firmness or of foresight in the parent board, that, finding its repeated disregarded, it never one remonstrances of the removed after directors, and took no effectual step to control them, until the adoption of offending 28, 1818, forbidding the offices to draw on the general resolutions of August each other."
3
"

Report

of Investigating

Committee,

1819, ibid., p. 308.

Ibid., p. 307.

Oct., $2,518,669; 1818, March, *1817, July, $2,424,900;

$1,203,874;July, $2,463

July, $2,908,160.". D. 128, 25th Cong., 2d Sess., p. 308. S 1819, Jan., $2,624,797;
5

In 1818

of Solomon,

silver could hardly than paper was money

"

have

in the days been more plentiful at Jerusalem in Ohio, Kentucky, and the adjoining regions."
"

GOUGE

(Cobbett's edition), 90. p.

36

THE

SECOND
was

BANK

OP

THE

UNITED

STATES

leniency
to

shown

the state banks

So national one.1 interested in the former as

the

which was not extended influential people were many not stockholders that it was

advisable to give offense by demanding payment in specie, anxious to keep the banks in the humor and borrowers were of the United States, even when it attempted to press its claims, found insuperable obstacles Hence to collecting in coin.3 the state banks a
to lend.2

Thus

the Bank

enjoyed

virtual immunity In their notes.

state

banks

was

of the vast majority of the striking contrast to this favor shown the attitude toward the national bank.
a

from the payment

Banks, brokers, and traders made coin from its vaults,* an operation management and bankers
them
in

of extracting facilitated by its faulty

business

Brokers excessive discounts. permitting constantly bought up its notes and presented for redemption, drew specie, sold it at an advance, bank
notes, presented

bought
so
on

them, drew

specie, sold it, and

ad

infinitum.5

It will consequently be perceived that the bank could draw any neither keep the little specie it began with nor
1

The

bank

was

aware

that,
annum

"

as

it

penalty forbearance
"

of 12 per

cent, per

to pay

A Treatise

not be extended would Currency and Banking," on

professedly a specie bank, liable, under a delicacy and its notes on demand, the same it as to the state banks." RAGUET, towards
was
"

p. 304, Report

to Pennsylvania

Senate,

Jan.

29, 1820.

zCRAwroBD,
to Eppes,

Report
Dec.

to H.

R., Feb. 12, 1820, F., Vol. Ill, p. 496.

394, 395.

29, 1818, ibid., pp.

was

the community over large demands to make 302, 303, Report to Pennsylvania

their power

boldness

upon

See also Crawford " banks were city sensible that have the that few individuals would so great, " for coin." RAGUET, On Banking," them pp.
The
"

Senate, Jan. 29, 1820. inability, require with indulgence, unreasonable settled indifference.""

3
or

"

The
our

banks,

our

debtors, plead

treat

Jones
*
"

and expostulations claims reiterated May 29, 1818, F., Vol. IV, p. 845. to Crawford, The fact is,that the bills of the bank India traders, in order to draw
are

brokers, and

to procure

Jones to Crawford,
5

but in a elsewhere June 23, 1818, ibid., p. 854.

was

sought after with avidity by banks, ticable the specie, which they find it impracpartial degree and with great difficulty.""

So laudable
even

it consid ered collectors

to

to aid

state

banks

occasionally used States, quoted by of the United cashier of the Bank July 12, 1819, ibid., p. 890; and cashier at Cincinnati to cashier Cheves to Crawford, of United States bank, ibid.
"

that

Letter

government from Savannah

against their powers

the national bank for this purpose

ADMINISTRATION from import the

OP

WILLIAM

JONES

37
to

state

banks.1

It

was,

therefore, compelled

specie, if it wished to continue paying specie. To like enthuthis foolish task it gave itselfwith something siasm foolish because the bank bought at an advance in Europe and sold at a loss in the United States. This was
"

bailing water with a sieve. due to mismanagement The censure be measured can only by taking into account the state of the currency during When it began operations, the early days of the bank.
at an advance of 14 per cent, in Boston and New specie was York, and of 6 per cent, in the West.2 This premium should have ceased on the 20th of February, and, if resumption had been complete, it should have ceased everywhere. In May,

however,

Niles declared that,

as

"

though
as

our

banks
was some

ostensibly

pay

specie, it is almost

ago to see a dollar. 'Paper July the prices of bank paper show greater variation than in February.4 In October Spanish silver dollars were at a York premium of 1^ per cent, in New city, and Niles declared that, though
helped the Bank the exchanges, Baltimore paper called bank notes, at almost every depreciated rate from ^ to 75 per cent." 5 On the 25th of the same month, President Jones asserted that the paper of the banks " of the interior of Pennsylvania
1
"

months does the business' still."3 In

rare

it

of the United States had " was still inundated with

"

had

"

as

littleof the quality

The
no

facts

States has

have which domestic resource

to Crawford,
2 *

May

been that the Bank stated prove of the United by which to replenish its vaults with specie." Jones 29, 1818, F., Vol. IV, p. 845.
"

Ibid., Vol. Ill, p. 334, Exhibit

20.

NILES,

Vol. XII, p. 185, May

17, 1817.

In New

Baltimore, South

York city Boston notes were at 1A per cent, and 1 per cent, discount; Virginia, 1 and 1!4 per cent.; North Carolina, 3 per cent.; 54 percent.; Carolina, 11A per cent. ; Georgia, 2 per cent. ; Louisiana, 8 per cent. ; New England,
cent."

1 to 2 per
5

Ibid., p. 347, July 19, 1817.

1!4 to 2 per cent, discount; Massachusetts, par to 2 per cent. ; to 1 per cent. ; Rhode Island, 1 to 3 per cent. ; New York, par to 75 incorporated, 15 to 25 to 12 per cent. ; unincorporated, per cent. ; Pennsylvania, par 2 to 10 per cent. ; Maryland, Baltimore, par ; others, 4 to 20 per per cent. ; Delaware, itself others were 2 to 5 per cent, discount) ; District of Columbia, cent, (in Baltimore
Connecticut,
par

New

Hampshire,

38

THE

SECOND

BANK

OP

THE

UNITED
it had

STATES
twelve
a

of money
'

ago." from 4 to

credit at this time In March, 1818, Spanish

or

as

months

dollars bore
and

4" per
was

cent, in New

York

premium of Boston.2 In October

7 per cent, advance in Boston, and York.3 By this time the commercial 7 per cent, in New panic had fairly started, and all through 1819 bank notes forward In 1820 Crawford came went from bad to worse. specie
at

6" to

" with the honest confession that in several of the States the of the circulation is not even ostensibly convertible great mass into specie at the will of the holder," and that, during

" " the greater part of the time the since specie resumption, notes into specie has been rather convertibility of bank than real in the largest portion of the Union." nominal There are two conclusions : first, while many of the banks
"

'

actually paid specie for their notes, the specie was valuable than the notes; secondly, most of the banks

more

only

pretended to pay specie. Yet by the very conditions of its existence the Bank of the United States was compelled to act as if specie resumption was complete: it had to pay specie for its notes under

penalty, if it refused, of forfeiting 12 per cent, on the amount demanded; to was and to fail in restoring specie payments for its existence. Under these circumlose the very reason stances
should have kept its dealings as restricted possible, for, unless it did this, it could not enforce restricthe bank

as

15 to Bank of, par ; others 2 per cent. ; Virginia, chartered banks, par ; unchartered, 25 per cent. ; North Carolina, State Bank, IVi to 2 per cent. ; Newbern and Cape Fear, 3 4 to 7 per to 4 per cent. ; South Carolina, 1 per cent. ; Georgia, 2 per cent. ; Kentucky, 5 to 10 per cent. ; cent. ; Tennessee, 7 per cent. ; Ohio, 8 to 25 per cent. ; Louisiana,

specie, 1 to 154 per cent, premium

1

in New

York."
2

NILES,

Vol. XIII,
to
same,

p. 97, Oct. 11, 1817.

Jones to Crawford, NILES, Vol. XV,

F., Vol. IV, p. 820.

Same

March

9, ibid., p. 832.

3
*

p. 125, Oct. 17, 1818.

p. 303,
were

nominally accordingly day. We say nominally, because in point of fact, a bona the appointed did not take place as is evident from the well-known circumstance, fide resumption as for a long time after that period, American that well as foreign coins would on the spot a price in city bank notes above their nominal value." command

F., Vol., Ill, p. 496, Report, Feb. 24, 1820. RAQDET, " Specie payments Senate, Feb. 29, 1820, says :
on

Report

vania to Pennsyl-

resumed

ADMINISTRATION
tion upon the

OF

WILLIAM

JONES

39

without such restriction no was effective resumption possible. The over-issues of the banks would drive specie out of the country and compel
suspension. To mismanagement
were

state banks, and

added was established the country was passing through a period of reckless inflation and speculation, in which gambling in bank

the wretched state of the currency When the bank speculation and fraud. and

features. Banks one were stocks was of the most marked being chartered all through the states, and from 1815 to " 1818 there was a perfect mania for them. Wherever there
is
a and a tavern' seems proper site for one of them!" says Niles.1 This passion for stock speculation was unusually violent in Philadelphia and Baltimore, and at these places the opportunity for speculating

'church,

blacksmith's

shop

in stock of the Bank of the United At Baltimore 40,141 shares were

States was
taken
in

seized at the
names

once.

of

15,628 persons, while at Philadelphia twice the amount was subscribed for by 3,566 persons.2 Most of these shares, however, were actually bought by a few individuals, who
placed them in the names of others in order that they might increase the number of their votes and thus control the bank.3 In this way some fifteen persons in Baltimore held about three-fourths of the stock there, and probably three-fourths of all the bank's stock
i

were

in possession of less than

one

hun-

NILBS,

Vol. XI, p. 130.

Boston New

....

York Philadelphia
Baltimore

....

...

thus subscribed for about one-seventh the stock, and had one-fourth had nearly one-third total number Philadelphia votes. of the stock, twoof ninths of the votes." F., Vol. Ill, p. 349.
the
3

Baltimore

George

Williams,
no

of Baltimore,

the charter stock he held."

By

stockholder Sec. 11, Art. 1.

Ibid., p. 372. 1,172 shares in 1,172 names. how thirty votes, no matter over much could cast I. See Appendix

took

"

40

THE

SECOND

BANK

or

THE

UNITED

STATES

dred persons.1 The consequences of these tactics was that a clique of Philadelphia and Baltimore stock-jobbers controlled it was the bank as soon as plying organized, Baltimore alone supwithin 115 of a majority all the voters present at of the firstelection for directors.2 This littleband of gamblers
to direct the bank's success, attempted, with only too much business so as to manipulate the price of the stock in the The men open market.3 who took the principal part in this directors of the bank, notably James Buchanan, action were

Williams, and Dennis Smith, of Baltimore, assisted by the complicity or incapacity of the president of the bank Jones's and the cashiers at Philadelphia and Baltimore. George
considered him a man of integrity,4but it is absolutely powerless to check painfully evident that he was the schemes of the gamblers and totally blind to his duty in contemporaries He the premises. Smith, and Williams profitson
1

weak as to permit Buchanan, to make him a present of some $18,000 speculation in the stock.5 In addition he himself
was so
"

were subscribers at Baltimore three-fourths of the stock." NILES,

The

225

or

Vol. XIV,

fifteen control230 all told," about ling 35, March 14. 1818. p.

2 3

Ibid., p. 22, March

7, 1818.

The

cess: sucprice of stock during the early days of the bank will show with what April 1, 1817, 118 on a 100; May 12, 125; May 28, 130; June 9, 131; July 10, 140.5;

Sept. March

1, 137; Sept.

30, 151; Oct. 16, 150.59; Nov.

4, 137; June

4, 150; Dec.

1, 154; Jan. 1, 1818, 146;

11, 145; April 15, 142; May

1, 141; July

1, 136; Aug.

8,127.25; Sept.
as

24, 128 ; Oct. 24, 114.

low

as

92.5.
"

After this it went steadily down, until in June, 1819, it was Conspiracy Cases, pp. 97-9. See "Exhibit of Losses at Baltimore,"

so

in the policy of the Baltimoreans, involved himself so completely ford Crawhe taken in their toils, that he obeyed no other impulse." completely Oallatin's Writings, Vol. II, p. 113 ; see also to Gallatin, July 24, 1819, ADAMS,
*

But

"

he had
was

"

SERGEANT,
5

A.

of C., 15th Cong., 2d Sess., Vol. IV,

p. 1384.

in Kay, for Jones without his knowledge shares were purchased later he was informed Somewhat 1817, at $132 a share. of this, and the stock was then selling transferred to him in July at the price originally paid, though stock was he sold it to D. A. Williams, one of those who had first at $140.50. The next month

One

thousand

" it for him, at $150 a share. Had there been any loss, " the company of stockjobbers it. The was had resolved that Jones should transaction not share whole mony to end." Jones's testino stock being transferred from beginning purely speculative, mony, testiCommittee before Investigating of 1819, F., Vol. Ill, p. 364; Williams's

bought

376 ; Jones's Memorial

ibid., p. 372; Smith's testimony, ibid., p. 374; McCulloch's to the House, Feb. 5, 1819, ibid., p. 413.

testimony,

ibid., p.

ADMINISTRATION bought
were

OF

WILLIAM

JONES

41

considerable extent.1 Most of the board four of the number consisas culpable as Jones, not over tently to inflatethe price of the stock.2 opposing the measures and sold to
a

attempt to inflate stock values was evident in almost all the acts of the directors. Of this character was the resolution of the board to discount on the security of the bank's stock in order to furnish stockholders with facilitiesto pay the second instalment.3 By this action the specie part of for the most part left unpaid, the bank the instalment was
notes, or notes of the state banks. receiving instead its own " Thus," wrote King indignantly, " tho' the Law says a sum in specie double the firstpayment shall be made at the second

The

period or Instalment, the Directors feel no scruple with a dispensation, which will prove so seriously mischievous in * Another measure the early resumption of Cash Payments."
whose
was

to enhance the price of the stock prime motive was the resolution of the 26th of August, giving stockholders the privilege of discounting on their stock at an advance
on

of 25 per cent,

the par value thereof, the directors naively necesalleging, as a defense for their action, that it was sary " to extend the discounts of the bank, in order
....

1,000) prices ranging at

"

dealt in 1,575 shares from Oct. 7, 1817, to Aug., 1818 (not counting the above from $139 to $153 a share in all over $200,000worth of stock. Ibid., p. 364. He
"

J. C. Fisher

to

Rufus

King, Jan. 25, 1819, Life and

Correspondence

of Rufus

King, Vol. VI, p. 197.

Resolutions of 18th and 27th of Dec., 1816, F., Vol. Ill, pp. 335, 336. It is true, however, that, resolution or no resolution, the bank would have secured very little specie for the second for, as specie was instalment, then at a heavy it would premium,
3

have

to refuse payment profitable for the stockholder and forfeit the first Moreover, in operation, its own the bank was since notes could already bo presented for specie with which to pay the instalment, as could also the notes of Nov. 11, 1818, ibid., p. 288. It was specie-paying state banks." Jones to Crawford,

been

dividend.

the charter ments instalthat was this method when granted, of paying be adopted the first would (MASON'S remarks, A. of C., 14th Cong., 1st after Sess., Vol. I, p. 236), in and, indeed, every bank chartered in that day began operations the same CALHODN, Jan. 7, 1817, A. of C., 14th Cong., 2d Sess., p. 431. way." precisely

recognized,

Nevertheless,

the directors

were

culpable

in

so

far

as

they gave

facilities for evading

the requirements

of the law. Correspondence

*Life and

of Rufus

King,

Vol. VI, pp. 38, 39.

42
to

THE

SECOND
a

BANK

OF

THE

UNITED
to

STATES
stockholders."1

afford
was

reasonable

dividend

the

This

laudable ambition, and just a as undoubtedly the highest price the stock ever bore follower! undoubtedly immediately upon the resolution.2 A third measure designed purpose was that creating a market for the by the establishment of an officein London stock in England to pay the dividends of foreign holders "at the par of The committee exchange, at the risk and expense of the bank."
to meet

the

same

did so on the ground this measure which recommended " " of the advantage to be derived by enhancing the value of the stock.3 These efforts were only too successful, and for
the stock commanded a premium of from 50 to 56 per cent, in the market, an advance for which there was absolutely
some

time

no

justification.

and fraud was the principal scene of mismanagement was dent presiofficeat Baltimore, of which James A. Buchanan and James W. McCulloch cashier. Baltimore at this
The
time

the center of airy speculation characterless and illegitimate business.4

was

firm of Smith and Buchanan was city, and for twenty-five years had formed and controlled the "moral, political,and commercial character" of Baltimore.6 Remembering this, one may easily imagine that it boded little
at the head of the branch. good to the bank to have Buchanan McCulloch, the cashier, was a penniless clerk of the house.8 It has already been pointed out that the Baltimore stockholders

great mercantile the leading one in the

and The

of all sorts of

names

almost controlled the bank by the scheme of buying in which the stock could be held. The next step of
IF., Vol. Ill, pp. 341, 842.
2

Philadelphia,
in September For

Aug.

30, 156.50; Baltimore,

Sept.

7,155;

New

York,

Sept. 2, 155.

Later
3

the prices fluctuated between

148 and

153." Ibid., p. 347.

11 to 10. Report resolution, ibid., p. 343, Nov 28, 1816. The vote was ibid., p. 342, Nov. 26. See also letter of John Donnell, ibid., p. 343. committee,
*

of

J. Q. ADAMS,
Ibid.

Memoirs,
was

Vol. IV,

p. 383.

Smith

United
He

all the business

e

of the firm.

States senator from Maryland. was one of the first government

Buchanan directors,

managed

Ibid., Vol. IV, p. 382.

See

also 2 WHEATON,

61.

ADMINISTRATION the interested parties the stock. Smith and

OF

WILLIAM

JONES

43

was

to form

Buchanan,

to deal in company Cashier McCulloch, and

a

George
This
view
:

Williams, all of Baltimore, composed this company.1 in little band of speculators had one prime object to manipulate the price of the stock in order to make
As
means

fortunes.

of the Baltimore directors. were where Williams and Buchanan The methods by the general management employed inflatethe price of the stock have been already related.
Baltimore
the

to attain this end, they had possession officeand unusual influence at Philadelphia,

to

At

swollen to an of the branch was In the first in enormous extent with the same object view. two years the Baltimore discounts ranged from five to twelve and a half millions; the drafts on other offices, particularly
those
was as

business

in

the North,

were

frequent and

excessive. in 1818

Specie

limited in amount, and once $26,714. The debt to the bank always

fell as low
was

and
over

branches

astounding, being for the most

1

of the time

$8,000,000.2

in his testimony before the committee of the House, stated in a company largely; Smith " Buchanan, who concerned purchased the company."" and Mr. McCulloch, of Baltimore, together with himself, composed F., Vol. Ill, p. 372. Williams the man was who took 1,172 shares of the stock in the in order that he might exert a great influence in the election names of 1,172 persons for the The 1,000 shares in 1,000 names Ibid. company also purchased of directors.

George

Williams,

that

"he

was

"

same

purpose.

"

Ibid., p. 376, McCulloch's

testimony.

Drafts 1818:

drawn

on

Bank On On
On On

of the United

States
.....

and

branches

327, 351-7. "Ibid., pp. from April, 1817, to Nov.,

Philadelphia Boston New York all others

$3,684,157
1,072,008 1,831,514 1,294,000

.......

......

.......

Total

........

$7,881,679
"Ibid.,
p. 328.

The

issues

were

not

managers,

Cashier

but very extended, McCulloch complaining

notes."
"

that

was

that

not the fault of the " had never the office had

Baltimore
a

cient suffi-

supply

of its own

Ibid., p. 377.

44

THE

SECOND

BANK

OP

THE

UNITED

STATES

to increase the price of the stock, the working bought still larger quantities. In April and manipulators 19,940 June, 1817, Buchanan and McCulloch purchased

While

shares in different lots from D. A. Smith at 19, 20, and 36 12,000 shares at 155.1 per cent, advance, and in December The total was 31,900 shares, for which they paid $4,451,376.

much determined,

How

more

extensive

their dealings

were

cannot

be

but they held 15,490 additional shares in March, 1819,2 making the sum of their purchases at least $6,397,626. Purchases
so

extensive

money, plan which

and this Buchanan's adopted, therefore, had

considerable ready business could not furnish. The

to borrow

demanded

was

it from

the bank,

agreed to accept bank stock at an advance of 25 and per cent, above par as security for loans.3 Buchanan to buy more McCulloch the money consequently borrowed stock on a pledge of the stock they already held. At the in this way. bank in Philadelphia they borrowed $1,957,700 but At Baltimore they procured $1,629,436.12,* here, though
the loans
were

presumably secured by stock, there were the entire actually only 2,558 shares in the office to cover debt.5 At an advance of 25 per cent, these shares secured only $329,750 out of this total of over $1,600,000. The conspirator loaned themselves
the remainder without giving As the cashier was the keeper of all

any security whatever.

stock pledged, none of the directors could know that no stock from That they might draw these sums was given in by them. the officewithout security, and without the knowledge of the board of directors, Buchanan declared to and McCulloch
1

Testimony

of D. A. Smith, X.

March

28, 1823, Conspiracy

Cases, p. 137.

2/Md.,
3

pp. 91, 92, Paper

Aug.

26, 1817.

"It

is expedient
a

that

the
notes

loans
to

on

the

stock

of

the
two

bank
approved

be

extended
names."
"

to the rate of $125 Ibid., p. 26.

share, upon

that

amount,

with

*For
pp.

the
a

77-83,
5

debt at Philadelphia ibid., p. 91, Paper X; for that at Baltimore, see list of loans upon March 8, 1819. the office at Baltimore, stock at

Ibid., pp. 91, 92, Paper

X.

ADMINISTRATION
the

OP

WILLIAM

JONES

45

of stock loans was making delphia executive business, and that they had authority from Philato make such loans without the consent of the board. Baltimore board that the

At other times, to conceal their designs from outside parties, they claimed that they had this authority from the Baltimore less These declarations were board. absolutely false.2 Neverthethe Baltimore directors acquiesced, and their acquiescence

shows reprehensible slackness and almost criminal neglect. At this point active fraud begins, for it was only after this the president and cashier had arrogated to themselves
the vast proportions already that their debts assumed On the llth of August, 1817, the discounts on noted. 3 bank stock were only $314,850. On the 12th, however,

power

after the usurpation of authority by Buchanan to $857,350,the result of the rose and McCulloch, the sum discount of a note for Smith and Buchanan,* and by the llth immediately

Buchanan, with the aid of his accomplice, of September McCulloch, had loaned himself $798,301.77on stock security.5 borrowed $574,001.036 in the same McCulloch ner, manthough
he
was

Williams

secured

absolutely without means, and George $169,833. 34,7 the total amount owed by
on

the three together

bank

stock securities being

were

$1,542,renewed,

136. 14.8
1
"

These

notes,

moreover,

constantly

He proved That after some time early was next examined. 1817, he thinks the 10th or llth, no stock notes, to the best of his recollection to the Board, for discount ever or renewal ; until some and belief, were submitted in January, Board the Parent 1819, when an was time order of received, forbidding

R. L. Colt

....

in August,

them

to be made on at the Board,

and

Jas. W.

the consent enquiry of the Directors : And that on making without A. Buchanan the subject of such loans, he was told by both James business, M'Culloh, the President executive and Cashier, that it was
no concern."
"

with
p. 48;

which he, as a Director, had of A. B. Bankson, p. 46 ; John John Hoffmann, John Finley, p. 119.
24, by-laws

Conspiracy

Cases, p. 48.

Also testimony

White,

p. 46 ; Jas. Beatty,

McKiin,

Jr., Jos. W.

Hoffmann, p. 47 ; George Gilmore, 49; Wm. Patterson, p. of Baltimore

5

p. 50; Thos.
2

Ibid., pp.23,

of the
*

bank;

testimony

directors,

pp.

119, 129, 130.

3 "

76 id., p. 139.

Ibid., p. 29.

ibid., pp. 29-32.

Ibid., pp. 37, 38.

For details, ibid., pp. 33-7.

40, 41.

*Ibid., pp.

there

were

several

This differs slightly from the figures already to them not counted which were stock loans made

as

given, because being for the

46

THE

SECOND

BANK

OP

THE

UNITED

STATES

of interest, and without the knowledge without the payment did their loans cease or consent of the board;1 nor when the parties were ruined.2 absolutely certain that they were 11, 1819, the stock was at 107,3 and the loss of the stock company by this decline in price, counting in brokerage, commission, and other incidental charges, was

Thus

on

January

$1,444,074. Yet
them.4

they

renewed

their notes

and

added

to

had evaded the superand McCulloch vision of the local board by usurping the power to make stock loans, yet the loans had to be entered on the books of the bank, and thus the chances of discovery were enhanced
to such

Though

Buchanan

degree that continued concealment seemed impossible, since the directors had the right, and it was their duty,
a

to examine

the books.

Yet these immense

recorded

and caused no comment.5 be remembered neglected their plain duty, though it must that many of them believed that they had no authority to inquire into the business of loaning on stock. Moreover, there
was

stock loans were Obviously the directors

at first glance
were

littleground
the books

the loans without

was,
or

entered
mention
manner

on

for suspicion, since merely as loans on stock,

was,

any

of what

the stock

how

much

it

in what

secured.8

They Stock loans did not comprise the whole of their debt. of the company. his account, Each loans on personal security for small amounts. secured overdrew to the great mass sums minor of the debt. The added and in several other ways to the sum to $497,723.40(ibid.),hich, added w already given, made whole amounted
use

total of $1,982,098.66.
i

Conspiracy

Cases, pp. 29-39.

ibid., p. 98. ibid., pp. 193, 194.
no

Ibid., pp. 68-71, 77-83.

3
*

See Colt's statement, Harper's "They

argument,

[the books]
dates,

amounts,
persons,
6
"

of such had been

to such the fact, that such notes, drawn by such at such periods, and and endorsed payable for the Traversers, Idem, ibid., p. 178. discounted as stock notes."

doubt

disclosed

"

They

[the books] were

by the
me,

now

proved, lying before

This is fully and undeniably wholly silent on all these heads. Cashier and the Clerks, and by the books themselves present been for a fortnight, day by day, to the as they have and open
of the notes
; its nature,
as

They of the Traversers and their counsel. simply speak but make no of the stock pledged mention whatever stock notes ; inspection

its

ADMINISTRATION
To

OF

WILLIAM

JONES

47

a evade the vigilance of the Baltimore directors was none triflingtask ; to evade that of the central board was at completely in the possession all. Jones, said Crawford, was of the Baltimoreans, and there can be no doubt that Cashier

But when the panic fell,in so. quite as much the autumn tinue. of 1818, this state of affairscould no longer conOn the 20th of October a call was sent out from

Smith

was

Philadelphia, asking for lists of the stock loans at all the There were branches.1 three points included in this call,on required: (a)a separate each of which full information was list of notes discounted to Philadelphia;
to be forwarded security was (6)with the names of the drawers and a description of the stock pledged. and indorsers ; (c) Discovery stared the unhappy wretches in the face, and for
on

stock

On the 26th to abandon they seemed all hope. wrote to the officers at Philadelphia, of October McCulloch saying that the information desired would soon be forwarded.2
a

moment

carried to Philadelphia a list of the stock loans, which he intended to present to the board, and in all its nakedness the which would have revealed at once Cashier Smith, however, fraud which had been practiced.
It
seems

that he

then

dissuaded

him

from

doing this.3 He

and on the 9th of November intended to pave the way for a Philadelphia,4 which was falsification the records of the Baltimore branch. Loans, of
amount,

more, then returned to Baltisent a second letter to

in which the pledge was All these matters or the manner were secured. the Traversers, Buchanan the sole cognizance of within and M'Culloh, as President the custody and Cashier ; and to the latter exclusively belonged of the Stock itself. See testimony Idem. All this is undeniable."" John White, ibid., p. 47. of
i/6id.,p.
2
"

27. directed

I have

the list of discounts

"

granted

here
as

upon
can

and

up, and as soon personal security, to be made Ibid., p. 58. to you." ; it shall be forwarded
3 4

it

the pledge of stock furbe conveniently nished

Testimony
"

of D. A. Smith,

ibid., pp.

62, 63.
....

a the delay in upon preparing stock at this office, list correctly, arises from a necessity to examine loans for some this these debited to loans on stock, which time back, as entries have been sometimes should have been to bills on personal security, and vice versa." to Smith, ibid. McCulloch

am

list of borrowers

furnishing

"

48

THE

SECOND

BANK

OF

THE

UNITED

STATES

he asserted, had been mistakenly entered as loans on stock followed instead of as loans on personal security.1 McCulloch up his letter by rectifying the presumably false entries.

This he did by transferring to the account of notes on personal from the stock list, security $852,683.64 and of course With this substitudiminishing that list by this amount.2 tion
Buchanan stock to
on secure

and

McCulloch

$645,400, and
14th

able to show enough the stock listthus manufactured

were

the
as

amount

owed

of November by them.3

showed

precisely

that

For the time the speculators were saved, but not for long. immediately In January President Jones resigned, and steps were taken to correct abuses everywhere, and especially at On January 22, 1819, an order was issued from Baltimore.
the bank
at Philadelphia

forbidding any discount

or

renewal

of any discount on the security of stock without the consent of the board of directors.4 This put an end to any further of the funds of the Baltimore office by the manipulation

president
i
"

and

cashier.

On

the

1st of February

another

and inspected : court will recollect that the books have been produced to the Traversers have laid on the table three weeks, open they and their Coun" has been made Traversers, to point on the part of the and that no attempt sel : 9th import, nor indeed any as this entry and the letter of November out any such errors The That
.

it fully appears, tion by the inspecthat such errors exist. On the contrary by the testimony of the clerks and the present of the books themselves, as well as that Cashier, that no such errors exist. Thus it is established, and indeed admitted, Harper's Argument, Conspiracy Cases, p. 212. For the entry is absolutely false." intimation
"

the evidence
2

see

pp.

67-73, testimony

of clerk and
on

the genuine

stock list of Nov. 13.

W. 1818, James of November, in relation to loans on wrote entry and stock, with did ; from directions to enter it in the day book of that day, which he accordingly into the ledger on the same it was day, and made part of the stock posted whence Ibid, p. 64. that day." account of "Mr.

Butter

then

M'Culloh

proved, that handed to him,

the

14th

an

"

See

Buchanan, Whether

list, ibid., pp. 60-62. " The follows: Smith sums are as given George Williams, $221,875and $188,150; total, $645,400. $97,875 and $137,500; is doubtful, but it was to the directors at Philadelphia ever presented
the letter of precisely the same date mentions that a stock list has letters of this date. from See two Ibid., pp. 58, 59. Both are " he says loans In one I send you herein a statement of the existing
a
"

since probable, been forwarded.

McCulloch.
made

at this office, upon "/6id.,p.

pledged

stock and

personal

security."

27.

49
stock.1 On came an order directed to Baltimore demanding a specific account of the loans at the officemade on stock security.2 Concealment could be continued but a resolution prohibited the 19th of February
new on

any further

loans

littlelonger.3

confessed time the same Philadelphia

Before the 16th of March the gentlemen had that they could not pay their debts, and about they handed
in
a

paper

to the directors at

purporting
to these

to show

precisely how

their affairs

stood.4 In addition

acts of the

speculators

as

body,

each of them kept his account after they knew that they were
must

continually overdrawn, even ruined and that exposure

be at hand.5 The mismanagement of the branch was flagrant in this respect, for when McCulloch was removed 6 footed up $200,759.60. Nor was the sums this overdrawn all,for the cashier knowledge of anyone The amount sums.
seems

loans without the made else, and to have kept no record of the 7 loaned was so over $84,000. Finally,
to have
was

the firstteller,J. S. LaReintrie,

found to be

defaulter,

count the sole right to disloans on pledges of stock, by indorsing for each other, by lying to the local board of directors, by false entries in

to the extent of $50,000." Thus, by arrogating to themselves

the books

of the branch, by

false reports to the bank

2

at

ibid.

They,

stock stock Smith

however, in another further deception by handing fraudulent attempted list and another fraudulent list on March false 8. The security personal list of March 8 gives the debts of the parties on follows: as stock security " Buchanan, total, $645,400. Williams, $221,875nd $188,150; $97,875 a and $137,500;
was

McCulloch so-called following

stock

credited with a loan. The true

loan

b on stock of $3,400,ut list of the same date showed

Buchanan, private

this

was

no

part

them

debtors

of the for the

McCulloch, " S sums: $592,201.01;mith $169,83334; total (omitting $3,400on McCulloch's

Ibid., pp.
* 6

Williams, $870,801.77; account), $1,629,436,12."

77-83.

The

false discount
X.
was

list,pp. 84, 85. "An Exhibit

for of Losses

Ibid., pp. 91, 92, Paper

Sustained,"

etc., ibid., p. 12.

Of

this

sum

Buchanan

debtor

McCulloch $39,916.24,

for $28,944.54, and

Williams
^

for $13,339.12." Ibid. sibid., p. 12.

Ibid., p. 11.

50

THE

SECOND

BANK

OF

THE

UNITED
kept

STATES
But
it

Philadelphia, the

speculation

was

going.

was

the panic of impossible that it should continue when once When the crash came, the country. 1818-19 swept over the parties to this shameless fraud failed to pay $1*401,685.32 of their debts.1
i

Smith
J. W.

" Buchanan's

McCulloch's Geo. Williams's debts

debts unsecured debts

....

$344,212.43
429,049.80 628,423.09

$1,401,685.32
"
"

Exhibition

of Losses,"

Conspiracy

Cases, pp. 21-4.

CHAPTER
THE

III
THE
BANK

ATTEMPT

TO

SAVE

UNDER

JONES

in straits finally the conviction that the bank was took possession of the directory at Philadelphia, strenuous it. These began July 20, 1818, efforts were made to rescue

WHEN

it was when resolved to curtail $5,000,000 in discounts at Philadelphia, Baltimore, Richmond, In addiand Norfolk. tion,

instructed to call for the office was payment of balances due by the other banks in the District, and the Cincinnati office to collect the balances due from
the Cincinnati banks
at the rate of 20

the Washington

The

reduction was to be mainly and East, outside of Philadelphia, this moment the immediate demand
were

per cent, a month.1 In the North in the South.

none

expected.2 At liabilitiesof the bank

was

the specie fund $22,372,000,

It
was

to meet
measures

them

$2,357,000.

soon

evident that these

a

effective in putting the bank's resources,

and western
i

period to the most the drafts of the southern namely, offices. Consequently, on the 28th of August

would not be serious drain upon

the reduction of the discounts more, at this bank, and its offices at BaltiRichmond Norfolk, be forthwith commenced, the average and at and continued count on rate of at least twelve and a half per cent, on the amount of the income each disday." Philadelphia, Baltimore, $2,000,000; Richmond, $2,000,000; $700,000;

(1) "That

Norfolk, $300,000. (2) " That the president be required to demand of the Bank of Columbia, a satisfactory that the large balance which is now assurance and has long been due from that bank to this institution be discharged, that the whole shall be so liquidated by the 15th day of October next ;
....

....

(3)
payment

"

the cashier of the office at Washington city be directed to demand the balances which be due to that office by the other banks of the may of
....

That

the of the office at Cincinnati be directed to demand the balances which may be due by the State banks in that place, at the reduction of rate of at least 20 per cent, per month, until the whole shall be extinguished." F., Vol. Ill, p. 387.
"

District of Columbia, " (4) That the cashier

2CHEVE8,

p. 14; NlLES,

Vol. XXIII,

p. 90.

51

52

THE

SECOND

BANK

OP

THE

UNITED

STATES

series of resolutions was adopted forbidding the offices to receive any notes but their own, except in payments to the United States, prohibiting the further sale of drafts at par, and restricting the purchase of billsof domestic
a

second

exchange.1 bank would

not been

these orders were be relieved of its most

If

faithfully executed, the formidable difficulties.

In October it was
as

found

had
to reduce

successful as been attained.2

to the amount

that the attempt to curtail had desired, though a material reduction

The

branches

in the South

failed

of the bank advised that these officesbe required to complete the reduction, be in discounts should and that $1,500,000 more mond, curtailed: $100,000at Middletown, Conn., $400,000 at Richand

mittee assigned by $1,077,500. A comreporting October 30, 1818, therefore

$1,000,000 at Baltimore.

Once

more

the

bulk

of the reduction was to fall upon the South, and particularly upon Baltimore, which had already been called upon for a tion reduction of $2,000,000and had failed to make that reducby

$763,000. In addition, the orders of the 30th of

prohibited the offices from drawing on each other; called upon the southern and western branches for $700,000 in specie; authorized President Jones to arrange for the

October

importation

taking the offices' the notes of any banks which did not redeem them in specie demand ; and insisted that no further credits be given to on discharged. the Cincinnati banks until the balances already due were
of could proclaim louder the distress of the bank than this report. Nor, if it were obeyed, could anything

$1,500,000 more;

forbade

Nothing

I.F., Vol. Ill, pp.

2

325, 326. the f $4,252,441.17;oreign had

In

discounts

diminished

was reduction debt $302,472.10, and funded

exchange

had

been

been

sold to the amount requested

to order

of $2,005,376.48. the additional

on

3(1)
sum

"That

the

President
a

of the bank.

one

million and

authorized and half of dollars, in French

be

coin, to be shipped

account

of

(2) That the branches

the resolution (3) "That

"

have not reduced their discounts, as required by which the 20th of July last, be required to complete said reductions. of to reduce in addition their the following offices be required
....

ATTEMPT be

TO

SAVE

THE

BANK

UNDER

JONES

53

effective, since it would not only directly reduce discounts, but indirectly, by the prohibition of selling drafts, go far toward putting a stop to all the southern and western On the other hand, it spelled ruin for thousands, business.
more

been strong, would have been the most evidence of a total incapacity to handle a monetary What the country stringency as it should be handled. had a right to expect at such a time from a bank holding and, had damning the bank
an of the United States was mate extension of credit, the granting at a fair rate of all legitifor loans. demands

the position held

by the Bank

to be effective. In March, 1819, seemed a total loans had fallen to $40,640,236.65, reduction of over

The

measures

$3,900,000
The

since

October,
from

whole began, was

aimed

reduction
at, the

almost entirely in discounts. July 20, when the contraction

$7,505,760.55. The

discounts had

been

particular effort being to reduce by $7,000,000, and the difference in this item in the eight $6,530,159.49.The circulation months of contraction was
discounts
at

especially them

the

average

rate of twelve

and

half per cent, each

discount
to

day."

follow.) (Names of offices and sums (4) (An order to Charleston to hold specie ready for Savannah, and t $150,000o Philadelphia.) (5) That the offices reciprocally refrain from drawing on each other,
"

ship
upon

or

this bank,
"

until further orders." (6) (Cashier to draw for specie.) in specie or bills at sight Richmond,
------------."----------

on

this city, New

York

or

Boston

$ 50,000
100,000 100,000 50,000

in specie in specie Louisville, Cincinnati, in specie Lexington,

in specie Chillicothe, in specie

Pittsburg,

50,000
--

-----

100,000 100,000

Fayetteville, in specie
Total

$550,000"
paid on demand cash notes of banks which has been made.)
notes

(7) (Only
credit payment
as

Not to in specie, to be received everywhere. for to the bank after demand shall be indebted

the

the banks arrangements at Cincinnati shall have with when made for the payment debts, the cashier of of their respective of this bank as cash, provided the office at Cincinnati may receive the notes of any such bank demand." Ibid., pp. its notes in specie on the said bank shall thereafter pay 388,389.

(8)

"

That

cashier

"

54

THE

SECOND

BANK

OP

THE

UNITED

STATES being
secure

fell away

rate, the reduction proportionate $2,500,000 from July, 1818, to January, 1819. To

at

had this decrease in circulation the most stringent measures 28, which been adopted, culminating in the order of August forbade the officesto take any notes but their own, even on deposit.1
it appearance, therefore, the bank had done what wished to do, but actually it had done nothing of the sort. The attempt had been directed against the southern and

In

branches, and here it was almost absolutely futile. instead of diminishing, increased In fact, the western offices, their loans to the extent of $500,000.2 Moreover, loans in
western

frequently changed their form only: the branches ceased to discount, but increased their purchases of bills of as a species of renewal exchange, in most cases of notes or bills drawn on them,3 and frequently this change resulted in
the West

transforming paying
one.*

an

interest-paying debt

into

non-interest-

could not be they did most

In addition, the southern and western offices "restrained from issuing their notes, which
5

profusely." The curtailment, therefore, fell almost entirely upon the not desirable. curtailment was offices in the East, where Philadelphia
1
'

alone reduced
directed

to the extent of

or $3,600,000,6

to inform yon that notes of this bank which are made payable offices of discount and deposite will not be received at this bank States. ever, Such notes, howof debts due the United after this day, except in payment have received during this day, will be received of the offices as your bank may J. Smith, cashier, circular to city banks ; issued in exchange to-morrow morning."

Sir

am

at its several

"

had ceased receiving offices also, F., Vol. Ill, p. 367. The office at Boston branch notes in March (Gray to Jones, March 19, 1818, ibid., pp. 324, 325), and southern New Orleans, and Charleston had never taken any but their the offices in Savannah,
to the
own

notes.

"

Report

of committee

of August

26, 1818, ibid., p. 325.

2CHEVES,
3

p. 15; NlLES,

Vol. XXIII,

p. 90.
ran

Ibid.

These

were

the so-called race-horse bills,which

from

office to office

without
*

being

paid.
in a change resulted merely of debts local banks, on neither or the notes of

"The

bearing

in many instances curtailments interest for debts due by local banks,

was

of which
5

interest received.""

Ibid.
6

Ibid.

CHEVES,

p. 14, and

MILES,

ibid.

ATTEMPT

TO

SAVE

THE

BANK

UNDER

JONES

55

half the entire reduction in discounts; Boston and New York, which were forced not required to reduce, were to follow the example of Philadelphia, the discounts at Boston
over

in April, 1819, being only $94,584.37.1In like manner it was the eastern officeswhich reduced circulation, the notes in the East.2 of the western banks having to be redeemed

that the bank was result was actually worse off than when it began the reduction, because the offices which needed strengthening became weaker, while the branches of the South

The

After could not be checked. rapid curtailments," says Cheves, "the New vital points (Philadelphia, York
infinitely in
worse

and West

"

these immense
most

and

sensible and

devised."

destroyed.
had

condition than The business of the eastern officeswas almost On the 19th of March, 1818, the Boston office

were and Boston) the remedy was when

It had made ceased receiving southern branch notes. discounts worth mentioning for many no weeks, its whole time and capital being employed in the redemption of southern branch paper.4 The office at New York suffered in the
manner.

same

Both

branches

were

depleted of their specie,

though
them.5

large quantities of the precious metals were sent to At times their capital was "less than nothing."6

The

general condition of the northern branches corresponded to that of the officesat Boston and New York. The entire
capital of the institution was rapidly being shifted to the South and West. Out of the total capital stock of $35,000,000 the office at Baltimore held $5,646,000 in May, 1819;
1 2

CHEVES,
From

p. 15,

and

MILES,

ibid. 24, 1819, $5,700,000 southern and western in " offices, nearly all at Philadelphia,
....

Sept. 1, 1818, to May

at the

been
and

received Boston.""
3 * 5

Cheves
pp.

eastern to Crawford,

notes had New York,

May

24, 1819, F., Vol. IV, p. 881.

p. 90.

CHEVES,
Letter

14, 15; also NILES,

Vol. XXIII,

of President Amount

Gray

to Jones, March

19, 1818, J7.,Vol, III, p. 324.

Ibid., p. 331.

furnished from

$6,293,392.01 office at Boston ; to

"

office at New York from May, 1817, to Dec., 1818, Jan., 1817, to Dec., 1818, $1,622,800.09.
7, 1820, ibid., p. 589.

Memorial

of the bank

directors, Dec.

56

THE

SECOND

BANK

OP

THE

UNITED

STATES

Richmond,

ton, $1,760,000;Savannah, $1,420,000, and Charlesin an $1,935,000,while the offices in the West were
condition, controlling a capital enormously Lexington out of proportion to their legitimate needs. had $1,502,000, Louisville $1,129,000, nati and Cincin-

equally

prosperous

$2,400,000, while New

and Boston had none From what has
which
the
state banks

York

had

capital of

$245,000,
manner

whatever.1 already been

was

specie of the bank

stated of the drained from

in

it by the

and speculators, it will easily be conjectured that the frantic attempts to secure specie would be of little the eight months avail. During of contraction the bank
could procure after the most strenuous efforts only $2,617,440.63, while from the beginning of its existence to the 5th of December, date no more

1818, it imported

$6,500,458.42.After

that

To get this specie over could be secured. half a million dollars was expended,2 and this half million represented only the direct cost of buying and importing. Cheves declared that a debt of $1,586,345.47 owed by the "principally if not entirely" out of its specie operations.3 The only result of any consequence, by over to diminish the bank's resources therefore, was bank
in 1818

grew

and

Capital of the bank, showing West, May, 1819:

the effect of the note issues and

drafts of South

The

CHEVES,
2F
3
.,

capital given p. 34, Appendix

for Philadelphia

was

merely

nominal."

P., Vol. Ill, p. 593;

II. Cost $525,297.35. Vol. XXIII,

p. 90.

Vol. Ill, pp. 338, 339.

Exposition,

p. 15; also NILES,

ATTEMPT

TO

SAVE

THE

BANK

UNDEB

JONES

57

$2,000,000. The sale of public stock

was

Specie purchases and similar nature. States stock ended by reducing " the productive capital of by "eight the Bank, within the period of eight months,"
millions of dollars and upwards." balances due from the state banks
l

operation of a the sale of United

an

The

efforts to
more

secure

were

perhaps

less hope-

still. In

the

West

these

banks

remonstrated, and when pressed were State banks had nothing insolvency. and hopes of relief from the them
were

when called upon forced to declare their with which to pay, ning. vain from the begin-

to efforts of Jones and his coadjutors the results. After a reduction the bank, and such were secure the officesin the North and East were of about $7,000,000, almost prostrated; the specie funds there had vanished;

Such

were

diate its debts abroad had been increased enormously ; its immeits liabilities in excess demand were of $13,168,000,
means

them only $2,666,000; the capital had of meeting tied up there been shifted to the South and West, and was debts could not be in notes and bills constantly renewed;

collected; the

orders of the central board could not be enforced upon the branches; and at Baltimore a gang of looting the office and striving with might thieves was

suspension of specie payments. demanded the government given when $2,000,000 of its deposits in specie in order to make a payment in redemption of the Louisiana purchase stock.2 For and The
about
a

main to bring final blow was

moment

the bank
....

trembled

on

the verge what

of insolvency:
to give
"
"

"the Directors

did not know

an

answer

they furnished arrangement whereby in lieu of the specie, a substitution " which bills on London 3 But no one conversant with its situation saved the Bank."
but finally made
i 3

CHBVES,
James
King,

p. 16, and

NILES,
to

ibid.

Redeemable

Oct. 21, 1818.

Correspondence

C. Fisher

Rufus

King,

Jan.

30, 1819, Life and

of

KM/MS

Vol. VI, p. 201.

58

THE

SECOND

BANK

OF

THE

UNITED

STATES
the

expected
storm.

that it would

be able much

longer to weather

brought down the popustringency of 1818 at once lar felt wrath upon the bank, and popular feeling was soon On the 25th of November, 1818, and reflected in Congress. John C. Spencer, a representative from New York, introduced The

investigation by a committee of resolutions demanding After a brief but spirited debate, these were the House.1 was adopted on the 30th,2 and the committee appointed with investigated committee laboriously, collected a vast amount of formless material, and on the 16th of January, 1819, reported, censuring the
as

Spencer

its chairman.3

The

speculation, and of the bank for mismanagement, ing violations of the charter. These violations consisted in buy$2,000,000 of the public stock for the government of managers
the United

States, in assisting the stockholders to evade part of the second payment of the coin and funded-debt dividends to stockholders who had instalment, in paying
not paid up their subscriptions, and in allowing stockholders to cast more than thirty votes in the firstand second elections

for directors.*

Despite the really flagrant mismanagement and fraud at the bank, and despite the amount of this which was revealed by the committee, the report was exceedingly weak, being hastily and in its imperfectly, contradictory constructed
The author of it charges, and in places incomprehensible. had too feeble a grasp on the complicated questions before him, and consequently failed to make the most of his He felt called upon, indeed, to apologize for advantages. The inaccuracy the report, admitting confusion.5 and
l
3

A.

ofC., 15th Cong., 2d Sess., Vol. Ill, p.

New

317.

"

Ibid., p. 335.

*Ibid., p. 552.

J. C. Spencer,
Harwell

York

William Louis

Lowndes,

South

Carolina

; John

ginia; Tyler, Virthe

Bassett,
pp.

Virginia;

McLane,

Delaware,

constituted

committee."/^.

335, 340.

The

in the report. S. proceeded to make expressions of some explanations ' business of the bank certainly has been to discount the principal remark, that
"

Mr.

ATTEMPT of the

TO

SAVE

THE

BANK the

UNDER

JONES

59
it who

minority possessed

committee,

anything

like

an

only members adequate knowledge

of

and currency questions, clearly demonstrated

of banking that the charges

Thus in the of slight moment. stock the bank had acted as agent purchase of government for the government, had committed no and consequently breach of the charter.1 The failure in respect to compelling

of charter violation

were

the payment
was was

in specie and funded debt for the second instalment ter, regrettable , but it was not a violation of the charby probably inevitable, and had been condoned
in advance.2

quent payment of dividends to delinfor trifling amounts, by stockholders was and made or subordinate officers of the bank without the knowledge The bank had no control of consent of the central board.3
The

Congress

had permitted the casting of election who than the legal number more no of votes, and there was method specified in the charter by which these judges could hinder such violation.* In explaining the mismanagement
the
not so successful, of the bank's affairs its supporters were but they forcibly argued that these acts were the result of ignorance, or of a difference of opinion with regard to coron

judgesof

notes

by a pledge of stock,' was liable to misconstruction. The expression secured does not convey it was tence the meaning ; of the committee either an inadverused in copying ; in the draught, or an intended to confine error and it was
.
.

the remark expression,

exist among the facts stated, they unanimously facts, and abstracts of documents

With of the bank at Philadelphia, regard to the in the. close of the report, that, ' whatever differences of opinion can them (the committee) as to the result and inferences to be drawn from
to

the

business

....

in giving to the preceding statements concur of Mr. S. observed that he thought their sanction.' it was liable to a misconstructhe expression sufficiently precise, but he understood tion. facts, the unanimous When inferences were did not sanction with mingled fact was definitely to these inferences ; but that, in all cases a wherever to sanction it. Mr. S. remarked, the committee that the report had stated, meant indisposition, and when had been been prepared the committee at a time of severe fatigued and almost exhausted labor, and he should not be surprised if many with
extend
erroneous 1 2 3
*

expressions
pp.

were

found

in it."
"

Ibid., Vol. IV, p. 1241.

pp.

LOWNDES,

1305, 1306 ; McLANE,

pp.

1339, 1340.
pp.

Ibid., LOWNDES, Ibid., LOWNDES,

Ihid., pp.

1306, 1307; McLANE,

1340-43; SERGEANT, The

sum

pp.

1389-91.

pp. 1308, 1309 ; SERGEANT,

p. 1391.

was

only $1,460. in the

1344, 1345, 1391, 1392.

See the summary

of all these arguments

pamphlet

by AEGLES.

60

THE

SECOND

BANK

OP

THE

UNITED

STATES

rect policy, and

consequently
was

Indeed,

criminality

not

did not establish criminality. charged, the Baltimore frauds

it was being unknown until later. Under the circumstances recting urged that the policy to be pursued should be that of corcent abuses, not the destruction of the ignorant and inno-

the victory of the bank's advocates in Congress that neither house could be persuaded to take any step except that of passing an act additional to the charter
was

offender. So complete

by which
House scire

in the future it would be impossible for stockholders to cast more votes than they were entitled to cast.1 The

rejected,
facias and

by

large

motions majorities,

to
a

sue

out

to repeal the charter, besides

less stringent measures.2 others contemplating did nothing until January, 1820, when it decidedly repelled the consent of the resolutions to compel the bank to secure
states for the establishment

of number The Senate

and to expose its of branches accounts with private individuals.3 The investigation of 1819 had its results, however: the fell below par;4 President stock of the bank immediately Jones, entirely discredited, fled in affright from the bank, and on the 25th of January, 1819, James C. Fisher became

president pro the wreck.5 Fortunate

tempore,

until

man

could

be found

to

save

States had
punishment,
crime
were

would it been

it have been

for the Bank

of the United

no more serious compelled to undergo but the consequences and of mismanagement be severely felt for the rest of its existto ence,

not only in the depletion of its capital, but

1

even

more

A.

of C., 15th Cong., 2d Sess., Vol. IV,

p. 1409.

p. 2522.

2/6id.,

Only

28 ayes

for

ibid., Vol. Ill, pp. 922, 923; Vol. IV, pp.

3
*

the scire facias. See 1411-16.

for

measures

proposed

Ibid., 16th Cong., 1st Sess., Vol. I, pp. 58-68.

Vote, 24 to 12, Jan. 4, 1820. Vol. XV,

p. 401.

To 93 at Philadelphia
F., Vol. IV, p. 868, and

; 97 at New

York."

NILES,
p. 417.

NILES,

Vol. XV,

ATTEMPT seriously in the

TO

SAVE

THE

BANK

UNDER

JONES

61

hatred

and

almost universal conception by Gouge in a single sentence: summarized ' The ruined." saved and the people were
conviction

hostility of the people. The is of the situation in 1818-19 "The

Bank

was

is apparent

in Niles, who

evidence of this breathed nothing but

threatenings and slaughter against all banks, but especially he of the United States, upon which against the Bank directed the whole weight of his clumsy artillery,declaring into a machine for the shaving of that it had degenerated
the oppression of the middle classes, and that it Its curtailments had, indeed, precipihad caused the panic. tated it was hardly more the panic, for which, however,
notes

and

Noah for the flood. responsible than was infinitely increased by the was

The

popular

terness bit-

restrictive orders of debts precisely when it was which compelled the payment to pay them, the climax of dissatisfaction being most difficult reached on August 28, 1818, when the bank issued its order
to the
measure

The receiving each other's notes. for which the country was one was quite unprepared, Notes and occasioned suffering and embarrassment.
offices to
cease
a

were current only at of distant branches Niles complains bitterly of the inconveniences

discount, imposed
"more

and
upon than

individuals, testifying to his

with hundred dollars in small notes of the Bank of the United one States " in his pocket, he " could not pay the postage of a few letters."2

own,

when,

keenest distress fell upon the West. In that section for the terously there never existed the slightest justification preposThe

large loans of the bank, and, as the state banks been equally generous, the inflation and over-trading Worse unparalleled. yet, much of the indebtedness
been
1

had
were

had

created
Cobbett's
NILES,
per

by loans to farmers, who

The
notes

had

no

security to
slightly, about

edition of 1833, p. 71. Vol. XV, p. 61, Sept. 19, 1818.

LOWNDES,
A.

depreciated

% of 1

cent."

of C., 15th Cong., 2d Sess., Vol. IV,

p. 1301.

62

THE

SECOND

BANK

OP

THE

UNITED

STATES

offer excepting mortgages and absolutely unsalable

on

real estate, absurdly overvalued, during a commercial crisis. A

reflection should have convinced anyone that these new and insignificant towns of the West could not possibly ton, pay debts as vast as those contracted in New York and Boshave been permitted to borrow such and should never
moment's
enormous sums.
on

Of

course,

expended repaid when

over
on

permanent The demand.

came

money improvements,
borrowers
never

the

had and

been

could

mostly not be

the notes
over

expected to pay due, the usual custom being to renew the 20th of July, 1818, the parent collection of the balances from the
rate of 20

and When,

again. therefore,
the

on

board

demanded

per cent, every month,1 the inhabitants of Ohio were extremely indignant, and complained The of the action as being diabolically oppressive. aggravated by the prohibition of the orders of July were
receipt of the branch notes of other offices. The Cincinnati banks could not pay,2 and, so far from discharging their in in October than they had owed indebtedness, owed more

Cincinnati banks

at the

July.3

Nevertheless

they had

striven

to reduce

their debt,

had inflicted great distress upon their and as a consequence debtors, who were absolutely unable to pay, having neither The Cincinnati bank notes with which to pay. specie nor banks

protested, therefore, against the United States as a " grievance bank, however,

the acts of the Bank

*

unprecedented."

of The

could not and would not yield, and, instead favorable terms, prohibited the receipt of offering more This act precipitated a of the notes of these banks.5
1
2

F., Vol. Ill, p. 326, par.

8. to Bank

Cincinnati

committee

of United

States, Aug.

20, 1818."

P., Vol. IV,

pp. 859, 860.

3

The

sum

was

Jones $721,006.12."

to Crawford,

ibid., p. 859.

See also NILES,

Vol.

XV, p. 59.
* 5

Protest

of the Cincinnati

banks, F., Vol. IV, p. 860.

Resolution

of Oct. 16, 1818, ibid., pp. 861, 862.

ATTEMPT

TO

SAVE

THE

BANK

UNDER

JONES

63
in

disaster, the three

Cincinnati

banks

stopping

payments

November.1 To detail the events in regard to the other western states would be merely to repeat, without essential variations, the The Bank of the United States story of the Ohio banks. The local banks could of its dues. pressed for the payment debts, and consequently could not pay. not collect their own In Kentucky They suspended, and ruin fellupon thousands.

20. 2 of the State ceased specie payments November 1819, the remainder By January, banks of the Kentucky had suspended, and their notes were at a discount of from
the Bank

20 to 30 per cent.3 Most of the banks of western had ceased payment by December, 18 18.*
initiatory impulse
came

vania Pennsyl-

Since the States,

from

the Bank

of the United

everyone held that institution responsible. In the South there were In difficulties of like nature. South Carolina there was constantly a balance of from $500,-

000 to $800,000 due United States.5 The

by the state banks to the Bank of the bank called upon the banks of Charleston
there
intense excitement, threatened to get a
was

to pay

$130,535.50, whereupon

and the exasperated local banks state law passed hostile to the Bank of the United States, They complained that and also to suspend specie payments.
the
"

"

monster

was

iniquitously draining

the South

conditions existed in North specie.6 The same where the balances against the State Bank were also large.7 As early as March, 1818, a hint was of given that payment balances would be agreeable, though no demand was made.8 The
1 2

of its Carolina,

State Bank
Ibid., p. 864.

offered to pay in notes of other officesof the

Though to partial resumption immediately compelled and continuing afterward (Cobbett's edition),p. 90. until Jan. 1, 1820." NILES, Vol. XV, p. 283; GODQE 3 NILES, * Ibid., Vol. XV, p. 385. p. 283.
'"" Jones to Spencer, Dec. 23, 1818, F., Vol. Ill, Jones, Dec. 4, 1818, ibid.

p. 323 ;

letter from

Charleston
844-7.

to

"
8

Ibid.

Jones to Crawford,
to Polk, of State

May Bank,

29, 1818, F., Vol. IV, pp.

Grove

of branch

bank

March

14, 1818, ibid., p. 848.

64 Bank

THE

SECOND

BANK

OP

THE

UNITED

STATES

of the United States, in notes of other banks, or in drafts upon other banks in places where the bank had offices,1 but the proposition was brusquely refused, to the extreme
embarrassment of the State Bank, which repeated the angry charges that the bank was attempting the ruin of the people by deliberately and wickedly trying to draw away the specie of the state.2
the hatred and enmity circumstances of states and state banks to the Bank of the United States From the firstthese had been higher and higher. mounted these

Under

ana, keen and persistent. Thus the earliest constitution of Indiadopted in 1816, had prohibited the establishment of the branch of any bank chartered outside the state.3 In February, upon

1817, Maryland

laid

tax of

$15,000 per

annum

Tennessee lowed folthe office at Baltimore;4 in November this example with a tax of $50,000 upon any bank settled in that state under any but a state charter,5 and in
" tax of thirty-one and annual dollars of bank stock opera fourth cents on every hundred ated " the state, a resolution of the within upon or employed 1818, declaring that this tax " was legislature in November,

December

Georgia imposed

an

of the only intended to apply" to branches of the Bank United States.6 When the panic began, the indignation of
the people found vent in further acts of the same character. The first constitution of Illinois,framed in August, 1818, prohibited the existence of any but state banks within the
state.7
1

In December
to Grove, March
to Polk, March Charters and

North

Carolina laid

an

annual

tax

of

Polk Grove

11, 1818, F., Vol. IV, p. 848. 14, 1818, ibid., and

2
3

March

19, p. 849.

POORE,

Constitutions,
1817, chap.

Vol. I, p. 509, Art. 10.

*Laws
5

of Maryland,

156, p. 174.

Laws

of

Tennessee,

Scott's

edition,

Vol.

II, pp.

389

ff.; Laws

of

1817,

chap.

132,

sec.

2, Nov.

22, 1817.
see

For statute ibid., p. 1206.

6 7

LAMAE,

Laws

of Georgia
21.

(1810-19), pp. 889-91; for resolution,

POOEE,

Vol. I, 447, Art. 8,

sec.

ATTEMPT

TO

SAVE

THE

BANK

UNDER

JONES

65
1819,
each of month in that

$5,000 upon the branch

Kentucky

at Fayetteville ;

in January,

imposed

the largest tax of all, compelling

the branches

to pay

$60,000 yearly,2 and

the next

Ohio

by enacting that the tax rivaled Kentucky Even in Pennsylvania, state should be $50,000 upon each branch.3 ture the supposed stronghold of the bank, the legisla-

warmly discussed the policy of a tax,4 and in 1819 the constitution petitioned Congress to take steps to amend to the District of Columbia.6 as to confine national banks so
6 also debated in the legislatures of Virginia York, Clinton, of New and South Carolina,7 and DeWitt urged action upon the legislatureof that state.8 It was only

The

was subject

Court in the cases the decisions of the Supreme of McCulloch vs. Maryland and Osborn vs. the Bank of the United Had it lost either of these States which saved the bank.
cases,

there
out

can

be

no

doubt

taxed
states.

of existence immediately
These
were

have been that it would soon in all of the southern and western the losses suffered in that the bank was pled crip-

More

disastrous
so
enormous or seven

were

1817-18.

in its dealings for six

debt

was

in

excess

its suspended that amount of its of $10,000,000,

years.

In 1822

capital being tied up in unavailable assets, while the actual 9 loss was calculated in October of that year as $3,743,899.
1 2

NiLES,Vol. SLAUGHTER,

XV, p. 367.
Acts

of Kentucky,
p. 64.

p. 637, chap.

343, Jan. 28, 1819. 459, Feb. 8, 1819.

CHASE,

Statutes

of Ohio, Vol. II, pp.

1072 ff.,chap.

*NILES,
5 A. 6
8 9

Vol. XIV,

of C., 16th Cong.,

Vol. XIV,

1st Sess., Vol. I, p. 70.

""NILES,

NILES,

p. 23, note.

Vol. XV,

pp.

289, 290.

GOUGE
Expected
and

(Cobbett's edition),p. 59.

loss in 1822 other than
:

SUSPENDED

DEBT

Personal Loans
on

stock securities

$6,401,255.90
4,017,050.76

stock securities

$10,418,306.66
of which it is calculated that $3,743,899 will be a loss." Report of Committee 4, and NILES, Vol. XXIII, p. 88. Oct. 1, 1822, CHEVES, p.

holders, of Stock-

66

THE

SECOND

BANK

OF

THE

UNITED

STATES

two years had been $1,100,000, that so The profitsof the first * in this period the management netted a loss of $2,600,000. The principal loss was being at Baltimore, the amount next. offices came Cheves declared in 1824 that from 10 to 15 per cent of the the 1st of capital loaned there had been lost,2 and on due and unpaid at these offices was April, 1819, the sum
over

$1,600,000. The

four

western

$6,351,120.80,hich w
on

was

August

30,1822.3

reduced by less than $1,000,000 In the South the offices most offending

Norfolk and Charleston, but there were after Baltimore were considerable losses in addition at Washington and Savannah. The final loss in the South was $2,234,138.61, while in the only $552,576.78.* The explanation of this small loss in the West is to be found in the appreciation of western real estate which the bank had been forced to accept West
it
was
i

For the profits

see

report

of stockholders, Nov. 5, 1819, NILES,

Vol. XVII,

p. 165.

a
3

JP.,Vol. V, p. 96.

Kentucky, in Ohio to the Bank and 6,351,120 dollars, 80 cents ; on the 30th of August due, including also real estate taken in payment, 1822, the sum 5,389,477 was dollars, eighteen being 961,653 dollars sixty-two a cents, cents."" of reduction p. 27, and NILES, Vol. XXIII, p. 94.

"On

the

1st of April 1819, the

sum

due

including

balances

due

by local banks,

was

"CHEVES, * Sums

lost to Aug. 30, 1822

Philadelphia

$ 177,057.02
3,708.33 2,807.48

Portsmouth Boston
Hartford New

6,299.02 29,939.79
1,696,643.09 70,794.85 38,057.20
-

York

Baltimore Washington Richmond Norfolk

-

191,082.66 21,481.88 100,428.13 78,041.29

Fayetteville Charleston
Savannah New Orleans
-

37,609.51 205,446.83 165,846.64 94,156.17 28,579.45 58,547.69

Louisville
Lexington

Cincinnati

Chillicothe Pittsburg
Total
"

$3,005,527.03
H. K., 460, 22d Cong., 1st Sess., p. 244.

ATTEMPT

TO

SAVE

THE

BANK

UNDER

JONES

67

This property had in liquidation of its debts in 1818-19. been taken at a low figure, but its value increased with surprising rapidity, largely owing to the phenomenal growth of

Cincinnati.

Had

it not

been

for this
bank's

enormous

increase

in values, the

and unexpected total losses in the

West

would

hardly

have

been

less than

$2,000,000. As

consequence of the transfer of real estate the bank owned a large part of Cincinnati: hotels, coffee-houses, warehouses, foundries, residences, vacant lots; stores, stables, iron
besides
over

Kentucky.1
the

former

of good farm land in Ohio and Its possession of this vast property maddened by a recklessness impoverished owners, now

50,000

acres

they would not acknowledge, believing instead that which the bank was responsible, as if it had taken possession by violence.
the situation gave to the politicians too tempting to be neglected, and by a an opportunity one can slight effort of the imagination almost hear the reverberations of "Old Bullion" Benton's voice startling the

Moreover,

drowsy
....

Senate
where
2

as

he thunders:

"

I know

towns,

yea, cities,

already appears as an engrossing proprietor. All the flourishing cities of the West are mortgaged to this money They may be devoured by it power.
"

this bank

at any

moment.

They

are

in the

jawsof
one

the monster!
one

lump

of butter in the mouth and all is gone!"3

1

of

dog !

gulp,

swallow,

S. D., 98, 22d

Cong., 1st Sess., pp. 22-36. Vol. I. p. 198.

3

Thirty

Years,

C. Z".,Vol. VIII, Part

I, p. 1003.

CHAPTER
THE
"

IV
OF

ADMINISTRATION

LANGDON
or

CHEVES
or

SHIP

without

rudder

sails
on no

masts,
sea

on

strong to express the hapless condition of the Bank of the United States, when I undertook the government of it." So asserted Cheves many years later,1and with truth, for when he came into officehe found an appalling state of affairs. There was
means a

allowance of provisions and water, from land, will afford a figure by

stormy

short and far

too

general

expectation

that the bank

was

about

to suspend

be more payment, and that the nation would once into all the difficultiesof the period just before plunged its establishment.2 As already seen, the situation of the specie

Elsewhere the particularly serious. attempt to curtail had frequently ended merely in changing the form of the debt, while the notes of the southern and western branches were stillpouring into the northern offices in an flood.3 The spirit of the offices is overwhelming
eastern

offices

was

evidenced
would
1

by

the

act

of the
a

Baltimore
new

not
in

attempt
answer

to make
President

directory, which curtailment required in

of South Mercury.

Cheves

to

Thomas

Cooper,

Carolina, Aug.

18,

1837, NILES,
2
"

Vol. LIII, p. 8, quoting

memory

the Charleston

My

deceives

entertained a sanguine On the contrary there

was

if I found any one in or out of the Bank, who me much longer. belief of its being able to sustain its payments much a public that the nation was and general expectation
....

suffer the calamity of a currency composed entirely of irredeemable CHEVES. p. 19, and MILES, Vol. XXIII, p. 91. paper."" " to pay The chief difficulty,probably, now continue will be if the Bank cannot incur a liability to be called upon by its creditors for twelve specie, and consequently about
to

interest We fear there is too much to calculate upon cause cent, per annum tors the Bank being placed in this unhappy situation before many months.'1''" Bank direcFeb. 2, 1819, to Cheves, Feb. 1, 1819, Exposition, to Crawford, p. 39 ; also Smith
per

F., Vol. IV, p. 869.

*
"

And

pouring

when in upon

in this wretched circulation was state, the southern and western NILES, Vol. XXIII, p. 90. these weak p. 15, and points."" CHEVES,

68

ADMINISTRATION

OF

LANGDON

CHEVES

69

February,
instructions

though,
from

renewed

"without

order to keep the strict letter of Philadelphia, the notes of debtors were An insignificant the formality of discount."1
in

violent and sometimes successful opposition by the stockholders.2 The government stock held by the bank had been sold and the proceeds with exhausted without bringing any relief.3 The

attempt Philadelphia was

to reduce

the excessive

loans

on

stock at

being

met

bank

was

almost without

vaults to meet banks, while a stillgreater sum was owing and immediately borrowed Meanwhile due for money at home and abroad.4

specie, and actually without sufficient in its the possible demands of the Philadelphia

dues embarrassed the bank to an the receipt of government chants almost ruinous extent, the duties being paid by the merin branch paper, and the debentures for these same

duties being demanded bank

There
i
"

in specie
was
no

"

by the government and paid by the or paper immediately redeemable in specie.5 specie to be procured at home, and the

the curtailing success, against after protesting, by letter, without Board, bearing date the 19th February, the Parent 1819, it was to order of agreed the formality of discount, in order not to violate the instructions renew the notes without Conspiracy Coses, p. 114. of curtailment."

That,

"

At the close of this period [of curtailment] the discounts on personal security had been so long the tion subject of curtailment, that but a small porbeen of further reduction, and, after great efforts, a rule had of them admitted to reduce had been granted on the discounts which the stock of the established Even Bank, at the rate of 5 per cent, every 60 days this small reduction was
at Philadelphia,

"

the subject of loud, angry, claimed the privileges and and CHEVES,
3

sometimes p. 16; NILES,

the borrowers, among and constant remonstrances who due to stockholdthe favour which they contended were ers, in communicating to the Board." their sympathies succeeded
"

Vol. XXIII,

p. 90.

"All the funded

"

exhausted."
" 5

CHEVES,

debt which was p. 16; NILES,

NILES,
were

saleable, had ibid.

been

disposed

of, and

the proceeds

CHEVES,
"The
were

p. 17, and

ibid.

sums

paper, every

which demandable

collected
next

the

day

daily on account in Philadelphia,

of the

revenue,

in branch

office of the establishment,

revenue
was one

The

thus paid

at

at the discretion paper principally paid in Branch in Branch the debentures paper, comptor
. . . .
"

time, at and, at the same the officers of the Government. of ; and while the duties were
were
"

demanded

CHEVES, money and paid at the other in specie, or its equivalent, of the place." ibid., and NILES, ibid., p. 91. See also Cheves's letters to Crawford April 6 and 13, 1819, F., Vol. IV, pp. 873, 874.

70

THE

SECOND

BANK

OP

THE

UNITED
broken

STATES
down

attempt to procure February ;* the bank

and
none

early in was receiving little aid from the South, from the West,2 while its own slender stock of the still being the resources have
drawn
into these

it abroad

had

precious metals was the Union.3 "All

Cheves, "would
mode and

not

of the Bank," sustained it in this course

!!
"

parts of declared

of business another month wreck could be expected.

"

Nothing

and but disaster

Even

Secretary Crawford

The stoppage of specie payments hope. by the abandoned bank and by the State institutions is inevitable," he wrote to Cheves.5
to save the man the president, however, was wreck, if it could be saved ; for what was required before all decision and firmness, and these Cheves posthings was sessed He clearly perceived to an extraordinary degree.
new

The

lay in that the essential cause of the bank's embarrassment the business of the southern and western offices, and these " immediately directed not to issue their notes," while were the bank itself " ceased to purchase and collect exchange This measure the vital one was and west." difficulties.7Alone, in rescuing the bank from its immediate however, it would have been effective only after a lapse of
on

the south

Smith "The

to Crawford,

Feb. 2, 1819, F., Vol. IV, p. 869.

were tardily, and the Western remitting not at all."" Vol. XXIII, 91. See also letters of March 17, and NILES, 20 and p. p. April 2, 1819, from Cheves to Crawford, Exposition, pp. 42, 51.

Southern

Offices

CHEVES,

to purchase and collect drafts on the southern Offices, though lay western almost the whole active capital already and in these quarters the Union, and though the great object of the curtailments was of ibid., p. 90. CHEVES, to draw funds from these points." p. 15; NILES,
3

"

The

Bank

itself continued

....

even

"

Exposition,

p. 17; NILES,

ibid., p. 91.

5"Langdon
KELL,

Report to Cheves,
"
?

American

States Bank," by Miss LOUISA P. HASand the United Historical Association, 1896, Vol. I, p. 366. See also Crawford April 6, 1819, CHEVES, p. 59. Cheves Vol. XXIII,
p. 92.

CHEVES,
"

p. 20; NILES,
cause

has given security to the bank, and without which it itself,has been the restraint put upon the offices, sustained certainly could were the exchanges Cheves to adverse, in the issue of their notes." with which Crawford, Sept. 15, 1819, F., Vol. IV, p. 903. The
great

which

not have

"

ADMINISTRATION
time than the bank

OP

LANGDON

CHEVES

71

had at its disposal. Hence it was immediate relief in other directions. necessary to seek forward a number Cheves consequently brought tional of addiThe curtailments having this end in view. measures
more

to be continued, though not increased ; already ordered were to be collected; the balances due from the state banks were to be requested to give the bank time was the government

transfers of public funds from the places where to be they were they were collected to the places where disbursed;1 to allow debentures to be paid in the same currency finally, as a temporary duties were in which paid;
to make

relief of absolute necessity, the bank borrowed in Europe, payable in three years.2 "These

$2,000,000
measures,"

in the short space of seventy said Cheves, "lifted the Bank to a state of safety and even days, degree of some In fact, the storm was not only weathered, but power." in part abandoned, the state banks the curtailments were
....

averted, assisted, suspension bank to some the capital of the

1

the

currency improved, extent localized.3

and

Hitherto had been allowed to call for its deposits at any the government longer possible, no was no matter where the funds might be. This arrangement office, the bank in a single day. as it led to infinite embarrassments prostrate and might May 3, See resolution of board of April 12, 1819, ibid., p. 874 ; Cheves to Crawford,
1819, ibid., p. 876. Confined to the offices at Philadelphia,

Boston,

New

York, and

timore. Bal-

the curtailments previously ordered. (2)To forbid the Offices to issue their notes when the exchanges were south and west against them. due by local Banks To collect the balances to the Offices. (4)To claim of the (3) to transfer funds from the Offices where Government the time necessary was money
to the to be disbursed, as well as like time (untilthe difficulties collected to those where it was funds to meet to transfer the Bank were the notes of Offices paid of removed) in the Bank or other Offices than those where to their they were payable according To pay debentures in the same in which tenor. the the duties, on which (5) money

"(1) To continue

debentures
not

were

secured, had

been

paid.
a

exceeding

2,500,000 dollars, for

pp. 20, 21 ; also NILES, Vol. XXIII, ibid., p. 95. p. 25, and NILES,
3

p.

for a sum obtain a loan in Europe CHEVES, three years." period not exceeding borrowed CHEVES, 92. For the exact sum see
"

(6)To

"These

measures

....

lifted the
the
some

Bank

in the prostration

short enabled

space

(from 6 March
to
a

to 17

May) from
even

extreme

which

has
it to

days of seventy been described,

state of safety and

except at points to sustain other

in

degree
an

of power,

it, and

where institutions which

it had

excess

of capital, to

wanted

aid

and

its curtailcease ments, defy all attacks upon to be were ascertained

72

THE

SECOND

BANK

OP

THE

UNITED

STATES

peril, it became necessary to attempt a complete reform of its business methods and the correction of all abuses, with the purpose of restoring and afterward retaining its capital. Cheves's

Having

rescued the institution from

immediate

management

of the institution was alone. He seemed to

dominated
care

by these considerati littleabout doing any

perfectly safe, and considerable business so long as he was is, therefore, to be judged, his career not by his ability as a banker in ordinary circumstances, but as an inventor of expedients
to restore the bank

to the position which

it firstheld.

completely successful ; as a banker, one may reasonably doubt his titleto any pre-eminence. Resolved to restore the capital of the institution, Cheves In this he
was

should be paid until the intact.1 In order to make once more original capital was the funds perfectly safe, he strove for three principal ends: the reduction of the active funds, a proper distribution of determined
that
no

dividends

capital to the branches, and the retention of these capitals they had been assigned. by the branches when once To reduce the active funds, he insisted on the retention
been surrendered as a result of the insolvency of the debtors at Baltimore and other ishing of 37,954 shares,2 thus virtually diminplaces to the number the bank's capital by $3,795,400. In addition to this,

of the capital stock which

had

Cheves secured
as

far

as

further reduction of active means by investing practicable in the funded debt of the United
a

States.3 As the former

stock that
was

management

sold all the government saleable,4 there remained only the

had

of the currency which had just before solvent; above all, to establish the soundness hopeless; and in a single season deemed business (the first) to giro to every been of it could advantageously Exposition, p. 21, and Office as much employ." capital as
"

NILES,
1
2

ibid., p. 92.

Report CHEVES, CHEVES,

There
"

of Committee
p. 29, and p. 30, and
an excess

of Stockholders, NILES, NILES,

Vol. XXIII, ibid,

Nov. 5, 1819, NILES,

p. 95.

Vol. XVII,

p. 165.

3
*

was

April.

Reports

of $322,823 in March, 1819, which of the state of the bank for 1819.

was

reduced

to

in $160,210

ADMINISTRATION

OP

LANGDON

CHEVES

73

government's subscription to the bank's capital, $7,000,000, To increase this the bank took a government at 5 per cent. loan in 1820 of $2,000,000at 6 per cent., and another in 1821 of by

$4,000,000 5 per cent.1 The capital was at $16,955,610. It was further diminished

thus reduced by the amount

debt, which was in excess of $10,000,000. of the suspended left as After all these deductions were made, the amount active capital was about $8,000,000. Cheves thought this almost
case

sufficient,calculating, in October, 1822, that in any

needed.2 only $1,500,000additional was More important to safe and proper management was the The firststep was to assignment of the capital- the branches. funds

to transfer the

of the

bank

from

the

western

and

held, to the northern offices, southern where it was offices, By putting an end to most of the it was where needed. business of the southern and western offices,and by compelling bills of exchange on Europe them to remit in specie or
or

the North, the bank

extent

the

by October, 1819, corrected to a considerabl distribution of the capital injurious

occasioned

There were, ever, howmismanagement. locked up at Baltimore and the western vast sums still offices,and at all the southern offices the funds held were Nevertheless, correct banking manded excessive.3 principles de-

by

former

that definite capitals should be assigned to the bank since otherwise it would be impossible to "do and its offices, 4 business with judgment success." The 1st of November, or

selected as the date upon which the capital should be considered fixed,5though the sums assigned in most cases was were provisional, and nothing whatever
was

1819,

therefore

allotted to Baltimore or the southern officeswere

i

to the western

offices.6 Meanwhile ordered to continue to remit in bills

2

CHEVES, Report

p. 22, and

NIIES,

ibid., p, 91.

CHEVES,

p. 30, and

NILES,
sees.

ibid., p. 95. 3, 4.
sec.

of Committee
sec.

of Bank,
5

Sept. 25, 1819, F., Vol. IV, p. 907,

sec.

*Ibid., p. 906,

1.

ibid., p. 909,

17.

"

Ibid., p. 907,

5.

74

THE

SECOND

BANK

OP

THE

UNITED

STATES

of foreign

all excess of capital and all revenue received on account of the government.1 The most difficult and the essential task stillremained, for the mechanism of the system had to be arranged so as to
or

domestic

exchange

keep

the capital stationary, and thus avoid a repetition of the disasters of the previous years. In analyzing the causes

of the transfer of the funds to the South and West, the directors pointed out those which needed correction before any permanent reform could be obtained or the bank's safety
These were: the payment revenues assured. of government at the eastern officesin notes of the distant branches, which made necessary the keeping of large supplies of specie at all the officesto redeem them ; the collections and drafts of the bank and its offices on each other; and the payments on account of the government,2 which had to be made wherever ordered if the bank held sufficient funds belonging to the

government,

officewhere The firstof these

most

if it did not have payment was demanded.

even

them

at the particular

causes

Cheves

after the western invariably against the West, and for half the exchanges were year against the South ; and hence the notes of these offices
serious

always considered as the the note issues, because

constantly to the East and North in payment of dues, and thus tend to shift the capital to the government West and South.3 As the course of exchange could not be controlled, one of two things was, in his opinion, necessary: would
run

decline to receive the branch must either the government dues, except where the notes in payment of government by their tenor made receivable ; or the bank must notes were

put an end to the issue of western notes and greatly diminish At the very beginning of his the issue of southern notes.
1

Eeport

of Committee
sec.

of Bank,

Sept. 25, 1819, F., Vol. IV, p. 908,

sec.

10.

2 3

Ibid., p. 908,

12.

Cheves

to Crawford,

April

6, 1819, ibid., p. 873; and

Memorial,

Bank

of the

United

States, Dec.

7, 1820, ibid., Vol. Ill, p. 589.

ADMINISTRATION

or

LANGDON

CHEVES

75

tary presidency, therefore, Cheves earnestly appealed to SecreCrawford to cease the receipt of branch paper in the dues.1 Crawford eastern cities in payment of government

declined to accede to the proposition, as he considered it illegal, certain that it would be inexpedient, injurious and was
to the treasury, and

transform

destructive to the bank, while it would the branch issues into local currencies, circulating

neighborhood of the issuing offices.2 Cheves submitted, but the belief that the government's dangerous rereceipt of such notes everywhere was mained 1820, the bank with him to the last. In December,
appealed
to Congress
to make

at par only within the immediate

and especially urged a change Congress would the treasury nor the
same

modifications in the charter, in this respect.3 Since neither

furnish the relief asked,

end

was

by prohibiting

exchanges ran. The notes of another nothing larger than five-dollar notes. not to be paid out except by an office having a officewere credit with the officeoriginally issuing them.4
The

reached by the alternative method, namely, the issues of the offices against which the The western officeswere instructed to issue

third difficulty, that of having to pay government funds wherever they were called for without having time to
1

Cheves

to Crawford,

April 2, 1819, Exposition,

pp. 49-52.

Same

to

same,

April 6,

1819, ibid., pp. 53-7; also F., Vol. IV, pp. 873, 874.
to same, to Cheves, April 6, 1819, Exposition, April 9, Crawford pp. 59-63. Same to pay however, It would seem, that for a brief period the bank refused deposited by the treasury except at the places where payable by the tenor such notes Bank from F., Vol. IV, p. 874; Memorial, Extract of the of the note. minutes,
2

pp. 64-9.

"

United

States, Dec.

7, 1820, ibid., Vol. Ill, p. 589; NILES,

Vol. XVI, pp. 417, 418; Crawford

to Cheves,
"
*

April 27, 1819, F., Vol. IV, p. 614. Bank

of the United

Memorial,
"

States, Dec.

7, 1820, ibid., Vol. Ill, pp.

586 ff.

from to be drawn When the notes of an office (above five dollars)shall appear to issue them, it,to be used as a substitute for exchange, it shall immediately cease On to sustain the credit of the office to do so. necessary unless it be indispensably run this principle it will be inexpedient, steadily and considering that the exchanges that the offices of Pittsburg, Cincinnati, country, constantly against the western pensably Chillicothe, Lexington and Louisville should issue their notes unless it be indisnecessary

to sustain

Report of the Committee

p. 908, sec.

their credit, until the further order of the Board." of the Bank of the United States, Sept. 25, 1819, ibid., Vol. IV,
"

14.

76

THE

SECOND

BANK

OP

THE

UNITED

STATES

completely obviated by a new ment arrangeto be with the treasury by which sufficient time was for the making of transfers.1 given in all cases in themselves sufficientto keep the These measures were transfer them,
was

not a capital fixed, but Cheves was and consequently further rules were

man

to take any chances,

enacted with

the upon

same

object
issues

in view.

In

addition
office
was

to the prohibition

the

of notes, each

to draw

it had other offices only when for only to be drawn bills were Such which to draw.2 sixty days and payable at sight, thus avoiding the danger of tying up capital in a species of long loans; they should

upon

bills of exchange provided a fund upon

not

be bought
Each

above

par,

nor

should
provision

par.
on

officemust make presentation, and indeed

checks be sold below for paying its notes

any unexpected minor debts due each other, and furnish one another monthly lists These notes were to be sent of notes of other officesheld. home as soon to pay them as possible, and the funds might be secured by selling drafts on the debtor office conversely, ;

retain specie sufficient to meet demand.3 The offices should collect

collections might be provided for by buying bills payable at the creditor office.* Besides the monthly reports, which acted as a check on the impulse to draw on the other offices,
to furnish the central board with a weekly each office was listof the billsof exchange bought and checks drawn, giving exact and minute information about them.5
1

F., Vol. IV, p. 909, sec.

16, and

Crawford's

answer

to the proposals,

Sept. 14,1819,

ibid., p. 640.
2

"They by
an

shall not
arrangement

draw,
or

except

on

funds

to meet

unless

understanding

with

each

the payment They other.

of their drafts,
may,

under
"

credits with each other and with the parent establish mutual be advised." the parent Board of all which arrangements shall immediately p. 908, sec. 12.
arrangements,
3
5

such bank,
Ibid.,

Ibid., pp. 908, 909,

"

sec.

18.

"

Ibid., p. 908, sec.

12.

to their weekly statements a list of the bills offices shall severally annex by them in the preceding week, with the names the drawers, endorsers, of purchased from sight or date, and the premium and and drawees, dates, the time to run, whether

The

ADMINISTRATION

OF

LANGDON

CHEVES
the

77

capital fixed: to draw for funds only after giving time the treasury was to draw for the transmission of the funds; the officeswere

Such

were

the

measures

for keeping

only
checks
course

when and

they

had

provided
notes
were ones

for the

payment

bills; the

in putting the bank into a position its its business, once it could safely continue where from the South and West and properly capital was withdrawn With their capitals assigned, the offices apportioned.

of exchange ran the essential were

of offices against These not to be issued.

of their the which

ures meas-

precisely how much beyond that sum which

knew

they
came

upon, and all into their hands had to be

once

had

to trade

accounted for and which it belonged.

returned

at

to the various

offices to

While
the bank banks
to

against dangers which threatened from Cheves undertook to hold the state management, providing
a

strict accountability.

It

was

bank's profits that the state banks should balances due to the bank; retain enormous
to the bank's

advisable for the not be suffered to

it
was

necessary

safety that they should not be permitted to trade absolutely without restriction, for if they did so the
currency

could not be kept sound, and specie payments Consequently, as a means to the could not be continued. profits,to its safety, and to the securing of the bank's just diate soundness of the currency, Cheves insisted upon an immeances reduction of state-bank debts, a settlement of balin the future at fixed intervals, and the constant time presentation of their notes for specie.1 At the same vigorous Kentucky
interest

efforts were

and

Ohio.

to recover the bank's funds in made By taking mortgages and collateral

"

received, the average rate

i

state to settle up
"

by them, with amount and also the aggregate of the checks drawn Ibid., sec. 13. received." of the premiums " It is generally understood that the U. S. office in this city has called on the 20 per cent, a week, till paid; then banks to pay their balances, up about

This is by orders from head quarters." short period. weekly, or at some Enquirer NIL.ES, Vol. XVI, p. 261, quoting the Richmond of May 28, 1819.

78

THE

SECOND

BANK

or

THE

UNITED

STATES

terms easy to the security, and by accepting real estate on debtors, it contrived by August 30, 1822, to secure $961,-

653.62
120.80.

out

of a Cheves

debt due at Cheves's accession of this as an naturally regarded

$6,351,unusual

achievement.1 in the management Reform was energetically pursued. Salaries were at once reduced,2 current expenses cut to the lowest possible figure,3and the London agency discontinued,
in

the expenses were lower than at any other period of the bank's history.5 before Cheves Changes of officials and directors began even In January, 1819, was placed at the head of the bank. directors had been elected to the parent board fourteen new
so as

far

possible.*

As

consequence

afterward of a total of twenty-five,6 and immediately President Jones and George Williams resigned from the board.7 Cheves remorselessly continued this necessary work, out incompetent officers and striving to bring weeding
out

Less than a year after his entercriminals to punishment. ing McCuloffice,Cashier Jonathan Smith left the bank.8

forced out of the Baltimore branch in May, 1819, at once resigned;9 the directors of the branch and Buchanan loch
was

president was elected;11 and suits changed;10 a new Williams, and McCulloch instituted against Buchanan,
were
1

were

for

Exposition,

pp.

26, 27, and

NILES,

Vol. XXIII,

p. 94.

President's

and

cashier's salaries from

$7,000to $6,000;rest of the officers, 20

per

cent.
3
"

The

year

1819.""

current Report

expenses

of Bank

of the bank have been essentially reduced since the Oct. 1, 1822, CHEVES, Committee, pp. 11, 86, 87, and the State of the Bank,

NILES,
*

ibid., p. 89.

Report

of Committee

on

July 19, 1821, NILES,

Vol. XX,

p. 344.
6

S. D. 98, 22d Cong., 1st Sess., pp. 44-8.

6ff. R. 460, 22d Cong., 1st Sess., p. 286.

7 8

CHEVES, NILES,

p. 39, and

NILES,
p.

Vol. XV, His

p. 417.
was

Vol. XVII,

440.

place

taken

on

Feb.

25, 1820, by Thomas

Wilson."
9

Cheves

to Crawford,

March

1, 1820, F., Vol. IV, p. 920.

p. 73, and

Cheves
NILES,

to Crawford, ibid., p. 321.

May
The

27, 1819, Exposition, vacancies

were

NILES,
"

Vol. XVI,

p. 223.

10

five.

Ibid., p. 238.

ADMINISTRATION

OP

LANGDON

CHEVES

79

These came to trial in the conspiracy to defraud the bank. The lower court acquitted the in 1821. courts of Maryland defendants, and the decision was then overruled by the court
of appeals;1 but on re-trial in the lower court in 1823 the defendants were also brought again acquitted.2 Suit was branch for defalcation,3 against the cashier of the Middletown while similar measures Louisville, Ky., the number
were

taken

at other offices. At

eight

to

thirteen, only

of directors was four of the old

increased directors

from

being

Half the appointed.4 president was retained, and a new directors at the offices,Niles calculated, were turned out.5 board In August, 1819, the president of the Richmond

of some resigned,6 there being a deficit at that branch $60,000; and in September, 1820, the cashier at Fayette-

N. C., resigned because of a deficiency in his accounts.7 ville, Meanwhile the western and southern officeswere carefully investigated by committees of the bank which reported their
of losses suffered during condition as well as the amount Cheves was of the opinion that the firstyears of the bank.8 branches,9 and it was too many determined to there were

reduce the number, if possible.10 The attempt the Cincinnati branch alone was withdrawn
1

was

made, but in October,

pp.

Conspiracy

Cases, Appendix,

pp.

81 ff.

*Ibid., Appendix,

1 ff.

3
* 6
one

Sum

lost, $66,548.Cashier Vol. XVI,

p. 260.
p. 405,

removed

Oct. 27, 1820." 12 WHEATON,

5

12, 13.

NILES, NILES,

NILES,

Vol. XVII,

p. 325,

Jan. 15, 1820.

Vol. XVI,

Aug.

of the clerks of the Examiner. the Richmond

i

branch."

NILES,

14, 1819; p. 421, Aug. 21, 1819. The fault was with Vol. XVIII, 11, 1820, quoting p. 32, March

NILES,

Vol. XIX,
pp.

p. 26,

Sept. 29, 1820, quoting

NILES, Vol. XXIII,
....

the Fayetteville

Observer.

8
9

CHEVES,
"We

26, 27, and

too
many

p. 94.

have May

branches,

I hope

they will be reduced."

"

Cheves

to Crawford,
10

27, 1819, Exposition,

p. 73.

that the number as committee strongly recommend expedient, of the discount deposite be gradually diminished, and offices of should whenever it shall be deemed beneficial to the institution." Report of Committee of Bank Nov. 5, 1819, NILES, Vol. XVII, p. 166. The same Stockholders, was recommendation
....
"

"The

made

by the committee

of 1822." CHEVES,

p. 11 ; NILES,

Vol. XXIII,

p. 89.

80

THE

SECOND

BANK
"

OP

THE

UNITED

STATES

1820,1 it being found

2

inexpedient to discontinue any other

office." Complete

On these various measures. crowned the 1st of January, 1821, the capital was once more entire,3 having been appropriated from profits since 1819 $3,550,000
success

contingent fund to cover A dividend of 1^ per cent, was

to
a

the losses of the early years. then declared.4 By January,

fairly apportioned, though not yet in manent Perentire consonance with the best interests of the bank. fixed in the cases of the southern and capitals were
1823, the capital
was

Here and with the exception of Baltimore. northern offices, at the western offices no capitals could yet be assigned.5 The effect of these measures the volume upon of the With bank's business was the effective funds of marked.
t $8,000,000,o which Cheves had virtually reduced the capital

done, and under his little could be done ; for his policy was one of management Since the western restriction. continuous and southern any offices could rarely issue notes, they could not make

of the bank,

no

extensive

business

was

material discounts, and

1

the

measures

thus

adopted
was

checked

Cheves

to Crawford,

Oct. 21, 1822, F., Vol. IV, p. 944. Oct. 2

the date of withdrawal.

2 3

CHEVES,
"

p. 28,

and NILES,

Vol. XXIII,

p. 94.

Resolved,
were

sustained, whole Bank,

*
on

That, in the opinion of the board, the losses of the bank, previously repaired, and that the capital stock was re-established, and made the State of the on the first day of January, 1821."" Report of Committee

Jan. 23, 1821, NILES, Eeport Dividend

Vol. XIX, p. 375.

July
2, 1821, NILES,

300, and
5

of Bank, H. B. 460, 22d Cong., 1st Sess., p. 213.

Committee

Vol. XX,

pp.

298-

Distribution
-

of capital, Dec., 1822

-

Philadelphia

Portsmouth Boston
Providence Middletown New York

$24,245,306.24 (presumably includes 200,000.00 Fayetteville

....

suspended

debt, etc.). $ 500,000.00

1,500,000.00 1,000,000.00

1,500,000.00
-

Charleston

....

350,000.00
-

Savannah
Lexington Louisville
-

200,000.00

2,500,000.00
500,000.00
-

Baltimore Washington

...

Chillicothe
-

....

Richmond Norfolk
-

1,000,000.00 500,000.00

Cincinnati New Orleans Pittsburg

....

1,000,000.00

"F.,

Vol. IV, p. 477.

ADMINISTBATION business

OP

LANGDON

CHEVES

81

western

it

was

almost futile for Cheves

a

never

a meant policy of that management " Total investments " for the whole contraction. continuous much less than at any other of Cheves's administration were particularl period of the bank's existence, and discounts were

ordered words, but the

In the light of this fact had to assert that his management It never had, in so many contraction.1 entirely.

entire

from about restricted, running from $39,000,000 to $30,000,000 out of productive funds.2 The issues kept

$25,000,000 to $44,000,000 of

pace with the discounts, ranging from in $3,519,000 January, 1820, to $6,630,000in September of
almost completely year. The West and South were deprived of the bank's notes, as a consequence of the policy 1819, which forbade their issue when the of September, the
same

course

in October of that was adverse,3 though of exchange plan allowed all the officesto issue five-dollar year the same notes, no matter what the course of exchange, and provided for their redemption at allthe offices.4 This permission, however,

of littlevalue, since the notes had to be signed by the president and cashier of the parent board, and these officers
was
1
"

now

state, and
ordered

defy

has
p. 21, and
2

been

from

NILES, of

Vol. XXIII,

contradiction, and the time I took my p. 92.

am

ready

to

prove

that
"

seat, until

this day."

no ment curtailExposition,

funds in April, 1819, $33,480,000ere a total of $40,640,000 of productive w In 1820 discounts at no time exceeded $29,913,000.In 1821 discounts were their maximum $29,346,000 of a total of $40,061,000,while in 1822 the maximum out discounts.
was

Out

in
at

$28,561,000 out of
3
"

the suspended

a total of $44,602,000. In the discounts, too, would debt of $10,000,000.

be included

All notes

issued
between

of exchange place, centered in those cities. The to direct those branches to refuse to issue their notes, even a deposite upon of specie. The effect of these causes, has been, the exclusion from circulation, in all combined, the states west and south of the seat of government, of the notes of the Bank of the state

south and west these places

have, in consequence of the of Washington and the commercial cities to the east of this itself constrained found Bank has consequently

United
*

States

and

its offices."" Crawford's

"

Report,

Dec.

1, 1820, F., Vol. Ill, p. 552.

is hereby given, that the notes of this bank and its offices, five dollars, will be received and paid on demand, the denomination of of at the bank and its offices respectively, without by reference to the place where they may, By order of the board of directors, Jonathan their terms, be made Smith, payable. cashier."" NILES, Vol. XVII, p. 115, Oct. 23, 1819 ; see F., Vol. IV, pp. 908, 909, sec. 15.
"

Oct. 16, 1819.

Notice

82 being

THE

SECOND

BANK

or

THE

UNITED

STATES

entirely too busy to give adequate time to this task, furnished.1 The bank, neververy few five-dollar notes were theless, was anxious to meet the difficultyby increasing its
issues of five-dollarnotes,2 and the order allowing them to be The prohibition taken at allofficesgave relief in the North.

upon the officesagainst receiving any of the notes had stood for fourteen months, and had caused much embarrassment and excessive feeling.3

management of the bank, on the whole, was He excellent. Nevertheless, he failed to avoid all errors. could not restrict overdrawing either at the parent bank or He could not control the branches to the at the branches.*
apology for his requisite, and found an adequate failure in the nature of the branch directorates and their as remedies the withdrawal of officers. He recommended
extent

Cheves's

possible, and the payment of good salaries offices where His banking methods, to the presidents.5 moreover, were He discounted notes at not altogether commendable. long dates,6 he
stock,7 and
1

made
was

loans

he
Bank

content

security of the bank's to have the bank's issues constion

the

Memorial,
"

of the United

States, Dec. 7, 1820, F., Vol. HI, p. 589.

five dollar notes of the bank and the offices shall be increased as fast as be prepared Report of Committee and signed." of the Bank, Sept. 25, 1819, F., Vol. IV, p. 908, sec. 15."
2

The

they

can

"

3NILE3,

Vol. XV,

p.

61, Sept. 19, 1818; Vol. 'XVI, p. 290, June

26, 1819; Vol. XVII,

p. 5, Sept. 4. 1819.

sary checks are presented, the officer will not think it necesdrawing, to see with the accounts examine of the individuals scrupulously Mr. Cheves attempted how much they are credited, but will pay them at once irregularity, and, in consequence, the business of the to check this practice an as
*

"

Sometimes

when

to

bank

with the brokers The practice T. WILSON, Cheves.""

was
was

diminished,
soon

H.

R.

were complaints however, not, resumed, with 460, 22d Cong., 1st Sess., p. 113;

and

many

chants. made by the merthe assent of Mr. case at Savannah

branch,
5

1820-21, S. Nicholas to Crawford,

to Biddle,

Feb. 26, 1821, B. P.

p. 73,

Cheves

May

27, 1819, Exposition,

and

Report

of Committee

of Stockholders,
"
"

ibid., p. 11.

The

bank,

to keep

up

its business

as

far

as
"

say

longer." Cheves at four and six months, and perhaps Aug. 18, 1837, NILES, Vol. LIII, p. 8, quoting the Charleston
amount of loans on bank stock in Aug., 1822, Sept., 1831, NILES, Vol. XLI, p. 117. stockholders,
^

possible, discounted long paper, to T. Cooper, in answer

Mercury.

The

was

Biddle to $5,974,725.80."

ADMINISTRATION
tute

OP

LANGDON

CHEVES

83

them so. merely local currencies, and strove to make In short, Cheves was not a banker either by profession or by inclination. He saved the bank, but, having done that,

he had exhausted his usefulness to the institution. The difficulties with the states and the state banks continued indeed much all through his administration, and were more serious then than either before or after. The currencies In April, in a wretched condition. of the state banks were York ranged from par for New 1819, bank paper at New England notes to 75 per cent, discount for other notes ; at

Baltimore, in August,
from

1819, New

England

notes

were

ciated depre-

1 to 6 per cent., New York notes from par to 8 ern per cent., Pennsylvania notes from par to 60 per cent., westfrom 10 to 60 per cent. , and southern notes from 1 notes
to 25 per cent.1

even

the states failures were continuous through 1819-20 ;2in the South and West affairswere All the banks of North Carolina virtually susworse. pended

Throughout

The banks of South specie payments May 31, 1819.3 In July, Carolina did not regularly pay specie until 1823.4 1819, the Nashville Bank of Tennessee suspended payment.5 6 The Bank of Missouri stopped in August, 1821, and in that Cheves was unable month Indiana, or Illinois which
to find any bank

in Tennessee,

he considered perfectly sound.7 In brief, there were very few banks in the South and West their notes in during the years 1819-22 which redeemed

Ohio, Missouri, Illinois, specie. In Tennessee, Kentucky, than elsewhere, for in even worse and Indiana affairs were was these states the relief system established, hindering ing creditors from collecting their debts, with the effect of bringdisgrace and ruin upon
i 3 5

the states themselves.8

2 *

The
passim.

con-

NILES,

Vol. XVI,

p.

434.

ibid., Vols. XVI

and

XVII,

F., Vol. IV, p. 1039.

GOUGE

(Cobbett's edition), 104. p.

Aug.
7, 1821, ibid., p. 956.

Crawford

to Cheves,

July 28, 1819, F., Vol. IV, p. 629.

1

6
8

Ibid., p. 758.

Aug. 24, 1821.

Cheves

to Crawford,

That

the

way

is, a system intended to give relief to the debtor by throwing This was done the collection of debts by the creditor. of

obstacles in by enacting

84

THE

SECOND

BANK

OF

THE

UNITED

STATES

sequences were painful to all parties. The bank would not take the notes of any but specie-paying banks, it did not issue its own notes in any considerable quantity in the South and West, and it forced the specie-paying state
banks presentation of As a result the people of these their notes for redemption. loans, and were left totally withno sections could secure out to Convinced a sound that the bank was currency.
to restrict their issues by

frequent

for all their woes, the entire population of the South and West spent their nights and days in reviling it as a rapacious, greedy, oppressive, and destructive monopoly. blame Cheves
adopted
vain,
as

had
as

wish to play the martyr, and consequently lenient a policy as possible; but it was all in
no

The

his experience proved. banks of Savannah, namely,

the Planters' Bank

the Bank from

of the State of Georgia, had paying their debts while Jones was Under
no

enjoyed

and immunity

bank. issued

Cheves

the

case

was

president of the altered. As the bank

in Georgia, the notes of the Georgia banks were and the received in payment of the government revenue, Bank of the United States, which took them, credited them
notes

specie. As a natural consequence it then asked the Georgia banks to redeem them in specie,1 and thus forced the Georgia banks to reduce their business in what
to the treasury
as

they considered an astounding 1820, the directors determined

degree.2

Moreover,

in May,

Georgia

banks

must

be

that the balances against the Hitherto the Savannah reduced.

of judgments in favor of the creditor, or giving replevin laws, staying the execution his property the debtor the right to recover of at a slight advance sold in payment his debts ; or by laws forbidding the sale of real estate excepting at a value appraised by the neighbors of the debtor ; or by similar pernicious legislative devices.
by receipts balances which had before accumulated were caused drafts, and have been long since paid to Government the revenue account of and by this bank."" Cheves to Crawford, June 9, 1820, F , Vol. IV, p. 927. the Government
1
"

The

heavy

on

"

The

very

diminished

amount

thirds of their paid capital, whereas to Cheves -July 16, 1820, ibid., p. 937.

of their circulation, (understood to be twoit was as once three to one)." Bichardson

"

ADMINISTRATION banks

OP

LANGDON

CHEVES

85

had received the benefit of at least $200,000 of the bank's capital,1 this being the average amount of the debt Even now the directors, dreading the possible against them.
results of popular hostility in the great state of Georgia, prepared to allow themselves to be robbed stillfurther, though to a less extent. The Georgia banks were to be allowed a
to be permanent credit of $100,000 without interest, that sum held by the branch in Savannah in their notes and not presented for payment. In other words, the bank was willing to devote

and profit of the But beyond this it would not go ; state banks of Georgia. it sternly demanded that all debts in excess of the $100,000
use

$100,000 of

its capital to the

should be duly paid, and instructed its officesnot to receive the notes of the banks unless they would pay the excess on demand.2 The Georgia banks considered the propositions refused to pay the excess,3 and declined haughtily to suffer the indignity of daily settlements for their notes.*
monstrous,
or

the office lost and these banks gained the use of the sum of $200,000, for a period of nearly three years." the capital of the branch of Report of Committee the State of the Offices, July 11, 1820, ibid., p. 933. See exact on figures, ibid, p. 934, column 4 of table.
1

"

Whereby

thereabouts,

"

do, immediately the office at Savannah on the receipt of this in deposit or payment to receive the notes of such local banks as shall order, cease them. not punctually and bona fide redeem " 2. Resolved, nevertheless, That if the said banks, respectively, shall bona fide pay 2"1. Resolved,

That

held by the office, of the whole proportions of the local paper over of $100,000, and above their proportions, respectively, of the sum which the office is permitted to keep on hand, then the foregoing resolutions shall cease to operate as
on

demand

their

to such
"

banks,

3. Resolved,
manner

in the

respectively, of Georgia,

respectively. That on failure of the said banks, respectively, to honor their notes stated in the second resolution, suits be commenced against them, States for the District at the next return of the Circuit Court of the United
for the recovery
amount of the whole interest thereon."
"

of their

paper

held

by the
on

office,with legal and customary State of the Offices, May 30, 1820, ibid., p. 932.
3

Report

of Committee

the

Planters' Bank refused to the amount of $10,900; State Bank, $25,600." Hunter, to Cheves, May 30, 1820, ibid., p. 928. This in excess of the permanent of Savannah, deposit." Cheves to Crawford, June 9, 1820, ibid., p. 927.
*
"

The

totally and in the intercourse of the banks in this quarter of the Union, who without example have always acted towards confidence, each other with unlimited and distinguished but as otherwise Joint Committee Report Banks of Savannah of objectionable.""
as

from

requisition by the office of the United States has been resisted, not only the local banks

Bank

for

daily

cash

ment settle-

unnecessary

[Planters' and

Bank

of the State

of

Georgia], June

21, 1820, ibid., p. 1055.

86

THE

SECOND

BANK

OP

THE

UNITED

STATES

still unwilling to grapple with the state institutions and took steps toward further concessions. The Georgia banks now dictated their terms: daily
was

Nevertheless, the bank

settlements of balances must be abandoned ; the Bank of the United States must issue its own notes and not those of the banks would redeem the Savannah state banks ; and, finally,

the notes already held and submit to weekly or monthly settlements in the future.1 Willing, if possible, to evade the conflict,the Bank of the United States accepted these terms,2

indignantly repudiating the insinuation of the Georgia banks that it wished to draw specie from them.3 Yet the arrangement letter a was scarcely accepted when
at the
same

time

from the president of the Savannah bank revealed to Cheves that the state banks would hardly be willing to consent to weekly settlements.4 To this Cheves replied that weekly be adhered to, but conceded that, if the settlements must ances Savannah banks would pay 6 per cent, interest on the balin excess of $100,000,they need not discharge them.5 The banks of Savannah at last accepted these terms 1821, with the addition, however, that checks
in January,
on

ern north-

cities might be given in lieu of specie. But peace endured only for the moment.

could satisfy the Georgia banks, for they

1

were

No concessions resolved to do

Report

of Joint Committee That

of Savannah

Banks,

F., Vol. IV, p. 1056.

as

be authorized Resolved, the office at Savannah and instructed, so long be kept within the rules heretofore preSavannah banks shall the balances of the scribed, in each week, oftener than once of these banks not to require settlements
2 "1.

it may hold of the said banks, respectively, of the notes which unless the amount over their respective proportions and above of $50,000, of the shall exceed the sum which the office is allowed to hold ; in which case the office of local paper aggregate demand as heretofore directed. will, of course, be authorized to cease the office at Savannah entirely, so long be kept within the limits aforesaid, to pay out the notes of the as the balances shall if these banks it pay all banks of Savannah, shall desire it, and that in that case it shall be disadvantageous its own it in to the demands upon notes, (except where
"

2. Resolved,

That

interests of the bank to do so), or in specie." the Bank, July 11, 1820, ibid., p. 934.
3

"

Report

of Committee

on

the State of

Ibid.

Richardson

to Cheves, July 16, 1820, ibid., p. 937.

Cheves

to Richardson,

July 21, 1820, ibid., p. 938.

ADMINISTRATION

OP

LANGDON

CHEVES

87

commercially justifiabl of what was and the agreement of January stillrestricted their dealings. business ;" They that they could do no " new complained and that they imported specie at a loss to redeem balances held by the Bank of the United States.1 After six months'
a

business far in

excess

trial of the new plan, they The Planters' Bank, ever.2

on

were

in

worse

condition than the

therefore, annulled

ment agree-

June
more

that

no

22, 1821,3 making the astounding request of its notes be received at the branch, and
notes

declining

to redeem

presented

by

the Bank
were

of the
on a

United
more

States henceforth, unless relations "liberal and friendly footing."*

was

placed

declared that He righteously indignant. the Bank of the United States had " exhausted the cup of " tributed concession and would go no farther,5 and the branch discirculars accusing the Planters' Bank of having Cheves suspended Hereupon the Planters' Bank specie payments.8 angrily retorted that no further intercourse could be held that of the United States,7and complained with the Bank "dissatisfaction
or

irritation against

the

Georgia"
1
"

arose

only

when

"this
and
....

mammoth
no new

in government here to came

in the purchase continued ardson Rich"

Still they curtailed their discounts the north, on of bills of exchange The Bank

did

business, except
This bank
the
excesses."

"

to import

of Georgia paid interest under the agreement. buy, at a considerable premium, and specie to pay to Crawford, July 21, 1821, ibid., p. 1068. experiment
to maintain
worse

"The
them in
a

has been made

(during which
enable

every

sacrifice, short their intercourse

ence and found to fail. After six months' experito of closing their doors, has been made the State banks find themselves with your office)

situation 25, 1821, ibid., p. 1070.

3

than

before.""

Richardson

to President

Campbell,

June

J. Marshall

to John

Hunter,
our

June
paper

22, 1821, ibid., p. 1074.

*"We that, from received The Bank

and

wish you the date

to refuse

hereafter;
to the

and

am

instructed

at your

of the office in any

annullment
shape."
"

present

agreement,

it may

to request not be

Planters'

Bank

of the United friendly footing June

on resolved refusing to pay States, unless their intercourse can

by the its bills accumulated liberal be conducted on the

which

prevails among
Aug.

the State

institutions."

"

Richardson

to

Campbell,
5

25, 1821, ibid. 25, 1821, ibid., p. 958.

Cheves

to Crawford,

Richardson

to Crawford,

July 25, 1821, ibid., p. 1071.

'

Ibid.

88

THE

SECOND

BANK

OP

THE

UNITED

STATES

Ships, plantations, negroes, substance. of wealth of the state have wharves, stores, all the sources by been [devoured]this all consuming power! " It declared
destroy
our

very

that it would cash no more of its notes Bank of the United States.1

presented

by

the

of the State of Georgia also of January, 1821, and the office annulled the agreement Attempts to collect specie refused the paper of both banks.2 for notes held, however, met with determined and succesful
the
resistance.

Meanwhile,

Bank

1819, the state legislature had this difficultby suspending the law allowing 25 per made on the failure of the state banks to redeem cent, damages
their notes in specie, so far as that law operated in favor of 1821, it the Bank of the United States,3and in December,

In

December,

totally precluded
notes

the bank

from

recovering specie

on

such

1, 1822, state-bank enacting that after January " notes held by the Bank of the United States shall not be in specie," unless the person presenting them redeemable that the notes were not procured by the bank should swear by
to demand to for the purpose or with any intent or draw specie " from the bank issuing the notes.* branch rapidly fell away. The business of the Savannah informed that " not a single In January, 1822, Biddle was
"
....

deposit is made

in it
5

nor

do

they discount

dollar but in
was

and by the close of 1824 it renewal of paper," totally deprived of business.6

1 2
3 * 6

almost

Richardson
Cheves

to Crawford,

July 21, 1821, F., Vol. IV, pp. 1069, 1070.

25, 1821, ibid., p. 958.

to Crawford,

Aug.
Laws

Dec. 18, 1818." LAMAE,

Enacted

Dec.

24, 1821." Laws

of Georgia of Georgia

(1810-19), 1206. p. (Dawson's Compilation),

Papers.

pp.

70, 71.

S. Nicholas

to Biddle, Jan. 14, 1822, Biddle

Reduction

of the business

of the Bank

of the United

States in Georgia
Oct., 1820 Dec.,

1824

Deposits of individuals Domestic bills discounted Bills and notes discounted Bills on stock pledged due from Balances state banks XXVIH, p. 116, April 23, 1825.

$ 112,562
...

$ 39,896
6.070 448,125 6,590

55,896 1,157,054 29,860

reduced

from

$75,724 to $10,862."NILES,

Vol.

ADMINISTRATION
The

OP

LANGDON

CHBVES

89

directors promptly inaugurated suit against the Planters' Bank to compel it to pay specie for its notes, and was settled in the of litigation the case after a long course Supreme
Hereupon repealed

Court of the United States in favor of the bank.1 legislature, in December, 1824, the Georgia
the

obnoxious law permitting the state banks to of the United refuse specie for their notes to the Bank States,2 and the national bank was once more enabled to
state of public feeling opposition and the same In July, 1819, the Bank of Nashville appealed existed elsewhere. to the public against the Bank of the United States in
same

engage The

in profitable banking

in Georgia.

address, declaring that it was striving to "destroy every In South Carolina, one mined state bank."3 year later, a deteran
" made to establish a system of state paper effort was that the Bank of the United States money," on the ground In all the western was collecting specie for bank notes.*

states the

which

into effect in 1819-20, by relief system went dered hinthe bank, in common with other creditors, was from collecting its just debts. In Kentucky a court
was

held

that it
a

without

power

under

its charter

to purchase

state

promissory note or to collect on such note if purchased,5 decision supported by the court of appeals.6 The a the bank. of Ohio waged relentless warfare upon

by the decision of the Supreme Court in the determined Maryland, case vs. a of McCulloch effort was to collect the tax laid upon the branches at Chillimade The statute decreed that the tax cothe and Cincinnati. Undeterred
1

Bank

904, Feb.
2 3
* 5

term,

of the United 1824.

States

vs.

The

Planters'

Bank

of Georgia,
p. 71.

9 WHEATON,

Dec.

20, 1824, Laws

of Georgia
p. 341.

(Dawson's Compilation),

NILES,

Vol, XVI,

Cheves
Bank

to Crawford,

July 12, 1820, F., Vol. IV, p. 931.

States
vs.

of the

United

Norvell,

2 A.

K.

MARSHALL,

101, fall term,

1819 (Kentucky

reports)

; NILES,

Vol. XVII,

p. 150.

6/6id., p. 365. The court reversed in 1821." Bank this opinion States vs. Norton, 3 A. K. MARSHALL, 422 (Kentucky reports).

of

the United

90

THE

SECOND

BANK

or

THE

UNITED

STATES

should be collected by the authorities of the state on the 15th of September of every year. The bank consequently filed a bill in the circuit court of the United States for a
writ The the enjoining auditor, was injunction issued,

Osborn, from
but
was

collecting tKe tax. not secured until the

the auditor had been notified under subpoena1 He therefore proceeded in conthat it had been granted. tempt

18th, though

On the morning of the 17th his agents of the court. the counter, entered the branch at Chillicothe, leaped over seized upon the vaults, and forcibly collected the tax.2 The
act aroused intense excitement,

out not only in Ohio, but throughfurious. "The

outrage," he be rarely paralleled under a Government can asserted,". of law, and, if sustained by the higher authorities of the 3 The bank State, strikes at the vitals of the Constitution."
was
. . .

the Union.

Cheves

instituted suits against Osborn and others for the money seized. contempt, for trespass, and to recover The legislature of Ohio interposed, and, finding that the bank immediately
would

drop its suits, passed an act in January, 1821, "to withdraw from the Bank tection of the United States the pronot

and aid of the laws of the State in certain cases," unless the bank should either consent to pay 4 per cent, of the profits from its branches in Ohio as a tax to the state,
or

the offices.4 In February of the same year it withdraw passed a further act, promising to restore $90,000 out of the $100,000 seized if the bank would drop its suits and agree
to pay the branches.5

4 per cent, interest henceforth, or The bank inflexible, and in was

remove

the

September,

1821, the circuit court of the United States for Ohio gave that the money seized should be returned to it, judgment
1 2
3

NELES,

Vol. XVII,

p. 86; 9 WHEATON,

738.

A. G. Claypoole To Crawford,

to Crawford,

Sept. 17, 1819, F., Vol. IV, p. 903.

Sept. 30, 1819, ibid., p. 905. It is interesting in the light of this to recall that Cheves was a determined nullificr in 1832. sentence * Statutes Ohio, Vol. II, pp. 1185, 1186, chap. 519, Jan. 29, 1821. of
5

Ibid., pp. 1198, 1199, chap.

524, Feb. 2, 1821.

ADMINISTRATION

OP

LANGDON

CHEVES

91

from collecting the time the and at the same enjoined state The defendants to the tax henceforth.1 appealed the case Court, which finally disposed of it in the February Supreme
term,

1824, affirming in all essential particulars the decision

of the circuit court.2 This narrative of dispute and discord with the South and ties idea of the almost insuperable difficulWest will give some slowly of the Bank of the United States, while it was

recovering from the shameful and criminal mismanagement so of its early years. In the opinion of judges competent
as

J.

Q.

Adams

would being most

" the interest of the stockholders and Rufus King, be to surrender their charter," the government

interested
this
was

in
so,

"the

continuance

of the

Bank."8

the government, outside of inclination to extend no the Treasury Department, showed unusual favors to the Bank of the United States. Requests bank's notes and to permit the election of directors eligible for longer than three in the persistently denied,4 though years out of four were
to allow other officersto sign the

Though

apparent that the bank could of signing notes it was not furnish the necessary circulation without this concession. done, and he could safely By 1823 Cheves's work was retire. Moreover, his restrictive policy, with the resulting
case

the opposition to him among profits, aroused an meager latter became The directors and stockholders. "restive

under
1

the low dividends"

Vol. XXI,
et al. vs.
p. 75.

which

they received.5
States, 9 WHEATON,

It is not

NILES, Osborn

the Bank

and Sergeant s ADAMS,

*

were

Memoirs,

counsel Vol. V, pp

of the United for the bank. 38, 39, March

738. Clay, Webster,

25, 1820.

Nov. 5, 1819, NILES, Vol. XVII, p. of the Committee of Stockholders, Memorial 166; Bank of of Dec. 7, 1821, F., Vol. Ill, p. 586; Report of the Committee Stockholders, Oct. 1, 1822, CHEVES, p. 10, and NILES, Vol. XXIII, p. 89. 6 Crawford to Gallatin, May 13, 1822; ADAMS, Gallatin's Writings, Vol. II, p. 244;

See Report

CHEVES,

in answer to President Cooper, Aug. 18, 1837, NILES, p. 9. See also Cheves Vol. LIII, pp. 8, 9, quoting Mercury, Cheves paints in warm the Charleston where the embarrassments the misery of his position because of the clamor colors and him. against

92

THE

SECOND

BANK

OP

THE

UNITED

STATES

he was surprising that under these circumstances willing to His willingness was lay down the burden of the presidency. increased by the provincial hostility of Philadelphia to him,

based
soon,

As not a Philadelphian. upon the fact that he was in therefore, as he felt himself justified doing so, he

his intention of resigning,1 declaring that it was announced "fixed and unchangeable," a "determination" and that he as the bank had always intended to resign as soon was once
more

restored to its first integrity. In October, 1823, he made a succinct report of the history of his presidency, and retired from the control of the institution.
i

Made

public July 1, 1822, NUJSS,

Vol. XXII,

p. 291.

CHAPTER
NICHOLAS
BIDDLE AND

V.
HIS POLICY, 1822-28.

IN January,

1823, at the age

of
an

Biddle,

member family, was

old

of thirty-seven, Nicholas distinguished delphia Philaand

being
Biddle

but
was

elected president of the bank, there for the office.1 one vote against his nomination College, was a proficient a graduate of Princeton

been secretary to Armstrong at Paris and Returning from Europe in 1807, he to Monroe at London. had devoted himself to the law and practiced for several

linguist,and had

senate. years. In 1811 he was elected to the Pennsylvania he cultivated literature,contributing extensively Meanwhile in both prose and verse to Dennie's Portfolio, ing and edit-

and later a Commercial and Clarke's Journal In 1819 Monroe him Digest. a appointed government director of the Bank of the United States. Having a taste

Lewis

for economic Ricardo, and enthusiasm

and subjects,
the French

being thoroughly
economists,

read in Smith, he threw himself with

into the study of banking and monetary questions, soon one of the most prominent members of and was tact, conciliatory in He was a man the board. of eminent temper,

his

own

of an been difficultto Immediately Robert Lenox,

industrious, quick of apprehension and quick to act, strong-willed and tenacious of fault was the possession His prominent opinions. On the whole, it would have over-sanguine temper.
versatile, untiringly
secure

upon of New

capable man his election, Biddle

a more

for the position. was advised by

first standing
i

and

merchant of the trusted director of both the firstand

a

York,

conservative

NILES,

Vol. XXIII,

p. 209, Dec.

7, 1822.

93

94

THE

SECOND

BANK

OP

THE

UNITED

STATES

the second banks of the United States, to select confidential keep him should advisers at the various branches, who informed of the affairsof the offices.1 The advice was taken. Lenox himself became Biddle's most intimate and confidential

adviser in regard to New York business, the affairs of the officethere, and the character and ability of its officers and directors. At Boston, James Lloyd and Daniel Webster son acted in a similar capacity; at Charleston, Robert PatterPotter; at Baltimore, John McKim, Jr., Robert in Oliver, and R. L. Colt men who had been prominent rescuing the office in that city from the destroying grasp of and John
"

Buchanan.2

It is commonly and

asserted that Biddle represented a new radical policy as against the conservative system pursued by Cheves, the intimation being that he was inclined

There is no evidence whatbanking. unsound ever for this opinion, and none could be more mistaken. That he represented a new policy may be conceded, but it far from being radical, and in some instances it appears was
to rash and
even more

conservative

two

important Cheves:

In than that previously obtaining. respects he differed materially in opinion believed

that the

from

He

supersession of a director for one for three years, was an furnished a means of excluding an

the rule compelling year, after he had sat consecutive because it excellent one,

member of objectionable his enmity ; while, in case of a the board without arousing desirable director, the seat could be held for a year by some firm, the director of the same relative,friend, or member returning to the board at the expiration of the year.3 He also believed, as against Cheves, that the receipt of all the
1

Feb. 6, 1823, B. P.

2 For an see CHEVES, of this aid rendered by Oliver and McKim acknowledgment HASKELL, his trusted agent Baltimore. Langdon Cheves and 18. Colt was p. at Historical Association, 1896, Vol. I, p. 366. the United States Bank," Report American
"
"

Biddle to Gallatin, July 29, 1830, President's Letter Book,

Vol. in, p. 306.

NICHOLAS
notes of the bank

BIDDLE

AND

His

POLICY

95

of the government everywhere in payment revenue need not be restrictive of the bank's transactions.1 In neither instance could the difference of opinion be

regarded as wildly radical. On the contrary, Biddle in the early years of his presidency In one of proved himself thoroughly conservative. his first officialletters as president of the corporation he
shows
more

this clearly: than enough

"

been

crippled
our

concentrate

and business

have had enough," he wrote, "and have in the interior. We of banking almost destroyed by it. It is time to

We

"

to bank

where

there is

some

use

to make at present the large profit in it, of our operations."2 commercial cities the principal scene Nothing could be less radical or revolutionary than this.

and

some

....

The

rendered and southern business was to be surperilous western bank employed where its and the capital of the in the large would be most useful and safe employment
"

In pursuance of this plan, cities along the Atlantic coast. the center of extensive the office at New York was made all the good paper it operations, being instructed to secure so managed possibly could, while the funds of the bank were
to protect it against inimical action by state banks to cease and brokers.3 To make this possible, the officewas the issue of state-bank notes, using its own exclusively; to
as

reduce the balances of the city banks due to it, and compel a week.4 them to settle all their debts in specie at least once The plan of operations thus outlined for the New York
1 2 *

Report

of Stockholders, Sept. 1, 1828, NILES, Vol. XXXV, of Committee To R. Lenox, Feb. 3, 1823, P. L. B., Vol. I, p. 5 (confidential). That

p. 74.
3

ibid.

hand This

on

" for nearly a year been occupied at second office has chiefly in Banking been largely their debtors. the notes of the State Banks have of course who

is a state of things not to be tolerated, and accordingly an effort has been to cause directed, to discontinue the special deposit of State Bank paper, weekly this operation combined with the settlements with the State Banks, and then, when its proper the effect on of business of the season shall have produced debts. While this movement to remit it in payment their Northern exchanges, of Biddle to is going on we wish to keep the office strong till the crisis is over." John White, of Baltimore, Feb. 19, 1823, ibid.. Vol. I, p. 11.
return
"

96

THE

SECOND

BANK

OP

THE

UNITED

STATES

consistently pursued, office was and bitter resistance of the New

in spite of the pertinacious York banks, which opposed

particularly the plan of weekly liquidation of balances.1 being created at While a more extensive business was York, the exchange New Orleans operations at the New

footing. Of all the a sounder placed upon ness, amount considerable of busioffices, this did the most the center of all the especially in exchange, and was The Southwest. banking and operations of the West
office
were

exchange
manner as

in such a operations here had been conducted to be almost unprofitable, while the same accommodations might be rendered to individuals at the New

York from

if strengthened office, it were Orleans branch.2 the New

wished to unify completely the bank.

and provided with funds In other words, Biddle the various business centers of

Biddle's management around these two measures

during his entire presidency turned of collecting state-bank balances

His plans for increasing notes. and issuing the bank's own business were all based upon an enlargement of the issues by means of which the greater part of the discounts was
"

necessarily made at that day. Since Cheves had believed the issues dangerous, because they were received everywhere in payments to the government and thus would, in his opinion, compel the retention of a specie fund much larger than the total note circulation, the bank had hitherto been
1 B. Lenox to Biddle, Feb. 21, 1823, B. P. Jan. 6, 1824, P. L. "., Vol. I, p. 96. 2
"

Biddle to I. Lawrence,

of New

York,

We have made also a vigorous effort to correct the exchange operations of the Orleans office which during the last year were on conducted principles equally For instance the office at New York unsound collects on and unprofitable But as the exchange is now New Orleans at 3 per cent. the office at New conducted it in 60 or 90 day bills at par without interest. Allowing them the 30 Orleans repays days for transmission, the 60 day bills are in fact at Vt and the 90 day bills at 2. So New
you

for the risk and trouble, even that really the profit is scarcely a compensation when Sometimes for a considfunds back immediately." they remain your receive erable Feb. 19, 1823, ibid., Orleans."" Biddle to White, of Baltimore, time at New
"

p. 11.

NICHOLAS

BIDDLE

AND

His

POLICY

97

discounts, to issue the notes of when accustomed, making state banks instead of presenting them for collection. The undesirable in several ways: the bank furnished result was littlecurrency to the West and South ; a very necessary check upon the state banks was removed ; the bank was deprived of the profits accruing from the circulation of notes; and the rendered impossible. In adequate increase of discounts was Biddle's plan of operations the fundamental consideration, the increase of the bank's circulation. He therefore, was

believed that the notes

might

safely be issued, despite the

account, necessity of paying them everywhere on government if only he could put an end to the depreciation of state-bank This was logical, for, if state-bank notes were notes. undepreciated,

the bank's

would

not

issues in the localities of state banks be employed as bills of exchange, and would not

as issued. constantly be presented for specie almost as soon The to bear state banks would, in brief, be compelled Biddle insisted, therefore, on their share of specie demands.

settlement of state-bank balances, and on the issue of the bank's own notes instead of those of state banks.1 done, the branches might receive each other's When this was
the
constant notes

without

At Philadelphia received much the issues of all the branches were indiscriminately2 taken. At the same were therefore, that these methods moment, delphia,3 York, they went into effect also at Philaapplied at New Richmond, Savannah, and Charleston,* and by August, 1825, Washington the only office not conducted was
i 2

hesitation, and from 1823 freely than formerly. more

the

notes

were

Report GOUGE
"Every

of Stockholders'

Committee,

Sept. 1, 1828, NILES,

Vol. XXXV,

p. 74.

(Cobbett's edition), p. 136.

change the clerks from the Bank meet to interand the State Banks morning The Balances are the notes received respectively on the previous day. struck for any length but no Bank ever remaining accordingly calculated on its Balance hesitated to send for Bank it grows ever a little too large, no of time, and whenever Biddle to C. P. White, ten or fifteen or twenty dollars from its debtors."" thousand
3
"

York, Feb. 3, 1823, P. L. B., Vol. I, p. 6. of New "Biddlo to C. J. Nichols, cashier Richmond

office,ibid., Vol. I, pp. 38-41.

98

THE

SECOND

BANK

OF

THE

UNITED

STATES

established there.1 The attempt was not wholly successful, however, and the central compelled on several occasions to call the authorities were attention of the officers to the regulations regarding the
on

this plan.

In that year it

was

ure issue of state-bank notes.2 The reasons for the partial failis found in the inability of the president and cashier to sign sufficientnotes for the offices. The problem was finally solved by the creation of "branch drafts." With the policy of issuing only the notes of the branches the discounts and purchase of went a plan for expanding bills of domestic exchange in the South and West instead of discounting personal security there.3 This operation was ness the complemental part of the plan for increasing the busion

The issue of the bank in the interior of the country. tions operaof the branch notes and the purchase of exchange were depending upon and supporting each other.* The proceeds
the bills provided a fund for the redemption of the note issues of the southern and western offices,and thus possible extensive loans in those sections without made

from

incurring the danger of transferring the capital thither from was encourthe other offices. On the whole, the success aging. The note circulation at the beginning of Biddle's only $4,432,000; in June, 1825, it was the $6,740,000, and in June, 1826, $9,616,000. Meanwhile operations of the bank were enlarged in every other item.
presidency
was that it should go into operation with you, as it has done inconvenience any else without everywhere and as far as possible without producing Biddle to R. Smith, Aug. 26, 1825, P. L. B., Vol. II, p. 42. excitement.""
1
"

am

very

anxious

Aug.

29, 1825, Biddle

bank

notes, and that In Jan., 1827, the same

says that he hears that the Charleston office pays out stateibid., p. 43. To President J. Johnson, this must not be done. difficulty existed at the Pittburg office." Correy to Mcllvaine,
"

Jan. 15, 1827, B. P.

" measures of the bank which had for their object the profits due to sive of its notes, the increase of private deposites, and the extenaugmented circulation cially benefidomestic in which a part of this circulation was of exchange, purchase

Increased

Binney

in the southern and western employed at Triennial Meeting of Stockholders, Report

of the Committee

parts

See Remarks of of the union."" Sept. 1, 1825, NILES, Vol. XXIX, pp. 31,

32, Sept. 10, 1825.

*

of Stockholders,

Sept. 1, 1828, NILES,

Vol. XXXV,

p. 74.

NICHOLAS The

BIDDLE

AND

His

POLICY
two
on

99
and three
notes

increase of private deposits was The millions by September, 1825.

between discounts

and

domestic
a

bills had increased to about the same extent, while debt of $1,292,000due in Europe had been discharged.1 intimately a larger circulation was The attempt to secure

connected, as already pointed out, with the plan to diminish It was one the issues of the state banks. of the cardinal doctrines in Biddle's banking creed that the big corporation existed for the purpose of furnishing a sound currency to the whole Union, and that this could be done only by forcing the state banks to redeem to secure The bank was

their issues in specie on demand. this end by keeping itself in the

Usually it maintained this relation creditor bank. and, on the slightest appearance of a without difficulty, tendency in a state bank to expand unduly, checked the by demanding times movement specie for its notes, though someposition of
a

dealings within bounds, and at such times could not restrain the state banks. On the whole, however, despite the growth of the population, the increase
it failed to keep its own

of business, and the necessarily enlarged and for banking facilities, demands the state banks
to redeem

legitimate
were
compelled

showed

very encouraging to all who had the good of the country at heart. This the directors of the Bank of the United States always claimed claimed, to be due to its efforts.2 and justly Biddle's conservatism also and ability as a banker are
a

their notes frequently, and which was progressive improvement,

the currency

revealed in the stress which nature of the paper which was The loans
were

constantly laid upon the to be discounted by the bank. he

mercial only on good cominstructed to loan

to be for short dates, and

paper.
i

The

New

York
triennial

office was
meeting,

Report

to the

Stockholders,

Sept. 1, 1825, NH-ES, Vol. XXIX, this feature

of the Sept. 1, 1828, NILES,

p. 32.

bank's

report and Gallatin's article lay stress upon benefits to the community. See Report of Stockholders, Vol. XXV, p. 74.

2McDuffie's

100

THE

SECOND

BANK

OF

THE

UNITED

STATES

paper at only 60 and 90 days, though it might take notes at 120 days if "beyond tomer." all exception, and for a good cusdirections are given, in answer In 1825 the same
on

request of the president of the branch to be permitted to extend the time of discount because he felt sure that larger profits could thus be secured. "Let us not," urged
to
a

Biddle,

"

by the hope

of doing better and

risk the

Loans demands

must

prosperity be confined
were

ness busigetting more safety of the Institution."2

or

to short-time

paper,

even

when

slack.3 Loans on real estate or forbidden, real estate not being fitbanking stock security were " tendency to lock up security, and stock loans having a for money

* " All the movements the funds of the Institution." of the bank," asserted Biddle, " are governed by this general considerati ! long loan to a senator He declined making a

from

Louisiana,6 and in 1827 he refused a long loan on real estate to an old and intimate friend, who had been a trusted " In director of the bank and of the Baltimore office. satisfied relation to the loan you suggest," he wrote, "I am Our great here. is that it would not be done object have so large a business men We and business paper. locked up in real estate part of the capital of the Bank
in a state obliged to keep every dollar we can of activity and I do not believe that a loan for eighteen be done for any however well secured would months,

that

we

are
"

of ties of friendship, pressure, no considerations of gain, no could persuade Biddle in these first years of his presidency
1

body."

The

evidence

is conclusive

that

no

amount

Biddle Same

to Lawrence, to
same,

Oct. 13, 1823, P. L. B., Vol. I, p. 55.

12, 1825, ibid., Vol. II, p. 22.

May

To the president of the Hartford Lawrence,

branch,

ibid., pp.

26, 27.

*To
5

Oct. 13, 1823, ibid., Vol. I, p. 55.

of the Hartford

To

the president

office,ibid., Vol. II, pp. 26, 27.

"

Jan. 9, 1826." Ibid., circa 90. John McKim,

Jr., of Baltimore,

f To

Jan. 9, 1827, ibid., p. 231.

NICHOLAS
to

BIDDLE

AND

His

POLICY

101

swerve

from

an

eminently

safe and conservative Biddle's management

course

of

banking.1

Equally respects.
discounting

conservative He repelled

was
a

in other

to make

tees proposition to erect small commita certain class of loans, instead of leaving all The bank, he declared, had lost to the board.

by "irregular discounting," and it was advisable not much for making to risk repeating the loss by creating the facilities such loans.2 He also made it a cardinal point of his policy rowers." to get rid of directors who were "large or habitual borIt
was

difficult to
on

while they remained the only alternative done.3 The

crux

was

refuse them accommodations the directorates, and consequently to exclude them, which was consistently lay, however,

of successful management keeping them in controlling the offices,

rather

vision, under a close superto engage freely in banking while allowing them Cheves's method of solving the problem had operations. been to restrict their business, in many cases almost completely. loss could accrue with such a plan, the Bank of the United States might almost as well have been conwere non-existent, so far as the West and Southwest cerned. Biddle justly regarded this situation as intolerable,
no

While

and the bank Consequently

an

admitted

failure if it could not be remedied.

he evolved new and stricter measures of control for the branches to to allowing them preparatory increase their business. to be When the directors were
chosen for the offices, he dispatched letters to his intimate friends and advisers in the neighborhood of the offices,
1 In the case of New York this policy was relaxed for a short period in the spring Lenox to discount 1827, the office being allowed at six months. of objected even to Dec. 27, 1827, P. L. B., Vol. this." To Biddle, Dec. 20, 1827, B. P. ; Biddle to Lenox,

II, p. 329.
2
3

To William To

Gray,
Lloyd,

president

Boston

office,1823, B. P.

James

Feb. 16, 1825, P. L. B., Vol. I, p. 209 ; to Cadwalader,

July 26,

1826, B. P.

102

THE

SECOND

BANK

OP

THE

UNITED

STATES

solicitingadvice as to the situation of the offices, and particularly The presidents to the condition of the vacancies. as likewise called upon for and cashiers of the branches were information, being given especial their recommendations a since it was point of prime importance that a

weight, branch board

should act in friendly conjunction with its a new executive officers. In case president was to be elected to designate the at a branch, the central board undertook individual of its choice by placing his name at the head
the of the listof directors forwarded to the office. Though by charter provision election of the branch president was mation exclusively in the control of the branch directorate, the intiof the central board
matter
was was

of considerable bank a surer control of its offices and secured presidents who had the confidence of the board at Philadelphia.1 In 1825 2 Biddle evolved still another plan for strengthening
the

The very rarely neglected. importance, since it gave the

directorates and checking any tendency This consisted in empowto perilous vagaries in business. ering the directors of the parent board resident in cities branch existed to sit at the local boards, with the right to advise and discuss, though not to vote.3 Naturally director so situated, acting as the agent of the central a
where branches ate, board, scrutinized keenly the methods of the local directorThe advanthe loans made, and the policy pursued.
the organization of the institution, the president of an office is necessarily Board with the general superintendence by the Parent of its affairs, charged in selecting the other Directors of the by the parent Board he is chiefly relied on Board. In any he is in fact a confidential officer of the parent estimate office,
1
"

From

for the Office,his acceptability to the parent then of the qualifications of candidates he is at once to contract Board with whom relations of very intimate confidence, is be attached."" to which Biddle to some a may weight naturally circumstance

William
2

Wirt,

Jan. 30, 1824, P. June

L. B., Vol. I, p. 121 ; also Biddle

13, 1834, ibid., Vol. V, p. 229.

to S. Wheaton,

of

Providence,

Sept. 19, 1826, ibid., Vol. Ill, p. 183.

Biddle to Lawrence,
"

3 But for the last few years the practice and an excellent one it is, nas been for the Parent Directors to sit at the office Board as regularly as if they were members Biddle to George Hoffman, of Baltimore, Oct. of it" and do every thing but vote." 27, 1829, ibid., VoL III, p. 79.
"

NICHOLAS

BIDDLE

AND

His

POLICY

103

tages accruing from this plan were most marked at the large officesof the East and South, since non-resident directors of the central board were almost invariably selected at these places. The authority of the central board was further strengthened by clearly defining, while enlarging, the functions of theory of the administration own the branch cashier. "My of the Bank," wrote Biddle, "and my uniform practice, is to consider the Cashier of an Office,as the confidential officer of this Board, to rely on him and to hold him responsible for the execution of their orders;" he must obey orders from to the extent Philadelphia even the local of disobeying keep both the central board, if necessary,1 and he must officeand the other branches thoroughly informed of those to their interest to know.2 Better transactions which it was
also secured by selecting all the new cashiers were the trusted, thoroughly known cials offiappointees from among had been trained at the bank in Philadelphia. who branch

intimately acquainted with the policy of the bank ; their honesty had been tested ; and machinery known; they were their characters were not open to the
cashiers
were

Such

of making loans to assist friends and relatives, since they had neither friends nor relatives in the localities likely to obey in which were they were settled.3 They
temptation
1 Biddle 2
we

to C. L. West, cashier
you
were

at New

Orleans, May

17, 1823, ibid., Vol. I, p. 27.

"Since

in the

Bank

before,
and
are

its discipline

is much

improved
constant

and

are

in the

frequent
the

of receiving These communications.

"

habit

requiring
essential being

(from all its officers

to

and of

the
course

good

Bank

the basis My

of all

our

facts

present

purpose

correspondence which cannot of Mobile, Jan. 10, 1827, ibid., Vol. II, pp. 233, 234.
3

of is to invite your attention to a constant and regular be too frequent Biddle to George Poe, and detailed."
"

measures

of

administration knowledge accurate

in the appointment Bank has been Policy of confidential of the trusts to take in preferto live at a distance and to execute such important ence officers Officers brought eye whose up in the Bank character and conduct under our own "The

known to us, and afford the best guarantee of their capacity to carry into effect I have long been satisfied that the system the Bank with which they are familiar. of in case a Branch is I think it will be pursued this is the true policy of the Bank and to the cashier. course Portland. The observation only applies of at established Biddle to John by the Directors The other officers are appointed of the Branch.""
were

104

THE

SECOND

BANK

OF

THE

UNITED

STATES

orders promptly and to keep a careful lookout for the general interests of the bank, since they knew that future promotion depended at Philadelphia and not upon the officials upon the local directorates. To diminish still further the temptation of the cashier to act as the mere creature of the forbidden to borrow from the local board, that officer was
prohibition applied to the subordinate These rules were as well.1 correct, and their results officials were excellent. Before their adoption the bank had suffered
same

offices. The

severely from the peculations of branch cashiers and other as officials,2 well as from the tendency of these to act with loans. It was the local boards in making

objectionable

found, too, that variations from these rules during Biddle's administration resulted disastrously.3
Further
were means

devised

by

February, business

1826.

of securing complete control of the offices the creation of two assistant cashiers in The first of these was to supervise the

a knowledge of the branches, especially to secure "of the accounts between the offices,"of which the bank had

never

before possessed sufficient information, and to superintend This officer was to keep up the exchange business.

quent correspondence with the branches and make fretrips of inspection.* The other assistant cashier was debt of the bank and of the to take charge of the suspended
a

constant

bank's real estate.5

P. Boyd,
Baltimore,

The

reports of the bank

show

that the
of
out

McKim, to John of Boston, Nov. 23, 1826, P. L. B., Vol. H, p. 209; same Dec. 26, 1826, ibid., pp. 219, 220. In letter to Baltimore Biddle points " is " a positive recommendation." that the cashier's being without connexions"
1 2

John Cases
The

Potter

to Biddle, Charleston,
were

Feb. 27, 1827, B. P. Richmond, New

Orleans,
and

in point

at Baltimore,

Middletown.
the Nashville

Nashville
was we

branch
*"

cashier was appointed the center of bad banking have

never

from the neighborhood, in the West.

and

Again,

offices Exchange another

wish to examine business particularly

We

March
5

officer for these two 14, 1826, P. L, B., Vol. II, p. 140.

between the of the accounts sufficient knowledge these accounts, and we wish also to have our have We therefore well managed. appointed Biddle to John McKim, Jr., of Baltimore, purposes." had
a
"

Ibid.

See Appendix

III, Rules

and

Regulations

of the Bank,

rules 19, 20.

NICHOLAS debt

BIDDLE

AND

His

POLICY

105

suspended

real estate were carefully and profitably while the Biddle correspondence proves that managed, the duties of the assistant cashier in inspecting the branches Biddle faithfully discharged. himself attached so were and
"

much

importance

"

to thorough

inspection that

on

several
in order

occasions

he took tedious trips through

the country

personally to inspect the branches.1 To secure thorough supervision it was

at Philadelphia
a

energetic, since Thomas branches.

necessary to have cashier watchful, completely informed, and in closest touch with the this officer was

cashier since 1820, was apparently superannuated ; at any rate, he did not tactfully satisfaction;2 and therefore he was give complete Orleans, while in his place was appointed a shifted to New

Wilson,

who

had

been

delphia.3 of Philaan thoroughly in was excellent officer, with his head, tactful and conservative, and watchsympathy ful He remained in office until of the interests of the bank.

younger

and abler Mcllvaine

man,

Mr. William

Mcllvaine,

July, 1832, when he resigned. These measures various resulted materially the amount of fraud which
upon the

in diminishing

very

had

bank,

and

in

securing

much

practiced better business

been

methods,
a

all they made possible the adoption of policy of expansion in the bank's business. Biddle laid particular stress upon the accumulation of a surplus. Since Cheves's entire administration had been devoted
and above
i
"

wanted

in a day or two to accomplish what I have find leisure. I mean tion but could never a personal inspecare easy of access, of the offices. I shall begin with those in the North which Officers distant offices will be afterwards inspected by some own of our and the more it thorimportance to execute to (.his measure oughly."" and will endeavor attach much "I Biddle to J. Potter, of Princeton, July 26, 1826, P. L. B., Vol. II, p. 179. I
am

about

leaving

Philadelphia

to do for three

years

Other Biddle
*

trips

were

taken

in 1829.

Cadwalader

and

Colt

visited

western

offices.

"

to Webster, H.

Feb. 26, 1827, ibid., p. 248.

R. 460, 22d Cong., 1st Sess., p. 128.

in January." NILES, Vol. XXIX, was transferred p. 289; Biddle to R. Gilmor, of Baltimore, Feb. 3, 1826, P. L. "., Vol. II, Mcllvaine's announcing election,
3

Wilson

p. 112.

106

THE

SECOND

BANK

OP

THE

UNITED

STATES
no

to the task of restoring the original capital of the bank,

In January, 1823, accordsurplus fund had been provided. ing "a dollar of reserved profits," to Biddle, there was not to though in his opinion it was "of the utmost importance have provision against current losses, so ' From the the dividend from fluctuation."
some as

to preserve beginning to

ceased his of his presidency, therefore, he never a surplus that would make the bank efforts to accumulate All profits from the safe and strong in all contingencies. the end sale of bank stock forfeited during the troublous regime of William Jones, allcollections of interest upon the suspended By July, 1825, the surdebts, went uniformly to this fund. plus
it steadily increased until at the expiration of the charter it was over $6,000,000. Biddle's management of the bank in these early years

exceeded

$550,000,and

was

by the stringency of approved He 1825. the action of the always claimed that it was Bank of the United States alone which saved the country in that year from serious losses. In 1824 business was

thoroughly

tested and

slack, and

instead of putting funds into long loans, as he might profitably have done, Biddle secured government 1825 When always a market.2 stock for which there was for money, he was brought brisk demands cautious of meeting " them, arguing that the unexpected and sudden increase of the demands

for that trade

....

requires that
3

we

Watching circumspect at the present moment." and the monetary affairsof the world with intent care, he clearly foresaw the approach of the pressure of 1825 and began to prepare for it.4 In May he wrote to Lawrence, of
Lloyd, of Boston, July 5, 1825, P. L. B., Vol. II, p. 28. " would be slack in this year, the bank had thought it very in the late loan." as possible desirable to place as much of the funds of the Bank Biddle to Kobert Qilmor, of Baltimore, June 23, 1824, ibid., Vol. I, pp. 165-7. The C., 18th loans to the extent of $10,000,000in 1824-25." bank took government .4. of 26. Cong., 1st Sess., Vol. H, Appendix, pp. 3228, 3229, 3249-51. Acts of May 24 and May
1

should be the market

Biddle to James
Seeing

that business

"

3
*

To

of Baltimore, April 15, 1825, P. L. B., Vol II, p. 12. April 22, 1825, p. 18. Instructions to President I. Lawrence of the New York office,

John

White,

NICHOLAS

BIDDLE the demand

AND

His the

POLICY

107

result of "wild and exaggerated speculation," and that the bank must not be by it.1 As the year passed the pressure carried away In England a comincreased, and panic began to develop. mercial
was

New

York,

that

most tremendous proportions carried so ruin everywhere, and in the United States the alarm was " " one of the directors of the great that, according to Gouge, crisis of the
" of the United States talked publicly on the Exchange specie payat Philadelphia of the expediency of suspending ments."2 Whoever this director may have been, certainly

Bank

the president of the bank

was

not of his opinion, for he had

resolved to ward off any such disaster. In discounting of loans on a pledge of bank

September
or

the

government holding stocks was approved,3 as giving relief to merchants tunately Unforsuch stocks and unable to find a market for them.
the bank
extreme

at this moment

was

compelled

to act with

circumspection, because it had to expend on the 1st of of October $7,000,000of the public funds in redemption debt. This brought it into debt to the state the national of Philadelphia, and expansion of its business. banks prevented any pronounced To extricate itself the bank sold thus

large portions of its own and the government stock in its possession in order to increase its supply of specie. By the it was firstof November more once the creditor of the state banks.* Though
the

compelled bank did not

to proceed with caution

"

contract.

Solvent

cretion, and dispersons in

"can get as much as they want good credit," wrote Biddle, ! In New York, which was the center of the at 6 per cent." for the substitution of excessive pressure, Biddle arranged

paper
1 3 *

for demands
to Walter

made
of New
H. R.

there
2

for specie,6 and

GOUGE

instructed

Ibid., p. 22, May

12, 1825. Bowne,

see

(Cobbett's edition) , p. 142.

Biddle For

York, Sept. 4, 1825, P. L. B., Vol. II, pp. 45, 46.

these

details

460, 22d

The

amount
5

of government

stock sold by the bank

Cong., 1st Sess., pp. 60, 61, 254, 434, 435. in October was over $2,100,000,f o

its own

stock, $160.054.16. Jones, of Washington, To Edward

Oct. 7, 1825, P. L. B., Vol. II, p. 56.

"H.

R. 460, 22d Cong., 1st Sess., p. 435.

108

THE

SECOND

BANK

OF

THE

UNITED

STATES

done the office at that place to increase its loans,1 which was immediately to the extent of $50,000.2 This wise policy was continued throughout the rest of the year,3 being deliberately

adopted It must

as

the

most

and enlightenment, that at aid was needed the Bank of the United States was able to render it. It had pursued in previous years a out sober and conservative plan of operations ; its loans were were on short paper, its supply of specie was large, its means and the moment
completely at its disposal, and its credit was unshaken.5 that Cheves had reduced the bank's It will be remembered capital by retaining the shares of its stock which had been
ance surrendered in 1819, and that he had advised the continureducing of of this policy with the object permanently the bank's capital by three or four millions. This was one

always be foresight, his conservatism

effective method of quieting alarm.4 Biddle's skill a tribute to Nicholas

which a difference of opinion prevailed, the stockholders wished to sell the stock and a party among in order to increase the active capital of the bank, which they considered too reduced, because over $11,000,000were
of the questions
on

tied up in suspended debts and real estate. In 1824 Biddle was of the officialsof the bank to part with urged by some this stock, but declined, since he agreed with Cheves that the bank
i

had

no

use

for the capital at that time, because

Nov. Nov.
22, 1825, H. R. 460, 22d Cong., 1st Sess., pp. 436, 437. 23, 1825, ibid., p. 437.
to give relief to both possibly can there is not so much a want of Dec. 7, 1825, P. L. B,, Vol. II, pp. 76, 77.

Biddle

to I. Lawrence, to Biddle,

2
3

1. Lawrence
"

It is our

the [i.e., banks

money,
*
"

desire to do everything which we in New York] the community and Biddle

to R. Lenox,

as

of confidence.""

the increase of the loans and stillthink, that this measure, in the face of an approaching panic, could alone have averted the same were consequences, with such fatal effect which, in a few days afterwards, operating Biddle to Investigating England."" Committee upon of 1832, H. R. 460, 22d Cong., I then thought,
of the bank, 1st Sess., p. 435; also Biddle to A. Dickins, Nov. 30, 1828, P. L. B., Vol. II, p. 443. 5 In March May, $33,992,000; July, $33,531,000; tember, Sep$31,668,000; active loans were

h $33,091,000; October, $33,400,000;December, $32,329.000;oldings of United increased from to $20,738,000in July and States funded $18,400,000in March stock from to $6,977,000in March were at $18,600,000 in December; circulation increased i to $9,542,000n October; and specie fell from $5,782,000 $4,544,000.

NICHOLAS

BIDDLE

AND

His

POLICY

109

the stock was not sufficiently appreciated, and because the loan and would need the bank wanted to take a government

funds from the sale of the forfeited stock to pay for it.1 The transaction then would be doubly profitable, since one profit could be secured on the sale of the stock and another on
the

of government purchase obviate the danger of having

bonds
too

; it would,
a

moreover,

large

capital, since the

stock would replace the bank stock sold and government the necessity of extending discounts would not arise. In 1824-25 the bank secured $10,000,000in government stock

forfeited shares. Most of the and began the sale of its own sales took place in the first six months of 1825, when the The market was very favorable, the stock selling at 119.
2 profits from the sales up to July, 1825, aggregated $481,000. In 1827 business was more, slack once and again Biddle loan.3 This time he was a government attempted to secure

not

the board permitted consequence This was a paper. mistake and was inconsistent with Biddle's past policy. There was constant pressure, however, for an increase in the dividends, many

successful, and loans on six-months'

as

of

dissatisfied with their much smallness and criticising harshly the conservative policy of Whether or the bank's management.* not these considerations influenced the president cannot be said, but it can be
the

stockholders

being

stated with certainty that he would

1 2

have done better had he

Biddle Biddle

to John
to

White,

of Baltimore,

Feb. 27, 1824, P. L. B., Vol. II, pp. 129, 130.

28.

James

Lloyd,

July

5, 1825, ibid., p.
were

From

June

14, 1824, to

Dec. 5, 1829, the proceeds of stock $117,548,and the profits were was
252-5, 294.
3

sold

the $4,645,859.16, average rate per share H. $693,559.16." R. 460, 21st Cong., 1st Sess., pp.

Biddle

to N. Silsbee, Feb. 19, 1827, P. L. B., Vol. II, pp.

244-6.

241-3 ; to Webster,

Feb.

23, ibid., pp.

*

Biddle and get a new board which formed to remove a combination was informant, larger dividends. It amounted to nothing, but Biddle's a pay would be increased." Bowne trusted friend, gave it as his opinion that the dividends should In 1825
to Biddle,
"

New

York,

June
aware

You

are

doubtless
over

the Bank

which

you

In 1828 a stockholder at Baltimore wrote : the opposition to your administration of the affairs of of itself in your city, preside, which has recently manifested
28, 1825, B. P.

110

THE

SECOND

BANK

OP

THE

UNITED

STATES

persisted in the policy of declining all long loans, as he had The year 1828 was done in 1824. again one of pressure, to not so well prepared and this time the corporation was On the contrary, meet the situation as it had been in 1825. gave for its refusal which were reasons not particularly laudable in the man who prided himself upon relieving the stringency in 1825 by the enlightened method of granting loans freely
to all who
reason
can was

the board

had

to refuse

accommodations,

and

Biddle

be

no

securities. His principal could furnish good that the banks had loaned too much,1 and there doubt that the Bank of the United States must be

To save itself, the delinquents. therefore, included among it should it had to restrict its dealings at the very moment have expanded them, and inaugurated a contraction lasting
2 from the 12th of February until the 1st of May.3 from 1823 to 1828 The success of Biddle's management

is revealed in the monthly returns of the bank. were of January, 1823, the total investments

On

the first

$41,754,000,

and
over

on

the

same

date in 1828,

an $51,307,000,

$9,500,000. Of the total, United comprised $11,000,000 at the first date, $17,624,000 at the less than $3,000,last,so that the increase in discounts was
000
the contemporaneous growth Circulation increased in population and trade is considered. in a larger ratio, the amount than doubling : on January more
"

increase of States funded debt

not at all excessive when

1, 1823, it
New

was

only

$4,432,000, and

on

January

1, 1828,

The the impression York and elsewhere. that your are under stockholders is to keep in check the State Banks, and to regulate the currency of the country object be inconvenient to you, while you receive the their cost." This they say may not at

salary of President of the Bank, but it does not suit them." to declare a dividend of 314 per cent." June 17, 1828, B. P.
1

He

then

advises Biddle

Article by Biddle

in National

Gazette,

extracts,
2
3

GOUGE

(Cobbett's edition), pp.

of Philadelphia, 150-56.

April 10, 1828.

See, for

Biddle Same The

to Lenox, to
same,

Feb. 12, 1828, P. L. B., VoL

II, p. 344.
reports
so

April 27, 1828, ibid, p. 381. The monthly for loans was is that the demand explanation would

show

no

excessive

contraction. that to get

relief

an

expansion

have been

necessary.

NICHOLAS

BIDDLE

AND

His

POLICY

111

$9,855,677. The deposits of individuals

000
to

rose

from

$3,372,-

$6,142,000; while the holdings of specie mounted from $4,424,000 $6,170,000. By July, 1828, the annual to its income of the bank had been increased $823,312 over income in 1822, an amount representing profits on $21,000,had been secured, first,by the sale of the bank's productive stock and the investment of the funds in a more form, and, secondly, by the enlargement of the bank's circulation The suspended and consequent dealings in exchange.

000, which

to debt had been reduced from over $9,000,000 $7,109,009. from nothing to $1,500,000; The surplus had grown the

semi-annual dividends from 2^ to 3^ per cent. ; the western that the arrears of offices had been so carefully managed interest paid annually $111,000. It was that with justice
the stockholders in 1828 triumph."1 looked upon the result as
a

"signal

The

most

during

notable increase in the transactions of the bank to be found in the dealings in this period are

Foreign was exchange exchange. of little consequence The profits from it began to develop. until 1826, when foreign exchange in the first six months of that year were $60,000,2 about the average rate of profits and this was
thenceforth,8 the The
extensive

trade

taking

its final form

were

in 1827-28.*

based upon As a conthe sale of southern produce, particularly cotton. sequence a large buyer of of the cotton trade the bank was

dealings in foreign exchange

large seller of them in the fairly level, This kept the exchange with England North.5 "less important and Biddle claimed that the dealings were and
a
1

foreign bills in the South

Report

of the Committee
to P. P. F. Degrand,

of Stockholders, of Boston,

Sept. 1, 1828, NILES,

Vol. XXXV,

pp.

74, 75.
2 8

Biddle Biddle

June

22, 1826, P. L. B., Vol. II, p. 172.

p. 308.

to Gallatin, July 29, 1830, ibid., Vol. HI,

to
same, same,

'Same
s

NOT. 15, 1830, ibid., p. 393.

Same

to

July 29, 1830, ibid., p. 308.

112

THE

SECOND

BANK

OF

THE

UNITED
as a

STATES

by far

as

of profit, than the currency from ruinous

a

source

great engine for protecting fluctuations."1 Undoubtedly

much of truth in this claim, but, truth or not, it is certain that from the year 1827 the Bank of the United States virtually controlled the foreign exchange market,
there
was

being able by the plan of buying billsin the South and selling in other words, through its branchbills in the North bank system to drive out all competition. This was the
" "

bankers and brokers of much dissatisfaction among who had hitherto drawn a considerable portion of their profits from dealings in foreign exchange.2 One of the most efficient causes of the bank's unpopularity with the local
source

banks

in the large business

centers

arose

from

of affairs,and frequent bank manipulated the market

charges were for the purpose of increasing its profits and driving out its competitors. These assertions do not appear to rest on any basis, and may be disregarded. The bank's dealings in foreign exchange were much expanded by the selling of bills for the China trade, and were effective in stopping the export of specie to the East Indies and to China.3

this condition that the made

The

while

dealings in inland exchange also increased very considerabl In January, 1823, they were only $1,940,000, in January, 1828, they were $5,022,000. Here is

Biddle's method of augmenting the bank's revealed at once discount business, for three-quarters of this augmentation is plainly apparent in these figures. The increase took place

The total discounts of bills mostly in the West and South. from July, 1827, to July, 1828, were of inland exchange as $22,084,222, and the profits $451,203.17, against profits in 1822 of $95,240.25.* The
i
3

period 1823-28

was

one

both of conservative
p. 308.
2

and
ibid.

of

Biddle Biddle

to Gallatin, July 29, 1830, P. L. P., Vol. HI, to T. Pitkin, Feb. 4, 1835, B. P.

The

Keport

of the Committee

of Stockholders,

sale of India bills began in 1825. Sept. 1, 1828, NILES, Vol. XXXV, p. 74.

NICHOLAS

BIDDLE

AND

His

POLICY

113

successful banking on the part of the Bank of the United States; the affairs of the institution were aged carefully mandealings considerably ; it checked the ; it extended its
tendencies
an was on

business; it put of the state banks to do unsound end to most of the depreciated state -bank currencies; it fairly popular; its dealings with the government were

the best footing; it gave the nation a better currency before had ; and it had finally reached than the country ever the point in public opinion where it was for the uses both of the government

considered necessary and of the people.

CHAPTER
THE BRANCH

VI.
DRAFTS.

by Biddle to suppress the depreciated employed currencies of the South and West, making the currency of the United States fairly sound and uniform, and thus giving the Bank of the United States a preponderating share
means

THE

in the business of those sections, have been detailed. Complete however, did not attend these measures success, until " branch drafts," as they were the introduction of called. These did not in any single respect affect the measures

already adopted, but simply supplied the them.1

means

of executing

It will be remembered believed that Biddle had never that the charter provision for receiving the branch notes in payment to the government a defect, nor was everywhere indeed that such a usage would be perilous if extended in a to individuals. He was large measure thoroughly persuaded could deal extensively in the West and South, discovered by were safe means provided only that some which the officesin those sections could be prevented from
that the bank

tal attracting to themselves an undue share of the bank's capithat some ; in other words, provided method was found whereby the branches furnished the funds when they issued
He very early their notes for the payment of their notes. concluded that he had found the solution of the problem in
i

Biddle

was

measure.

always proud of his "Among the documents

"

in the policy of the Bank change its powers and its usefulness. of

a very curious and a very authentic document because the Bank the change of the system made and specially really I should like that it has been for the ten years past, and is my peculiar work. what historical and by your Committee, to the country so as to become explained matter I will thank you therefore to take charge of it."" Biddle to Webster, Dec. 8, 1834, P. L. B., Vol. V, p. 284.

made It is

in which the drafts were the crowning system," furnished Mr. Tyler was the one showing by myself which led to the full development

interests

me

114

THE

BRANCH

DRAFTS

115

the purchase of bills of domestic exchange which should be tated.1 payable in those centers to which the notes naturally graviThe bills bought were to be drawn on New Orleans
or

cities at short dates, so that they might to maturity and be paid at these places simultaneously come The plan was an with the notes.2 excellent one, and could provided the bills of exchange produce no embarrassments,

the Atlantic

promptly paid. Even before the system was elaborated, however, it was painfully evident that the bank did not possess the means of executing it. By the terms of the charter all its notes had
to

were

be

signed

by

its president

and
not

countersigned

by

its

cashier, and
amount

these officerscould

of small notes with Consequently Biddle's plans could the necessary currency. By not succeed in the first years of his administration. 1828 the South and West were almost destitute of notes The whole of the bank. up to that year equaled
were

possibly sign a to supply the branches

cient suffi-

of five-dollar notes issued only $1,576,000. Several offices nations: almost entirely without notes of the smaller denomihad on hand only 2 notes of $5; "Portsmouth
amount

1 "The ties has always been, and stillis one of the greatest difficulquestion which in the administration The difficulty arose the bank is this of its circulation." of from the necessity of redeeming all the bank's notes at every office,no matter where issued, in dealings with the government, this giving rise to fears of embarrassment

culty the difficonsidered worthy of trial, whether large participation in domestic not exchanges; might which, besides its other advantages, might enable the bank to be always provided accompany out of these issues, would with a fund, which, being in fact created and
to the institution.

"

be

afterwards by a surmounted

It

was

BIDDLE, H. R. 460, 22d Cong., sustain them."" Report for 1831, NILES, Vol. XLI, pp. 113 ff.
2
"

1st Sess., p. 321.

See

also Triennial

When

the

branch

at New

Orleans

and for bills on

for different

objects

the north, these bills are the functions paid, await the arrival of the period when the notes, having performed in the course brought trade to the Atlantic offices, are of a circulating medium, of given ; or, finally, where they are met by the proceeds of the bills for which they were
in the purchase of exchange, based on the drawn by the bank upon the the bills of exchange exportation of produce houses to which the bills from New Orleans are remitted, provide the fund European Orleans, originally issued in the purchase to meet the notes of the branch at New of
notes
are

issues its notes, it does it to various persons, issued in payments If these notes, however, are branches, and, being there sent to the northern

if these

issued

in New

Orleans

to Europe,

them.""

H.

jR. 460, 22d Cong., 1st Sess., p. 321.

116

THE

SECOND

BANK

OF

THE

UNITED

STATES

"without a single only 8;" and Louisville was All the offices together had only $100,five dollar note." 000 in five-dollar notes, and $500,000 in ten-dollar notes.1

Providence

existed from the first,there had been frequent attempts to escape it by petitioning Congress for permission to have signers of the notes other than the president and cashier. The bank firstapplied in January,
As

had this difficulty

bill authorizing the appointment deputy cashier for the purpose,3 of a vice-president and but the bill was in the House at the indefinitely postponed passed
a

18 18.2

The

Senate

third reading.

After

Cheves

became

president

Again a bill was memorial was presented.4 Senate, empowering the appointment of an agent and a registrar to sign the notes,5 and passed there in February, 1821 ;6 and again it failed in the House after being twice
read.7 and
a

second prepared in the

A third memorial was presented in December, 1821,8 bill was offered in the Senate, failing there by a vote acted ably.11 favor-

of 23 to 19.9 A fourth memorial, in 1823,10 was never reported upon by the Senate, but a House committee Nothing, however, was done.

The
and
worn

difficultyof signing sufficient notes became greater as time passed, since many of them From February out and had to be destroyed.

greater became 2, 1826,

to January

21, 1827,

over

were $2,800,000

circulation.12 Cashier Mcllvaine intolerable, that sufficient could not signing notes was
1

thus retired from declared that the labor of

be

Biddle

to Secretary

Rush, Jan. 10, 1828, H. R. 460, 22d Cong., 1st Sess., pp. 53, 54.

2 Ibid., Jan. 13, 1818, A. of C., 15th Cong., 1st Sess.,Vol. p. 49. Memorial presented I, p. 710; reported favorably Jan. 20, ibid,, p. 792. 3 April 14, 1818, ibid., p. 365.

*Dec.
5 8
9

1, 1820, ibid., 16th Cong., 2d Sess., Vol. in, 20, ibid., p. 127.
"

p. 29.
^

Dec.

Ibid., p. 360.

Ibid., p. 1193.

Dec. 27, ibid., 17th Cong., 1st Sess., Vol. I, p. 40. March
14, 1822, ibid., p. 291.

10

Presented

Jan.

27, 1823, ibid., 2d Sess., Vol. Ill, p. 156 ; in the

1134 ff.
12

House,

Jan. 28,

ibid., p. 713.
11

Feb. 27, ibid.,

pp.

Mcllvaine

to Biddle,

Jan. 22, 1827, B. P.

THE

BRANCH

DRAFTS

117

supplied in any case, and that he would resign rather than structi "The decontinue in office under such harsh conditions. " is now that our so rapid," he wrote, circulation
and specie must profit from
soon
a

balance each other and leave us without quarter where we ought to have the most.'"

directors, therefore, returned to the of project securing to the appointment consent of additional congressional
Biddle, writing to Webster in 1826, gave it as his opinion that the charter as it stood would permit other signers, but added that he "would like to have an act," and Acting of 1823.2 suggested the revival of the memorial

The

signers.

gress,3 authority from the board, he again appealed to Condeclaring that the House but without avail, McLane Committee and Means would not make a favorable of Ways
under

report.* Satisfied now the board

that Congress

would

never

of directors cast about for some The invention of which they could obtain the desired end. branch drafts was the result. The possibility of issuing
first pointed out by John Forsyth in such a currency was 1818,5 and it is probable that Biddle took the idea from Before proceeding to issue the drafts Forsyth's suggestion.6 the board
it advisable to consult competent legal talent, and Biddle laid the proposition before Daniel Webster and Horace Binney,7 both of whom were at the time members of

give permission, expedient by

thought

To Biddle, Jan. 24, 1827, B. P. Feb.

"

Dec. 1, 1826, H. E. 460, 22d Cong., 1st Sess., p. 52. Biddle, Jan. 19, 1829, B. P.

2 5

16, 1826, ibid.

*To

to trade in bills of exchange, The bank is authorized and trades in bills with The directors to do but make an thus have nothing order each of its branches. to draw directing the president and cashier of each branch on them small bills, payable to the bearer, and the object is effected. ""A. ofC., 15th Cong., 1st Sess., Vol. II,
p. 1748, April 16, 1818.
6

Biddle

mentions

Forsyth's remarks

to Edward

Everett, March

10, 1832, P. L. B.,

Vol. IV,
i
"

p. 213.

The several offices of this bank, especially those at a distance, are in the in its habit of drawing of the community checks on the bank for the accommodation from These the business they are the nature exchange operations. checks, of

designed

to facilitate,

as

well

as

from

the labor of multiplying

them,

and

the hazard

118

THE

SECOND

BANK

OF

THE

UNITED

STATES

the central board and thoroughly familiar with the subject. Binney gave an opinion supporting the bank's power under

the charter to issue the drafts, and Webster and AttorneyThe opinion was to the effectthat, General Wirt concurred. since the issue of checks upon the bank by its branches was

ordinary banking operation, the proposed use was legal, " " for large sums or signed small," whether the checks were by one "the external with or without officer or more," l Hereupon the bank authorized appearance of a bank note."
an

been for large sums. It is proposed, of their being counterfeited, have generally the community a view to the more of general accommodation and the bank, with that the offices should be instructed to issue these checks for smaller sums, such as twenty, by the dealers with those offices ; ten, and five dollars, whenever requested in order to relieve the offices from the burden of preparing them, to transmit, and, from the bank, the blank forms of the checks, wanting the signatures of the only to the prevention a view persons at the respective offices. With proper of counterfeits,

and the security of the bank as well as the public, it is further proposed, that as near the general appearance of these checks should be uniform, and approaching, to that of the notes of this bank, to which the as their different natures will permit, is now habituated be signed, not by the ; and, also, that they should community

cashiers alone, as the checks are at present, but by both the presidents and cashiers 22, 1827, H. R. 460, and Binney, March of the respective offices."" Biddle to Webster 22d Cong., 1st Sess., p. 50.
" As there is no substantial difference as follows : were essential points made between the the checks or drafts heretofore drawn at the different offices upon hereafter to draw, the it is proposed States, and those which Bank the United of be no legal difference being in appearance than in form, there can more even tion objec-

The

does not apply to everything of this nature that has been done to them, which by the present Bank of the United States, by the former bank, and by almost all the banks in the country : " If the former practice has been lawful, so must the proposed practice be ; for, or small, the drafts be for large sums they are signed by one officer whether whether
. .
.

or they have the external appearance note of a bank and whether wise, otherindifference, and entirely within the competency be a matter must of perfect of the bank to regulate at its pleasure. That the former practice is without objection, is to be inferred from its long or more,
"

It is a practice, continuance. for, in this way only, can between operations exchange

of every banking corporawithin the powers tion, intercourse of a bank and its offices, and the banking institutions, be adequately prosecuted, and to empower by charter, every bank is competent its unless restrained consequently, its funds, wherever to draw such drafts or checks upon situated, and to bind officers It is an ordinary banking to the holder for their due honor. the corporation operation,
moreover,

the

it is Whether their general faculties are perfectly competent to issue ' bills or notes promising the payment the power the corporation of of within his or their order, or to bearer,' unless signed by to any person or persons, money by the principal cashier or treasurer, is not the the president, and countersigned inquiry. The affirmative provision in the 12th fundamental article, which present
to which

gives

bills or notes, though a particular unsealed, effect, has the bank."" to checks or drafts drawn at the offices upon conceive, March 23, 1827, H. R. 460, 22d Cong., 1st Sess., p. 51. such

no

reference, I Philadelphia,

THE

BRANCH

DRAFTS

119

the issue by the officesof five- and ten-dollar drafts,1signed by the branch presidents and cashiers, drawn on the principal cashier at Philadelphia, and payable to some officerof branch, or his order. This officerthen indorsed the drafts the the effect of transforming them The drafts were into a circulating medium.2 prepared in blank at Philadelphia and transmitted to the offices. They

"payable

to bearer," with

to resemble bank notes as closely as possible in made design, color, and texture,3 and so accurate was the likeness five that after they had been extensively circulated for over
were

years "not one difference."* and

man

in ten thousand"
were

They

noticed the issued firstin June, 1827, in fiveever

had

"

ten-dollar denominations,

twenty-dollar

drafts

being

added in 183 1.5 The secretary of the treasury accepted them in payment footing of taxes and dues on precisely the same the notes of the bank,6 thus giving the approval of the as to their use and materially assisting in their cirgovernment culatio and when Congress renewed the charter it inserted a clause forbidding their use after 1836, additional signers of the circulating them notes being permitted instead.7 The bank employed to the end, while the government their receipt continued
until January
1
2

They

were

bitterly attacked

in

1832,

1, 1835.8
April 6, 1827, ibid., p. 52.
was
as

Minutes

of the Bank,

Ibid., p. 56.

The

form

follows

Pay

Cashier of the Bank of the United to Jas. L. Smith^ or order, five dollars. Oihce of discount and deposit in Utica, The 3d day of September, 1831. JOHN
B. LEVING,
cashier. indorsed : " Pay
name

States,

President.

N. V. GRAZIER, This
Part
was

then

to the

bearer.
at Utica

JAS. L. SMITH.""
was

C. D., Vol. VIII,

not Leving.

I, p. 120. SBiddle
"

The

of the president

Devereux,

to Secretary

Rush,

Jan. 10, 1828, H. R. 460, 22d Cong., 1st Sess., p. 54.

II,

CLAYTON,

C. D., Vol. VIII, Part

March p.fl.975,

2, 1832.

5ff. R. 460, 22d Cong., 1st Sess., pp.

" 7

56, 57.

Secretary

Rush

to Biddle, Jan. 21, 1828, ibid., p. 55.

to charter, sec. 2, proviso, Sen. Jour., 22d Cong., 1st Sess., IV for the amended bill. 8 Woodbury's circular of Nov. 5, 1834, forbidding their receipt after Jan. 1, 1835, Ex. Doc. 42, 23d Cong., 2d Sess., pp. 2, 3.
p. 451.

See

amendments See Appendix

120

THE
Benton,

SECOND

BANK

OF

THE

UNITED

STATES
in

who attacked the drafts as illegal,succeeded casting doubt upon them, and it consequently becomes Of course, to determine their legal status. importance

of
a

layman's

opinion on the legal character of bank paper is of value, but, by sticking to facts which are pretty relativelylittle generally admitted, one may hope not to go far astray. first point to be noted is that the drafts, while in in form and law drafts or actual use notes of the bank, were In determining their legal status it is certainly of checks. the firstimportance to keep clearly this distinction between

The

Benton and the legal nature of the drafts. Had chosen to do so, his speech would have been briefer, less But he preferred to involved, and less incomprehensible. apply two incompatible tests to the drafts: to treat them as
the
use

if they
and
as

were

to be
notes.

judgedin

law both

bank

Clearly, to spend

bills of exchange time and labor piling

as

fatuous, since no one not notes was up proof that they were ever claimed that they were; to argue that, as they were not therefore illegal as a currency, notes of the bank, they were disingenuous, the conclusion by no means following was

from the

What the premises. drafts as checks were

was
an

to prove that necessary was illegal currency, and this

certainly did not succeed in doing. In confirmation of this conclusion there exists the opinion To the lay of Binney, Webster, and Wirt already quoted. But the opinion of the three conclusive. mind this seems

Benton

great lawyers does not stand alone; it is supported by a decision of the circuit court of the United States, which definitely that the bank was within its legal powers

adjudged

when decision,

issuing the
were

drafts.

The

drafts, according
not

to

this the

not notes, and

consequently

to subject

The charter did charter stipulations in respect to notes. not on that account prohibit their issue ;' in fact, it author1
"

We

this kind

find in it [i. e., the charter] no prohibition direct or indirect of paper either by the bank or any of its branches, or

against
any

issuing
or

word

THE

BRANCH

DRAFTS

121

ized the issue of such paper by the insertion of the words "or article of the other contract" in the twelfth fundamental contracts between the bank eleventh section;1 the drafts were and the recipients of them, for whose payment the bank was liable under the charter, as it was for all acts done under its rency authority by its agents ;2 that the drafts constituted a curmade
no

difference in their legal status

a

the counterfeiting of them was liable if they directors were charter stipulation.5 After this decision it
ton's arguments,

were

crime,* and issued in

whatever;8 the individual

excess

of the Ben-

seems

superfluous

to combat

may

but their consideration will assist in determining the precise legal character of the paper and therefore not be labor lost. To begin with, Benton reached his

conclusions
"expression neither can

only by
congress

denying

the

validity of the

court's

has excluded it from the purview of the 18th section ; ence thing in its nature justify such inferany perceive which would debts by any other mode The bank is left free to contract than by their an or note under seal, with no other limitation than is contained promissory obligation is merely as to amount, in the 8th fundamental the only effect article, which from liability for the excess, but to make the the bank of which, is not to exempt liable." United it shall happen, administration personally "directors, under whose States vs. Benjamin Shellmire, October term, 1831, Judges Baldwin and Hopkinson, 1 Baldwin, 370 ff. see also MILES, Vol. XLI, p. 231. ;

by which
we

"

is an by that the bank may explicit declaration make, and are bound These other than those by bond, bill, note or deposit. other contracts "contracts must be taken to mean and be co-extensive with ordinary transactions of banks In all these operations, checks or orders on the bank or its cashiers, are indispen
i

"

This

It is in our opinion no answer to the business of the bank sible to conducting to these views, that the law has not expressly authorized the officers of the branches draw for this point that they are on the bank ; it is enough not prohibited from Ibid. so." "doing
"

"The

8th fundamental
amount

"exceed the
agents,"
or
....

limited

mode is of the places where contracted, by them become the debts contracted them."" "They
or

The

they the bank liable for all debts, though article makes the offices of discount and deposite its the 14th makes ; it assumes, in which the bank contracts a debt, the shape
"

no

importance.

the debts

to pay
3

Ibid., and

MILES,

Vol. XLI,

officers being its agents, imposing a duty of the corporation, 232. p.

The

for curor or rency small ones orders for remittance, devices or marks. in any form, with or without ornaments, circulation, and Whether they resemble in these particulars the notes of bank, is immaterial ; their debt or duty, obligatory legal effect are the same they create a new ; substance and on the bank."" Ibid.
may

be

in large drafts

Ibid.

Ibid., and

MILES,

Vol. XLI,

p. 231.

122

THE

SECOND

BANE

OP

THE

UNITED

STATES

decision,

method which in itselfinvalidates most of his Having refused to admit the correctness of own argument. the court's interpretation of the law, he insisted on treating
a

tations instead of limiupon powers already possessed;1 asserted that the drafts were their legality as not notes, and then impeached the charter specifications as grants of power His assertion that the drafts were billsof exchange. not he proceeds, however, When notes will be readily admitted. bills of exchange they were not valid to be in error, for to reach this coninstruments, he seems clusion he argued that bills of exchange must always be transferred by indorsement and not by delivery, and that
to declare

that

as

such bills could not be reissued;2 This as to transfer, for "notes and bills
to bearer,
or

was

certainly

ous errone-

are

'A. B.

or

bearer.'

Such

often made payable instruments are

faciethe property of the holder, are transferable by prima delivery, and if transferred by indorsement the indorsement
Even if not made payable to bearer need not be proved."5 when drawn, if indorsed "payable to bearer," the bill would * Nor did it become "transferable thereafter by delivery." both drawer and any difference that the bank was make drawee, maker and payee, providing that the bill was indorsed.5 The bank was bound also by the act of itsofficers
at the branches.

These
them
correct
no

supposing
1

the branch drafts compoints cover pletely, As to be inland bills of exchange.

in this, the bank sory could not have dealt in promisin the charter to do this. The courts of on the bank's power this ground. For
answer see

If Benton

had been

notes, since there was had at one time Kentucky

clear grant decided against 2 For Benton's C. D., Vol. VIII, Part I, pp. 114-40. see argument ibid., p. 553. Buckner's argument, 3 American and English Encyclopedia of Law, Vol. II, p. 337.
"
"

The
to

payable delivery."" Ibid., pp. 338, 339. 5 "That the payee or drawee

be changed may character of an instrument to 'bearer,' becomes 'order,' if indorsed

by indorsement, transferable

e. g., a

note

thereafter

by

invalidate
indorsed."
drawee,
p. 315.
or
"

note or bill." 118 Mass., 541;

"

is identical with the maker Ibid., p. 336. "But such notes 85 111.,513. "The same person
"

or

drawer, does
incomplete

not

are

may

drawer

and payee."

American

and

English

Encyclopedia

until be drawer and of Law, Vol. II,

THE
to reissue, it would

BRANCH
that, in

DRAFTS

123

seem

case

all parties to the drafts

agreed, they might be reissued. The drafts, however, were not ordinary bills of exchange, but checks on the bank, differing from ordinary bills in deposit of money in a bank; in on a always being drawn
days of grace allowed ; in not freeing the drawer by neglect on the part of the holder to present them for demanded.1 was payment; and in not being due until payment

having

no

Of

course,

they

were

transferable

by

delivery if indorsed

payable to bearer. It must be admitted, however, that the use of branch drafts as a currency was not contemplated when the charter This would not necessarily make them illegal. was granted. Many
when grown Such
other banking operations have not been contemplated banking privileges have been conferred, but have up without any specific legal authority for them.
was

the

case

with

the

Yet
was

the courts would illegality. an The

not

practice of certifying checks. therefore hold that certification

drafts varied in their legal status from the notes of the bank in the following particulars: they were not signed bank; by the president and cashier of the parent nor drawn
to of the corporation; nor subject the legally supervision of the secretary of the treasury; nor payable where of public dues; nor receivable in payment limited to issued ; nor suable on at the issuing branch ; nor
name

in the

the denomination
i
"

of five dollars
not inland

or

above.

Of all these dif-

Bank

checks

of such commercial The to both

a

bank

or

banker.

bills of exchange, but have many of the properties are ; and many paper of the rules of the law merchant applicable difference are that a check is always drawn on chief points of is not discharged No days of grace The drawer are allowed.
are

by the laches of the holder in presentment has sustained some injury by the default.

for payment, unless he can show that he is demanded, It is not due until payment from that time. It is by its face the approthe statute of limitations runs priation only and in the hands of the drawee to the payment money of the drawer of so much liability of the drawer. It is not necessary that the drawer of a bill of an admitted

should have funds in the hands fraud."" 10 Wall., 604, 647.

of the drawee.

check

in such

case

would

be

124

THE

SECOND

BANK

OP

THE

UNITED

STATES

ferences not one was of practical interest to the community, because in actual use the bank took advantage only of the power to sign the drafts by others than the president and

Nor would it have paid to take cashier at Philadelphia. a advantage of any other difference. What was wanted was substitute for notes, not an instrument of different properties
aroused suspicion and thwarted As to the other differences, the only the very ends sought. from which the bank could by any possibility reap an ones those by which it might issue drafts of a advantage were whose
use

would

have

than five dollars and refuse payment of the bank all drafts excepting at the parent office.1 Had either of these legal rights, however, the attempted to use imposing a penalty greater than appropriate punishment,

lesser denomination

any benefit gained, would have been found immediately in to it. the refusal of the treasury to take them in payments In that case their circulation would have been diminished, their credit impaired, and the very purposes for which they
were

created completely thwarted. In actual use, therefore, the bank

branch

between
notes
were

and receivable, drafts

notes

made no branch drafts.

discrimination Hence,
the

where
same

were

receivable, and

rules obtained in regard to redemption, payment, and deposit. dangerous, branch notes Consequently, if branch drafts were
must

have

These facts even the enemies of the other. of forced to admit, while laboring in vain to the bank were Thus Benton in his incoherent attack explain them away. violently asserted that they were later granted but a moment
i

paper was been true

equally so; if the issue of to injuriousthe community, the same

been

one

kind
must

of have

phia, payable only at Philadelthat they were sometimes

payment of 12 per cent, interest on non-payment might if it existed, but only in case been an advantage The of the bank's failure. fact that the government to take them in receipt of revenue was not bound payments to the bank. a positive disadvantage was

The

ability to refuse

have

125
branches.1

paid

at other

Biddle

stated the

whole

matter

clearly and draughts," branch branch

branch "The and over again. succinctly over in practice, substitutes for he said, "being, Like notes, are considered in all respects the same.
notes,

those

branches;

necessarily Branch draughts of all denominations are received received on account of the Government, and those only of five dollars are uals." necessarily received on account of individ2

those

of five dollars, are five dollars above

received
are

at all the

not

These

statements
on a

are

corroborated
no

by

the
was

bank
ever

correspondence

the

and subject,3

evidence
the

adduced The

mist able econohas treated at length the history of the bank, is who invariably cited as conclusive against the drafts. It becomes therefore, to point out some of moment, misapprehensions he seems into which to have fallen. For instance, he declares
one

different usage. judgment Professor Sumner, of

to show

brusquely
*

manner

as
"

convertibility." Since the drafts were treated in precisely the same the notes, they had just the same amount of convertibil
no more, no

that

the

drafts

"had

no

true

less.

If they
no

were

not convertible,

the notes

were

not convertible; but

one

has

ever "no

reached

true conthe point of asserting that the notes possessed vertibil Again, he appears to believe that the branch drafts as a currency device to be substituted for notes were

issued branch

in 1818,

drafts"5

speaking in 1827.

of the "revival Here there seems

of

the

use
a

of
confusion

to be

drafts as a currency device with the of the branch drafts drawn by the bank. The ordinary bank customary drafts did not need
1
3

reviving in 1827, for they had been used

I, pp. 139, 140.
2

C. D., Vol. VIII, Part

3. D. 79, 22d Cong., 1st Sess., p. 2. 2d Sess., p.

Cashier

120 ; Jaudon
* 5

York to Jaudon, Sept. 28, 1833; 8. D. 17, 23d Cong., at New to New York cashier, Sept. 30, 1833, ibid,

Life of Jackson
Banking

(revised)

p. 303.

in the United

facts in connection

with

States, p. 186 ; though elsewhere drafts. the " invention " of branch

he describes

the

actual

126

THE

SECOND

BANK

OP

THE

UNITED

STATES States,1 and during

the

by banks
were

ever

used

since banks existed in the United by the bank without intermission

period when

the "branch

ordinary note. in form.2 The

doing the work of the But these credit devices were the same only drawn for large sums, was ordinary draft was
draft"
was

transferable only by indorsement, and in 1818 certainly was supported by no provision for payment, and did not circulate The " branch drafts " differed in to any considerable extent.

all these particulars. They were transferable by delivery; they

created from and, above
as a

for small sums;

were

they

were

the simultaneous intended all,they were

supported by a fund purchase of billsof exchange ;

to circulate,and
were as

bank-note

the customary As Sumner he redeemed. redemption

2
case

bank

currency. drafts as

They
were

did circulate, different from

the notes

themselves.3

promptly loose," he asserts, " from actual had cut in capital,"* and might be indefinitely inflated. They
"

considers the drafts possessed of no not naturally holds that they were

true convertibil

ifl".R. 460, 22d Cong., 1st Sess., p. 51, Binney's

opinion. It may functions. In that be said, however, that they could perform the same is at a loss to understand be made tion one over the invennoise should why so much branch drafts, and why anyone illegal. of should regard them as Sumner, in denying

" in were convertibility to the drafts, asserts, too, that they form redeemable issued, but in intention and practice they were redeemed where hundreds Andrew Jackson (revised),p. 303. The drafts were not of miles away." " in form redeemable while in practice they where issued," but only at Philadelphia,

"

were

His

issued, at Philadelphia at many and of the other offices. where draft is again bank the ordinary of note with of this species he quotes Gallatin in regard to the drafts. Gallatin is here (ADAMS, apparent when use Gallatiri's Works, Vol. Ill, p. 265) speaking of the ordinary of bank drafts, and redeemed confusion
arguing

that they

are

not usually included the average amount Now, this statement

by his adding : part of the circulation, as is shown in the amount cannot of circulation of the bank, we

"

Though

in circulation as making part of the currency were will not in the least apply to branch drafts, which " included in the amount H. R. 460, 22d Cong., 1st Sess., of the cirulation." always doubt confusing, no are p. 56 ; 8. D. 79, 22d Cong., 1st Sess., p. 4. Gallatin's remarks
"

but consider of the country."

not

draft" at the beginning of the paragraph, since he speaks of the "branch and does he proceeds to discuss the ordinary between the two when clearly discriminate bank draft. of the character of convertible bank-notes proved that they had none instruments were money, of credit which of credit, and, like all instruments limit to their have cut loose from actual redemption in capital, there was no more inflation than to the infinity of human hopes and human desires."" Andrew possible
* was
"

It

or

but

Jackson

(revised), pp. 313, 314.

THE
To in this the

BRANCH

DRAFTS

127

answer

absolutely no against them, to be valid, must be valid as against the notes. The But one does not need to urge this general objection. truth is that the drafts did not embarrass the bank because but that in many they had " cut loose from redemption,"
cases

is always ready that the drafts differed the notes, and respect from objections

too soon they had to be redeemed ; not that they stayed out too long, but that they did not stay out long enough. More than once they had to be paid before the bills of exchange,

from
to
come, were

the funds for redemption whose payment in February, themselves paid. Thus

were

1832,

the cashier at the to keep down

parent bank urges his loans, because

nati the cashier at Cincin"

otherwise

connected with it must press uncomfortably institution " in the East,1 and Biddle, writing to the

the circulation upon the

of the Charleston branch in January, the bank at states that the branch circulation embarrasses its eastern offices,because it is presented there for redemption before the bills of exchange on the notes were which issued
are

dent presi1834, distinctly

themselves

paid.2

Nor

from could not pouring out streams of this paper, for the drafts were all prepared at Philadelphia in blank and dispatched thence to the offices.4 Consequently all that was necessary to stop the
1 2
necessary. attention is at present large masses your notes, of find their way to the north, and being immediately soon a charge create which paid, the bank and the northern offices ; while in the present disturbed state of priupon vate drawn, find it extremely bills are upon credit, many of the houses which

Benton,3 that the bank

will it do to reason, hinder the branches

as

did

Feb. 4, H. R. 460, 22d Cong., 1st Sess., p. 526. " There is one point, however, to which particular Your purchases into circulation naturally throw

difficult to meet their engagements and an extension of time without indulgence, from the bank itself,so that the notes must be paid by the bank, and the bills to Jan. 30, 1834, S. D. 17, 23d Cong., 2d Sess., are meet them not paid by individuals."" Orleans office,ibid., p. 81 ; p. 79 ; see also letter of Biddle of date Jan. 24, 1834, to New and
Ex.
3 ^

Doc. 8, 22d Cong., 2d Sess., p. 27, Report

of Committee

of Offices, July 27, 1832.

C. D., Vol. VIII, Part

I, p. 138.

"And

by having

"Biddle

[i.e., branch drafts] is preserved of the issues of them tribution, for disall prepared and registered at the bank itself, and forwarded wanting only the signatures of the presidents and cashiers of the offices." to Secretary Rush, Jan. 10, 1828, H. R. 460, 22d Cong., 1st Sess., p. 54.
the entire control
them

128

THE

SECOND
from

BANK

OP

THE

UNITED

STATES
to forward

branches

issuing the drafts

was

to refuse

any further supply to them.1 Seventeen branches issued this species of currency, those more, York, Baltinot doing so being Philadelphia, Boston, New Portsmouth,

Hartford,

Portland,

Washington,

this list it will be seen intended, in the West and South, and, as were employed, indeed, four-fifths of all the drafts issued in 1832 were put two in the South, and the other six in out at eight offices

Richmond.

From

and that the drafts

"

the West

what amount of this currency was in circulation in 1832, since knowledge of this fact will help to determine the share which the drafts had in the expansion rency. of the issues of the bank and in the inflation of the curBenton, without knowing, assumed that the amount ran up into untold millions.3 The bank, however, sent in a
1

and Southwest.2 It is important to know

Sumner,

believing
of

embarrassments
were
can a

the

that the drafts bank, naturally Most

"

were

lays

and responsible for most of the errors too to their charge. "They much

most

be traced
of the
a

unlucky invention. to them." Banking

embarrassments result of the working tell seriously, and it was cumulative

was

of the subsequent real troubles of the bank in the United States, p. 186. And again, in speaking the bank found itself of 1832: "The position in which drafts. Their effect was just beginning to of the branch in
a

made

investments

drafts or no branch drafts. Again, speaking were of " the charges against the bank in 1832, Sumner the expannotes that one of them was sion September 1, 1831, and April 1, 1832, of the circulation by $1,300,000between He adds : " The bank although the discounts had been reduced during the winter." was the facts struggling already with the branch drafts, and this struggle produced
permanent

and inevitable, branch

in the West

Southwest

high ratio." Ibid. The truth is, if the bank in 1831-32, loans which were virtually
"

which On

Ibid., p. 204. It would be curious, to say the least, if circualleged." lation have increased discounts were to a considerable falling. extent, while should it is apparent that the facts alleged did not exist. The real state of examination
were
"

: In the time specified the circulation had increased $2,500,000, by Professor Sumner. The discounts, however, amount named almost On the contrary, they were had not fallen off during the winter. April 2 $4,400,000 on in excess on they were 1831, and they had not been at as the 2d of September, of what

affairs

was

as

follows
the

double

low

figure through

the winter

as

they

were

on

the 2d of April.
on

exchange aggregated 1831." Monthly Reports the 2d of September, in Cong., 1st Sess. Surely an increase of $2,500,000 the than
on

of bills of inland

$7,600,000ore m

Moreover, the purchase the 2d of April, 1832, of the Bank, Ex. Doc. 523, 22d circulation
was

not excessive

in the face of an increase in loans of $12,000,000. 2 For localities see note 3, p. 129. Fifty signers at work, and one hundred five and twenty places their perennial Part I, p. 138.
3
"

and
streams

fifty endorsing
of paper."
"

out

from

clerks, pouring C. D., Vol. VIII,

THE
the

BRANCH

DRAFTS

129

return

on

subject

for January,

1832, which

was

as

lows: fol-

$10,781,000; gross circulation, $7,410,000; net circulation,1 $5,029,000.2 The entire net $21,080,000. The circulation of the bank at this time was
whole
amount

issued,

proportion of drafts to the whole is, therefore, less than onefourth. The showing left Benton crestfallen, and it can hardly be held that the drafts played a very large part in
the inflation of the bank's issues. That must have been to a much greater extent the result of branch notes of large denominations used in the purchase of western and southern bills. A comparison at the eight officeswhich issued fourfifths of all the branch drafts in 1832 shows that they

circulated almost twice the amount of notes, and only three had a larger offices Pittsburg, Lexington, and Louisville
"

"

circulation of drafts than of notes.3 Benton to be countemade other charges which seem nanced by Sumner. Thus he asserts that the drafts drove specie out of the West and debt.* The charges do not
1
2

put that section

seem
or

irrevocably in

worthy of credit.
worn

Sumner

In computing
fif. D.

which,

notes

in transitu,

out,

were

subtracted.

1st Sess., p. 2. $5 drafts, $1,991,000;10, $2,428,000; $20, $ $610,000. See also H. R. 460, 22d Cong., 1st Sess., p. 57, for April, 1832; issued, $10,781,635; ou hand, $3,371,545;gross (calculated), net circulation circulation, $7,410,090; 79, 22d Cong.,

$5,928,072;and S. D. 17, 23d Cong., 2d Sess.,

on

p. 64, for

Oct. 1, 1834: issued,

$12,341,212;

hand,
3

$5,565,465 gross ;
and

; circulation, $6,775,747net circulation, $5,164,037.

Drafts

notes, January,

1832, net circulation

(four-fifths gross) : of
Drafts Notes

Fayetteville
Savannah New

$381,740
344,604 726,740 503,476

$ 492,010
699,996 2,536,580

Orleans

Nashville Louisville Lexington Cincinnati Pittsburg

1,311,664 470,712 548,149 561,994 385717

535,008
640,356

482,048
415,560

Total
"

$4,029,532$7,006,822
S. D. 79, 22d Cong., 1st Sess., p. 4.

H.

R. 460, 22d Cong., 1st Sess., p. 536, and

currency which has enabled the bank to fillthedebtors in chains, who scream incessantly for the life and glory of their with Juggernaut, man and attack with the fury of wild beasts every public who will not his public conduct by the devouring their own square private condition, miseries of
*

"

It is this illegal, irresponsible

Union

and

the remorseless

cravings

of their insatiate idol."" C. D., Vol. VIII, Part

I, p. 139,

130

THE

SECOND

BANK

OP

THE

UNITED

STATES

himself contradicts the assertion of driving away specie when branch drafts were he says: "The transferring the capital of the bank to the western branches, and locking it up there in accommodation paper indefinitely extended by drawing Now, the drafts could hardly drive the and re-drawing."1
specie out of the West and simultaneously transfer the capital bank to the same lock it part of the country and of the as the real state of already shown, up there. Moreover,
affairs was that the drafts
were

were

sometimes

before funds

the funds
were

furnished

paid in the East from the West, and those

usually forwarded, not in the form of specie, but in the form of bills of exchange bottomed on the crop and

Orleans. Specie the eastern offices or on New did, indeed, flow from the West to the East, for the simple in which the that specie was the cheapest commodity reason
drawn
on

West

have away

Most of the specie, however, could pay many of its debts. from Mexico, and complaint, if justified, came should been made by that country. Whether such drawing of specie would
constitute
a

casus

Benton belli,

did not

intimate.

As to the second charge, that of impoverishment by the issue of drafts, it would be indeed surprising if the effectof loaning to a poor country was to impoverish it. The usual opinion has always been
Jan. 20, 1832. the States
and
"

that such

loans

are

of great assist-

bank, and an adethe branch quate hand to redeem them ; but these supply of gold and silver must Philadelphia, the gold and silver of the State must be sent on orders being drawn Ibid., p. 140. "The in debt for this there to meet them."" are people of the country from borrowers, the greater part of them at second and third hand, borrowers paper, lenders. The labors of the year barely suffice paying rack-interest to the intermediate for the payment the sixty days' collection of all this interest. The principal of has is still behind, to come delayed payment these exhausted upon countries when
are

in which silver. If notes

In the next place, these orders are impoverishing and destructive to issued, because they lead to the abduction they are of its gold

issued, they

are

payable be kept on

at

difficulty of making Ibid., p. 141. Sumner of says apropos payment." " So far as the branch drafts after 1827 helped to produce this result, : such remarks the bank had some then very few banks of issue in the share in it, but, as there were doubled
the
"

Valley,

greater

before."" Banking
l

amount inthe

of specie was probably United States, p. 203.

retained

at that

time

than

ever

Ibid., p. 206.

THE

BRANCH

DBAFTS

131

country, and that it is of a new be developed. only by procuring loans that the country can To be sure, the bank its loans and received interest on the principal. Perhaps this was what expected to recover
ance

in the

development

But, after all,it was hardly fair to ask that it should give away its capital or make loans for nothing. have Benton had perceived, too, that the bank should Benton

objected

to.

of forcing its loans upon the people of the West, and, if they contracted debts at the bank, they did so because to their interest to do so. it was
no means

A portion of the population of the West undoubtedly had that portion which was a grievance constituted of bankers in They were justifiedhating the bank and note-shavers.
"

their note issues and monopolized the ness, transactions ; it put an end to much of their busiexchange to almost allof their bad business, and at the same time
it reduced

because

compelled

them

to loan at lower rates than

possible had
results
were

the bank

been

out

of

the

would have been field. As these

secured to a considerable extent through the drafts, their righteous hatred was use naturally of branch transferred to this currency. In
seem

conclusion to have been

one

repeat briefly the points which notes established : In use the drafts were may
were

to all intents and purposes ; in law they

checks or bills of exchange ; as notes, those of the denomination of $5 were at all the offices,and the others usually at all the redeemed offices, and always at Philadelphia and the issuing office; all in payments taken everywhere to the government; were depreciated, drafts would be depreciated where notes were to the same extent ; they were readily convertible ; they were only a small part of the circulation ; they did not abstract specie from
the West ; and they to the interests of the bank.
were

ous not necessarily danger-

CHAPTER
THE

VII
BIDDLE'S

RESULTS

OF
were

SYSTEM

THE

branch

drafts

invented

in

1827.

By

July,

had proved its ability to check the business of the state banks, put an end to depreciated state-bank currencies, issue a full supply of its own notes, and secure By July, control of the exchange business of the country. 1831, its success was complete,1 and Biddle, in the triennial
report
to

1828, the bank

the stockholders, gave

utterance

to

pasan of victory while explaining what had been Naturally enough he laid more tance the imporstress upon to the public than on their value to the of his measures bank, for the of securing a renewed charter was now

veritable done.

project

full-blown, and, if he could carry home to the people the conviction of the bank's indispensableness, the chances of getting the new "The experiment," enhanced. charter would be much he declared, had could supply
a

been

to

see

in how

far the bank

sound

while intercourse between He

cirand uniform currency of extensive culatio mercial reducing "the necessary expenses of com-

emphasized in the interests of commerce, and explained how the bank, eign by its extensive participation in them, and especially in forexchange, bank
1

distant sections" of the country.2 the importance of these exchange dealings

staved off monetary

curtailments, which
The depreciation
year

stringencies and periodic otherwise would inevitably ensue

any

other
2

from

on the whole, lower in 1831 than in of state-bank notes was, 1817 to 1837." S. D. 457, 23th Cong., 2d Sess., pp. 126-30.

far the It was to try how interesting and hazardous. was experiment in diffusing over a currency institution could succeed so wide a surface of country ; and and of uniform of large amount value at all places and under all circumstances limit the necessary it could bring down to its extreme expense of commercial also whether

"The

....

intercourse
were

between
various

distant

sections

of such

and

unequal

of country, exchangeable whose NILES, Vol. XLI, p. 114. values."

"

productions

132

RESULTS
because

OP

BIDDLE'S

SYSTEM

133

of the slender stock of the precious metals in the The bank, he asserted, had now fulfilled"all the country.1 it was in the true purposes for which created," and was
sense

of the word a national bank.2 Undoubtedly the country and the business community were the beneficiaries of a sound currency and a low rate of was exchange,3 but the jubilation not all on account of the

good people of the United that "these purposes have

States, for it
been

was

not forgotten

accomplished
*

sacrifice of the interests of the stockholders."

without any " ests The inter-

the contrary, had been fully of the stockholders," on cared for. This was notably evident from the figures for For the year ending June 30, 1831, the bank exchange. had purchased $44,053,520.10 bills of domestic exchange in 123, 161. 23. 5 counts, Disand had sold drafts to the extent of $42, from $32,877,000to $41,448,000. The too, had run
increase in the two

400,000.

species of investments Meanwhile, however, the bank

$7,000,000 in funded debt, so investments was $7,400,000.

with that the actual increase in The change a meant much

aggregated had parted

$14,-

greater total profit, since discounts paid 6 per cent, and inland exchange at least 9 per cent., while funded debt was In other respects the state of the bank's affairs at 4 and 5.
Loans equally gratifying. almost ceased.6 The suspended
was
on

bank-stock securities had debt had been reduced from

$10,426,000 in 1822 to $3,633,000 in 1831; the loan of had been paid; the continto $1,180,880, 1821, amounting gent
fund had been increased

all losses; the surplus was 1828, net circulation had increased
1
3

than covered $1,698,102.93;since July 1,

so more
over

that it

$8,000,000, private
at
par,
or

Ibid., p. 115.
"

ibid., pp.

115, 117.
at the utmost
one-

At present
one

these exchanges

are

generally

either

half of
* 6

per

cent.""

Ibid., p. 116.
5

Ibid., p. 117.

ibid., p. 116.

Ibid., p. 117.

Loans

on

bank

1831, $779,458.07. stock, 1822, $5,974,725.80;

134

THE

SECOND

BANK

OP

THE

UNITED

STATES

$2,700,000, $5,500,000, specie over and $380,000.* The song of triumph annual profits over
deposits
over

net
was

not

unjustified.
But there
were

fliesin the ointment. While increasing the bank's transactions and its profits,Biddle had extended
its dealings in the Southwest

and West out of all proportion, rior and in doing so had returned to that policy of extensive inteloans of which, in 1823, he felt sure that the bank had had "enough It is true that he than enough." and more system of operations which, if faithfully executed, completely transformed the situation, but he should have known that the men who had to execute that plan were

had

perfected

not likely to execute

it faithfully, in which

case

the bank

would suffer loss and perhaps ruin. There was a number why Biddle had turned of reasons ness deliberately to the task of building up a large banking busiFor one in the West and Southwest. thing, the steady payment of the public debt had put an end to the bank's

holdings of public stock and compelled it to invest its means In July, 1831, the government had even in other ways.

liquidated its stock-note for $7,000,000which it had given in 1817 for its shares in the bank's capital stock,2 and by left without a cent of govNovember ernment of 1831 the bank was
funded of attempted
debt
"

diminution

$17,000,000 since July

to supply

in this species of investment 1, 1828. Biddle at first

ments the lack of government stock by investin that of the states, offering a loan of $8,500,000 at 5 in 1829,3 while in September, per cent, to Pennsylvania 1830, he was eagerly inquiring as to the chances of getting

and Mississippi stocks.4 These effortsfailing,some To put them other disposition of the funds had to be made.

Louisiana

1 3
*

NILES,

Vol. XLI,

pp.

117, 118 ; also Appendix

V.

Ibid., p. 112.

Biddle to George Biddle to Jaudon,

Hoffman,

Dec. 15, 1829, P. L. B., Vol. Ill p. 106.

338, 339.

Sept. 7, 1830, ibid., pp.

RESULTS

OF

BIDDLE'S

SYSTEM

135
sible, impos-

out in the East and the South from 1827 to 1831

was

for there the bank's loans diminished

during this period

in spite of constant efforts to keep them up.1 Competition in the East was excessive, there being a great deal of capital In Boston the total business of to be had on easy terms.

the branch

000

in

$4,150,000in January, 1827, to $629,January, 1829, a diminution of $3,500,000.aBanking

fell from
the West

therefore the only and Southwest was Moreover, Biddle's system of branch drafts and resource. dealings in exchange this, and consequently contemplated
in

necessity and inclination this field. No

sooner

hands joined

to push

the bank into

the plans for extensive banking in these to work, however, than unforeseen distant sections begun demand for loanable causes gave rise to an overwhelming had

indeed years of phenomenal capital. The years 1831-32 were " The growth in trade, industry, and internal improvements. introduction of the new means of intercourse," says Sumner,
"

produced
to
a

development

of industry
as

so
a

great

as

to amount
3

revolution, so sudden 1825 the Erie Canal was Baltimore

to create

But the effect and Ohio upon business produced by these means of communication, though large, was not comparable to that resulting from the By extensive application of steam to water transportation. 1825 steamboats the Mississippi. everywhere from the Hudson to The result was a tremendous reduction in increase in the the cost of transportation, an enormous volume of production, and a marked diminution of the price
were

completed, Railroad was begun.

convulsion." in 1828 and

In
the

found

of the
most
1 2 3

commodities

transported.
was

The

American

industry
a

profoundly
See monthly

affected

the cultivation of cotton,

V.

statements

for the period, Appendix

Biddle
SUMNEE,

to T. H. Perkins, June History

7, 1831, P. L. B., Vol. Ill, p. 533.

of American

Currency,

p. 90.

136

THE

SECOND

BANK

OF

THE

UNITED

STATES

for The demand in great request after 1824. commodity cotton led to brisk speculation in southern, and especially southwestern, real estate, and to a less extent in western

lands. there
revenue

Times
were
was

good and everyone wanted to borrow; from Europe, importations the enormous and the spur of excessive unusually large. Under
were

demands

and

largely increased

facilities for loaning, it is

not surprising that the bank

expanded.

So intense

was

the

the bank to grant pressure for loans, and so willing was them, that in 1831, contrary to all precedent, its accommodations The were not reduced during the summer months.1

urgent demand

effort to meet larger "monster" much The

result
was

for money continued have taxed it would

that
as was

through

1832, and the of

to
a

all the resources than the Philadelphia one.

the

bank's

loans increased

an

astonishing extent, By May, in 1831.

so

completely counting from

evident from Biddle's exposition 1832, he would probably not have been By that time, satisfied with the situation.

of the bank had increased from $54,800,000 $70,400,000, increase to an

of
four years. Remarkable this increase as was, the really remarkable fact about it was that discounts in and domestic-exchange purchases had been augmented this period by $33,100,000,almost double their total in in $15,600,000

May

1, 1828, 2 the investments

May,

1828, domestic-exchange

$17,360,000. Other in circulation, $10,578,000,

dealings alone increasing by the increase in significant items were total deposits, $2,762,000;while

held on May specie had hardly increased at all,the amount 1, 1828, being $6,318,000, and on May 1, 1832, $7,890,000.
Thus, while the immediate-demand liabilitiesof the bank had had risen by $13,340,000,the ability to meet them
IS. D. 17, 23d Cong., 2d Sess., p. 97.
2

The

bank's

1st of May, dealings were

1832, is deliberately most

selected

as

being

the moment

at which

the

extended.

RESULTS
increased

OF

BIDDLE'S

SYSTEM
the bank

137

by only $1,572,000. Meanwhile in $1,878,122.29 Europe. How

this

owed

far the West

and

Southwest

were

responsible for

enormous

On

May

few figures will clearly reveal. a expansion 1, 1828, the discount and exchange dealings of the had
been

bank

in those sections of the country

a

$13,697,000

out of

total of

$36,419,000out

$39,352,000;on May 1, 1832, the sum was OOO.1 In other words, of a total of $70,400,

loans had increased from a the western and southwestern little over one-third of the whole to over one-half of the business of offices doing this enormous whole, the number being
out of a total of twenty-six, established almost exclusively in cities of moderate size.2 Since the dealings

nine

in inland exchange were responsible for this state of affairs, they deserve full consideration.

At

the

time

of

the

bank's
"

"equalization of exchange in that of putting an end

was

establishment used in three

the
senses:

phrase first,

to the depreciation of state-bank thirdly, in that of notes; secondly, in that of real exchange; due putting an end to the discount on bank notes which was to their being at
a

distance confusion
Natchez,

from

redemption.
i

This
West:

their place of issue and led people to believe of use

New

Southwest

St. Louis,

and Lexington,

Mobile,

Orleans,

Nashville,

Louisville,

Cincinnati, Pittsburg,
Discounts

(Chillicothe agency).
Bills of Exchange
Totals

May 1, 1828" Southwest All others

May 1, 1829" Southwest All others

All others May, 1831" Southwest All others

May, 1832" Southwest All others

"Compiled
"

from

the monthly

reports

of the bank.

New

Orleans

excepted.

138

THE

SECOND

BANK

OF

THE

UNITED

STATES

ought not to charge for making exchanges for the public. The banks of the day rarely dealt in exchange,1 and considerable hostility was aroused when the Bank of the United States undertook to charge a premium for purchasing
hint of such action and collecting bills. At the very first Secretary Crawford came forward with violent and objections,2 the House committee of 1819 disparaged the practice.3 This

that the bank

hostility was
the bank
secure

never

used

allayed. Moreover, it was asserted that bills of domestic exchange device to as a

* usurious rates on its loans ; Clayton declared that in this way the bank extorted 12 per cent, interest.5 Gallatin, on the other hand, asserted that the bank's

this line constituted one of the three principal advantages derived from a national bank, and one at large.6 Besides, the which accrued to the community
transactions

along

bank

had to keep specie

to make

in order

hand, and at times transport it, Moreover, interest and preexchanges. mium
on

together must be less than the cost of transporting specie ; otherwise they would not be paid. It was only just,
i"That
to the
institution

business

of

of the United States], at some quent period subseits operations in February, 1817, entered upon the commencement of dealer in inland bills of exchange by buying and selling bills upon all
e., [i. the Bank

located, upon it a profit on the transterms that gave action. points where its branches were to the general This practice probably now gave custom rise prevailing banks of buying and selling bills of exchange." RAGDET, pp. 114, 115. amongst
"

exaction of one-fourth, or one-half, or one per cent, on checks drawn on the comone upon another, munity office of discount will as effectually convince of the prostration of its rights and interests at the will of the bank as the It is the establishment of ten per cent. of the principle, and not the exaction amount of the exaction, which will exhibit the power of the bank to levy contributions
2

"The

....

on

the

commerce a

of the protest
on

The whole
3 5

letter is

July 3, 1817, F., Vol. IV, p. 540. nation ad libitum." the subject of the bank's system.
"

Ibid., Vol. Ill, p. 309.

BENTON,

Thirty

Tears,

Vol. I, p. 240.

C. D., Vol. VHI,

Part II, p. 1977.

....

6 "The States, derived from the Bank of the United principal advantages therefore, first and principally, securing with certainty a uniform, and, as far as can, a sound currency paper ; secondly, the complete security and great facility it in its fiscal operations ; thirdly, the great convenience to the Government and affords bills in domestic from its extensive transactions benefit accruing to the community are,

of exchange

and

inland drafts."" ADAMS,

Qallatiri's Writings,

Vol. Ill, pp. 345, 346.

RESULTS
therefore, that the

OF

BIDDLE'S

SYSTEM
the

139

community

should

pay

premium

asked.1 This reasoning furnished a complete answer to the foolish that a national bank ought to make arguments exchanges for them. But it must be noted that, without charging is to the complete as the answer against the sale

objections

and

objection,
more

purchase of drafts, it does not at all touch the other that the discount of bills was a device to extort than

the 6 per cent, rate of interest allowed by the bank's charter. Biddle When this charge was made, it by describing the operation of purchasing a answered bill of exchange with interest at 6 per cent, and 1^ per
cent,

premium,
"two

hinting

that the bank's

accuser

had

confounded

blended

things distinct in themselves, but necessarily in the same the interest on the bill, operation"
"

and the premium The to the point.

on

the bill.2 But

charge was bills on to purchase their crops when they desired instead to discount notes, and that by doing this it secured than the legal rate of interest. Undoubtedly more this
it is plain enough that, in the case explained by Biddle, if the borrower paid 6 per cent, on the loan and
was

this explanation is not that the bank forced its customers

true,3 and

For the bank to be always in the market, drafts, to suit the varying demands of commerce, sell disturbances trade, be compelled the course of of
i

"

ready to buy domestic bills, or to it must, on occasions of unusual to transmit specie from place to

place ; for, whatever

an

be the supposed there has been credit of its paper, when it at any one the bank at that place must of accumulation point, extraordinary be reinforced with an the balance of of specie; more especially, when addition It is, then, obviously just,that the bank is against the place. foreign commerce
may

should

this office ; and which, if it did not perform, The premiums the community. and discounts other part of must to the bank must be less than the expense transporting of specie, or they would paid by the operations be paid; and the difference is a net gain to the community, of not The Theory Money Banks Investigated, the bank."" TDCKEK, p. 301. and of be compensated devolve upon some
for performing
2H.
3
"

R. 460, 22d Cong., 1st Sess., p. 47.

ing For the last two seasons, my attention has been steadily applied to the lessenour ; but of such reduction note business, by a substitution of bills to the amount it is the interest of the in this, I have not been so successful as I could wish, because to counteract this policy."" Cashier at Nashville, Oct 21, 1832, S. D. 4, 22d merchants

Cong., 2d Sess., p. 32.

140

THE

SECOND

BANK

OP

THE

UNITED

STATES

1" per
the
common

cent,

as

exchange, he paid for

rate

of 12
one

laws of usury.8 Twelve the market rate, of course, per cent, was and the result only illustratesthe truth that the market rate and not be paid, if the borrower wishes to be the legal rate must
the

per cent, per annum.1 at that date to evade

bill at ninety days at The method was a

accommodated. exchange
were

It

should

be

noted,

too,

that

bills of

to not so much really used in such cases loans. Almost obviate the transfer of funds as to make all the bill operations of the Bank of the United States were or less than a species of discount. nothing more

In

the first years

of the

bank's

were very slight and exchange of the business in October, 1819,

existence dealings in The volume unimportant.

was

it did not reach $2,000,000until May, the first considerable increase, the figures for July shows

only $1,375,087, and 182*0. The year 1822

$3,273,305 and the total purchases for the year to $7,353, 190. 56.3 The reports for the succeedamounting ing
being
years marked
to

1827

growth of Biddle's system.4 It was part of Biddle's plan to secure control of the entire business of the country in inland exchange.5 The bank, therefore, worked
almost
course,

a show slight increase, but real and did not begin until that year, with the adoption

and by 1832 had it.6 Competition in exchange was, accomplished of free, but the Bank United States of the perfectly
with this

object

in view,

secured
1
excess
"

virtual monopoly
bills purchased

by offering to individuals advanwere or $28,000,000 profit, $650,000, ;

In 1829 domestic

$210,000in
annum.

Biddle
2 5

of the discount, an average of % of 1 per cent. ; equal to 9 per cent, per Hemphill, Dec. 19, 1829, P. L. B., Vol. Ill, p. 117. to Joseph
p. 107.
3

RAGUET, Jaudon
TUCKER,
for it

TYLER,

S. D. 17, 23d Cong., 2d Sess., p. 25.

"

See Appendix

VI.

to the cashier

at Cincinnati, Oct. 3, 1832, H.

R. 121, 22d

Cong.,

2d Sess.,

p. 148.
6

p. 300.

"Though

they [i. e., the state

....
"

banks] had
they did

always

been

competitors

business] yet exchange in their efforts tillsince 1832." Woodbury's report, successful Sess., p. 13.

[i.e.,

inland

highly not prove 8. D. 13, 23d Cong., 2d

KESULTS
tages not furnished It can better rates.

OP

BIDDLE'S

SYSTEM

141

The

bank

had

in other words, by other competitors the case. surprise no one that such was decided advantages over tors. all other competi"

It had branches
its machinery that of any
was

all over

the United

States, and therefore

more suitable and adequate much than state bank, while its large capital permitted it to deal in exchange far more extensively than other institutions.

The

rates of exchange

between
to the

the

western

from
from

the West

and

South

East

and

offices and North ranged

par to

from par to than three-fourths of 1 per cent.2 The rates from the East to higher than the rates on the the West and South were much Between the eastern offices East from the South and West.
the rates officeswere
were

2^ per cent. The average rate was 1^ per cent.,1 the average for 1829

probably being less

low.

The

rates in the West

high, in order to discourage cities,since it was considered that good

other western bills drawn on western and paying bills Orleans. Thus the
as

on

should be drawn on the East or on New rates between the western officeswere almost as high higher than these. rates on the East, and sometimes Not

the

but it sold drafts.3 Each only did the bank buy bills, of the offices sold drafts on the others and on state banks. in These operations were also very considerable, amounting

1829
1 2

to

$24,384,232,* and
VII. profit
per
on

in 1832

to

$45,157,424.

The

See Appendix
"

The

gross

the purchase
"

at which they were than three-fourths

purchased,

cent." bury points to the fact that the state banks bought States. He uses the rates of 1834. of the United One might as well use state-bank figures for 1839.

of bills, arising from the rate of exchange in the year 1829, to 227,224 dollars or less amounted, ADAMS, Gallatiri's Writings, Vol. Ill, p. 343. Woodexchange These, of
cheaper
course, are

than

the Bank

not apropos.

3 " These The bank purchases consist of two correlative but distinct operations. Philadelphia at payable at different and at every one of its offices bills of exchange United States where there are such offices, and the bank dates and on all parts of the Gallatin's at sight."" ADAMS, and its offices sell their drafts on each other payable

Writings,

Vol. Ill, pp. 343, 344 ss. D. 17, 23d Cong., 2d Sess., p. 180.

*Ibid., p. 343.

142

THE

SECOND

BANK

OP

THE

UNITED

STATES

slightly lower than premium charged for selling drafts was that on billsof domestic exchange. It ranged from par to ^ and 1 per cent. The most common rate per cent.1 Besides

was^

drafts, the bank collected drafts drawn by selling its own other institutions and individuals. The amount of this side of its exchange business was large.2 The charge for collecting
was

and West, as already pointed out, constituted What the great field for these operations. the was proportion of the whole business done in these sections? Early dealings were $8,890,000in slight, aggregating some
The

moderate. Southwest

29 per cent, of the bank's entire 32 per purchases of inland exchange bills. In 1827 they were 56 per cent. cent. ; in 1829, almost 46 per cent. ; in 1830, over 1824 and being less than per cent., and did not again fall below 50 per cent, until 1835. Here was a able remarkincrease in the proportion of the business done in the
they
were over

In

1832

60

and Southwest to the whole business done, running from less than 29 per cent, in 1824 to over 60 per cent, in In the former year the western dealings were 1832.3 not as large as the southern and only a littleover half as large as

West

those
excess

and East, while in 1832 of the North of those of the North, East, and South.

they That

were

in

is,nine

ness officesin the Mississippi and Ohio valleys did a larger busiin exchange than all the other offices combined. But this comparison of the business of the West and Southwest as against total business does not reveal all the significance of this surprising increase, for business in the East and South was by no means at a standstill. Hence, to get a true conception of exchange transactions in the West ity must compare the business in that localand Southwest, one In 1824 the total sum with itselfat different periods.
i 3

See Appendix

VII.
VIII.

in $42,096,062.07 1832." S. D. 17, 23d Cong., 2d Sess.,

p. 180.

See Appendix

RESULTS

OF

BIDDLE'S

SYSTEM

143

$2,540,000;in and southwestern purchases was of western 1828, $8,140,000; in 1831, $27,000,000;in 1832, $40,900,is, the volume of the purchases of exchange than trebled from 1824 to 1828, these sections had more

000.

That

in
was

over

teen sixgreater in 1831 than in 1824, and over This simple statetimes greater in 1832 than in 1824.1 ment ments investreveals at a glance the increase of exchange
ten

times

and West in accordance with Biddle's plans. The sale of drafts had increased in a like ratio. The officeswhich did most of the business were only four Thus from 1829 to 1832, including both five in number. or
ville, these years, the four officesof New Orleans, Nashville, Louisfour-fifths of all the exchange and Lexington did over For the remaining business of the West and Southwest.

in the Southwest

years of the history of the bank the first three of these offices,with the addition of the two branches of Mobile and four-fifths of the whole. Lexington did over Natchez, becomes much lessimportant, while Natchez, an officestarted late in the life of the bank, more than takes its place. New Orleans, being the great entrepot for all the commerce of

sissippi, the valleys tributary to the Misthe the center of exchange operations ; it was was branch where most bills were purchased, and on which the two-fifths of officesof the West drew most bills.8 About
the Mississippi valley and
1 2

The

figures

are

computed

from

the added
"

monthly

totals.
....
....

It will be perceived, the the system that, in those sections of funds of the bank have naturally sought a temporary employment the Union where there is less banking capital, and where the productions of the great into the in bringing to require them seem most assistance staples of the country

Biddle

describes

thus

This observation Orleans, the centre applies especially to New market. commercial depository of all the trade of the Mississippi and its tributaries. The course and the business is to send the produce Orleans, and to draw bills to New of the western bills are purchased branches, and remitted the proceeds, which on at the several When New branch Orleans. issued by the several branches to the the notes at
in the course find their way pay the Atlantic branches

New

or Orleans on account turers, manufacof the northern merchants This explains the large amount the circle of the operations. thus completing H. R. 460, 2'2d Cong., 1st Sess., pp. 316, 317. of business done at that branch.""

Orleans, which in New made

branches of trade to the Atlantic branches, the western drafts on their funds accumulated branch in by at the by bills growing there pay the Atlantic branches out of the purchases

144

THE

SECOND

BANK

OF

THE

UNITED

STATES

the exchange transactions of the four or five offices already Orleans alone, or from over done by New 34 to noted was 45 per cent, of the exchange purchases throughout over the

whole

15 to over 33 of the western country, and from over per cent, of these transactions throughout the entire country.1 Of the officesin the West which ranked next after the New
another

Orleans branch, sometimes one, sometimes more extensively in this line of banking.2
On

engaged

Biddle most of these bills drawn? what offices were " " states that the billswere purchased at the several branches in the West, "and remitted to the branch at New Orleans."
This office paid the eastern offices for the collection of the " by bills" on the East growing western note issues out of in New Orleans on account of the the purchases "made In other words, or northern merchants manufacturers." New drew Orleans, and New branches on the western In the main the statistics It is to be noted, however, available bear out the assertions. that during 1831 and 1832 this system of operations was in the West not adhered to. The drawings and Southwest

Orleans

on

the eastern

offices.

on

western
was

which

cities increased very materially, a state of affairs in the beginning and extremely not contemplated

undesirable.3
Biddle, in his explanation of the business to the committee of 1832, gave a table for 1831. The total is $48,562,185.32, the amount of the business in exchange containing Orleans footed up $9,470,184.38, over 19 per or the purchases at New and of this sum The to all the western and amount accredited southwestern cent, of the whole.
i

42 per cent, of the business of the West in gives over which offices is $22,452,760.32, Orleans." H. B. 460, 22d Cong., 1st Sess., p. 318. Similarly, figures to New exchange bought for the year 1832 give the whole at $67,517,000. The amount of exchange In the Orleans is $13,251,000, over 19 per cent, of the entire sum. or amount at New "western offices these dealings footed up 37 per cent." Orleans is over to New
a table shows practically the same 20 per o share, $14,439,367.80,r over 40 per cent, of this. a

total of $34,627,000, which the sum of ited accredS. D. 17, 23d Cong., 2d Sess., p. 180. At p. 192

cent.

facts for 1833 ; total, $71,761,370.86.New Orleans's Total western, $32,582,000 New Orleans over ;

2"T. R. 460, 22d Cong., 1st Sess., pp. 316, 317 ;

3

see

Appendix
1830, total

VIII. dealings
in domestic

According
were

to

McDuffie's
month

table

for March,

exchange

for that

$5,700,000,f which o

$2,100,000 were

in the West $10,100,000. The sum equaled purchased drawn on the Atlantic offices, mostly by the branch

RESULTS
Though the bank

OP

BIDDLE'S

SYSTEM

145

had expanded everywhere through the as a consequence years 1831 and 1832, it was of the extravagant dealings in inland exchange in the Southwest and West
that the greater part of the debt to it had and in this particular it acted incautiously

been

Adams

was

imprudent

and that the Bank had been somewhat convinced in her issues and accommodations" in 1831 ;'
' '

created, foolishly.

" as and one of the directors at New York wrote Biddle that it turned out we done harm last fall" by "letting out."2

The

summed up exactly by a Philadelphia banker, no doubt Girard, who, after seeing the report of the bank's condition for 1831, wrote to a friend :
situation
was

I confess I am alarmed at the picture. Their loans have been increased in the year from forty-five to sixty-six millions, while their specie has decreased from twelve to seven millions. The bank

(whichit will be outstanding that vast amount of loans difficult to reduce or call in,) specie low its funds in Europe no to draw for; on the contrary, in debt a million and a half exchange at eleven per cent, premium specie shipping by every
now
" "

has

"

"

millions of their notes in circulation, them which the pressure of the times will bring back upon They and their private deposites liable to be withdrawn. rapidly have acted like madmen, and deserve to have conservators appointed packet
"

....

more

than

twenty

"

over

them.3

Having

unduly

perilous situation

the bank found expanded, Specie by October, 1831.

itself in
was

rapidly

drawn on Of the remaining $2,500,000ere w $3,600,000, at the mouth of the Mississippi. leaving only $1,100,000 bought the same the offices up the Mississippi, on office, down the Mississippi." H. R. 358, 21st Cong., 1st Sess., pp. mostly by the branches
39-41. According
a

to the figures in Toland's

total of $16,304,000 of expended 000 were spent in the West and drawn
on

report for the month of October, 1832, out in the purchase inland bills of exchange, $10,053,of Southwest. Out of this sum were only $1,545,000

the drawn

East,
on

amount 000. The

drawn while $7,300,000were New Orleans was a little over

remaining

$3,331,000 were
Ex. Doc. to Biddle,

drawn

on

The and Southwest. the whole, being $3,900,one-half of offices." 8. D. 4, 22d other western
on

the

West

Cong., 2d Sess., p. 12.

1
2

8, 22d

Cong., 2d Sess., is identical

with

8. D. 4.

J. G. Watmough

May

11, 1832, B. P.

Saul Alley to Biddle, March

21, 1832, ibid.

a

Cambreleng,

bank."

quoting letter of Feb. 16, 1832, from C. D., Vol. X, Part II, pp. 2380, 2381.

dead

banker

friendly to the

146

THE

SECOND

BANK

OP

THE

UNITED

STATES

proof that the paper currency was and prices inflated. Directors were redundant urging that the exportation be stopped by the sale of foreign bills and expressing fear that the state banks would secure running
out of the country,1
a sure so the bank was of specie.2 Meanwhile hard pressed for funds that Biddle notified the American agent of the Barings that it would be compelled to draw to the limit of its standing credit of $1,000,000 with that

the bank's

fund

and, if possible, to increase the credit by another $1,000,000on which bills of exchange might be drawn to be repaid later at 5 per cent.3 The bank evidently could house,
not stop the exportation of specie, because
on

it lacked

funds

The government which to draw bills of exchange. added by calling for its deposits in order to to the embarrassment pay off part of the public debt, and doing this without giving The final timely notification of its purpose. blow came of $6,000,when the treasury demanded payment 000 to discharge the 3 per cents.*
the bank

of October, 1831, the day after Biddle's letter to the agent of the Barings, the bank turned5 to the task of procuring the necessary means by creating a
Hereupon,
on

the

7th

Biddle

to Lawrence,

Dec.

6. 1831, P. L. B., Vol. IV, pp. 48, 49.

"
" *

S. Alley to Biddle, Oct. 17, 1831, B. P. To T. W.

"

Ward,

Oct

6, 1831, P. L. B., Vol. IV, pp. 28, 29.

any

has worked mora Treasury measures of your recollect which " I for all concerned."" Biddle to A. Dickins, Nov. 29, 1831, ibid., pp. 46, 47. crossly Mr. McLane he means to pay next you would above all let us ask and wish what
I
never
"

not have any more payments Biddle to Cadwalader, Dec.

to amount to calculated McLane's letter, Sept. 29, 1831, H. R. 460, 22d Cong., 1st Sess., pp. 542, 543. 5 The unusually heavy reimbursement of six millions of funded debt
"

like the last caprice."" moment's without warning, 27, 1831, B. P. The payment of public debt for 1832 was H. $18,080,057." R. 121, 22d Cong., 2d Sess., p. 162. See
a

is

the office at the parent bank, and upon upon calculated to press very New York ; the more the necessary from our uncertainty proso, as to the time when vision Be pleased, for money. be made, and from the prevailing active demand must denying reasonbusiness immediately, therefore, so to shape as that, without able your inconveniently
interests of your or sacrificing the into large amount throw, as early as possible, a may office, you of available means hands in Philadelphia time, abstain, as far as York, and, at the same our and New Circular of Oct. 7, 1831, drawing upon practicable, from either of those points." ibid., p. 19. accommodations
to
your
own

customers,

"

KESULTS

OP

BIDDLE'S

SYSTEM

147

contraction

of its business, issuing orders to that effectto all to diminish discounts and to instructing them the offices, purchase bills of exchange Nor funds to the East.
with the object transferring of the board content with this, was but as time passed it urgently repeated its orders again and July 29, 1832, after seven months again.1 Finally, on of
contraction, it issued
....

instructions

that "the

western

or southern offices it may be of any domestic bills of exchange, except when debt already due to the bank or the a necessary to secure

decline the purchase

and discounting

offices," thus

orders were In the face of these frantic efforts to contract, the expansion ber, of the bank's business went steadily forward from Octo1831, to May,
was

loans ; and these stringent cutting off all new 29, 1832.3 not relaxed until September

1832. of
a

in the nature

For the entire period the advance for one moment triumphal march, never

suffering check
reached
a sum

of which
amount

must
was

1, the loans had pause until, on May before approached,* the contemplation never have been terrifying to the managers. The
or

against $60,101,000 at the beginning of October, 1831, while the net note issues rose from $19,708,000 to $21,377,000. The tract attempt to conbegan to show results, however, after the beginning
i

$70,400,000,as

Ibid., pp. 521-7 ; Documents

13-22.

2-S.D. 4. 22d Cong., 2d Sess., p. 27. 3ff. R. 121, 22d Cong., 2d

Sess., pp. 140, 146.

"Resolved

that

the Committee

on

the Offices be authorized bank have been acting."" stated to the board,
so to modify advisable Louis, Cincinnati and as

under which the offices of the Report Biddle, Sept. 21, 1832, ibid., p. 27. "The dent Presiof had deemed it that the Committee on the Offices,
....

to modify

the instructions

the

instructions
as

Pittsburg,

heretofore,

and

to extend

their

Louisville, St. offices at Lexington, freely upon to allow them to check the bank in domestic bills." Minutes purchases of Oct.
to the
"

4, 1832, ibid.

facts: The from total loans rose the following reports show monthly Sept., 1831, to $70,400,000t the beginning May, 1832, and $60,101,000 the end of of a at in October, standing to $63,600,000 fell from $70,400,000t the beginning a of May The net circulation in began. the contraction $2,500,000bove what they were when a

"The

Oct., 1832, was

1831." Ex.
Doc.

i as $19,487,000 against $21,377,000n May, 523, 23d Cong., 1st Sess.

1832. and

in $19,708,000 Oct.,

148

THE

SECOND
The

BANK

OP

THE

UNITED

STATES by
the

of May.
chart. The

entire movement

is clearly revealed

increase of the bank's transactions in the marked face of this strenuous attempt to reduce took place at the offices in the South, the West, and the Southwest, especially
at

Charleston,

Savannah,

New

Orleans, Mobile, Natchez,

Adding the other western and Nashville. offices to these, to just the expansion amounted $10,587,000, counting from the last day of September, 1831, to the first day of May,

1832, actually exceeding the figures for the whole expansion for that period. Taking the western and southwestern branches alone, the total expansion was $9,000,000. Of this

$1,385,000 was

in bills remainder of The chart for these offices on p. 151 domestic exchange.1 reveals at a glance the astonishing increase. in the

discounts,

Meanwhile
eastern

the bank

had

also attempted

to curtail at the

and most of the southern offices,2 ith the result of w keeping down loans, though contraction did not really begin The even at Philadelphia until the end of May, 1832.3
offices of Boston, New

and Philadelphia succeeded most completely,4 but at no time did the reductions means at the other offices. The equal the augmentations
in April, 1832, The was, whole of the bank's purchases of inland exchange $13,952,000in June the ; $23,052,000, which the western and southwestern share was of Reducing the matter total was $14,342,000. $22,577,000, western and southwestern,
1

York,

Baltimore,

for New Orleans, Natchez, Mobile, exchange follows: April, $10,594,000May, $10,816,OTO ; ; months This being nearly half of the business done in domestic exchange. June, $10,059,000, at four out of twenty-six offices of the bank. still further, the amounts and Nashville for three
of domestic
are as

It has

delinquents.

out that Savannah serious and Charleston were already been pointed demands for contraction found at Richmond, Slight failures to meet were Hartford, Portsmouth, Norfolk, Fayetteville, Burlington, and Portland.

"

Offerings Income
Excess

today

$265,851
157,647 108,204 112,300
.--.-.-..

of offerings within income have for many that we months to Biddle, May 29, 1832, B. P.
from

Rejected
Discounted
"The

$4,096
been
able
to keep
on

first time

the

right

side.""
*

Cadwalader

For

all four offices the reduction

January

to November

was

$5,516,000.

RESULTS

OF

BIDDLE'S

SYSTEM

149

CHART

II

75

70

70

65

65

60

60

15

20

15

10

10

Total nccommodations
...............

Inland exdmngo

Circulotio

MOVEMENTS

OP

DISCOUNTS,
OP
AN

OTHER
ATTEMPT

LOANS,
TO

AND

CIRCULATION,
BUSINESS

IN

THE

FACE

CURTAIL

150

THE

SECOND

BANK

OF

THE

UNITED

STATES

secured in the East thus went to pay the debts incurred in the other sections of the country, and the bank was still without the funds needed to meet the government's requisitions. That apparent to Biddle
would be the result had become March, 1832, and out of this as early as the attempt to postpone the payment of the such

situation sprang 3 per cent, stock which the treasury had directed to be paid.1 It was that the bank only by securing this postponement

could meet
a

the government's

demands.

It

was,

in short, in

position, and had to use every possible means to extricate itself. diminution in the bank's While there was actually no

very grave

loans, there

pressure occasioned by its real and severe This would, of course, be true in the attempts to reduce. East and South, for there the bank had actually reduced its Yet, curiously enough, the most intense accommodations.2
was
a

pressure

felt in the West, where there had been no contraction The cashier of the branch at Cincinnati whatever. 1832, that the "demand for money" in November, writes "enormous," at that place is and that the branch would
was

time to resist it."3 The struggle for some " bills of very short dates cashier at Nashville declares that character, drawn and offered by persons and of undoubted have been desirous to accommodate," In were we

"have

severe

rejected.*

on the "unexampled scarcity of another letter he remarks " in Alabama Tennessee, and prays for the priviand lege money discounting, if that privilege is to be extended to of because the branch at Nashville is the center of a any office,

population
1 2

which
"

is suffering for the want

against the Bank."

of

circulating

See chap,

xi,

Charges

Wayne,
our

driving

Vol. XLIII, pp. 17, 18. Evidence p. 20, and of Lippincott, 460, 22d Cong., 1st Sess., p. 548; of Sullivan, ibid., p. 554 ; of Neff, ibid., p. 563.
3

precede NILES, Vol. XLII,

declared is that "the want of money at this moment to all those shifts and expedients to raise it which usually merchants March 13, 1832, C. D., Vol. VIII, Part II, p. 2144. See also bankruptcies."" of Georgia,
H.
R.

Nov. 21, H. R. 121, 22d Cong., 2d Sess., p. 149.

"

Nov. 26, 1832, ibid., p. 154.

RESULTS

OF

BIDDLE'S

SYSTEM

151

CHART

III

I
40
10

do

35

30

30

25

25

20

20

15

15

10

10

"

Totals
Domestic

"

exchange

EXPANSION
OF

AT

THE
AN

WESTERN ATTEMPT
TO

AND

SOUTHWESTERN

OFFICES

IN

THE

FACE

CONTRACT,

SEPTEMBER,

1831-32

152

THE

SECOND

BANK

OF

THE

UNITED

STATES

A gentleman in Cincinnati writes that " the distress medium.1 for money here at present, is greater than can be well The brokers get readily one-fourth of one imagined, : Similar complaints of a lack of money per cent, per day."
....

came

from

other western

were offices complaining purchase of bills of domestic

the offices,yet at this very moment piling up debt upon debt by the

The exchange. in the West simple: The actual expansion below the demand for loanable capital there

explanation is
was so

much

that the effect that of a severe was contraction; and if there had been no attempt to reduce, the increase in the amount of western loans would have been infinitely in excess of what it was. All this embarrassment to the bank and all this distress

had arisen from Biddle's plan of operato the community tions in the western and southwestern country at a moment for capital were The business the demands excessive. when
almost entirely based of the bank in these sections was Money to grow was the crop, advanced upon the crop. the crop the loan paid out of the proceeds when and to market.3 The bills of exchange by which these came

loans
case

were

made
sudden

were

frequently
upon

of

demand

six-months paper. the bank, such paper

In
was

certain

to

occasion

would if the crop in 1831 and in 1832. The crop was this is what happened to this were added excessive short in both years.4 When
1
"
....

So it embarrassment. considerable failed even like partially. Something

It is reported here, that the Louisville office has received instructions If this be true, then allow me, bills for money. to solicit similar instructions to this office ; for I assure a you, that no of the Union contains portion for lack of a circulating medium, than does that portion more suffering population,
to discount
....

of which this office is the focus." Oct. 21, 1832, H. R.. 121, 22d Cong.,

"

Cashier

at

Nashville

to cashier

at Philadelphia,

2d Sess., p. 151. 18, 1832, quoting from

2NILE9,
Express.
SH.

Vol. XLII,

p. 436, Aug.

the New

York

Courier

and

R. 460, 22d Cong., 1st Sess., pp.

316, 357, 358.

p. 34.

*NiLES, complains

Vol. XL,
that

p. 271,

and
are

Vol. XLI, certain

on

See, however,

low

prices

account

ha 164, 165, where "And, to add of over-supply.

pp.

KESULTS importations

OP

BIDDLE'S

SYSTEM

153

arising from a visitation of the cholera, it will readily be supposed that the bank could not get itsdebts paid when they felldue. Nor could it secure and disturbances

foreign bills to send abroad in order to check specie drains, drawn for the most part upon the since foreign bills were
crop.1 had not manifested But if the difficulty it would have done so later,for the cause
cotton

itself in 1831-32

lay in the nature torates of western loans and in the character of the western direc; it lay in the purchase of bills at six months' time ;
in that constant renewing of discounts which was customary in the loan of money in the West and Southwest; a crop on This was even. not ungathered, unsown yet unmarketed,
correct

and, worse who had to make yet, the men ignorant, careless, and interested in their the loans were sections rather than in the bank. The letters of branch officialsreveal these facts clearly. Thus
the cashier at Louisville wrote to Jaudon in November, from the too great 1832, admitting that the difficulties arose

banking;

extension
to
own our

of its loans,2 that there had

season, we

been

overtrading at
so

difficulties last

had

very

and payable not be paid Nashville branch to Biddle, Nov. 24, 1832, H. R. of out in his letter of Oct. 21, 1832, speaks 121, 22d Cong., 2d Sess., p. 47. Sommerville, " disappointments by the unlocked for frost of the the severe occasioned of last." he mentions Ibid., p. 149. Again, in November, "the ficulties dif25th October
crop
....
"

drafts, predicated on the President the crop."" of

short crop of cotton, Orleans, could at New

that

our

crop," unfavorable of another of the last season, produced redrawing Ibid., p. 155. [i.e., Alabama]."
"

further in the same letter, " the on and by the failure in the crops in that quarter

Cong., 1st Sess., pp. 319,320. "The situation of the We have had on the one hand is very delicate. an at this period excessive country in value and diminished on a importation, the other hand crop short in amount, Swartwout, of New York, Feb. coming in at a time unusually late." Biddle to Samuel
1

BIDDLE,

H.

R.

460, 22d

"

27, 1832, P. L. B., Vol. IV, pp. 189, 190. For the difficulties arising from the New York, to Biddle, June 28, 1832, says that it makes alarm, C. W. Lawrence,
B. P., Feb. 9, 1832. Biddle anticipated to reduce. P. L. B., Vol. IV, p. 157. I. Lawrence,
"

cholera it difficult
source.

difficulties from

that

"To been

"Encouraged
induced

by

to purchase

the excessive importations largely than their more which

at the east,
own now means or

country required : hence the embarrassment 2d Sess., p. 145, Nov. 18, 1832.

have merchants the necessity of the exists."" H. R. 121, 22 Cong.,

our

154

THE

SECOND

BANK

OF

THE

UNITED

STATES

the branch, and that some of the bills purchased comprised but the that "nothing worthless paper.1 The result was indulgence of the bank " and " a full year's products of the

could relieve the situation. The position of the " The cashier admits one was of peculiar delicacy." that bills of exchange sent to Louisville to be collected are country branch taken instead. That is, collected, but other bills are bills to Louisville for collecthe other branches forwarded tion, and the parties at Louisville, not being able to pay,
not
on allowed to settle by selling other bills of exchange The amount some other branch. of such transactions is hot known, but $4,000,000of collection paper had been sent to

"

were

and "the The tobacco and hemp cashier at Pittsburg exports." bears witness to similar conditions, declaring that the loans for the present be lessened, and inland bills cannot on
*

Louisville in the year just past.3 The branch reduce its loans ; indeed, for a time they might because business" increased," of the "pork

"

could not be a little

admitting be

that the branch

it now

has

discounted

paper

known

to

since objectionable,

at maturity, and
i
"

of

declines all notes "not pay able business character." 5 The cashier at

I do not

mean

often imposed 2/6td.,p.

3
"

upon

to say all our bills have a real business origin : we are doubtless by fictitious transactions."" H. R. 121, 22d Cong., 2d Sess., p. 144.

145.
.
. . .

We have been, and stillare, in a situation of peculiar delicacy ; A large proportion bills were to enable the parties to meet of our purchased their obligations sent here for collection : the amount of such collections has been from at least four millions of dollars in the past year, of which about one half came
of the United States and the office at New Orleans. hasty estimate, the bills collected for the office at New Orleans, amount, for the past twelve months, to upwards is stillon of $1,300,000, and a large amount hand coming to maturity." Ibid., p. 144, Nov. 18, 1832.
"

"

the Bank

By

"

*Ibid., p. 145.
5 " In that the reply to your letter of the 10th instant, I remark, in the west, are founded transactions, and that the amount on could inconvenience to our at this time, without ; but, in a few customers doubt, the operations here, in exchange, no will be as limited as

not

bills purchased be lessened,

I have months, be desired.

may

Our

diminishing because are their products, the office is moro manufacturers in its loans, declining all new are cautious notes which not payable at maturity, and fore of a business character, and calling in, by regular reductions, those on time heretodiscounted."" Nov.
17, 1832, 8. D. 4, 22d Cong., 2d Sess., p. 31.

RESULTS Cincinnati

or

BIDDLE'S

SYSTEM

155

impossible that for the present it seems Evidence of renewal is apparent here to reduce discounts. " bills of exchange are offered, to be as fast as good also, for
asserts
l At notes, they are purchased." applied to discounted Nashville both the president and the cashier of the branch declare that renewal is the best, in fact the only means of

dent meeting the situation.2 In the preceding October the presihad declared that the scarcity of money and the refusal had to be to do business where money of the branch advanced had compelled the renewal of all billsfalling due within the four months preceding, the bills of exchange by for six being purchased the renewals were which made
to some and passed on months " This operation," he concluded, bill account very much, without

other office for payment. " has swelled our domestic

lessening the debts due to

'

Bills renewed this office very sensibly as yet." at New Orleans had been again renewed at Nashville after having been sent there for collection.* A request from Biddle that for bills should be restricted to four months the term

brought

back
"

the

answer as

that

"bills payable
as
"

after date
1
"

were

for

short terms

ought

months to be taken."

six

'

Our

discount Our

wish
soon,

board

but at present

as fast, I am not go down afraid, as the parent board to get it down, and we hope to be able to do so struggling it appears to be impossible." Nov. 21, 1832, H. R. 121, 22d Cong., are
"

line does

2d Sess., pp. 148, 149.

2
3

Ibid., p. 155, Nov.

26, 1832, and

ibid., p. 47, Nov.

24, 1832.

"The

refraining bill,has compelled

to the Orleans In

unexampled from doing

and have this way all the bills been from the Orleans and other western
p. 150,

in both Alabama scarcity of money and this State, and our business wherein is to be advanced on money either note or to discount safe bills at six months us to enable debtors advance, deposited with us for collection. other offices to meet the paper paid

which

were

remitted month

to

us

offices since

the

of June

for collection last " Ibid.,

"

Oct. 21, 1832.

*"In consequence by have been drawn of which, drafts to a very large amount the commission on their friends here, and made merchants of New Orleans payable due, at this office,by the payment at this office. Those drafts could not be met when of cash on account of its scarcity ; and no other means could be resorted to but drafts again on New p. 47, Nov. 24, 1832.
5

Orleans, which

our

directory thought

right to purchase."

"

Ibid.

Ibid.

156

THE

SECOND

BANK

OP

THE

UNITED

STATES

Biddle admitted that many bills had to be taken up at Nashville by redrafts, but considered the number actually drawn In reply to this the president at Nashville excessive.1 bought, " amounting that too many billswere acknowledged
to
more
J

than But
or

pay." taken

the present no there was

crop of cotton and tobacco will help for if; the bills had to be
have

protested, and

protests would

led to many

The failures and endless embarrassments. amount of redrafts fall amounted for the summer to over $1,000,000.* and Notes and bills stillto fall due could be met only in the same probable that the branch would add not way,4 while it was

less than

$400,000 of

its

own

debts to

this total.5 The

president of the Nashville branch declared that it would be to "get the debts due this office paid; impossible anyhow
....

the
not

"

means

were

expected that three times the ordinary amount complained officials of bills had been sent them for collection.8 Under these circumstanc they considered it their duty to renew the
could
notes

be

in the country." 8 Payment June, 1833.7 The before May or

"

not

maturing
"mature

during again"

October
they

and

November,

but

when

these

either by bill or
i"We
necessary
are

would "insist upon payment otherwise," and, if the debtors did not pay

to take

anticipated
2
*

bills have returned it was that many this office which upon by redrafts, but still the amount had been up exceeds what much by the board."" H. R. 121, 22d Cong., 2d Sess., p. 46, Nov. 10, 1832.
aware

Nichol to Biddle, ibid., p. 47, Nov. 24, 1832.

"

ibid., pp. 47, 154, 155.

There

are

some
can

thousands only be

yet to mature, 158.

*"
a

which

of dollars of bills from Orleans and other offices Ibid., pp. 157, bill operations." our met through
"

What

portion

of

our

own

satisfactory estimate, 1832, ibid., p. 158.

o

not

less perhaps

debts may be turned into bills, I cannot form now Cashier to Biddle, Nov. 26, than $400,000.""

Nov. "The

22, 1832, ibid., p. 153. bank, and the offices at New Cincinnati, Louisville, and

ibid., p. 47.

parent Pittsburgh,

York, Baltimore,
Lexington,
have

Washington, been
at

mond, Rich-

the practice forwarding them

say, three times

bills and notes made of discounting payable here for collection. This has been done this
of any

tinue and still conthis office,and too, I would season,

the amount

previous

year.""

Ibid., p. 47, Nov. 24, 1832.

EESULTS

OP

BIDDLE'S

SYSTEM

157

they would bring suit, " unless in such cases as justice would 1 dictate the propriety of further indulgence." The propriety kind of Orleans the same of further indulgence ! At New business was done, the figures for renewal at Nashville showing drawn at New Orleans.2 Indeed, that most of the billswere New Orleans must share with Nashville and Louisville the discredit of being the source of most of this bad business.

In May,

ing expressand dismay at the bill purchases at New astonishment Orleans, Cashier Jaudon defended the action of the branch.

1832, in

answer

to

letter from

Biddle

This

was

ominous,

for Jaudon

was

tried employee

office,and if he could err so littlehope that others would keep the strict letter of was The instructions or practice more conservative methods.8

Philadelphia

of the grievously there

and on mature such circumstances, reflection, under the difficultiesof discussions to supply the deficiency, and frequent crop, without money unfavorable another it a faithful discharge of the the subject, the board on considered tant .importhe notes maturing within the last and responsibilities confided to it, to renew to insist upon these shall again the present month, mature, payment, and when
i

"

Under

either

by bill

or

otherwise
as

; and,

in the

unless Ibid., pp.155, 159, Nov.

2

in such

cases

justice would
26, 1832.

event of failure to pay, to sue the debtor dictate the propriety of further indulgence."
"

Bills collected from Sept. 1 to Nov. 26, 1832 Bank of the United States
------

$147,473
746,893 203,061

New

Orleans

All the others

$1,097,427
"

Ibid., p. 157. to October

:

"

Bills business

of New

Orleans

for western
Amt.

offices 1830-31, October

Office

of billi collected by Office N. 0. for

in favor of Ami. of checks B. U. S. " northern offices, drawn N. 0. office by on

Nashville Louisville
....

$2,421,301.26
775,002.68 398,627.33
....

$2,350,000
910,000 500,000 930,000 187,000

Lexington
Cincinnati Pittsburg

396,947.25 25,018.82

$4,016,897.34

$4,877,000

it appears, "Thus that we are not only obliged to pay at the north the whole Offices ; but that we are obliged to pay amount of bills remitted to us by the Western ern are of our notes which collected by the Westat the north also, for a large amount Orleans demand New A further on funds. offices." Difficult to get northern
New Orleans office at the end country. of the offices taken in the western by drawing bills to pay all this, so have attempted payment of its devices for means from
notes

158

THE

SECOND

BANK

OF

THE

UNITED

STATES
to

perilous business of the bank the West, however, for there

was

not

entirely confined

hints of something of the * sort at Richmond and at Charleston,2 while, as already seen, neither Charleston nor Savannah was able to reduce. These bills and drafts drawn "to pay "other bills, drafts,
are

and

to maturity were what were coming "racers" bills, by which loans or "race-horse" As a result there was "the payment perpetual.

notes

known
were

as

made of debts"

up the Mississippi by bills on New Orleans; "the payment" Nashville and other western of these by bills on offices, " " bills the payment and of the bills on these officesby more
The iniquity of other western towns. the business was naively disclosed by an advocate of the bank in 1834, in what he supposed an was argument conclusive bank's usefulness to the West and Southwest: of the
on on

New

Orleans and

houses, all through the Western States [said tor SenaPorter of Louisiana] having credit, and doing business with those of our city, have drawn late in the summer, or early in the
autumn,
on

Commercial

bills of exchange
"

on

New

Orleans, and

sold them
New
:

to the
Orleans

Jandon Another to Biddle, May 16, 1832, B. P. the western country. statement offices in 1830-31, October to October of business with western
Billi Collected at this Office for
Remitted

Notes of this Office

to Us

Office

from

Nashville Louisville

$547,179.56
469,293.54 197,162.67 65,673.36

$431,940
542,385
706,300

Cincinnati
Pittsburgh

193,475

Lexington

30,714.24

211,430

$1,310,023.37
"This

$2,085,530

dred a sum again, as the former statement of 7 or 8 hunshews shewed, find the means in the WestDollars, which we ern thousand of paying could not Cities ; and were therefore obliged to allow to become a charge against us at the So they are paid "by purchasing Bills on the western North." cities, and so far
diminishing

"Our
nearly met
1
"

us they can make against chargable the two great points, Nashville and notes collected at by bills bought on those places." Ibid.

the amount

which

at the

North."
are

Louisville,

"

Your

assurance

that the paper

require to be renewed, is gratifying." H. R. 460, 22d Cong., 1st Sess., p. 518.

2

lately taken is of such a character as will not Mcllvaine to Eichmond office, Jan. 19, 1832,
"

Biddle to president

of Charleston

branch

Jan.

30. 1834,5.

D. 17, 23d

Cong., 2d

Sess., p. 78.

RESULTS
branches drawn

OP

BIDDLE'S

SYSTEM

159

....

established in their respective States. With the money from this source, the planter and the farmer have been supplied, Its utility, however, did not stop here. A few months
are

run

round, the crops transmitted to New

gathered, delivered to the merchant, and Orleans for sale. There then happens what
considerations of personal make of the future. It is

be expected in all cases where into the calculations we advantage enter

might

found that the planter has estimated too largely his crop; he falls in debt to his merchant, and he in return has a balance against him
in the city where the produce was sold. The bank steps in again, and purchases from the factor in New Orleans, a draft on the House
country, and in that way enables the produce of a is really demanded. second crop to be got to market before payment What I now state, has been every year's transactions for several

in the Western

years back.1

with a vengeance, and, since it had renewing been the transaction every year " for several years back," it debt was follows that one piled on top of another year after was stillfar in the future. year and that final payment

This

was

What

Porter

situation, and a out his statements.

the whole said revealed clearly enough comparison of the figures for exchange bears It shows

that at New Orleans the sums in the purchase of bills were expended very small in the beginning of the year, large in the early summer months, At Nashville the sums were and small again in the autumn. of the year, and then generally large at the beginning

diminished
The
reason
on

tillat the end of the year they were very small. for this difference lay in the fact that bills were

drawn
came

New

Orleans at Nashville

back renewed six months Orleans. What proportion of the West

was

early in the year, and later to Nashville from New bills purchased
in the

character it is impossible to say. of this permanent Folk's committee sippi declared that, if all the bills in the Missis-

ville, of the same character as those at Nashvalley were "at least $7,000,000" were "secured by paper" which
1

C. Z".,Vol. X, Part I, p. 706, Feb. 25, 1834.

160

THE

SECOND
from

BANK
branch

OP

THE

UNITED

STATES

was

"running

to branch,

waiting for crops to

it.1 be raised to meet" It was this dealing in permanent in an the bank when it needed means

loans that embarrassed How could emergeney.

any bank collect its debts with any facility,when they were No bank could, out for six, twelve, and eighteen months ?
and the Bank of the United States did not in 1831-32.2 Though it managed to correct many of the abuses after that date, the difficulties entailed by western banking remained to The state of the Louisville branch in 1834 was no the end. better than in 1832, three-fourths of its debts being practically When the bank closed many of its offices permanent.3
i
"

The

month, as the bill debt at Nashville, at least seven out of the ten millions is secured by paper from branch to branch, waiting for crops to bills, which is running called race-horse be raised to meet them, and ruining the drawers sions commiswith interest, exchange,
for endorsement Sess., p. 49.

bills under discount in the valley of the Mississippi, of domestic whole amount last, as shown in November by the monthly statements at the close of that that it is all in the same was $10,112,106.37.Upon the supposition condition

and

acceptance,

and

other expenses."

"

H, R. 121, 22d Cong., 2d

2Benton,

Jackson,
a

and

their
purpose

expanded with Thus in Benton's

political

" of July branches, false, infamously false, were the true curtailing at the western is now This, reasons were threatened." political : a foretaste and prelude to what its business had expanded that the bank $5,000,000since the year after showing

speech

had first that the bank associates declared purpose. and then contracted with the same Her 12, 1832, he said : reasons then assigned for
....

opened. applied
to press ;

debt had been created for the very purpose to which it was now The contraction was a contrivance electioneering, political purpose." " in the West, the screw Every where was the debtors. turned far The
an
....

"

enough

to make

the

screams
"

nauseam. ad and so on the presentation of the

of the victims reach their representatives Thirty Years, Vol. I, p. 258. These charges

in Congress,"

facts.

The

bank

order to wished.

secure

renewed
swayed

It

was

This charter. by forces greater

was not attempting the bank could not than itself. It had was

vanish before to create distress in have done even had it

to extend its it wished to keep be charged to political
power

no

to as great an extent as accommodations them down, but could not. Consequently In the next place, the bank schemes. in paying the action of the government

demanded

; indeed,

the expansion
was

cannot

troubles
any
more

not of debtors thus caused were than the previous expansion.

to attempt by compelled curtailment debt. Consequently the off the national in politics to be charged to participation

"This

"1st.
"

held three classes of discounted office then [Nov. 1, 1833] Notes payable at maturity.
on

paper.

2d. Notes Notes

which

ten per

cent,

was

"3d. "The December

"

on renewable, which first class of those notes

....

no was

required to be paid at each renewal calls heretofore have been made. of November all paid in the months
ten
per

and,

and

last,

The

second

class

of notes

on

which

cent,

is paid

at

each

renewal,

KESULTS
in 1835

OF

BIDDLE'S

SYSTEM

101

1836, it protested at one branch alone $405,Other losses 280.87, all in bills of domestic exchange.1 must have been concealed by the methods of selling the debts
and
to other banks

for long credits. Renewals mon.2 comremained It must be concluded, therefore, that the later business not conservative and of the institution in the West was But this must to the bills of not be charged sound. The
same

exchange.
on

discounted

losses would undoubtedly lowed have folFrom the letters already quoted notes.

it is plain that the discounted notes of the offices had to be renewed, the renewal generally being by turning these notes facts as to the renewing The same into bills of exchange.

of notes

come

out

in the

already referred to. The discounted, and yet the major not, then, the form of accommodation
it was

report of the Louisville office loans here were in every case notes It was part was permanent. which involved loss ;
so

the granting This was extent.

of accommodations

at all to

large

an

indeed made possible, and rendered inevitable, by Biddle's plans for employing the capital of the bank in the West and Southwest ; and his system, therefore,
must
amounts

be held responsible.
to this time
very

ultimately bear any great I fear, greatly would,

"

to about $1,100,000. This class of debts, although considered that cannot of debtors well good, is generally due by a description beyond to force payments this rate an ; and curtailment attempt

increase our list of suspended debts. third class of notes amounts to about the sum at of $600,000, renewable different periods, from sixty days to six months. This description of notes was generally debts, real estate sold, "c., and is well secured to taken for old compromised The
or very considered personal either by mortgage security ; but although it would be difficult to force heavy this class of our on curtailments good, yet debtors."" Feb. 4, 1834, S. D. 17, 23d Cong., 2d Sess., p. 110. The amount of discounted in Oct., 1833, had been $2,343,000.They were their highest in that month. notes at

the bank,

to the president's letter, then, the amount have from run $800,000 to $700,000 and notes must in the shape of permanent loans. The $2,400,000 was

According

of really good

paper

in local the

$800,000,while

the

rest of

figures for 1834 show

that

counts dis-

never

fell below

$1,780,000.

118, 24th Cong., 2d Sess., p. 43. " The second item consists of domestic bills, Of these you were were that $405,280.87 under protest at already informed /6td., p. 48, bank committee's a single "branch."" statement.
1

Ex.
....

Doc.

The

bills to enable

" " direct renewals committee of bills and speaks of 48. the parties to take them up." Ibid., p.
"

"

the discount

of

new

162

THE
The

SECOND

BANK

OF

THE

UNITED

STATES

to have been board of directors at Philadelphia seems unaware tive of the nature of the business done,1 but the execuawoke to a realizing sense officers soon of the situation.

The

firstintimation in April:
as

Jaudon
and

of this "I have

occurs

in

letter from
so

Biddle to

rarely been

much

startled

at the appearance

of your two
extension He adds

surprized last weekly

statements

domestic

representing such an bills widely scattered."

of discounts of that this is in

direct conflict with the plan of operations to be pursued, and directs Jaudon to reduce at once.2 Cashier Mcllvaine was

positive that the New Orleans bill business was wrong. than two-thirds of the domestic bills purchased," "More he wrote, "are Cities at 60 days upon the Northern
more
"

and

large

already noted, the bank prohibited the purchase of all bills at the western and southwestern " it may be necessary to secure a debt offices, except when already due to the bank or the offices." In sending these
roots.'"3

portion In July, as

of

them

must

'come

up

by

the

orders Biddle bluntly and truthfully asserted that these bills are "in fact a mere by the Bank advance and the * Atlantic offices." He had had this truth thoroughly brought
home
never

to him

by his experience forgot it. In November

since October, 1831, and he he again peremptorily bids

the president at Nashville to "abstain from the purchase of domestic bills,except in reduction of pre-existing debts to the bank,"5 and in 1834, after getting rid of most of the bills by the contraction of that year, he shuns their renewal,

writing in relation to the desire of the Pittsburg office to begin purchases once more: "Unfortunately these bills are
mainly
i

in the crop

exchanges

of the western
2

cities and

H.

R. 121, 22d Cong., 2d Sess., pp. 58, 77, 89.

P. L. B., Vol. IV, p. 256.

3To *To
5

Biddle, June Hermau

1, 1832, J5. P.

Cope, of Cincinnati, July 30, 1832, P. L. B., Vol. IV, p. 273.

Nov. 10, 1832, H. R. 121, 22d Cong., 2d Sess., p. 46.

KESULTS feel

OP

BIDDLE'S

SYSTEM

163

little afraid of reviving them. I should prefer, if delphia, any thing were necessary, an increase of its bills on Philabut as these are very often made they paper
a
"

not be as might loans."1 He had

of "banking
iTo

good as a direct increase of the local had "enough than enough" and more in the interior."
"

Jaudon,

Newport,

July 16, 1834, B. P.

CHAPTER
THE
BANK AND THE

VIII
DEMOCRACY

opinion prevailed in 1829 that the bank was almost impregnable in popular favor, a conviction which was not confined to its friends but found voice in the expressed fear How the consideration of of its enemies. mistaken it was the influences at work against the continuance of the bank will reveal. These influences may all be reduced to five heads:
belief that the bank was the widespread unconstitutional, the hostility of the states, the opposition of state the rise of the Democracy, and the envy and hatred

THE

banks,

which the poor always feel for the rich. Sumner considers the constitutional question as having delivered,1 and no vitality when Jackson's firstmessage was
it must

than

be conceded that it had less vitality at this moment Nevertheless, the belief in the bank's before. ever

still vigorous, and was extremely unconstitutionality was see, Tennesprevalent in Virginia, Georgia, Ohio, Kentucky, and

South

Carolina,

southern and western for years, the discussion

certain to arise
as soon

and only states. Though

less

so

in the

other

it had been

quiescent
was was

of the constitutional question as the proposition to re-charter

broached. undying hostility of the states, which believed their rights infringed and feared the centralizing tendencies of the bank, was intimately connected with the constitutional question.
The

In
party
1

South

Carolina
the bank

and

Georgia

the "states-rights"

opposed
Jackson

almost

exclusively for the

one

latter
it may in

SUMNER,
that

(revised edition), p. 283. As

bank's

fact to the
were

contrary

be stated the South

the resolutions against Carolina legislature in 1828.

constitutionality

introduced

164

THE though

BANK they

AND

THE

DEMOCRACY

165

also influenced by the conviction to that it was injurious the material welfare of the state.1 Kentucky In the West similar were objections offered; in involved the bank the "relief system" the struggle over
reason, were

it in his annual message; Tennessee tax upon a the state law imposing any branch not repealed until 1827 ; in Ohio the established there was bama commonwealth persisted in opposition until 1824; in Alathe governor establishment attempt
was

it very unpopular; and made that state, bitterly denounced

in 1825

Governor

Desha,

of in

of

and legislature protested against the in 1827; in Connecticut branch an

in 1829 to tax the stock held by its made tax of 1 a citizens;2 and in 1830 South Carolina imposed per cent, upon the dividends of stockholders resident in that state.8 In New York, state pride was offended because the location of city was the bank; the struggle while of still deadlier import was for commercial supremacy between the two cities, to secure and
not

Philadelphia

New

York

The situation which the bank was of great importance. further complicated by the political rivalry between was sylvania the two states. In the scramble for national honors Pennpoliticians
were

forced

to

It was politicians to oppose, the bank. the institution that at this juncture Democracy the
York
was

York support, New of fatal import to

of New

headed

by Martin
an

Van

Buren,

of his day and

i
"

enemy

of the

the acutest politician bank.* The hostility

truth was that in all those States in which the not to be concealed, its local expenditures, the Government the operation of vastly exceeds of less severity and inconvenience." the Bank of the United States is felt with more or income

The

Such

was

the

case

in South

HAMILTON,

of South

Carolina, and the bank was therefore unpopular Carolina, Dec. 21, 1827, C. D., Vol. IV, Part I, p. 853.

there.

"

2ff. R., 460, 2'2d Cong., 1st Sess., pp. 290-92.

3

NILES,

Vol. XXXIX,

p. 460.

Imposed

in Dec., State
ex

not unconstitutional." of appeals 654 (South Carolina Reports)

.

court

1830, and rel. Berney

declared
vs.

by the state Collector, 2 BAILEY,

In 1826 Van
convention,

Buren
Dec.
a

state

Benton's letter to the Mississippi against the bank. Vol. I, p. 402. In 1829 his message 16, 1834, Extra Globe, as governor
"

declared

contained

phrase

which

evidenced

dislike of all national

monopolies.

Van

166

THE

SECOND

BANK

OP

THE

UNITED

STATES

less pronounced in of the states as a whole, however, was 1829 than at any other period of the bank's existence. interests were The opposition of state banks whose It arrayed a powerful party against the bank. had forced many of them to restrict their business by compelling for their notes in specie, and it had been payment particularly active and particularly offensive in this respect involved Consequently it could count upon and West. Other reasons opposition from most of these corporations. were operative also, as a review of the situation in New
in the South

Here, as elsewhere, the bank reduced the will show. profits of the state banks, because it loaned at 6 per cent., being compelled to do so by its charter, while the New York banks, which compelled
so;

York

might legally have charged 7 per cent., were to loan at the lower rate because the big bank did
reason

another

for hostility

was

found

fund system
a common

which

bound

the politicians and

in the safetythe bankers in

The politicians expected to control the union. New York banks through this system, but could not reach the Bank of the United States; while the bankers felt that
restraints not imposed upon the national bank, and cherished the dislike which the members of one system are apt to feel for those under another and These remarks unfriendly system.1 relative to New York

they

were

to subjected

likely to be united will show how the conflict of interests was with the opposition of politicians. Yet it is true that, as in the case of constitutional and state opposition,

objections
distinctly

the local institutions

Bnren

were

more

friendly to the
"

the bank on other than constitutional grounds opposed are against the bank on the ground of its unconstitutionally.' Mr. Madison believe with that the contemporaneous recognition

'

Van

Buren,

you

' Oh I no, I said, of the constitutional to establish a bank by all the departments power of the government, and with the " in favor of the power.' view Interconcurrence of the people, has settled that question Van in a letter to a friend, Nov. 28, 1829, A. Hamilton, Buren, James with

He

"

Reminiscences,
1

p. 150.

The

center

Mechanics'

Bank

of the union at Albany.

of state

politicians and

banks

was

the Farmers

and

THE

BANK

AND

THE

DEMOCRACY

167

Many of national bank in 1829 than at any other time. them petitioned that it might be re-chartered. devoted to the principle of equality, is Democracy, than to more opposed to all forms of privilege, and to none
it is recollected that the Bank When monetary monopoly. of the United States was at that time the one great monopoly directed all the pasin the country, and that against it were sionate
a

fear which today fall upon banks, railroad companies, and trusts, its danger from the rising Jackson which with Andrew power of that fierce Democracy opposition and The be faintly measured. may to the was positive that the bank was a menace political and social interests of the United States; that it that it "the rich richer and the poor poorer;" made swept over Democracy the country depressed and made "the potent more powerful;" that it accentuated the differences of society, creating on the one hand a powerful aristocracy and on the other hand beggarly impotent an and opinions proletariat. These the weak

Democracy especially prevalent in the West, where mination While the other factors in the deterwas most powerful. of the bank's fate had been diminishing in potency, this had increased with every year since the granting of the
were

charter. Inextricably linked with the Democratic opposition the ceaseless hostility between rich and poor, the envy

was

and hatred of the man has nothing for the man who who has much, the ill-willwhich the debtor eternally cherishes for directed against the the creditor; all the social arguments

bank

gathered force and passion from this feeling and at time added to it. the same These were tion the forces which worked toward the destructhe conserving forces ? For the most part persons interested in the bank and conscious its debtors, its stockholdthat they were so : its employees,

of the bank.

What

were

168

THE

SECOND

BANK

OP

THE

UNITED

STATES
the value of

ers

; enlightened

business-men

who

understood

the bank ; statesmen of the nationalizing school, who would uphold the bank because they believed it to be in accordance with the politicalprinciples they professed ; and finally crowd of noisy politicians and newspaper motley These factors of strength could not be very important. employees could have no weight in politics; the debtors
a
men.

The
were

only

few thousands

; politicians would

inevitably follow the

to yield principle

the majority;
to

statesmen

expediency;

would be compelled while the enlightened

business

men

be of more than assistance to any cause they injury supported, for they belonged to that intelligent class whose influence upon American able, affairs has always been inconsider-

would

partly because they are not interested in politics, partly because they are themselves of objects suspicion to the There remained the stockholders. The democratic masses. distribution of the stock was moment consequently of some In July, 1831, in determining the strength of the bank. 4,145 stockholders, of whom 466 were ers.1 foreignthere were
This small number of people, and mostly people who took littleor no interest in politics,could give the bank no popular strength, and the dreadful fact that foreigners held

stock, and that among

was a

these

were

English

of positive weakness localized in the states of the bulk of the domestic stock was Massachusetts, Pennsylvania, New York, Maryland, Virginia,
and South Carolina, and it is plain that the bank could derive littleassistance from the distribution of its stock. Any additional support of the bank would spring from the realization of its usefulness a sound services in supplying business

source

lords and ladies, to it. Add to this that

general public currency, in managing

to the

its

the

of the treasury efficiently and cheaply, and in furnishing banking at a reasonable rate. accommodations
i

NILES,

Vol. XLI,

p. 112.

For the distribution

of the stock

see

Appendix

IX.

THE
But
never

BANK

AND

THE

DEMOCRACY

169

these

were

virtues hidden

from

be made apparent to them The bank's and involved nature of financial discussions. hold on popular favor was consequently of the most tenuous kind; as Webster said, popular once aroused was

the vulgar and could because of the abstruseness

prejudice

"more

than

match

for ten banks;"

conflict with a popular faintest hope of success. That its error and its misfortune.

in

and it was president the bank

certain

that

had

not the
was

it failed to realize this

The December

beginning

of the bank struggle may be dated from 13, 1827, on which day P. P. Barbour, of Virginia,
in

of Representatives a resolution directing the sale of the bank stock owned by the government.1 It was suspected that this movement portended "the
of an attack" which would "lead to permanent distrust in the stability of the institution,"2 and the price of fell. It was also believed that the act the stock immediately indicated the hostility of Jackson politicians to the bank.3 The motion to adopt the resolution was lost by the overwhelming vote of 174 to 9,4 a result which caused the stock
to

introduced

the House

beginning

its standing in the market that the bank would be re-chartered.5

recover
*

and

convinced

many

C. D., Vol. IV, Part

I, p. 815.
I, p. 843.

John

Sergeant

to Nicholas

21, 1827, C. D., Vol. IV, Part

3

Biddle, Dec. 13, 1827, B. P. ; Gorham's remarks, The intention was disavowed by Barbour. fundholder
men
"

Dec.

Hamilton,
"

"exclaim

of South there, you see

Carolina, said that "many an old how it is the moment these Jackson

would
possession

have

got

States ' sky-high,' and we shall goes the Bank of the House ; away of the United ' in hand, his way, sword next see the military chieftain,' after his election, making into the vaults of the Bank, and seizing its coffers as his especial portion of the booty do not mean to Be quiet, gentlemen. Be assured we after the strife and victory. heads against the Bank of the United States run our vote will show." and this our believe that there was truth more people later would "Ibid., p. 854. A great many
"

than

humor
*76td.,
5

in this description
p. 858.

of what
"

Jackson

would

do.

Some

of the bank."" very favorable attacked Department nation.""

believed that the vote was NILES, Vol. XXXIII,

conclusive in favor of a renewal of the charter Rush's Barbour's p. 275. occasioned motion

notice of the bank last winter, for so it was

Rush

without placing to Biddle, Dec.

in the report of 1828. " At the time the Bank was in effect, I took my determination not to leave the testimony upon my of its vast value to the record
10, 1828, B. P.

170

THE The

SECOND

BANK

OP

THE

UNITED

STATES

attack was made incidentally by Senator Benton in February, 1828, in a series of resolutions relative to Though direct reference to the sinking fund. there was no
next

the bank

enjoying
for he

in the resolutions, yet the senator's speech in support of them reveals a purpose to attack it as an institution undemocratic privileges at the expense of the people ;

constantly refers to the balances of public money in the bank as " the gratuitous deposites," and the whole purpose to reduce these deposits.1 In of his resolutions was
the aggrespertinaciously resumed sive in a series of resolutions, one of which declared that the Bank of the United States " ought to be required to make a for the use of the balances of public compensation
....

December,

1828, Benton

On the 6th of January he spoke to money on its hands."2 his resolutions, devoting considerable attention to the sums in the keeping of the bank and advancing of public money
that the provision in the charter argument the which permitted the secretary of the treasury to remove deposits " included the right to make terms for letting them

the astonishing

remain."3

far from being the opinion of the Committee Finance, which reported on the 20th of February, on and asserting that the controverting Benton's arguments This
was

paid in consideration of the privilege of holding the deposits.4 But Benton's attack upon the privileges of the bank had its effect upon popular opinion, and for later he asserted that the attempt to secure compensation bonus had
the balances
was

been

the actual beginning

I, p. 379.

of the struggle with

the bank.5
i

C. D., Vol. IV, Part Jvurnal,

"

^Senate
escape

the bank.

Biddle, "that
B.P.
3 5

hostility did not 20th Cong., 2d Sess., p. 48, Dec. 23. Benton's to Senator Samuel Smith wrote will see from the papers," Dec. 27, 1828, his attack on the Bank." Colonel Benton has renewed
You
"

C. D., Vol. V, p. 19.

"

*S. D. 92, 20th Cong., 2d Sess., pp. 4, 5.

seem

Mr. President,

it does

to

me

that

there

on the undrawn bank in this contest for compensation in which the struggle began in the British Parliament

to the is something ominous It is the very way balances.

which

has ended

in the

over-

THE The

BANK

AND

THE

DEMOCRACY

171

of opposition grew out of circumstances Complaints were attending the election of Jackson in 1828. made that the branches at Lexington, Charleston, Portsmouth,
next

act

Jackson's defeat. and New Orleans had attempted to secure Kendall, who At this time Amos was justbeginning to assert his dominance of Jackson's politicalthinking, Isaac Hill, a pettifogging politician and newspaper editor of New
an and Francis P. Blair, of Kentucky, editor who had borrowed from the bank and had apparently the at a loss to the institution,1 were settled his account Kendall and Blair principal authors of these charges.

Hampshire,

infected with the monetary heresies which then raged in Kentucky, and both believed that the bank had participated
were

in campaigns
" "

for the

purpose

The complaints old court party. branches were to Biddle as early as January, communicated 1829, coming from the Democratic congressmen of that state

the of overthrowing against the Kentucky

through

Postmaster

McLean,

who

suggested

both political parties." of directors "from from Colonel R. M. Johnson a list of members of the Jackson party in Kentucky who were considered eligible and fit for such positions.2 Biddle, in reply, repelled the
insinuation

the selection He also furnished

dictated by were appointments "a political considerations, and repudiated the suggestion of " as tably" system of political balance" almost ineviresulting in that the bank's forcing
'

persons."
throw

He

the bank inferior or "incompetent upon then forwarded the charges to the Kentucky

is beginning It is the way in which the struggle of the Bank of England. My resolutions of two and three years ago are the causes here. of the speech which is now itself for balances hear; the question you now of compensation mixing Feb. 2, 1831, here, as in England, the charter." up with the question of renewing
....
"

Thirty
i

Years, Vol. I, p. 196.

Leslie Coombs

Clayton

July 21, 1831, B. P. "I have sent to Mr. to Biddle, Lexington, Mr. Blair which to accompany those of the other edithe account of tors."" ought Biddle to John Watmough, April 23, 1832, P. L. B., Vol. IV, p. 220. It appears

that Blair owed the bank $20,744 and settled by paying $2,237." NILES, Vol. XLV, p. 39, Lives of Butler and Hoyt, pp. 87, 88. J. G. BENNETT ; and see MACKENZIE'S quoting
2
"

John Biddle

McLean

to Biddle,

Jan. 5, 1829, B. P.

to McLean,

Jan. 11, 1829, ibid.

172

THE

SECOND
a

BANK

OF

THE

UNITED

STATES

to request for information and a warning officers of the branches avoid all political action.1 The replied, denying the charges and demonstrating to Biddle's

branches, with

made by the congressmen satisfaction that the nominations were cal unfit and designed to transform the officesinto politiLouisville declared that machines,2 while the cashier at
scheme to make a Jackson partisan president of These explanations did not satisfy the plotthat branch.3 ters against the bank, who continued to insinuate charges to there
was a

Jackson, filling his mind free expression.4

Under

with suspicions

to which

he

gave

these circumstances Secretary Ingham, of the treasury, shire Hampby Senator Woodbury was persuaded of New to make complaint to Biddle of the noxious activity Mason, president that Ingham

of Jeremiah

Woodbury
at the

wished bank mother

branch. of the Portsmouth his "influence should use

Two using his place for political purposes.6 weeks earlier Biddle had received a letter of a similar tenor from Woodbury, and, almost simultaneously with Ingham's,
one

requested Mason was

in producing Ingham a change."5 that the charges be investigated, intimating that

7

in Philadelphia, written by Isaac Hill to two gentlemen for his perusal and containing two intended memorials. from a number mouth The first of these was of merchants at Ports-

and Hampshire

complaining the second was list of

of the business methods of the branch, from the Jackson members of the New legislature, uttering similar complaints and containing
names men.8

those of Jackson
1

for directors, four of which This cumulative attack from

"
*

were

the

S. D. 17, 23d Cong., 2d Sess., pp. 208, 299.

Ibid., pp. 301, 302, 304, 305. NILES,

3
5 6 7

Feb. 12, 1829, B. P. Woodbury

Ingham Biddle
to Ingham,

Ingham's

Exposition,

Vol. XLII,

p. 315.

June

27, 1829, H.

R. 460, 22d Cong.,

1st Sess., pp.

439, 440.

to Biddle, July 11, 1829, ibid., pp. 438, 439.

to Ingham,

July 18, 1829, ibid., p. 441.

and John Pemberton, 29, ibid., pp. 472-4. July
17, 1829, inclosing
memorials

Isaac Hill to J. N. Barker

27 and

of June

June

THE

BANK

AND

THE

DEMOCRACY

173

ury, secretary, the senator, the second comptroller of the treasHampshire legislature, and the merchants the New of Portsmouth, added to the action in regard to the Kentucky
and the charges against the branch at New Orleans, an convinced the board of directors that there was ized organattempt to convert the bank into a Democratic party machine. thought,
that Mason

branches

The in
a

animus

was

of the attacks was revealed, they in Woodbury's letter declaring sentence " a particular friend of Mr. Webster, and

his political character is doubtless well known to you," and another sentence in Hill's letter which asserted that "the friends of General Jackson in New Hampshire have had but
too to complain reason much branch The at Portsmouth."

been adopted by most hostility is to be dated

This

management of the opinion of the directors has historians, who believe that Jackson's
from

of the

the repulse

of the attempt.

has the corroborative weight of assertions opinion John C. Calhoun, by Daniel Webster, made and John It is, however, only partially true. In so Quincy Adams. far
as

it may be accepted, Hill and Woodbury, but the implication of Jackson and the bulk of the party is false. Ingham demonstrably also disclaimed any such purpose it involves

both

in his letters to Biddle

in 1829,1 and

again

in

1832, asserting that he acted as a friend in order " to avert His disclaimer is the meditated destruction of the bank."2
strengthened by the fact that he of his subordinate, Hill, who was
was

ignorant

of the action affair.3 intention to

behind

the whole
an

Ingham's
i

letters,therefore,
....

as

showing

"Allow

me

to

assure

the Government,

....

disclaim

To of the bank."" in the letter of Oct. 5, ibid., pp. 456-62. expressed 2NILES,
3
"

that those charged of with the administration desire to derive political aid through the operations all Biddle, July 11, 1829, ibid., p. 439. Similar are views
you,

Vol. XLII,

p. 315.

to the Bank of the United States by Mr. Isaac Hill, communication made it adverted to to me, two memorials, was accompanying until I saw wholly unknown in your letter."" Ingham to Biddle, Oct. 5, 1829, H. R. 460, 22d Cong., 1st Sess., p. 457.

The

174

THE

SECOND

BANK

OP

THE

UNITED

STATES

make

party machine

administration, or as to it,may be safely neglected. that Democratic

of the bank revealing the source

out

the part of the of Jackson's enmity On the other hand, they prove
on

politicians believed that they had ground for complaining of the bank. The truth is that the vast of majority the bank's officers and directors were drawn from the ranks of the party hostile to Jackson, not because
the

bank

supported
men were

business

and directors had business men. Yet this result, so simple and obvious, naturally appeared to Jackson and his supporters exceedingly

this party, but because most of the unfriendly to Jackson, and the officers to be selected from the ranks of the

hostile.

By

the Jackson

Democrats

the opinion
was a

was

firmly

held that the branch

political engine; that Mason, an aggressive and influential politician and the to close personal friend of Webster, owed his appointment these circumstances, and especially to Webster's influence 1
in which lattersurmise they were quite correct2 and that " " " Mason to establish the bank's then absolute undertook 3 Hill, in his letter of July 17, both parties." control over
"

at Portsmouth

"

1829, asserted that all now to be an continue engine party ;"* while in 1832 he made
a

that it should "not of political oppression by any declared that the branch "was

asked

was

tion party engine previous to the last Presidential elecits directors were exclusively of one politicalparty its favors were dispensed with a view to affect that election ;
"

"

to give, in the choice of the principal instrument to electors of President in 1828, a small majority the party ' in that State which has ever since been in a minority."

and it

was

Woodbury
"

to

Ingham,

June

27, 1829, H. R. 460, 22d Cong., 1st Sess., p. 440

The

Portsmouth

recommendation.""
3

have this day arranged to your we office*which agreeably Biddle to Webster, Aug. 14, 1828, P. L. B., Vol. II, p. 410.
a

Extra

Globe, Vol. I, p. 256, quoting

letter from

Portsmouth.

*H.
5

R. 460, 22d Cong., 1st Sess., p. 472.

C. D., Vol. VIII, Part I, p. 1062, June

8, 1832.

THE
The Ingham

BANK

AND

THE

DEMOCKACY

175

correspondence
attitude of the

revealing the

is of stillgreater import as Jackson Democracy toward

questions of privilege and monopoly, and consequently It shows that the party from its political toward the bank. principles was necessarily hostile to the bank, and that
Ingham believed, and
as

did

McLean,

the Kentucky

Kendall only
"checks

Hill, Woodbury,

and

men, congressMajor Lewis, that

"a

just and counterpoises" would provide in other words, that only by having an equal equilibrium;" number of directors from both parties could the bank be
of politics. This was absurd, since the bank's interests could only be injured adopting any such prinby ciple for the selection of its directors. On the other hand,
out

kept

it was

great privileged monopoly, and therefore justly ious obnoxto the democratic theory of equality. Ingham pointed
a

this out by asserting that two opposing principles struggled for control in the management of the bank: the democratic, " that the bank ought to exist exclusively for which held benefit of all," and national purposes, and for the common the aristocratic, which held that it was the "prominent use " to strengthen the arm of the bank poise of wealth, and counterthe influence of extended
1
"

Whatever affairs." principle, it is manifestly false to assert

public

suffrage in the disposition of be said about the first may

that anyone supported bank certainly The stockholders of the the second. did not invest their funds with the purpose of counterpoising " " for any other or the influence of extended suffrage

racy It was enough, however, that the Democpoliticalpurpose. believed that they did, and that it was correct in considerin the bank as exclusive privileges in which enjoying the masses could not participate. political charges against the bank effective by the complaints of the merchants
iff. R. 460, 22d Cong., 1st Sess., p. 465.

The

were

rendered that Mason's

176

THE

SECOND

BANK

OP

THE

UNITED

STATES

course

The truth is that the office offensive to them.1 had been too free with its accommodations, at Portsmouth d and had consequently fallen into difficulties uring the pressure
was

of 1828. Mason

Hereupon

the board

had elected Jeremiah

proceeded rigorously to cut off accommodations and collect the debts of the branch." In this he had been eminently successful. He had reduced the time of the renewal of accommodation days, and had insisted on the payment
notes

president, and that gentleman

loans from 120 to 60

acted only as business-man, but his acts were a excessively irritating to debtors and gave an opportunity to the politicians. Biddle, whose apprehensions had been keenly excited by
the similar complaints about the Kentucky ately immedioffices, replied to both Woodbury and Ingham, repelling the charges, and, incited by his suspicions, wrote a second letterto

before renewing In pursuing

of 20 per cent, of the them, instead of 10 per cent, as previously.

these
measures

Mason

Ingham

hostilityboth to spiritof uncompromising what he considered an attempt to involve the bank in politics, and to the "officiallecture," which he thought the secretary showing
a was

not

in delivering.* justified

Ingham

believed himself

treated unjustly

and retorted sharply in a letter which, " the writhing of according to General Cadwalader, revealed " In Biddle's opinion it revealed far the scotched snake." relations between the bank and the administration which he was not inclined to admit. " The Secretary of the Treasury believes," said Biddle, " 1st. ' That the ' relations between the Government and the bank
more

than

this:

it announced

confer
1
2 3

some

supervision of the choice of the officersof the

of June 27, H. R. 460, 22d Cong., 1st Sess., p. 473.

Memorial Biddle
Extra

to Ingham, Globe,

July 18, 1829, ibid.,

a

p. 442.

Vol. I, p. 256, quoting

letter from

New

Hampshire. Cong., 1st Sess.,

pp.

letters of Biddle to Ingham, "Two July 18, 1829, H. R. 460, 22d 440-46 ; to Woodbury, June 30, 1829, P. L. B., Vol. Ill, pp. 55, 56.
5

General

Cadwalader

to Biddle,

undated,

B. P.

See Ingham's

letter of July 23,

H.

R. 460, 22d Cong.,

1st Sess., pp.

446-8.

THE

BANK

AND

THE

DEMOCRACY
'

177

ment action of the Govern' the bank on not precisely explained, but in which he is the proper agent; and, finally,3d. That it is his right bank,
....

2d. That

there is

some

as and his duty to suggest the views of the administration to the political opinions and conduct of the officersof the had not said as much Ingham as this, but he bank."1

had

talked of suggesting

his own the secretary to mind business, and he wrote Cadwalader outlining a reply, which " better from should be sent by the latter,as it would come He was glad, you and would annoy the individual more." he said, that they had withstood him.2 Biddle had scarcely dispatched this letter to Cadwalader still further confirmed in his conviction that when he was the real battle was with the administration for the bank's integrity, by the receipt of a letter from Mason stating that being made to remove at Hill's instigation an attempt was from the Portsmouth the pension funds of the government branch to a state bank in Concord, of which Hill had formerly been president.3 Immediately afterward the secretary of bank.4
"to
course see
war
"

management" did not tend to change his desire to teach it, nor

"proper

government's views as to the His letter certainly of the bank. Biddle's opinion of the motive behind
the

ordered the removal of the funds to the Concord It requires little prescience," wrote Cadwalader,
developments of a germ In the the Bank. the institution is the

in these disgusting

hands

of systematic hostility against men of impartial and independent they wish to make
5

not what

it

"

an was

to their political Nor objects."

Secretary Ingham
1 2 3
*

objected

engine of subserviency this the only added complication to paying the com-

Biddle From Mason Aug.

to Ingham,

Sept. 15, 1829, ibid., p. 452.

Utica, July 27, 1829, B. P.

to Biddle, 3, ibid., pp.

July 31, 1829, H. B. 460, 22d Cong., 1st Sess., p. 475.

476, 477.

The

bank

withstood

the attempt

and

it failed.

To Biddle, Aug.

4, 1829, B. P.

178

THE

SECOND

BANK

OP

THE

UNITED

STATES

mission charged by the bank for transferring government funds abroad, asserted that he could procure the service elsewhere at a cheaper rate, and threatened to place part of

the public deposits with a state bank, which would oblige the transfers for 1 per cent, the administration by making instead of for 3^.! commission Ingham
so: was
now

"If

we

must

exasperated, Biddle only less fight," exclaimed the latter, "I want no
thoroughly

After investigating the Portsmouth fairer battle ground." a "I can now say with the affair, he wrote to Cadwalader: utmost confidence that the whole is a party intrigue got up by
a

gogues." of small bankrupts and smaller Demacombination 3 The business opposition to Mason melted completely in the face of investigation.* Indignant at the away

he believed were being made upon the attempts which bank's independence, Biddle returned to Philadelphia and in which he took the wrote a withering reply to Ingham,

liberty of inferring the three points already noted as involved in Ingham's "altogether earlier letter.5 This action was
by the guileless secretary, and "created a unexpected" " in fact, he was deeply incensed that strong impression ; these meanings should have been read into his letter,and time asserting that indignantly repudiated them, at the same the bank by its the administration did have power over authority to appoint five directors and the secretary's right deposits.8 The letter, to remove the government whole along
1 2 3
* some
some

with

Asbury
Albany,

Dickins's
Aug. Aug.

comments

to

Biddle

on

his

Cadwalader

to Biddle, Aug.

10, 1829, B. P. 16, 1829, ibid.

To Cadwalader,

Biddle to Cadwalader,
complainants sa-id that they had The
were

28, 1829, ibid.

said that they had signed it because of the difficulties they

" They came ; and asked to meet Biddle at the branch. the petition because they had been asked to do so signed knowledge no of the subject ; and others said that they had

the Senate,
5

Feb. 20, 1838, Congressional

found of getting discounts."" WEBSTEE Globe,25th Cong., 2d Sess., p. 192.

in

Biddle to Ingham,
Ingham

Sept. 15, 1829, H. R. 460, 22d Cong., 1st Sess., pp. 450-56.
460 and 462.

"

to Biddle, Oct. 5, 1829, ibid., pp.

THE

BANK

AND

THE

DEMOCRACY

179

letterof the 15th of September,1 leaves no doubt that the secretary ingenuous in his correspondence than was much more
Dickins's regretBiddle and most historians have supposed. ful warnings and pleadings for conciliation convinced Biddle
in answer that he had possibly the misjudged secretary, and letter,spun out to a prodigious length and full to Ingham's

of the sputterings

of inappeasable

returned a good-tempered " You shall not complain " for I have written as conciliatory

and helpless wrath, he reply closing the correspondence.2 he wrote to Dickins, of me now,"
as

possible

an

answer

to

8 It the voluminous and belligerent epistle of your chief." is evident that Biddle had mistaken the purpose and temper able into a position favorof the secretary, who had blundered

to Hill, but resented with

indignation the

imputation
*

" a connexion with the movements of of these other people," but not their the Hills and Kendalls, whose tool he was,

conscious

coadjutor.5
effect did

What If his
own

word

can

have this contretemps be credited, little or

upon
none.

Jackson?
He
wrote

to Biddle: I feel very sensibly the services rendered by the Bank at the last payment of the national debt and shall take an opportunity of declaring it publicly in my message to Congress. That is my own
feeling to the Bank
a

and Mr. Ingham's also difficulty thro' the foolishness if I may use
"
"

He

"

and you got into the term of Mr. Hill. that has all

Observing
1 2

he

was

littleembarrassed
Oct. 5, 1829, B. P.

I said Oh

Asbury

Dickins

to Biddle,

Biddle to Ingham,

Oct. 9, 1829, H. B. 460, 22d Cong., 1st Sess., pp.

469-71.

3
* 5

Oct. 9, 1829, P. L. B., Vol. Ill, p. 76. Biddle

Parton to Dickins, asserts that

Sept. 30, 1829, ibid., pp. 73, 74.

Hill's rejection by the Senate to a subordinate post in the by Jackson due to the bank." PAETON, Life of probably considered Vol. Ill, p. 274. This is highly improbable. Jackson, Benton has no mention of it. The that Hill had made reason was Mrs. Adams a scandalous alleged attack upon
treasury
was reason.

in his newspaper. There is

"

no

Ibid., and ADAMS, Memoirs, Vol. VIII, p. 217. This was trace in the Biddle correspondence of Biddle's having

sufficient

the Portsmouth

It

was

kept

very

affair to any quiet.

cated communiof the politicians before the investigation of 1832.

180

THE

SECOND
He

BANK

OF

THE

UNITED

STATES

passed he had

now.

?] said with the Parent Board and myself [yourself to be satisfied that he had heard comreason plaints ever[y] then mentioned Louisville a case at and of which he
"

"

promised to give me the particulars. I said Well I am very much gratified at this frank explanation. We shall all be proud of any kind mention in the message
"

should feel like soldiers after an Sir said he it would be only General. it [i. the bank's services to the e.,
for
we

action commenced
an

by their mention

act of

to justice

government].1

This extract shows Jackson amused, indifferent, and open in his attitude, perhaps a littlecontemptuous as regards poor Ingham,
was

The

he certainly did not like,and whose discomfiture whom in allprobability more pleasing to him than otherwise. son's next movement against the bank foreshadowed Jack-

On the 30th of November attack in his firstmessage. Kendall informed James Watson Webb, editor of the Amos New York Courier and Enquirer, that the president would
take ground Webb with
scheme

against the bank

a

of a the state banks

in his message, and furnished number of queries for publication, in which a substitute for the bank was outlined:2 Would

ernment general govdeposits of the revenue ; of their safety in receiving of the United States?" and transacting the banking concerns Would "the Legislatures of the several states adopt resolutions
on

"take

measures

to satisfy the

the
"a

and subject

instruct their senators how

to vote ?

"

proposition be made to authorize the government to issue exchequer bills,to the amount of the annual revenue,

Would

circulating medium equivalent to the notes issued by the United States Bank?" in the Courier Enquirer These and appeared queries redeemable embodied
1

at pleasure, to constitute

in

an

editorial article,with
Papers

no

intimation
undoubtedly

that

Letter

in Biddle

without

date

or

signature,

but

Jackson's

and

written

in November.
on

For the fact

3

2ff. R. 460, 22d Cong., 1st Sess., p. 80, shows that the article appeared 111. J. G. BENNETT, Memoirs see p. of

the 30th.

For

the queries

see

NILES,

Vol. XXXVII,

p. 378, Jan.

30, 1830.

THE they from

BANK

AND

THE

DEMOCRACY

181

came

the suggestion

In them is to be found the administration. ment of the removal of the deposits, of the experi-

of using the state banks as places of deposit, of an stitute attack by the state legislatures upon the bank, and of a sublater by Jackson. for the bank's currency supported That the act of Kendall was not an isolated one is shown by the response of the South Carolina legislature. Resolutions introduced there requesting their representatives in were Congress and instructing the senators of South Carolina to oppose
the re-charter of the bank unless it were to the District of Columbia, declaring for
to be
a confined

bank

stockholders, and requesting that the Finance Committee on the should be asked to report on feasibilityof a national bank without private stockholders.1 To Nicholas He Biddle these cumulative believed it necessary to meet
assaults
were
a

foreign

out withSenate

revelation.

the attempts to overthrow

were which he clearly saw already making.2 His method of doing this, after his first ebullition of anger and indignation expressed in the Ingham correspondence, to adopt the means was of conciliation suggested by McLean

the bank

and Ingham,
ilbid., p. 275. Carolina by
2

namely,

to appoint friends of the administra15.

Resolutions
a

South

vote

Dec. considered of 26 to 10." Ibid., p. 367.

Agreed

to by

the

senate

of

to
an

secure

believed that there was a settled attempt management I have on my table the bank for political purposes "And now : possession of to the manner in as of the views of the Administration officialcommunication
the Bank by the ought Board as
to choose
a

From

this time the bank

which

showing Bank, on a point where it is peculiarly sensitive as well from duty as And they think it should be resisted at all hazards and accordingly to Dickins, Sept. 16, 1829, P. L. B., Vol. Ill, p. 67. "Biddle " know You do not perhaps that soon after these people came
"

its officers It is regarded and remove determination to injure the independence

from
so

generally

of the honor
"

it shall be." into

power,

there

of the most active of the Jackson party as to the in place themselves means was of sustaining and the possession of the Bank Cooper, of Columbia, as a primary S. C., May 6, ranked object."" Biddle to Thomas 1833, ibid.. Vol. IV, p. 481.
was a caucus
"

deliberation

in

the same of directors in Dec., 1833, made charge publicly. States, Dec. 3, 1833, p. 1. committee of directors of the Bank of the United of Kendall as the statement DALL, KENa falsehood. Autobiography stigmatized of AMOS 392. The denied by Hill, March 3, 1834, C. D., Vol. X, was p. charge also committee
a
"

The

Report

"

Part

I, p. 770.

182

THE

SECOND

BANK

OP

THE

UNITED

STATES

of the bank and the branches. This was indeed a lame and impotent conclusion after his brave challenge to the secretary, his bold declaration that there is but one course "for the bank of honor or of
tion to seats at the boards
....

safety.

Whenever

its duties

come

of party, it should not compromise it, but resist it resist it openly and fearlessly."1 the wrath of his enemies and deprive them
"

in conflict with the spirit with it, nor capitulate to

To mitigate of their

friendly to of attack he appointed men who were weapon York,8 the administration as directors at Baltimore,2 New Orleans,6 and the western offices. Utica,4 Portsmouth,5 New He tried to put himself in touch with the administration, opening a correspondence with MajorLewis, Jackson's most intimate and confidential adviser; and he expressed himself "desirous of treating MajorBarry with great kindness and liberality" Barry owing money to the bank and being Major
"

unable to pay it when due.7 There has been much as conjecture to the origin and Historians in nature of Jackson's opposition to the bank.

general believe that he did not contemplate action in regard His he firstcame to it when to Washington as president. relations with it, they think, conclusively prove this. It is
offended by the refusal of the New Orleans branch to cash his drafts on the secretary of state,8 On but he would hardly remember this trivial annoyance. Hoist, he had the other hand, declare Parton and von
true

that he

had

been

in 1821 recommended Pensacola, and so late

1

the
as

establishment of a 1828 the appointment

22, 1829, DAWSON, Historical

branch

at

of certain
Magazine,

H. R. 460, 22d Cong., 1st Sess., p. 455.

2 ser.,

Biddle

to

Vol. IX, pp.

3 * 6

Baltimore, , at 10, 11. Nov.

Nov.

2d

Biddle Biddle Biddle Biddle

to I. Lawrence,
to General

27, 1829, P. L. B., Vol. Ill, p. 96.

P. B. Porter, Sept. 25, 1829, ibid., p. 70.

Aug. 28, 1829, B. P. 29, 1829, P. L. B., Vol. Ill, p. 97.
"

to Cadwalader, to W.

6
i

B. Lewis,
Dec.

Nov.

Biddle to Lewis,

7, 1829, ibid., p. 102.

PARTON,

Vol. II. p. 596.

THE

BANK

AND

THE

DEMOCRACY

183

Now doubt there is no officers at the Nashville branch.1 that Jackson had done both of these things, but they have little significance, since nothing signatures to a petition, which
is easier than
was

to

secure

all that

either act

to.2 Moreover, the letter recommending officers amounted for the Nashville branch was not written in 1828, but in 1818. With this correction of dates, the whole weight of the argument

is removed, and Jackson's act loses all significance in the determination of his attitude in 1829.8 Of his opposition to the bank before coming to Washington there exists,

Biddle was 1827 proof. In see warned that Jackson had opposed the repeal of the Tenneslaw taxing branches established in that state.* James A.
moreover,

incontrovertible

Hamilton,

expressed strong opinions against 5 He had undoubtedly the Bank of the United States." wished to insert a paragraph attacking the bank in his
firstinaugural, but had
1

writing of 1827, says that

an
"

interview with Jackson

ber, in Decem-

he

been dissuaded
HUGH

by politicians wiser
Memoirs;
VON

PAETON,

Vol. Ill, p. 257, quoting

L. WHITE'S

HOLST,

Vol.

II, p. 32.
2 See J. Vol. VIII, pp. 212, 213, commenting Memoirs, on Q. ADAMS, had actually recommended Chief Justice Marshall and Justice McLean Henry Lee for an office, his nomination to which was unanimously infamy of his character." the Senate, " on account the surpassing of 3

the fact that the notorious

rejected by

adds

to his

See the letter in 8. D. 17, 23d Cong.,[2d Sess., pp. 233, 234. In signing, Jackson " He had resigned his comDivision." name Major-General Southern mission in 1821 (PAETON, Vol. II, p. 590), not have signed in this fashion and would

later than
among

though moreover, undated, is placed by the committee " of 1817. It speaks of the anticipation of the location at this States Bank." This was both in 1818 place of a branch of the United anticipated and in 1827, but not in 1828. Jackson could not have signed in 1827 ; see next note. here," declares that "Gen'l of the Louisville directors, now in in his power to prevent the repeal of the Law everything Tennessee if there had been a delay taxing the B. U S., and would have succeeded in coming The repeal was to the decision. of a single day more carried in one of the Houses, as he states, by one vote. ""Cashier McHvaine to Biddle, Jan. 27, 1827, B. P.

that. The the documents

letter,

*"Mr. had n

Hill done

one

"

The
to

informant
a

Jackson
that
the

of Mr. Hill of Louisville Tennessee Branch Colonel Wm. was

respecting

the Hostility of Pittsburgh,

"

of who

Gen'l pened hap-

Robinson

discussed, and who stated positively when the subject was to Mcllvaine repeal was effected in one of the houses by a single vote." Biddle, Jan. 29, 1827, ibid.
5

to be in Nashville

Reminiscences

of James

A.

Hamilton,

p. 69.

184

THE

SECOND
Again

BANK

OP

THE

UNITED

STATES that Jackson

than himself.1 certainly been

in 1829

Lewis
"

wrote

had

led to believe
"

loaning unfriendly manner, This conviction of defeating him.2 object gave a personal flavor to Jackson's opposition, yet that at bottom not personal, but based upon conopposition was stitutio
an
-

presidential election his candidacy toward money with the

during the pendency of the branch had acted that the Lexington
in

and
opinion

social opinions.

The
as
a

bank

was

in Jackson's

unconstitutional, and, monopoly, dangerous to society.

He

privileged powerful himself expressed these

time indicated the

ideas freely to Biddle, and at the origin of his dislike of banks :

same

I think it right to be perfectly frank with you. I do not think that the power of Congress extends to charter a Bank ought of the ten mile square. I do not dislike your Bank any more since I read the history of the South
But ever than all banks. Sea bubble I have been

afraid of banks.8

After
1

this naive

and

delightfully Jacksonian
"

reason

for

Vol. Ill, pp. 258, 259. Von Hoist also conconsiders this a tradition. siders it a "tradition Vol. II, pp. party not well founded.'' of the democratic SI, 32. But the assertion was made with great particularity by Polk in 1833, and he

Parton

"

....

could

not be mistaken adverse to the United

"

It

was

very

well known
was

that the opinion

origin

States

Bank,

before he prepared
a

his inaugural

of recent address, he had

not

of the President, At the Hermitage,

"

But it was fact which was susceptible of proof. of this opinion, until he should send his first message communication it was into his inaugural On this account not introduced address."
C, D., Vol. X, Part

his opinion communicated best not to make public thought

to Congress.
"

Dec.

30, 1833,

II, p. 2263. See also BLAIE, Extra Globe, Vol. I, p. 90 ; Bancroft's June, 1845; INGEKSOLL,, History Eulogy of Jackson, of the War of 1812, Vol. II, p. in Sept., 1833, said: "The President's convictions 264. Jackson, of the dangerous States, so were tendencies overpowering when of the United of the Bank he entered on the duties of Chief Magistrate that he felt it his duty, notwithstanding
....

he was to avail himself the objections of the friends by whom surrounded, to call the attention of Congress and the people to the question Vol. Ill, p. 5, paper Messages and Papers, of Sept. 18, 1833. recharter."

firstoccasion
"

of the of its

"He

during
Lewis
3

of his friends, certainly had been led to believe from the complaints pensing branch in disthe pendency of the presidential election, that the Lexington its golden favours, in the way of discounts, had manifested great partiality."
to Biddle,

"

Oct. 16, 1829, B, P. in Biddle

Lexington
no

was
no

near

Clay's residence.
no

Letter

to Biddle,

Papers,

date,

Jackson's,
aspect

in Nov., 1829. and written from of the question quotations

place, See for further

same

signature,

but indubitably

stitutiona expression on the conletter, p. 192, infra.

THE fearing

BANK

AND

THE

DEMOCRACY

185

all banks,
no

scruples,
or

after this frank confession of constitutional one need henceforth seek for the motives

He fails to tell of Jackson's opposition. he had read the history of the South Sea Biddle just when it fixed him it happened bubble, but whenever against
the

origin

banks.

Let

it be noted, too, that his dislike not

was

for banks States in

in general, and

for the Bank

of the

United

particular.1
I understand Jackson's antipathy is not to from Dickins that General He considers the Bank of the United States in particular, but to all banks whatever. all the State Banks unconstitutional and impolitic and thinks that there should be no
1
....

"

Currency
part

of

our

but coin, that the Constitution designed to expel paper altogether C. J. Ingersoll to Biddle, Feb. 2, 1832, B. P. system."" monetary

as

any

CHAPTER
ATTEMPTS TO

IX
JACKSON'S ASSENT
TO
A

SECURE

RE-CHARTER

early awake to the possibility of Jackson's enmity, and began immediately to calculate the chances of In March, 1829, he thought them renewal, good;1 but,
was

BIDDLE

to make them better, he bestirred himself to produce His plan was to convince a favorable effect upon Jackson. the president of the usefulness of the bank to the government
anxious

in its management community and to the commercial of the public debt.2 He at of the disbursement of payments the position held by Major Lewis, and once comprehended in June

addressed a letterto him in reference to the appointment branch, in which Lewis of directors at the Tennessee might presumably be interested.3 Lewis in return expressed " himself as " much gratified at the selection of directors, and added: If your Directory is composed of men ence, of influit the people have confidence, will have and in whom In tendency to prevent opposition in a good degree."*
was
"

other words, it

with the sympathy could have the confidence of the people in the implied.

to appoint men political party in power,

advisable

in who were for only such

sense

here

In October, after the brush with Ingham, Biddle became for supposing the that Jackson had personal reasons aware bank inimical to him, and he undertook to remove these
1 2 3

Biddle

to Jos. Kingsbury,

March

6, 1829, P. L. B., Vol. in, p. 18.

To A. Dickins, As

May
was

19, 1829, ibid., p. 43. to take

on the opinions of all sorts of persons to find be useful, there is no valid reason

the bank

such subjects,where fault with this step.

*

accustomed these opinions

could

Lewis

to Biddle, June

28, 1829, B. P.

186

ATTEMPTS impressions.
He

TO

SECURE

JACKSON'S

ASSENT

187

the charges regarding branches, and to rebut these made against the Kentucky forwarded a letter from an ardent Jackson partisan who was
wrote
a

to Lewis

which indignantly denied the truth of the reports, and which he asked Lewis to show to the pleased, Lewis president.1 This Lewis did. Jackson was director at Lexington,
wrote
:

he says to learn that probably It is gratifying to him for those complaints, or at least, that there was no just cause He requested me to they possibly had been much exaggerated.
....

say, that
moment,

he

has

too

much

that you

Branches

of your

would Bank;

confidence in you to believe for a knowingly tolerate such conduct in the but from the complaints which are still at New of them, particularly the one improbable that party feeling may yet

made with regard to some Orleans, he thinks it not have some influence upon

The President their operations thinks, as you do, that the Bank of the United States should recognize that in all its operations, it should have an eye no party; and to the interests of the stockholders and the good of the single
country.

"Some

of

our

friends in Nashville,"

he

about directors from outside, and and corrected "to prevent jealousies unpleasant feelings."2 This letter undoubtedly expresses accurately Jackson's attitude toward the bank and
its head.

continued, complain that ought to be

stillsuspicious of political activity on the offices; that he believed that the bank

It shows that he the part of some

was

of

should not engage in politics either for or against him ; that both he and Lewis discriminated against in thought that Jackson partisans were

appointments to the directories ; and that Lewis was inclined to place the Nashville office on what he considered a fairer footing by putting more friends of the administration upon
its board.

His

reasons

for this

are

political exclusively.
this
was
an

Biddle
1 a

might

well have

that objected
p. 75.

attempt

To Lewis. Lewis

Oct. 14, 1829, P. L. B., Vol. Ill,

to Biddle, Oct. 16, 1829, B. P.

188

THE

SECOND

BANK

OP

THE

UNITED

STATES

which

denied flatlythe expressed opinion that party considerations should not be intruded into bank affairs,but he would consider a refusal to place ination. on the board as being in itselfa politicaldiscrimLewis's letter also proves that Jackson was sonally perwas

recognized Democrats

that Jackson

well disposed to Biddle, and such considerable period after this date.1

his feeling for

Altogether Biddle
was

saw

reason

to think that the situation

and that the most material matter to disabuse Jackson's mind of the suspicions about the was branches. For this purpose he sent a friend to Washington,
not
a

difficult one,

satisfiedthat the parent who reported that the president was board knew nothing of the political abuses at the branches, a if such abuses existed, and asserted that the bank " was blessing

administered as it was, diffusing a healthful circulation, sustaining the general credit without this partiality or political bias."2 Biddle followed up
to the country

auspicious beginning by dispatching the cashier and one of the directors of the New Orleans office to repel the charges " Not against it, and succeeded in dispelling all suspicion. the least doubt the charges
'Thus struggle the most
manage

on remained against the New

his mind,"

said Jackson, that unfounded.8

Orleans officewere
"

Jackson Biddle as a government nominated always In July, 1830, Biddle was for re-charter. assured that that exalted terms and says that there is no gentleman
Bank" branch do the Bank and Country better or more of Nashville, to Biddle, July 20, 1830, B. P.
"

the

director until the he speaks of you in be found can would justice." J. Nichol,
"
"

president
2
"

I cannot in saying the result of the pleasure it gives me withhold a moment is most inasmuch President expressed himself in the as the my satisfactory, visit decided friendly to the Bank ' that it was manner a blessing to the most clear and it was, diffusing a healthful circulation, sustaining as the country administered general credit without partiality for its excellent President, (I use Bank possess'd
true many
a high regard political bias that he entertained his own words) who with the Board of the Parent his entire confidence for the readiness and and indood his thanks to meet he said it the views of Government" which they had seemed
or

cordiality with
was

in Kentucky made of partiality in the Branchee have he any foundation, added if these complaints knew nothing the Parent board was persuaded of them, and if they did would not M. L. Bevan to Biddle, Oct. 21, 1829, ibid. sanction them.""
and

New

had complaints but further Orleans,

been

3"
.

that he by the

was

was

exercised

that no hostility to his administration entirely convinced Board the Parent Bank, and that in reference to yourself of

ATTEMPTS Biddle thought

TO

SECURE

JACKSON'S

ASSENT

189

so the moment opportune that he sent word able to Lewis urging him to procure from the president a favormention in the annual message of the bank's services in

payments of the public debt,1 to which Lewis replied : making " to I think you will find the old fellowwill do justice the for the handsome in which it Bank in his message manner in paying the last installment of the assisted the Government
2 And so he did, as anyone may perceive by national debt." turning to the message. It was that Jackson politicians received at this juncture

appointments to the branch directories from one end of the sion country to the other, and Biddle, convinced that the impressufficient, made upon the mind of the president was to assure determined to seize the favorable moment the bank's future.
the vanity which was so nent promifeature in the character of Jackson, the astute head a of the bank suggested to Lewis that the hero of New Orleans glories to the 8th of January by arranging for might add new the complete discharge of the national debt upon that day before his final retirement. The idea pleased in 1833, just

Perceiving

Biddle say to him the President would be glad to see his proposition for sinking or paying off the three per cent stock," wrote Lewis,8 and Biddle, conJackson.
see

"

If you

Mr.

confidence in the purity of your intentions. particularly he had the most unbounded have been satisfied, he said by your letter alone of the want of any He should New Orleans for the accusations foundation against the office at not the least his mind." Samuel Jaudon to Biddle, Oct. 26, 1829, ibid. doubt remained on
....

....

"

Mn say of debt paid off in 1829 he naturally would speaking of the amount that in July last a larger payment the principal of the public debt was of made ever than was at any former period" that looking to frequent payments redeemed of
"

an similar kind in future the effect of that in July was object of great solicitude it was to perceive that this large displacement very satisfactory of funds was and to any branch the least shock or inconvenience accomplished without of industry

"

'

result which of that excellent institution the B. he Nov. 9, 1829, the substance of which

it is but

justiceto ascribe

in

great
"
"

degree

to the

judicious arrangements

U.
was

/S.'

Memorandum
to Win.

to write

given to Mr. Walsh for Qeneral B. Lewis

Jackson's
2
3

Lewis
Ibid.

perusal, ibid. to H. Toland, He

"

Nov. 11, 1829, ibid.

"

I will submit

He had better write to me adds : when his leisure will permit and Say to Mr. Biddle it to the General." A little earlier he had written :

190

THE

SECOND

BANK

OF

THE

UNITED
come,

STATES

fident that the critical moment for the extinction of the debt bank's charter. No suspicion
ever

had

submitted

through

the renewal that the two

plan of the

has heretofore
a

arisen

dents presi-

approximated

the other consider a nothing could be more

to Jackson,

relation where one could make and And yet proposition of this character. Biddle was not unfriendly natural.

while

Jackson

expressed

hearty

him.

should the two not agree upon a continuation of the charter and the payment of the national debt at the same time, and thus settle with mutual satisfaction a question which might give rise to future difficulties?
His plan was interesting and brilliant: So Biddle reasoned. For a new charter for twenty years the bank would exchange $7,000,000of 5 per cent, stock held with the government

Why

regard for plan for the

by it for the government's $7,000,000 in bank stock, and then in return for one-half of the 3 per cent, revolutionary to over at the time amounted stock, the whole of which
the $13,200,000, bank would
to pay the whole.
assume
manner

the government's
over

tion obliga-

In this

$20,000,000of

the debt would be the government as

paid immediately, could discharge

only so much ary, by January or Febru-

leaving

1833. payable might

on

true, would not be A small part of this, it was creditors until after that date, and the government's

not choose

to surrender

it, but in that

case

the bank,

to it of the amount by the government, would payment that portion as well, and thus the country would be assume completely freed from debt. Briefly stated, this proposition
was

that

the

government

$13,648,124.72, whereupon once $20,296,249.45 the public debt. of

this looks
the President his Bank.
as

present the bank with should discharge the bank at would At the firstglance to present the government

if the bank

proposed

the project of gratified with the report I have made him upon to it will be well."" Lewis tr H. Toland, Nov. 9, with regard B. P. 1829, in Biddle's handwriting,
is much All things

ATTEMPTS

TO

SECURE
it must

JACKSON'S

ASSENT

191

with

but $6,648,124.73,

stock which only

the government

be remembered that the bank held, though nominally worth

in the market worth considerably more further if the charter were and would appreciate still renewed. Biddle calculated that it would be worth $8,500,000in that

was $7,000,000,

and with a have sold for ten or renewed charter it would undoubtedly the 3 per cent, stock was below eleven millions. Meanwhile par, so that the sum of that stock would have been worth less contingency, already worth than

but it was

that

sum,

$13,000,000. On

littleor nothing not only made this offer,but said that the bank would probably and, for Jackson's benefit, he pay a bonus of $1,500,000,

the whole, the bank would have lost Biddle if its suggestion had been adopted.

argued the constitutionality and expediency of the bank at length, declaring that, if the charter were not renewed, three months after its cessation would see a suspension of specie in the United States and the ruin of the state payments
banks.1 The
to this proposition, contained

president's to have what seems

i

answer

in
ever

been

the only communication

....

he

National

debt

on

Jan. 1, 1830

$48,522,869.93
-

Redeemable Redeemable Redeemable Redeemable Redeemable

at pleasure, 5 per cent, bank stock at pleasure, 3 per cent, stock in 1830 at any time
....

$ 7,000,000.00
13,296,249.45 7,998,793.92 18,901.54 11,018,900.72 2,227,363.97 2,227,363.98 4,735,296.30

in 1831, Jan. 1 and in 1832 in 1833

in 1834

22

Redeemable
Redeemable Redeemable

in 1835

$48,522,869.93
Biddle then says that in consideration of re-charter, the receipt of the $7,000, to the bank for the government's 000 of 5 per cent, stock subscribed shares, and the bank of half the 3 per cents, (say $6,648,124.72), will give the government $7,000,000 5 per cent, stock and assume the payment of of the principal and interest

$13,296,249.25 the 3 per cents., thus striking off $20,296,249.25 the of the whole of of A long calculation is then entered debt." into showing that the rest of the debt, be discharged Jan. 1, 1833. The bank would can on of $2,145,036.04, with the exception
the government, on payment of the principal to it, thus probably take this from Biddle to W. B. Lewis, Nov. 15, 1829, relieving the government entirely from debt. and again on the 17th, P. L. B., Vol. Ill, pp. 84-91. Biddle's addition in the cents
"

"

columns

is

erroneous.

192

THE

SECOND

BANK

OP

THE

UNITED

STATES

directed immediately

to Biddle, is interesting and

curious,

and should have revealed to the latter Jackson's position:

Mr. Biddle: I off the debt submit it to you. I would have
very thankful to you for your plan of paying I thought it my duty to sent to Major Lewis.
was

it to Congress, difficultyin recommending I do not think but I think it right to be perfectly frank with you. that the power of Congress extends to charter a Bank ought of the
no

great and pure mind and could not agree though if he had said, that as it was necessary for the with him there ought to be a national purposes of the national government bank I should have been disposed to concur.1
" "

ten mile square who I believe was

....

I have
a

read the opinion

of John

Marshall

This

was

plain negative to Biddle' s bank

Jackson's
same

constitutional time his opinion that

stating frankly project, yet objections, revealing at the

a was

necessary to carry and

constitutional

out

the financial operations of the government if established in the District. Biddle immediately
went
to Washington

for

an

interview

he and his advisers. The arguments but Jackson merely repeated what he offered are unknown, had already written.2 Biddle was view, pleased with the interwith
the president

however, writing to Robert Lenox that he "found with in the great pleasure a friendly feeling towards the Bank merly minds of the President and his particular friends who for3 These particular friends entertained different views." not members of the cabinet, for he said later that he 1 2

were

Letter
"

without

date, place,

or

signature.

"

B. P.

In regard to what passed at Washington I speak of it with great reserve, but to you, I have none and will therefore say that the President spoke in the highest in the administration terms of confidence of the Bank and particularly of the had afforded to the Government, in July last assistance which the Bank of which
"
"

"

he intended that

to bear

he doubted
Biddle

in his message He mentioned to Congress. public testimony to incorporate Bank trict."" the right of the Government a out of the DisS. Smith, Jan. 2, 1830, P. L. B., Vol. ITT, pp. 129, 130. to Senator
a

Biddle's plan of after the 17th he went

3

re-charter

was

sent

on

to Washington,

and

returned

the 15th and 17th. the 26th. on

On

or

immediately

To Robert
Historical

Lenox,

SON'S

Magazine,

Dec. 4, 1829, P. L. B., Vol. HI, p. 99. Nov. 22, Vol. IX, 2d ser., p. 10.

See also letter in DAW-

ATTEMPTS had

TO

SECURE
"

JACKSON'S

ASSENT

193

no

conversation
"

with
was,
never

Lewis

friends, but he had

istration. of the adminone of the particular of course, "entertained different views."8 It

any other member

is necessary to infer that the others were various members No doubt he had also learned that of the Kitchen Cabinet. favorable to the bank.3 But a of the cabinet was

majority

he had

ground failed completely to perceive in the obscure backthe menacing and sinister figure of the most powerful, determined, and most subtle enemy most of the bank,

Amos

Kendall.

The

attitude of Van

Buren

was

likewise

unguessed. So confident

Biddle of a favorable issue that he spoke view, to his friends of what had passed at the interunguardedly that he had given, and it was reported to Jackson to individuals in Baltimore "that the charter assurances
was

with the good- will of the president.* should be renewed" Jackson was surprised and offended, declaring that he had " never and that Major Biddle given any such assurances,
to my frankness to him on this subject Major acknowledged He suspected that Biddle had spread Lewis and others." the report in order to facilitate speculation in the stock.5

He

declared that he
1 2

was

"pledged
been

against the Bank"6

"

To John
"
. . .

McKim,

Jr., of Baltimore,

Jan. 13, 1830, P. L. B., Vol. Ill, p. 138.

and
p. 236.
3

in favor of a National Bank tion, descripalways of some this present Bank should not object to the rechartering with modifications."" Lewis to J. A. Hamilton, Jan. 1, 1832, Reminiscences A. Hamilton, James
.

that I have

of

Jackson

says

in

a
"

letter to Hamilton

first message, of my
*

that he cabinet."" Dec.

rumors

disliked to act contrary 19, 1829, ibid., p. 151.

"

in relation to the bank to the opinion of

paragraph
so

in th"

great

majority

in Baltimore I gave I saw to those gentlemen assurances fair with the administration, that I had every that the interest of the Bank stood assurance and their good of the President and others of their friendship for the Bank handsome that the Charter should be renewed that I expected something will and The that from the President

John
5

McKim,
Jackson

in his speech be some great mistake." must Jr., of Baltimore, Jan. 13, 1830, P. L. B., Vol. Ill, p. 138.
....

"

Biddle

to

to J. A. Hamilton,
a

Jan. 1, 1830, Reminiscences,

p. 154.

Hamilton

had

sent to Jackson

letter from

Duff

Green, containing
Nov.

reports

of Biddle's

supposed

conversation,
"

ibitl., p. 152.

J. A. Hamilton

to

friend, Washington,

28, 1829, ibid., p. 150.

194

THE

SECOND

BANK

OF

THE

UNITED

STATES

leaves no doubt that he had not been which Of this, entirely ingenuous in his conversation with Biddle. however, Biddle had no suspicion. When on the 27th of
statement

November

Alexander him

Hamilton,

son

of Washington's

great

that the president's message would in an unfriendly manner,1 he of subject renewal " conversation replied that he did not believe it,since in a of a very full and frank character with the President about secretary, warned treat the the Bank
....

he

never

intimated

such

purpose.

look

to the

message,"

of the most it would contain words of commendation surprise and dismay, therefore, when extreme.3 else it contained, were The message
was

concluded, He satisfactory kind."2

he

"with knew,

expectations in fact, that His

what

for the bank.

he

discovered

both surprising and alarming. After an encomium upon the bank's usefulness to the pronouncing treasury, Jackson asserted that "both the constitutionality

and the expediency of the law creating this bank are well by a large portion of our fellow-citizens, and it questioned must be admitted by all that it has failed in the great end The currency."4 sound and of establishing a uniform declaration that the bank's currency was not sound and uniform was particularly offensive to the bank's supporters: do you think of the assertion that the Bank has not "What
uniform and solid currency?" asked John Sergeant. " Did you believe that any man who valued his intelligence and veracity would have character for common hazarded such a declaration in the face of this community

produced

an

Nov.

27, 1829, B.
wrote

P.

Hamilton

probably

received

his information

from

his

brother,
2

who

the final draft of the message.

Nov. 28, 1829, P. L. B., Vol. Ill, p. 98.

"

The
saw

that I

result I and heard

increases
"

every

I recollect all when with equal surprize and regret Washington, the contents my at surprize of the message at Dec. 9, 1830, ibid., p. 103. Biddle to A. Hamilton, moment."
see
....
"

Messages

and

Papers

of the Presidents,

Vol. II,

p. 462.

ATTEMPTS

TO

SECURE

JACKSON'S fact?" 120.2

ASSENT

195

and in contradiction of the immediately declined from

manifest

Bank

stock

125| to

Biddle consoled

" a measure himself with the belief that it was emanating exclusively from the President in person, being the remains it is not a cabinet of old notions of constitutionality, that the a nor measure and finally that on party measure,"3
"

His attack would "rather benefit" the bank.4 opinion as to the president's sole responsibility for the act to was at which the bank question was correct; the moment
whole
the

be

taken party one was stillfar in the future. But he was misin laying all the stress upon the president's constitutional Jackson's that he own show words opinions.
as

considered the social reasons In making public his

not to be censured.

at least equally important.5

to objectionsthe

bank

Jackson

is

His act was not the result of the Portsmouth quarrel, for it had been determined upon before that episode ; nor did it spring from the belief that the bank was opposed this was
for he had been persuaded that politically, He was convinced that the bank was not the case. to republican institutions, unconstitutional and dangerous
to him
What Jackson by a uniform iTo Biddle, Dec. 11, 1829, B. P. currency meant be inferred from in his farewell address : " The corporations a clause which to keep the circulating medium can money create the paper not be relied upon form uniin amount."" Messages Vol. Ill, p. 301. There never was and Papers, and never He have meant, however, that the bank's notes were may will be such uniformity. depreciated distant from the place where they were when made payable ; or he may
may

have

inclined

Gallatin was the purchase meant of bills and selling drafts at any rate but par. to the opinion that he referred to the selling of drafts for a premium. Qallatin had asked an explanation from the president, but Jackson did apparently
not

know

what he meant. Vol. II, p. 438. NILES, To

"

Gallatin to Biddle, Aug. 14, 1830, ADAMS,

GallatMs

ings, Writ-

Vol. XXXVII, Hoffman,

reasons: was

p. 275.

George
two

of Baltimore,

Dec.

15, 1829, P. L. B., Vol. Ill, p. 106.

currency
was

*For and

(1)because
by everyone terrify everyone.

the

objection that the

uniform

known

would proposed To John McKim,

8
"

to be unfounded; and On the whole, Biddle

(2)because
was

correct

not sound the substitute in his judgment."

Jr., of Baltimore,

Jan. 18, 1830, ibid., p. 141.

I was by all the sordid and aware bo disapproved the bank question would interested who liberty, and the more the perpetuity than prize self-interest of our blessings of a free republican I could not shrink from a duty so government imperious to the safety and free institutions I considered as this to purity of our be."" Jackson to J. A. Hamilton, Dec. 19, 1829, Reminiscences, 151. p.

196

THE

SECOND

BANK

OP

THE

UNITED

STATES

and therefore he only fulfilledhis duty by speaking out. If criticism is to be offered at all,it must be directed against his presumption in daring to dictate while he was completely

ignorant of banking and monetary affairs. Nevertheless, he fair to the bank, willing to hear reason, was sult willing to conthe opinions of Lewis, Hamilton, and Nicholas Biddle,
Kendall.1 well as those of Hill, Taney, and Amos It is important to remember that Jackson's hostility was to a national bank as "to the bank as organnot so much ized,"
as

with exclusive privileges in which the whole form He was people could not share. convinced that some of a bank was convenient, and perhaps necessary for carrying
a

to

bank

on

the financial operations of the government, and in this message he argued for one with provisions which would not the constitution. conflict with the constitution as he understood difficult to comprehend It was just what he meant,
not settled in his own mind as and it is evident that he was Writing to the precise nature to of the bank he wanted. 1829, he requested him to outline in December, Hamilton

the firstto be that of a " bank of deposit for the plans facilityof the transfer of public moneys and the establishment of a sound and uniform currency, making, if you please,
two
"

the

Custom-house

branch

to this National

Bank,

and

other of a mixed character which may fulfilall the purposes of a bank, of State rights and our and be free from the infringement attaching

it to the Treasury

Department.

The

Constitution."
i

Six months
penned the

later he expresses himself

some-

James
He

A. Hamilton had

the bank. and paragraph slashing

tone
on

requested the message, the bank, he says, was down

been

in opposition to phrases in the first message by Van Buren, Lewis, and others to come ington to WashThe original especially in relation to the bank.

or style," fairly good to possibly Kendall, Blair, or but the president declared impossible, that it was omit the paragraph altogether, " he was Hamilton as to a friend, Dec. 28, 1829, Reminiscences, pledged against the Bank.""

" at great length in a loose, newspaper, written from the pen of Jackson himself evidence that it came Hill. Hamilton to persuade the president attempted

pp.

149, 150. 151, 152.

"Dec.

19, 1829, ibid., pp.

ATTEMPTS

TO

SECURE
"I

JACKSON'S

ASSENT

197

what Bank

more

decidedly:

chartered upon of our Federal

have often spoken of a National ances the principles of the checks and balGovernment, with a branch in each

State, the capital apportioned

agreeably

to representation,

to and to be attached to and made subject the supervision of the Secretary of the Treasury, and an expose" of its condition

annually, in his report to Congress, as part of the If, revenue; might be a bank which of deposit only." however, it should be necessary to make count it a bank of disbe made and issue
as

exclusively," and South Carolina as the model for such an institution.1 What bank, in whose he preferred then was a purely governmental to be a place profits all the people should share, which was

well, "then it should belong to the nation he referred to the Bank of the State of

of deposit only, under the control of the secretary of the This, he thought, would obviate all difficulties, treasury. both constitutional,state, and social. On the other hand, he
bank of deposit and issue, but in case such a one should exist, it ought to be on the model of that of the state of South Carolina. This bank was owned completely by the state; its president and directors
was

not absolutely set against

were

had

session; it annually elected by the legislature in joint discounts, dealt in exchange, and no monopoly; made

The feature of state ownership was issued notes.2 that upon fixed. He was more much which Jackson's attention was inclined to the first plan, however, and adopted it finally as the only proper one, advocating it in his second message at considerable length, with the added features of allowing it to deal in exchange "based on and individual government

deposits," transferring the government

with
1

no

stockholders,
Hamilton,
at

no

funds without charge, capital except the deposits, and no

To

June
Large

3, 1830, ibid., p. 167.

Statutes

of

South

Carolina,

24 ff No. 2021. .,

The

dato

of the charter

is Dec. 19, 1812.

198

THE

SECOND

BANK

OF

THE

UNITED

STATES

not thoroughly worked out, but property.1 The details were it is sufficiently plain that Jackson's bank would have been

like the present sub-treasury system, with the additional features of the privileges of trading in exchange and of receiving the deposits of private individuals.2 something
to Congress, the the submission of the message parts relating to the bank were referred in the Senate to the Committee on Finance and in the House to the Committee of Means. Biddle urged the latter to discuss the Ways and

After

a re-charter.3 The committee esced, acquimessage and recommend both it and the Senate committee reporting at length McDuffie's report in the House in favor of the bank. was It controverted the president's reasoning at every exhaustive.

point, declared that the bank was constitutional and expedient, " that it had a actually furnished circulating medium
specie,11and contemptuously condemned Jackson's proposed bank, "founded upon the credit of the Government being inefficient and as and its revenues,"
monstrous,
"a "prodigious giving to the government patronage" in its character," in its influence" and "dangerous and creating a centralizing agency of enormous potency.4 To him, and the not to convince refute Jackson, however, was

more

uniform than

report only fixed him more it to be," he wrote,

can

"

firmly in his opinion: "I presume a joint effort, and the best that
it will

be
1

made

in its support, and it is feeble

Second

INGERSOLL,
for
a

bank

Messages Vol. II, pp. 528, 529. See also message, and Papers, annual Vol. II, pp. 283, 284, where Jackson declares this " the only safe outline deposite." or government

2 Jackson wrote Lewis, Jan. 1, 1842, that his plan did not contemplate SUMNER'S Jackson by the government." (revised),pp. 286, 287, quoting letters of Jan. 1 and Jan. 15, 1842. The wonder is that anyone

note

issues
manuscript ever

Ford should

have
are

now

supposed in the Lenox Biddle

that Jackson's

The note issues. plan contemplated collection of the New York Public Library. Hemphill,
reports,

Ford

manuscripts

to Joseph

the facts for both

wrote
*

and

Dec. 22, 1829, P. L. B., Vol. Ill, p. 118. Biddle for word report is word much of Smith's

as

supplied he

it for the senator.

Beport

of April 13, 1830, H.

R. 358, 21st Cong., 1st Sess., pp. 14, 26, 27.

The

italics

are

McDuffie's.

ATTEMPTS

TO

SECURE

JACKSON'S

ASSENT

199

' He a proper time arrives." unanswered when interpretation of his bank plan.2 resented the committee's That the report had aroused his temper, and that he had

not

go

reverted to his suspicions of the bank's corrupt activity in " The bank was the present hydra politics,is also evident. liberties by its corruptto our ing of corruption, so dangerous influences everywhere, and not the least in the Congress 3 His determination that the bank should of the Union." not be continued in the form in which it existed is shown in Duff Green 26 to Lewis, wherein he censures for laxity in making attacks upon the bank, and asserts that for that purpose.* The be founded another paper must
a

letter of June

Globe, with Blair Biddle himself

irritated by

as

editor, was

was

the result. lest Jackson apprehensive

should

be

conthe reports of the committees, and was vinced that conciliation was the best policy.5 He adopted a bad curious method remarkably of conciliation. With he judgment, proceeded to scatter the reports from one end

of the country to the other as a species of appeal against the He reprinted thousands of copies at the expense president. tracts not sufficient,he sent exof the bank, and, as if this were
wider circulation. He paid for the printing of other articles as well, and he secured from Grallatina long and exhaustive treatise which
Jackson Jackson's.
2"
never

to the newspapers

so

as

to give them

to J. A. Hamilton,

May

3, 1830, Reminiscences,

p. 164.

The

italics

are

I have
did

had no conversation nor the subject of Banks; on with Mr. McDuffie I contemplate in his imagination he has assumed, as recomsuch and mended in his Report."" June 31, 1830, ibid., p. 167. Jackson to Hamilton, letter of June occasions is, he
as

In the

3, Jackson

shows

temper
"

by

three separate
*
"

the

"

hydra

of corruption." to

mentioning Ibid.
to be heart
as

the

bank

on

The

the Bank,
puppits,

much to announce the the policy, " defend organ must get another in his hands it is more ing, Wheelinjured than by all the opposition."" administration," June 26, 1830, SUMNEB'S Jackson (revised), 206, quoting Ford manuscripts. p.

[Duff Green] has professed but his idol [Calhoun] controls him as
truth
we

me

the

showman

" soul, against does his

and

"

What

am

feel vexed at being Vol. Ill, p. 227.

most anxious about thus contradicted.""

now,

is that the President S. Smith,

himself

To Senator

April

should not 22, 1830, P. L. B.,

200

THE

SECOND

BANK

OP

THE

UNITED
text.1

STATES
irritating and

may be inferred from what he had already said about McDuffie's report. That Jackson would " persevere in his opinion, and refuse to sign a Bill," Biddle could not believe.2 Lewis remained sagaciously continued to furnish good advice and the names of Jackson partisans Hio should be made directors at the branches.3 Biddle took the advice and the directors, telling Lewis that he ought to be satisfied, named
cordial, and
"

took the president's message as to Jackson offensive all this was

How

for out of the whole

Board

a [atNashville]very

large proportion are of gentlemen nominated by yourself." * He assured Lewis that the bank entertained kindly feelings if the rumors the president, and wished to know toward
credible that the president had declared that he would veto a bank bill.5 To this Lewis replied:
were

I told you in Philadelphia when you first mentioned the thing to me, that there must be some at mistake because the report was / had heard him say upon the In conversing variance with what

subject.

few days ago upon the he entertained subject still Bank might be established that would be a national preferable to the present U. S. Bank; but that if Congress thought differently,and it was deemed necessary to have such a Bank as
with him the opinion that
a

the present, with certain modifications he should not

to object

it.6

This

letter is 3, where

curious

commentary

June
"hydra
1

he

repeatedly and

Jackson's of upon stigmatizes the bank as the necessarily at

of corruption,"
Gallatin

yet it is not
Writings

Gallatin to Walsh,
furnished

Biddle
p.

April 27, 1830 ; ADAMS, with the necessary

documents

of Gallatin, Vol. II, pp. 425-7. (ibid,, and information

1830, ibid., pp. 443, 444.

offered to pay Gallatin $1,000for the work." Gallatin to Biddle, Dec. 8, Biddle Gallatin refused payment. also sent a clerk from digests, etc. ; sent his own to give whatever the bank to assist in making secretary In many particulars the article assistance needed ; read the proof, and gave advice. in Biddle's letters. The article furnished follows the statements and arguments

429),and

appeared
2
3

in the American

Quarterly Review

for Nov., 1830.

Biddle to S. Smith,
Biddle
to Lewis,

April 22, 1830, P. L. B., Vol. Ill, p. 227. Feb. 24, 1830, ibid., p. 185 ; Lewis
to Biddle,

May

3, 1830, and

June
*

13, 1830, B. P.

To Lewis, May

June

22, 1830, P. L. B., Vol. Ill, p. 277.

8, 1830, ibid., p. 240.

"To

Biddle, May

25, 1830, confidential, B. P.

ATTEMPTS

TO

SECURE

JACKSON'S

ASSENT

201

with it. Omit the temper in Jackson's letter,and Provided that there is no difficultyin reconciling the two. Jackson was not further irritated,Biddle might stillhope to
variance

receive his consent to Biddle immediately

new,

though

wrote

modified, charter. to Edward Livingston, asking

him

conversation with the president on the subject,1 and, to leave no stone unturned, he instructed President interview with Nichol of the Nashville office to have an
a

to have

Jackson

the president's visit to Nashville in 1830, and attempt to convince him of his mistake in the message He Nichol did not neglect his instructions. of 1829.2 "to be well satisfied" with reported that Jackson appeared

during

in transferring the funds of the govthe bank's management ernment "a Bank that and of individuals, and admitted

such as the present" facilities. "The only present Foreighners

"

was

objection
a

alone capable of rendering such he appears to have to the

Bank
"

is that

great part of the stock is held by consequently the interest is taken from the
am

country and I interfer with Congress on of the Bank altho' on

....

well convinced that he will not the ter of subject renewing the charhe keeps his opinion this

subject

to himself."
i

All this

was

reassuring, though

Jackson

had

May

27, 1830, P. L. B., Vol. Ill, p. 256.

?To
3

Josiah

Nichol, June

22, 1830, ibid., p. 275.

President States arrived in town last Tuesday I done of the United during his stay at my the pleasure of waiting on him, as an Old friend myself house I had frequent opportunities, and did not neglect the subject of your letter I enforced every argument I could make bear on the that subject or that would be
....
"
"

"The

of any

that a Bank point to another and acknowledges do so he appears to be generally pleased with the such as the present only can Management States and Branches of the Bank of the United and particularly so I this office. I have taken considerable with pains and gave him all the information Banking him have that the consistently could on convinced subjects and believe
"

with transferring

his prejudices service in removing facilities that the Bank has given the
"

....

he

appears

to be well

to Government

and

satisfied in individuals
"

their funds

from

One

"

"

"

injury manifest could not be dispenced with without to this Western as no country particularly so other currency He then states Jackson's could be substituted." objection to foreign stockholders, He is well satisfied that Politicks have no influence in Bank in the : or and adds Directors."" Nichol to Biddle, July 20, 1830, B. P. Choice of
present and to the Country and
"
" "
"

Bank

Branches

202

THE

SECOND

BANK

OF

THE

UNITED
He

STATES

said no keeping
a
on

more

than he had in 1829.

own

was

counsel, and meanwhile in he considered the loss of the interest new objectionwhat the stock held by foreigners. Biddle answered immediately,

his

quite capable of he had discovered

refuting at length this supposed and objection, Nichol to press these points upon the president.1 urging Biddle had recovered mtfre than his former By autumn " The worthy person who firstmade the attack," confidence.
" he assured Grallatin, looks at the matter now with different feelings." His advisers " studiously disclaim all participation" in the opinions of the firstmessage; both houses of

Congress
the Bank

are

favorable, and on the whole it seems best should apply at the next session of Congress
a

"

that

for

renewal of its charter." Despite this robust confidence, Biddle at times felt apprehensive The newspapers was that something amiss. supposed
to voice the sentiments

ceaseless hostility; in May House declaring the bank

of the administration showed brought into the resolutions were

unconstitutional, asking for a full report on its affairs,and asserting that the House would not consent to a re-charter; and, though these were voted down

by large

they majorities,3 were

ominous

; at Boston,

in June,

to remove the deposits the collector of the port attempted from the branch to a state bank/ and obscure hints coniTo

J. Nichol, Aug. 3, 1830, P. L. B., Vol. Ill, p. 314.

person

2 "The worthy different feelings.

who

first made
him

Those

opinions
quarters,

announced I have very

favorable

by

about him, and little doubt that there renewal of the

attack, looks at the matter now with in the studiously disclaim all participation from a great mass of observations from various
the

is

decided

majority of both houses of

is therefore present impression charter. the next session of Congress for a renewal should apply at This it can well do after the invitation given by the President and it of its charter. to approach is I think of great importance the question before it becomes involved Congress
....

to the

My

that the Bank

in the controversy
3 *

for the

Presidency.""

To Gallatin,

Sept. 9, 1830, ibid., pp. 345, 346.

Vote, 89 to 66, May

"

10, 1830." C. D., Vol. VI, Part

II, pp. 921, 922.

has transferred, or means The Collector at Boston to transfer, the collection to a State Bank." Biddle to Dickins, June 24, 1830, of his Bonds from the Branch " P. L. B., Vol. Ill, p. 281. The bonds have been restored by order of the Secretary,"
"

"Biddle

to S. Frothingham,

of Boston,

Aug.

20, 1830, ibid., p. 334.

ATTEMPTS

TO

SECURE

JACKSON'S

ASSENT

203

tinually reached Biddle of Jackson's implacable hostility,and of a coalition against the bank between Van Buren and certain
Richmond politicians.1

Jackson's second message disappointed Biddle's prevailing his occasional fears. It declared hopes and justified to lessen in any degree the that nothing had "occurred dangers
from that which many citizens apprehend of our institution as at present organized," again recommended the "as branch of the Treasury Department," a creation of a bank

should obviate constitutional and other objections, his plan at length, and concluded by saying outlined to call " the attention of the president's that it was
which

object

possible modifications of a system which cannot continue to exist in its present form without occasional collisions with the local authorities and perpetual apprehensions discontent on the part of the States and the people." 2 and

Congress

to the

Jackson's attitude had clearly not changed in the slightest He was degree. to the bank as organunalterably opposed ized, and wanted
men

that, if he

was

sentative Reprenational bank of another model. however, convinced of his own party were, sible, imposonce was persuaded that his
a

project

he would be willing to sign a bill re-chartering the old His message allows as much to be inferred, since it bank.3 "in its present form" that his oppois against the bank sition
is directed.

Immediately

expressed" that repeated the opinion he had more bill to re-charter "with certain modifications" would rea ceive What these modifications were the president's assent. between does not appear, but it is certain that somewhere
the president's scheme
1

after the than once

message

Lewis

and that of the existing bank

of Eichmond, Nov. 29, 1830, ibid., p. 398.

com-

Biddle
Messages
"

to James
and

Eobertson,

2
3

Papers,

Vol. II, pp. 528, 529, Dec. 6, 1830.

is not likely to take, I do not believe he 25, 1830, Bank."" Lewis to Biddle, May
to the
same

If the President opposed,

finds that his scheme

present wrote

will be

altogether, to the S. Smith Senator confidential, B. P.

effect

on

Dec.

12, ibid.

204

THE

SECOND

BANK

OP

THE

UNITED

STATES

promise could

could it be long before the president would surrender his plan, for it met with no encourage whatever from the of his own party.

be found.1

Nor

majority

what he queried; "whose does all this mean?" attack is this?"8 Meanwhile the presses supporting the bank treated the president's his bank plan with contempt. message with insolence and

Biddle, however,

was

keenly disappointed.

"

Well

both
"such

attacks apparently Buren. Jackson and Van

The

exhausted the patience of The latter declared that

the part of the Bank on severity of animadversion it felt and would do the institution much injury,"being was from the bank.1 taken for granted that the attacks emanated be taken, the Bank that ground must fail," warned Senator Smith six months later.* But Biddle would not "If interfere with
irritated, of the press." He was " not the slightest fear of either and affected to have " Our countrymen General Jackson or Martin Van Buren. "the
"

freedom

throats to please any body, and I have so perfect a reliance on the spirit and tion sense of the nation, that I think we can defend the institu' Perhaps from much stronger enemies than they are."
are
own

not naturally disposed

to cut their

Nicholas Biddle
that
"

men

are

read Hamilton's sagacious saw reasoning rather than reasonable animals," had
never
....

from a conversation that altho' the l"I gathered with Major Lewis, to Congress, yet if President is decidedly in favor of a Bank such as he recommends both houses, renewing the charter of the Bank United States to pass a bill were his approval the President would What not withhold with certain modifications, I conld not distinctly understand were the modifications ; but I believe that the principal
"

one

was

to take from

the Bank

the right of establishing

"

unless with Dec. 13, 1830 confidential, B. P. 2 To S. Smith, Dec. 10, 1830, P. L. B., Vol. Ill, p. 411.
3
"

the consent

of the states."

Cashier

R. Smith

branches in the states, to Biddle, Washington,

I called yesterday on the Secretary of State, and found him very sensitive on on that part of the message, the last publication in Webb's paper which related to on the part of the Bank was the Bank, he said that such severity of animadversion was felt and would do the institution much injury." The same opinion expressed
by the Speaker, and the general impression Senator S. Smith for the publications." * Smith to Biddle, June 3, 1831, ibid. To Cashier M. Robinson, of New
to be that Biddle was responseemed sible to Biddle, Dec. 19, 1830, confidential, B. P.

York, Dec. 20, 1830, P. L. B., Vol. Ill, pp. 423, 424,

ATTEMPTS

TO

SECURE

JACKSON'S

ASSENT

205

upon it the reflection it Instead of moderating the ardor and the wrath deserves. Biddle of the journalists, redoubled his exertions to influence letters from He ex-Presidents secured public opinion.
or,

if he had, he had

not

bestowed

Madison
bank's

and

Monroe,

expressing opinions

favorable to the

he published expediency;1 constitutionality and floods of articles at the bank's expense: reports of Smith Gallatin's treatise, to Benton, McDuffie, answers and

speeches
torrents.

guished and the opinions of less distincongressmen, writers on finance poured forth in ever-increasing
of

Meanwhile
and

Jackson's partisans were not idle. The Globe its following fulminated against the bank in the most

The charges of political activity at the violent fashion. Wayne, Kentucky branches were renewed. of Georgia, in to refer that part of the message dealing the House, moved
to with the bank friendly Committee

instead of to the select committee, The motion was and Means. of Ways lost by a vote of 108 to 67.2 In the Senate the indefatigable Benton presented a resolution against the renewal of
a

the charter,3 for the purpose of creating an opportunity to deliver a speech which should arouse "the masses" against It was a long, involved the bank.* performance, revealing

abysmal
on

but not the less effective of banking affairs, that account, since "the masses" were even more

ignorance

ignorant strong

than

the

orator.

Moreover,

it

was

particularly
exclusive

in its appeal

to their
"

against prejudices

privileges which
i

made

the rich richer and the poor poorer."

to C. J. Ingersoll, Jan. 15, 1831, ibid., p. 442; Biddle to Silas E. Burrows, To 3, 1831, ibid., p. 484. Crawford a letter in support also wrote of the bank." Ingersoll, Dec. 5, 1831 ; MILLEB, Bench Bar of Georgia, Vol. I, pp. 242, 243, and and NILES, Vol. XLI, p. 301. For letters of Madison, of Feb. 2 and June 25, 1831, see

Biddle

March

NILES,
a ^

Vol. XL,

pp.

56, 357 ; for that of Monroe,

"

Jan. 20, 1831, ibid., Vol. XLI, Thirty

"

pp.

82 ff.

C. D., Vol. VII, pp. 350, 354.

"

Tears,
"

Vol. I, pp. 187 ff. the millions ; and

was

It

was

conceived

and

the masses speech to be read by the people delivered for that purpose." Ibid., p. 204.
"

206 The

THE

SECOND

BANK

OP

THE

UNITED

STATES

motion to grant leave to introduce lost by a vote of 23 to 20.1

the resolution

was

The February

state legislatures

the

New

against re-charter. its passage, and for a time succeeded, but other influences taneously finallypreponderated and the resolution was passed.2 Simulbrought a resolution requesting re-charter was legislature of Pennsylvania. Biddle urged its adoption and, under the assiduous lead of C. J. Ingersoll, it It declared "that the was carried almost unanimously.
into the constitution
a

also called upon to act. In York legislature took up a resolution Biddle was active in trying to thwart
were

of the United

century's experience States as necessary and and

States authorizes, and near half sanctions, a Bank of the United

proper
to regulate

the

prevent paper currency of unequal 3 The two great states were thus arrayed in value." hostile columns, and Jackson was warned that he must tread

money

value of ciated and depre-

In July the support of both. carefully if he would secure legislature the Republican members of the New Hampshire passed a resolution "in decided opposition to re-chartering * The same the secretary the United States Bank." month

of war again attempted fund, this time to a bank

to

remove

in Albany,

part of the pension N. Y., which was the

center of opposition to the bank in that state.5 Biddle, however, now understood the president's position The bill to take no chances. exactly, and had determined

for re-charter, he wrote, must not be brought forward at the it would probably be short session of 1831, for, if it were, postponed.
1 2

Thirty

Years, Vol. I, p. 204.

see
can

resolution responsible, and it Devereux,

3

For

NILES, hardly

be

Vol. XL, p. 114. Biddle believed that Van Bnren was doubted that he was right." Biddle to Nicholas

Feb. 17, 1831. P. L. B., Vol. Ill, p. 470. For Ingersoll's part in the matter the Biddle Vol. II, p. 268. For the resolutions see NILES, Vol. XL, pp. 69, 73. The resolutions in the senate ; in the house by 75 votes to 11. unanimously Vol. Ill, p. 384.
5

INGEKSOLL,
are

Papers

authority.

passed PARTON,

H. R. 460, 22d Cong., 1st Sess., pp.

481-9.

ATTEMPTS
Once
brought

TO

SECURE

RE-CHARTEB
it would

207

be of course blended up with one of those political matters judged exclusively by party considerations. On the other hand if it passed through both Houses, and was negatived by the

postponed, the election, and become

forward

and

Pres't, from

that

between
construe

the Bank
it
as a

question him, and he would and re-elected, decision by the nation against the Bank, and act

time

forward

it would if he were

become

accordingly.1

Shrewd

calculation could

situation more Biddle had

possibly analyze a political accurately, and it would have been well if forgotten his own To avoid never wisdom.
not

blending
becoming

the

by

party

question with the election, to hinder its " one exclusively of those political matters judged the guide-posts to these were considerations"
"

could inspiration itselfforetell more precisely the result of a failure to remain true to these precepts; the Jackson and the bank, question would become one between
success.
" and if re-elected he would construe it as a decision by the nation against the Bank, and act accordingly." " In January Biddle was that the President aims certain

Nor

2 at the destruction of the Bank ;" in February he 3 he was convinced that they must fight ; in March
*

was

almost

utterly at in April and May all his sea as to the president's position ; hopes flashed up once for the cabinet had gone to more,
"an friend Mr. avowed pieces and the change substituted The new Livingston, for a decided enemy in Mr. Van Buren. friend.'" The Secretary of the Treasury is also a known
1 2
s

Biddle

to Joseph

Hemphill,

Dec.

14, 1830, P. L. B., Vol. Ill, p. 414.

p. 444.

To Jonathan
"

Roberts, Jan. 15, 1831, ibid.,

has assailed it, his partizans, those who claim to be his special between friends, unite in this denunciation they wish to force it into a question the ascendancy and it is to of General Jackson of the Bank and the destruction be feared that they may Feb. 17, 1831, ibid., p. 470. succeed."" To Nicholas Devereux, The President
" "

heard

On the subject of the determination of the President towards the Bank, I have " such various opinions by knowing that I have ended nothing." much To Leslie Coombs, Lexington, Ky., March 23, 1831, ibid., p. 496. of
*
so
"

"

believed that May 4, 1831, ibid., p. 514. It was even of Savannah, in the cabinet resulted in part from a change in the president's opinions the change Justice Johnson Court assured Biddle " that the of the Supreme about the bank.

To J. Hunter,

208 hopes

THE

SECOND

BANK

or

THE

UNITED of the bank

STATES immediately

were

The justified.
in touch

head

put himself

with the two secretaries, and was soon He was cess, now assured of their assistance. sanguine of suc2 the stockholders in their triennial and on September

authorized the president and directors "to apply to congress for a renewal of the charter of the bank" gressmen Conat any time within the three years next succeeding.1 meeting
directors at the bank who were left off the boards.2
or

its offices were

The

two

exerted their stubborn

in of sentiment Convinced chief, and with excellent success. that his own plan could not succeed, Jackson prepared to ter. accept the alternative of the old bank with a modified charchange

secretaries, acting in a their powers to produce

with conjunction

Biddle,

then argued that he ought not and McLane in his next message. to mention Jackson agreed the subject Biddle, however, on learnto this, "tho' reluctantly." ing even

Livingston

of this decision, declared that he considered it better for the bank that the president should speak, "that his silence the would not be so useful as his mentioning and

subject,"

left the matter suggested that he should say that he now Biddle entirely "with the representatives of the people." to recommend a re-charter in his report also urged McLane
At firstMcLane thought he could not go so far, of 1831. but finally acquiesced, and in the presence of Livingston the president that in his report as secretary of the informed treasury he would advocate a re-charter "in the strongest
manner

he could."

Jackson
to mention

"made

no

whatever," objection

and also consented manner which had

Bank Points Smith
1

the bank

been suggested

in the message in the by Biddle. The secretary

have

to think
on

from the present Cabinet, nay there is much reason nothing to apprehend leading that a a change of Policy on several object of the change, was Information has been elicited." W. Johnson more to B. correct which
"

for Nicholas

Biddle

R. Smith

to Biddle,

Washington,

Aug.

9, 1831, B. P.

NILES, Biddle

Vol. XLI,

p. 119.

to N. Silsbee, Nov.

21, 1831, P. L. "., Vol. IV, p. 4L

ATTEMPTS

TO

SECURE

RE-CHARTER

209

then, "with which

view

to show

his report might that the Committee of Ways and Means might choose to act upon the report, and immediately bring in a bill to re-charter,
which he, McLane,
"

the Pres't the full extent to lead," pointed out the possibility

he only that After this interview with Jackson, upon him in that way." McLane the prospects of went to Philadelphia to talk over

could not oppose. The president answered forced would be sorry if the question were

Biddle showed with its president. anxiety about the forthcoming message, and insisted that the president " "or a shade of opinion" must not express against the bank, any declaration that having once expressed his views and
the bank

having

no

reason

to change

Congress."

McLane

them, he would " assured Biddle that

now no

leave it to
such sion expres-

Jackson's position was could or should be introduced." discussed, and the secretary said that the bank should wait for until after the election before petitioning for re-cnarter, brought forward earlier, the president if the measure were
" On the consider it a defiance and act accordingly. other hand, if given time the President would probably That Livingston's this was acquiesce in a re-charter."

would

Some conversation opinion is also well known.1 the details of the bill then followed, and the two
with mutual
1

respecting
men

parted

satisfaction.2
"

Livingston
to
cease

disposed
2
me
"

said the

war

that, at this stage the bank." upon

"

of the conflict, the President PAETON, Vol. Ill, p. 395. Secretary

was

really

About

ten o'clock to-day

Mr. McLane
to Philadelphia

at the Bank.
"

He

had

come

principally

called to see of the Treasury for the purpose of conversing

to him

with He now

which there might

consequences

the President. after he had seen stated that he had seen the President, he proposed in regard to the Bank. to pursue
me

and explained He had done

the

course

no on the part of the President misapprehension to say in his report. which might result from what he proposed " He said to the President that he thought the act of Congress which directed it the duty of to report to Congress the Secretary of the Treasury made annually his own his own that officer to present responsibility and that the views and on

be

this in order that of his views and the

Executive

stood the Legislature.

Secretaries. volume
with

him (the Secretary) and between rather in the light of a moderator had always been the construction That such of the powers of the to whom I left a by Mr. Dickins infusion an (This was obviously

all the passages

marked

which

I thought

might

encourage

this opinion.)

210
At

THE

SECOND

BANK

OP

THE

UNITED

STATES

the goal it had long striven to reach a re-charter with the assent of the Biddle, Livingston, McLane and Jackson now president.

last the bank

seemed

to be nearing

"

acted under a sort of informal compact: to remain work for re-charter, Jackson present, but to sign a bill in the long run

the secretaries to quiescent for the

if his wishes were met, and the bank on its part to wait until after the election before, presenting its petition for a charter, and to accept the modifications desired by the president.
He means He proceeded to speak to explain to the President what his intentions were. to pay off the whole of the debt on the 3d of March 1833 the Government the power of of that this stock if sold out would occasion alarm in the the aid of the Bank stock with he was and the panic would sink its value whereas country satisfied that the Bank
"
"

would take it at a reasonable price, not less certainly than eight millions. This would in the most favorable manner, of speaking of the Bank give him an opportunity to a the continuance the charter of the present Bank in preference of recommending as without one, injuring the institution might be usenew with such modifications ful
to the country
strongest
manner

President Mr.

the heads

who to say in his report and showed to the President. them of what he meant by request of Mr. McLane Livingston this meeting. was present at " It had been previously understood between Mr. Livingston and Mr. McLane had

This he meant to present in the and acceptable to the Executive. he could to Congress. All this he explained particularly to the For greater precision he had put down no made objection whatever.

that the President

in the message The President the Bank. should say nothing about he could not well tho' reluctantly in this, because he thought acquiesced be silent with consistency. But in my Mr. McLane I had conversations with him be useful as his mentioning the opinion that his silence would the not so expressed The matter was Messrs. Livingston McLane therefore renewed and with subject.
"

and the Pres't and it was that having on former

resolved

occasions the representatives of the people. " Mr. McLane to show the Pres't the full extent to which his report a view with lead, said that perhaps his report was when migh't presented and referred to the Ways in his present Mr. McDuffie Means Committee and of of thinking in mode for continuing to introduce a bill into Congress to the Bank the regard might choose

the subject in this way that he should introduce brought before Congress it was the question now

left with

charter and of the Bank

entertained be sorry if the any opposition make him in that way. forced upon were question " I said it would be necessary to scan the Pres's speech so that very accurately be a shade of opinion expressed it, or any declaration that there might not against having once no to change them, he would reason expressed his views and having
now

if

so

he (Mr. McLane)

could not with the views which to it. The President said he would

he

leave

it to Congress

"c.
as

Mr. McLane
it would

said

certainly
or

no

such

expression

or

should
"

be introduced,

not be in harmony

consistency
the be

with

could his own

report.

Mr. McLane
"

bonus

said that he would be willing to charter but intimated large bonus would that he thought a
in

Bank

without and

any

required,

said

that this should be considered " Ho said that he thought this Bank wished to pull down

our stock. proposed of Bank purchase from those who the greatest danger of the Bank was in order to build up another. Mr. West That a of

ATTEMPTS These

TO

SECURE

KE-OHARTEB

211

modifications are not known certainly, but may be The governinferred from what Jackson afterward wished. ment holding stock in the bank, as may be to cease was from Biddle's memorandum seen and from his correspondence The bank would take the stock and with the secretary. in paying off the national debt, thus assist the government as suggested by Biddle to Jackson in 1829.1 The bank's
I said there were I believed some pressing on that point. talists capiNew York who were it but I thought they had and anxious about little political weight. He said that the argument was that to continue it would be Salem had
been
very

in Boston

"

for the renewal, he does not wish to be to the period of applying because it might be imputed to him that he the adviser of the Bank but he renewed he was the opinion which acting in concert with the institution doubtful (indeed he seemed inclined to be more that it was expressed at Washington it inexpedient) whether it would be expedient this year. to think to apply now considered
as
"

monopoly. " In regard

His idea

posed disbe more to the President test, he would as a The President is now account. perfectly confident of reject is the greater but he is sure less majority his election the only question or of If therefore success and wishes to succeed by a greater vote than at the first election. affecting while he is so confident of reelection this question is put to him as one
was
were

that if it it on

put

to

that very

"

"

his reelection he might on that account it were dared to do it. For what I see

be disposed
says

to put

his veto

on

it, if he be

as

Mr. McLane

Jackson
"

I think

he would then

be

more

disposed

of General of the character he he is strong than when to yield when

is in danger.
"

he

now
"

"

on now stands is this : which the matter is to say that having previously brought the subject to Congress leaves it with them. The Secretary is to recommend the renewal. he did not This latter point pleases me When I saw him at Washington much.

The
The

footing

President

think he could go examined all the Banks

so

far

as

reports

to originate a recommendation of all the Secretaries to show

"

and I left the all originated with them Dickins's hands marked, them so that he might the Secretary's attention. on urge " He thinks he can he will then press with present the tariff question strongly if he can the question of the public arrange strength the Bank question equal and lands (the surrender to them of the lands within their limits at a certain price so as
"

of the Bank and I therefore for the that the proposals in Mr. these reports of volumes

to make the landholding states pay in stock the latter have a right to the Bank would
"

States the proportion which in such good company and on put Mr. Benton such a footing that even could not attack it. " sistency On his way to Mr. Carroll's with the President the latter adverted to the inconthe new, those who pulled down to build up the old Bank and larly particuof This he then made were that foreigners stockholders. of the
to the old

be

objection

considered Memorandum This

unfounded objection. (He mentioned by Biddle, written Oct. 19, 1831. McLane interview is undoubtedly with
an

this to
that

me

at

Washington.)"

"

his Autobiography,
excepting memorandum. what

pp.

373-5.

The

account

he says

about

Webster

and

in to by Weed referred but, inaccurate, is evidently be reconciled with Biddle's Clay, may
in Weed

1 See Also Biddle to McLane, Oct. 21, 1831, offering on memorandum. of the bank to pay at least $8,000,000for the government stock in the bank.

the

part

212

THE

SECOND

BANK

OP

THE

UNITED

STATES

capacity to hold real estate was to be limited and the number than two ; the permisof officesin any state fixed at not more sion to be secured before establishing offices; of states was to be issued from the parent office, all the bank's notes were
to be permitted to have two was which officers whose sole business should be the signing of the notes, and the to be allowed to tax the branches.1 There was states were

nothing in all this to which the bank might not well agree.2 The president's message in 1831 spoke of the bank in terms which its dismayed enemies considered indicative of a change the part of the president, or at least a desire to on
avoid the issue, while the secretary's favorable report created But to Biddle's distress McLane had been a sensation.3

unable
1

to fulfilhis promise

that the president should

in chap, x, "The that he had seen

not

See the agreement Struggle for the Charter." with Livingston letter from Shippen, of Louisville, wrote Biddle a the president's " The substance letter is, that the Pres'dt does not private secretary : of the a Bill with consider himself pledged against a renewal, and that if Congress passes
proper

modifications of the charter his approval will not be withheld." in each state; (6) bank stock than two branches (a) no more individuals; by government to be sold to now (c) limitation of capacity of owned to loan money on a the institution to hold real estate ; (d) take away power pledge to appoint two officers to sign notes, and all power ; (e) give bank of merchandise
Modifications:
notes

bank; the mother (/) existing provisions in regard to government directors and deposits to remain ; (g) the corporation to be rendered suable in to Biddle, Dec. 6, 1831, B. P. state." Cashier Shippen
to issue from
2

with the administration " in circulation. The Telegraph," respecting " says Niles (Vol. XLI, p. 325, Dec. 31, 1831), with reference to the report of the secretary, ' But what will Mr. Ritchie do with the bank? What asked will he think of " he learns that a bill to re-charter the bank, the this state paper," when admirable
was,

It

of

course,

impossible

to keep

the

agreement

entirely secret, and

"

rumors

it were

soon

the sanction of the treasury and of the bank, had already received before the message The Globe to congress?'" the president, transmitted was of hereupon denied the report, saying that it was The National to do so. authorized Gazette did the same for the bank. The Telegraph thereupon that there explained

joint production

had

declared

NILES, ibid., and footnote. The New York Enquirer misapprehension. " from the most unquestionable that Blair, in the Globe, did not authority speak with the authority of the president." Ibid., p. 338, Jan. 7, 1832. 3 " The annual treasury report has caused much speculation and remark
a
"

been

"

The

'

Globe
'

'
. .
. .

dissents

the United

Enquirer in respect " For

States, and the horrors

to that

"

to the bank as of the secretary of ' the venerable editor of the Richmond they seem given but the strangely moderated tone of the president's message

from

the

opinions

to have

institution, ought to have prepared him for something." long breath since have not been able to draw a ourselves, we it until we have recovered to say what a we think of and cannot pretend Ibid., p. 281. the shock of surprise which it gave us."
" "

we

read it ; little from

ATTEMPTS

TO

SECURE

KE-CHABTEB

213

declare his opinions unchanged. On the contrary, Jackson asserted that he stillentertained "the opinions heretofore
expressed in relation to the Bank as at present organized," but deemed it his duty " to leave it for the present to the

investigation of an enlightened people and their representatives." 1 This to Biddle seemed ominous, but he expected The president's remarks too much. heartene should not have dishim, especially as Jackson repeated his trite "as The arrangement was at present organized." with McLane that there should be modifications, and therefore a bank

organized Moreover,

in

different

manner

from

the

existing
was

one.

it appears

certain

that Jackson

Writing the concessions expected. make this time, he said that his opinions had not changed; that did not differ, as some he and McLane supposed, and then McLane and myself understand each other, added: "Mr. about the prinand have not the slightest disagreement ciples,
which

willing to to Hamilton at

can sentence rechartering only mean that Jackson had agreed that upon certain points being conceded he would assent to a re-charter. The bank might with safety have continued under the agreement made with

will be a sine qua 2 This the Bank."

non

in my

assent to

bill

McLane.
suspicious and distrustful. Moreover, the comments and of the administration papers dismayed disheartened him.8 There was also a powerful attempt making bank, which he feared would to establish a new receive

But

Biddle

was

Finally his friends among the National Jackson's support. Republicans were only in conjuncassuring him that it was
1 2
3

Messages

and

Papers,

Vol. II, p. 558, Dec.

p. 234.

6, 1831.

Dec. 12, 1831, Reminiscences,

"

in that passage about the Bank, with the commentary style of the paragraph I confess shake Enquirer and the Standard, of the Globe, the Richmond tone that a President should It is not in such an ambiguous my much. confidence Biddle to Dickins, Dec. 20, 1831, P. L. B., to speak."" speak, or suffer his dependants The Vol. IV, p. 60.

214

THE

SECOND

BANK

OP

THE

UNITED
a

STATES

tion with them

that

now

was

that he could the only time.

not

secure

The

re-charter, and urging pressure was intense from

his hopes

sides, to act and haled him either way. he made it, and made open conflict with
as a

both

to act, and
was

and

fears
at last

Decision
it wrong.

necessary, and

He

the president, and

chose to enter into the bank was overthrown

consequence.

CHAPTER
THE

X
THE

STRUGGLE

FOR

CHARTER

is universally regarded as responsible for in 1832. the entrance of the bank into the political arena Clay's influence was, This opinion is mistaken and unjust. directed to this end, but it was only a minor of course,

HENBY

CLAY

in the ultimate decision. Nicholas Biddle was the to be forced into responsible actor, and he was not the man

element

any

of action which he did not approve. He Clay's position is easily determinable.

course

had

considered the advisability of bringing the bank In May, 1830, he expressed the opinion that it was to decide "on too soon the question of the renewal of the " In August he had " great doubts of the expecharter diency

early ward. issue for-

of making the application until the next Presidential Contest " was decided, and thought that the bank ought to 2 " In September he conthe two questions." avoid mixing sulted
Biddle
was
on

the

and subject,

"satisfied that it would nothing but a certainty of success

s

the latter answered that he be inexpedient," and "that

now."

advised

"an

should induce an application It was 1831, that Clay not until November, immediate having application to be made,"

changed his mind about the necessity of waiting until after Repubthe election.* The following month the National
1

Clay to Francis
Clay, p. 271.
"

Brook,

May

23, 1830, COLTON,

The

Private

Correspondence

of

Henry
2

next to avoid

possible have a tendency to mix or the two connect which would At this time he suspected it a campaign that Jackson questions." wished to make issue." J. Harper Aug. 20, 1830, B. P. to Biddle, Lexington,
any
measures

has great doubts of the expediency the application of making Presidential Contest is over, and thinks that the Bank ought as far

He

until the
as

3
*

Biddle In
a

to Clay, Nov.

3, 1830, Clay's

Correspondence,
of

p. 287.

conversation year before he thought

with that the bank

John

Tilford, should

Lexington,
two
or

Clay
three

said

that

about
asking

wait

years

before

215

216

THE

SECOND

BANK

OP

THE

UNITED

STATES

licans at the Baltimore convention in placed the bank their platform, lauding it as a " great and beneficial institution," to which Jackson had "gone out of his way " denounce immeas a sort of nuisance," diate upon whose
....

....

destruction"
over

he

was

intent.

He

was

"three

times

pledged

....

for re-chartering

to negative any bill that may be passed the bank," and would in all probability

" the extraordinary substitute which attempt to replace it by he has repeatedly proposed," and which would bestow upon the executive almost despotic power, placing in his hands

The of corruption without checks or bounds." National Republicans were son's evidently persuaded that Jackby injecting the position could be seriously shaken "the
means

issue into the campaign ; and Clay, as the leader of the in his advocacy warmer party, became of this maneuver. He declared that Jackson was deep game to a "playing avoid, at this session, the responsibility of any decision on 2 " the Bank or that now the time to never, was question," " the declining to act with any chance of success," and that memorialize"

step against" the bank must

for
a

be considered might the Clay party.3 This expect

that he
no

"as

an
a

was

electioneering plain hint that

Republicans
an

aid from
thought

the National

re-charter,

"but
to

now

application 1831, B. P.
1

be

made

by

them."

"

differently and would advise Tilford to Biddle, Lexington,

immediate, Nov.
11,

NILES,

Vol. XLI,
Brook,

p. 310.

2
3

To Francis

Dec.

25, 1831, Clay's

Correspondence,

p. 322.

branch that " he had heard on Clay told President Smith of the Washington " Bank Jackson had said Andrew or that Jackson that either the good authority" but Clay thought it was that he would go down," probable sign a bill passed must " his doubt did not before the election ; but after that Clay rejecting it" That now
or

son's Smith the time to act with any was chance of success." said that Jackfriends would consider this as an electioneering step on the part of the bank To this Clay replied that "there was aspect of the subject another against him. in general friends of the Bank, to the President, and under which those opposed
never,

might

especially after the action of the stockconsider the delay to memorialize, holders on the subject, as an electioneering step against them ; that already rumors President S. H. Smith to Biddle, circulated." of a coalition to this effect were Dec. 17, 1831, B. P. Washington,
"

STRUGGLE
unless it was Clay do not

FOB

THE

CHARTER

217

willing to lend mutual assistance.1 Biddle and to have had any interview, however ; and, seem in response to a letter from Clay, Biddle replied: "Nothing is under is yet decided, altho' the serious and
was not in Biddle's secrets, anxious consideration." for he knew nothing of the dealings with the cabinet,8 and on the very day that Biddle wrote the foregoing non-committal letter to him he declared to another correspondent:
a

subject

Clay

"My would

own

individual impression

is that such

an

application
serious

be advisable, and
*

it is at this moment

under

consideration." The month succeeding President Jackson's third annual All message was the most criticalin the bank's existence. chances for and against, expending all his energy and intellect in sifting out the various assurances given him, interviewing those

through

that month

Biddle

was

weighing

the

taking the opinion once more of the leaders his conin the cabinet, and finally sending to Washington fidentia General Thomas Cadwalader, to look

best informed,

coadjutor,

over

the ground carefully before any decision was made. During all this time he never exhibited the faintest trace of on account wavering of the opinion of either Clay or Jackson partisans, unless that opinion appealed to his intellect
as

sound
man

The

and valid. the National among

Republicans

had
was
a

most

influence in determining

ently who apparBiddle's decision

Sergeant, the party's candidate for vice-president, Philadelphian, an intimate friend, and one of the standing counsel of the bank, whose opinion was asked in every
i
'

John

It is said that Messrs

was

the Charter
on

their support
2 3

for Clay and Webster declared, that if the application the present session, that no reliance should be placed not made at Henry to Biddle, March 13, 1832, ibid. Toland at a future time."
"

Dec. 22, 1831, P. L. B., Vol. IV, p. 63.

He
says

"already

rumors

of
shows

note

3, p. 216; a remark

which

coalition to this effect that he knew on nothing

were

circulated" the subject.

(sea

*To

Nicholas

Devereux,

of Utica, Dec.

22, 1831, ibid., p. 61.

218

THE

SECOND

BANK

OP

THE

UNITED

STATES
in
were

and conjuncture

frequently

stood Webster, whose similar. On his way to Washington,

Next adopted. relations to the bank

influence

interview stopped with Biddle had pressed upon him the expediency of applying immediately for a re-charter, in opposition to the wishes he reached the capital he wrote and when of Jackson;

Webster

had

in the autumn in Philadelphia, and in an

precisely of 1831,

of the politicians there, and that the result was a strong confirmation of the opinion which I expressed at Philadelphia that it is expedient for the Bank to apply for the renewal of its Charter
saying

that he

had

conversed

with

many

"

without

delay."

'

He

was

Cadwalader

Clay party bend to the Government

in
a

assured Biddle be lukewarm "would

very that

much
some
or

set in this opinion.

of the members of the perhaps hostile, if we

footnote, "Webster

influence," and significantly added Nevertheless, if would be cold."2

Biddle chose to disregard the displeasure of his friends, one aver confidently that the party could not oppose the may bank on principle and would in the end vote for it, however
reluctantly. But the question which What would Jackson do?
assurance

tortured

him

incessantly
have

was:

If Biddle

could

from

for

that Biddle modified But it was would have acted in union with him. precisely this assurance which he could not procure, although Jackson's friends were confident that the president would yield in the
a

the president that he be charter, there can

would doubt no

received approve a bill

that he would not sign a bill now. end, and absolutely sure Senator Samuel Smith warmly counseled delay, and said that by McLane he was to say that it was "authorized" "his
deliberate opinion and advice that a renewal of the Charter ought not to be pressed during the present session The message is as much as you could expect," he continued.
JTo Biddle, Dec. 18, 1831, B. P.
2

Dec. 25, 1831, ibid.

STRUGGLE "It shows

FOB

THE

CHARTEB

219

Time would set him that the Chief is wavering." favorably right, and all of the cabinet excepting Taney were to the same disposed.1 Lewis's advice was effect;2 and this indeed, the universal opinion of the Democratic of the bank.3 When, therefore, Cadwalader went to Washington
was,

friends

as

the

bank's agent, his principal was object He had firstof all "a attitude.

to discover the president's

with Mr. McLane," who " the Bill ifthe matter is agithat the President" would tated reject this session.'11 The bank must wait.* No one, however,

long and frank conversation assured him "positively

could speak
assurance

authoritatively for the could be given Biddle was

he wrote:
abstain
to you

president, and unless disposed to act. To

Cadwalader
1 of
course

from

forming

any

I will mention
i
"

exactly my

present

definite opinion, but If Mr. state of mind.

I had last night a long conversation with McLane, and I am authorized by him to say, that it is his deliberate opinion and advice that a renewal of the Charter ought I concur The sincerely" most not to be pressed during the present session, in which
message

is

as

pressed

into

It shows as you could expect. much immediately, Corner neither McLane

that
or

But we both feel confident of ultimate consequences. 1 to convince himself of the Error into which P the if you
Every
one

is wavering. If for the answer myself will if time be given for success,
the

Chief

Opinion
converts

long
are

formed,

dice (preju-

him. Every day please) had committed the Cabinet except Taney is favorable." of

new
"

Senator

Smith

making to Biddle, Dec.

7, 1831, ibid.
2
"

I told General
the renewal

W.

pressing be construed as an would to be forced into any measure,

this winter

that Major Lewis had spoken very freely on the subject of that if the friends of the Bank it pressed it now, him on that the President was a man act of coercion not
"

"

likely to veto the bill before the and would in the one his signing it would as than afterwards, case to be the appear election fear, and in the other, of choice that General Jackson was and not a man result of R. Smith Dec. 14, 1831, private to Biddle, Washington, to be forced in any thing."
more
"
"

be

and

confidential,
3 *

ibid. Years,

BENTON,
"

Thirty

Vol. I, p. 227.

says

I have had this morning He a long and frank conversation with Mr. McLane. is agitated this session. positively that the President will reject the Bill if the matter He before the movement, (the Pres't) and those about him would regard
"

founded or as the idea that his opinions on the election, as an act of hostility induce him to truckle bend to present Mr. and that his fears would views would he would if cerMcL. is sure that under such circumstances even apply his veto, tain The question he says cannot be that he would now thereby lose his election.
"
"

"

being regarded started without Dec. 21, 1831, B. P.

as

party

one."

"

Cadwalader

to Biddle,

ton, Washing-

220

THE

SECOND
could

BANK
a

OP

THE

UNITED

STATES

reference to the Committee of Ways I would not and Means, and a favorable report of that Committee hesitate to try it,if I could rely on a of one only in each

McDuffie

insure

majority

house.1
" agreed, and said that McDuffie leans in favor but both McDuffie and he thought "it of going it now," best not to decide until after a conference with McLane

Cadwalader

a The question then was to be decided after taking and Smith." McDuffie, Smith, and the opinions of three Democrats for and two against immediate McLane one application.
" "

into the correspondintroduction of McDuffie' s name ence is significant. It was between Biddle and Cadwalader he, and not Clay, who took the principal part in bringing

The

the bank

his advice that was asked As chairman of the Committee of Ways and and followed. Means, as a Calhoun man, and as the leader of the very few
was

into the field. It

representatives from South Carolina in favor of the bank, his support was not less important than that of Webster or that of Clay, and have would
now was

had

he

at any moment

advised

delay, delay
that that
act.

followed.
time.

He

the

On

positive, however, the 29th Cadwalader wrote

was

McDuffie He
was

and
sure

he

were

convinced

that the bank

must

that the president would "never sign" and that it was advisable to put the question before the people in order that the country might get to the point where a twoMcDuffie and he thirds of Congress might be had.

majority

had listened to McLane's

arguments and thought nothing of The conference between the four men them.3 changed in no the ultimate respect the opinion of the two in whose hands was decision. Biddle was equally certain that the time had
i 3

To

Cadwalader,

Dec. 24, 1831, B. P.

To Biddle, Dec. 25, 1831, ibid.

"The

though
"

down.
if
a

future time, as at any President would be at least as likely to sign now, I have got leads me to the belief that he will never sign." all the information is the time. If you delay a session you might as well lie McDuffie insists that now McDuffie and I have heard McLane's talk and think nothing of it." He thinks it is desirable of two-thirds

veto is certain, that

majority

in order that the people may now elect a congressional for the bank bill." To Biddle, Dec. 29, 1831, ibid

STRUGGLE
was

FOB

THE

CHAETEB

221

to forward the bank's ready at any moment He waited, however, until Cadwalto Congress. memorial ader's return to Philadelphia, that they might talk the

arrived, and

matter

over

together.1

firmly with Cadwalader only fixed him more in his resolution, but action was still postponed until McLane delayed, and on This was could send in a communication.2
Conversation

tor the 6th of January, 1832, Biddle notified McDuffie and SenaSmith that the application would be made,3 and forwarded to Senator Dallas.4 He wrote Webster also,5 the memorial
hesitation, no sign There was but sent no word to Clay. no " I have scarcely given to any of being forced into the step. deliberate attention than I have bestowed on question a more this, and

after procuring all the information within our power, and deliberating upon it long and anxiously, I have His reasons made up my mind on the clearest convictions." for it now; that the stockholders were unanimously that delay would put the question off until 1834, a date too the expiration of the charter; that the question was a near
were:

business, not

political one; that postponing on account of the election would in effect be a discrimination against the National Republicans; that the president had three times
a

brought

mated question and therefore distinctly intithat it ought to be settled.6 He laid particular stress upon the argument that to postpone would be to discriminate in favor of Jackson and so make the bank a politicalissue7
the
"

forward

i"I

am

waiting
a

anxiously memorial.

for

some our

it, we

and all my reflections go that in my mind when I found that Mr. M. though was way. almost settled be vexed. In truth I hope he will be friendly." He added that opposed would not he was Stories to that effect had that the president not sign. convinced would him which rendered him sure Dec. 30, 1831, ibid. reached of it. To Cadwalader, will send you The question
"

All

signal to move information

"

and

the moment

you

hoist

2 s 6

To McDuffie,
Ibid., pp.

Jan. 5, 1832, P. L. B., Vol. IV, p. 79.

*Ibid., p. 81.

80, 83.

*Ibid., p. 89.

To J. W.
"

Webb,

Jan. 5, 1832, ibid.,

pp.

74, 75.

Now

if we
we

the Presidency,
party

it on account postpone in fact take the side

we

to the election,

violate

our

of its effect on one of that candidate. Ibid. neutrality."

"

for of the candidates We make ourselves a

222

THE

SECOND

BANK

OP

THE

UNITED

STATES

an

argument which would not have been hazarded six months earlier. On the very day that Biddle wrote this letter McLane diate sent his deferred protest, deprecating immeabsurd

not elected application, arguing that this Congress was to decide the question; that it would inevitably get mixed would be up with the presidential election; that Jackson offended ; and that, since his advice had not been taken, he

could not interpose against a veto.1 That Biddle in giving his reasons had not exhausted the arguments for the bank's action is self-evident. The opinion
was

firmly held by the Clay

would defeat Jackson. Pennsylvania ; if he failed to veto, after his past position, he These were votes. would lose many southern and western
the determining

that application at that time If he vetoed the bill,he would lose

men

political considerations with the National Republicans,2 and it was the belief in the influence of the former upon Jackson which gave the bank a hope, though but a slender one, that the president would yield. Yet this
very motive

for acting must draw down for the act determined by

demnatio upon the bank conit inevitably linked political party, to be decided by
a

the destiny of the corporation

with that of

question of re-charter one It is inferable, politicalrather than by business considerations. letters that another motive also, from Cadwalader's
making influencing
the

the

the bank two-thirds

was

the hope

that if Jackson

bill

of majority

Congress

vetoed favorable to This

re-charter could
was
1

be secured

at the coming

elections.

preposterous.
Jan. 5, 1832, B. P.
"

to told me that he had most earnestly urged Mr. Clay not to attempt bill at this Session, insisting that, if deferred to the next Session, he a pass be bill so framed was as satisfied that he could by that time, and by a Bank would induce Jackson it. But that Clay persisted to approve as useful as was necessary,

McLane

Bank

in the
those

hope

that, if the President

of his party

who

others who approved President the vetoed Hamilton to a friend, March

lose the support the bill, he would of approved his opposition to the Bank, and a vast many approved And, on the other hand, if the system. of the State Bank bill, he would lose Pennsylvania J. A. and his election."
had
"

14, 1832, Reminiscences,

pp.

243, 244.

STRUGGLE
Both

FOB

THE

CHABTEB

223

bitterly offended by the were and McLane bank's action, and felt that they had just to complain. reason Jackson in particular must have been deeply irritated,since

Jackson

persuaded to soften his message on the understanding that the bank would not make application until He did not leave his friends in doubt as after the election.1 to his attitude. When informed that the to force was
he had been

object
never

him

to assent

to the

bill

or

to lose Pennsylvania's

vote, he

retorted:

"I

will prove
when

to

them

that I

flinch; that
me

they

were

mistaken

they expected

to act upon

by

decide for itselfthe time and mode of applying for re-charter, but it selected its own champions. General Samuel Smith, who, as chairman of the

such considerations."2 Not only did the bank

Senate Committee

on

Finance,

would

have

been

the logical

person to present the memorial, was set aside, because it was nation, feared that he would not press the bill with sufficientdetermibank Democrat, and Senator Dallas, a Pennsylvania
Dallas was selected in his stead. gratified, having desired the distinction as the son generally of the man credited with being the creator of the bank, and he assured
was

Cadwalader

that he would

not

In postpone the measure.3 of Ways of the Committee

yield to Jackson's wishes to the House, McDuffie, chairman the bank's was and Means,

chosen leader. On the 9th of January, to the surprise of the of majority had "calculated both its "friends and foes," few of whom
1 Senator hurt, and would Smith said that McLane the bank." was not support " I understood him to say that the President C. J. Ingersoll to Biddle, Feb. 5, 1832, B. P. the understanding that he should not have the on toned down the last message Feb. 29, 1832, ibid. It is eviSame to same, dent, question up until after the election."
"

too, that the

2 3

movement

compromised

McLane's

position

in Jackson's

J. A. Hamilton

to

friend, Washington,

March

14, 1832, Reminiscences,

cabinet. p. 243.

It was to Biddle, Dec. 29, 1831, B. P. that no Cadwalader also determined it being considered best to National Republican should be intrusted with this task, This is in direct opposihave a partisan the bill. Ibid. tion present of the president Public Men Sargent says Biddle told him." SAEGENT, to what and Events, Vol.
"

I, pp. 213, 214.

Sargent

is, of

course,

mistaken.

224
that

THE

SECOND

BANK
be

OF

THE

UNITED

STATES

memorial

would

bank's application was made chagrin of the ardent bank using

presented this Session,"1 the in both houses. Dallas, to the

men,

which the bank wing of the Jackson party to the present application. He wished it understood that he had discouraged the presentation, because he considered it too early, and because this particular Congress had not been elected for the purpose of deciding the issue.2 did not leave its memorial unsupported. Biddle ton sent Horace Binney, a remarkably able lawyer, to Washingto see the bill through Congress, and at the same time
The

language

his part but indifferently, revealed the opposition of played

bank

busied

himself

state banks

in securing petitions for the re-charter from and merchants throughout the country.3 He also

exerted

lature all his skill to procure a resolution from the legisof Pennsylvania instructing the senators and requesting in Congress to vote for the bilL the representatives
in February

that this attempt had been completely successful, the legislature passing the instructing resolutions by an almost unanimous vote.* At
was

Early

Biddle

informed

the

same

moment

he

was

told by

intimate footing with Jackson be induced to sign a bill.5 At

once

friend who an was on that the president might still

a

reverted to his former project charter with the assistance of Jackson. of securing a new How little he felt bound to the National Republicans is apparent by
1 2
*

his active mind

from

his immediate

decision to leave them

completely

and throw himself upon the president, as well as his declaration to Charles J. Ingersoll that he cared
John
C.

Connell to Biddle, Washington,

Vol. VIII, Part
in the

Jan. 10, 1832, B. P.

3

-D.,

I, p. 54.
senate
; in the

P. L. B., Vol. IV, pp. 96-116.

a

Unanimously
p. 436.

house

by

vote

of 77 to 7.
"

NILES,

Vol.

XLI,
5

S. E. Burrows

to Biddle, Feb. 5, 1832, B. P.

Burrows that

says

three with

days

with

the

president, and

is confident

the bank

that he has just spent be re-chartered can

Jackson's

consent.

STRUGGLE
"nothing chagrin
moment.

FOR

THE

CHARTER The
did

225 Clay's for

a

about the election." and Webster's coldness

'

prospect of not deter him

he urged Dallas to take the 6th of February legislature to Jackson, the resolutions of the Pennsylvania

On

the state, and offer in the name of the directors to accept a bill with modifications.2 At the he asked Ingersoll to take similar action. same moment
warn

him

not to anger

delegation press it upon the president ; if you cannot and Livingston started; "Try get McLane The bank could not bring it about without loss of time." withdraw
the
the bill,but
measure, was

Let the Pennsylvania

perfectly willing to make

it

an

administration

president might Ingersoll, on the contrary,

modifications accepting whatever desire.8 Dallas disappointed him.4

was

delighted with the plan, and He hastened to Livingston eagerly seized the opportunity. Livingston agreed and presented Biddle's letter to him. the correct one, that the procedure was and said that the
the bill on not oppose would constitutional on the frame grounds, "but had certain notions of his own Let him of the charter which ought to be complied with."

president

frame it to suit himself, replied Ingersoll. Livingston then the success said that he would attempt to secure of the plan ; that McLane could not remain neutral ; and finally outlined
the

modifications insist.5
Livingston

upon

which

he

thought

Jackson

would

him joined

approached the president at once, and McLane in the attempt to secure JackJackson's assent.
president,

iFeb. 13, 1832, P. L. B., Vol. IV, p. 167. 2 In doing this he his own fortune. The Please tell him so. would make too, would be elected." Biddle to Binney, Feb. 6, 1832, ibid., pp. 150, 151.
3
*

Feb. 6, 1832, ibid., p. 152 ; also Feb. 9, 1832, ibid., p. 162. Biddle to Ingersoll, Feb. 13, 1832, ibid., p. 168.

War See Ingersoll's account, Ingersoll to Biddle, Feb. 9, 1832, B. P. of 1812, II, p 268, where, however, he does not mention his own Vol. agency. The modifications mentioned by Livingston to possess as follows : The bank were to tax the only real estate enough" to carry on its business ; states to be permitted

branches

; some

additions

to be made

to

the capital,

so

that

new

subscribers

to the

stock might

be accommodated.

226

THE

SECOND

BANK

OF

THE

UNITED

STATES

that the particularly anxious to be a stockholder, and also should cease government desired the modifications already mentioned.1 Biddle was pleased to hear this, and declared that the bank would go
son,

said

Livingston,

was

"Let him nine-tenths of the way to meet the president. take the charter and make any changes he likes, let him hands. I am sure write the whole charter with his own
would agree to his modifications; and then let him He will and his friends pass it. It will then be his work. On the 21st of February then disarm his adversaries."1
that
we

Ingersoll wrote that Livingston had " got most if not all the President's advisers to second our movement and that 3 In another letter of the same he thinks it will succeed."
date he transmitted the intelligence that the entire cabinet, On the 22d he with the exception of Taney, was favorable.

had

decisive interview

the modifications which The government upon.

to continue

with Livingston, who outlined the president had finally determined

was

not to hold any

on

appointing

directors
at least
one

in addition to appoint

stock, but was the parent board, and director at each of the

offices; the

states

were

property at the same state banks ; no real estate was These was absolutely needed.
His

to be permitted to tax the bank's rate used in taxing the property of

to be held excepting
were

such as the president's terms.

several others: a certain proportion of to be open to new the capital stock was subscriptions, the directors were two or three of their number, and to nominate the president of the United States would appoint one of these

friends added

president of the bank.*

1 2

Biddle

agreed to all of these terms

Ingersoll to Biddle,
To

Feb. 12, 1832, B. P.

C. J. Ingersoll, Feb. 13, 1832, P. L. B., Vol. IV, p. 167.

3 *

Ingersoll to Biddle, Feb. 21, 1832, B. P.

Livingston

agree

said : to the President's

"

them recapitulate I make suppose

would ascertain from him whether the Bank will to charter, and he proceeded views of the terms for a new fail me in some As my said I, memory particulars, might Very well he rejoined, and accordingly note written of them.
"

I wish

you

STRUGGLE
the last,which

FOB

THE

CHARTER

227

All passed without mention.1 was now pleased that considered settled, and Biddle was finally, after three attempts, the goal would be reached, with What Clay the dismayed the consent of the president. excepting
would say to this he neither asked nor, apparently, The welfare of the bank, and not the election of cared. Henry Clay, was His the consideration which swayed him.
men one

he

fear

now

in which with the

that the friends of the institution, in conjuncti its enemies, might postpone the bill,2 some with of the plan of securing a charter in agreement case
was

administration

would

fall to

the

ground,

since

I sat down when done

at his desk, made

"

and

we

that I would

submit

the enclosed minute with his assistance, read it to him declaration of his desire parted on the footing of his unreserved be." them for your approbation or otherwise, as may
THE INCLOSUBE

"

"

1. No government 2. Appointment 3. Government 4. Taxation

"

interest in the bank. directors of one and more there. represented

at the branches.

"

real

or
"

by states of property i. e. property in bank whether of bank to be liable to same taxation of State as their own personal rule of property. 5. No debts and to be sold in real estate except such as b'ot in to secure
" "

time. reasonable 6. Government

"

to have

no

interest in Bank.
new

"7.
may

be done
"

for open proportion of capital thrown from present capital. by pro rata deduction 8. Directors to nominate two or three friends of them
one a

Certain

subscription,

which

President

of the United
read
to

States to choose
"

President.
in Mr.

22d February written by him. sanctioned In the body follows

"

Livingston's

house

and
the

presence,

and
as

C. J. INGERSOLL."
again
wrote out

of the letter Ingersoll

no

conditions

revised

1. Government 2. President 3. The 4. Bank

"

to appoint

"

States

interest in the Bank. a director at each branch. to tax its property as they tax own.
such
as

to hold no real estate except debt, and to part with in set time. of " These the Pres's terms.
"

"

was

taken

in payment

or

security

any

to new open proportion subscriptions. of capital stock to be thrown President's, but Mr. L. seems "This not to be very tenacious of it. " President to appoint to nominate 6. Directors of whom annually 2 or 3 persons President of the Bank. one
"

5. Certain

This neither Pres's Biddle

wrote
out

nor

L's, but others.""

Ingersoll to Biddle, Feb. 23, 1832, B. P. without

reservation."
2

Biddle
"

to them at length the other five points, and assented to Ingersoll, Feb. 25, 1832, P. L. B., Vol. IV, pp. 247-50.
"

the greatest danger now." Vt., Feb. 27, 1832, ibid., p. 189 ; also to J. W.

This

is

Biddle Webb,

to Herman

Allen, of Burlington,

Feb. 20, ibid., p. 176.

228
the

THE

SECOND

BANK

OP

THE

UNITED

STATES
to

president

would

prefer

postponement

any

action

fair prospects were blighted by unexpectedly what appears on the surface to be a remarkable fatality,but may show to have been no chance which fuller knowledge It must be recollected that Congress thus far had medley. decisive step on the so subject, that the president considered himself as yet unfettered in his action. Just at had apparently been reached, the moment when agreement taken
no

whatever. All these

the inveterate enemy of the bank, resolved that Congress should act, and in such a way as would preclude for the time being any further consideration of the

Senator Benton,

plan
with knew

now

before Jackson.

Was

he

acting in

conjunction
the

those

what the skilful moves of Biddle Jackson himself playing fast and Livingston ? The latter

of Jackson's advisers who opposed being done, and had determined was

bank,

to checkmate

conjecture
from

and Ingersoll ? Or was loose with McLane and is rendered probable by

to Jesse

letter of February 16 Hoyt, wherein he says :

a

C. C. Cambreleng

Clayton of Georgia has a resolution prepared and will in he can I the as offer it as soon -it will cover objects view director who has a confidential shall see the President to-night the spot. You need not fear but what we shall take care of the on Judge
" " "

Mammoth

in

some

way

or

other.1

Certain it is that the opponents of the bank had resolved that the institution should be investigated. The result would be fatal to the bank's hopes. The until after investigation, and did not show it certainly the bank spotless,2 which would not do to Jackson's satisfaction. Benton' s account of
1

president would do nothing tion nothing then if the investiga-

MACKENZIE,
"

Lives

of Butler

and

Hoyt,

p. 101.

On

bill be passed, on this point.

the other hand, should that enquiry not be made successfully and a Bank the President will most certainly veto it. He is open and determined I conferred to a with him yesterday on the subject." J. A. Hamilton
"

friend, Washington,

March

14, 1832, Reminiscences,

p. 243.

STRUGGLE his
is that he

FOB

THE

CHARTER
to employ

229
this
in

maneuver

wished

means

He order to furnish campaign material against the bank.1 and his friends therefore determined that an investigation of
its affairs should be demanded in the House. This would " If the investigation place the bank party in a dilemma.

denied, it would be guilt shrinking from detection ; if admitted, it was well known that misconduct would be found."2
was

A. S. Clayton, of the House, with a number of charges of misconduct and violation of the charter, and investigation.8 the 23d of February Clayton demanded on an

Benton

provided

fatal to Biddle's well-laid plans. The president " must needs await the issue " of the inquiry, investigation must take place; said Livingston;4 and an if the president was there must be no shirking examination, The
act
was

immediately

to do anything

ston the 6th of March Livingasserted that the president would assuredly have signed it not for the action of Congress ;6 the bill agreed upon were
in "nothing and on the 14th he repeated that there was 7 The president's position, however, the way but the Inquiry." Neither he nor now was completely changed. any knew what other man Clayton's demand
he would do.8 for an investigation

for the bank.5

On

by the bank's
for
some

supporters
reason

after

heated

acceded to debate, McDuffie

was

unknown

conditions
1
"

unfavorable

allowing it to take place under Stevenson, to the bank.9 Speaker

"

was of action became obvious, which assail at all points, display the evil of the institution, rouse Thirty Years, Vol. I, p. 235. them to sustain the veto."

Our

course

to attack the people

"

incessantly,
and
prepare

"

2
5

Ibid., p. 236.

ibid., pp. 237, 238.

3, quoting

Ingersoll to Biddle, March

ibid. to
same,

1, 1832, B. P.

Same Same Same

what

to to

same, same, same,

March
March March

Livingston,
7

6
8

6, 1832, ibid.

Same

March

14, 1832, ibid.

to the

11, 1832, ibid.

Had

know

President

satisfactory
9

interview"

Same will do." Livingston, but nothing with

talked with Lewis, March 14, has to same,

to be done
yet.

who does not had "the most

"

Vol. VIII, p. 483. His action, said Ingersoll, was a " he is politically either a coward or a said to Ingersoll, capitulation." To Biddle, March 2, it was Ingersoll thought traitor." and coolness. want of nerve that MeDuffie's object was to 6 Ingersoll concluded, however, 1832, B. P. On March
See

ADAMS,

Memoirs,

il

Adams

"

230

THE

SECOND

BANK

OP

THE

UNITED

STATES

who

was

an

uncompromising

enemy,

with an anti-bank majority. however, to substantiate a single one of the multifarious ing charges. Indeed, the report showed total ignorance of bank-

mittee appointed a select comfailed, The committee

incompetence the on operations and an astounding They were bewildered by the heaps part of the majority. of abstruse documents placed before them, they had no

training hearted

kindin monetary affairs, and, worst of all, no bank president volunteered to lead them through The
result
was was an

the doleful labyrinth. and blundering

sistent absurdly incon-

refuted by the minority, and torn to tatters by a minority of the tive Quincy Adams, whose talents for invecminority, John to better never and scathing denunciation appeared completely Clayton's report was ure, not only admittedly a failadvantage. laughter by but it was greeted with shouts of Homeric " He I almost pity Clayton. every man of understanding.
is quite prostrated," wrote Watmough to Biddle,1 and Niles declared that the report made converts to the cause of the bank.2 Nevertheless,
ones were mistaken, understanding conthe people," who do not need to understand, were vinced that something was wrong with the bank, and they its fate.3 More important to determine still for the was

report, which

the

for

"

were

moment
press

the effect upon

before the bank.
"

Jackson, who
To

was

convinced
disgusted.
"
"

the tariff question

To C. J. Ingersoll, March
acquiescence
1 2
were

4, 1832, P. L. B., Vol. IV, p. 202. Everett, March To Edward unfortunate."

"

Biddle, ibid. Biddle was He considered

10, 1832, ibid.

McDuffie's

May
"Some

2, 1832, B. P.

who

had doubts as to the correctness of its [the bank's] proceedings, who its enemies, by the showings that all was of right 1 and others, satisfied the institution, have laughed so much were at the solemn arraignment opponents of
"

....

and

now

of the charges and statements feel entirely willing to renew

powers
"

of the institution." The fate of the bank and the condemnation are unconsciously of its opponents in these words : " Certainly the great business community, by Benton pronounced for the bank, with few exceptions, comprising wealth, ability and education, went
present
3

against it, as to become quite good-humored, its charter, with a few modifications of the NILES, Vol. XLII, p. 209.

and the

masses

for General

Jackson."

"

Thirty

Years,

Vol. I, p. 228.

STRUGGLE

FOB

THE

CHARTER

231

that the charges had been fairly established.1 So much may be gathered from his veto message, wherein he declares that
" the examination was unwillingly conceded and so restricted it incomplete and unsatisfacin time as necessarily to make tory," to excite suspicion and but yet it disclosed "enough

alarm,
....

....

enough

to induce
a

of majority the

committee

to recommend

the bill and a to have been

suspension of further action upon prosecution of the inquiry," and that "it was
....

would expected that the bank itself, its application for the present, and demanded have withdrawn 2 Jackson, the severest scrutiny into all its transactions."
then, confirmed in his suspicions of the bank's integrity, tors believed that the investigation imposed upon the directheir application. The plan the duty of withdrawing
was

and

of re-chartering the bank longer tenable. no

at this time with his consent

was

It remained to do one of two things: either to withdraw the bill,or to press forward in the hope that the president could be persuaded to assent or that the necessary two-thirds

majority
measure
now.3

for the bill could be secured. Rumors that the would be deferred had existed, and they revived But on The inexorable. this point Biddle was

without a tacit confession could not be withdrawn in having presented it. The leaders of the National of error Republicans were also resolved that there should be no
measure

postponement.4
l
"

It

was

this dogged

resolution to press for-

mated. I anticipated to be precisely such as you have intiaffairs of the Bank When fully disclosed, and the branches looked into, it will be seen that its that could add to its strength corrupting influence has been extended everywhere

The

and

secure

its recharter." p. 244.

and Papers,

"

Jackson

to

James

A. Hamilton,

March

28, 1832, Reminiscences,

2
*

Messages
"

Vol. II, p. 589.

....

McLane

to Biddle, April 8, 1832, B. P.

to carry

that they were confident of their ability replied though the bill should re-chartering the bank, even a presidential encounter veto ; but that they could not be responsible for the result if,in the heat of the contest, the bank, abandoning its reliable friends, should strike hands with its foe."" WEED, Vol. I, p. 374. See corroborative stateAutobiography, ments in INGEBSOJLL,

Messrs. Clay and Webster Congress a bill through

Vol. II, p. 269.

232

THE

SECOND

BANK

OP

THE

UNITED

STATES

tution, ward, despite Jackson's opposition, which ruined the instibecoming " the great cause of the conflict which arose

between

the

Livingston's

l and the President," and it explaina assertion that the veto "could not have been

Bank

avoided; the managers of the bank Nevertheless, though determined

drew

it on

themselves."*

to prosecute the attempt

notwithstanding the opposition of Jackson, Biddle resolved to approach him once On the 20th of May he took more. in to manage the campaign up quarters in Washington person, and
so near

immediately

success

out

McLane him
on

with

to return to the plan attempted before the fatal investigation. He sought and had a "full and frank conversation'* He then saw Livingston. He the

subject.

that the investigation had resulted so favorably argued for the bank that it disarmed, "or ought to disarm some of

Consequently Jackson the hostility hitherto entertained." gation, could revert to the project agreed upon before the investibeing willing to accept "such the bank cations modifiIt would be agreeable to the administration." before Congress, was awkward, he said, to have "the measure to which it belonged had no while the Department zance cognias

of it."

McLane

and

Livingston

probably consulted the president, and sense of the cabinet. But the situation
assured : Jackson irretrievable." withdrawal
1
2 3

conferred together, more the took once

was

unchanged.
was

Livingston

Biddle

that

"the

awkwardness by

would

be

satisfied only

the

of the

measure.

Ingersoll to Biddle, Washington, Livingston

"On to Dallas, Ang.

Jan. 18, 1833, B. P.

28, 1832, HUNT,

Life of Livingston,

p. 370.

on

my arrival I began with a full and frank conversation with the subject of the Bank Mr. Livingston saw and at his suggestion
"

Mr. McLane
after which

"

they conferred and I saw " The general purport given

a
new

Mr. Livingston.

was this. The investigation has of my communication it disarms, or ought to disarm tility some of the hosaffairs hitherto entertained it, and furnishes a new for pressing a towards motive decision. Under these circumstances it would if the Executive be very agreeable in promoting concur the object would which we would gladly attain by accept-

aspect

to

our

"

"

STRUGGLE Having

FOB

THE

CHABTEB

233

failed in this last attempt, nothing remained but to the dent to press the bill,1 making it as unobjectionable presias possible, in the hope that his assent might thus be
As Biddle knew secured. precisely the kind of a charter which the president could be brought to compromise upon, the task was not difficult;and a reading of the bill to continue to the bank will show that some attempt was made
meet

the president's wishes.2 After the interview with McLane

a

conference with McDuffie determined to take up the bill in the Senate first.3 Accordingly on the 23d of May Dallas, reporting from the Select

had

and Livingston, Biddle and Webster, and it was

Committee

which

the petition for re-charter had been committed,* to the original charter outlined the amendments A number the bank party was willing to grant. of
to which

was other amendments suggested, both by the friends and The southerners wanted the by the enemies of the bank. rate of interest lowered,6 and it was proposed that, instead of

demanding

bonus, the rate should be 5 per cent.6 Mangum thought that this concession would tend most materially to " in the South." T Other amendments allay public excitement that no branch should be established offered demanded
a

ing such modifications be agreeable to the administration. I stated moreas would over before Congress while the extreme awkwardness of having such a measure it belonged had no cognizance to which the Department of it and my anxiety to
"

cooperate

detail

in modifying I need not and perfecting the measure. of their situation which makes them passive and all that I could peculiarity learn from Mr. Livingston irretrievable was was that the awkwardness and that it to make the bill as unexceptionable as possible. only remained
with
"

the Executive

"

We
"

have

then parted myself

good

friends."" Biddle

to Cadwalader,

May
"

30, 1832, B. P.

I then betook

seriously to the

passage

of the bill."

Same

to

same,

ibid., loc. cit.

2

to the

In these points : Not more than two offices in each bank's business not to be held more than
"

two officers to sign its notes." appoint 3 Biddle May 30, 1832, B. P. to Cadwalader,
*

sary state ; real estate not necesfive years ; the bank might See Ingersoll's remarks, Vol. II, pp. 268, 269.

Note

the absence

of Clay. excepting

Dallas, Webster,

Hayne,

Johnston,

Hayne." 5FOBSYTH,
6

C. D., Vol. VIII, Part

and I, p. 55.

Ewing.

All friends of the bank

June

6, 1832, ibid., p. 1045.

BIBB,

June

4, 1832, ibid., p. 1022.

TMANQUM,

June

5, ibid., p. 1030.

234
in
a

THE

SECOND

BANK

OF

THE

UNITED

STATES

the state's consent ; that branches should by the states;1 that the president of to be subject taxation the United States should appoint all the presidents and onestate without

half of the directors of the bank and its branches, who need not be stockholders;2 that the bank should be required to take any of its notes at any of its branches in payment of debts from
*

individuals;8 that its monopoly stroyed should be dethat members of Congress and officersof the government

be prohibited from holding stock ;5 that in interest should the public deposits exceeded $1,000,000, case 6 be charged at 3 per cent. ; and that foreigners should not be should permitted to financial stock.7 It is apparent that allthese amendments contemplated no fixed plan of improving the bank as
own

only one which could be so considered that compelling it to receive all its notes from was The remaining amendindividuals in the payment of debts. ments looked to depriving the bank of power and efficiency
a

concern.

The

for the benefit of state rights or of state banks, or else were intended to diminish its profits. They were offered mainly
the bank and assisting with the purpose of embarrassing All new Jackson in the coming amendments campaign.8 bank were with rejected the exception of one compelling the to furnish annually to the secretary of the treasury a list of

foreign stockholders, and to any state treasurer, on demand, list of stockholders resident in his state; and another a allowing Congress at any time to prohibit the issue of all
notes of
a

Even

the bank
i 3 B

than twenty dollara smaller denomination Biddle was warned to pause, and at this juncture Democrats appealed to him to defer the bill.9 He
June
6, C. D., VIII, Part I, p
1043.
2

MAECT, IDEM,

BIBB,

June

1, ibid., p. 1005. 2, ibid., p. 1007.

ibid., p. 1007.

*BENTON,
6
8

June

IDEM, ibid., p. 1010.

BENTON, June 2, ibid., p. 1010.
as

WHITE,
Thirty

June 6, ibid., p. 1045.

Years,

Vol. I, p. 236. bill if "pressed

SBenton
now.""

said INGEESOLL,

late

as

June

2 that Jackson

would

veto the

Vol. II, p. 269.

STRUGGLE On

FOB

THE

CHARTER

235

refused.

sylvania the 9th of June the resolutions of the Pennlegislatureinstructing their senators and asking their

representatives to vote for the bill were presented in the Senate. Two days later the bill passed that body by a vote ' sentatives of 28 to 20, and on the 3d of July the House of Repre-

by

vote of 107 to 85.2

The

vote in the Senate

is significant of the position of various All the New England the question. on

parts of the Union

senators

voted aye ; of the senators from the excepting Hill of New Hampshire middle states only three were opposed, those from New York
one

and only from

and Southwest favorable, those from Louisiana and one three were Mississippi. All the western favorable states were

from

New

Jersey.

In

the

South

Illinois,and Missouri, which divided excepting Kentucky, The determined opposition was from the South their votes.
and Southwest.3 The new the original provisions modified and improved act. The bank was given a renewed lease for fifteen years ; have two or more it might officerswhose sole duty should
consist in signing its notes of $100; it was to issue "no branch
a

less denomination
bank drafts, or

than

paper not payable at the place where issued" nation denomination of $50; it was to pay all notes of a less denomiissued; it must at the bank and at the officewhence

other bank under the

offices tendered in payment receive all its notes at whatever of debts due from state banks ; it must not hold for a longer

period than five years real estate in

1 Senate

excess

of what
then

was

neces-

Journal,

22d Cong., 1st Sess., p. 345.

Biddle

returned

to Philadelphia.

2 3

House Senate

Journal,

22d Cong., 1st Sess., p. 1074.

Journal,

Rhode

Island,

mont, 22d Cong., 1st Sess., pp. 345, 346, June 11, 1832. For : Maine, Verware, DelaMaryland, Pennsylvania, Connecticut, Massachusetts,

Ohio,
North Illinois, New Maryland,

Indiana,

Louisiana.
Alabama,

Against:

New

York,
:

Virginia, South
New
Hampshire, for
:

Carolina, Kentucky, 22d Cong.,

Carolina, Tennessee,
Delaware,

Georgia.

Divided
Senators

Jersey, Missouri,

Mississippi. against:

instructed
House

Pennsylvania,

Louisiana;

New

York."

Journal,

1st Sess., p. 500.

236

THE

SECOND

BANK

OP

THE

UNITED

STATES

sary for carrying on its operations; it must not have more than two offices in any state where more than that number to pay an were not already established; it was annuity of

$200,000 to

the United States ; Congress

issue of any notes of less than furnish annually to the secretary of the treasury a list of foreign stockholders, and, on demand, to the treasurer of any state a listof stockholders resident in his state.1

might prohibit the to $20; the cashier was

skilfully designed to satisfy the and that powerful opposition of states and state banks aroused by the issue of branch drafts, but they also achieved amendments
were

These

that of amending the commendable purpose currency by modifying the bank's privileges of issue. The attention of Congress was evidently fixed on this question This was almost to the exclusion of any other. natural,
a

much

more

"

because the issues

at that day, and

were were

the absorbing

of subject important

discussion than

much

more

later,

because

deposits constituted a relatively small part of the bank's currency. The amendments were consequently of Thus importance. to have officers the permission much whose sole duty should be the signing of the bank's bills

would permit the issue of sufficient paper to supply the South It would also render counterfeiting more difficult. and West. The prohibition of the issue of branch drafts would terminate

the
and

use

of

an

irregular currency, which

was

might

be dangerous,

to the laws that certainly not amenable applied to the rest of the bank's issues ; the clause compelling the bank to pay all its notes of a less denomination than

which

at the place of issue would make notes payable at these places, as well

$50

almost all the bank's bank; as at the parent

it would tend to destroy the slight depreciation which existed, and to place a check upon over-issues, since the notes would

be

more
1 Senate

easily redeemable
Journal,

than in the past ; the necessity of

See Appendix IV for the bill.

22d Cong., 1st Sess., pp. 451-3.

STRUGGLE

FOB

THE

CHAKTEB

237

all notes from state banks would operate in the same way, but to a much greater extent, since it would have meant virtually the receipt of all notes at all the officesfrom Individuals with distant both the state banks and individuals. accepting branch
notes

would

have deposited them

to accept

in state banks

and the state bank in payment they of balances when would would would of necessity be received. The arrangement therefore terminate all depreciation ; it would do much more if the branch refused then offer them
them,

than this, for it would materially reduce the bank's ability to control the issues of the state banks, giving the latter a power to draw specie for notes not issued by the particular
offered. The inevitable diminish its business in must result would order not only to retain control of the state banks, but also to prevent them from securing ruinous control over it. The in turn be compelled to diminish their state banks would

branches

at which

the notes be that the bank

were

effect would certainly not have been a business point of view, since it would place but it the tendency to over-banking; new restrictions on to the bank that Biddle protested would be so annoying accommodations. from injurious
was useless, vigorously against the provision.1 Remonstrance for Senator Ewing, who championed the amendment, declared flatly that unless it were incorporated in the bill

The

of the western Under its operation many

members would not vote for the bank.2 the bank's notes would have been as

convertible as the notes of the present national banks. Similarly, the clause permitting Congress to prohibit the issue of all notes less than $20 would, if Congress used the power granted, materially reduce the bank's circulation in All the defects of the bank's the interest of the state banks.
note issues would

have been

supplied if the bill for the

new

charter had succeeded.

i

To H. Binney, Binney

Feb. 18, 1832, P. L. B., Vol. IV, p. 181.

2H.

to Biddle, Feb. 14, 1832, B. P.

238

THE

SECOND

BANK

OP

THE

UNITED

STATES

Stillanother clause which would have had a far-reaching effect in improving the character of the bank's business was
that providing that the corporation should not hold longer than five years real estate acquired for other than its necessary business operations. The result of this clause would have been to diminish the temptation
"

to loan

on

a practice and other real-estate security which in In responsible for the bank's difficulties 1819.

mortgages largely was

so

far

as

the clause thus operated, it would have been of vast consequence in the improvement in the of banking everywhere United States. No doubt it would have diminished the capital

and South, thus decreasing the bank's profits while increasing its security.1 The remaining important, but by no were amendments loaned in the West The restricessential as those already mentioned. tion of its officesto two in any one state was a concession to state rights and to state banks; the necessity of supplying the secretary of the treasury with the names holders of foreign stockmeans so
no could serve particular purpose, except that it met a popular demand ; but that of giving to state treasurers the names of resident stockholders might furnish an opportunity

to the states to tax the bank

Had

the bill been

approved,

indirectly by taxing its stock. the bank would have lost none

of its usefulness, and a marked improvement of the currency would have resulted, to such an extent, indeed, that the currency of 1837 would have been easily convertible, elastic, undepreciated, and littleliable to over-issue. What would Jackson do with the bill? Well-informed both sides were on men confident that he would veto it. On May 31 Cadwalader declared that the veto was certain.
BE!" IT WILL "I say the veto" tor VETO Biddle was almost as certain as Cadwalader.3
1

he exclaimed.2 Robert Pat-

The provision
To Biddle, May

as

first introduced
have

would
2

in all probability
31

fixed the term of holding at two years, which loans on real-estate security. checked completely
P.
3

B [1832],.

To Cadwalader,

July 3, 1832, ibid.

STRUGGLE
terson,

FOB

THE

CHARTER

239

friend of Biddle, tried to persuade the president culties that he should affix his signature, and thought that the diffi" But he was insuperable." l were not and
a

objections

mistaken, for on the 10th of July the president returned the bill to the Senate with his

objections.2

The financial and constitutional arguments of this famous may be message have been keenly criticised,and, whatever its economic the validity of its constitutional

objections,

reasoning reasoning

is in
was

main its least valuable

the

beneath

But contempt.3 part, for it appealed

the
to
a

was clientele which truth from

utterly incapacitated falsehood in matters so

from

distinguishing

abstruse, but

to the arguments which appealed completely understood To be told that the charter would present Jackson himself. "a millions to the stockholders," of gratuity of many

the holders of "more than eight millions" were whom foreigners, and that this gratuity " must directly or come " indirectly out of the earnings of the American people ; that the

stock would foreigners than

such grants had the potent more foreign nation, a
"

"be
to

worth

10

or

citizens of the " to make a tendency that in powerful;"

per cent more United States;"

15

to

that

the rich richer and

case

of

war

with

bank

"almost

would be more of that nation than the naval and military power of the enemy bank's loans in the West involved " a burden

by wholly owned subjects" formidable and dangerous

"

that the

industry and demonstrably

was

drain

and

of their currency grossly false, seemed

"
"

upon their all this, though and

comprehensible

were certainly terrifying, and the masses grateful to learn these things which had been hidden from the wise

and prudent
i 3

and revealed unto Andrew

21, 1832, ibid.
2

Jackson.
Papers,

To Biddle, June Livingston,

Messages

and

Vol. II, pp. 576 ff. it to consider seemed to Dallas, Livingston

of the contributors."

many wrote who of the president's papers, to do with this. that he had anything necessary Aug. 26, 1832, HUNT, Livingston, was one pp. 370, 371. Taney

to deny

"

TYLER,

Memoir

of R.

B. Taney,

p. 181.

240

THE
The

SECOND

BANK

OP

THE

UNITED

STATES

monopoly granting privileges to a favored few, and therefore opposed to the principles of democracy and dangerous to the government It is hard to believe, however, that and country.
there

even was message stronger, and defensible, in its attack upon the charter

certainly
as a

more

much weight in this strain of argumentation, but it was very influential with the people. Of the other little need be said : The president
was

objections

asserted that the bill favored state banks as against too small, the capital too individuals ; that the bonus was large ; that the institution was dangerous to the rights of
the states because they were not permitted to prohibit the placing of branches in their territory, or to tax it; that it

necessary to that it was the government; unconstitutional; and that he could have furnished a better plan had he been called upon
was

virtually

foreign bank;

that it

was

not

to do

so.

The strength of the veto consisted in its appeals to Americans against foreigners ; to the poor against the rich ; to the West against the East; to the democracy against privilege. These
were

powerful

sentiments,

certain to overthrow aroused were ludicrous and The blindness of the bank's supporters was said the bank's life depended almost pathetic. Cadwalader

once and the bank.

thoroughly

getting the veto now roused before the autumnal I should feel sanguine as
"on

"

so

that
....

the

nation

may

be
now
new

elections to the two

if vetoed thirds of the

the message from the point of view the bank's partisans exulted, considering of intelligent men, it as utterly contemptible, and, instead of perceiving the

Congress."

Regarding

and peril which lurked in its appeal to popular prejudices to the democratic passion for equality, they thought it so it, and they conseanarchical that everyone would

reject

iTo Biddle, May

31

B [1832],.

P.

STRUGGLE

FOB

THE

CHARTER

241

ment docuquently circulated 30,000 copies of it as a campaign " damn it the administration wherever calculated to * Biddle considered the effect of the veto as all was read." that " the friends of the Bank and of the country could
desire;" "It has all with the message: the fury of a chained panther, biting the bars of his cage. pierre It is really a manifesto of anarchy, such as Marat or RobesSt. might have issued to the mob of the Faubourg 2 The general contempt of the bank's adherents Antoine." he
was

"delighted"

was

will probably be kept in memory and often appealed to as a curious example of the extent to which, at the commencement of the nineteenth century, the elected chief magistrate of a free, civilized and enlightened people dared to
....

well expressed This document

by

one

of them:

insult the

common

sense

and moral feeling of his constituents.3

After
was
no

the veto, and it finally failed by the Senate's vote of 22 to 19.* In the campaign which immediately followed the bank issue, and it was soon was the paramount evident that the veto, instead of providing a congressional of twoover

was the message received, a number made in the Senate to furnish campaign one expected that the bill could be passed

of speeches material, for

majority

thirds for the

bank,

had

lifted Jackson

to the summit

of

popularity,5 for the election closed with

1

his overwhelming
contained
an

PAETON, for
"

Vol. Ill, p. 411.

Gen.

The

accounts

of the bank

item of $558

"

paid them.""
B. P.

printing S. D. 17, 23d Cong., 2d May I beg the favor document

....

Jackson's

veto, 30,000 copies, wrapping and distributing Sess., p. 325. See Watmough to Biddle, Sept. 25, 1832, to send
me

of the Veto

of you It is an

admirable

paper

this afternoon another is attended and

p. 341. pp.

ample with

supply the best

effects." 2 To H. Clay, Aug.

3

1, 1832, Clay's

Correspondence,

Pamphlet
Senate

on

The

Conduct

of the Administration,

57, 58.

* 5

Journal,

22d Cong., 1st Sess., p. 463.

Jackson

ing to Lewis, them That

that

Writ was more much clear-sighted in this respect than his opponents. Aug. 9, 1832, he said : " With my sincere respects to Kendall " Blair, tell the veto works well, " that the Globe reVolves with all its usual splendor " expected by my enemies, " some instead, as was of my friends, predicted
" "

SDMNEE, destroy me, it has destroyed Jackson the Bank." would in possession the New Ford York 326, quoting now (revised), p. of manuscripts, Vol. IV, No. 9, pp. Library, See Bulletin of New York Public Public Library.

the veto

299,300.

242

THE

SECOND 219

BANK

OF

THE

UNITED

STATES

electoral votes being cast for him against 49 for Clay.1 As Biddle had clearly foreseen, the victorious general accepted the result as a distinct approval of his
triumph,
veto

and
was

He
a

to complete the work so nobly begun. mandate in so justified regarding it. Biddle had committed
a error

monstrous
a

with his eyes wide open

a

re-charter at into politics. The the bank

for

moment

bank

war

which began

he had applied precipitated the question

"

at that point.

forth Thence-

acted, not as a business corporation should act, but as a body possessing political functions and created for political purposes; it divided the Democratic party into
bank and anti-bank factions, and drove Jackson to the wall. It is no wonder, therefore, that Jackson was infuriated and
to crush

determined

the bank.

did, he would have he would courage

"

been

he failed to act as he inconsistent and lacking in moral

Had

not have

been Andrew

Jackson.
100 opposed."

The

new

House

of Representatives

stood 140 for Jackson,

NILES,

Vol. XLV,

p. 228, note.

CHAPTER
THE

XI
THE BANK

CHARGES

AGAINST

in connection with the bank which always arouses most interest is its alleged corrupt connection with has been that there never politics. It may be said at once to show that the bank as a national any evidence produced

THE

subject

bank
was

ever

spent
so

repeated

dollar corruptly. often that historians

a

Yet have

the

accusation been inclined

to accept as and it begot

asserted, proved what was only vehemently incurable suspicion which has endured to an

this day. It is self-evident that the bank would be affected by politicalconsiderations, since from the beginning to the end to a large extent to the will of its existence it was

subject

frequently attacked by and whim of politicians, and Had the board of directors been composed them. exclusively of canonized saints, stillthe conciliation of politicians
it was

The only and politicalforces would have been necessary. question worthy of discussion is that of the bank's honesty or corruption in this situation. Biddle
in

1829

as rejected

totally inadmissible

any

attempt to create boards on which the politicalparties were fairly balanced, and declared that politicalaffiliations should not be considered in such selections. He was right in this ; but it must not be supposed that the proposition of a political first sugDemocrats balance was novel, or that Jackson gested it, or that there was any moral obliquity in such an directors were When the first government arrangement.
named, his own President

Madison

frankly
the
243

selected them

all from

politicalparty, and

private stockholders, quite

244

THE

SECOND

BANK

OP

THE

UNITED

STATES

or certain that the bank must either be a political machine and possess a balance of parties, elected ten Republicans Madison ten Federalists as their members of the board.

and

his capable

and

honest

struggled successfully to secure for a Republican partisan of no

as a

secretary, A. J. Dallas, then the presidency of the bank

banker,1 and thus the presidency of William Jones

to James

particular ability or experience disasters consequent upon the primarily chargeable James Dallas.
are

and Alexander The policy of political balance then inaugurated was liam religiously pursued all through the administration of WilJones, and certainly through part of that of Langdon

Madison

Cheves.
him

Writing

to Biddle

in 1820, John

McKim

election of a Republican Baltimore, "as you know that the Republicans are of their number, and the necessity of giving us our
to assist in the

urges director at
one

short

share of the Directors, as we do hold more than the half of the stock, and it having been Policy to divide the two Partys in the direction, since the Bank When this was established."2

equal division ceased it is not possible to say, but it may be reasonably presumed that the disintegration of parties under Monroe caused its cessation.
Biddle
was

opposed

it strenuously when in Kentucky branches and the branch in New Hampshire He then stated that he considered such an arrange1829. ment

to the practice,3 and fought it was suggested in the case

against of the

largely responsible for the bank's losses in the West As to his rumored desire in the early years of its career.4
as
i

See p. 22 for the evidence.

"

Jan. 8, 1820, B. P.

The truth is, that every day's experience satisfies me, that the safety of the lies in its complete from politics."" Biddle to R. Smith, Feb. 5, estrangement 1829, ibid. Bank, '"The States, in
a

are

truth is, that almost of the Bank all the misfortunes traceable, directly or indirectly, to politics. In Kentucky
measure

of the United the losses were

great

incurred

influence procured them by ruining them cases,

to prominent politicians of all sides whose in such facilities which ended, as frequently happens undue These things have made the Branches. as well as crippling

by loans

CHARGES
to have

AGAINST

THE

BANK

245

anti-Jackson, he repudiated it altogether, why anyone could suppose that a and constantly wondered bank would care which politicalparty was up or which was
the bank

down.

weary of quoting Dean Swift's remark Tory," and in asserting is neither Whig nor that "money that "men of getting back will lend where they are sure He
was never

ing their money with a profit." This was sound sense, and holdthese opinions with deep conviction Biddle was anxious
above all to exclude political considerations. Nevertheless he was not able to carry out his wishes of the altogether. During Adams's administration members less ready to complain no and to party in power were demand the Jackson assistance from the bank than were politicians later. Biddle repulsed them with he repulsed Ingham,1 as yet he was
as

littleceremony

consider political affiliationsin the In January, 1824, there boards all through his presidency. dissatisfaction in Boston with the political complexion was Crowninshield was of the directorate there, and B. W.

to compelled to the appointments

substituted for a Federalist on the parent board in order to " feelings which give the other party a chance and to assuage 2 he in 1828 Again may hereafter grow into hostility."
retained the services of C. P. White at New was not expedient to "alienate a member such
a

York

because

it

time

"

to offend personally

of the Board at gress member of that Cona

before

whom

the
3

Bank
while

renewal of its charter,"

us

for may probably come 1832, he was in November,

great

on to see that point, and unwilling any lead to a recurrence of similar which might Jan. 10, 1829, confidential, ibid. McLean, 1 inch in what I will not give way an concerns

sensitive

misfortunes." the

duced, political influence introBiddle to John

"

"

independence
for them them.
mean

of the Bank,
"

to please all the Administrations past, present or future. " The bigots of the last reproached me with not being that the Bank will not support the present will be annoyed
"

the bigots

of

Be it

so.

both.""
2 8

Biddle

I care nothing for either class of partisans and to Dickins, Sept. 16, 1829, P. L. B., Vol. Ill, p. 67.

to disregard

Biddle

to David

To I. Lawrence,

Sears, of Boston, Jan. 5, 1824, ibid., Vol. I, p. 90. Nov, 28, 1828, private, ibid.. Vol. II, pp. 434, 435.

246

THE

SECOND
"to

BANK

OP

THE

UNITED

STATES
be useful to the

anxious

conciliate gentlemen

who

may

institution."

It will be observed, however, that there was no plan of a Another conclusion political balance in these instances. must also be drawn, that, so far from trying to constitute his

boards all of one political party, as the Jackson politicians asserted, Biddle took unusual pains to appoint members of he could secure those who were the various parties when qualified for the positions. After the correspondence with Ingham and the reiterated charges of doing precisely what he wished to avoid, Biddle introduced additional Jackson
He did this at Baltimore,2 at politicians into the boards. New York,3 at New ville,6 Orleans,4 at Portsmouth,5 at Nashat Lexington,7 and at Utica.8 He allowed Lewis to
In the choice of our Directors it often becomes to conciliate gentlenecessary men who may be useful to the institution and to be very careful not to alienate our friends. At the present moment it is especially desirable to avoid everything which
i
"

"

in a cordial and warm those who are engaged might estrange To M. Robinson, Nov. 30, 1832, P. L. B., Vol. IV, p. 328.
"

support

of the Bank." Magazine,

ser.,

Biddle to , of Baltimore, Vol. IX, pp. 10, 11.

Nov.

22, 1829, DAWSON,

Historical

2d

3 "On list of Directors, it struck me that it might be liable to your examining I the reproach of being exclusively composed of one of gentlemen political party. have but a moment Mr. Robinson to ask you to name two or three gentlemen and friendly to the present Administration are who good considered who would make Directors."" Biddle to I. Lawrence, Nov. 27, 1829, P. L. B., Vol. Ill, p. 96.

You will not be displeased to know that at the last meeting of the Board, Gordon White two of the four new were and Maunsel members elected as Directors of the office at New Orleans." Biddle to Lewis, Nov. 29, 1829. ibid., p. 97.
*

"

Martin
5 6

"

Biddle Biddle

to Cadwalader,

Aug.

28, 1829, B.'P.

opinion about the Nashville board, Oct. 14, 1828 (P. L. B., asked Vol. Ill, p. 75); and again in April. Same April 27, ibid., p. 229. Lewis sent to same, Lewis list of names for members May 3, 1830. to Biddle, B. P. that board a of To Lewis, May 8, 1830, private, P. L. B., Vol. Ill, Biddle received it with thanks."
" "

Lewis's

pp.

239, 240.
"

On
to

May
same,

of it. Same

24 he sent Nichol's list to Lewis, and asked for Lewis's opinion the nomination private, ibid., p 249. Lewis violently opposed
"

June 11, 1830, confidential, ibid., Carroll's friends. Same to same, of any of Governor for reasons, Lewis 270. When to be appointed the person was p. said that asked Lewis to the friends of the present to Biddle, June 13, administration. obnoxious
"

1830, B. P.

Biddle

June

21, 1830, P.

be respected. that his wishes should assured L. B., Vol. Ill, p. 274. Governor Carroll's nominees Lewis
to Carroll, June
22, 1830, ibid., pp.

"

To

Lewis,
not

were

appointed." 7 Lewis Lewis,

8

Biddle

279, 280.

Feb. General

sent a list of directors 24, 1830, ibid., p. 185.

for the Lexington

branch

early in 1830." Biddle

to

was not to be chosen president because Biddle to Porter, Sept. 23, 1829, ibid., p. 70. affiliations."

P. B. Porter

of his anti-Jackson

CHARGES

AGAINST

THE

BANK

247

the members of the Nashville board,1 took his advice about the Lexington branch, and ceased his complacency to suspect that the wily reason only when he saw
name

most

of

all the western directorates. In August Lewis wrote saying that he was half ashamed to " Our friends at Louisville, ask for further favors, but that

majorwould

soon

be naming

Kentucky,

think they

are

not fairly and equally represented

in your Branch at that place," and he forwarded of three gentlemen whose appointment would
"

the

names

probably

give entire satisfaction to the friends of the administration in that part of the state." 2 This further encroachment upon
the province of the bank exhausted the patience of its much" new enduring head, and he politely declined to introduce for the purpose of making any political balance."3 members The refusal is creditable to Biddle; it proves that
....

he would
most

not be subservient to the administration

even

at

critical moment
assent to
a

in the bank's attempts to secure son's Jackfixed in his re-charter, and that he was

determination

that the bank

should

not

degenerate

into

political machine. It may be argued, however,

was
were

free from
not.

that while the parent board political chicane and bias, the local boards

are arguments undoubtedly the early years of the bank, because in the
1

Such

applicable to
southern

and

Lewis

ought

to be satisfied,

"

of gentlemen ibid., p. 277.

2"

are

nominated

by

for out of the whole Board, a very large proportion June 22, 1830, Biddle to Lewis, yourself."
"

almost such great favours I am ones. more of your ask one ashamed still I must if Board of three gentlemen, who, with the names to I have reason Directors for the next year, in your Louisville Branch, appointed in that part believe will give entire satisfaction to the friends of the administration have
to ask
me conferred upon for any additional I have been furnished so

You

many

and

But

of the state.""
3

To Biddle, Washington,
new

Aug. members

18, 1830, B. P.

"To

introduce

there, for the purpose would

expose
us

On
prevail
p. 370.

not so well qualified as those now in itself and balance, would be wrong any political of making looking to party conto avoid imputation to the very we of sideration wish it better to let the business considI thought the whole therefore erations over politics."" To Lewis, Oct. 31, 1830, P. L. B., Vol. Ill, circa

members

"

248

THE

SECOND

BANK

or

THE

UNITED

STATES

western

states campaigns

at times

questions and would involve Every officerand employee of the Bank of the United States must have been on one side during the struggle between the new rences and the old court parties in Kentucky, and such occur-

revolved about bankingthe institution despite itself.

lead to the conviction that the bank spent would money for the purpose of controlling elections which were vital to its interests. It is also certain that a board of directors composed tain would conof intelligent business men few members a condition of the Jackson Democracy
"

which would incur suspicion of politicalfavoritism.1 As the bank's loans would be made mostly to the same class as that from which the directors were nating selected, a charge of discrimiagainst Democrats would inevitably arise.

Consequently
were

assertions of corruption frequently made. As early as 1825

at

the

branches

it was

insinuated

branch, though recogthat the president of the Washington nized incompetent, had retained possession of his office as because of his influence with the Monroe administration.2 In regard to Kentucky frequent charges of political

unjustifiable
own

activity
1
"

were

made.3

Blair asserts of his

knowledge

have not been recommended, is, And Jackson men the only reason why more belong that a large majority of the most that it so happens respectable merchants Shippen, cashier of Louisville branch, to Biddle, Jan. 26, to the other party."" 1829, S. D. 17, 23d Cong., 2d Sess., p. 303. has been heard, as I was credibly informed, to drop hints and its being in his power to turn the whole weight and influence of the executhreats, of tive his re-election as president of the mother against Mr. Biddle so as to endanger One thing is notorious here, that the executive influence, in all its ramificabank. tions, decidedly exerted to uphold the election of Mr. Swann was ; I refer here to the
2
"

Mr. Swann

late administration."" R. C. Weightman United States, July 26, 1825, p. 9.

3

to

the

stockholders

of the

Bank

of

the

"Dear
on

Sir

"

In the

summer

that

the Sunday

he then resided, to appropriate belonging to the bank, $250 of a certain contingent secret service money, fund they had the control, to aid the party called the old court party, of which Mr. further stated that $100 of in carrying the elections in Jefferson county.
of the United

preceding States branch

informed by Mr. of 1828, 1 was determined the election in 1825, it was

bank
at Louisville,
or

of Frankfort, by two directors

where

fund,

the money that

carry

was

put

into the hands and the balance

of himself
opened
put
was

and

another

they went
up

to Shippingsport

voters ; that

grog shops into the hands

that day, on gentleman it, and hired hacks to with of others for like purposes,

CHARGES that "bank though

the
"

AGAINST

THE

BANK

249

men

employed

phrase "bank include officersof the bank.

bribes to influence the elections,1 is scarcely sufficient to men" Like

in assertions were made South Carolina reports came

From reference to Louisiana.2 of of officials the branch engaging actively in politics.3Hill, mouth Hampshire, declared in the Senate that the Portsof New
" in 1828, and that made a party engine office was " " in carrying the state for it was the principal instrument Adams;* while Clayton, of Georgia, asserted that the president

"

of the Norfolk branch had engaged most offensively in politics,publicly declaring that he was "opposed to General

Jackson," and becoming

These
are

as involved in fisticuffs

result.5

the specific charges of politicalaction which The charge against the president of admit of examination. He did indeed the Washington moment. office is of no
exert
secure

his supposed influence with the administration to his election to the local board, and was severely
; that

in Louisville
to
use
"

his

own

they did employ with that money all the hacks ' did a main business on Sunday.' expression,
this

in the place, and

's

Not

requested these are

being authorized to use Mr. Gilly Cuddy to prove facts to which he alludes.

information

on

Mr.
other

authority,

it, if possible, through

"

channels,

and

Very respectfully, " KENDALL." AMOS Vol. XLII,

p. 315, note.

"

Letter furnished
i
"

by Amos

Kendall, NOT. 23, 1829, NILES

Wo
men

Bank

Bank.""

known horses, and pieces of furniture, presented rifle guns, to certain to talkers, opposed zealous active and neighborhood Extra Globe, Vol. I, p. 177, Sept. 8, 1834.
have

by the

zingham,
3"!
passages:

NILES,

Vol. XLII.
received
over

p
a

315, and

B. P.
....

have
....

recently
presides

pamphlet,
Federal

which
States,

contains
was was seen

the

following
ve,

the president

of the bank
this great

of the United
"

not less acti

and

the head
with
an

which anxious

institution,

superintending

scrutiny,

of Charleston
* 5

branch,

the polls at the election." Biddle to Joseph Johnson, Sept 27, 1830, S. D. 17, 23d Cong., 2d Sess., p. 308.

president

June
"

8, 1832, C. D., Vol. VIII, Part

I, p. 1062.

did in person the polls, at an president of the Norfolk branch attend for the member to the Congress, challenged the voters as they came up of "election he changed, for his conduct, he stated that table, some and, when clerk's reproached indifferent as to the candidates to he was individually, but he stood there opposed General Jackson. This course nated termiof conduct great excitement, produced which in
a

The

fight between

Mm,

immediately

the president of the bank in the presence the managers." of

and
"

the person who reproached Ibid., Part II, p. 1994.

250

THE

SECOND

BANK

OP

THE

UNITED

STATES

censured for doing so by the president of the bank.1 In the New Hampshire case no political acts were adduced, and the which gave color to the assertions were only circumstances
that the president there was The New friend of Webster. by President
an

old-time

Federalist and
were

Orleans charges

admitted
to

Jackson
were

to be baseless;2 those

in regard

South

of a different character. It was asserted had been that the president there, who was an active politician, the polls at the elections "seen "superintending

Carolina

....

tunately, Unformight well be without involving the branch. this officerinsisted on taking an active part in the over heated campaign nullification opposing that heresy
which
"

Biddle wrote him a letter requesting with all his power. that he refrain from such action, as it was calculated to injure fundamental the bank, and added, "no principle is more
3 Johnson's subsethan its total abstinence from politics." quent however, occasioned complaint on the part of activity, The charge Vice-President Calhoun and Senator Hayne.* He was character. against the Norfolk officeris of the same

at the polls and

involved

opposed to General the bank it is difficult to

Jackson,
see.

but how

this

charges himself
as

against the Kentucky as satisfiedthat they were

In regard to the branches, Jackson expressed

the parent board was denied them ; while Biddle urged the officersto exercise for such complaints.8 in avoiding all cause
1
2

without foundation as far The directors there concerned.5

care

Biddle to Swann, See

p. 188.

March

17, 1824, 8. D. 17, 23d Cong.,

2d Sess., p. 297.

3 *

Sept. 27, 1830, S. D. 17, 23d Cong., 2d Sess., p. 308. See also NILES, Mr. Calhoun
him said that
"

Vol. XLI, p. 478. Charleston

may

the

course

taken

by the

Branch

at

it had done? He said that it had taken an what soured active part in their State politicks, that I ought to apprize you of it," that you might S. Smith those who had been intermeddling." correct, and I think he said, remove to Biddle, Jan. 27, 1831, B. P.
have

[Hayne],

I asked

"

See p. 187. Biddle branch,

to the cashier of the Louisville 2"1 Sess., p. 304.

"

Feb. 12, 1829, 8. D. 17, 23d Cong.,

CHABGES
The

AGAINST

THE

BANK

251

actual status of Biddle's policy never showed better than in 1831, when the charges against the Kentucky offices Writing to him in April, the cashier of the were renewed. Lexington officeurges loans to help the anti-Jackson candidate,

because
The

funds

were

needed

"to

win

for

our

men."

nished, president of the branch thought they ought to be fur"so The coming does Mr. Clay. election of and tial is all important in its bearing on the PresidenCongressmen
l To this Biddle instantly and decisively election." principle in the replied: "I believe it to be a fundamental that its officers should abstain administration of the Bank

from

with what are called politics,to abstain any connexion in appearance not and merely, but entirely, candidly Thus at the moment honestly."2 that Blair was charging political corruption in Kentucky, Biddle refused assistance Henry Clay thought should be granted. larly Simiwhich even
in 1832, after the veto, Biddle declared that the bank would take no active part in the campaign, such action being contrary to its principles.3 To this resolution he adhered.

Unquestionably

the

bank
York

lobbied

in its

own

interests.

It did this in the New

and March, 1831, to hinder the adoption of resolutions hostile to sylvania time it strove to get through the Pennit.* At the same

legislature in February

legislature acting
as

resolution in its favor, C. J. Ingersoll its champion. Again, during the struggle for
a

ton, at Washingre-charter, Horace Binney acted as its manager while in 1834 the bank used its influence with its
friends to elect John
1 2 3

Sergeant

senator from

Pennsylvania.

J. Harper

to Biddle, April 22, 1831, B. P.

Biddle to James
"

Harper,

of Lexington,

Ky., May

10, 1831, P. L. B., Vol. Ill, p. 524.

own

But political concerns their must be left to those who are at liberty to pursue G. I am must chained and views. obey the laws of my station."" To William July York, July 17, 1832, ibid., Vol. IV, p. 261. Also same to same, Buckner, of New
13, 1832, ibid., p. 260; to J. W.

Webb,

July 17, ibid.,

York,

p. 261.

"S. E. Burrows

to Biddle, New

Feb. 17, 1831, B. P.

252

THE

SECOND

BANK

OP

THE

UNITED

STATES

The

attempt In all these

use
means

failed, but prevented Richard Rush's election.1 however, there is no reason to suspect the cases, ; while the suspicion that it used such of corrupt means to secure re-charter in 1832 is absolutely baseless so evidence goes.2 did not do directly, it

far

all the known What the bank

as

was

frequently

charged
emphatic and

with

Its enemies declared, with repetition, that it secured the favor of congressmen

doing

indirectly.

tions politicians by granting them unusual accommodainsufficientsecurity and extending to them favors on It must be admitted that not granted to other individuals. to give drafts for the salaries of the bank was accustomed congressmen,
without

payable

at points distant from

Washington,

Biddle said he knew charging exchange. of no but if they occurred they were defensible on such cases, had a right to their pay wherthe ground that congressmen ever
"the
answer

Treasury

satisfatory, and the frequently made that not only did congressmen assertion was it, thus they chose to demand receive their pay wherever could benefit of the exchange, but that in other instances they were accommodated without being charged Such a practice was certainly open to the objecexchange.4 tion being in the nature of granting favors to those from of

chooses to give hardly be considered

it to them."3

This

getting

the

Rush

had

"provocation

from

the

bank

party,

Senate of the United States by the Legislature Vol. IX, p. 40. Memoirs,
2

who defeated his election to the last winter." ADAMS, of Pennsylvania

"

If there had
papers,

been

any

everything written, saved absolutely quite his future fame. But there is positively no trace of regardless of its bearing upon to be found there. such attempts
3

Biddle

for

Nicholas

evidence, Biddle

some

trace

of it might

be expected

among

the

H.

R. 460, 22d Cong., 1st Sess., p. 532.

any

formerly furnished to Members not draughts of Congress without for premium, by the United States Branch Bank in this city, in exchange charge as well as for their lawful money paid into Bank, pay?
*"

Were

for
that

"

To this the
the

Intelligencer

such

was

fact.

Drafts
or

were

no reply. It was made to members furnished

founded

on

knowledge

whether

for their pay

not,

on

charged

from

% to 1 per cent.""

of Congress without charge, every part of the Union, while private citizens were Globe, Vol. I, p. 143, Aug. 23, 1834. Extra

CHARGES
favors

AGAINST

THE

BANK

253

whom
must

were

to be expected.

The

same

condemnation

fall upon

government

and practice of paying congressmen before their salaries became due by the officials

the

a warm passage of the general appropriations act. Adams, that in a single session the champion of the bank, showed thus advanced was was amount almost $400,000, "which

equivalent to a loan without interest," and that the amount over $3,000. He was of interest thus lost to the bank was
1 without doubts of the propriety of this indulgence." That congressmen were not to borrow money, or that the bank was not to lend them money, could hardly be argued,

"not

unwarrantable discrimination against That the officers of the bank as congressmen. congressmen is loans on easy terms to congressmen were willing to make likely, and is illustrated in the case of General Stevens, to
since this would

be

an

whom he was

Biddle granted
a

loan

on

his

stranger, and although that the drawers of the notes were

authority, although the president did not know

own

1829, Biddle

of good credit.2 In June, loan to Congressman Verplanck, a justified

of Robert Lenox, partly on the ground against the objections that it was expedient for the institution to stand well with those who held its future existence in their hands, especially
as

he believed that "the

loan

he permitted John Forsyth at a long date on the security of a mortgage, though such loans were A similar accomagainst the declared policy of the bank.4
1
2 s

perfectly safe." to borrow a large sum

was

In 1831

H.

R. 460, 22d Cong., 1st Sess., pp. 392, 567.

Testimony

of Diddle

and

Cowperthwaite,

ibid., p. 190.

Verplanck

for instance I think it was case you well to lend to Mr. mention he for what because use the money the loan was perfectly safe, no matter to apply it. After all you know the existence of this institution must depend meant on the opinion entertained of it by those who will before long be asked to continue its Charter and altho I would sacrifice nothing of right or of duty to please them or

"In

the

to please anybody, occasion still if a proper the usefulness the interior proving of the

presents

itself of rendering
as

Bank,

so

[to] convert

enemies

service to into
"

friends, Biddle

it to ourselves Lenox, June to Robert

we owe

not to omit and to the stockholders 4, 1829, P. L. B., Vol. Ill, p. 48.

that occasion."

*To

J. Forsyth,

May

9, 1831, ibid., p. 520.

Same

to

same,

June

28, 1831, ibid.,

Vol. IV, p. 3.

254

THE

SECOND

BANK
to

OP

THE

UNITED McDuffie
on

STATES
in 1833,

modation
to

was

granted

George
being

for

$100,000, the agreement

renew

to loan

the note
to

indefinitely.1 David

and mortgage Crockett's bill was

about Joseph

by Biddle perbe protested, and was renewed sonally favor was accorded to protect Crockett,2 and the same Vance.3 In 1826 the board released Senator Samuel

his debt consequent upon the Baltimore frauds Dickins, first clerk in the treasury Asbury of 1817-19.* and a valuable friend, was released in 1830, the bank saving

Smith

from

about half the debt.5 Colonel R. M. Johnson 6 treated with like kindness in 1824. were favors to
men

and his brother All these were

might be politicallyuseful. Moreover, during the years when the bank was attempting to secure a lease of life,the loans to congressmen large, and were new
who

been customary at earlier periods.7 It must be remembered, however, that all the loans of the bank were more extensive than usual at this time, and much
much

beyond

what

had

those of congressmen might fairly be expected to be so. Similarly, in settling the debts due when the debtor could were not pay, congressmen not the sole recipients of such hence favor, but shared
i

it with
"

hundreds

of others.

Therefore

no

to pay. be renewed till the parties were prepared might in practice with less inconvenience be arranged than renewals might first be supposed, by leaving the bills, or any authority to sign them with might at the Cashier."" Biddle to McDuffie, Aug. 29, 1833, P. L. B., Vol. V, pp. 2, 3.
....

Biddle
The

said the loan

2
3

Biddle to Poindexter,
Biddle
to Joseph to John

Dec. 13, 1834, ibid,, p. 289.

Dec.
17, 1834, ibid., p. 292.

Vance,
Donnell,
see

* 5 "
7

Biddle

On Dickins's loan
Biddle

of Baltimore, Sept. 21, 1826, ibid., Vol. II, p. 187. R. Smith to Biddle, Sept. 22, 1828, B. P. Ky., June
:

to J. Harper,

of Lexington,

9, 1824, P. L. B., Vol. I, p. 16

Number

Loans

made

to members
Years

of Congress

Amounts

of Members

1826 1827 1828 1829 1830 1831 1832 1833 1834

$237,436
221,026 218,830 212,346 192,161 322,199 478,069 374,766 238,586
"

82 25 38 34 52 59 44 58 52

8. D. 17, 23d Cong., 2d Sess., pp. 320, 321.

CHARGES
censure

AGAINST

THE

BANK

255

is implied

and the evidence that in all the cases Smith's debts had

not unduly granted, where the favor was of the president's letter books is conclusive

full payment could not be made. named been contracted in 1817-19 through the
he could not discharge been incurred at

criminality of his mercantile partner, and them; Johnson's indebtedness had

the
same

debt
he
was

time and he was entirely bankrupt ; while Dickins's had been contracted with the Bank of Columbia, and in a situation to pay it. never

the other hand, in the matter loans to congressmen, the bank seems

On

of granting unusual to have laid itself

Yet much of this must be mitigated in 1834 reported if the loans were safe. Tyler's committee this head that of loans made by the Philadelphia office on
fairly open
to
censure.

only $400 had been carried debt" and one note for $500 to the account of "suspended protested. These it considered debts which would ultimately Some cases be paid. existed at the branches, but all these " " loans seem to have been made as upon as good security
to individuals then

in Congress

customary in other cases.1 Other charges of indirect bribery were those of paying excessive fees to lawyers and making donations of the bank's
was

money

for political effect. Nothing of the kind was The fees to lawyers were not excessive.2 No
were

discovered.
cases

of bribes by donations 1834,8 and the

committee

known

by

the

committee

of

was subject

whole

of 1832 with amount of donations

carefully investigated by the results favorable to the bank, the from

were

1817

$4,620.* The
made for the

contributions
most

aggregating insignificant and were

to 1831

part to fire companies, or to turnpikes, with the object increasing the value of real estate held of by the bank or of protecting its property.
1
"

3. D. 17, 23d Cong., 2d Sess., p. 41.

Ibid., p. 39.

2 *

n"id., p. 42.

H. R. 460, 22d Cong., 1st Sess., pp. 74, 75,

256

THE The

SECOND

BANK

OF

THE

UNITED

STATES

effectiveof all the indictments against the bank was that it "subsidized the press." This was a vague phrase, but it was pretty clearly understood by everybody and meant
most

publishers by granting on them accommodations easy terms, with the expectation of Of course, editors occasionally receiving their assistance in return. bank accommodations, yet, as professed needed
that the bank
first to take sides molders of public opinion, they were either for or against the bank when the subject re-charter of In this situation, a loan to an editor favorable to came up.

bribed printers and

re-charter would opposed a bribe. loans

were

be called a subsidy, a loan to an The most prominent editors to secure

editor large

Duff Green, of the Washington Telegraph, Webb Courier and Enquirer, Gales and Noah, of the New York Seaton, of the Intelligencer, Robert Walsh, of the and Gazette and the American National Quarterly Review,

Thomas

Ritchie, of the Richmond

Enquirer,

Jesper Harding,

of the Pennsylvania Enquirer, and F. P. Blair, of the Globe, though before he established that paper.1 All were nent promifavorable to the bank, some and able editors, some Suspicion was also aroused by the conversion to opposed. the bank's cause of several editors who had been unfriendly. Duff Green ceased to oppose ; while Webb and Noah became
active supporters instead of bitter opponents. Numerous cases of attempts to buy up editors were alleged. Parton intimated that such an attempt was

also

made Blair himself makes charges of this character in on Post and the New York reference to the New York Evening Standard,3 and presents the affidavit of a country editor

Blair.2

Harding,

$36,916.71 Walsh, ;
see

Green, $20,000;Ritchie, $10,900; Gales and $11,541.72;

1832." H.
R. 460, 22d Cong.,
1st Sess., pp.

Seaton, For

$44,695. All made

case

Blair's
2
"

in 1831 and p. 171, note 1.

"

108-10.

known

ton.

"

PARTON, and

friend of the bank Vol. Ill, p. 338. When

the story

the bank
3

failed to pay,

Blair a loan of $200, says Paroffered to make it is recollected that Blair had borrowed from loses its verisimilitude.
....

"Silas
espouse

E. Burrows
the
cause

would

pecuniary considerations offered valuable Extra Globe, Vol. I, p. 125, Aug. of the Bank.""

if they
15, 1834.

CHARGES
declaring
that
"

AGAINST

THE

BANK

257

date of the Whig, or Bank candi" at offered him $100 and banking facilities the Bank of the United States if he would use his influence for the It is apparent that all this evidence is of Whig candidate.
a

supporter

does not establish in a single instance any In one connection of the bank with the alleged attempts. "a known friend of the bank" case offers a loan, in another

the flimsiest,and

erations," promises "valuable pecuniary consid" " and in the third it is a supporter of the Whig That there were to not averse candidate. editors who were Gordon receiving favors scarcely needs to be said. James

"

Silas E. Burrows

"

Bennett, who always displayed in public the most rancorous antipathy for the bank, nevertheless kept up a friendly corresponde
with its president, gave good advice, and on I am one course occasion defined his position thus: "Of but I suppose you to the Bank and must be so opposed J Three that." weeks later he hints that he understand
"

like to hear from Biddle.2 The and would needs money bank had nothing for him, however. " " Biddle' s own the attitude in relation to subsidizing press has been incidently left on record by himself, and does honor
the
to his integrity.

In 1828

of granting order to sustain their newspaper, which might be useful to To this Biddle responded warmly that he could the bank. expediency
not and The

urged upon him loans to Gales and Seaton in

Webster

would

not proceed his paper

on

any such principles:

the

ance advantage of its continuare considerations entirely foreign to us and the very that but for the Bank of the United States any circumstance

value of

and

"

had gone be discontinued, or that the Bank newspaper would out of its way in order to sustain any newspaper either in administr in opposition be a or would subjectof reproach

and
1 2

what
Bennett
Same

alone makes
to Biddle,
same,

reproach
York,

uncomfortable

of

just reproach.*

New

Nov. 9, 1832, B. P.

to

Dec.

1, 1832, ibid.

"Biddle

to Webster,

Dec. 2, 1828, P. L. B., Vol. II, p. 448.

258 As

THE

SECOND
was

BANK

OF

THE

UNITED for the

STATES

this letter

never

intended

is the best possible testimony And yet it was time it was written. the man who wrote it, and who in so

public eye, it to Biddle's integrity at the

the untoward doing denied
a

fate of
accommodations

to old and trusted friends at

their fortunes and risked offending an advocate, to be generally regarded

in criticalmoment intimate and powerful

a

as

wholesale briber

of editors and publishers. Of all the loans to editors, those to Webb and Noah, of York Courier and Enquirer, the New gained the widest notoriety and created the most intense feeling. This journal
had been pronouncedly anti-bank from November, 1829, to its attitude and advocated a April, 1831. It then changed new charter with modifications, though still professing to support Jackson. James Gordon

Bennett, in his Memoirs,

declares that the

in 1831, and that Noah, seeing "the breeches pocket of Mr. Biddle open, entered it 1 It is not necessary to credit Bennett with immediately."

paper

was

financially embarrassed

extraordinary veracity, but he was probably not far wrong. Certain it is that in the spring of 1831 the proprietors of the funds, and one of them decided to sell paper needed more
out.

At

this

M. juncture

M.

Noah,

who

was

buying

up the retiring proprietor's shares, met Burrows, and Burrows, Webb, and Noah planned to raise " to change the tone of the Courier the necessary means, and
and Enquirer of the bank.
"
"

desirous of with Silas E.

in other words, to bring it out in support Burrows was the pivot upon which all the succeeding He was a vain, loquacious, intruding, events turned. scheming merchant, who wished to be regarded as one who

bore upon to Biddle

His letters his shoulders the burden of empires. are rious stillextant, and are filledwith hints of mystesecrets ; chatter of grandiose plans ; fulsome laudation
of a Journalist,
p. 150.

Memoirs

CHARGES
at
one

AGAINST

THE

BANK

259

and causeless reproaches at the next; abject petitions for loans to be used in airy ventures ; denunciations of the officials the New York branch ; tales of intimacies of
moment

ence with presidents and ex-presidents ; boasts of imaginary influover the course tions of politics; and again with exclamaof fear and violent assertions that he is a persecuted
and

hunted

man.

They

operations for securing complete Webb possession of the Courier and Enquirer, mentioned "was to Burrows that he prepared to advocate a modified Burrows urged him to come recharter of the bank." an "unconditional recharter,"1 and promised Noah
out for

possessed of an When the trio began

portray only too clearly incurably weak head.

an

vidual indi-

that he

would raise the funds for the purchase of the half interest in the Courier and Enquirer by securing a loan from his father.2 This proposition was accepted, and Burrows hurried off to Philadelphia
to

share in a newspaper," and offered the notes of Noah, indorsed by Webb, The Exchange Committee as security. ized of the bank authorBiddle then the loan at one year and eighteen months.
to purchase
"a

there money that he wanted

Biddle, with the of object securing the instead of from his father. He told Biddle
see

$15,000 for

Noah

furnished

out of his own with the money pocket, the sum, without even seeing the notes to secure and consenting that Burrows should not indorse them, thus leaving

Burrows

The the responsibility of payment with Noah and Webb.3 did not then have the notes, for he truth is that Burrows took the
a

$15,000to

New

York, told Noah

loan from his father, gave Noah took Noah's notes,4 and then sent them to of the money, Biddle, who held them in his own nine possession for over
1

that he had secured his father's notes instead

Examination Noah's

of J. W. Webb, H. R. 460, 22d Cong., 1st Sess., p. 81. affidavit, April 8, 1832, ibid., p. 95. testimony,
ibid., pp.

sBiddle's
*

85, 86.

Noah's

affidavit, ibid., p. 95; Webb's

testimony,

ibid., p. 82.

260

THE

SECOND
instead Here,

BANK

OF

THE

UNITED

STATES

months

bank.1

of placing a then, was

them

in the possession of the large loan made without the

receipt of any security at the time on the notes of one ner partindorsed by the other an act in contravention of the rules of the bank ; not indorsed by the borrower ; and for a
"

long period. In January,

account

for

one

1832, Biddle at last decided to transfer the to the books, and then the notes, instead of being transformed into year and for eighteen months, were

paper 1836;

paid at intervals of six months until October, to almost five years.2 that is, for from six months In February discussed in the investigation of the bank was

to be

Congress, and on the 2d of March Burrows took up the notes, securing a loan at the bank for the purpose,3 so that the loan
made to Webb Burrows. The and Noah
was

paid by making

new

one

to

had

rows precise relations existing between Biddle and BurIn the spring of 1831 Burrows cannot be determined. Biddle that he was a person of vast though persuaded

York politics, and as at that undefined influence in New the legislature of New York was discussing a resolumoment tion denunciatory of the bank, Burrows to Albany to went
attempt
was

to prevent

made

It was the action. with Webb and Noah.

then that the agreement As Burrows could

not keep

bruited in the public at once silent, the matter was Biddle wrote, asking Burrows to send him press, whereupon "received any authority a letter saying that he had never from any one connected with the Bank to influence
....

by pecuniary or other means New York or elsewhere."

'

the

course

Burrows

of any newspaper in did not furnish this cer-

1 2 *

Biddlc's

testimony,

H.

R. 460, 22d Cong., 1st Sess., p. 86.

3

Ibid., p. 553.
"

Biddle's

testimony,

ibid., p. 87.

And

it occurs

to

me are

that

the fact, that altho' you lest your silence might

be

be well if you to write to me were stating indifferent to the allegations of this writer, yet, into an in his statements, you construed acquiescence
yourself

it would

CHARGES

AGAINST

THE

BANK

261

tificate good character ; but, on the contrary, denominated of himself " your agent, confidential agent," l and later, in a letter of passionate, childish, and desperate reproach, angrily

"whilst the asserted that he was refused accommodations Bank has stifled the press here by rewards of fortunes," and transmitted a bill for services which shows that Biddle
had paid him $16,000and still owed him $1,100.2 One week later he forwarded another long letter of reproaches, and hinted that he held secrets which would bring a fortune to himself and ruin to the bank;3 in March, 1832, on the other hand, he wrote Biddle: "All discounts made at your bank to have been for my accommodation, me, and individual benefit.

Beyond
'

this is unknown He not would

to you, and

is left for

me

to explain."

investigating committee, and I will not be called on, and then exclaims: "The moment knew you had made an ment entry of those documents, that moI knew a fortune was at my disposal if I would accept by the world, of it, and made without censure 5 me justify for testifying to all."
as

appear however,

before

congressional he to God" "hopes

the

they would

It is difficultto assert anything with confidence in the face of such declarations from a man rows of this character. Burmay really have thought that Biddle had agreed with
him
think
any
one

to bribe
it right to say
connected
newspaper

the New
that
you

York
never

press; the

sums

which

Biddle

have

of any
1

with in New

the Bank York May

or

received any authority or any request from by pecuniary or other means the course April 14, 1831, B. P. Biddle to Burrows, elsewhere.""
to influence

Burrows

to Biddle,

25, 1831, ibid. to S. E. Burrows

The

United
To

States Bank

by the directions expended various times Cr by Cash received of the President Esq. Due S. E. Burrows cash
"

of the

President

at

$17,100
16,000 1,100
same,

Same

to

New

York,

Nov. 25, 1831, ibid.

Same

to to
to

same,
same,

Dec. New

2, 1831, ibid.

*Same
5

York,

March

19, 1832, ibid.

Same

same,

March

26, 1832, ibid.

262

THE

SECOND

BANK

OP

THE

UNITED
that he
was

STATES

had intrusted to his keeping

actually acting for the bank in some capacity ; his remarks about the money loaned to him prove that Biddle did not know what
show

had done with it, and the testimony of Noah and Webb Biddle' s friends shows that he did not transfer it to them. he evidently regarded writes of him as
Burrows
"

as

bad and

character, for Bevan

'

troublesome

and later

as

"a

time expressing a same confidence can " wish that arrangements could be speedily made to get W. and N.'s paper out of his possession."2
were with other loans. accommodated and Noah In August, 1831, they received $20,000, payable 10 per cent, They declared that they could not secure every six months.

very dangerous man, be placed," at the

unprincipled man," in whom and one

no

Webb

because they had supported the bank.3 On this occasion Noah said that their paper would, if it took part in the agitation for re-charter, "go as far in favor of the bank " as it had done in April.4 In December
loans from York back once more, this time for $15,000, the partners were claiming that the bank was morally bound to support them, because their course had cut them off from assistance from by the granted Exchange Committee, though at the time the board was in Philadelto good customers phia.6 refusing to lend small sums In both cases drawn by one the notes were partner the
New
was

the New

banks

York

banks.5

The

loan

and

indorsed by the other.7 In Nor was this the end.

twice

July, 1832,

after the veto,

to

Biddle

brusquely

refused

further accommodations

iTo Biddle, July 18, 1832, B. P.

2 3

M. L. Bevan

to Biddle, July 20, 1833, private, ibid. H. R. 460, 22d Cong., 1st Sess., p. 76; and

Webb's

testimony,

Webb,

Aug.

8, 1831,

ibid., p. 98.
^

M. M. Noah

to W.

Bowne,

Aug.

5, 1831, ibid., p. 97.

See Webb's

share

in securing

the loan, A. L. Stewart

5
e

to J. W.

Webb,

Aug.

5, 1831, ibid.

J. W. Webb

to Biddle, Dec. 16, ibid., p. 101.

Ibid., p. 107, Exhibit

A.

1bid., p. 550.

CHARGES Webb,

AGAINST

THE

BANK

263

that gentleman threatened that unless whereupon son.1 something was done for him the paper would support Jack-

Biddle then consented to see if the loan could not be raised by one of his friends,2 for which kindness he received Whether anything was done or not is the thanks of Webb.8
but Noah unknown, Webb the removed

retired from the Courier and Enquirer. Buren from names of Jackson and Van the head of the editorial columns of the paper and came out Let it in a long article for Clay, Sergeant, and the bank.* be added that Webb's notes for $18,600 went to protest in February, 1833,5 and that in 1835 he offered to settlefor ten
cents

the dollar.6 It does appear as if Biddle had become and could not sadly involved with the Courier and Enquirer The loans granted to the editors of this extricate himself.
on

paper would

assuredly not have been made

the conjecture

to others

unless

similarly situated. It is easy to

appealed to Biddle in this matter. He had openly announced his belief knowledge in the policy of disseminating of the bank

arguments

which

through

press, and of the justice of paying for such publications. In this policy he was supported by men of the irreproachable character,7 and it may be added that most
the
1
"

If you think proper to act in the meantime I handed yon, do the paper npon if not the paper then support the measures the President, but I will never of will in his favour."" Webb to Biddle, no date, private and conagain write a paragraph fidential,
so,

ibid.

and your friends do not enable me to take the stand called for by every consideration of justice and principle, I will turn the political part of the paper over " Same to same, July 13, 1832, ibid. A similar letter was to Noah ! written July 16.
If you
"

"

Aug.

to R. L. Colt, of Baltimore. sent the proposition 4, 1832, P. L. B., Vol. IV, pp. 278, 279.

He

"

To

Webb,

Aug.

3 and

s
6

Webb

to Biddle, Aug.

5, 1832, B. P.

PARTON, To

Vol. Ill, pp. 428,429.

S. D. 17, 23d Cong., 2d Sess., pp. 40 and

314. in defence been

Biddle, Jan. 4, 1835, B. P.

of the bank, that, assailed as unfaithful to its trust, both to the in its power means and to the public, had it not resorted to every proper stockholders to defend its conduct, and, among others, the free circulation of able and judicious publications."" Jan. 13, 1834, C. D., Vol. X, Part I, pp. 212, 213. 7Calhoun
say,

it

was

by the

I must "But said: it would Executive,

have

to be " explanatory publications were bank. Confined to that object exclusively."" S. D. 17, 23d Cong., 2d Sess., p. 322.

The

Biddle

of the of the operations and conduct Tilford, Sept. 26, 1832, to John

264

THE

SECOND

BANK

OP

THE

UNITED

STATES

after the beginning of the campaign of shameless slander inaugurated by Blair, he was and calumny certainly not than an without justification, and would have been more
ordinary mortal had he done otherwise than he did. But it was only one step from this legitimate policy to that of making loans as a sort of payment for publications, and perhaps He might regard such this subtle logic appealed to Biddle.

loans,

if it could be pointed out that they were not by business considerations, as justifiedthe resoby justified lution If he had been of the bank to pay for publications.
even

willing to pay the Courier and Enquirer dollars for the publication of a few columns what possible could there be to

several hundred in a single issue,

a

loan of $52,000 every issue of the paper for the bank's which would secure As a matter of economy the second method cause? might be preferable to the first,since there was even a chance of

objection

securing the repayment of the capital with interest, besides having the support of the paper.
Payments documents, made
to

printers

by

the bank

for publishing

articles,and speeches favorable to re-charter were open to the criticism of being political; outside the out of the money of the stockprovince of a bank ; made holders,

United

the largest of whom the government was of the States itself;and, finally,virtual bribes to the fortunate

printers and editors who received the jobs.While the in making directors felt justified these expenditures, yet all these were valid, even supposing that the prices

objections

Everyone knows not excessive. paid for the work done were that the securing of printing which yields a fair profit is a moment matter of much with publishers, and that those
who furnish such business are naturally treated as patrons. In reference to compensation, the Senate committee of 1834 declared that the bank had given no gratuities to printers or

publishers, and

left it to the Senate

to

judgewhether

or

CHARGES
the
1

AGAINST

THE

BANK

265

not

institution had

The

evidence

"extra allowed them tion." compensaproves that the rate of payment was

moderate.2 Another

objection the

of the bank was discretion. his own

that the presiexpenditure was dent permitted to dispose of the funds at Jackson bitterly complained of this in
on

to

18, 1833, declaring his paper of September directors that the sums of the government for printing 000." 3 about $80, funds of the bank

the authority spent by the

bank

"

the years 1831 and 1832 were The directors, said Jackson, put "the at the disposition of the president for

during

the whole press of the country in the purpose of employing the service of the bank, to hire writers and newspapers, and to pay out such sums as he pleases to what person and for

pleases without the responsibility of rendering 4 The criticism was just. The any specific account." expenditures for extra printing from 1829 to 1834, inclusive,
what

services he

103.25, and to these were added expenditures aggregated $65, by President Biddle, without vouchers, and without designation The total of the purposes for which they were made. of these
items
was

$29,605.5 In whatever light the firstof

these

totally indefensible. may be viewed, the second was Senate committee The of 1834, though favorable to the bank, condemned the practice and virtually censured the directors for allowing the president to exercise such 11, 1831.6 under the resolution of March It is to Biddle's credit that he of his policy in regard to paying
1

powers

never

any mystery for publications in the made

2

8. D. 17, 23d Cong., 2d Sess., p. 39.

and Papers

Ibid., pp. 322-9.

3 Messages

of the Presidents,

Vol. Ill, p. 14.

*Ibid., p. 15.
Report

6" Committee

D. 17, 23d Cong., 2d Sess., p. 329. See for the bank's statement of Directors in 1833, p. 40. They admit the expenditure

of the

of $58,265.04 in

four years.
have grown to the resolution they say : " But expenditures up under defined purpose." it, resting on or the orders of the president, without vouchers " be " set forth."" Ibid., p. 46. They hold that " the object of expenditure should
6

Referring

266

THE

SECOND

BANK

OP

THE

UNITED

STATES

newspapers, and willingly gave his reasons that most of the opposition to the bank and
that explanatory

for it. He believed

was

due to ignorance,

articles would dispel this ignorance Thoroughly and so put an end to the opposition. convinced that this was true, he continued publishing.1 He was assuredly Ingersoll in 1831 gave it as his opinion that mistaken. legislature had ever not three members of the Pennsylvania read or will ever read McDuffie's report, Gallatin's article zette or the views in the North American and the National GaCarey declared that the sys;"2 while in 1834 Mathew tem
"

of issuing pamphlets questions at great length would read them, or, This them.8

abstruse banking was utterly mistaken, that nobody if anybody did, that he would not understand with

dealing

judgmentseems

sound,

as

anyone

will

agree who has read the pamphlets. The amount of published matter paid for by the bank in April, 1830, with Senator was very great. It began for about five years. The but distributed those bank not only published articles itself, to publish reports. As a of others, and paid newspapers banking on wrote who consequence, everyone

Smith's

report, and

continued

subjects

case, wanted was at least,a pamphlet published without the privity of the demanded. Newspapers, of bank, and then recompense was

the bank

to pay for his publication.

In

one

course,
i
"

would
On

not print articles supporting

the bank
simple.
"

without

nine tenths

security of all our

the great the irresistible power, of truth. I in the Legislature of my state the twenty ago I opposed years recollect well when taken to prostrate the former Bank, how much measures of the opposition to the Bank ignorance was the result of downright and its operations of its meaning be wanting. I know what was then wanting and I am resolved that it shall not now

this whole theory of publication, my theory is very of men arise from their ignorance of the errors
institutions is in the
power,

I believe that that

and

"

....

"

saw
"

the and

the

same

in which the small demagogues the commuof that day deceived nity to try to prevent the small demagogues of this day from repeating 2, 1831, P. L, B., Vol. To Joseph Gales, of Washington, March delusion."
manner

mean

"

m,

p. 482.
"

Ingersoll to Biddle, March Carey

to

3, 1831, B. P.

3M.

the directors

of the

Bank

of the United

States, Philadelphia,

March

28, 1834, ibid.

CHARGES

AGAINST

THE

BANK

267

A congressman rarely made a friendly speech without expecting its dissemination at the expense of the bank. The most amusing case is that of John Tyler. Tyler compensation. of 1834, of the Senate investigating committee and, voicing the austere public morality characteristic of Virginia Republicanism since the days of Jefferson, criticised for disseminating pamphlets the bank and congressional
was

chairman

reports.1 "Our all his censure

friend," wrote Webster, "seemed to reserve for these heads."2 Biddle, therefore, felt

nated. quite safe in asking Tyler if he wished his report dissemiThe surprise and disgust of the bank's president he discovered that Tyler did may easily be guessed when wish it to the extent of a thousand copies.3 Whatever credit is due Tyler for his politicalmorality, a sense was of humor evidently not his prominent characteristics. That the matter of printing was carried entirely too far will easily be gathered from what has been said, and even the bank's most eager partisans were that this convinced who arranged for much of the printing, He thought they should cut down the at last protested. he number of congressional speeches published, though added, with bitter pleasantry, "It is a great assistance to
was so.

Watmough,

Green, to be
a sujet,nd
him."
"

sure.

He

is at best however

but

alike The charge of jobbing public stocks touched the honor in of the president and corporation, and, if proved, established
a

scarcely worth what has already been The printers, in his opinion, were "pretty much all let them handle the money, au diable, the rest."4

mauvais done for

violation of the law ; for the charter declared that the

1 8.
3

cor-

D. 17, 23d Cong., 2d Sess., p. 45.

To

Biddle, Dec. 17, 1834, B. P.

in its defence "after documents blaming for circulating the Bank it, ends by making the the task of vindicating of leaving to its enemies in publication Bank incur an expense which it did not desire and takes a thousand ' ' copies of these very unpolitic publications, such being the phrase I believe in his Feb. 9, 1835, P. L. B., Vol. V, pp. 318, 319. Biddle to Watmough, report.""

Tyler

instead

"

To

Biddle, Washington,

Feb. 7, 1834, B. P.

268

THE

SECOND

BANK

or

THE

UNITED

STATES

poration should not "purchase any public debt whatsoever,"1 "more than $2,000,000 thereof in anyone or sell year."2 The specific charge was in that the bank jobbed the 3 per
cent, stock, and that in doing
so

it had

the payment

of the national

debt

interposed to prevent by urging the government's

creditors not to present the certificatesof the stock came. when the day of payment The facts were as follows: On the 24th of March, 1832, Dickins, acting secretary of the treasury, informed Biddle to that one-half of the 3 per cents., amounting the 1st on $6,500,000,ould be paid off by the government w

Asbury

of July.3 The bank would have to furnish the funds from deposits held. Unfortunately, the discharge the government

of the debt in this year had been so the bank's business so expanded, that it was

enormous,

and
to

impossible

raise the sum required by the date specified. Biddle, long before the notice from Dickins, had attempted to reduce the bank's business and so get possession of sufficient specie to

demands. had failed in this He government's He accordingly looked about him for some attempt.4 other the threatened means embarrassment, of evading which would be fatal if it occurred in the midst of the campaign
meet

the

for

renewed
as
a

charter.

Hurrying

to Washington,

he

requested

the

of the payrelief a postponement ment from July 1 to October 1, and offered, on behalf of bank, to pay the interest on the stock for the three
was

temporary

His request months. the treasury concluded

granted on this condition.5 Later to discharge two-thirds of each certificate of the debt
I.
on

in October, and the remainder

1

January

Sec. 11, 9th fundamental

article.

See Appendix

2
3

Sees. 5 and
"

6.

See Appendix

I.

that the means of the Treasury will be sufficient to discharge to give notice the 3 per cents, on the 1st of July next, and it is proposed one-half of the 1st of April."" H. B. 460, 22d Cong., 1st Sess., p. 531. on accordingly
*

It is believed

See pp. 146-50. Testimony of Dickins, H. R. 121, 22d Cong., 2d Sess., pp. 89, 90.

CHARGES

AGAINST

THE

BANK for

269

1, 1833,1 thus calling upon the bank 000 within three months' time.
The

sum

of

$13,000,-

bank's

difficulties under

these

vividly portrayed in the correspondence and in a letter of Biddle's to Cadwalader, outlining his plan Biddle thought that local to secure the means of payment. ings discounts must be diminished wherever possible ; that dealshould be materially reduced ; that count as could be spared should be used to dismoney much paper secured by a deposit of 3 per cent, stock
in internal exchange

are circumstances with the branches,

as

tions and to purchase bills of foreign exchange ; and that negotiashould be begun with the holders of the 3 per cents.2 doubtful as to the adequacy of this plan, Cadwalader was be in a evident that the principal reliance must and it was

negotiation with the holders of the stock, in which the bank the interest on the stock in a loan by paying would secure the holders accepting its the place of the government,
from all responsibility and thus relieving the government hardly liability. Any other form of loan at this time was feasible, since no one wished to lend.
already authorized the president to defer "a committee part of the and the exchange 3 Proceeding in accordance with this authority, payments." The certificates of foreign the following plan was adopted:
1 2

The

board

of directors had

Secretary
"

McLane
diminish

to Biddle,

July 19, 1832, ibid., p. 166.

local discounts ; I would we can our wherever avoid as domestic bills any where except on the northern Atlantic as possible purchasing much 90 days frontier and those at very short dates, certainly within and I would put in discounts dollar we can on the 3s at 5 per cent, and the purchase spare every of I would
"

those we [add] negociations must with the large holders To Cadwalader, Washington, June threes, especially the agents of foreigners." 1832, P. L. B., Vol. IV, p. 255. foreign exchange.
"

To

of 30,

"Resolved,

That

be referred to the committee bank, whatever arrangements

United States
may,

by the President, just made behalf of the to make, on of exchange, with authority with the holders of the three per cent stock of the in their opinion, best promote the convenience of the public and
the

subject of the communication

the interests

of

the

Resolution of this institution." States to the Committee United of Ways

"

of March
and

13, 1832, Report

of the Bank
See

Means,

Jan. 28, 1833, p. 6.

also H. R. 121, 22d Cong., 2d Sess., p. 162.

270

THE

SECOND

BANK

OF

THE

UNITED

STATES

holders of the stock were to be surrendered to the bank and by it passed over to the government as evidence of the payment however, would not pay of the debt. The bank itself, the principal, but borrow it from the original holders of the debt, continuing
the loan for another year in place of the the interest during the continuand paying ance. thus of $5,000,000 of the stock was this plan there could not be the least

government The

payment To to be deferred. possible

either objection,
a

would

procuring
its
own

moral, since the government be discharged of all obligation, the bank simply loan to the extent of the $5,000,000 on new
or

legal

responsibility. The operation would be the same if it had paid the debt outright and then immediately as it back from borrowed its own the original holders on

account.

On

the day that the directors authorized the postponement of the stock, Biddle opened negotiations with T. W.

Ludlow,

of New

little chance

of service.2 to make England arrangements with the Barings to defer the payment ceeded. of $5,000,000of the stock.3 This mission sucThe Barings agreed to invite the foreign holders of
the 3 per cents, to retain their stock until October, 1833, to continue the while the Bank of the United States was of the interest quarterly and to pay the principal payment Since this would probably not sufficeto at the date named.

perceived that there was of getting the transaction settled in time to be He therefore dispatched General Cadwalader to
soon

York,1 but

defer

as $5,000,000,

bought
1

to be much of the stock as possible was up by the Barings for the bank, at the best terms,

The

Biddle and
2

is given entire in H. R. 121, 22d Cong., 2d Sess., pp. 93 ff. correspondence before this. had talked the matter over Ludlow
to to

come

I am e., before Oct. 1] be in my power afraid that it will not before [i. definite arrangement to any on the subject." Ludlow with the bank Biddle, July 14, 1832, ibid., p. 95 ; and same July 21, 1832, ibid., pp. 96, 97. to same, "But
"

Cadwalader
was

had

mission

to be undertaken.

been notified between the 1st and 10th of the month Cadwalader's testimony, ibid., p. 50.
"

that

the

CHABGES

AGAINST

THE

BANK

271

to remain with certificateswere the Barings, or with the holders of them.1 It will be noticed that this arrangement differed considerably from the firstplan of the bank, inasmuch as the Barings

not

over

$91

on

$100.

The

were

The

hold authorized to buy stock for the bank, and also to withthe certificates, which would leave the debt stillunpaid. bank would be culpable in both particulars, for it was

prohibited by its charter from purchasing any public debt, for deferring the delivery of the cerand the arrangement tificate
interference with the government's Cadwalader's agreement plan to discharge the debt. therefore, both morally wrong and illegal. But this
was
an

unjustifiable

was,

would
was: answer

not necessarily involve the bank, for the vital question he authority to make Had In such an agreement? to this question
was

Cadwalader

distinctly averred

that

he

alone

responsible, his instructions not having contemplate the purchase of the stock.2 In support of his
the declarations of the directors that contemplated, and Biddle's disavowal
was
no

admission

are

agreement was part of it which

such of that

that the patently illegal on the ground forbidden by its charter " to purchase any institution was Unless there was infinite an public debt whatsoever."5
amount

of shabby
was

not

lying, and that, too, under oath, the corporation The presumption that everybody guilty.

lied will hardly be considered tenable.*

Circular of Aug. 22, 1832, ibid., pp. 101, 102. An arrangement was also made Hope " Co., of Amsterdam. Ibid., pp. 103, 104. with 2 " The to in my of the stock by Messrs. Baring had not been adverted purchase instructions, or in any conversation with my constituents at home." Ibid., p. 52. 3 Ibid., p. 117.
1
" "

4 Suspicious had forwarded the substance that Cadwalader were circumstances for the bank to purchase the agreement the Barings, stating that they were of with Aug. 22 (ibid.,. 99); that he had forwarded itself on the 25th (ibid., the agreement p had not disavowed the illegal clause until Oct. 15, after the p. 100); but Biddle

had appeared in a New York paper (ibid.,pp. 87, 117). Biddle always however, he had not received the agreement that asserted, until Oct. 12, and that disavowed he had straightway it. (To John Sergeant, Feb. 1, 1833, P. L. B., Vol. IV,
agreement
p. 407; also in all

had

had

walader and reports on the affair.) Again, Cadpublished examinations in manuscript, instead of in print, in the agreement circulated

272

THE The

SECOND

BANK

OP

THE

UNITED

STATES

disavowal of Cadwalader's contract gave rise to new Biddle insisted that the certificates of the complications.
stock must

might Barings

be sent to the United States in order that he to the secretary of the treasury.1 The turn them over had already

purchased They $2,376,481.45postponed.

owners

$1,428,974.54 and
now

concluded

got to buy the

would not consent to the bank's to the effect that new certificates revised terms,2 which were be given for the old ones surrendered, the bank to. should continue paying the interest.3 Many of the foreign holders latter also if the

agreed to these terms, and the Barings secured their certificates and forwarded them to the United States.4
The

affair made a great noise, and kept the bank's advocates Biddle was busy explaining for many months. particularl sensitive about the charge of violating the charter.

should encourage the holders of the debt not to present the certificatesfor payment, he apparently considered littleimportance to anyone but no concern and of of

That

the bank

the bank.

Writing

on

the

he subject

revealed the depth and

the keenness
With

of his feeling:

to the return of the certificatesthe Government cannot oblige any body to present his certificate the Government but cannot compel a stockholder to take his prinstops the interest cipal

regard

"

"

"

But

supposing

few months, what harm the money remains stopped

"

delayed for a that the certificates are does that do to any body ? The interest has
in the

Treasury;

so

that instead of

not become public (H. R. 121, 22d Cong., 2d Sess., p. 100). The order that it might it would Sept. 21, which done bank presumably not have curtailments ceased Indeed, the letter of Aug. 22 knowing the agreement (ibid.,. 169). p about without

had the

Biddle reached in ceasing bank

enough

to justify explicit enough said this was Sergeant, loc. cit.). But it was (to curtailment also explicit to justify disavowal a of the contract.

by

this time;

Biddle

i"T. R. 121, 22d Cong., 2d Sess., p. 118.

a

To

Biddle, Nov.

29, 1832, ibid., pp. 112, 113; and

Biddle

to Barings,

Oct. 19 and

31, 1832, ibid., pp. 119, 120.

3
*

Ibid., pp. 118-20;

circular of the Barings,

p. 112.

of stock, Nov. 115, 116 ; Dec. 22, p. 116.

Returns

29, p. Ill ; Dec. 6, p. 112; Dec. 14, pp. 113-15; Dec. 19, pp.

CHABGES
depriving the Government
is true, for the Government

AGAINST

THE

BANK

273

of the

of itsfunds, directlythe reverse retains the funds and pays no interest.1

use

that the bank, the agent of the government, should urge the holders to delay presentation of the certificates, when its business was to procure them for the government at once,

But

by such proposition, and one not to be justified Moreover, the assertions that " the money remains arguments. in the Treasury," Government "the retains the
was

another

strictly true, unless the bank and the identical, for the bank retained the funds and treasury were had no further use of them. the government Suspicious souls will consequently to believe continue
were

funds,"

not

that Biddle's explanations were not veracious, but in morals in law it is well to give the accused the benefit of the as doubt. The evidence of the bank's integrity was sufficient

for J.
Thomas

Q. Adams,

Gulian

C. Verplanck,

Cooper,2 and may well be is that after Biddle's disavowal

Albert Gallatin, and is cerWhat tain accepted. the bank

legal position, if it had ever postponement of the 3 per cents, did not take place. The the point of view of most serious charges from those which imputed proper and safe business were tion usurpaof the authority and power of the board of directors, by the president and the exchange committee, and the use of such power to loan funds to favored individuals on unusual
terms.

returned to its deliberately left it, and the

The
was

by

charge of loaning large sums of money to favorites The bank replied made in the case of T. Biddle " Co. asserting that the firm acted as its brokers, which is
and

undoubted,
iTo
2

that the

loans

were

made

to them

to loan

C. A. Wickliffe, Dec. 6, 1832, P.L.

me,

B., Vol. IV, pp. 335, 336.

"To

the reasoning

my

view

of it, show
of Gen'l

agency

does the evidence, in is sufficient; nor of Verplanck infraction of the charter by the bank through the any voluntary S. C., July 16, 1833, Cadwalader."" T. Cooper Columbia, to Biddle

B. P.

Verplanck
it "the

making 2d Sess., p. 1.

the arrangement, that in and declared nevertheless condemned institution exceeded H. R. 121, 22d Cong., its legitimate authority.""

274

THE

SECOND

BANK

OP

THE

UNITED

STATES

assertion 8 is that precisely such loans led later to the ruin of the bank not apropos, because the later loans were made deliberately
to close up the bank's business, and were of an entirely different nature.8 The president of a bank, if he is a real and active executive, a man of energy, of autocratic temper, of tact and skill,
at
a

for the bank.1

This is likely. Professor Sumner's

moment

when

it was

intended

will always secure wishes to do so.

power In the

over case

his board, provided that he of the United of the Bank

States this

was

Under

dent. rendered easier by the position of the presithe by-laws he was a ex member of

officio

This power in committee increased was every committee.* by his right under the rules of 1833 to name them all with In addition it must be recollected that his one exception.5
tenure
was was

of office was continuous, while that of the directors intermittent. Again, most of the voting for directors done by proxy,6 and out of 4,533 proxies in 1832, Biddle

holder in the case in person held 1,436, and was joint 1,684 others.7 While he thus held a controlling number

of

of Philadelthe votes of distant stockholders, those resident in phia rarely attended elections,8and consequently the holders of proxies had power to elect the directors if they chose. Nicholas Biddle was a man of intense energy, autocratic in temper, and possessing supreme confidence in his own

judgment. It
1 2
*

was

inevitable that he should

rule and

not

Adams's
Andrew

report, H. B. 460, 22d Cong., 1st Sess., p. 390.

Jackson

(revised) p. 311.
,

See p. 365.
States, Rule

Rules

See Appendix
""

Regulations and III.

sec.

of

the

Bank

of

the

United

XVI,

par.

2.

Ibid., Rule XIII, and The the State of the Bank. 2d Sess., pp. 53, 54, 56, 65.
6 8

3, Rule

XXV.

The
were

exception

was
"

the Committee

on

rules in this respect

effective.
^

H. R. 121, 22d Cong.,

H. R. 460, 22d Cong., 1st Sess., p. 284.

"

Ibid.

to the inconvenience

on

resident in Philadelphia, will not put themselves The consefor the purpose to the Bank quence of coming of voting. is, that the responsibility of voting at elections devolves, in a great degree, Biddle, ibid., p. 283. the representatives of the distant stockholders." the stockholders
....
"

But

CHARGES

AGAINST

THE

BANK

275

reign, and the proofs that he did rule are observable He appointed the committees of the bank after everywhere. 1828, though the rules giving him this power were not
merely the bank's books until 1833 ;' he does not want directors, and he gives orders by the government examined that the books must not be examined by them,2 though only the adopted directors at could rightfully do this ; he desires new the central board and writes, "General Cadwalader and myself have thought it was for the interest of the Bank to make the board
8

change,"

though

it would

any clause giving General

be difficult to find in the charter Cadwalader and Nicholas Biddle

directors. authority to appoint new Though such power might not in itself be objectionable it was certainly liable to abuse, and under Biddle something like abuse can be detected. The most serious charge was
that of R. M. Whitney, who asserted in 1832 of the bank (1) made discounts on his that the president
own

authority ; that in doing so he favored his relatives,T. Biddle " Co. ; (2) that he made such loans without charging interest; (4) (3) that a custom had obtained of permitting brokers to receive
money from the teller's drawer
as

temporary

loans, leaving

that these transactions were stock certificatesas security ; (5) the books of the bank, and consequently not entered on to the knowledge never came tiate of the directors. To substanhis charges, Whitney told a very circumstantial story to the effect that the cashier and assistant cashier had reported to him specific transactions of this character in May, drawer

1824;

that he

with

them

went

to the first teller's

and found security for two temporary loans of large to the discount clerk's desk and sums ; that they then went found two notes for large sums which had been discounted by the president alone, and not entered on the books. He
1

Memorial
To

of the Government

Directors,

Ex.

Doc.

12, 23d Cong., 1st Sess., p. 9.

2 s

Jaudon,

Newport,

July 16, 1834, B. P.

To D. Sears, Jan. 5, 1824, P. L. B., Vol. I, p. 91.

276

THE

SECOND

BANK

OF

THE

UNITED

STATES

said that he instructed the officers"to enter on the books the money that had been loaned from the Teller's Drawer,"
done under the head of "bills receivable;" and that this was to President Biddle and "desired that he then went at once of a similar nature should occur while" he director. The president "colored up a good a remained deal" and said that there should not.1 Whitney had taken it in a memorandum at the time and produced of the sums that nothing corroboration of his assertions.2 the transactions.

He

gave

exact

dates for

Unfortunately for him, his evidence broke down

one

at every

In of the essential points most needing corroboration. discounts on regard to the charge that the president made his own said to have authority, ex-Cashier Wilson, who was
to support Whitney, given the information and was summoned counted swore positivelythat the notes referred to had been dis-

by the board and not by the president.3 Both the to him the officerswho, Whitney asserted, had communicated facts about the loan swore that they had no recollection of
The firstteller and the discount clerk such an interview.4 declared that they had no knowledge of the alleged visit to that no single director their desks.5 The officers also swore had
case

authority to order

entries made

on

the

such an order was given no clerk would furnished evidence in the books to show that the Andrews sum actually entered on the day the loan of $45,000 was
was

books, and in obey it.6 Mr.

made, and consequently could not have been ordered In regard to the charge of favoritism entered by Whitney.7 to the Biddies, the evidence adduced was conclusive that the
i

H. R. 460, 22d Cong., 1st Sess., pp. 115, 118.

ibid., p. 118.

3"

With

respect

to the note

am positive it was I am of C. Biddle.

discounted
as

by

for $20,000for T. Biddle, referred to by Mr. Whitney, I am the Board. equally positive as to the note this
as

positive about

about
5 t

the other.""

Ibid., pp. 114, 126.

*/6td., pp. 112, 119.

"

Ibid., pp. 131, 132.

Ibid., pp. 120, 121, 126, 140.

Ibid., p. 120.

CHARGES

AGAINST

THE

BANK

277

president had not been guilty.1

on

That

granted all accommodations established by the testimony, by the books of the bank, and ney's by those of the firm of T. Biddle " Co.2 Finally, to Whit-

interest had been paid to the firm was irrefutably

proved that President complete discomfiture, it was Biddle was in Washington when the particular loans referred to were made in Philadelphia, and so could not have made
in could he have been interviewed then by Whitney so overwhelmingly regard to the loans.3 The entire case was to admit that the that he was compelled against Whitney

them,

nor

view president; that the interwith him so confidently alleged did not take place at the the loans; and time stated; that interest had been paid on that he had directed the entries to be that he was not sure
two

loans

were

not

made

by the

made.*
a

The

committee,

resolution majority
were

hostile to the bank, passed declaring that in their opinion the

though

charges
1

"without

foundation."5

Biddle;

Ibid., pp. 112, 114, Wilson's testimony ; p. 129, Beck's testimony ; pp. 135. 136, T. 139, Andrews; ; pp. 154, 155, Cadwalader p. 153, Cowperthwaite p. ; pp.155, 156, Mcllvaine ; p. 156, Eyre.
2

Ibid., pp. "The

two

114, 134, 136, 137, 506. loans

Ibid., pp.

141 ff.

President,

to have been made appear and charged, while Mr. Biddle, the I think it may be fairly inferred that ; and at Washington absent by the officers, in consequence they were of the precedent allowed established of been made, similar loans having and they, not feeling willing to refuse to do, while he had authorized was the President absent, what and done while present, which
*
was

was

the
put

reason

been being

upon

of my being the books, or

informed

that I directed

paid, it certainly appears at the same paid off, interest was Ibid., p. 149. borrowed.""
$

been made, and that they had should be. In relation to interest by the books loans were that, at the time the two had time paid, for the period been the money
that they they

had

must

have

Ibid., p. 433. In regard to Whitney's He charges several facts deserve notice. been informed loans to T. Biddle, despite the failure of the officers to of the

remember he had no

he could not have his memorandum, for ; otherwise made have given the inforto the bank's books after 1825. Wilson mation, access must the act questionable (ibid., 126). Being informed p. and considered of these
at the

the interview

loans, and consulting the books books, Whitney keeper of those

time, and

" This bills receivable." of account loans charged this time were such

probably is made

necessarily in company with the transferring the loans to the advised more probable by the fact that only at

Whitney

believed

the

absent

it at the time the loans when

to bills receivable (ibid.,pp. 134, 506). That is proved by his having menmatter worthy of reprobation tioned The fact that the president was to a Mr. Hunt (ibid.,. 141). p
were

made

does not

prove

that

the

practice

did

not

exist ;

278

THE

SECOND

BANK

OP

THE

UNITED

STATES

Yet before the very committee which heard these charges question and admitted their disproof, it was proved beyond that the president of the bank had on his own responsibility billsof exchange;1 that he had granted interest to T. loans by them Biddle " Co. on to the bank, without the consent of anyone and against the protests of the cashier;2 that on March 23, 1832, he had discounted a note for $3,500 bought for General

Stevens,

without consulting board,3 and this in spite of the fact that the board met the day.4 In May, 1831, Biddle also granted a loan to the same

congressman and either the exchange

stranger to him, or the committee

War

Department,

though

he

had

"

had

no

opportunity
5

of

consulting the Board of Directors on the These cases however, the only ones are,
search has revealed.

subject."
which
a

thorough

many
but

cases

Nor would it be rational to expect that so autocratic that his existed, since Biddle was

besides the president employed it. This someone was probably himself, an assumption the cashier made of T. almost a certainty by the testimony Biddle, who declared he believed " that the transaction that was altogether with Mr. Wilson" transactions (ibid., 136). See also p. 135: "My -p. with the Bank, in done with the Cashiers ; when are a rule is once ordinary cases, established, or in for 1 do not know it becomes a rule, we usage, when apply to the Cashiers ; and, in that
someone

is begun transaction cases out of ten, the whole and concluded with them ;" from the entries in T. Biddle's books that the money came and p. 137, where show The probability is that Wilson objected,not to the practice, but to the the cashier. he had made himself. Troubled over them size of these particular loans, although he then consulted it, stating as a grievance Whitney the matter, that the about nine

loans. Whitney then of such extensive president had distinctly approved would tion advise their being put on the books instead of leaving only a record of the transacin the teller's drawer. At Biddle's return he probably the pracargued against tice, is the only that he was agree and Biddle would right. This, it would seem, possible explanation
1
2

of the matter.
R. 460, 22d Cong.,

Wilson's
"

testimony."/?.

1st Sess., p. 112.

by me as a loan to the Bank tillthe interest account was not regarded by the President, nor was it known to the the explanation was given rendered, and Idem, loc. cit., p. 114; see also pp. 128, 135, 436. Directors."

It

was

"

"

I directed the discount

on own

Exchange, been
was

because, from
to leave town

my

this occasion, without waiting for the Committee of knowledge it would have sure of the party, I was

to

I am by the committee, of which myself a member, and as the applicant I thought it right to give that reasonable about accommodation Biddle, ibid., p. 190; also Cowperthwaite's testimony, ibid. stranger.""
done
*

Memorial

of Reuben

M.

Whitney,

pp.

49, 50.

"

Biddle to Secretary

Eaton,

May

7, 1831, S. D. 98, 22d Cong., 1st Sess., p. 49.

CHARGES

AGAINST

THE

BANK

279

This be pretty certain to obtain at the board. was particularly likely because the directors rarely attended board in any number. On one a session of the occasion
will would

Mcllvaine
and
on

writes Biddle another he says,

*

that
"

we

quorum could be secured, had the unusually large Board

no

devoted With a directorate so little of eight this morning." duties of their positions, it was inevitable to the irksome that power should fall into the hands of a few, and it is not surprising to find an acquaintance appealing to Biddle for
the ground 2 the Board."
a
on

loan

that

"

you always get your way

with

Fven

if Biddle

had

not

controlled the board, still he

of exchange, which was easily control the committee which he presided. small and appointed by himself, and over The essential charge was that this committee supplanted the might

That the committee itself had no reason board completely. counting for existing could not be urged, since the purchase and dismight frequently need to be of bills of exchange made between discount days, and the board met only twice
a

week.

Horace

as committee parent bank."

consequently upheld the exchange indispensable "to the due management of the
8

Binney

The

agent or the master The exchange department

question stillremains: of the board?

was

Did

it act

as

the

of the bank,4 and a committee naturally followed.5 As exchange

i

created early in the history to manage the department operations

were

at first

Aug. 4, 1826, B. P.
"

B. Patterson

to Biddle, Sept. 10, 1832, ibid.

is known by all who Sir, the power of exchange exercised by the committee it is now in our as anything of practical banking, cities, to be not conducted indispensible ; and, to the due management of the parent only usual, but almost C. Z"., Vol. X, Part II, p. 2355, Jan. 7, 1834. bank, entirely so.""
3

know

July 18, 1817." Tyler's report, 8. D. 17, 23d Cong., 2d Sess., p. 3. " A Committee of Exchange consisting of three members shall be appointed have special charge of all matters who shall relating to the operations of the
and
"

its offices,in Foreign Exchange and Domestic and Bullion and who for the purchase daily committee Exchange at the Bank." of Domestic shall act as a Regulations Rules and of the Bank of the United States, Rule XIII, par. 2. Bank
"

See Appendix

III.

280

THE

SECOND

BANK

or

THE

UNITED

STATES

was very limited, the committee of littleweight; but with the stupendous growth of such dealings under Biddle's system it became very important.1 It was now appointed quarterly

down to 1828 it had been president, though might sit upon it.2 selected by rotation, so that all members In the early days, too, the functions of the committee consisted in the management of only exchange operations,

by the

officerof the bank could say that "the " Committee was of principal object having the Exchange to discount notes on days that the board of directors did not,

while

in 1832

an

sit.3 At

this time

the

committee

purchased

"bills both

foreign and domestic, discounted "domestic States.''

it might
....

"

and, in the absence of the Board," bills on any part of the United It also discounted promissory notes.5 In brief, to represent the board be said, in some measure,
"

to act for the board

even

in the ordinary

business

In acting, however, it was authorized by votes of the bank. to perform specific duties, as of the directorate, sometimes to operate generin the case of the 3 per cents., sometimes ally, 9th of July, 1830, which by the resolutions of the as authorized the committee
' '

to loan

on

the collateral security

of money, at a rate of public stock, large sums of approved 7 The discount not lower than five per cent." government discounts by the to directors in 1833 objected the making of
1

From

July 3, 1827." Tyler's report, S. D. 17, 23d Cong., 2d Sess., p. 3.

of

Report Sess., p. 24.

2

the government

directors,

April

22, 1833, Ex.

Doc.

2, 23d

Cong., 1st

John

Burtis, H. R. 460, 22d Cong., 1st Sess., p. 552.

H. R. 121, 22d Cong., 2d Sess., p. 73.

*M.
5

L. Bevan,

Lewis,

8. D. 17,, 23d

Cong.,

2d

Sess., p.

51; Sullivan,

H. R. 121, 22d Cong., 2d

ibid., p. 564.

Sess., p. 65; Cope,

6

H. R. 460, 22d Cong., 1st Sess., p. 557; Bevan,

Cope, ibid., p. 557.

Ibid., p. 505, and resolution of Sept. 17, 1831, ibid. ; resolution of March 6, 1835, NILES, Vol. LX, p. 139. These resolutions, be it noted, gave the committee authority to loan money on stock security. In other words, on July 9, 1830, it ceased to be only
i a

committee

of exchange.

CHARGES

AGAINST

THE

BANK

281

committee,

moving to restrict it to exchange purchases; but, nevertheless, the board as a whole approved.1 Such authority and such powers might not be provided
transactions

able, objectionof the

that the board

kept the

itself informed and

entered

into by

But not generally when necessary. " laid before the directors for their approval or rejection," 2 " definitely by the committee," but were the acted upon
them directors not members meancommittee of the exchange while " knowing no more of the nature of the operations 3 Such discounts were, however, entered than other persons." upon
with
never
"

committee the discounts were

checked

the books and submitted to the board after being made,4 "bills receivable," which the exception of loans on before it at all.5 In 1831, moreover, came the loans on

bills receivable," that is, loans secured by stock,6 began to increase notably.7 This was ominous, when it is recollected that Biddle early in his administration had condemned such

loans

as

bad

banking.8

But

in all this the committee

acted

under the board's authority. A committee of five, including the president and cashier " a committee expressly invested with an authority which, it "from many of the ordifrom its very nature, exempted" nary
"

rules of discounting,"
Ex. PP, 8, 9.
2
3 5

which
23-5; and

discounted

promissory

Doc.

2, 23d Cong.,

1st Sess., pp.

Ex. Doc. 12, 23d Cong., 1st Sess.,

Biddle, H. R. 460, 22d Cong., 1st Sess., p. 84.

R. Willing, H. R. 121, 22d Cong., 2d Sess., p. 69.

Report
of the

"

Sullivan, ibid., p. 62. April 3, 1841, NILES,

Investigating

Committee

of Stockholders,

Vol. LX,
6"

p. 107.

'Bills receivable' are those secured by stock, and on which the full amount To this is advanced to the borrower the loan is due. with interest, payable when is also carried bills growing out of compromises account of debts, and more recently, if. R. 460, 22d Cong., 1st Sess.,. of bills received on account of India arrangements.""
p. 120.
7 8 "

For

1822-30, $1,059,202.90; for 1831,

to

Ibid., $1,121,107.51."

pp.

506, 507.

Biddle

Isaac

Lawrence,

Oct. 13, 1823." P. L. B., Vol. I, p. 55.

Bevan
said that it interest in the bank
was

Biddle, H. R. 460, 22d

rules "other than

Cong., 1st Sess., p. 542.

feeling
an

bound
in the

by

no

public good,

would

which men, be governed by."" H.

those

and

R. 121, 22d Cong., 2d Sess., p. 74.

282

THE

SECOND

BANK

OP

THE

UNITED

STATES

mous and controlled the enorexchange operations of the bank, was likely to absorb power, likely to abuse its authority. There can, indeed, be
no

notes four days out of every week

doubt

that this

was

certain of the destroyed the institution, the specific charges being that a resolution of March 6, 1835, gave the complete control of the bank into the hands of the president and the exchange committee,

bank,

the result. After the downfall of the directors accused Biddle of having

exercised its authority to loan on the pledge of the stock of incorporated companies, money like or their were no what matter what the companies and that these loans ruined the bank.1 operations were,
that this committee

Biddle's

omitted the extremely important qualification that such powers had been primarily granted to five years earlier,and Biddle answered their the committee dealt in regular discounts by charge that the committee
accusers,

however,

proving

that this had

long been

the custom,

and

had

been

authorized by the board,2 as is apparent enough from what has already been said. This, however, was only to push back the charges to a date five years earlier. The directors
had
were
no

answer,

because

Biddle's
been

proved rejoinder

that they

equally guilty, having the time, and having voted

besides declaring the business
answer, was as

members

members of the board at for the obnoxious resolutions, that of examining committees

however,

They had partly forestalled this sound.3 by declaring that the committee the on
never

state of the bank

i

really investigated its affairs,but

loans

"to make This resolution gave the president and exchange committee power on the security of the stock of this bank, or other approved security, and if necessary, at a lower rate than six, bnt not less than five per cent per annum." Committee Report of the Investigating of Stockholders, April 3, 1841, NILES, Vol.
"
"

LX,

p. 106.
2 3

Biddle to John
Idem,

M. Clayton, April 14, 1841, ibid., p. 138.

on

Votes

Eyre
on

and

Lippincott

the proposition to reduce the powers of the exchange tee, commit2, 1833. Committees in the negative, April 19, 1833 ; May always

state of the bank, Ibid., p. 139.

including

Lippincott

on

four of them,

from

1836-38."

CHARGES

AGAINST

THE

BANK

283

accepted statements made by the president, while many of the transactions were concealed under the item of "bills 1 The conclusion is irresistiblethat abuses did receivable." participated in by both accused and accusers. Biddle could not controvert the charge ; the directors could not carry it to its logical conclusion because it inculpated
exist, and
were

them.2 abuses existed after 1830 must be admitted, and this But admitting this is the principal point. admitting that That
"

the president and the exchange business of the bank, in regard domestic

exchange, to loans on counts between discount days, while the president even made disabsolutely on his own authority admitting all this,
"

committee controlled the to dealings in foreign and stock, and to discounting

to be held responsible yet it does not follow that they were The board gave this authority in for the losses accruing. many cases, and, where it did not, it might have checked the
were committee practice, for the dealings of the exchange later before the entire board, and the transor placed sooner

The mode in which the committee transacted their business, shows of exchange the officers,and that the funds of upon that there really existed no check whatever They exercised the power the bank were almost entirely at their disposition loans and settlements, to full as great an extent as the board itself of making to have been, for the first teller to pay on seems The established course of business
i
"

at the counter, all checks, notes, or due bills having indorsed the order presentation or the initials of one of the cashiers, and to place these as vouchers in his drawer, for so much they remained until just before the regular periodical cash, where of the cash, by the counting These were bank. vouchers
on the state of the of the board ' bills receivable,' in a entered as It can be said, book, under the charge of one of the clerks small memorandum in this way, does with entire certainty, that the very large business transacted books, was to the examithe face of the discount never upon nation submitted not appear is it anywhere nor of the board, at its regular meetings, of the members

committee standing then taken out, and

....

entered
or

been reported to that body, for their information the minutes, as having on April 3, Report of the Investigating Committee of Stockholders, approbation." Biddle to Clayton, April 14, 1841, ibid., 1841, NILES, Vol. LX, p. 107. See, in answer,
"

p. 139, and in rebuttal 18, 1841, ibid., p. 203.

2

of this the second

report

of the Investigating

Committee,

May

directors finished by saying that the "board of directors and its standing This was form. had become" their thesis." Ibid., p. 203. The a mere committees form, the conclusion that the president and the committee was board being a mere its functions. had usurped The

284

THE

SECOND

BANK

OP

THE

UNITED

STATES

All the business of at any time.1 actions might be known to be investigated by a committee the bank was appointed by
was year,2 and if this committee efficient, all errors and all transactions should have been known to it, and through it to the board. If, therefore, bad done, the board, and not the president or the business was
a

the directors four times

The censure was must exchange committee, responsible. lie here, and it must be heavy, for of all the charges examined this is the only one thoroughly substantiated, and the only
one

of great and perilous import.

of foreign to the

1 "They report, on the books, all their doings daily. The aggregate is always bills are entered in the general account of the bank, which inspection of every director, so that the board can time what see at any doing, by an examination are committee of the debit and credit on
....

open

the executive the books.

payer,

domestic bills are indorser, and the drawer, entered daily in detail due, are all entered, with the discount and all the amount, when and where Bevan, Feb. 14, 1833, H. R. 121, 22d Cong., 2d Sess., pp. 73, 74. particulars.""

The

"

Rules

See Appendix

Regulations and III.

of

the

Bank

of

the

United

States, Rule

XIII, par.

3.

CHAPTER
THE

XII
ON THE BANK

WAR

supporters of the bank that it would take no active part in the campaign, since ever, contrary to its principles.1 It aided, howsuch action was while by the dissemination of publications in its favor. Meanannounced
to

IN July, 1832,

Biddle

it devoted

its energies to its

own

affairs,though

upon its final policy, which could yet determined known.2 If the was settled until the issue of the campaign was two-thirds secured, it would continue as before ;

not not be

majority

if it

was

not

adopted. been triumphantly

secured, then When at last it

a was

change known

in policy might be that Jackson had

should

re-elected, the directory concluded, nevertheless, " that no change in the general system of operations" take place. The bank would not " commence any

systematic reduction of its loans with a view to winding up " to give its affairs." The only change was contemplated gently and gradually the loans of the Bank the direction of domestic bills, would "give But funds."
its
new concerns."3

being payable at maturity" which the Institution a greater command its over intention of beginning "to close no there was Evidently the directors still hoped that a
....

A materially diminished. of the struggle had been to embitter necessary consequence both parties and to increase the suspicion of base motives
on

charter might Their chances,

be secured. however, had

both

sides.

The

Globe

did not hesitate to assert

were

"

that

members
1
2

of the defeated party

to various

prompting

the

'

minions

See p. 251. Biddle directors, Nov., 1832, P. L. B., Vol. IV, pp. 311-15.
of New York,

Biddle to John

Rathbone,

Nov.

21, 1832, ibid., p. 332.

285

286

THE

SECOND

BANK

OP

THE

UNITED

STATES

' " to assassinate the president,1 and the tone of of the bank became absolutely ferocious. Jackson the party newspapers not content to rest satisfied shared in this spirit and was
" with his signal victory. He longed, he said, for retirement, But until I can strangle this and repose on the Hermitage. hydra of corruption, the Bank, I will not shrink from my

entered the fray, he would be appeased with nothing less than the total annihilation of the bank, thoroughly convinced that the monster was unconstitutional
or

duty,

my

part."2

Having

once

dangerous

corrupt, undemocratic, to "the people."

subversive

of

liberty,

In the message of 1832 he complained at length of the bank's behavior and recommended the sale of the government stock therein and it was determine whether
its control.3
an

investigation by

Congress

to

Biddle

was

safe to leave the public funds in ing well aware of the president's feel-

and for the firsttime was not surprised by the contents He indeed suspected that the executive of the message.4 would attempt the discredit of the bank by planning a run
office. "I have to-night directed a to protect the Branch reinforcement of specie to Washington Is not that a monstrous against the Officersof the Executive.

upon

the Washington

state of affairs?
more was

"

What
had

that McLane

and angered him still tions supported his chief's insinua-

hurt

of the bank's insolvency, declaring that its action in relation to the 3 per cents, and other matters had "tended to disturb the public confidence in the management of the
institution,
"

of the bank
1

" an inquiry into the and had suggested security The the depository of the public funds."6 as

PAETON,

VoL
to

III, p. 431. Rev. H. M. Cryer, Washington, Vol. IV, p. 239.

Papers,

Jackson

April

7, 1833, The

American

Historical

Magazine,
3

Messages

and

Vol. II, pp. 599, 600, Dec. 4, 1832.

the message would contain just such Dec. 6, 1832, P. L. B., Vol. IV, p. 335.
6
a

*"I have known notice of the Bank.""

5

for some time that Biddle to Watmough,

Ibid.

Ex. Doc. 3, 22d Cong., 2d Sess., p. 14.

THE

WAR

ON

THE

BANK

287

and report shook the credit which is the very life of such an institution and depressed the price of the stock.1 The bank might be broken as a consequence of the loss of confidence in its solvency, and Biddle bitterly denounced message
master

and

man

as

deserving impeachment.2

to dread impeachment, president, however, had no reason determined but pressed constantly forward. He was to deprive the bank of the deposits, basing his determination

The

upon and

two opinions

first, that they

were

secondly, that if they were custody, they would be employed Congress to pass a re-charter over
wrote:

not safe in the bank ; in its allowed to remain to bribe

the members of To a friend he the veto.

[ofClay and Calhoun] wields the U. States combination Bank, " with its corrupting influence they calculate to carry every its recharter by two thirds of Congress, against the veto thing, even
This

of the Executive, if they can do this, they calculate with certainty to put Clay or Calhoun in the Presidency and I have no hesitation to say, if they can recharter the bank, with this hydra of corruption
"

they will rule the nation, and its charter will be perpetual, and its I When corrupting influence destroy the liberty of our country. into the administration it was came said, " believed, that I had a
of majority
over

it was

believed it has bought since then, it is now seventy-five by loans, discounts, "c., "c., until at the close of last session, said, there was two thirds for rechartering it.3
"

In

this opinion he the Globe, pressing

1

was

most

it
the

upon
United

obstinately fixed, Blair, of him He was, constantly.4

fell 4 per
cent."

The

War

on

the Bank

of

States, p. 25. Stock

NILES

Vol. XLIII,
2

p. 240.

in thus I think of the conduct when of the President and the Secretary both here and in to prostrate the credit of the Bank the country endeavoring and Europe, I come To Watto the conclusion impeachment." that they both deserve

"But

"

mough,
3

Jan. 13, 1833, P. L. B., Vol. IV, p. 381.

Jackson

to Rev.

H.

M.

Cryer,

Washington,

April

7, 1833, American

cal Histori-

Magazine,
*
"

Vol. IV, p. 239.

is permitted
to have
"

the public money, that can there is no power it will have it if it has to buy up all Congress, a charter prevent obtaining it to do so."" B. Lewis, Lewis's Jackson to W. and the public funds will enable Vol. Ill, p. 506. See for Blair's opinion ibid., pp. 503-5. narrative, PAETON it from

If the bank

288

THE

SECOND
informed

BANK by

or

THE

UNITED
Hamilton

STATES
that
"a

moreover,

James

A.

knowledge whose of the views of the is only second to that of its President" had States Bank told him that the bank counted upon securing a re-charter in spite of the president.1 Even if it did not succeed now,

tleman genUnited

he believed that it would attain its purpose after his retirement, and consequently it was necessary to precipitate another The idea of withholding conflict and thus force the bank's hand.2 the deposits
was

not

new

one.

Secretary Ingham

with Biddle in 1829 had pointed out such a possibility,3and it had been suggested during the Moreover, investigation of 1819.* at a partial attempts in his acrid correspondence several times, withdrawal of the deposits had been made The authority to remove the pubthough without success.5 lic been confided by the charter to tion. the secretary of the treasury, to be exercised at his discrefor the act to He must, however, give his reasons had

funds from the bank

possible after the removal.6 The advisability of depriving the bank of the public mates deposits was apparently discussed by the president's intias
soon

Congress

as

the campaign of 1832, for the bank was warned of the likelihood of such action in August of that year.7 After thick the campaign, rumors of the president's resolution came informed " that the determination and fast, and Biddle was to take the deposits away is final."* Other correspondents
1
2

during

Feb. 28, 1833, Reminiscences,

Extra
"

p. 251.

Globe, Vol. I, p. 27, July 3, 18J4.

Taney's

speech, Aug. 6, 1834, ibid., p. 146.

Secretary

I take the occasion of the Treasury

to say, if it should

that

the

bank

injusticeand oppression, he would be its capacity for such injury, by withdrawing

To
* Spencer's 922,923. 5

to the satisfaction of th" ever appear for purposes power used its pecuniary of faithless to his trust if he hesitated to lessen

from its vaults the public Biddle, Oct. 5, 1829, H. R. 460, 22d Cong., 1st Sess., p. 460.

deposites."

"

resolution,

Feb.

1, 1819, A.

of C., 15th Cong., 2d Sess., Vol. Ill, pp.

6

See pp. 177, 202.

"

Sec. 15 of the charter. Appendix

I. for that

He

may

take

"vent.""
8

Senator

the responsibility and [I]think it well to be prepared to Biddle, Aug. 2, 1832, B. P. J. S.Johnston
"

K. L. Colt; Cowperthwaite

to Biddle, Dec.

7, 1832, ibid.

THE
assurance gave the same informed that there was

WAR

ON

THE

BANK 1833. He

289

in January,
a

was

project

to create

another

also bank to

take the place of that already existing.1 A third plan was for the president of the United States to issue " a scire facias
to ascertain if the charter had not been

forfeited."2

While

these

were projects

being discussed

had taken

hostile

measures

Lane, during the interval between

an

the administration Mcagainst the bank. the sessions, had appointed

Jackson partisan, formerly a director of the bank into its affairs, and engaged in western business, to examine comfitur especially into the condition of the western debts. To the disagent,
a

his report declared that these debts in his opinion were safe and that the deposits might with ration.3 confidence be allowed to remain in the custody of the corpo-

of its enemies,

report was strengthened through the rejection in February, 1833, of a motion to sell the by the House stock,* by a report of the Committee of Ways government by the emphatic effect,5 and stillmore and Means to the same declaration of the representatives, by a vote of 109 to 46, that in their opinion the deposits were perfectly safe in the

The

keeping

of the bank.6 Though these acts certainly staggered Jackson's supporters, they did not affect his purpose in the least. On the

contrary, he was all the more convinced that it was necessary to act in order to hinder the bank's securing a re-charter by The effect upon Biddle and his friends was bribery. cheering. The hope of securing a new charter had not perished. In

January

Jaudon

stock in the bank

1 Ingersoll 2

the sale of the government's opposed because "it would weaken our chance of

to Biddle, Jan. 18, 1833, ibid.

Biddle to J. G. Watmough,
report, Dec.

Feb. 19, 1833, P. L. B., Vol. IV, p. 440.

8, 22d Cong., 2d Sess., p. 3.

SToland's
*

4, 1832, Ex. Doc.

C. D., Vol. IX, Part

R. 121, 22d Cong.,

II, pp. 1707, 1722.

Vote, 102 to 91.

2, 1833.

5H.
"

2d Sess., p. 5, March II, p. 1936, March

C. D., Vol. IX, Part

2, 1833.

290

THE

SECOND

BANK

OP

THE

UNITED

STATES

l On the day that the House declared its belief re-charter." in the safety of the deposits in the bank's custody, Sergeant to hope for a reason said that he thought there was

new

charter,2 while Clay informed were not bad, though nothing

"

Biddle could

the prospects be done for the that

that at the next session or the session present.3 He hoped after, the charter" would be renewed,* while Biddle expressed his conviction " that the chances of a renewal have increased

Jackson's conflict with the Nullifiers encouraged Biddle to believe that support could be secured in the South, while the momentary affiliation of Webster and
and
are

increasing."

Jackson

against the Nullifiers gave hopes of influencing the The firstexpectati president through the bank's great champion. 6 was justified second was not. In April Biddle ; the
wrote to Webster

asking him to attempt a reconciliation with the administration, saying that "whatever is done in the way for if the deposits are of pacification should be done soon,
withdrawn,
7

it will be

declaration

of

war

which
war

recalled ;"
matter

whole question of peace or Webster did what of the deposites."8

"the

cannot be lies in the

he could, but

without avail. Before acting

1

Jackson
Washington,

took

advice

as

to

the probable
to Watmough,

Jaudon

to Biddle,

Jan. 23, 1833, B. P.

Also Biddle

Feb. 13, 1833, P. L. B., Vol. IV, p. 432.

2
3 5

To

Biddle,

March

2, 1833, B. P.

To Biddle, Feb. 16, 1833, B. P. To William B. Shepard, of Elizabeth

*To

Biddle,

March

4, ibid.

City, N. C., March

16, 1833, P. L. B., Vol.

IV, pp. 459, 460.

6 Cooper, of South in its favor." Cooper

Leigh,
new one

of Virginia,

had written against the bank, now came Carolina, who S. C., April 27, 1833, B. P. Columbia, Cooper between that the issue was the old bank took the ground
to Biddle,

out

and
or

such was p. 513.

7

Biddle constantly after Jackson's pattern. To Cooper and to J. S. Barbour, the case."
to Webster,

that the southerners assured July 11, 1833, P. L. B., Vol. IV,

Biddle

April 8, 1833, B. P.

I be in New York. to you to say that Mr. L. [Livingston?] would wrote The whole quesbe well to see him. to you again to say that I think it would tion write it is If they are withdrawn, lies in the matter of the deposites. or war of peace before any It is wiser therefore to begin the work of peace war. a declaration of 8"! irrevocable
step is taken.""

Biddle

to Webster,

April 10, 1833, ibid.

THE

WAB

ON

THE

BANK

291

A. Hamilton of the deposits. James a convoked meeting of bankers in New York city and obtained decidedly averse. It was Mr. Galtheir opinion.
effect of
a

removal

latin

was

most

determined

in opposition.1

Isaac

Bronson

He said that the of queries at length. answered a number bank would not be placed in the power of the state banks by the removal of the deposits; that it would be compelled reduce its discounts by an amount equal to the average from it," since it could sum of public deposits withdrawn not otherwise pay them without reducing its specie, which it "could not do safely;" that if it reduced, the state banks
to
"

would have to do likewise ; that a contest between the bank comand the state banks would necessarily result; that no bination of state banks could be formed to take its place ; and that the withdrawal of the deposits would probably aid in
to guide him, securing a re-charter.2 With these assurances that a panic Jackson persisted in his course, and knowing must in all probability result, according to the opinion of a a friend to him competent banker who was and an enemy to

the bank, he must be held accountable, as the supporters of sides the bank asserted, for having precipitated the panic.3 Besecuring these opinions, the president on April 14, and

again

on

make an bank.*

directors to 3, instructed the government into the situation and conduct of the examination In their reports to him they detailed a number of

August

acts which

inhe considered conclusive proof of the corrupt terfere ity of the corporation in politicsand its settled hostil-

to the government.5
i 3

Reminiscences,

p. 253.

"

Ibid., pp. 253-8, April 4, 1833. the bank

Moreover,
measures

by its
Bank

that the administration to contract is inferable

believed
from

that

Kendall's

determined

to Secretary them," he wrote not to remove its wonted course, of the United States will resume and Sept. 4, 1833, S. D. 17, 23d Cong., 1st Sess., p. 16. community.""
*

be compelled " If it be : correspondence *' it is supposed Duane, the would

cease

to distress the

Jackson
Paper

to

the

directors, April

14 and

Aug.

3, 1833, Ex.

Doc.

12, 23d Cong., 1st

Sess., pp. 27, 33.

5

of Sept. 18, 1833, Messages

and

Papers,

Vol. Ill, pp.

13-16.

292

THE

SECOND

BANK

OP

THE

UNITED

STATES

that the deposits would be removed in spite of the action of Congress continued to reach the Yet, at the same bank's president. time, he was informed Meanwhile,

warnings

the question farfrom being settled as

....

that

"

of the cabinet
own

were

about removing the deposits is as ever" and that the leading members unalterably opposed to the policy.1 His

remove

opinion was 2 them."

that the administration " would not dare to On the 15th of April he was informed that

changes would be made in the cabinet; that McLane would be secretary of state, a Pennsylvanian ury, secretary of the treasMcLane and that "the deposits will not be removed" having " taken a decided stand " and won the day.3 The changes This information was in partially correct. the cabinet made
were

made

in accordance

with it, but

more man

they

were

with the expectation of securing a The of the treasury than McLane.

pliable secretary

William

J. Duane,

take the office as do so on the 30th

of Philadelphia. early as December

He

selected was had been asked to

of January, had been that the removal

4, 1832, and agreed to 1833.* It is therefore evident determined

as upon even immediately by R. M.

informed was early as this. Duane Whitney, who claimed to be acting for the president, that to be removed.5 Soon after this he was the deposits were the same information,6 gave him visited by Kendall, who
while on the 3d of June Jackson in person communicated On this occasion the president discovered to his intentions. his dismay that Duane was unwilling to order the removal.
1

Webster

to Biddle,

New

York,

April

8, 1833, B.

P. ; R. W.

Gibbes

to Biddle,

Baltimore,
2
3 *

April 13, 1833, private, ibid., pp. 13-16.

to Webster,

Biddle Cashier

April 8, 1833, ibid.

to Biddle, Washington,

R. Smith

April 15, 1833, ibid.

p. 272, quoting

Letter of Duane,

Oct. 23, 1833, NILES,

Exposition,
p. 5.
own

Vol. XLV,

the New

Orleans

Bulletin; and Duane's

5 6

ibid., p. 236.

DUANE'

Narrative,

Kendall

of Jackson."

called at first on his Autobiography of Amos

responsibility, Kendall, p. 377.

second

time

at the request

THE

WAR

ON

THE

BANK

293

his question, he expostulated, he begged secretary to be reasonable ; but the stubborn subaltern would not yield. On the contrary, he argued the point against the

He

argued

the

ending by promising to president with equal strenuousness, resign if he could not see his way clear to giving the required
order. Hereupon banks
on

Kendall

was

sent

on

mission

to the state

to

see

terms

if they could be persuaded to take the deposits In Duane's to the administration.1 advantageous

failure, and Jackson's plan was a the mission was " the " fiscal concerns certain, if carried out, to plunge of 2 " Kendall himself is said to into chaos." the country opinion have
that the "project removing of admitted to Jackson Jackson agreed neither the deposits must be given up.'" His purpose was not with the secretary nor with his agent. in the slightest degree. On his return from the shaken
eastern

of 1833 he told Duane that be removed the deposits must and that he would take the mous he read his faresponsibility. On the 18th of September trip taken in the
summer

cabinet, in which he gave his reasons for the removal and assured the cabinet, as he had assured Duane, that he would take the responsibility. Duane, however, ated refused to budge from his position. He then exasper"paper"
to the

stillfurther by recalling his promise to resign. This decision was taken after the publication of the president's Duane act which paper, an considered personally Jackson

insulting.

tember, the 20th of Sepon publication was made a long, querusent Jackson and on the 21st Duane lous letter,giving twelve reasons why he would not remove
The
"

1 Kendall Sept. 9, 1833, to Jackson, received his instructions July 23. Duane NIL.ES, Vol. XLV, S. D. 17, 23d Cong., 1st Sess., p. 9. His was semi-public." mission Aug. from 1. The the Pennsylvanian p. 26, note, Sept. 7, 1833, quoting of about

announcement
2 3

of his appointment Narrative, Jackson

p. 96.

was

made

in the Globe

on

the 25th of July.

DDANE'S SUMMER,

(revised),p. 352, quoting

banks
were

Rives

in 1856, in the Globe.

See also

Benton's

statement Thirty Years, Vol. I, p. 385.

that "local

shy of receiving

them

"

[i.e., the deposits]."

294

THE

SECOND

BANK

OP

THE

UNITED

STATES

the deposits, refusing to resign, and rather inconsequently himself "your Jackson obedient servant."1 subscribing

Duane wrote a second, returned the letter forthwith, whereupon Jackson third, and then a fourth in quick succession. returned the third and fourth as "inadmissible," and then

gave

dismissal, concluding a curt, "I feel myself constrained cutting letter to him with these words: to notify you that your further services as secretary of the treasury are no longer required."2
Duane
an

ignominious

Biddle between

was

thoroughly

informed

the president and that the determination of the president was the 30th of July he wrote to Robert Lenox
are

of the relations existing the secretary, and knew at last unalterable. On that "the gamblers

doing everything in their power to bend Mr. Duane to their purposes," but the secretary "will not yield an 3 days later he described the situation so corTwo inch." rectly
that there information:
can

be

no

doubt
been

that he

"Duane

has

required

had confidential to withdraw the

This mission [i. Kendall's] is deposits and has refused. e., now got up to prove that he can do without the Bank of the United States and then he will be again asked and he will
"

will either leave the Treasury, or Cabinet the Kitchen in either case the have conquered * Biddle was therefore triumph of the Bank will be signal." of the president's purpose and took sufficiently forewarned

again refuse.

Then

he

"

precautions accordingly.5 Immediately after Duane's

consistent

dismissal, Roger

B. Taney,

foe of the bank, who had all along urged upon the deposits,6 was the president the necessity of removing
i " *

Duane's

Exposition,
to Lenox,

NILES,

Vol. XLV,

p. 237.

Ibid., pp. 237, 238.

Biddlo Biddle

July 30, 1833, P. L. B., Vol. IV, p. 518.

Potter,

to John

of Princeton,

Aug.

1, 1833, ibid., p. 519; and

to T. Cooper,

July 31, ibid.

5
"was

Warning

of the removal

Vol. XLV,
6

resign, and said, would p. 33, Sept. 14, 1833.

in September. Mr. Duane, it given by the papers Taney or Kendall be appointed NILES, secretary." either
was

Taney

to Jackson,

Aug.

5, 1833, TYLEB,

Memoir

of R.

B. Taney,

p. 195.

THE

WAR

ON

THE

BANK

295

the president's design. appointed secretary and executed The bank's stock immediately declined 1^ per cent.1 The deposits were On the contrary, the not actually removed.

funds held by administration did not touch the government the bank, hoping thus to deprive the directors of an excuse for contracting their business.2 It was but a shrewd move, had littleeffect. The mere withholding of further deposits, in while those still in the bank were gradually withdrawn the regular course of the government's use of the funds, was in to force a contraction. sufficient, the opinion of most men, Besides, the phrase "removal of the deposits" gained instant currency, and the assertion that they were not removed passed almost unheeded. Besides Taney, the other thick-and-thin supporters of " " Kendall and Blair, Barry, removal about Jackson were and Reuben M.

Whitney.

The

excepting Barry and Taney, were Cass allowed himself to be overruled ; lukewarm in support. Woodbury though said he was with the president now, close friends of the president supopposed earlier.3 Many
Vol. XLV, p. 65. It revived by Nov. 5." Ibid., p. 166. It is contemplated, the whole of the we not to remove, at once, understand, deposite in the bank States, but to suffer it to now on the United of public money, by the usual operations there until it shall be gradually remain of tho withdrawn, And this plan is adopted in order to prevent the part on any necessity, government.
1

members of the cabinet, either hostile to the act or

NILE3,
"

the commercial ; and of the bank of the United States, for pressing upon community to enable it to afford, if it think proper, It is the usual facilities to the merchants. to the believed, that by this means inconvenience the change any need not produce community, commercial and that circumstances and heavy will not require a sudden call
on or
"

the bank

of the United States so as to occasion the public."" Ibid., p. 51, Sept. 21, 1833, quoting

to the institution embarrassment Globe of the 20th. the

sudden

transfer their by
a

banks would

to extend

be followed

would certainly enable the state the money easy ; but it accommodations, market and make disastrous reaction. The United States bank being thus suddenly
of
a an

large specie

fund

weakened, would have not only her debtors with the greatest urgency
rigor than ever, " We must
pressure,

excuse,

but

justificationin calling
would
return

upon
more

The be thrown

pressure upon

with

and

the blame

would

not expose

(as she certainly

ourselves to such an by unreasonable can

the government. If the bank shall produce attack. her debtors) the blame calls upon

would
upon

for casting it a pretence now attach to herself, and she will not have even Letter of A. Kendall, Oct. 18, 1833, ibid., p. 299. tho government."" 3 PAETON, Vol. Ill, p. 508. DUANE'S Narrative this plainly. Van Buren shows to McLane's
p. 378.

to the president's side during the trip to tho Hip-Raps, much changed Reminiscenses, Autobiography, disgust." HAMILTON, p. 258; KENDALL,

296

THE

SECOND

BANK

or

THE

UNITED

STATES

of ported the opinion of the majority the cabinet, considering the act and tion unjust, above all impolitic. A large proporDemocrats in the position of Duane, who were of the
had

always been

"

opposed

to

the United
....

States bank, and

but aristocratic monopolies; considered the removal of the deposites, unnecessary, unwise, vindictive, These opinions were arbitrary, and sound,
to all such

unjust."1

though

it is conceivable that the president might

secure

for

his act of overbearing mastery almost as many supporters as belief that the policy was he would lose. His own one of justice self-defense would in the long run be that of and for Jackson's mental processes were masses, the Democratic
As he thought, those of the average honest, ignorant man. differently different men How think. so they would would

feel is evidenced

by

the

president would remove might be re-chartered,2 and done.3 it was

that the wish of Robert Lenox the deposits in order that the bank the admiration

of Benton

when

In his paper read before the cabinet on the 18th of September, and prepared for him by Taney,4 Jackson gave for the removal: The bank had increased a variety of reasons its loans in 1832 in order to compel a re-charter; it was settled by the campaign of that year that the charter should not be renewed, and therefore the president thought ests that the removal could not, "with due attention to the interCongress could of the people, be longer postponed;" not act with regard to the deposits until the secretary had
first acted; the public funds were probably unsafe in the bank's custody ; it had interfered to hinder payment by the
1

Letter of Oct. 17, 1833, NILES,

Lenox
to Biddle,
men

Vol. XLV, July

to

p. 178.

2
"

New

York,
friendly

29, 1833, B. P.

The

by political Reminiscences, p. 257.

desired

the

Bank.""

I. Bronson

was removal actually to J. A. Hamilton,

"

I felt

an

emotion
Years,

heroism.""
"

Thirty Taney,

of the moral sublime Vol. I, p. 379.

at beholding

such

an

instance

of civic

TTLEB,

p. 204.

THE

WAR

ON

THE

BANK

297

treasury of the 3 per cent, stocks ; had mistreated the government in the matter of the French indemnity bill; had refused to allow the government had conducted business
seven

directors their charter privileges; with less than a quorum of

for publications sums spent immense for political effect, and thus corrupted the press. Finally "as he declared that the responsibility had been assumed directors; had necessary to preserve the morals of the people, the freedom of the press, and the purity of the elective franchise."1 One would search the constitution in vain to find the clauses

giving the president of the United States the guardianship " the morals of the people, the freedom of the press, and of the purity of the elective franchise," but it is certain that believed himself endowed Jackson thoroughly with such for his action. authority, and considered this a sufficientreason Jackson's act precipitated a panic in a market already tions stringent on account of the reductions in bank accommodadue to the hostile relations between the administration The withdrawal of the deposits necessarily and the bank. interests in a had this result, because it left all moneyed condition of suspense and doubt, put monetary affairs on a new and uncertain basis, and gave a tremendous shock to dealings cannot public confidence, without which commercial
continue.2
i

The
and

commercial
facilities of
to

situation

was

further aggravated
have, exchanges the transactions,
the cities and

Messages

Papers,

Vol. Ill, pp. 5-19.

communication and inland heretofore unknown, extent

"The

increased

within
even

the last years, and

contracts

the most " The regularity

an multiplied the several cities, and responsibilities, between remote parts of the country.

between

with

which
over

the
the

enormous

mass

those

together,

transactions spread be discharged, can

whole

country,

of engagements resulting from intimately and all connected

the ordinary sales, payments, remittances which business in all its various branches
utmost must

limits.

Whatever produce

on an continuance uninterrupted of by and credits. The whole machinery, is carried on, is credit extended to its lessens the general confidence, on which is founded, credit

depends

entirely

necessarily business.
"

fatal derangement

and

interruption

in every

branch

of

It is with this state of things, that, without to interfere."" Report the executive thought proper

investigation, or necessity Union Committee of the of New

any

York, March,

1834, NILES,

Vol. XL VI, p. 76.

298

THE

SECOND

BANK

OP

THE

UNITED

STATES
tariff law, duties, the
as

at this moment

which importers being compelled

by the effects of the compromise introduced a new system of paying

to pay at
once

and not,
was

heretofore, that
an

The after six months' time. for credit was increased demand
moment

consequence
occasioned, the

at the

very

The

that it could least be met.1 bank immediately answered

a

by increasing
was

The justified.2
was

of the president In this it contraction already begun. tion only question was how far the contracmove

to go.

The

bank

would

certainly not
was

be

justified

in contracting after its own

point

was

massing not far enough,

Where this assured. one no could say excepting the directors. The of statisticsto prove that the bank went too far, or safety

is of littlevalue, if taken alone, since the amount of contraction must be determined at each moment by the peculiar circumstances of that moment, and what

might prove an ample insufficientat another.

beyond

reserve

But

time would be totally supposing the directors to go

at
one

the point of safety, they would certainly be severely legally bound or not, they were censurable, since, whether

of the country from It may be concluded, therefore, that though the president of the United States was responsible for the firstcontractions of the bank and for the sufferings resulting

morally bound harsh shocks.

to protect the business

therefrom, the question of responsibility for later contraction and later sufferings remains open. In attempting
was

to determine

in how

tors far the board of direc-

policy, the reader must remember that the unceasing hostility of the administration placed the bank in a very precarious position. The withdrawal of the
1

in justifiedits

Jaudon,

writing

the present pressure that are temporary."" the

9, 1834, says : " We know that a great part of in the system of duties and other causes arises from the change Hill, of New Hampshire, March 4, 1834, pointed out that B. P.
to Biddle

March

new system entailed a double payment into effect." C. D., Vol. X, Part I, p. 797.

of duties for

one

year

after the law went

Bronson's

opinion, already

quoted,

is conclusive

on

this head.

THE deposits
power

WAB
to

ON

THE

BANK

299

it and put it in the weaken If the executive had shown willof the state banks.1 ingness henceforth to let the bank alone, it would have been
was

intended

morally confined to more restricted limits in its contraction. But every fresh act of hostility necessitated a further reduction, As in order to make the institution perfectly secure.
such acts continued, the task of dividing the responsibility difficult. for the panic of 1833-34 becomes more and more It is of importance, therefore, to determine justhat further w

taken by the administration, and what of other events affected the judgment the directors. In the autumn had been made on the of 1832 a run aggressive steps
were

Lexington

branch, incited without doubt by political opponents.2 In the autumn for $350,000 in of 1833 a demand

at Savannah, suddenly made upon the branch which could be met only because, the suspicions of the board having been aroused by the failure of the bank to receive

specie

was

branch, it had sent large supplies the notes of the Savannah tion of specie there. Biddle had no doubt that the administrawas

The
the

this attack.3 dispute over the French

behind

situation.

The

United

Bill aggravated States, in order to collect the

Indemnity

of that claim, had on the 7th of February, 1833, sold to the bank a bill of exchange drawn upon the The amount French government.* was $903,565.89. The
first instalment
1
"

This

boasting
he
can

treasury,
next

Oct. 9, 1833, NILES, Vol. XL.V, p. 297. " You mention from the branch ; this will bank drew $60,000 that the Merchants' be followed by other draughts, until the U. States bank will find it difficult to sustain there that institution must keep means the branch in your city. As things now are, to meet almost all its entire circulation, and it will have to become a great collector
Standard,

which forty days ; and Kendall in a letter to the New

the feet of the secretary of the a reptile beneath It exists by his forbearance, crush at will. and will, for the forbearance it require to save it from destruction." great will

giant

is

now

but

"

York

for the ultimate use quarter of your bank, and of the union, it at New York."" Letter of A. Kendall, Oct. 18, 1833, ibid., p. 299. others who may want 2H. R. 121, 22d Cong., 2d Sess., pp. 127-43; also Biddle to H. Binney, Dec. 3, 1833, P. L. B., Vol. V, p. 35,
of specie from
every
3 It was due largely to the Ibid. Washington.""
"

Deposit

Banks

at New

York

that is the

Treasury

at

*MeLane

to Biddle,

Feb. 7, 1833, 8. D. 17, 23d Cong., 2d Sess., pp. 266, 267.

300
bank

THE

SECOND

BANK

OP

THE

UNITED

STATES

presented the billin Paris, where payment was refused, and the bill went to protest.1 The bank would have been dishonored if the firm of Hottinguer et Cie,its continental agent, had
not

taken

up

the

bill for it.

The

bill

was

returned and the bank sent it to the secretary of the treasury, with a claim for the principal, interest, cost of at 15 per cent.2 The protest, re-exchange, and damages based upon a statute was claim of the bank to the damages law in the District of Columbia.3 of Maryland, which was Secretary McLane at once paid the principal, but not the In other items.* Secretary Duane
answer

to

letter from

Biddle

in

June,

the validity of all the other admitted to which Attorneyclaims excepting that for damages, General Taney declared that the bank had no claim either
"

in law

was

in equity." 5 Having requested to give his reasons

or

given this opinion, Taney for it,but so long as he was

Not only so, but attorney-general he refused to give them.6 nored secretary of the treasury he completely igafter becoming Woodbury the bank's claim. when secretary followed Thus Taney's example. 16, 1833, affairs stood from May

date which until July 2, 1834, on finallydeclined to pay the damages.7 notified the secretary that the from the government's deducted
sum

Secretary
The

Woodbury
thereupon

bank

be claimed would part of the semi-annual On the 16th of July this was bank dividend.8 done, the amount plus interest to that date being retained.9 The sum
1 2

Jaudon
Same
to

to McLane,
same,

April 26, 1833. S. D. 17, 23d Cong., 2d Sess., p. 271.

13, 1833, ibid., pp. 271, 272.

May

3H.
*

R. 312, 22d Cong., 1st Sess., p. 20. to Biddle, May

McLane
Duane

16, 1833, 8. D. 17,^233 Cong., 2d Sess., p. 272.

to Biddle, June

24, 1833, ibid., p. 273.

6

The

21, 1833, and other items were

opinion

of Attorney-General 734. all paid." 2 HOWARD,

Taney,

May

Duane
Aug.

to Taney,

Aug.

14, 1833, 8. D. 17, 23d to Taney,

Cong.,

2d

15, ibid., p. 276; Duane 16, ibid., p. 277.

Duane,

Aug.

16, ibid.; Taney

Sess., p. 273 ; Taney to to Duane, Aug.

Biddle
Ibid.

to Woodbury,

July 8, 1834, ibid., p. 279.

9

Jaudon

to Woodbury,

July 16, 1834, ibid., p. 281.

THE

WAR

ON

THE

BANK

301

left the only one to it, since the administration refused either to pay or to submit decision,1 and could not be the question to a judicial
was
was

$170,041.18. The

bank's action

Consequently the corporation was bound to retain sued. to be The if the claim was ever the money adjudicated. for the damages by the " unidirectors justified demand the versal
department," and inflexible rule of the Treasury in of the damages which had always compelled the payment Their action was cases of this character.2 good business, but bad politics,for it gave the administration a chance to charge the corporation with seizing public funds, and thus increased its unpopularity. The sired the deretention of the dividend, however, brought Secretary Woodresponse from the administration. censured the act of the corporation in an acrimonious

bury

Butler drew up reasons letter,3while Attorney-General in " no support of Taney's assertion that the bank's claim had * The government foundation in law or in equity." then

instituted suit to recover the dividend withheld, and in the its case tinction on won the fine discircuit court for Pennsylvania
that the bank
was
was an

indorser reversed

the bill.5 This decision

and not the holder of by the Supreme Court

in 1844,6 which expressed the opinion that the United States bound, both by law and equity, to pay the damages.7 was The case was retried in the lower court in 1847, but came

again

before

the

Supreme

Court
as a

on

writ

of

error,

the

government

subject
1

claiming that to the law merchant.

not sovereign power it was The court affirmed this view,

Woodbury
See

to Biddle, July 8, 1834, ibid., p. 281.

case,

20 per

258-61.
3
* 5

the law of Pennsylvania the government lected colwhere under for a protest of two of Girard's bills on Paris." Ibid., pp. See also other cases, ibid., pp. 261-3.
cent, damages to Biddle,

Qirard's

Woodbury

Dec.

11, 1834, ibid., p. 284. 28, 1834, 8. D. 2, 23d Cong., 2d Sess., pp.

Butler to Woodbury, See 2 HOWARD,

Taney,

Nov.

57 ff.

733, review

of the

case 7

by Justice
2 HOWARD,

McLean.
734 ff. January term,

C. J., did not sit.

1844.

302

THE

SECOND

BANK

OP

THE

UNITED

STATES

This ended and judgment was entered against the bank.1 It is only necessary to add that the nation's the matter. honor was forfeitby the refusal to pay the damages. On precisely
the
same

plea it might

have refused to pay the

cipal prin-

and interest. At the time of the withholding of the deposits, members of the administration naturally feared retaliatory measures. likely to accrue To avert any injury to the state banks, Taney

resolved to protect them by intrusting to certain of the deposit banks drafts for large amounts on the public funds left in the Bank of the United States. These sums
were

to be drawn

banks

for if the institution called upon the state for payments of balances due in coin, or refused to
notes

receive branch
at places where

given in payment
were

made Maryland of received three drafts for the 000 each ;3 the Girard Bank of Philadelphia,

they

not

dues of government payable.2 The Union

sum
one

Bank

of $100,draft for

$500,000; and

Bank, of America, the Mechanics Company Bank and the Manhattan of New York city, each it draft for $500,000.* Thus fortified, was one calculated
the Bank

that any "superfluity of naughtiness" of which the Bank of the United States might be guilty in trying to draw specie from banks which owed specie but had no specie, could be
met

on

and turned to the discomfiture of the aggressor. The Union Bank of Maryland received its three drafts the 3d and 4th of October ; on the 5th it concluded that

the time
one
1

for action had come, and presented two of them, The preat Baltimore and the other at Philadelphia.
394 ff. Taney

5 HOWARD, sat.

and Woodbury

were

both

on

the bench

at the time.

Neither
2 was. course

The cashing of these drafts constitutes all the removal there ever of deposits in the ordinary The rest of the government funds in the bank were withdrawn debts. of paying government
Taney
to the Senate, April 3, 1834, 8. D.

Taney was in this bank." a stockholder 238, 23d Cong., 1st Sess., pp. 18, 19.
3
*

Taney

to deposit

banks,

Sept. 3 to Oct. 4, 1833, 8. D. 16, 23d Cong., 1st Sess., pp.

321,322,329,337,338.

THE

WAR

ON

THE

BANK

303

text for this astonishing

of the United States had demanded coin from the Baltimore banks.1 in straits.2 Its The truth was that the Union Bank was
action
was

that the Bank

president admitted that he had departed from the secretary's instructions, having swelled his discount list enormously,
necessity of helping the interests.3 His action embarrassed Taney, but commercial he did not hesitate to repeat it, and had the third draft the Bank of cashed at Baltimore on the 4th of November,

but pleaded the

justification of the

the United

States having

drawn

on

the Union

Bank

for

$125,000owed
and bank

to it by that institution.*

The Girard Bank

the 3d of October, with this security against calls for specie boldly proceeded to expand its business. By the 10th of October the received its check
on

this to such a degree that it had " made " 5 very sensible impression on the moneyed market such "sensible impression," indeed, that it had placed itself in
"

had

done

a a

position where the use of the draft was almost necessary for its own sion safety. In this state of affairs it besought permisto have the draft cashed if it thought circumstances
demanded, without waiting for any decided attack on the ' " The president of the bank believed part of the monster." that it ought to continue to extend its operations and, if the
1 "

Ellicott to Taney,
Kendall thus

Oct. 8, 1833, ibid., p. 327.

draft" transaction at Baltimore: The explains the "transfer had a chance before Taney to receive an explanation. Ellicott, were cashed to Washington. Kendall was at Taney's request, came at the interview. present Taney to know "Mr. the drafts had been cashed. Ellicott made a wanted why incoherent statement in connection stammering, about transactions with a bank in drafts Tennessee,

Ellicott, you

his conclusion Mr. Kendall Mr. you, and upon said, 'If I understand have used those government funds to sustain a stock speculation.' To Ellicott virtually assented." this statement Taney was of the case, much annoyed,

Ellicott being his special adviser on financial subjects. KENDALL, Bank Conspiracy, by ELLICOTT, "p. 389. See pamphlet of Maryland the affair, pp. 68-75. of
"

Autobiography,

for

an

tion explana-

3
* 5

Ellicott to Taney, Cashier Mickle

President

Oct. 8, 1833, 8. D. 16, 23d Cong., 1st Sess., p. 328. Nov. 4, 1833, ibid. Bank
to Taney,

to Taney,

Schott

of the Girard

Oct. 10, 1833, ibid., p. 332.

Ibid., pp. 332,333.

of the United States called for specie, present the 2 the Girard Bank owed the Bank On November check. of the United States $149,000,and the time for action had Biddle was come. given his choice: either to permit the calling for the of the balances in coin, or to pay the $500,000.* payment feared that by He He insisted that the draft be cashed.2 chance or design these large sums might be called for at a
to continue

Bank

Girard Bank

its

course,

by

not

time

or

The

place where they could not be paid. three banks in New York acted in concert.
at
a

On

the

16th of November they concluded that it was necessary to present one of the drafts for $500,000,the bank having at
that date drawn The
on

the banks

Manhattan
and

Bank,

of the city for over $100,000.3 therefore, presented its draft on the

Taney had now come beprompt payment.* anxious about the remaining drafts, and desirous of On the 21st of November, having them returned to him.5
received

18th

remitted to Washington,8 and no further use was made of this means of protection or offense. The to particular atrocity of this mode of granting therefore,
one

of them

was

heavily upon the Bank of drawing of the United States lay in the fact that no notice was given that institution that these drafts were out ; and a sudden call for sums ranging from $100,000 to $1,500,000might
the
means

deposit banks

not all. The bank had always ruined it. Yet this was been furnished with a weekly list of treasury drafts issued 7 and also from 1829 with a daily listof all warrants out.8 It

have

1 2 3 *
5

Schott to Taney,
Same
to
same,

Nov.

2, 1833, S. D. 16, 23d Cong., 1st Sess., p. 333.

Nov. 2, 1833, ibid., pp. 334, 335. Nov.

16, 1833, and

Newbold
White Taney Newbold Jaudon
to

to Taney,

White

to Taney,

Nov. 18, 1833, ibid., p. 349.

to Taney,
to Newbold,

ibid.

Nov. 16 and
Nov.

Nov.

20, 1833, ibid., pp.

341, 342.

" i

to Taney, to Campbell,
same,

21, 1833, ibid., p. 351.

5, 1833, ibid., p. 358.

Nov.

*Same

Nov.

15, 1833, ibid., p. 359.

THE had

WAR

ON

THE

BANK

305

right to expect that this would continue to be the case As a was until notice annulling the arrangements given. the daily business of the institution was matter of course,
a

the lists of warrants and drafts always in thus prepared view, and with the certainty that the bank was for all calls from the government. Now in these lists no

conducted

with

been given of the drafts issued by Taney.1 The treasurer, in answer to Jaudon's remonstrances, acknowledged furnished to the bank, but defended that listswere information the action of Taney drafts. If they had would
account,
on

had

the ground that these were special been included in the lists,the sums
once

have

been

at

deducted

from

the

treasurer's

hoped all along that no necessity would and it was 2 " They were To a arise for their use. contingent drafts." further communication of Jaudon's the treasurer answered that the

drawn,

to give daily notice of warrants was agreement but not of "transfer drafts."3 To this subterfuge

Jaudon
sense

replied by showing transfer drafts, but

contention

that the drafts

warrants.

were

not

Admitting,
were

in any however,

the treasurer's

that they

not warrants,

and

therefore not placed on the daily lists, yet all drafts appeared the weekly lists.4 To this the treasurer had no on reply,

and

discreetly made In January, 1834,

so

none.

the

step. Congress, 1817, had transferred to the bank the functions of the commissioners loans, including the duty of paying all pensions of in states where it had branches. Where it had no branches
it was
to designate the state banks

administration took another aggressiv by an act of the 3d of March,

which

agents.5
1 2 3 *

An
Nov.

attempt
Nov.

was

now

should act as pension to deprive the made

Same

to

same,

5, 1833, ibid., p. 358. 8, 1833, ibid., p. 354.

355, 356.

Campbell
Same Jaudon
to

to Jaudon,
same,

Nov.

25, ibid., pp.

to Campbell, at Large,

Dec.

9, 1833, ibid., p. 361.

t"Statutes

Vol. Ill, p. 360, chap. 38.

Charter,

sec.

15.

See Appendix

I.

306
bank

THE

SECOND the

BANK

OP

THE

UNITED

STATES

exercise of its functions in respect to certain not the first time that somepension laws. This was thing of the sort had been tried. In 1829 the transfer

of

had at Portsmouth of the pension funds from the branch been attempted, but the effort failed.1 In 1831 a similar to remove the pension agency at New attempt was made York to Albany. The bank again remonstrated,2 and in March,
that in his opinion " Department in appointing a was the War not warranted pension agent, in any State or Territory, where the United States Bank has established one of its branches." 3 In 1834

1832, Secretary Cass

admitted

the action

was

based

on

new

contended
were

that the acts of May

plea. The administration 15, 1828, and June 7, 1832, that they
were

not pension

acts, strictly speaking, but

laws allowing pay to the old Revolutionary Of veterans. for the sake of convenience, these sums course, were treated
as

ments, pensions ; and the pension officehad control of the payBut all and the pension agencies disbursed them.
was

this

they

were

like pensions, not because simply because they were pensions.4 Accordingly, on January 2, 1834, the

commissioner

of pensions ordered the bank to give up the books, accounts, and funds relating to pensions disbursed The bank bluntly refused under the act of June 7, 1832.5 in a towering rage, and President Jackson was to do so.6
on

to Congress his comthe 4th of February communicated plaint.7 Senate decided that the As a matter of course, the
was

bank
1

in the right and

Eaton
to President

the
Aug.

House
3, 1829, and

declared

that
to

the
same,

Secretary

Mason,

J. L. Edwards

Aug.

25, 1829, H.
2

R. 460, 22d Cong., 1st Sess., pp. 476-9.

secretary

Biddle

to the acting

of

war,

July 15, 1831, ibid., p. 481.

3
*

Cass to Biddle, March

Argument

1, 1832, ibid., p. 489.

R.

Sess., pp. 10-22.

5

Butler, Feb. 3,1834, H. of Attorney-General Generals. See also Opinions of the Attorney

263, 23d Cong., 1st

Ex.

Doc.

78, 23d Cong., 1st Sess., p. 23.

6
i

Biddle

to secretary

of

war,

Jan. 23, 1834, H. R. 263, 23d Cong., 1st Sess., p. 22. II, p. 2615.

C. D., Vol. X, Part I, pp. 461, 462; Part

THE bank
no

WAR

ON

THE

BANK

307

was

means

demands

In this state of affairs there was the corporation to accede to the of compelling of the administration, and it did not yield.
in the wrong.1
was

odium upon The commissioner the bank. of pensions had not only ordered the institution to deliver the books and papers, but
also to pay no more The secretary of
were

This issue

skilfully made

so

as

to bring

pensions under
war

paid

veterans

under of the

assenting the act. The result Revolution could not

the act of June to this order, no

was

7, 1832.2 pensions

that many

poor

draw

The them. they needed allowances when deprivation fell entirely upon the bank, though the fault was It is easy to imagine that many with the government.3 people
were

their meager blame for this

sive oppresto the aged soldiers, while the enemies of the bank " made effective political capital out of the situation. It will not spare the holy remnant of the officers and sires of the
much

moved

over

an

act which

seemed

revolution," declared Senator Wilkins, with maudlin pathos. to make "So sweeping and unsparing are they determined a the distress, that even solitary soldier of the revolution
cannot
4 tone of injured The indignation same escape." by all the Democrats. was employed Webster accordingly urged Biddle to surrender the funds. " he wrote, " is a weak The Attorney General's argument,"

one;

it is easy to demolish it, as an argument. The to all, it is a bad subject dispute about.
1

But, after
pensioners

of Senator 263, 23d Cong., 1st Sess.

Report

Clayton, S. D. 92, 23d Cong., 1st Sess., and Folk's report, H. R.

2 3

Ex.
"

Doc.

78, 23d Cong., 1st Sess., p. 23.

If any inconvenience should be felt by any of those veterans of the revolution, believe it will be by all by the delay which the committee will take place in due to them, it is to be attributed to the unjustithe payment of the next annuity fiable in withto thwart the views of Government, conduct of the Bank in interposing holding
as

from the officers of Government the public money and public property, The committee to have they do not pretend any claim. cannot condemn which Folk's report, H. the conduct terms too strong of the bank in this transaction."" 263, 23d Cong., 1st Sess., p. 7.

to

in
R.

"Feb. 6, 1834, C. D., Vol. X, Part

I, p. 489.

308

THE

SECOND

BANK

OP

THE

UNITED

STATES

' Old Soldier ' is the cause ing will not believe that the of keepback their money," therefore it would be "better to give ] In this opinion he was up the fund and the papers."

heartily supported by Representative fell upon deaf ears. The bank had
and
it would not yield. 12, 1834, remarks

Woodbury,
that the

advice the support of the law, in his report of December bank

is still employed that it had
....

Gorham.2

The

to pay pensions, " under an impression a right to perform these duties, until relinquished by its own He is careful to consent, or until the acts were repealed." add that the two acts in dispute are not regarded in this

light,3and the administration persisted in paying these pensions, difficulties.4 though under almost insurmountable
Another found in the acts of the govof strife was ernment believed that these directors directors. Jackson
cause

by the charter to keep a watchful eye upon the acts of the bank in the interest of the public,5 and, since he was the representative and the custodian of the public's
were

designed

interests, to report to him

if they had

Wager,

abuses or mismanagement. Sullivan, and McElderry,

for susany reason pecting In 1833 Messrs. Gilpin, directors,

sharing his opinion, forwarded respecting those transactions they did not of the bank of which Moreover, they systematically opposed the other approve.6
directors in regard to the powers of the exchange committee, the authority of the president, the curtailments in the
1

government to him reports

Webster
Webster

to Biddle, to

Feb. 12, 1834, B. P.

Feb.
12, 1834, ibid.

J. G. Watmough,

Gorham

added

note

to

Webster's
3 * 5

letter.

S. D. 13, 23d Cong., 2d Sess., p. 3.

Biddle This

to A. Porter, June opinion

20, 1834, P. L. B., Vol. V, p. 240. in the debates

finds support
A.

WEIGHT'S

argument, ibid., p. 1144.

of

C., 14th

See the bank was when chartered. Cong., 1st Sess., Vol. I, p. 1118, and FOESTTH'B,

6 Papers Aug. 19, 1833, S. D. 2, 23d Cong., 1st Sess., A and B, April 22, 1833, and 22 ff. See also their memorial to Congress, Dec. 9, 1833, Ex. Doc. 12, 23d Cong., 1st pp. Sess., pp. 1 ff.

THE

WAR

ON

THE

BANK

309

West, and the Naturally they

nor

measures
were

taken
not

against the administration.1 delphia, at the board in Philawelcomed

taken

and

his

coadjutors,

into the complete confidence of Biddle nor tees appointed to the important commit-

of the bank.2 In these circumstances,

government immediately in

as

renominated directors for the year 1834. 3

and wrote

Jackson

all of them Biddle was

long letters to all the senators friendly to him, urgently pressing the of rejectionthe " They are e., people unfit to be there [i. in nominations.* the directorate] unfit to associate with the other members
arms,
"

"

or that their colleagues will not confer with them 5 The board " having no confidence act with them on committees." 6 in them, they were not allowed to know anything."

so

"

He

also wanted

Taney's

nomination

to the Treasury

ment Departures, meas-

rejected.7
advising Again his good
as

Webster

remonstrated

against these
as

littleopposition

to persons

possible.8

The strong-willed advice went unheeded. president of the bank had his way, and the Senate finally Taney's nomination, and refused by a vote of 20 to rejected for government in the nominations directors.9 25 to concur The
to president, inflexible as always, returned the names the Senate,10 and again it refused by a vote of 11 to 30 to

1 2
3

See their reports, Third

paragraph

ibid.
of Paper A, report

of April 22, 1833, pp. 22, 23.

Jackson

to the Senate,

Dec.

17, 1833, S. D. 333, 23d Cong., 1st Sess., p. 1.

*To

N. Silsbee, T. Ewing,

D. Webster,

George

Poindexter,

H. Clay, Dec.

23, 1833,

P. L. B., Vol. V, pp. 56-9.

5

Biddle

to Webster,

Dec. 20, 1833, ibid., p. 60.

Binney

in the

House

in January,

1834, intimated

be difficult to get gentlemen that it might directors." C. D., Vol. X, Part II, p. 2357.
to Watmough,

to sit beside

the government

Biddle Biddle
Webster

Jan. 6, 1834, P. L. B., Vol. V, p. 81. Dec. 20, 1833, ibid., p. 60. Dec. 13, 1833, B. P.

7
8

to Webster,
to Biddle,

98. D. 333, 23d Cong., 1st Sess., p. 3, Feb. 27, 1834.

"o

Jbid., p. 4, March

11.

"

Ibid., p. 15, May

1.

310

THE

SECOND

BANK

OP

THE

UNITED

STATES
of the disqualified Two

In the end, Jackson made Messrs. Ellmaker nominees,

as

other nominations. and Tibbetts, were

therefore refused seats stockholders, and were declined appointThree at the board.1 ments, other gentlemen and accordingly for the year 1834 the government
not

being

only two directors.2 On the 14th of October Jackson notified them that he wanted certain information regarding They at once the expenses and profits of the bank.3 made a
had mation call for the necessary books, adding that they sought inforfor the use of the president of the United States.4 incontestable, yet the Their right to examine the books was

bank

tion informapermit these to be used to secure the which would be employed to injure institution, and Biddle wrote Jaudon that they must not be permitted " to could
not

Hence look at any thing."5 the cashier refused their request.6 They immediately sent in a complaint to Jackson.7 This again placed the bank in a bad light before the people.

If there

was

refusal ? directors. To these arguments the rights of the government the bank had no adequate defense. fresh difficulties Then there were created in reference to the branch had by
notes

nothing to conceal, nothing to fear, why this Besides, the refusal itselfwas infringement of an

and drafts.

Benton

declared that the bank

the nation branches.8 that the Balti-

conspired

to embarrass

refusing to receive Nothing could be more

officers of the branches
1 S.

the state banks and the notes of distant

inaccurate.

It is true

at New

York,
2

Mobile,

and

D. 17, 23d Cong., 2d Sess., pp. 35, 291-6. Doc. 45, 23d Cong., 2d Sess., p. 1.
my

ibid., p. 35

3 Ex.
5
"

Letter

of Oct. 24, 1834, ibid., p. 4.

If during
wish
seen

should be

to look

at any

without

absence thing, books, papers, application to the Board.

be

the Government

either singly or together "c, they should be told that it cannot If they apply to the Board, refuse it
to

Directory

positively whatever 1834, B. P.

" 1
"

the consequences.""

Biddle

Jaudon,

Newport,

July

16,

Letter of Oct. 29, 1834, Ex.

1bid.

Doc. 45, 23d Cong., 2d Sess., p. 2.

The

letter of Oct. 29 detailed the whole

I, pp. 106, 107.

proceeding.

C. D., Vol. X, Part

THE

WAR

ON

THE

BANK

311

had shown an inclination not to receive notes of other But they had never branches from the state banks.1 received all branch notes at par from these banks, and their
more

But a to continue the usual custom.2 only intention was " " face was new put upon the matter since the pet banks was now and most of the revenue paid received the revenue 3 " " in notes uncurrent of the Bank of the United States.*

When

the bank

had received the

revenue

it necessarily took

at par, since they were all its notes in payment of revenue Now, however, if the offered on behalf of the government. old plan of not accepting such notes at par from the state

institutions

would loss to the state banks.

one

continued, the be redeemed by the Bank

was

revenues

collected by them of the United States at a

such
action
"

Again,

great purpose of of the currency

receive its notes depreciate to a considerable extent, since all the notes to it from the revenues to it now came used to come

establishment for if the bank should refuse to at par, from the state banks, they would
"

bank's

might nullify the purification

which from

the state banks.

notes
as

Was

not

the bank

banks

in the government concurred it On the other hand, if it did receive them opinion.6 threw down all restrictions on the receipt of the issues of its
so,5

coming thought

indirectly from and

the

to receive these ? The state the government

bound

branches,

criminat by which it could dismethod notes received by the state banks in payment of duties from those received in the ordinary course of business.
was
no
1

for there

Ibid., and

8. D. 24, 23d Cong., 1st Sess., pp. 2-4, 7.

2
3 *

Letters of Oct. 1, 2, and 5, 1833, S. D. 17, 23d Cong., 2d Sess., pp. 120, 123.
Notes
of other offices not taken to Taney,
see

at par

from

state banks

or

individuals.

Fleming

1st Sess., p. 345;

5

Oct. 2, and White to Taney, Oct. 5, 1833, S. D. 16, 23d Cong., D. 17, 23d Cong., 2d Sess., p. 124. alsoS. Oct. 2, 1833, ibid., p. 344 ; cashier of Union Bank of Maryland the United States, ibid., p. 325. See also S. D. 24, of

Newbold

to Taney,

of branch of the Bank 23d Cong., 1st Sess., pp. 2-4, 7.

to cashier
6

Taney

to banks

in Philadelphia

and

Baltimore,

Oct. 3, 1833, 8. D. 17, 23d Cong.,

2d Sess., pp. 321, 329.

312

THE

SECOND

BANK

OP

THE

UNITED

STATES

Consequently

it would

the state banks. forced to take.

have to redeem all notes offered by finally This was the position which it was
was

to give to its actually compelled before, receiving branch notes a greater currency than- ever them from everybody at their face value at all the Atlantic

It

offices.1 It did this because it feared by doing otherwise to create a demand upon distant, unprotected branches.2 In regard to the branch drafts, the president repeatedly that he would prohibit their receipt in payment dues.3 A rumor that such action would be of government tory taken was current as early as February 8, 1833.* The directhreatened that orders to be issued in January, 1834, and
reason

fully expected

cease

receiving them would adverted to the fact as a

for further contraction.5 The supporters of Jackson further justified bank in contracting its business by the " loudly calling upon those who " took " part with them to

collect and present the notes of the bank of the United States, for payment in coin. " The foregoing acts of the administration must be kept
in reviewing the action of the bank in clearly in mind These measures 1833-34. show the temper of Jackson and his allies,and they palliate,to some extent, whatever retaliaare given, we wish you to receive all the issues of be offered to you, from whatever the tender quarter and be made."" Cashier of the Bank of the United States to the cashier of the New may York office,Oct. 5, 1833, S. D. 17, 23d Cong., 2d Sess., p. 123; see also NILES, Vol. XLV, p. 97.

"

And

until such

instructions

the bank

offices that may

determined that no refusal to of the grounds upon which the committee branch notes ought to be made that the issues of the offices ought to be was, receive the means, and that their provision paid at the points where the offices had provided having been made the Atlantic cities principally, it was their not right to throw at
*

"

One

notes

back

timore them."" Cashier of the Bank of the United States to cashier of BalOct. 8, 1833, S. D. 17, 23d Cong., 2d Sess., pp. 123, 124. office,
upon

Jackson

to Baltimore

Philadelphia
*

committee,

Feb. 6, 1834, NILES, committee, Feb., 1834, ibid., p. 9. C. D., Vol. X, Part

Vol. XL VI, p. 31; to

Ibid., Vol. XLV,

p. 393; Webster,

I, p. 542.

SBiddle to presidents 2d Sess., pp. 77-83.

e

of the branches,

Jan. 22 to Feb. 1, 1834, S. D. 17, 23d Cong.,

NILES,

Vol. XLV,

p. 393, Feb.

8, 1834.

THE tory

WAR

ON

THE

BANK They
furnished

313

plenty of for taking steps to protect its interests. Indeed, reason there could be but one policy to follow in any case, for the institution expected to go out of existence in March, 1836. adopted.

measures

the bank

It ought, therefore, to diminish

its operations.

CHAPTER
THE

XIII
AND

CONTRACTION

PANIC

OF

1833-34
on

THE
August,

bank's

operations

to curtail began

ceased effectually on It will be 1834,1 and entirely on the 16th of September. noticed that the curtailments began before the deposits were

1833, and

the 13th of the llth of July,

one of the bitterest charges of the removed, and this was if Justification, justification needed, bank's enemies.2 were found in the bank's knowledge that the deposits would was

probably

be removed. caution desirable

we

Biddle
:

was

not

ered afraid, but consid-

do not feel anxious as to the movements ington at Washit touching the Bank, still is thought prudent to prepare for have this day given instructions any adverse event and accordingly we to keep their discounts at their present to the Branches amount change. and to shorten the time for which they buy billsof exAlthough
"

movement be ready.3

This will make the institution strong and if any sudden is attempted by the cabinet, proper or improper, we shall

The money

took two contraction loaned on discounts was

to be drawn of exchange were the eastern offices. These on

of not to be increased, and bills only at short dates, and mostly

"

directions

the

amount

in

contraction, but

of winding exchange bought work

up on the East would transfer the bank's capital discounts, being to that part of the country,* while the
Tyler's report, S. D. 17, 23d Cong., 2d Sess., pp. 16-18.
C. D., Vol. X, Part
Aug.

would not only result would also render assistance in the the bank's affairs, for the bills of

measures

2BENTON,
3
*

I, p. 106.

To Webster,

13, 1833, P. L. S., Vol. IV, p. 526.

on

Report

of Committee

Offices of the Bank,

April 8, 1834, S. D. 17, 23d Cong., 2d

Sess., p. 98.

314

CONTRACTION

AND

PANIC

OP

1833-34

315

kept stationary, would aid in putting an end to the local As discounts would not, in the business of the branches. of business, go higher until the late autumn normal course
months,1 there was littlehardship in this part of the policy. The question of real reduction was involved in the orders Bills were to be purchased at relating to bills of exchange.

The western offices might, it of only ninety days. is true, draw at four months for the purpose of paying a debt Such bills might be already existing, but not otherwise. drawn to pay the money on could secure whatever branch
a

term

to be payable at the Atlantic all others were offices.2 This order evidently looked toward a reduction in the bank's loans,3 for it put an end to the drawing of the

them,

but

offices on each other, and materially shortened the term of bills. The whole movement was justifiable, and was intended only for the protection of the bank.
western

more

followed by This first effort to lessen business was soon dent On the 24th of September, Presistringent measures. Jackson's
"

paper" having been made public meanwhile, directors was a committee of seven appointed to "take into " " in consemeasures were necessary consideration what quence
of the
1

recent

intimations

that the deposites of the

be recollected that the bank's business always fell off in the summer in the autumn it is rose and always months, and winter months, and therefore, when found falling in these latter months, that the course one may conclude either of business is unusual, or that the bank's curtailments are very effective. It must That for the present, and until the further order of the board, the bills discounted amount of shall not be increased at the bank and the several offices. "2. Resolved, That the bills of exchange at the bank, and all the purchased have more the five western than ninety days to run. offices,except offices,shall not "3. Resolved, That the five western bills of no offices be instructed to purchase in the Atlantic cities, not having than ninety more exchange, except those payable debts to the bank days to run, be received in payment or those which may of existing to run." Ibid., p. 73. than four months and the offices, and those not having more
"

"1. Resolved,

porary." e., the of restriction they [i, orders] contain, will, I trust, be temCircular, Aug. 13, 1833, addressed to all the offices with the exception of branches. the five western
3

"Whatever
"

"

It is

a
on

subject of regret to be obliged

your

to impose

any

restraint
a

on

yonr

business, value."

especially

"Letter

addressed

in exchange, to which wo operations to the presidents of the five western

attach branches,

particular

ibid. pp. 73, 74.

316

THE

SECOND
are

BANK

OP

THE

UNITED
The

STATES

government
was

to be removed."

adopted October fears. It had reason

committee's report 1. At this crisis the bank had many to anticipate that the public funds still

in its vaults would be removed ; that a demand upon it for would be collected specie would be created, since the revenue

by the selected banks largely in its paper ; and that its tration, circulation would be forced in by the action of the adminisits note-holders. panic among It was therefore, in taking further steps to restrict justified, its business.

which

might

create

to counts; adopted had three objects: reduce disto extend the restrictions on the drawing of bills to ; all the offices and to collect the balances against state banks, Even now while restricting the receipt of state-bank notes.2

The

plan

now

Biddle held that the orders excessive scarcity of bank

that the resolutions
We
are

were

not intended

to produce

an

were

accommodations. adopted he wrote:

On

the day

all satisfied that the best thing to be done is to do as little possible. The exchange operations are placed by the resoas lutions structi to-day on a proper footing. We do not give any inpassed
as ours

to reducing

the local discounts,3 but

can

we

shall reduce

gradually diminish yours without it would be very good our customers exciting uneasiness among policy. Our wish is not to give an order to that effect lest it might create alarm, but to do it quietly and imperceptibly.*
and if you

at the Bank,

reduction January,5 and was

The

of discounts

was

to aggregate In New land Engof the curtailment is instructive. to be only $237,000; in the souththe amount was eastern states, $938,900; in the valley of the Mississippi and

by the 1st of tributio $5,825,906.74.'The dis-

to be made

in its tributaries, $2,204,200; the middle states, $2,445,000. to contract to the extent of The five western offices were
.

17, 23d Cong., 2d Sess., p. 74. at New

2
*

Documents Biddle

5 and

6, ibid., pp. 74. 75.

J.

e.,

York.

to Lenox,

Oct. 1, 1833.

See circular of Oct. 12, 1833, ibid., p. 75.

"

Ibid., p. 94.

CONTRACTION

AND

PANIC

OP

1833-34

317

$1,156,700. It will thus be

contraction

in proportion at these offices.1 The heaviest proportional reductions to be at Natchez and Nashville.2

that by far the greatest to take place to business done was

seen
were

In respect to bills of exchange, six more branches were placed under the restrictions imposed upon the five western in August, while the others were to purchase bills only ones and at business was Exchange necessarily limited by ninety days.3 this short period and by the limitation of time and place in bills. The main in October, drawing restriction imposed rearrangement of the rates of 1 per cent, from the western exchange. made officesupon all others except those on the Atlantic, on which bills could be drawn at ^ per cent. ; 1^ per cent, on the West from the eastern offices or from those at New Orleans and
was
on

the Atlantic

cities, New

Orleans, and

Mobile,

however,

caused They were

by

Mobile.

These

measures

were

intended

to force the buying

the capital of the of bills on the East, thus bringing home bank and restricting the bill business very materially.4
1

These

reductions
ensue

necessarily Hence
on

reductions which would the observance ness. busiof the restrictions placed upon exchange intended to be more was the curtailment than appeared considerable
upon

are

severe,

yet

they

do

not

include

the surface.
2

This latter branch

was

instead of four." Ibid., p. 76. West.

'"1.

given the privilege of renewing old bills at six months Nashville was the center of the bad banking of the

last, relative to the purResolved, That the resolution of the 13th August chase bills of exchange be extended the five western to the offices at of at offices, Burlington, Utica, Buffalo, Pittsburgh, Natchez, and New Orleans. "2. Resolved, That all the other offices be instructed in like manner, not to purchase
not having *"3.

bills of exchange, except on than ninety days more

Resolved, and

the Atlantic to
run."
"

cities, and Ibid., p. 74.

New

Orleans

and

Mobile,

the bank
1

One

That the rates of collection and purchase of bills of exchange, the several offices,be increased, so that they shall be as follows : and a half per cent, from the Atlantic offices to the western offices.
per

at

'Half
'

'

'

'

'

the western offices to the Atlantic offices. from the Atlantic offices to the New Orleans and Mobile offices. cent, One per cent, from the New Orleans and Mobile offices to the Atlantic offices. One per cent, from one western office. western office to another One per cent, from the western Orleans offices. and Mobile offices to the New One and a half per cent, from the New Orleans and Mobile offices to the western

cent, from

One

per

offices.

318

THE

SECOND

BANK

OP

THE

UNITED

STATES
state banks

State-bank balances and

the third
on subject

dealings with

branch

was

to take the notes

which action was of the state banks

stituted No taken.

con-

the city in which it was established. The to be collected in specie these banks were

outside of debts due by

in drafts
on

or

the Atlantic cities, and balances were not to be permitted henceforth to accumulate.1 This action would create intense hard to obtain, pressure on the state banks, since specie was

and drafts on the East meant precisely the same Whatever Biddle might say, these orders were All the measures harsh. were create pressure.
in discounts
was

thing.
certain to

immense,
were

and

was

tion reducin to be compassed

The

brief period. inevitable; the

a

If it

successful, much

suffering

was

dealings
more

occasion

even

in exchange as restricted would distress, while the action against the

state banks

would compel them to contract, and thus increase the pressure. On the whole, nothing but peril to the bank these measures. could excuse

On the 17th of attempt to curtail did not end here. October a second circular was issued to the branches in the West
of and
a
" the course perseverance in already prescribed," while the contraction was by two additions. Drafts on the northern Atlantic

The

few others, urging

measures

aggravated
"

officeswere
One One

to be avoided, and
an

an

extra attempt
to to
an

was

to be
ington. of Washington. of Wash-

per cent, from

office north office south

of Washington

office south office north

"

per

cent, from
per

an

of Washington

an

to each other. cent, from the offices north of Washington to each other. cent, from the offices south of Washington " Subject to such modifications at the respective offices as the Committee S. D. 17, 23d Cong., 2d Sess., p. 74. Exchange of this bank may deem expedient.""
"

Quarter
Half

"

per

of

be received on deposite, except notes of State banks in the same place with the office receiving them, but they of such as are established discretion of the office in payment be received at the may of a pre-existing debt. State banks as by arrangement keep a balance at Provided, that the notes of such
i

"

4. Resolved,

That

no

be received as heretofore. their credit, for the redemption of their notes may "5. Resolved, That due by distant State banks be collected all the balances either in specie, or in drafts on the Atlantic cities, and that such balances be not
permitted
to accumulate.""

Ibid., p. 75.

CONTRACTION
made to keep down further contraction

AND

PANIC

OP

1833-34

319

circulation.1 Not satisfied with this, a in discounts was ordered on January 23,

to of $3,320,000, be completed by the first days of March and April.2 As before, the largest reduction to take place at the western was and southwestern offices.3

1834, to the

sum

New

ness. also imposed upon the exchange busiregulations were The localities on which bills could be drawn were to stillfurther limited. Henceforth the western officeswere

draw

only

on

New

Orleans, Baltimore,

and

the

Atlantic

be for only officesnorth of Baltimore, and such bills must ninety days.* These instructions thus prohibited the western
officesfrom drawing office Was forbidden
8 the Mississippi."

another, while the New Orleans to purchase bills " payable at places in These measures harsher were rendered still
on

one

by another increase in the rate of exchange, which was again regulated so as to discriminate sharply against the western The rate went up 1 per cent, for all bills drawn branches.
on

these
1

offices,no

matter

from

what

part of the Union.6

action against the bank's York of New city, Oct. 1,

Circular of Oct. 17, ibid., p. 77. Biddle feared some To R. Lenox, circulation on the part of the government. 1833, P. L. B., Vol. V, p. 16.
"

2
3

Letters

to the offices,8. D. 17, 23d Cong., 2d Sess., pp. 77-83, 94.

-

Mississippi valley New England

-

$1,600,000
-

200,000

Middle states Southern states

-

$1,020,000
-

500,000

To purchase "First. Those

more

"

bills of exchange except in Baltimore, and payable

no

the having

Atlantic

cities north than

of

it not

having
"

run

ninety Those payable in New Biddle to western to maturity."

than

days

to

run

to maturity

Second.

Orleans,

not

more

"

offices and

office at Natchez,

ninety days to Jan. 22, 1834, ibid.,

p. 77.
5 6

Biddle

to Montgomery,

Jan. 24, 1834, ibid., p. 81.

:

Increase

in rate of exchange

In October, 1833

In January, 1834

Atlantic offices to five western Western offices to Atlantic Atlantic to New Orleans and Mobile West to West New Orleans and Mobile to West North to south of Washington of Washington South of Washington to north of Washington West to New Orleans and Mobile North to north of Washington of Washington South of Washington to south of Washington
.... ...
-

114 Yt
1 1

2Yt 1A
2

1""
1 1 1

forbidden forbidden
1

1 2, to N. O. alone

" %
"

Ji 1A and
Ibid., pp.

1 74, 75, 77-83.

320
These

THE

SECOND

BANK

or

THE

UNITED

STATES

restrictions would distress would be most

for it was here that be severely felt, easily produced, since by breaking

up the system

western of bill purchases in the western and southcities pressure would immediately be exercised upon

those whose accommodations were be remembered, loan. It must

bills

was

frequently
means

an

entirely in this species of too, that the purchase of the planter operation by which

secured the
means were

resources.

of growing his crop, and that when these immediately at the end of his refused he was Not only so, but individuals who were accommodated

heavily charged that it became more profitable to pay for the carriage of specie than to buy drafts. In short, the breaking up of the exchange system bank created immediate distress. and widespread of the
system
were so

who bank's

had to pay very heavily for the favor. Finally, those had been accustomed to transfer funds by means of the

various measures remained in full force until the llth of July, 1834, when it was determined that the bank's tion,1 business in discounted notes should suffer no further diminu-

These

but,
The

on

the other

hand, it

was

not

to be

increased.2

New

were restrictions on exchange York was permitted to purchase

affected but slightly. bills on the southern

and southwestern officesat four months, and to any amount. But the rate of exchange was not diminished; and, indeed, for bills drawn to be at over ninety days the rate was per
cent,

higher.8

Trade

in

western

bills

was

couraged still diswere

-|

In the month
at last removed.

of September

all restrictions

Resolved, That the instructions hitherto given for a reduction of the amount bills discounted at the bank of and the several offices, are hereby revoked ; and that the line of bills discounted the several offices shall, until the further order of this at S. D. 17, 23d Cong., 2d Sess., p. 84. board, remain at its present amount.""
2 Even before this, special exceptions liouisville." Ibid., pp. Ill, 112.
3 *

"

had

been

made

in favor of New

York

and

Eyre Eyre

to Lawrence, to Pittsburg

July 18, 1834, ibid., p. 85. branch, Aug.

1, 1834, ibid., p. 86.

"

CONTRACTION
Taking

AND

PANIC

OP

1833-34

321

together, and from the 1st of all the measures counts August, 1833, to the 1st of April, 1834, a reduction in dishad been contemplated to the amount of $13,300,000
"

To this must be added the preposterously large sum. restriction occasioned by the breaking up of the exchange This could be calculated at not less dealings of the bank.
a

$5,000,000. The whole contraction, then, would be at least $18,300,000 out of $62,000,000. What was the actual
than

of directors alleged that the entire reduction 12.1 They to the 1st of April, 1834, was only $5,047,527. traction counted from the 1st of October, however, while the conin August, and counting from had actually begun
that month,

result ? The board

$4,000,000 must be added to their estimate. in discounts, Of this total of $9,000,000,$7,000,000 was By July 1 the entire $2,000,000 in bills of exchange. $13,000,000 nearly $9,000,000in discounts, reduction was
"

the
never

rest in exchange.2

Such

an

enormous

reduction

had

It was oneundertaken. equal to over fifth ot the bank's entire dealings.3 The distribution of this reduction is interesting. Of the
before been

firstcurtailment ordered, the South succeeded in diminishing its discounts to less than one-half the amount demanded.
1 2
"

Ibid., p. 99.

By

September

the total

reduction,

reckoning

from

August,

1833,

was

$1.7,000,000

in $8,400,000 discounts, and

in $8,800,000 exchange.
LOANS AND DISCOUNTS
Total Loans

Aug. 1,1833 Oct. 1

$64,100,000
60,000,000 54,900,000 54,800,000 51,000,000 47,000,000
REDUCTIONS

Jan. 1, 1834 April 1 Julyl

Sept. 1

Aug.

to Oct., 1833 ,1834

....

$ 4,100,000
9,200,000

To Jan. To April To July

9,300,000
13,100,000

To Sept.

17,100,000

322

THE

SECOND

BANK

OP

THE

UNITED

STATES

In the section comprising the Southwest and the West the better, reducing to about the extent of branches did much Here the five western two-thirds of what was required.
officeswere
out
more

the chief delinquents, reducing only $789,000 little By April they were a of $1,705,000 expected.1 successful.2 Up to this time, however, the increase in

business of the West and Southwest well-nigh in the item of billsdiscounted. offset all reductions made By the end of February it was over $4,000,000in excess of
the exchange

and did not diminish until after April, the total business done in the valley aggregating in that month just about what it had been in the beginning Final orders to cease of October, 1833. curtailing in the
what
it had

been

in October,

West,

however,

were

not issued

until September,

by that time the contraction had accomplished In discounts the business possibly be desired. by

1834, and all that could

was

diminished

$3,300,000, and

in exchange

by

offices was reduction at the five western only Louisville and Natchez had failed to meet the demand.4 The collection of state-bank balances had been the third

$3,400,000.3 The $3,500,000, and

part of the bank's plan to strengthen its position. When taken in October, 1833, the state banks were this action was
1

In the

against

from Oct. 1 to Jan. 1, the reduction was as $802,000, counting in the West $1,973,000ordered ; $2,968,000 and Southwest, $1,954,000, against

South,

ordered. 2 By April the in the South, $2,673,000; the in reductions should have aggregated Mississippi valley and the West, $4,568,000; the five western in cities, $2,705,000.They The South was were, $3,125,000, $1,800,000. most at fault, then respectively, $1,200,000,
the

five western
3

offices. Yet there

Orleans,
:

was

nothing

like the failure to respond Natchez,

Discounts

shown

in

1832-33.

Offices of New

Nashville,
Total

Mobile,

St.

Louis,

Cincinnati,

Louisville, and

Lexington 1
-

Loans

Bills of Exchange

1833, Aug.

$24,158,000
-

$15,296,000
14,217,000 12,106,000
11,579,000

$ 8,852,000
7,208,000 9,919,000 11,412,000 10,315,000 6,290,000 3,877,000

Oct. 1 1834, Jan. 1 March April 1

1
-

21,425,000
-

22,025,000
22,991,000 21,407,000 17,052,000

11,092,000 10,762,000 10,987,000

July 1
Sept. 1
-

14,864,000

*S. D. 17, 23d Cong., 2d Sess., pp. 78, 110.

CONTRACTION

AND

PANIC

OF

1833-34

323

CHART

IV

CONTRACTION

OP

1833-34

324

THE

SECOND
to the Bank

BANK

OF

THE

UNITED

STATES

in debt

of the United States to the extent of $2,200,000. By January, 1834, the debt had been reduced to $1,500,000,nd by the 1st of April it was $500,000. The a clearly evident from the strenuous opposition offered to it by the banks of New York city in March, 1834.1
measure

created distress, as

was

severity of the contraction of 1833-34 however, entirely determined, until its effect upon the circulation, the deposits, and the supply of On the issues the effect is marked, the specie is considered. question is not circulation being reduced $3,200,000from the 1st of August, 1833, to the 1st of October, 1834, the lowest point it had Individual deposits in the 1830. reached since August,
the bank's stock period fell off $3,300,000. Meanwhile ing of specie, representing a further diminution in the circulatThe sum medium of the country, increased enormously.
same

The

of the

It was $10,023,000at the beginning of August, 1833. $15,500,000at the end of September, 1834. It had never During the before reached within $4,000,000 that sum. of
was

in excess were never period of the contraction cash liabilities of $30,000,000,a fact which proves that the bank never crease inThe greater part of this immense in any danger. was
must

United

have been extracted from the circulation in the States, largely by means ances. of collecting state-bank balIf Taney was correct in his views of the effect of

such

an

culation operation by the Bank of the United States, the cirof the country must have been diminished by $20,this hoarding of specie.2

000,000 through
i
"

In March
York
agree

of New would

e., 1834] a committee of that year [i. of the merchants and bankers informed his course, him [i. e,, Mr. Biddle] that unless he changed and to their terms, which were to that the United States Bank should cease

call upon denounced

Banking,
2

for thirty the other banks for its balances of the exchange." at the adjourned meeting p. 60.

days,
"

his

course

APPLETON,

would Currency

be
and

from the circulation that for every dollar in specie withdrawn argued Ex. Doc. 2, in from four to five dollars of their paper." the state banks had to call 23d Cong., 1st Sess., p. 9.

Taney

CONTRACTION Though
the

AND

PANIC

OP

1833-34

325

carried reached a lower level than it had touched since 1827,1 while the total reduction from August 1, 1833, to August 1, 1834,

first order to contract could not be completely out, the bank's business in April, 1834,

counting

discounts, circulation, deposits, and

mean
a

the hoarding

of specie, would
community
in
one

running, however, had to contract to

to the reduction of accommodations year to an incalculable amount, probably over $25,000,000. Since the state banks

proportionate degree, the suffering occasioned by the decrease of banking facilities must have been
a

extreme.

placed the bank in a position that of great strength, a result evident in the circumstance its notes were not only undepreciated, but in some parts of Its means, too, were the country at a premium.2 situated so The
as

contraction of 1833-34

to

be

much

began, having
the West thus

the movement accessible than when been transferred to a considerable extent from
more

to the

East.

be

made

with

settlement of its affairs could dispatch, if settlement were desired.

The

The
1

amount
Had

and the method

at reduction bank on April

of the reduction must

been
1, 1834, would

also

com-

the total loans

not

the attempt of the

low

completely successful in the time given, have been $47,000,000. They had
table gives the of the United

The following they were $42,700,000. since 1824, when in discounts, exchange, debt aggregate and funded of investments States, in millions, for April :

been

so

1825 1826

....

$54.8
-

1830 1831 1832

1833 1834

$54.0
59.2 70.4

52.3
-

1827 1828 1829

50.8 54.8 57.9

...

64.5
-

----

53.7

months

done in the months A comparison of contraction of the business in 1832-33 and 1835 will give a very just idea of the reduction:
DISCOUNTS
AND DOMESTIC EXCHANGE 1833
1834

with

the

same

1832

1835

Jan. 1
April 1 Julyl Sept. 1

-....

$61.6
....

$54.9
54.8 51.0
47.0

$51.8
61.9

64.3 63.3 62.5 60.0

....

65.1

$65.5
-

Oct. 1
2

G3.6

46.0 Vol. XLVI,

Whig
p. 86, April

One

to two

per

ibid., p. 169, May

for coin." NILES, cent, in exchange 10; ibid., p. 188, quoting the Richmond

5, 1834 ;

of May

9.

326

THE

SECOND

BANK

OF

THE

UNITED
now

STATES

pel the conviction

over

demanded

considerable control its offices. Few of these failed to do all that was in the West and Southwest only Louisville and
"

that the bank

had

not only Charleston.2 These were matters of any great importance, while the failure at the Atlantic offices was of no importance whatever.3

Natchez,1

in the

South

While

the bank

che country that " money

placed itself in suffered bitterly. In is

scarce,"

an

impregnable

September
no

position, Niles says for the

though

he knows

reason

scarcity.4 In October he virtually repeats this observation,5 later he speaks of "a A month severe most pressure for " and the probability of a paralysis in business.6 In the money
month state-bank notes began to depreciate,7 and loans In December the pressure were at 18 per cent, per annum.8 being discharged because had increased, and laborers were
same

ures their employers could not procure credit.9 In January failof business houses and banks began at Philadelphia,

New

York, and Washington. At the end of the same month loans in New York and Baltimore could be had only at from mercial 1^ to 3 per cent, discount a month.10 The New York ComAdvertiser

of January 25, 1834, declared that it had "never deep a cloud of gloom hanging over seen so the exchange,"11 while the Boston Courier of the 20th said that " 'change that day on Saturday was the most tempestuous
we

have
1

yet had.

The

gloom
Ordered

was
Oct., 1833

" absolutely frightful.

12

Attained

July, 1831

Failure

Louisville Natchez All this in discounted

2

$682,743
562,081
paper.

$555,223
486,230

$127,519
75,850

Jan. 30, 1834, S. D. 17, 23d Cong., 2d Sess., p. 78. 3 Yet branches had was out on paper capital at the western which considerable President to Biddle, Feb. 4, 1834, to be renewed." of Louisville branch constantly
Biddle
to Johnson,

ibid., p. 110.
* 7

NILES,

Vol. XLV,
notes

p. 17.

Ibid., p. 81.

*Ibid., p. 97.
2 per

Louisiana cent.; Alabama

8 10

and Ibid., p. 146.

5 per cent, discount in Baltimore York safety fund ; New Georgia 6 to 8 per cent." Ibid., p. 194, Nov. 23, 1833.
9

Ibid., p. 265, Dec.

21, 1833.

Ibid., p. 389, quoting ibid., p. 346.

"

the New

York
12

Commercial Ibid., p. 390.

Advertiser.

For

Baltimore,

Ibid., p. 389.

CONTRACTION The failures beginning

AND

PANIC

OF

1833-34

327

in this month continued unintermittently until June.1 Wages went down ; notes of specie-paying depreciated at from 1^ per cent, on New state banks were

England money

notes to 12 per cent,

on

Alabama

notes ; prices fell;

only at from 12 to 18 per cent, were ; state loans could not be raised ; workmen per annum discharged in large numbers; real estate declined in value.2
could be borrowed In April money that due billshad to be given so scarce was by many persons, while loans were in payment at the made rate of 5 per cent, a month.3 " We The height of the distress was reached in May. felt anything like the present pressure," have never or seen

declared
*

Niles,

worse,"

there

was

every day worse and and it is becoming Even the Globe, which had hitherto asserted that distress, or very little, no was at last forced to
"

admit the situation. "A blasting mildew," it complained, brought "is suddenly of the upon the business concerns country, and a prostration of trade and credit, to an extent supposed
to have been
5

effected." to diminish.

hitherto unknown, After this month, however,

Even
so

is by

some

means

the distress began

Benton early as May, exultantly that recited a catalogue of facts supporting the presumption In July the Bank broken.6 the force of the panic was of
1

Ibid., p. 309, Jan,

Vol. XL VI, p. 5, March 6 ; p. 245, June 7.

2

1; p. 65, March ibid. Vol. XLV,

4; p. 375, Jan. 25; p. 390, Feb. 1; pp. 393, 396, Feb. 8; ibid., 24; p. 96, April 13; p. 113, April 19; p. 117, May

For details

see

p. 331,

Jan. 11 ; p. 345, Jan. 18 ; pp. 364, 373, Jan.

22.
24, 1834.

25; p. 390, Feb. 1 ; p. 396, Feb. 8; p. 415, Feb. 15; p. 434, Feb.
sibid., Vol. XL VI, pp. 86, 87.

*Ibid., p. 204, May

fi/Md., p. 243, quoting 6 " Prices of property,

some cases

the Globe

of May

24.

higher, than
now

South,

this time

cotton, was last year.

now as high, in general, in of produce, and of labor, were The great staple in the they have usually been heretofore. in the pound, Orleans, than it was a cent higher at at New

The

domestic

by the power in nearly as

and

policy of the Bank

currents to four ; the exact

in the New York price are quoted notes, at from three other Southern Louisiana the notes at five per cent. ; and these are and Mississippi in those happy rates at which they have stood in that market and prosperous

good a condition as in this city to be ten per cent, discount, at three per cent. ; North Carolina and

for a while had been deranged exchanges, which States, were now of the United recovering, and The notes of the Virginia banks, though proever. claimed

328

THE

SECOND

BANK

OP

THE

UNITED

STATES

the United

States ceased to contract to a very considerable extent, and on the 19th of that month money was noted to
"

be

more

ended.
was

plentiful than it In October cash was

yielded few

was."
a

The
on

stringency
a

was

sluggish and

the market, profitable investments

drug

"

which the

usual consequents of a panic. The president and his adherents angrily censured the bank for the distress. At first, indeed, the administration

supporters declared that there longer be assertion could no

most

was

no

distress. they

When

that

hazarded,

bank

of the evidence of distress was true to the extent that the its partisans.3 This was or

alleged that by the manufactured

bank's advocates made as much noise as possible, and urged of government others to do likewise.* Several volumes filled with distress petitions and memorials.5 reports are The bank in answer to the charges retorted wrathfully that the administration alone was responsible for the distress,and

to add to contraction by it solemnly prefaced every movement Thus on the calling attention to the sins of the president. 17th of October, 1833, the " movements of the executive " is the reason alleged for further curtailment officersat Washington

and in January
are

understood

Biddle declares that further reduction measures necessitated by "the new of hostility to be in contemplation" by the administration.7
paint in such glowing
p. 346.
2

times which gentlemen May 21, 1834.

i

colors."

"

C. D., Vol. X, Part

II, p. 1796,

NILES,
Thirty

Vol. XLVI,
Years,

Ibid., Vol. XLVII,

p. 113,

Oct. 25, 1834.

3 *

Vol. I, p. 421.
....

"What
has

What
Brooke,

in your Legislature [Virginia] about the deposits? has been of immense Clay to Francis service to us." 377. "Our is full of distress Correspondence, Jan. 14, 1834, CLAY'S p. city been done
there
"

is doing

committees. Biddle, Dec.

The

more

the

better."

"

Same

to

same,

Feb.

10, 1834, ibid.

Clay

to

P., suggests a meeting the deposits. of memorialize $Ex. Doc., Vols. Ill, IV, V, 23d Cong., 1st Sess., passim.
21, 1833, confidential, Congress for the return
6 '

B.

at Philadelphia

to

Biddle

to presidents

Ibid., pp.

80, 81, 83.

drafts would 1834, ibid., p. 79.

branch

of branches, Oct. 17, 1833, S. D. 17, 23d Cong., 2d Sess., p. 77. to the apprehension The reference was that the receipt of Biddle to president of Charleston branch, Jan. 30, be stopped."

CONTRACTION

AND

PANIC

OF

1833-34

329

The wicked administraIn brief, the old fable still applied. tion persisted in his wolf had troubled the waters, and now Who sinful purpose of dining upon the innocent bank lamb.
was

by the bank were certainly made in excess continued of any possible danger, and were The president and long after any such danger threatened. in fact, not company of the Bank of the United States were, reductions only frightened by Jackson's attacks, but angry ; not merely angry, but vindictive, and vindictive with calculation. They hoped to force a re or at least a restoration of the -charter, deposits, by exercising a monetary pressure upon the country.

right? The enormous

of reduction only does the degree and manner argue this, but the language of Biddle and his friends leads " This discipline, it appears to me," to the same conclusion.
Not
wrote

Webster,

"must

question of the went to Washington

was

have very great effects on the general l Jaudon, who re-chartering of the Bank."
to look after the bank's interests there,

relief should be given which could be do you think of the proposition to extend avoided: "What for entries ? Would Bonds it not give too the credit on much relief?" he queried.2
anxious

that

no

determined Biddle, for his part, was that no misguided leniency should be exercised, no "On relief granted:
to sufgeneral principles, I believe that if the Bank were fer itself to be misled into the measure of making money plenty, it will only give to its enemies the triumph of having

mies robbed it with impunity, and only confirm what those enehave said that their act of violence would be attended 3 It is deducible from to the public." with no inconvenience

these remarks that the bank could, if it chose, make " money to plenty," but that it did not intend to allow the enemy
1
2 3

Webster Jaudon

to Biddle, Jan. 2, 1834, B. P. to Biddle, Washington,

Jan. 17, 1834, ibid.

Biddle to C. A. Davis P. L. B., Vol. V, p. 100.

[Major Jack

Downing],

of

New

York,

Jan.

21, 1834,

330

THE

SECOND

BANK

OF

THE

UNITED

STATES

" inconvenience to the public." carry out his schemes without for A temper of this sort was viciously unjust, it struck at the guilty by inflicting penalties upon the innocent; and

these innocent

to a considerwho were able friends and partisans of the bank. Continued number but contraction, consequently, was not only unjust, impolitic Nevertheless Biddle was determined to the last degree. to
were
men

and

women

abide by it.
The

week

later he wrote:

ties of party allegiance can only be broken by the actual Nothing but the conviction, of existing distressin the community. evidence of suffering abroad will produce any effect in Congress.

If the Bank the Bank

remains
save

and

strong and quiet, the force of events will all the institutions of the country which are

save now

in great peril. But fear of offending or

a sensitiveness the desire of conciliating,the Bank permits the itselfto be frightened or coaxed into any relaxation of its present the relief will itself be cited as the evidence that the measures,
"

if,from

too great

from

or of the Govt are not injurious oppressive, and the Bank will inevitably be prostrated. Our only safety is in pursuing a of firm restriction and I have no doubt that such a steady course measures
"

will ultimately lead to a restoration of the currency and the How soon this will take place, it is of course recharter of the Bank.
course

difficultto

conjecture but
"

I have

littleapprehension

as

to the

ultimate result.1

satisfiedthat in the end the upon his course, bank would win, Biddle could not be swayed from his purpose. He was encouraged in it by hundreds of friends and correspondents, and above all by speculators in bank stock Determined who
harvest from the commercial disasters of the time and therefore urged a continuance of the If you want a charter, "you must persevere. pressure.
were

anxious

to reap

There

must

be

no

let-up," wrote
was
men

market hand, less interested men,

severe
1 "

that the New

York

he complained getting relief.2 On the other of clearer insight,deprecated and

"

Webb,

measures.

Webster
Appleton,

urged

that the Bank

ought to

Biddle to Wm. Webb

of Boston,

Jan. 27, 1834, P. L. B., Vol. V, p. 109.

to Biddle, New

B York, Feb. 4 [1834],. P.

CONTRACTION

AND

PANIC

OF

1833-34

331

reduce
to

as

ease

and occasionslowly and moderately as they can ally where it is requisite to prevent extreme sufoff fering." " He thought that the administration was setting
" "

into action

strong sentiment of opposition to the Bank, on ' Biddle appeared irritated by account of the reductions." The Webster's opinions, and bluntly disregarded them.
a

community
My
own

must
course

take

care

of itself:
....

all the other Banks and all the merchants may break, but the Bank of the United States shall I have asked Com* Biddle what is the least sail under not break. of war can lie to in a gale of wind, and he says a close which a man reefed main topsail. So
our

is decided

reefed main topsails and As for those who have no

they must
rely
sure
on

squadron will all be put under close ride out the gale for the next two years. sea room and breakers under their lee,
or

Providence
a

Amos

Kendall.2

He
won

re-charter would result. It might be by securing a temporary act, extending the present charter for three years. At the end of that time the president
was

that

" and his advisers will all be dispersed among would be out, able, the penitentiaries." His successor would either be favorVan Buren, too timid to veto a bill.3 if it were or,

I think very favorable. are, prospects of the Bank The state of the country is so bad, and goes on daily worse hold on in this way much that I do not see how things can "The

longer.

is uneasy and anxious and Congress * be obliged to act." will soon It seems plain, therefore, that Biddle and the board of directors had determined to exert all the power of the bank

Everybody

to

secure

new

charter, and

succeed by causing panic there for such expectations? was must answer. session of 1833-34
1
2

that they believed it possible to justificati and distress. What The story of the panic

H. Binney,
Biddle

at the instance

of Webster,

to Biddle, Washington,

Feb. 4, 1834, ibid.

to Watmough,

Feb. 8, 1834, P. L. B.t Vol. V, p. 120. Fob. 10, 1834, ibid., p. 123.

Biddle to Elihu John

McKim,

Chauncey,

*To

Jr., Feb. 10, 1834, ibid., p. 125.

CHAPTER
THE

XIV
OF
THE

DEFEAT

BANK

WHEN
immediately

Congress
came

met

in December, it.

before

The

the deposit question National Republicans

supposed that all the advantages lay with them, and leveled their assault against Jackson along three lines : that he had functions not granted to the president by the usurped
constitution, had inflicted suffering upon the country, and had violated the contract between the bank and the government by seizing the public treasury in contravention of the charter.

The

party issue sought

to be

made

was

that the

Congress, and over supremacy president wished to secure hence the struggle was The one of liberty against a despot. Democrats, though for the moment thrown on the defensive,
supported

the president's dismissal of his secretary as constitutio and the removal of the deposits as legal. In these points they were ping undoubtedly in the right. Not stopthe offensive and they boldly assumed pressed forward to an attack upon the bank, insisting, with endless repetition, that the real struggle was not between the legislative and executive departments, but between the president

here, however,

the president of the United States; not the restoration of the deposits, but a re-charter ; that the bank operated a gigantic and needless contraction, and therefore that it and not the president was

of the bank that the issue was

and

responsible for the suffering caused. fearful, the opposition justly The Democrats were justly So hostile was popular confident, when the struggle began.

feeling to the president

in Washington
332

itselfthat the

con-

DEFEAT

OP

THE

BANK

333 by such loud

elusion of Clay's great speech applause from and repeated

"

was

followed
immense

thronged

the galleries and

crowd which the lobbies that the vice-president"

the

had the galleries cleared.1 In January Calhoun wrote " doubt that the administration will no that he entertained It has already received its death blow," 2 be overthrown.

and he was equally confident in February .3 King, of Georgia, approved declared that the great of majority Jackson's friends dishis act as inexpedient,4 and Preston, of South

Carolina,
more

was

convinced

toward

securing

that the president's action had done re-charter than anything the bank

could do.5 Moreover,

greatly encouraged by receiving the assistance of the Nullifiers and the State Rights party.8 Calhoun spoke strongly for the bank ;

the National

Republicans

were

Dr.

Cooper

wrote

in its interests;

Clayton,

of

Georgia,

apologized publicly for his past attacks on it;7 and McDuffie Yet constitutional scruples stood a staunch was supporter. in the way of a permanent them union between and the National
with his wellknown subtlety of constitutional interpretation, attempted to demonstrate that the bank was constitutional, if Congress indeed, had the right to regulate the paper currency, and that the continuance constitutional, though its estabof the bank was
1 2

Republicans.

Calhoun,

C. D., Vol. X, Part

I, p. 94. Van Deventer,

Association

Calhoun

to Christopher

Jan. 25, 1834, Calhoun Vol. II, (1899),

p. 329 ;

Correspondence,
so on

Report

of

the American

Historical

the 30th to

John
3
*

E. Calhoun,

ibid., p. 331. E. Calhoun,

Calhoun

to James

Feb. 8, ibid.
5

C. D., Vol. X, Part

"

I, p. 847.

ibid., p. 563.

find sustaining the cause of the bank those who believe a protecting tariff believe it unconstitutional; those who believe a those who and constitutional, internal improvements by the General Government of system constitutional, and
6

We

those
a

who

Bank

believe it unconstitutional ; and, most astounding States constitutional, and those who of the United Alabama, ibid., Part III, p. 3143. I ""CLAY, of
6, in the House, ibid., p. 2903.

of all, those who think believe it unconstitutional

March

334

THE

SECOND

BANK

OP

THE

UNITED

STATES

lishment

was

not.1

McDuffie

Cooper upheld arguments;2 believed that the president of still greater

power and

adopted the second of these the present bank because he

was

intent upon
more

chartering

one

much

objectionable

to

clared constitutional scruples; other State Rights politicians dethat the constitutionality of the question depended " A bank was upon the necessity of the moment. necessary
now, and proper" These arguments

though
are

it might not be so next week. only too evidently the product of the

temper

and passions of the moment, and

test of cooler examination

and could not stand the It was criticism. certain,

be against the bank in the therefore, that the party would long run, and that dependence upon it was vain. There was were also a number of congressmen who willing to restore the deposits, but declared themselves
against a re-charter.3 These were generally counted upon but illogically, as is evident from the vote by the bank, the resolution of the Committee on of Ways and Means that the

bank

stood 134 deposits was

This vote not to be re-chartered. ought to 82, while that against the restoration of the

only 118

to 103.

In other words, there

was

has the right to receive anything 11. If Congress but specie in payment, it has the right to regulate its value. 2. Hence, if bank it has the right to regulate are notes received in payment, their value. is necessary 3. So the banking power and proper under the constitution if notes are received ; hence constitutional.
upon

the right to incorporate a bank, but constitutional question is not upon the right to receive anything but specie in payment of dues. be constitutional in the beginning. 5. An act done so was may not which Act of madness to take up constitutional Louisiana quespurchase, for example. tion. Same reasoning applies to the bank.
4. The

6. Principle applied to compromise to apply here. That act was tariff ought but it was judged better to pass it than to upset everything at unconstitutional, So paper State Rights party ought to vote for his bill under these once. currency. In Senate, March 21, 1834, C. D., Vol. X, Part I, pp. 1070, 1071. circumstances."
2
3

Ibid., Partni,

p. 3469.

Clayton, of Georgia, ibid., p. 2903; Bibb, of Kentucky, ibid., Part I, p. 533; PinckSouth Carolina, ibid., Part III, pp. 3087, 3088; Clowney, ibid., p. 2788; Leigh, ney, of ibid., Part I, p. 996 ; Archer, of Virginia, ibid., Part II, p. 2629; Gholson, of Virginia,
ibid., Part

III, p. 2941.

Almost

all the Virginians

were

in this category.

DEFEAT

OF

THE

BANK but

335

about

score

of votes favorable to restoration

opposed

to re-charter.1

1833, the bank sent a memorial of the violation of its charter by the removal of the deposits, and praying for justice at On the last days of December the hands of Congress.2 Clay opened the campaign against Jackson in a three-days'
the 18th of December, to both houses, complaining

On

he outlined speech, in which His tactics were Republicans.

the

policy of the National faulty, however, in that he

Resolutions proposed no effective remedy for the situation. passed by the Senate alone, censuring the president and the illegal and an secretary of the treasury for committing the deposits, might irritate and act in removing

unjustifiable
enrage Jackson, the real

but could

was object

edly other effect.3 Undoubtto give time to let the panic work,
have
no

since panics are powerful engines in party warfare. Clay's speech and resolutions opened the flood-gates of debate in the Senate, while the bank's partisans buried

Congress

Such
came

praying for relief. under huge piles of memorials Thousands the strategy of Clay. was of memorials for the bank, Forsyth for the adin, while Webster ministr seventy times, and Clay over sixty spoke over Other
incitements
to debate
were

times.

Every

memorial produced a speech, and nished fur5 a new February source while on of discussion was Committee, by Webster's report from the Finance

constantly added. a dozen, sometimes

declaring Taney's

reasons

and recommending censuring the president.*

for removing cient, the deposits insuffithe adoption of Clay's second resolution

iThe legislature of Virginia expressed this policy in its resolutions against to Jackson's removal of the deposits, though time refusing its sanction at the same States on constitutional Bank the United Ibid., Part III, p. 2840, the of grounds." March 3, 1834. resolutions presented
2 3
*

Ibid., Part

II, p. 2207.
criticism, Thirty Years,

See BENTON'S

Vol. I, pp. 393-6.

C. D., Vol. X, Part

I, p. 467.

336

THE

SECOND

BANK

OF

THE

UNITED

STATES

by no means was of campaign, however, The to the bank. satisfactory to those who wished success true policy, so far as it was concerned, would have been to its, introduce a joint resolution for the restoration of the deposplan which should have been thoroughly discussed and quickly Biddle himself urged that the Senate should pass passed.

Clay's

jointesolutions to this effect as r

soon

as

possible, "then

send

to the House, and the resolutions down 1 But as in 1832 pressure to do the rest."

trust to external

"nothing littleor

for the campaign," so in 1833 Webster nothing for the bank.

Biddle had cared Henry Clay cared

soon

exhibited discontent with Clay's away from his leadership, and supported measures involving effective Webster wished to re-charter the bank for six action. for twelve, and the two could not comproyears, Calhoun mise
their differences.2 bank's representatives were as While Biddle approved the senators.

and Calhoun broke maneuvers,

The

at variance as much Webster's plan,3 Sergeant

and Binney supported Calhoun's, to wished him to "take the direction in chief," objected " for a short continuance of the charter," and compromising urged Biddle to help to "alter the feelings of our friend W.,

* Webster himself was course." and reconcile him to a new "If Mr. C. and confident that his scheme might succeed. Mr. C. would go along with us," he wrote, "we could carry Bill through Senate by a strong twothe the compromise

thirds

majority.
?"
H. Binney, who

Can
b

with Mr. Calhoun

1

you write through any body to talk He had assurances from friends of the
to

To

was

give this advice

to Webster,

Jan. 8, 1834, P. L. B.t

Vol. V, p. 85.
South Carolina statesman that, if it really objected to Webster's scheme too short ; if it was re-charter, the time was simply intended to give the bank It would inject the bank issue too long. time to wind up its affairs, the period was into two more C. D., Vol. X, Part presidential campaigns, and it settled nothing."
meant
a

The

I, p. 1057, March
3

21.

Biddle

to Webster,

Feb.

13, 1834, P. L. B., Vol. V, p. 130 ; and

same

to

same,

March
*

15, 1834, ibid., p. 163.

Sergeant

to Biddle, Feb. 17, 1834, B. P.

Webster

to Biddle

(undated) ibid.
,

DEFEAT

OF

THE

BANK

337

" if all the president that they would support his measure ' King, of Georgia, anfriends of the Bank nounced stood firm." in the Senate a willingness to support him, though Jaudon ster's he was thought that Webunfriendly to the bank.2

the better and would be easier to carry, and plan was that Clay would give his support to either bill. " But Mr. Webster and Mr. Calhoun are each to obstinately wedded
his
own

plan!"3

Two

days

later he discovered

that Clay

wished all action deferred until May, and would not vote for Webster's bill,though he would support a long-term bill.4

Calhoun

the support of Wright, Benton, attempted to secure He but without success.5 and their friends for his measure, was not confident that his bill could be carried, but declared that if anything his suggestions.6
"

was

done

it would

be

in accordance

with

Biddle

thought
we can

that the bank

ought to
charter, make it

go for the practical. If let us do so if not, let us

"

get a permanent take the temporary and

hereafter." 7 Calhoun's plan would be "the basis permanent the friends of the of the final settlement," but meanwhile bank ought to act in unison, and he hoped that they would.8 His hopes
were

doomed

to disappointment,

however,

for the

leaders could not agree, and complete lack of harmony was necessarily fatal.9 On the 18th of March Webster outlined

his bill;10 on
i

the 21st Calhoun

Vol. I, p. 433.
March
9, 1834, B. P.

to objected
2

it and

presented

Thirty

Years,

c. D., Vol. X, Part I, p. 849.

Jaudon
to

to Biddle,
same,

*Same
6

March

11, ibid.

Thirty

Years,

Vol. I, p. 435.

"It is very uncertain, what will be done; but if anything should be, it will be, I feel confident, in conformity the suggestions, I made on Mr. Webster's motion, with have been well received on all sides." To Anna M. Calhoun, April 3, 1834, Calhoun which
"

Correspondence,
7

p. 334.

Biddle Biddle
Benton
was

to Jaudon,
to Thomas
expresses

March Cooper,
surprise which

11, 1834, P. L. B., Vol. V, p. 161.

" 9

April 8, 1834, ibid., p. 177.

at the

failure to unite, and

any

declares
Thirty

that

Webster's Vol. I,

plan
pp.
10

the

only

one

stood

chance

of

success."

Years,

433, 435.

C. D., Vol. X, Part A short continuance

I, p. 995.
was

Webster's
"

bill is given in extenso

an

on

pp.

1004, 1005.

"What
"

the bill proposed,

of the present

charter, with

addition

of its exclusive

338
his

THE

SECOND
measure.1

BANK

OF

THE

UNITED

STATES

Clay remained silent,but he refused to support either plan, and was so incensed with Webster's that in private he demanded that the Massachusetts senator to lay it on the table, threatening that if he did should move
own

not

he himself would make the motion, whatever the consequences.2 It is plain that Clay had determined that none lated, capituing, the table, declar-

but he should lead. On the 25th of March making the motion to lay the bill on
however,

Webster

that he would call it up again " about the first 3 This was virtually the end of it,though Webster of May." gravely and emphatically declared on the 21st of May that his plan was Abandoned or not, there was not abandoned.4
no

further hope for the

and project,

Calhoun's

scheme

was

equally futile. The action on

for the bank.

the billswas For

some

the criticalstage of the struggle it had been weeks previously

one

steadily losing friends. Biddle had been warned by in February his correspondents that this result was The would
right
; so

of

able. prob-

populace,

urged
a

this keen-sighted

understand

only

clear, easy

politician, argument, and the

another,

that, while this bank Congress, at its leisure, might continued, provide if it chose, and bring it into existence to take the place of this, at the end of

six years ;...." to be There was

a restoration of the deposits ; and a provision for enlarging the the hard money specie circulation, so as to increase in fact to a great extent of the is the substance "This country and to discontinue the circulation of small notes. of the measure."
" " the Bank will have the country and will be relieved C. D., Vol. X, Part II, p. 1763. time to collect its debts and wind up its concerns.""

Thus,

said

Webster,

"

the banks ; i. e., the big plan : (1) Must use a bank to unbank to control the small ones. (2) The bank to be a new continued for twelve years; to be chartered not to engrafted on the old. (3) This bank bank under the denomination notes smaller than $10; no notes of any of $5 or the bank to ; at the end of six years bank received either by the government
1

Calhoun's
be

bank
one

must

issue
to be

issue

no

notes

size. bank.

smaller (4) Twelve I, pp.

than $20; then government years best to let agitation

and

bank

not

to receive

subside, and

fix upon

of smaller best plan of future

notes

(5) Other details

2
"

Ibid., Part

later, but rate of interest to be 5 per cent." to be arranged 21, 1834. 1067, 1068, March he will move J. W. Webb
to lay it
on

If Webster abide

zards and
1834, B. P.
3

refuses, Clay says the consequences."" I, p. 1145.

the table Washington,

at

to Biddle,

all hazMarch 23,

C. D., Vol. X, Part

*Ibid., Part

II, p. 1791.

DEFEAT bank's arguments

OF

THE

BANK

339

removal

hension; always involved and hard of compreindeed be exercised after the pressure should of the deposits to show that the administration had
were

far as to ruin merchants, caused it, but if pressure went so it would alienate that class and convince the people that the ures bank was at fault ; if it was continued while all around faildaily occurring, the people would be persuaded too powerful and therefore dangerous, that the bank was
were

The time had come and would insist upon its destruction. ruary for a change of policy.1 The St. Louis Republican of Febfriendship for the 10, while asserting its continued
Even Niles institution, criticised its action severely.2 admitted that the bank's ability to protect itself proved too great,3 and a littlelater held that that its power was
it was

evidence of the bank's excessive power, " I would to continue" 4 not agree power, which Nevertheless the directors could not be convinced and would
"

"

conclusive
.

not yield.

"The

relief," doggedly

useful or Congress
come
"

come must permanent, If that body alone.

persisted Biddle, "to be from Congress and from

its duty, relief will vocation to redress the

will do

feels no if not, the Bank wrongs inflicted by these miserable people. This worthy President thinks that because Indians

Rely upon that. he has scalped

and imprisoned Judges, he is to have his way with He is mistaken." 5 the Bank. Later in the month, however, came a crushing reminder of of the fallibility bank presidents and of the transitoriness

Wolf of Pennsylvania Governor of the power of banks. denounced the corporation in his message, thus severely crip1

S. M. Stilwell to Biddle,
"

New

York, Feb. 16 and

19, 1834, B. P.

have been, and still are, the fast friends of this institution. But, when it adopting fraught with distress and ruin to our community, a course we hesitate to condemn it." St. Louis Republican, Feb. 10, 1834, C. ""., Vol. shall not X, Part III, p. 3157.
we see
"

We

3 5

NILES,

Vol. XLV,

p. 363, Jan.

25, 1834.

Ibid., Vol. XLVI,

p. 20,

March

8, 1834.

To Joseph

Hopkinson,

Feb. 21, 1834, P. L. B., Vol. V, p. 138.

340

THE

SECOND

BANK

OP

THE

UNITED

STATES

pling it by influencing public opinion against it.1 Since Wolf had hitherto been a bank supporter, his attitude was fatal. faced about whole Democratic party in Pennsylvania The senate of that state passed resolutions immediately. had senators, who against the bank;2 both Pennsylvania
The supported
soll, who

the re-charter, now opposed the institution ; Ingerhad toiled energetically for the bank in 1832,

Sutherland,
House all were
an

had led the Pennsylvania forces in the who on that occasion, Rush, who was an old supporter in opposition, and the bank scarcely numbered now
"

advocate among by its Forsaken

the Pennsylvania
own

delegation in Congress.3
was

state, its

cause

doomed.

one Every-

by the only emphasized recognized this,4 and it was that the governor's opposition was assurance not to a bank, but to the bank, being caused by the recent operations of the corporation.5
1 2

The

lead of Pennsylvania's
bank of the United which States ought have

governor

was

Message,
"

NILES, That That

Vol. XL VI, pp. 26, 27. the present

the government
not to be chartered

Resolved,

by congress. " Resolved,

deposites to be

bank

States ought not of the United 21, 1834. 18-14." Ibid., p. 85, March
3

restored."

been withdrawn from the Vote for first,19-13 ; second,

See
on

Essay
*

a very good r6sum6 of the situation the Spirit of Jacksonism, pp. 128-34.

in

ABISTIDES

(T. L. McEenney),

"Mr. President, when the Governor's unexpected message arrived here, it was his great weight into the scale of the Presifelt by all parties that he had thrown dent. It was blazoned forth by the administration ernor party and prints, that the Govhad come out in favor of the removal of the deposites, and against the bank._ from it, as a damper." It was felt here, as the Senator Georgia expressed CLAY,
"

April 29, 1834, C. D., Vol. X, Part

"

On
'

burg
as

viewed ' ' Waterloo to be was of the continent, and that the battle of Everj effort was fought at the seat of Government. an expresexerted to procure sion favorable to the renewal of the charter, and a restoration of the deposites ; but had marked the directory of that institution for somo the course of policy which Legislature, and a vast time previous, had sealed its condemnation with the Executive, WILKINS, April 29, 1834, ibid., pp. 1543, 1544. portion of the people of Pennsylvania.""
the

II, p. 1546. last, all eyes were 26th of February the memorable turned towards It was Pennsylvania was evident, that in this political warfare
'

Harris-

Belgium

5"

He

now, and Government

is

stated, as in favor
cannot

matter
a

of

of his own national bank,

knowledge, and it. He he does

that Governor
think,

Wolf
concerns

was

then,
of the recent

believes the fiscal

developments
create

doubts

get along without in relation to the management of that institution, McKEAN, the public morals." as to its influence upon
"

however,
are

that

sufficient to Senate, April

25, 1834, ibid., p. 1486.

DEFEAT

OP

THE

BANK

341

one

month later followed in New York by Governor Marcy, to break the force of the financial pressure who did much by advising the issue of four or five million dollars

of state stock to be loaned to the state banks,1 whereupon the legislature passed a bill creating $6,000,000 of 5 per
cent, stock for this purpose.2

tives afterward the House of Representaput the quietus to the bank's hope of securing either a restoration of the deposits or a re-charter. The debate there
Almost immediately discussed in the questions as were centered about the same The tactics of Polk, who led the Democrats, Senate. were to secure a and memorials reference of the various documents to the Committee of Ways and Means, of which he was chairman. the bank In this he succeeded,3 and when he had done so, beaten. On April 4 the committee was reported,

It was adopted its findings. resolved that and the House " the bank of the United States ought not to be re-chartered," 134 to 82; " that the public deposites ought not to be restored," 118 to 103; "that the state banks ought to be continued as the places of deposite," 117 to 105; and that a to examine the bank's should be named select committee

for the commercial crisis, affairsand investigate the reasons " furious; The history 175 to 42.' The friends of the bank were of this day," wrote from the annals of the
" of them, should be blotted Republic; for the heart of every

one

Patriot must sicken, at the recital of the events which it will The Chief Magistrate of the United States seized record.
1

Message By
a

of March

23, 1834, NILES,

Vol. XL VI, p. 96.

"

vote

112, 114. York,

3

This

April 2, ibid., pp. Ill, of 89 to 12 in the house, 17 to 4 in the senate. loan was known HAMMOND, as the Marcy History mortgage." of New
Dec. 10, 1833, C. "".,
11, p. 2170;

Vol. II, p. 441. McDuffie's

for referring to Committee motion of the Whole, II, p. 2166; Folk's motion for reconsideration, Dec.

Vol. X, Part

motion to to reconsider to Ways carried, Dec. 17, p. 2207, vote, 124 to 102; motion commit and by Polk, ibid. ; Folk's motion carried, Feb. 18, 131 to 98." Ibid., pp. Committee Means 2739, 2740. *Ibid., Part

III, pp. 3474-7.

342

THE

SECOND

BANK

OF

THE

UNITED

STATES

the Public Treasure, in violation of the law of the land ; and the Representatives of the People have confirmed the deed !!!

What

American
"

ever

expected

to

have the

lived to

see

such

turpitude ?

In House

accordance

with

appointed a It was to pry into the accounts of individuals extensive powers.2 into the private correspondwith the bank, and even ence
with it;3 and would, as of congressmen return a hostile and damaging report.
a

April 4, the

last resolution of committee with the most

matter

course,

The

of bank's

exhausted; the president had done his worst; patience was the institution had everything to lose and nothing to gain by permitting such an exhaustive and vexatious investigation
; above

all, Biddle

was

of private accounts, The bank, therefore, put as many obstacles congressmen.4 as possible in the way of the committee, ending by refusing to allow the examination tions of its books, except under condito

resolved not to suffer the examination and particularly of the letters of

The the committee not assent.5 would which thereupon reported warmly to the House, concluding majority Biddle and his fellow-directors that with the demand
should be arrested and brought to the bar.6 The matter committees suffered to end here, however, and no more appointed by the representatives.
i

was were

John

Connell

to Biddle,

Washington,

April

4, 1834, B. P.

A week

later

Niles

despondingly out the real secret of the defeat. wrote of the situation, and pointed " It is a great misfortune that the question as to a restoration of the public deposits into that concerning a was of the charter of the present renewal suffered to run bank
It was States. bank not the will of the friends of a national of the United it should have been so ; but the other party, in pursuit of its original design to destroy the present bank, forced the connexion, and the removal of the deposit into action against ites, by the president rallied this party, and pushed the currency that
....

a
3

NILES, Vol. XL VI, p. 98, editorial of April 12, 1834. of the country."" C. D., Vol. X, Part III, p. 3476, resolution 4. " directors be requested Resolved, That the president and of the bank
the

to

between the president committee of with copies of all correspondence letters the bank or any of its officers,with members of Congress ; or of unanswered received from one of them since the 1st day of July, 1832, touching the renewal of the charter of the bank, the removal or restoration of the public deposites, or touching
the business
*
5

furnish

transactions

To John

Bell, May

of such members with the bank." 2, 1834, P. L. B., Vol. V, p. 187.

"

NILES,

Vol. XL VI, p. 188.

H. R. 481, 23d Cong., 1st Sess., pp. 1"-29.

75^.,

p. 13.

DEFEAT Meanwhile

OF

THE

BANK

343

movement

partial abandonment had early been purpose bank,

out-of-doors had ended in the sure of the bank's restrictive policy. Presbrought to bear upon the bank for the

exerted of securing a change in its operations, and was friends of the who were particularly by business men

saw

ruin approaching, solicited accommodations began to assert that the directors were and soon

incessantly,

acting

flagitiously in their restriction. The pressure was especially York, and in February the banks and merintense in New chants which should of that city selected a union committee
interview

the management
a

of the Bank suspension

and The

attempt to arrange directors were much

of the United States of the contraction.

embarrassed

and attempted to avoid acceding Biddle declared that the bank would have granted relief had it not been for Governor Wolf's attack.1 Put bluntly, this
meant

by their propositions, to them. On February 28

that New

York

was

to suffer because

the governor committee

Pennsylvania
not

abused the bank. despair, however, and it soon

must

The

union

of did

became

evident

that the

bank New
"the

York
reasons

its reap a ruinous unpopularity among James G. King assured Biddle that supporters.

yield

or

assigned"
our

sufficient by

for refusal "would for a longer community,

not

be

deemed

not granted New and that if relief were Bank.2 Gallatin and other members establish a Regency believed that the bank was of the union committee

postponement," York would probably

strong enough
"

to give assistance, and

that it ought

to do
a

so

opinions which they were report to the merchants the Bank "Hence

determined

to express in

lic pub-

evil of such an announcement Finally on March 23 King's

1

they represented. and bankers whom for the had to do something, would have been enormous."
'

warning

seemed

about

to take

Biddle King Biddle

to J. G. King,

of the committee,
11, 1834, B. P.

Feb. 28, 1834, P. L. B., Vol. V, p. 145.

2
3

to Biddle,

March

to Watmough,

March

17, 1834, P. L. B., Vol. V, p. 164.

344

THE

SECOND

BANK

OF

THE

UNITED

STATES

Marcy the loan to the banks. recommended shape, when ther The directors therefore agreed that there should be no furin its business "up to the first of May diminution
next."1

When

this decision

was

made

the bank's

cause

was

in the opinion of most men. contraction had been inexcusable

It

was
or

said at once else the relief was

ruined that the

so;

either the bank

could have rendered assistance earlier or it Struggle as they might against could not render it now. this charge, the managers return could neither refute it nor
to the original policy with any chance of The was certain to be permanent.
success.

The relaxation tors, exasperated direc-

of the 4th of April, enraged by the act of the House petulantly but vainly warned the nation that it had no right Previous to the 1st of October, to expect further favors. 1833, the bank responsible for the general condition It had underof the currency and the exchanges." gone "years of effort and sacrifice" to bring "the currency been had
"

to a condition superior to that which and the exchanges" It had also had upon its existed in any other country. Right shoulders "the duty of averting every calamity."

nobly had it fulfilled this obligation: witness the panic of 1825; witness the extension of loans in 1831; witness the defraying of the cost of the postponement of the payment of
the 3 per cents, in 1832; witness its self-sacrificing action in the presence of the cholera. But now this obligation had The bank would hereafter attend to its own forever ceased.

business, and

it

was

not

to blame

if disaster overtook

the

country.2 The effect of the bank's

its supporters

concessions

Webb
i

is vividly portrayed by a had constantly urged to a friend. Webb

Committee, March
29, 1834, NILES,

upon one wing of letter of James Watson

Biddle

Report

of the Union

Vol. XL VI, p. 73.

D 2fif.. 17, 23d Cong.,

2d Sess., p. 100.

DEFEAT
to persist, and not to

OP

THE

BANK

345

waver

that continued severity was had also requested Biddle

in his policy, with the assurance He a charter. certain to secure to let him know the moment any

The motives underlying change in policy was contemplated. apparent in his letter. He had been all this zeal became When the news of speculating in the stock of the bank. the concessions to the committee reached him, he uttered a "The truth is,that wail of mingled reproach and despair. friend Biddle, by loaning himself most unadvisedly to our Committee the Union of N Y, has ruined most of us
in New

Hamilton * and dispirited the others and Joseph and myself $11,and myself lose about $3,000, This takes my all, except my interest in the paper, 500! but I do not complain of Biddle." 2 York

Some

of 1834. the New York

the ward Jackson's

gleams of hope Rhode Island

were was

by the spring elections against the administration;8 shed favorable to the Whigs;4
5

anti-administration ; opponents carried the Virginia legislature by a large and Louisiana followed Virginia's example.7 majority,6 These elections, however, lacked the significance which the
and its friends persisted in seeing in them. rebuked Jackson, but would not support a bank. bank York

local elections were elections in Philadelphia

were

Virginia
The
New

the utterance of voters who hardly knew elections were what to do in circumstances of great distress and aimed a blow at the only head that could be struck. Louisiana had Island had certainly always been a tariff state, and Rhode
not been
a

Jackson
won

stronghold.
a

Clay, too, had the president

i s " 5

having

victory in the Senate, the censure of been voted by 26 yeas to 20 nays.8

Jr.
2

Presumably SENATOR

Alexander BOBBINS,

Hamilton,

Webb

to

March

23, 1834, B, P.

April 24, 1834, C. D., Vol. X, Part

pp.

II, p. 1462.

NILES,

Vol. XL.VI,

100, 101 ; April 12, 1834, pp. 115, 116, 132.

6

Ibid,, p. 66, March

29.

ibid., p. 218, May

3.

1
8

1bid., p. 379 ; for other

March

elections, ibid., p. 445. 28, 1834, C. D., Vol. X, Part I, p. 1187.

346
But

THE

SECOND
a

BANE

OF

THE

UNITED

STATES

such

victory

ests effectivestep in the interof the bank ought to be taken. He therefore introduced were joint resolutions, declaring that the secretary's reasons

Clay and ruinous Clay at last determined

to of the Pyrrhic order, injurious His triumph once to the bank. secured,
was

that

some

insufficient and directing the restoration of the deposits after The resolutions passed the Senate June 4 July 1, 1834.1

and June 5.2 But it was too late,the action of the House on that agreethe 4th of April having long since determined ment The bank had impossible. between the houses was lost its chance because Clay
saw

fitto sacrificeit to the supposed

not down,

interests of his party.3 The hope of a charter would

however,

desire to

secure

the

return

of the deposits would

and the intrude

itself: "If the Bank said Biddle, would

"

or charter were renewed prolonged," I believe the pecuniary difficulties the country of

If only the deposits were restored and the executive would show itself friendly, the bank would make an effort to relieve the country ; but if be immediately healed." continued its efforts to destroy the Bank," the return of the deposits alone would produce no change.4 done by Congress, the bank would continue If nothing were its contraction see and autumn and the summer would
"

the Executive

threat; every unusual distress.5 But this was an unmeaning day the resolution of the bank managers weakened, and in June they would gladly have capitulated if only a vote of

Congress could
1
2 3

be secured

ordering the restoration

II, p. 1813.
29 to 16, and 28 to 16.

of the

May

27, 1834, C. D., Vol. X, Part

Ibid., pp. 1880, 1895, 1896.

Vote

The

bank,
a

said King,

in making
*

party

of Georgia, lost its chance by the action of its supporters March 10, 1834, ibid., Part I, p. 847. question oat of the removal.
"

Biddle

to General

John

S. Smith,

of Baltimore,

May

9, 1834, P. L. B., Vol. V,

p. 192.
"
a summer
"

Of

one

May

and 15, 1834, ibid., p. 195.

thing I am fall such

as

that if nothing is done this session, we shall have certain Biddle to Webster, have not often been experienced.""
"

DEFEAT deposits.1
find
some

OP

THE

BANK

347 blindly to of certain

time of one-

In

truth, they

were

now

struggling confession the murmurs

defeat.

pretext to avoid an open heard All around them were

were

The

friends who Boston Whigs York

rising in revolt against their action. threatened to denounce the bank;2 the

asserted that further pressure would result in the loss of the autumn elections in that state, everybody there being convinced that the bank could relax and Mr.

New

Whigs

Gallatin

"himself strongly expressing Biddle's close friends in the management

on

the

subject."3
to
see

began

light
save

judicious action also, and advised beloved country from the curse our
thereby When
save

"

....

which may of Van Burenism

and

the Bank."

at last Congress

without adjourned

taking action,

left to continue its course without present and the bank was hope of re-charter or the restoration of the deposits, the conviction had was irresistible. A committee that all was over been appointed in June to determine what should be done,

and

the result

Jackson's triumphant only possible one. gress assertion that after the close of the session of Conits ability and in June, "the bank announced
was

the

....

readiness to abandon
....

"

was

the system of unparallelled curtailment to the comand to extend its accommodations munity In justified.6the resolutions of June 27 the

bank
"

distinctly states that the step is advisable in consequence of the approaching of gress adjournment Conwithout having taken any steps to restore the violated management
e., [i.

rights

the

report of July
1

of deposits] the Bank."8 11, the "adjournment of

14, 1834, ibid., p. 231.

So, too, in the

Congress"

is put

Biddle Biddle

to A. Porter, June to W.

2 3
" 5

Appleton,

July 4, 1834, ibid., p. 245. July 5, 1834, B. P.

New York, July 9, 1834, ibid.
and Papers,

R. M. Blatchford
Mathew L. Bevan

to Biddle, to Biddle,

President's

message,

Dec.

1, 1834, Messages

Vol. Ill, p. 109.

"-S. D. 17, 23d Cong., 2d Sess., p. 83.

348

THE

SECOND
as

BANK

OF

THE

UNITED

STATES

forward

the

reason

for modifying

It is plain that a great part of what been planned with an eye to its effect on The

the policy of the bank.1 the bank had done had

Congress.

relaxation of July was virtually final. The bank did not intend to remove all restrictions and did not do so, but the state banks, no longer fearful of the monster, had begun
a

rapid expansion;

some

exchange operations. follow suit, and, moreover,

begun extensive of them had even The bank might therefore as well it was constantly embarrassed by

its half-hearted policy. On July 18 Jaudon wrote Biddle, tailed saying that the papers charged the bank with having curfor political effect,and that it was now expanding with the purpose of engineering tumn. another contraction in the auOur friends, he mournfully concludes, say "they do 2 how to answer On the 24th he writes them." not know

that the western friends of the bank want accommodations, too, "and I suppose that we shall be obliged to let the western officesextend their purchases of Bills on New Orleans without reference to the amount of their receipts from collections for other offices." The accommodations demanded were granted, the bank putting an end to all restrictions in September, and thus ending the last faint efforts to force
'

completely changed in public favor. It had now become the position of the bank extremely unpopular, and for the first time parties clearly bank. The strife had divided on the issue of bank or no been
most

action by inflicting commercial ruin. The long, harsh struggle of 1833-34

transformed,

too, from

fair and

savage and implacable struggle. gress; thoroughly developed on both sides by the contest in Conby the suffering resulting from the panic; by the cumulation of irritating circumstances: the pension

open contest to the This temper had been

ques-

18. D. 17, 23d Cong., 2d Sess., p. 83.

2

Jaudon

to Biddle,

July 18, 1834, B. P.

Ibid.

DEFEAT
tion ; the

OF

THE

BANK

349

Taney

matory of the president ; the protest ; the inflamthe of memorials; rejection the appointments of directors ; the refusal of the bank and the government
censure

to permit investigation by the House the votes committee; The feeling generated by these events of the two houses.

difficult," says Benton, "for people in after times to realize the degree of excitement, of by this was agitation and of commotion which produced organized attempt to make panic and distress. The great
was

tremendous.

"It

will be

cities especially of frenzy."1

were

the

scene

of commotions

but little short

opponents of Jackson, convinced that he was Congress, soon lost their over at absolute dominion be counted Neither Clay nor Webster, however, can number, though Calhoun, intense in his convictions,
much bitterness.

The

aiming temper.
of this

of the government exclaimed: "Directors! did I say? No ! spies is their proper 2 designation !" and after the protest he spoke with indignation

Speaking

showed directors, he

" " Infatuated man ! he cried, "blinded of the president. by ambition intoxicated by flattery and vanity ! Who, that is in the least acquainted with the human heart who, that
"

"

is conversant

with the page of history, does not see, under all this, the workings of a dark, lawless and insatiable ambition!" McDuffie, in the House, more was passionate,
incoherent in his and more Burgess, of Rhode Island, shrieked wrathful outpourings.4 that the "miscreants of our times and of our country " should the Marats, the Dantons, the Robespierres of "remember
more more

intense,

Thrasonic,

other times and other countries," and declared that the outraged " American flaming ruins of the people would quench by the immolation of those traitors who their country had lighted up the conflagration."5 The venerable Senator
....

1
3

Thirty

Years,

Vol. I, p. 421.
6, 1834.

2
"

c. D., Vol. X, Part Ibid., Part

I, p. 212, Jan. 12, 1834.

5

Ibid., Part II, p. 1645, May

III, p. 3459.

Ibid., p. 3166.

350

THE

SECOND
of Rhode

BANK

OP

THE

UNITED

STATES

Bobbins,
momentous
"

Island, asserted that " the fearful and " liberty and despotism had between struggle

and that unless checked "blood must already commenced," flow." * Ewing, of Ohio, commenting Jackson's assertion on his " person enduring in his protest that he bore upon liberty was of that contest in which American memorials

achieved," queried:
lad, he got hurt any where, or any how, at any time, or by any accident, during the revolutionary war, what effect ought it to have, or should it have had, if urged in time, in their construction of the the grave judgment of the Senate, upon If it be true that, boy
or

The Senate say to the President, You had no right constitution? to seize the public purse; the constitution intrusts its custody to Congress; pray restore it. Hear the reply: You are mistaken in construction of the constitution; I got hurt when in the time of the Revolution, and I have the scar on
your

I
me

was

boy,

yet.2

Poindexter

was

furious

declared, "is wholly one, sir, spurn this foul effort to cast a stigma and patriotism of this honorable body,
....

in his assaults. The vindictive and libellous

....

protest, he I, for

on

the purity I throw back

the libel into the hands

Jackson, declared Napoleon,

a
a

": of its reckless, infatuated author. his opponents, was a tyrant, a usurper, a

Cromwell,

George

III., an

infatuated old

man,

in Congress supporters that of his opponents, and the depths of the matched frequently reached in the search to attain ridiculous were the moral sublime, as when Peyton, of Tennessee, concluded
a

turbulent military chieftain. The language of Jackson's

glowing

peroration by shouting:

Yes, sir,he had trod the paths of glory which Washington had The historian had but to complete his office, trod before him. and his name his task, and he to perform immortal; the sculptor was

stood beside the father of his country, with the finger which penned
1 2

C. D., Vol. X, Part

III, p. 1462, April 24, 1834.

3

April 21, 1834, ibid., p. 1411.

jftfd.,Part

I, p. 1340, April 17, 1834.

DEFEAT
the Declaration

OF

THE

BANK

351

pointing him out as the noblest of Independence And, sir,this is the man, Roman stances, of his day. under these circumYes, sir,even against whom all these shafts are hurled! the kitchen knife of Kentucky, which has been cast aside for years,

is hunted be sawed

up and thrown
across

into this House,

full of rust and

gaps, to

the bosom

of

patriot.1

The

bank, in the vocabulary of the Democrats, was a monster, hydra, a dark, subtle, demoniac a power, striving to the constitution and hurl free institutions into overthrow
ruin.

sought to extend the nation; to the sway of a moneyed aristocracy over "old Nick," equipped in imagination another wing he was with horns, hoofs, and tail.
But
no

section of the party Biddle Nicholas, the imperial despot who

one

To

appeared

as

peror Em-

one

was

so

thoroughly

at home

in this tempestuous

warfare as the aged president of the United States. As his opponents continued to call down anathemas upon his gray head, his temper higher and higher, until it rose

finallyreached the bursting point. With paroxysms of rage he drove popular deputations from his presence. In response to the request of the Baltimore delegation for relief,
he burst out
:
"

Relief , sir !
"

....

Come

not to

me,

sir !
"

Go

to the monster!

Jackson The

"

The

It is folly, sir, to talk to Andrew government will not bow to the monster."
....

chairman

meekly

something injecting

the exasperated old man exclaimed: Andrew The people, sir, Jackson, sir, about the people! I have undergone are with me. much peril for the liberties

about the people, "The people! talk to

Jackson yet lives, to put his of this people, and Andrew foot upon the head of the monster, and crush him to the dust." The chairman that Jackson's experiremonstrated ment was "The sir," ruining the merchants. mammoth,
shouted undergo
1

the president, " has bled you !....! would rather the tortures of ten Spanish inquisitions than that
II, p. 2659, Feb. 6, 1834.

Ibid., Part

352

THE

SECOND

BANK

OP

THE

UNITED

STATES

be recharthe deposites should be restored, or the monster And tered." thus he continued until his rage had grown too great to permit further discussion.1 To the Philadelphia

he said: "Andrew committee the deposites to the bank

"

Jackson Andrew
"

never

would

restore
never

Jackson
....

sooner recharter that monster of corruption than live in a country where such a power prevailed, he in the wilds of Arabia." As for would seek an asylum " brokers and stock speculators, and all who were doing

would that

business upon borrowed capital, such people ought to break," and he threatened repeatedly to put an end to the circulation of branch drafts by forbidding their receipt
....

in payment revenues.2 of the government ers Such being the temper of the leaders, that of the followThe grand jury Davidcertainly did not lag behind. of son

Carolina, solemnly presented Andrew county, North for "his arbitrary, despotic and unconstitutional Jackson his "reckless obsticonduct, in seizing the public money," nacy,"
his
number

"haughty

and

kingly

deportment,"

besides The

of other equally monstrous offenses.3 declared that if Congress Whig

mond Rich-

without adjourned

doing

anything to end the distress, "the clangor of arms and " " " the voice of battle would resound in the land within six The Commercial Herald cally months.4 of Philadelphia theatrisay in the face of the world, and with a solemn reliance on the God of the free, that this people are not excusable for remaining an hour longer quiet under exclaimed
:
"

We

the present state of constitutional degradation, and of national

Report
1, 1834; C. D., Vol. X, Part Vol. XL VI, p. 9, March by twenty-two of committee members. signed
S,

in,

pp. 3074, 3075.

2NILES,

ibid., p. 31, March

see

almost about Feb. 2, 1834, Reminiscences, p. 270.

3 NILES, Enquirer.
*

borrowers

the

8, 1834; C. D., ibid., p. 3074. On Jackson's sentiments in his letter to J. A. Hamilton, same expression

Vol. XL VI, pp. 155, 156, May

of Alabama,

3, 1834, quoting

the New

York

Courier

and

CLAT,

quoting

the Whig,

March

25, 1834, C. D., Vol. X, Part

III,

p. 3144.

DEFEAT

OP

THE

BANK

353

Let the crisis be met!" l A Washington and individual ruin. letter published in the Richmond Compiler voiced the "My writer's "sincere belief" that violence was certain. that, in their opinion, cities tell me pistols will be flashed and dirks drawn in their streets before There must be a the expiration of another month

friends in the Northern

bloody revolution. I confess I am man,

For

one,

though

my letters threatening assasand Biddle received anonymous sination, and Jackson having had the bad taste to allow some

ready to whet

cool and knife."3

considerate Both Jackson

to be published, the Globe overflowed with rage against the inciting murder at the hands of " bank opposition which was
minions."

appearance of enormous "been made President

Biddle, meanwhile, attained immense fame. His in Wall street was a signal for the gathering " " to gaze upon the man had crowds who

by the unrelenting hostility of conspicuous Jackson," while the merchants cheered him at the

exchange.3 The Senate, too, attempting interest. The

or

was

savagely assailed
the
executive

as

an

to

overthrow Pennsylvanian

power

oligarchy in its own

abolished, and upon the senators bill.4 "Fearful

intimated

it should be amended that violence would be visited

thought

if they refused to pass the appropriation "put in circulation." Rumor reports" were

asserted that the president was about to issue a proclamation not received, "and that against the Senate, if his protest was
a

gathering"
him,
l

was

"already

making

at Washington

to support

in certain

ulterior

measures."1
2

At

Baltimore
letter of Feb. 16.

IDEM,

ibid., quoting

the Herald.

IDEM,

ibid., quoting

3 Diary
*

of Philip
democrats

Hone,
never

Vol. I, p. 96, March

heartily
and

15, 1834.

"The

sanctioned

it, and

now,

having

the

power,

or get rid should amend of it once "Let them, if they dare, and

forever."
the bursting
yet

hasten
have

of the
to what

storm
an

lowering
may

They their heads. above be aroused."" NILES, Vol. XLVI,

to learn

p. 131, April 26, 1834, quoting

which is already indignant people the Pennsylvanian.

Ibid., p. 145, May

3, 1834.

354

THE

SECOND

BANK

OF

THE

UNITED

STATES

McDuffie

cheered the soldiers into the senate chamber, to send the senators home, that 200,000 volunteers would be in Washington." ' Meanwhile

tumultuously referred to these reports and was he said "that ten days after the entrance of when

memorials and resolutions poured in, for and against the action of the president in removing the deposits, filledwith denunciations and intemperate language. ers, Paintcarpenters, coopers, tanners, watchmakers, cab-drivers, curriers, blacksmiths, and all the other comshoemakers, ponent cordant in parts of the "sovereign people" joined the disclamor. The

inhabitants of Bucks

vania, county, Pennsyl-

resolved,
the deliberate opinion and the decided conviction of this Jackson, President of the United States, meeting, That if Andrew is sustained by the people in his reckless usurpations, and the As
monstrous

in

the

doctrines promulgated late protest, and sought

all power,

presses, and by his pledged

and executive, legislative and

by him and his kitchen cabinet, to be enforced by prostituted centrate collared partisans, tending to conin judicial,

himself,

to liberty in this country, and the last refuge of freedom, the world's last hope, will cease to be a republic ;2

there is

an

end

while the freemen of Schuylkill county resolved to the contrary,

That
we

in the

same

state

we

able pursued by our venerChief Magistrate, with regard to the United States Bank, that view it as a corporation dangerous to the permanency of our free
approve
course

highly of the

institutions; subversive of

sentiment, corrupt and that would draw the last drop of blood from the veins of vampyre the honest yeomanry of the country, and revel in the glorious exhibition the effects of its secret implements of destruction.3 of

free and unbiassed expression of public in its desperation, a corrupting, and now,
a

personal enmities and animosities engendered by the by the social ostracism which was struggle may be measured visited upon Philadelphians like C. J. Ingersoll who deserted
1

The

NILES,
Ex.

Vol. XL VI, p. 146.

435, 23d Cong., 1st Sess., p. 4.
" Ex.

Doc.

Doc.

144, 23d Cong., 1st Sess.

DEFEAT
the bank's in 1833,

OF

THE

BANK

355
treatment

cause

and

by

Adams's

Rush, who had warmly supported the bank had requested the presidency of the Washington 1831,1 and in 1834 urged his supporters to "go Richard
their "patriotic work With righteous sorrow

of in 1828, office in

on

with"

of extirpating such Adams gave Rush

corporation."2 what old John

to Adams

Knox Rush

would
was a

call a
moral

"

discharge of his friendship;"

these breakings

pariah.3

social ostracisms; friendships; these repeated

These

of old-time

charges and countercharges; these insinuations and insults, criminations tions, and recriminaferocity in the congressional campaign bred a vehement

by all odds the for many years. It was of 1834 unknown It was in which the bank was hottest campaign involved. a charter the last desperate effort of the institution to secure against the will of the president, and the last occasion on

identified themselves with the big bank. which the Whigs The political passions generated during the struggle over the deposits had reached an excessive point, where no one
listened to arguments, where everyone wished to declaim at the same moment, and where partisans on both sides were quick to proceed from words to blows and from threats to Each party to the contest felt that the struggle outrage. So important did would be decisive of the bank's hopes.
the crisis that he began in June the publication out of the Extra Globe, to be issued at brief intervals through"one the campaign, of contributing with the object feeble ray to aid in disclosing the machinations of the great

Blair deem

Tempter

and
i
3
"

seeks to pollute and destroy the purest which now happiest Government The known upon earth." 4 ever
2

To Biddle, Jan. 31, 1831, B. P.

I received
a

Extra

Globe, Vol. I, p. 122.

letter from

Richard

Rush,
and

confidential correspondence in him again

proves

between

him

stillfriendly in terms, but it closes all forever. I can me never conrepose fidence

that

minority * Announcement

There is a moral course which obliquity in his present his principles sit light upon him, and that he cannot stand fire in a long."" ADAMS, Memoirs, Vol. IX, p. 40, Nov. 29, 1833.
of
reasons

for issue, Extra

Globe, Vol. I, p. 1, June

28, 1834.

356
bank,

THE

SECOND

BANK

OF

THE

UNITED

STATES

the other hand, relaxed its now evidently impolitic contraction, and covered the Union with swarms of articles disseminated for it in scores of instances under the franking
on

tee privilege of its supporters in Congress ; the Senate CommitFinance, with John Tyler as reporter, investigated the on
bank prepared a points ; and the Whigs and elections and prepare e., "when that \_i.the
to discuss the renewal

all essential to work with zeal to secure the went for a re-charter. Biddle hoped still:
is over election]
or

report supporting

it

on

it will be time, I think,

elections were especially at Philadelphia, where a number of houses were burned by the mob ; and when the decisive day came, Biddle

The

the modification of the Charter."1 attended with riot and bloodshed,

for himself as for his family took precautions, not so much Wife and children were sent out of the city ; and the bank. his house literally his "castle," filling it with he made
armed
" while he stationed a force provided with muskets " in the bank on the night of the election and bayonets to provide for its safety.2 The precautions were unnecessary. No physical assault was made, but when morning

men,

dawned

upon Biddle standing to his defenses in house and disaster than any mere bank, it brought the news of a worse defeated, were everywhere mob could inflict. The Whigs numbered. and the bank's days were
another important effect. The Whigs at last were convinced that their alliance with the bank was a blunder, and henceforth the party silently dissociated itself

The

campaign

had

The advisability of doing so from the moribund monster. had been pointed out much earlier by that subtile politician Thurlow Weed,3 and immediately upon the close of the dimittis in the Evening nunc election he uttered a joyful

Journal
1
2

To C. A. Davis Biddle WEED,

to John

[Major Downing], Sept.

p. 431.

14, 1834, P. L. B., Vol. V, p. 257.

Tyler, Oct. 23, 1834, ibid., p. 270.

Autobiography,

DEFEAT
There
is one

OP

THE

BANK

357

of congratulation connected with the results minated we can of the recent election in which even participate. It has terAfter staggering along the United States Bank war
cause

from year to year with a doomed bank upon our shoulders, both The burden, the bank and our party are finally overwhelmed. however, is now removed, and we hope to see the efforts of a great to the and patriotic party directed, with better chances of success, ultimate restoration of the rights of tLe people and the honor of the country.1

Four

days later the Journal

a

published every
which
reason

staid Whig organ, for the defeat, in which review of the reasons back to the connection came with the bank,
a

of Commerce,

gave the party a hateful aristocratic character: the support institution, right or wrong, the panic fomented by of the

"the tools of party for politicaleffect,"the unmeasured attacks upon the president in connection with the removal of the deposits, the these curtailments of 1833"34

unjustifiable

"

of the party's defeat ;2 while Blair exulted " because the party had ruined the bank. Had the task been of conduct assigned to us to delineate for the opposition a course
were

the

causes

which should utterly destroy the present Bank, and forever prevent the establishment of another, we could not have devised one so effectual as that which they have pursued." At the same time he admitted that had the Whigs the bank in 1832 "and come out in favor of a renounced institution, with a charter much modified, it would have new been difficult, not impossible, to prevent their success."1 if To these judgments Few unqualified assent may be yielded.
causes

have

ever

the bank

from

unwisely managed the beginning of 1832 to the

been

more

it had to see its friends, unwilling and now in its overthrow, silently desert it. Even Webster, its great1
2

that of end of 1834, to be involved

than

Ibid., quoting
Extra

the Albany

Evening

Journal,

of Nov.

15, 1834.

Globe, Vol. I, pp. 354, 355, 357, 358, quoting

the Journal

of

Commerce

of

Nov. 19, 1834.

3

Ibid., p. 355, Nov.

24, 1834.

358

THE

SECOND

BANK

OP

THE

UNITED

STATES

influential champion, coldly gave up its advocacy, declaring that "the people had decided against" the Biddle bank, "public opinion had decided against it!"1
est and

most

upbraided him sorrowfully and reproachfully for his aposhearty co-operation tacy,2 but from this time Webster's
ceased. Jackson's message of 1834 as usual expressed hostilityto The president censured it for withholding the the bank. the government's shares in order to force of the bank's charges for the protested French bill, payment the sale of the government's and closed by recommending

dividend

due

on

stock, the cessation of the reception of its notes in payment dend, revenues of government until the bank had paid the divi" ment and the repeal of all laws connecting the Governor

its officerswith

the bank, directly

or

indirectly.

";

Finance on offered its set-off,the Senate Committee The message and report were report favorable to the bank. heart in the support supported and attacked, but there was little

As

and not much closed.

1 2 3

more

in the attack.

The

affair was

virtually

In Senate, Biddle
Messages

Feb. 26, 1835, The

Works

of Daniel

Webster,

Vol. IV, p. 200.

to Webster, and

April 6, 1835, P. L. B., Vol. V, p. 369. Vol. Ill, pp. 109-11.

Papers,

CHAPTER
THE

XV
OF
THE

LAST

DAYS

BANK

results of the election of 1834 having decided that the doomed, it had now to prepare for the end, and it bank was Accordingly one would expect began immediately to do so. THE But this that its business would diminish all through 1835. was not the case, for the monthly returns furnish proof that the bank carried a larger active debt through the last months of its existence than at almost any other period of its history. A review of its transactions will show how extensive they By February, 1835, the total debt was $55,000,000; were.
by July it
at

$65,000,000; and by January, 1836, it stood $59,000,000. The remaining items were, as a matter of
was

course,

correspondingly reached a higher

of the bank's over $23,000,000. All and at the close of the year it was through 1835 the amount of specie held was also unusually held was large. At the beginning of February the amount
over

Thus the note circulaextensive. tion level in 1835 than in any other year history. On July 1 it stood at $25,000,000,

on $16,000,000, October 1 it was $12,545,000, and in it was December $8,749,000. The total showed no considerable diminution it was $5,595,000. until March, when

This result was due to the increase of the bank's transactions Pennsylvania because of its new In like manner, charter. deposits kept up until August and then fell away rapidly. The
1

whole

movement
Discounts

is revealed by the chart

on

on

p. 361.1
Specie Deposits of Individuals

Discounts on Personal Security

Domestic
Exchange

other Security

Total

Circulation

Feb. 1 31,354,000 3,962,000 20,208,000 55,524,000 April 32,161,000 5,013,000 22,926,000 60,100,000 Aug 24,198,000 64,314,000 33,638,000 6,478,000 Nov 9,176,000 30,499,000 17,854,000 57,529,000 Jan., 1836... 25,775,000 14,206,000 19,251,000 59,232,000 8. D. 128, 25th Cong., 2d Sess., and 8.
"

19,733,000 16,369,000 8,755,000 20,544,000 16,448,000 9,372,000 24,329,000 12,883,000 8,508,000 23,031,000 10,224,000 5,406,000 23,075,000 8,417,000 4,369,000 D. 312, 24th Cong., 1st Sess.

359

360

THE

SECOND

BANK

OP

THE

UNITED

STATES

that the would be misled, however, if lie supposed business of the bank was increased because the managers did
not
was

One

"

of the increase torate explicable enough, resulting from the policy of the direcin making long loans in settling up the bank's affairs loans which appeared as discounted paper in the monthly
to close up

intend

its

concerns.

Most

getting control of the capital without exerting pressure upon the business community. The enormous amount of specie secured and retained
returns.

This

policy contemplated

so

long

as

the bank

proves Biddle

how

adhered to its design of closing up, Writing in June, successful the effort was.

pointed out the policy under which he was acting, to concentrate that the attempt was the capital in showing the East, " while the diminution is going rapidly on in the distant and unmanageable points. This is in fact the I am to work the insensible endeavoring great problem. in large masses of concentration of the funds of the Bank
more

disposable capital,while the process of reduction is going without being felt."1

on

this statement plain of policy, it is easy to exThus it will be found that most of the business done. the dealings in exchange were particularly large.2 Not only

Remembering

so,

but the

and New Thus out of $16,614,000in billsof to the vanishing point. inland exchange, falling due about March 3, 1836, $14,970,000 were payable at the offices of Philadelphia, New York,

drawn on the East of the bills were Orleans, while those on the West diminished almost

majorpart

Orleans, while at all the western officesthe fact will also be sum only $95,000.3 Another payable was ley, revealed: the exchange transactions in the Mississippi valBoston, and New

infinitely less extended than usual, are much being payable larger than usual at New Orleans, $7,000,000
though
1 2

Biddle

to C. A. Davis

[Major Downing], June

VIII.
3

5, 1835, P. L. B., Vol. V, pp. 372, 373.

See Appendices

VI

and

Ex. Doc. 118, 24th Cong., 2d Sess., p. 128.

LAST

DAYS

OF

THE

BANK

361

CHAKT

MOVEMENT

OP

PRINCIPAL

ITEMS

WHEN

CLOSING

UP

THE

BANK

362

THE

SECOND
on

BANK

OP

THE

UNITED

STATES

the 3d of March, 1836.1 In brief,the loans at the small and distant offices fell off rapidly, while they increased rapidly at the large eastern branches.
at this office alone

The conclusion and only one: bank was getting its capital from the distant branches to the Much Atlantic officesby dealings in exchange. credit is due
one

These

facts lead to

business^ this to it in this respect, for, if it intended to cease in which it Must operate. was precisely the manner of "discounts on other security" the increase was largely due to the closing up of the bank's being made concerns, with the idea, first of keeping its

Similarly in the item

being settled,and secondly as a result of granting stock loans in the process of This is the noticeable item in the selling the branches.
funds employed

while its affairswere

bank's
was

returns

in

1835, and

how

few figures will show. loaned "on a amount other security" was only $3,900,000, before exceeded, while by March 3, figure which it had never 1836, it had reached the enormous sum of $17,300,000,
a

the increase remarkable Thus in February, 1835, the

according be added

to the monthly

reports.

But

there

were

stillto

accrustock and other amounts, ing from the sale of distant branches and not yet known at the aggregate $28,600,000.2 the central office,which made

loans

on

bank

York, at Philadelphia, New made of these loans were Since this state of affairs was Baltimore, and Charleston.3 due to the settlement of the bank's business, in what appeared Most the best and most feasible method, it is not to be condemned. It was nevertheless decidedly unfortunate, for it constitutes

the real beginning

1 2

of

great deal of the bad business of the

Ex. Doc.
"

118, 24th Cong., 2d Sess., p. 128.

the long paper years arising from these sales, loans for one or more both at the bank and its offices,principally with a view to the employment made The total amount up of long of winding of the funds during the process loans is, therefore, $28,624,289.31, the other offices there are some others at of and Commissioners ment of the bank to the governwhich it would take time to ascertain."" 3 Ibid. Oct. 19, 1836, ibid., p. 42. commissioners,
Besides
were

LAST
bank.

DAYS

OP

THE

BANK

363

Nor is it necessary to suppose that there was anything before this to explain the bank's final overwrong whelming The errors ruin. which led to that disaster began

on sums the security of bonds of immense depreciated rapidly during the critical and stocks, which years of 1836 to 1841, and brought the bank into difficulties

in this loaning

from which it could not be extricated. From the moment when it made its firstgreat loans on stock to its fall,one can
trace the steps by which

it

was

hurried headlong

catastrophe unequaled Sea Bubble.1 There

on

since the breaking

monetary of the South

to

counts for consideration only the regular disAt the distant branches these mercantile paper.
remains
a

felloff to

considerable extent, being transformed into bills of exchange payable in the East; but at Philadelphia, New York, New Orleans, and some of the other large offices they The demand remained at the old figures or exceeded them. for loanable capital was indeed very great. An immense expansion in all lines of trade and industry had been gathering
in full swing. The price now since 1830, and was of cotton in 1835 reached a very high figure, and its cultivation led to an almost unparalleled inflation in the Mississippi

head

borrowed valley. Everyone money, quite regardless of his future ability to pay, and invested it in slaves or land, with the of increasing the culture of cotton.2

object
was

The speculation in land

and
1

was

west

everyone

astonishing;3 north, south, east, trading in real estate.4 Internal

"

See the chart, p. 361, for the movement in other securities." 2 " The high began to rise in 1833, having made the price of cotton, which for the to borrow tempted were money of it a most gainful pursuit, many culture lands, and of purchasing purpose of buying slaves, as well as for the ordinary
....

interior
s

traffic."" TUCKEB,
1833 1834 1835

On
:

Money

and

Banks,

p. 373.

Sales of public lands

$ 3,900,000
4,800,000 14,700,000

1836 1837

$24,800,000
6,700,000

* The Reflectionsupon the Present State of the Currency writer of the pamphlet in the United States, published in 1837, declares that $30,000,000were invested in land

364

THE

SECOND

BANK

OP

THE

UNITED
a

STATES

improvements
sums
were

were

also

on projected

vast scale, and

mous enor-

building of railways and built in 1835 than in canals. More miles of railway were any other year in that decade.1 All this led to a very active for meeting the demand, for capital. The facilities demand
expended
in the

created by the chartering of numerous new state banks and a tremendous expansion of their loans. From 1830 to 1836 the state banks in the United States however,

had

been

increased their paper issues from $60,000,000to $140,000,000, their loans from $200,000,000to $457,000,000.' In

1830

there

were

330

state banks;3

in 1834, 506.*

Under

the supply of capital in 1835 was such circumstances adequate Consequently the Bank of the United to the demand.5 States for the most part steadfastly resisted the temptation
to make

loans, though

not

in every instance, the New

York

office apparently large and

unjustifiable
in December
similar

seizing the opportunity loans.6 The excuse

must,

afforded to make for extending in

New

York

however,

be

admitted, for in

in 1835, which " within a 5" 7 or 8, and rarely over in; "Towns
were
"

portion Even millions.

"

before attracted over of time had never lands in Massachusetts were speculated
"

Timber, lands, stone-quarries water-power and sold that could be twisted to a possibility of future use." and coal-mines, everything York was Pp. 22, 23. Sumner says that the real estate of New assessed at $309,000,000 high a figure until 1851. History in 1836, and that it was as not again assessed at of plotted
"

"

American
1

Currency,

p. 119.

1830
1831

23 miles in operation 72 miles built 134 151 253 465

" " " "

1836
1837

175 miles built 224 416 389 516

"

"
"

1832
1833

1838 1839 1840

"

"

"

"

1834

" "

"

"

1835
2 3 * 5

POOH,

Manual

of Railroads,

1874-75, p. xxvii.
States, p. 15.

Reflectionspon u
ADAMS,

the Present Writings,

State

of

the Currency

of

the United

GallatMs
report,
"a

Vol. Ill, p. 356.

Wilde's It
was

Ex. Doc. 498, 23d Cong., 1st Sess.

...

on

and deposit
per

In January appeared lowing the folgolden age for money-borrowers. like advertisements Money be had at 5 per cent, per annum :....' may to $15,000, loan on bank stock at 5 per of bank stock as security
....

"

cent,

annum.'

"

JOSEPH

G. MARTIN,

Twenty

-one

Tears

in

the

Boston

Stock

Market,
6
"

p. 7.

It is probably
manner we

well and
are

very

here in the

making

well to, to put loans." Lenox

"

to the way are we going to Biddle, Jan. 22, 1836, B. P.

a

stop

on

LAST

DAYS

OP

THE

BANK

365

that month the city suffered severely from a disastrous fire, and for the benefit of the insurance companies, and at the the bank a opened request of the merchants, credit of $2,000,000.1A further increase of business was occasioned

by the demand

banks which the phenomenal

for the bank's notes being organized.2 were

increase

on

the part of new state This would account for

in its circulation.

the whole, the directors managed their affairs in a laudable manner 1835, and were all through clearly busy in order for the purpose setting their concerns of final In addition to the transfer of funds to the East settlement.

On

from the distant offices by the as already explained, these

consisted
in loaning

of exchange operations, preparations for closing up the bank's capital at long dates while

means

The sale of the branches included selling out the branches. the disposal of the active debt,3 the suspended debt, and the in fact,everything real estate, including the banking houses
"

that the bank

more

owned

in these branches

"

of settlement attempt to collect all its debts itself. Moreover, since those who much easier for the community,
continue

expeditious

mode

much than for the bank to

it would

this being

be the

bought

debt would

and bank.*

the business of the office, diate whose immehave occasioned distress closing would in many cases considerable loss both to the community and to the The

property

banks

in the cities or Sometimes

for the most part sold to local towns where the branches were established.5 the active debt went to one, the suspended
was

debt to another, and the other items to a third.6 Money was very plentiful early in 1835, and the bank took the opportunity
1
"

thus afforded to collect its debts in the

Vol. XLIX,
p. 307.

Biddle Biddle

to Albert

Gallatin, Dec. 21, 1835, NILES,

to C. A. Davis

[Major Downing], June

is meant

5, 1835, P. L. B., Vol. V, pp. 371, 372.

3
*

This is frequently

what

by selling the office,t. the sale of its active debt. e.,

P.
"

E. L. Colt to Biddle, July 2

Ex.
Doc.

B [1835],.

118, 24th Cong., 2d Sess., pp. 105-7.

NILES,

Vol. XLIX,

p. 181.

366

THE

SECOND

BANK

OP

THE

UNITED

STATES

way described.1 It began the sale of its offices as early as issued to the branches the month of March, when orders were Utica, and at Fayetteville, Cincinnati, Savannah, Richmond, loans.2 Washington Lexington to cease making new received similar orders in April,3 and Louisville and St. Louis in May.4 In June the Hartford, Utica, and Portsmouth offices were
on the point actually closed, Buffalo and Burlington were were of closing, while the nine other officesabove mentioned

month the rapidly reducing their loans.5 Late in the same officeat Nashville ceased active dealings, though it is worthy of note that a long term was granted it in which to put its

It was discounting; its old debts to cease affairs in order. to be settled by the 4th of March, 1836 ; its more were recent debts, founded bills to New Orleans, were to be settled on 1835 ; and the office was to within six months of November, be closed on the 1st of May, 1836.6 The western business to was evidently to be settled through this office, which was The Lexington branch collect and remit to New Orleans. had arranged to close up its affairs in August,7 while the New Orleans officewas instructed in October to cease taking bills
marks
on

Baltimore,8 and this order probably the end of the bank's active business in the western
or
on

the West

and southwestern By November

active debt
1 2 3 *
5 soon

country. 30, 1835,

the bank By

had 3d

disposed

of nine

branches.9

the

of the of April, 1836,

NILES,
Biddle Biddle Biddle
"

Vol. XL VIII, p. 128, April 13, 1835.

24-8, P. L. B., Vol. V, pp. 341-2. to the presidents of these offices, March branch, April 3, ibid. to the president of the Washington to the offices, May 4 and 29, ibid., pp. 354, 367.

Buffalo and Burlington Portsmouth are and Hartford closed; and Utica folk, Cincinnati, St. Louis, Louisville, Fayetteville, Norwill be ; while Lexington, Washington, Richmond are a process of reduction." and Charleston under
"

Biddle
6

to C. A. Davis,

June

5, ibid., p. 373.
p. 310, July

NILES,

Vol. XLVin,

4, 1835, quoting

Nashville

paper.

TIbid., p. 410, Aug.

8
9

15, 1835.
p. 138,

Ibid., Vol. XLIX, These

were

Portsmouth,

Oct. 31, 1835, quoting the New Baltimore, Fayetteville, Charleston."

Ex. Doc.

Orleans Buffalo,

Union.

New

Orleans,

Natchez,
p. 109.

St. Louis,

Cincinnati, and

118, 24th Cong., 2d Sess.,

LAST
the number

DAYS

OF

THE

BANK

367

eighteen.1 Moreover, three officeshad been closed without the sale of their assets.2 There remained, therefore, only Boston, New York, Savannah, Nashville, and the mother officeunsold, and these were rapidly getting their
was

of Philadelphia, affairssettled. The intention in the case New York, and Boston was not to sell the debts, but to collect be done more for the them, as this could advantageously The suspended debt in the South would be collected at Savannah and that in the West at Nashville. Meanwhile to be diminished, Biddle instructing the eastern discounts were
bank.8 the New
cease

York

office in August

to reduce its discounts, to

the collection and purchase of bills on the western and southwestern offices,to stop discounts on bank stock excepting

for long dates, and to increase its supply of specie.4 A In week later he forwarded like instructions to Baltimore.5 change, the stockholders being their stock at 5 per cent, encouraged to take long loans on interest, in order to keep the stock together "to await the
came
a

October, however,

contingency of an incorporation from any other quarter."6 This is the firstintimation in Biddle's correspondence of a new policy in connection with the of securing a state

project

charter.

Up

to this moment

the bank

had

conducted

its

intent but that of closing up. affairs apparently with no "The bank," wrote Biddle late in August, "is winding up its affairs,quietly and certainly. The nature of its operations

which consist mainly in selling out its debts on credits, is calculated to ease the debtors, and our great
1

long

object

Richmond,

Portland, Louisville.
"

Lexington,
Ibid.

Providence,

Mobile,

Norfolk,

Burlington,

Pittsburg, and
2

Hartford,

Utica, Washington." five, but is in

Ibid., p. 291, Dec. 26, 1835, quoting

error.

the National

Gazette.
3

Miles says

Case of New
same

York, Biddle
Appleton, Aug.

to C. A. Davis,

Nov.

13, 1835, P. L. B., Vol. V, p. 409 ;

Boston,
* 5 6

to Win.

Nov.

17, 1835, ibid., p. 410.

Biddle Same

to Jaudon, to John

7, 1835, ibid., pp. 386, 387.

McKim,
Hughlett,

Jr., Aug.

15, 1835, ibid., p. 392.

Biddle to W.

Oct. 31, 1835, ibid., circa p. 400.

368

THE

SECOND

BANK

OP

THE

UNITED
a

STATES
as

that the idea of a new charter was seriously adopted, the institution varied its policy but little. Discounts ceased in New York city on the 23d of January,
at any of the other made virtually no loans were being colbranches, and in April the debts at Boston were lected distress.8 to cause so rapidly as much

is to close its concerns l Even now pressure."

in such

manner

to avoid

all

1836;*

The
with they

collected, the facility with which the debts were sold, and the terms at which which the offices were were sold furnish conclusive evidence of the bank's
ease

The sum realized by the sale of active debts up condition. 4 to the 3d of April, 1836, was $15,716,726.53. There was difficultyin making the sales at good prices to responno sible

sold "at their par value, without any actual deduction for the risk and expense of collection."5 Biddle considered "the arrangements ' The branch which brought the highest very advantageous."
.

parties, the

debts

being

sum

was

New

Orleans ; next

Baltimore, in order were As a rule, cash was not paid for these debts, but instead given, secured by collateral. The promissory notes were
terms
were

Charleston, and after that Louisville, Mobile, and Natchez.7

came

in four years, with interest usually payment until paid at from 4 to 6 per cent., the larger part of the debt bearing 5 per cent, interest.8 The security given was

generally
1 2 3

in

stocks and

bonds,

frequently

the

stocks

or

To Silas M. Stilwell, of New NILES, Vol. XL1X, William

p. 387.

York, Aug. 24, 1835, P. L. B., Vol. V, p. 393.

to

President

Appleton

Biddle, Boston, April

7, 1836, B. P.

*Ex.
5

Doc. 118, 24th Cong., 2d Sess., p. 109.

on

Report

1836, government
6

To John

3, of the United States on March effects of the Bank to Secretary Woodbury, Jan. 25, 1837, ibid., p. 19. commissioners McKim, Jr., Aug. 15, 1835, P. L. B., Vol. V, p. 392. It must be remembered

the debts

and

that these other

7

were
or

for

"

active debts

"

arrangements,

collected, while

only ; suspended bills of exchange

debt would
were

be sold under collected by the bank.

The

prices paid

were

$3,500,000, 2,073,645.61, $ $1,339,776.46, $1,100,000. $1,095,446.79,

at 5 per

and $1,043,278 respectively. 8 Out $8,200,000 was of $15,700,000, Sess., p. 109.

cent."

Ex.

Doc.

118, 24th Cong.,

2d

LAST bonds

DAYS

or

THE

BANK

869

the debt.1 In sixteen of the corporation which bought the sale was cases made to banks, and the securities of the notes of individuals were taken; in one case these were
the purchase case was received, and in one money paid The misfortune which followed this disposal of the down.2 bank's business was that much thus tied of its capital was

up in long loans for from

enormous

to twenty years, while it accumulated tions, quantities of the stock of various instituone

which it would have been better off without. Further settlement of the bank's business was made in the debt," "real estate," and "banking items of "suspended

houses."

real estate, houses, valued at $1,110,924. By apart from its banking October 19, 1836, the corporation had sold of this lands and
owned
to the value of

In

December,

1835, the bank

buildings

$356,258.3 In these

transactions

houses is not included. These the sale of banking the institution parted with at a slight loss. By October, 1836, it had sold all but seven, receiving from the purchasers $640,100 for property which had cost $666,077.*A loss of $89,621 calculated to result at the sale of the remaining houses.5 The suspended debt amounted to $3,481,000 on the 3d of March, It was 1836. increased by the operations much
was

the settling of the bank's affairs. For consequent upon instance, at one officealone $405,280 had been added to it,8
p. 104. In 000 at 4 per

States." $1,761,100on stock of the Bank of the United on the credit given -was for four, five, six, and seven years twenty on $1,000,000 at 5 per cent." Ibid., cent. ; in another, years This last was the sale of the Cincinnati branch to the Ohio Life and Trust Co." pp. 78, 106.
Ibid., p.
one

101.

Ibid.,

case

$250,p. 42. Ibid.,

2/fetd.,p. 109.
was $1,532,000

to net an actual gain to the bank ; expected real estate was to bring in profits amounting Ibid., p. 115. to $111,900." estimated * Ibid., 5 ibid., 112. pp. 112, 113. p. 6 This sum in domestic exchange. P. 48. It is worthy of note that the items was debt " were the " suspended composing and not bills of mostly bills discounted, On the 3d of Mapch, 1836, the account as follows : was exchange. Bills discounted on $2,672,693.97 personal security Bills discounted 498,851.98 on other security Domestic bills of exchange 244,333.23 Foreign bills protested 114,285.41 Total $3,530,164.59
"

Ibid., p. 117.

The

...

-----

"

Ibid., p. 92.

370

THE

SECOND

BANK

OF

THE

UNITED

STATES
far from being

and

at another

$232,000.' This debt

was

complete loss.
the

For example, at Lexington the Bank of Kentucky agreed to manage and collect it without charge,2 while bank calculated that out of the whole it would lose

debt of $1,297,979.3 Even so, however, the suspended debt $3,481,285 would be worth $2,183,306. Suspended calculated at $6,822,000 in and real estate together were July, 1834, while by July, 1836, in spite of many additions to the items, the bank had diminished the whole to $4,427,-

000.
time,

In other words,
over

$2,355,000 had
of the whole

one-third

secured in that The original amount.*

been

showing is an excellent one. It has already been several times said that the most questionable result of these methods of closing out consisted in the creating of long loans on stock securities. Many of the
billsof exchange were also taken for doubtful debts and at long terms.5 When the bank ceased doing business on the

3d of March,

1835,

the

$16,413,144.26, and

bills to be collected amounted it was calculated that by October

to

28,

1836, only one-half of this sum was paid.6 The loans on bank stock and other security, moreover, amounting to over had all been renewed $5,300,000, with slight exceptions.7 The for the bank estimated that by October commissioners 28, 1836, only $22,727,000had been collected out of a debt
in March

due

of

$54,890,000.8 Of

course,

it must

be remembere

on that most of the sales of the branches were notes due only in one, two, three, and four years. Unhappily, the
i

Natchez."

Ex.

Doc.

118, 24th Cong., 2d Sess., p. 124.

2Biddle p. 386.
3

to John

Huske,

of

Fayetteville,

N. C., Aug.

6, 1835, P. L. B., Vol. V,

Ex.

Doc.

that the item 1836. It must of suspended

5
"

be worth while to remark 118, 24th Cong., 2d Sess., pp. 114, 115. It may debt does not appear in the bank reports before March, of suspended On the sale therefore be entered under the caption of bills discounted. debt at Cincinnati the bank lost $140,846. Ibid., p. 53.
"

*Ibid., pp.

118-25.

and

are

At other offices, bills at long dates were taken Letter of the Committee not yet at maturity.""
1

in payment of doubtful debts, of the Bank, ibid., p. 48.

8

Ibid.

Ibid.

ibid., pp. 47-9.

LAST

DAYS

or

THE

BANK

371

actual state of the bank is considerably obscured by the fact that the corporation continued business under a state charter, it impossible a new set of books,1 thus making without opening
to disentangle

the accounts

of the old bank

from

those of the new. Several conclusions, however,

reasonably be drawn: in good order; though the bank's affairs were many of its debts might have to be renewed, the vast of majority them by business firms as reputable as any then were secured may
2 existing in the United States ; and it had a surplus in excess it ceased to be a national of all losses of $6,155,177when bank.3 With the capital stock and the funds due stockholders,

the books class assets to meet 000,000, by far the

showed

$70,500,000of first$26,outside liabilities of a little over

a

total of

The
and
i

specie
more

on

hand

larger part of which was was $5,595,000. The bank prosperous.4

circulation.
was

than solvent; it was

2

solvent, Its profits had

3

Ibid., p. 42.

See the list, ibid., p. 105.

:

Ibid., p. 129.

State

of bank,

March

3, 1836 (cents omitted)

ASSETS

LIABILITIES

Notes Real

discounted
-

and
-

bills
-

Capital
$57,368,019
2,212,390

$35,000,000
-

of exchange
estate houses

Circulation
Due Barings

21,109,352 371,777

and

banking 101,449 and

4,933,178 5,595,077

Dividends Discount,
Due

unclaimed
exchange,
-

253,938

Mortgages, State

etc.

...

and

terest in1,105,647

banks:
due

balances
....

notes Specie

to bank

and
-

offices

1,548,869 120,622

Public debt
Due depositors

Deficiencies Expenses
....

....

149,797 166,803

3,594,048
-

Profit and loss Foreign-exchange Fund

for banking

3,765,032 925,020 1,104,223

account houses

Contingent

fund, less losses

1,628,185

chargeable Totals

$70,526,713

$70,526,713
"Ibid.,
p. 100.

The

The

loss and surplus from the

loss on banking estimated this fund, therefore, was fund

aggregated of William

houses,

Oct. 19, 1836,

was

$114,635.83.

chargeable lost during

p.

to contingent

administration

The losses p. 112. Ibid., p. 88. Most of this was $4,304,000." Jones." H. R. 460, 22d Cong., 1st Sess.,
Ibid., $989,587.26." Doc.

217.

The

suspended

debt

amounted

Ex. to $3,415,000."

118, 24th

Cong.,

2d Sess., p. 87.

372 been

THE

SECOND

BANK

OP

THE

UNITED

STATES

large, its losses small during the administrations of Langdon Cheves and Nicholas Biddle, for even at closing
the larger part of the losses were of William Jones.

chargeable

to the administration

to be in the way of final settlement, seemed but unfortunately the bank did not go out of existence at this time ; unfortunately the complete settlement of its affairs

Everything

did not take place. The of project was started, and the bank immediately for closing.1 This February the bank
was was

Pennsylvania

charter

ceased itspreparations In the end of the whole movement. vania, chartered by the state of Pennsyl-

under the style of the Bank of the United States of The new Pennsylvania. institution went on under the old the trustee of the defunct corporation, president, became
Mathew Bevan, reissued the notes was whose president now of the old books, of the old bank, and continued the use difficulties thus involving in immense any attempt to reach a settlement.2 The consequence
one serious, for there was holder stockmands dea settlement, and whose which urgently demanded bank went on withhad to be satisfied, since the new out
was

This this partner. States. In his message

bank upon

the government of the United of 1834 Jackson referred to the as "the scourge of the people," and urged a settlement Congress, to be reached by selling the government
was

wrote stock.3 On September 18, 1835, Secretary Woodbury Biddle, asking him for information as to the bank's inten1
2

Biddle to J. W. Webb,
"The

Feb. 16, 1836, B. P.

have been increased by the difficulties in making a satisfactory estimate its concerns last, at on by the bank, in not closing the 3d of March course adopted least, in not requiring manner the expiration ; or, at of its charter, in the customary by its trustee, and in not retaining or cancelbooks and accounts to be opened new ling of the circulation, instead of re-issuing it after the transactions Ex. Doc. 118, 24th Cong., 2d Sess., Woodbury, bank chartered by Congress had ceased." p. 3. Congress specifically repealed the 14th section of the charter in June, 1836, in to put an end to any responsibility of the government to take the old notes. order Statutes at Large, Vol. V, p. 48, c. xcvii.
its redeemed
"

"

Messages

and

Papers,

Vol. Ill, pp.

108, 109, Dec. 1, 1834.

LAST

DAYS

OF

THE

BANK

373

for its shares tions in regard to reimbursing the government in the capital stock.1 Biddle replied that nothing had yet The president in his annual message been decided upon.2 for 1835 urged Congress to begin proceedings to bring about a settlement with the bank,3 and Congress responded by an 23, 1836, appointing Secretary Woodbury the act of June agent of the nation with full powers to make terms.4 Woodbury then addressed a letter to President Bevan of the old Bank of the United States, asking for information and the
intentions of the directors.5 The secretary was In September to the new bank.6 an answer

referred for Biddle wrote

appointed by the bank saying that a commission had arranged the matter, and offering to submit the materials The commission had on which it had based its conclusions.7 been appointed government
on

Woodbury,

to evaluate the stock without

word

to the
was

the

though subject, The

the government
was

the

party most interested. stock of the bank was

calculation reached

that the

which was revised so Commissioners appointed by Secretary Woodbury believed The bank finallyoffered that the correct value was $115.58.10
to pay at a valuation of $113.44 a share." This was refused, The whole amount and here negotiations obstinately stuck.

worth $111.47 a share,8 an estimate 87.9 the value $111. as to make

by the United States at the time was of stock owned 68,752 shares, and the difference involved in the diverse was at least estimates of the government and the bank

$242,000."
i

The

secretary of the treasury had hoped

2

to get

S. D. 2, 24th Cong., 1st Sess., p. 39.

and Papers,

Ibid.

3 Messages

Vol. Ill, p. 163, Dec.

c.

7, 1835.

^Statutes
"Ex.
*

at Large,

Vol. Ill, p. 56,

cxvi.
25, 1836.
a

Doc.

118, 24th Cong., 2d Sess., p. 28, June

Bevan

to Woodbury,

July 25, 1836, ibid., inclosing

resolution

of the Bank

of

the United
7 "

States of that date, ibid., pp. 28, 29.

8 10

Ibid., p. 29, Sept. 10, 1836.

Ibid., p. 49.

ibid., p. 83. Ibid., p. 18.

"

Ibid., p. 20.

12

Woodbury's

report

to Congress,

ibid., p. 2.

374

THE

SECOND

BANK

OF

THE

UNITED

STATES

from the bank in 1836.1 The bank, on about $4,000,000 in that year, the other hand, declined to pay anything in 1838.2 Woodbury disappointe was wishing to begin payments and, in sending the report of the commissioners to the House, censured the bank, particularly for its failure to post up the old books and for its reissuing of the old
notes.3

bank

Jackson, who had not once failed to strike at the in his annual messages, did not neglect this new tunity, opporbut denounced institution for its delaying to the

" settle with the government and for its reissue of the notes " an act of the expired corporation" sanctioned by no law * and warranted by no necessity."
"

had offered to accept commissioners government payment for the stock at an evaluation of $115.58 a share, interest at 6 per cent, until the bank to pay the government the shares were paid off. Woodbury's report of the failure
to arrange

The

30, 1837.

year the president and directors of the Bank of the United States presented a to the government memorial petitioning to have the debt
same

affairs satisfactorilyhad On February 24 of the

been

made

on

January

due

by the bank

to the United
reason

States liquidated.5

Biddle

declared that the mainly

account

due

for the bank's delay in settling was to the stipulation that the funds retained on

indemnity affair should be surrendered of the French He asserted that the bank was to the government. and
anxious to settle, and

would gladly accede to everything that the secretary of the treasury had demanded Board of Directors," he concluded, in his report. "The " to those terms, and are ready to carry them agree, at once,

ready

into execution."

'

Woodbury
corrections,

to rejoined the

bitter
1

sarcasm,

and

an

memorial exegesis of his

3

with
own.7

Ex.

Doc. 118, 24th Cong., 2d Sess., p. 1.

and Papers,

ibid., p. 18.
"

ibid., p. 3.

"*Messages
6

Vol. HI, p. 252, Dec. 5, 1836.

7

S. D. 201, 24th Cong., 2d Sess.

Ibid., p. 3.

s. D. 208, 24th Cong,

2d Sess., Feb. 27, 1837.

LAST

DAYS

OP

THE

BANK

375 the
to

Congress

on

the

3d

accept the bank's the bank, payable in September,

at 6 per cent, interest, were

of March offer.1 This

directed
was

of 1837, 1838, 1839, and 1840 taken as security for the debt
"

done.

secretary Four bonds

the
two
as
a

sum

being $7,866,145.49. The

at "about

bonds

redeemed the time they became due."2

bank

the first

In 1838,

panic, the secretary of consequence of the commercial the treasury was in urgent need of funds, and sold the third It was bond, the bank being the purchaser. the irony of
fate which so disposed events that Van Buren's secretary of forced to admit that the purchase of the bond by war was by which a failure to the bank furnished "the only means

of the United States, or the alternative of another call of Congress by the President, 3 The fourth bond in was could be avoided." redeemed
meet

the pecuniary

engagements

1840, and
interest in
course
1 2
3

thus
the

the government bank, which was

finally cleared itselfof its left to run its disastrous

under

its Pennsylvania
No. 5, March

charter.
at Large,

By Joint Resolution

3, 1837, Statutes

Vol. V, p. 200.

Woodbury's
Poinsett

report, Dec. 24, 1838, 8. D. 31, 25th Cong., 3d Sess., p. 1.

to Van

Buren,

Jan. 11, 1839, 8. D. 78, 25th Cong., 3d Sess., p. 2.

CHAPTER
THE

XVI
THEIR

BRANCHES

AND

ADMINISTRATION

THE
and

the most characteristic possession of branches was the most essential feature in the plan of the firstand

them they of the United States. Without would have been virtually useless to the government ; unable pable to exercise an efficient control over the state banks ; incasecond

Banks

in discounts and exchange of furnishing accommodations the country; throughout with a note unprovided

circulation of uniform value, or with any extended currency. tile On the other hand, they would have been relieved from hoscontact with states and state banks, and freed from the

charge of unconstitutionality. The charter authorized the corporation to establish offices in the United States and to appoint annually the anywhere
directors, who were to number thirteen not over less than seven, nor and who must be citizens of the United States resident in the state in which the branch was located. branch They
to appoint one presiempowered of their number dent to retire each of the branch ; one-fourth of them were excepting the president could be appointed year, and none tory The central direcfor more than three years in succession.
were

best for the government whatever regulations it deemed not of the branches, providing that they were "contrary to law" or to "the constitution of the Bank,"1 made while the treasury must deposit its funds in the branches, if the funds were collected.2 such existed in the states where
1 2

Charter,
Ibid.,
sec.

sec.

11, Art. 14.

See Appendix of the his reasons

to

I.

16.
must,

But

the secretary

[treasury might

he

saw

fit. He

little moment

made

give it obligatory upon when required

however,

to Congress.

District of Columbia

the corporation do so by Congress,

if order their removal Other stipulations of in the to establish a branch

and in any
state where

376

THK

BRANCHES

AND

THEIR
were

377
si

for directors central board.

wever

almost wh

the bank, t
dty of its polic ? branch official

The making of r'ernment of th

f the firstboar
rere

generous
to be di*

Certain restriction
)tes
were

,a

han sixty days ;l a of which three-fourth

were

overdrafts
made
on

forbidden

personal securit

f control the central boar*

Stars
on

the map

indicate defunct branches.

THE
req
i

LOCATION
and Ret

OF

THE

BBANCHES

AND

AGENCIES
X.

Kulet

Art. ffice*, 12. Beo Appeudix

"

Ibid.,Art. 14.

3/6id.,Art.l6.

"/6id.,Art.I7.

Ibid., Art. IS.

"

iftid..Art. 4.

the mostl d Banks of i have been virl

ercise
s

effieie of furnishing throughout ti

an

lation of uni. other hand,

ontact with at

of unconstil charter aut here in the \ directors, wh ai than seven,

resident in the
were

ap

ess

empowered
'"

Vr

"i
-

Ba ion of rttiel

lCaarMr.Me.il,
he

Art. 14.

DM

*|
Otlier stipulations of 'on^tress. in the to establish a branch poration in any state whero kgr Congress, and

howc' fit. Hemust, saw it obligator littlemoment made District of Columbia when requ

376

THE

BRANCHES

AND

THEIR

ADMINISTRATION

377

The

similar to those for qualifications for directors were The general control of the directors of the central board. however, almost wholly in the power of the branches was,
central directorate through its authority to appoint the local directors and to create by-laws for the branches, the election

important privilege left to the of president being the one uncontrolled will of the branch directorates.
essential to the safety of the bank, to the security of its operations, and to the unity of its policy the branch officials that the control of the central board over
It
was,

of

course,

and directors should be real and effective. The making of a body of rules and regulations for the government of the therefore one of the first tasks of the first board officeswas generous in of directors. These rules and regulations were the extent of the power imposed; however, were

Certain restrictions, they granted. for instance, notes were counted to be disl only at short dates, not longer than sixty days ; all to be laid before the board,2 of which three-fourths notes were forbidden;4 to the discount;3 overdrafts were consent must
on not to be made personal security and discounts were 5 "without two responsible names." larger measure To secure a of control the central board hands the power of appointing the retained in its own

these being the most important officials cashiers of the offices,6 the only ones thoroughly versed in and sometimes
correct

over

Consequently the power to apmethods. point by which effectivecontrol them was the principal means If the board at Philadelphia the officescould be exercised.
banking used

discretion in these keep

a

undoubtedly

firm hold
to it, who

cashiers known

appointments, it could upon the branches by selecting had the interests of the corCongress
by law

it and held, if the state legislature requested 2,000 shares were I. article, Appendix required it." Ibid., sec. 11, 14th fundamental
i

Rules

and

Regulations
3

for

the Government

Art. of the Offices,

6

12. See Appendix

X.

2/6id.,Art.l4.

/bid.. Art. 16.

*J6"d., Art. 17.

ibid., Art. 15.

6/6"d., Art. 4.

378

THE

SECOND
at heart

BANK

OF

THE

UNITED

STATES

poration bankers.

and

were

competent

and

conservative

To increase its hold upon defined his duties. He was the subordinate
"

the cashier, the board carefully

to exercise supervision
over

the settlement officials, examine cash account of the office; take charge of the cash," attend all board meetings, keep the minutes, report to his board all his subordinates, and of neglect or incapacity among hold himself at the disposal of the board for consultation, the furnishing of information, and what other services were
cases
* Moreover, required of him." instructions came through which
"

all of the

he

was

from
the

the usual channel the parent office. influence

in

Consequently determining

he

might

exercise

utmost

the character and amount acted. of business transThe branch cashiers, in short, were treated as executive of the central board, as well as of the branch, and officers constituted the efficientlinks in the system of branch banks.

The other local officerswere appointed by the local board.2 To exercise efficientand intelligent control, the central director the branches, but needed not only authority over
complete information about them. statements of the affairsof each" were "made sixty day
"

For this purpose

were

"

weekly
returns"
"

"made

"

returns"
"

were

monthly "made

"made were and in addition to quarterly examinations" all these an inspection not anticipated, at uncertain times by officers immediately "made notice," was and with no deputed from the Bank;"3 while every quarter a committee
"

of each of the branches investigated its affairs,scrutinizing The listsfurnished by the debts and reporting upon them. detailed enough to show whether they enthe branches were gaged in discounting paper which took the form of perma1 2

Rules

and

Regulations

for

the Government

Art. of the Offices,

5. See Appendix

X.

Biddle, H. R. 460, 22d Cong., 1st Sess., p. 315. Biddle

to A. H. Tracey,

March

3, 1830, P. L. B., Vol. Ill, p. 198.

See also H. R.

460, 22d Cong., 1st Sess., p. 315.

THE

BRANCHES

AND

THEIR

ADMINISTRATION

379

the constant drawing and redrawing of bills.1 The officers sent out from the parent office to tecting the branch accounts were experts, capable of deexamine
nent

loans,

or

allowed

errors

and

and might the branch discounts at any time by declining to furnish any phia further supply of notes. All in all the board at Philadelcould exercise the branches.
a

frauds at once. The parent board also prepared furnished all the notes issued by the branches, therefore limit the branch issues and diminish
or

very real and

very extensive control

over

Did it exercise such control? Under the administration The extensive establishment of William Jones it certainly did not. in itself an of branches under his presidency was Eighteen offices were sign of loose management. a number cases, erected in 1817 much too large.2 In some badly selected and in defiance of correct too, the locations were
ominous
"

banking
western

principles. states had

populous New
no

thinly settled,and poor as many officesas the whole of rich and England or the middle states. There could be
new,

Thus

the

for so a supply of branches possible justification numerous in most parts of which in these agricultural communities, transactions were hardly possible to any genuine banking
borrowers constantly demanded, where not bank quently credits, but long loans, and where the security offered frehad to take the form of real estate. Many of the
extent,

these may not skilfully placed. Among other branches were those at Fayetteville, N. C., Portsmouth, be named N. H., and

Middletown, The

Conn.
were

directors in the early years of the bank fault, not only in locating offices,but in managing
1

at

them.

J. Lippincott's Secretary
one

testimony,
says

Feb. 4, 1833, H. R. 121, 22d Cong., 2d Sess., p. 58.

Crawford

at Augusta, mentions lack of ability to supply A.

that twenty offices were established by April, 1818, and Ga., which would probably be abandoned on account of the it with notes." To Senate Finance April 7, 1818, Committee,

o/C., 15th Cong.,

1st Sess., Vol. I, pp. 353, 354.

380 The

THE

SECOND

BANK

OP

THE

UNITED

STATES

not thoroughly of government noted above was worked out until the administration of Nicholas Biddle, and under Jones but littleefficientcontrol was exercised. The too incompetent executive officersat Philadelphia were and

plan

require strict obedience from the branches; the officersof the branches were incapable, or with little no knowledge of banking methods ; while the business which they were permitted to transact inevitably took loans made to agriculof semi-permanent tural interests. Finally, Jones's conception of branch management
the

too

anxious

to make

fortunes

to

form

that specificcapitals ought because it was the intention of not to be assigned to offices, the central board " to extend or control their operations, as
was

faulty.

He

thought

the exigencies of commerce, " should of the institution

....

"

and the general interest from time to time direct." *

the institution
unit, ests." indivisible in its interas a

This, Jones
"

thought,

was

managing
....

integral in its organization, 3 But the supposed unity

actually meant

complete

disintegration, since strict and competent loss. The result was enormous wanting.

supervision was The story of the

looting of the Baltimore officeand of the piling up of suspended debt at the southern and western branches is eloquent to the inefficiency and impotency testimony of the Jones administration both at the central office and at the
branches.
As
soon
as

Cheves

became

president he struck at the root

of the disorder by recovering the capital and then apportioning fixed capitals to the offices. To accomplish these ends he
in check with an iron grasp. The issue reduced, and in of southern and western branch paper was instances totally suppressed, while the other transactions some

held the branches

of these offices were

1 2

materially reduced;

the Cincin-

Jones to Charleston Jones to Savannah

branch,

Feb. 6, 1818, F., Vol. Ill, p. 335.

Dec. 5, 1817, ibid.

branch,

THE

BRANCHES

AND

THEIR

ADMINISTRATION

381

nati branch

was

discontinued;

the boards

many officialsdismissed, committees central board investigated the affairs of the branches, while formulated by which the capitals of the branches a plan was and
were were

reorganized appointed by the

were

stationary.1 When fairly under control, but kept their justified

resigned, the offices the business done by them

and the advantages of a destroyed by the limitations

Cheves

scarcely
uniform

existence,

almost currency were placed upon the issues. Cheves defect of the bank's organization

pointed
as

out

the essential

existing in the character of the local directories, and he advised the strict execution of good of the orders of the parent board,2 the payment reduction of the salaries to the presidents, the permanent
bank's active capital,'and the diminution of the number of He was the only safe the branches. positive that these were
measures

to pursue.4

It is these early years which furnish evidence that the or were at least subwestern branches political machines, ject directors,6 to the influence of politicians who as acted
1

See chap. "That the

iv. President and

Directors

Bank keep steadily in view of the Parent ments through orders all the various departabsolute necessity of enforcing be expected in its can the institution; without which, neither harmony of Report of Comto the interests of its stockholders." mittee nor security administration,
2

the

its

own

"

of Stockholders,
3

Oct. 1, 1822, CHEVES,

p. 10, and

NILES,

Vol. XXIII,

p. 89.

CHEVES,

p. 30.

*"I
never

it can am of the Bank perfectly satisfied that with the present organization have branches, too many be managed quently well. We and the directors are freby individual For a time we and local interests and feelings. governed

with the branches, but I hope they will be reduced, and I hope the presidents in no other to devote be made time to the business, engage their whole them business, and receive a very liberal salary, which would make value their
must

bear
may

Offices and be afraid in the business would

of losing
of each

them.

A different and

have

saved

five thousand
calculating

has sustained by the want of Cheves to Crawford, at the head of the branches." competent and confidential men Oct. 1, May 27, 1819, Exposition, p. 73 ; and Report of the Committee of Stockholders, 1822, ibid., p. 11. the actual
"

dollars per year to each president loss and the loss of gain the Bank

management of several offices have paid more than would gained Nay, there is no of the branches.

5"!

am as

disposed
it

partisans, recovered.""

it is placed in the hands of political losses sustained there will be was once of the much Tilford to Biddle, Lexington, Jan. 30, 1829, S. D. 17, 23d Cong., 2d Sess.,
to think,

that, unless

before, that

382

THE

SECOND

BANK

OP

THE

UNITED

STATES

and made the

large loans to politicalfriends. This was particularly In this matter it was Cheves's in Kentucky.1 case

fluence wish and endeavor to withdraw the branches from such inthough apparently he did not entirely succeed. to diminish the number Cheves's recommendations of the

sequence officesand to retain the bank's stock forfeited to it in conof the frauds at Baltimore and other offices, in spaired order to decrease the size of the capital, proved that he decontrol over the branches, of establishing any efficient since, relatively to the capital of the bank, no one could have too numerous. All the evils incident argued that they were
to their management

Cheves could not The affairs of the western branches were infinitely amounts confused by the enormous of real estate thrown upon them in discharge of bad debts, and by the attempt to in real estate. collect from hundreds who refused to pay even
probably Continuous
or no

under Jones be in the time

were

not

corrected, and had at his disposal.

litigation was

carried on;

the branches

did little

business, and the conflict with the states absorbed The time and energy. cashier at much president and in other repreSavannah hensible allowed overdrafts and engaged of the local board.2 practices without the knowledge entire business of the Georgia office had finally to be
with the state and until the difficulties the state
"

The

suspended
p. 306.

His name to the bank in former times, having and character were well known to politics, that served several years as a director previous to 1822. So devoted directed to the policy of the Government as were all his views as a director, Always connected with the bank, and not to the interests of the stockholders. factions he produced in the board, and of being a leader of a party, ambitious
....

from feeling alone Many were party of advocated and opposed be attributed to him." Shippen, regardthe difficulties and losses of this office may ing Pope, to Biddle, Jan. 24, 1829, ibid., p. 301. Warden
measures
"

In your section of the country we have surely had a melancholy experience of the hazard of lending to politicians." Biddle to J. Harper, Jan. 9, 1829, 8. D. 17, 23d Cong., 2d Sess., p. 298. " had suffered deeply from the influence of politiThat the offices in Kentucky cians
1
"

"

; that we

reach

had for some to withdraw the bank out of the time been endeavoring in giving a business charof that influence ; that we had, at length, succeeded acter Biddle to Shippen, Feb. 12, 1829, ibid., p. 304. to its transactions."
"

2S. Nicholas

to Biddle, Savannah,

Feb. 26, 1821, B. P.

THE banks

BRANCHES

AND

THEIR

ADMINISTRATION

383

which did not occur accommodated,1 until the Court in the case of the Bank of the decision of the Supreme United States vs. the Planters' Bank of Georgia and the consequent
were

repeal in 1824 of the Georgia law hostile to the influenced the choice of directors, cashiers bank.2 Politics still were not selected judiciously, frauds frequently resulted and The offices were to a as a consequence.3 stillunmanageable considerable extent, while them was accounts between"
"a

sufficient knowledge

of

the

stillwanting.* Nicholas Biddle became president of the bank, the When by Cheves inaugurated conwere safe business methods tinued,

but of
measures

more

effective
were

business

consisted in

sion of control and an expanbrief, Biddle's also desired. In the transactions of the extending
means

large

eastern offices; prohibiting the issue of state-bank notes; forbidding loans on long-term paper and mortgages, renewals, and the making of loans by small committees;

while dealings in exchange and the bank's notes were

It was not everywhere. die put the finishing touches to his schemes for expansion, by the invention of branch drafts and a larger participation
in inland

extended at all the offices, freely circulated and redeemed until 1827, however, that Bidwere

safe and
1
"

This was exchange. extensive dealings, which

Biddle's final plan for kept the capital of the

Not a single deposit is made in it nor do any business. dollar but in renewal as no one there from of paper offers any paper into it." The branch had done nothing the entire inability to make for a payments Jan. 14, 1822, ibid. S. Nicholas to Biddle, Savannah, year." they discount
a

I believe its not doing

to the the way repeal and the decision of the court having opened the office and the investment a the capital of the of re-establishment of portion of " in Georgia Biddle Gumming, to John Bank president of the Savannah
2

"The

"

branch,
3

Jan. 12, 1825, P. L. B., Vol. I, pp. 196, 197.

The cashier Orleans defrauded in 1825. He was the bank an at New old The cashier at Middletown, Conn., plundered the branch there in 1820. appointee. The cashier at Richmond The was also delinquent. president of the Portsmouth funds in 1824. The bookkeeper branch appropriated the pension at Charleston was
guilty of peculation
*

in the

same

year.

Biddle to John

McKim,

of Baltimore,

March

14, 1826, P. L. "., Vol. II, p. 140.

384 bank

THE

SECOND

BANK

OF

THE

UNITED

STATES

localized,and it was

one

which

he always regarded with

pride and satisfaction. His plan of stricter control consisted in securing the appointme of the presidents of the branches by designating
the central directory wished whom Biddle declaring that unless the boards elected to that office, did appoint as directed, the central board would find a remedy
men

to the local boards the

by leaving off the local directorates presidents chosen in opposition to its will;1 directors of the parent board living authorized to sit at the board outside of Philadelphia were
of the branches which

advisers were of the branches trained at Philadelphia, made responsible to the central board, and required to furnish information to that board and
to the other

located in their cities; official ; chosen at the different offices the cashiers were carefully selected from the employees might
be

branches;

large borrowers

were

excluded

from

the

directorates;

and, finally, assistant cashiers were appointed at Philadelphia, whose duties were exclusively confined debt and to the management of the bank's suspended
to the business

real estate and

were

gratifying.

There

is no

of the offices.2 The results instance known of peculation by

cashiers appointed during Biddle' s presidency; the control fined of the officeswas fairly efficient,and their business was conto safer channels,
even

while it

was

largely expanded.

Biddle' s
new

success

branches
not

led to the establishment of a number of From during his presidency. 1817 to 1826

there had

been

at Chillicothe had

branch created, while that single new From 1826 to 1831 been discontinued.
a

branches were established: two in the Southwest,8 eight new two in the West,* two in New England,5 and two in the middle These localities were states.6 carefully selected. The
1
2

Biddle

to S. Wharton,
"

of Providence,

Sep. 19, 1826, P. L. B., Vol. I, pp. 183-6. His Policy, 1823-28."
* 6

See chap, Mobile,

v,

Nicholas

Biddle
1821.

and

3 "

1826 ; Natchez,

Nashville,

1827 ; St. Louis, 1829.

;

Portland,

Me., 1828

Burlington, Vt., 1830.

Buffalo, 1829

Utica, 1830.

THE

BRANCHES

AND

THEIB

ADMINISTRATION

385

beginning in offices secured the business southwestern the new established for cotton-growing country, and were the phenomenal that purpose, while in the West growth of cisms the wealth and population justified additional offices. Critibecause may be directed against their establishment the loans in these sections would necessarily be made to persons in agriculture and consequently apt to become engaged
In both instances the wishes of the semi-permanent. treasury were considered, the secretary having urged the In the cases opening of offices at Mobile and at St. Louis.1 of Buffalo and Utica the increased trade due to the navigation of the Great Lakes and the opening of the Erie Canal was sufficient warrant for the selection ; the trade with Canada the justifiedchoice

land while the office at Portof Burlington; fore was at the solicitation of the treasury.2 Beopened establishing these various branches, the central board sent special agents to make careful examination of the sites in relation to their convenience to the government and the
amount

of trade which centered about them.3 Notwithstanding the improved methods introduced, there

stilloccasions when the control of the central board was not effective. Necessarily much power had to be given to the For instance, the president executive officersof the branches.
were

and cashier of an office were given complete authority in the purchase of foreign bills,and a veto upon the purchase of Indeed, in the early years of Biddle's inland exchange.4 given entire Either this control of all questions relating to exchange. discretion had to be confided to them, or a certain amount of capital for investment in bills put at their disposal, or the
administration
1

the

branch

directorates

were

8. D. 17, 23d Cong., 2d Sess., p. 225. of the thoroughness

Ibid.
see

3 For examples documents.

of such examinations

ibid., additional

*"You foreign West,

have the exclusive and the President confided to you purchase of domestic bills," and bills." Biddle an on to Cashier absolute negative of New Orleans, May 17, 1823, P. L. "., Vol. I, p. 28.
"

386

THE

SECOND

BANK

OP

THE

UNITED

STATES

central board must give minute instructions in regard to It was found inexpedient to give a general credit purchases. on which to trade,1 while the central board could not give the necessary instructions with regard to purchases without intimate acquaintance with the state of business a more much in the neighborhood than could be possessed of the offices

by

it.

Later

the

plan

was

adopted

offices as to the rates to be charged bills to be taken, and an officerof the central board to supervise exchange dealings. Even so

of instructing the and the nature of the

was

pointed aplate as

1829, however,
was

the claim of

branch

admitted, and the flatopposition to the wishes of the parent board, upon management of its inland exchange business.2

to fix its rate of exchange Savannah office insisted, in

the

Similarly, in the making of discounts a large discretion had to be granted. The bank fixed the capital of each branch, but, having done that, could not dictate the precise
loans which and those It prohibited long loans tions on real-estate security, but within these limitaloans. the offices were supposed to control their own should be made by it.

" The question of general credits by the Bank to the Southern offices has often discussed, and after some it was found best not to continue them. experience The general theory on that subject is to leave the office as far as possible perfectly free, to give it the command of the Bill market, and let it judge of the time and

been

its bills. Where and rate of purchasing credits were given, the office was less obliged to buy the bills,and even or the office did not, the knowledge more where lodged with the office enabled pose the party to disof the fact that the credit was of his bills out of doors at a higher rate than the office would be willing to have disadvantage." to its own Biddle to B. thus using the credit of the Bank given Baltimore, Dec. 19, 1823, P. L. X., Vol. II, p. 82. Gilmor,
manner
" "

The
on

branch,
the

despite

instructions

from

Philadelphia,
of state-bank
course on

checks
mings
"

North

to Biddle,

Savannah,

at par, Dec.
was

in liquidation 24, 1828, B. P.

at the

had resolved to take balances. Q. B. Cum"

The

fact is, that I

unwilling I have ever

The

to trust myself

change
"

of the Board, and have been so it,that this is the very first time, with any observations Board. [alluded?]to it, except to the members attended of the Parent it made in the policy of the office with regard to exchange, was which surprised
"

obvious

the surrender of the whole question, which it involved was yet, painful do, the right of the Board, to fix its rates of exchange, it was as we recognizing for the present, but to watch better not to interpose thought the progress of the Biddle B. Cummings, to George Savannah, the Board system adopted."" of which Feb. 6, 1829, P. L. B., Vol. Ill, pp. 3, 4.

THE This

BRANCHES

AND

THEIR

ADMINISTRATION

387

excuse unavoidable, and indeed there could be little for separate branch directorates on any other basis,1 and though the central board appointed all the branch directors,
was

it could not know them all,nor Indeed, though of them.2

any considerable number Biddle took advice about the

even

he could get it, the qualifications of candidates, whenever board had finally to depend mostly upon the opinion of the executive officersof the branches.3

consequently of vast importance that the executive While these qualities should be honest and capable. officers were usually assured in branch cashiers by the methods
was

It

already explained, there was always a doubt in the case of be well known branch presidents, who could not in all cases Moreover, though to the managers the at Philadelphia. presidents
were

extreme meager to secure losses might and did occur, as a result of the inefficiency dishonesty of these officers. Thus the president of the or

in most salaried, the sum paid was first-classtalent. Consequently

cases

too

secured complete control there, used his power to defraud the government of $20,000, and remained undisturbed until his death in 1824 revealed the
here to say to a Distant I do not think it judicious nor safe for the Board Proceed liberally as if the failure of Mr. A. and Mr. B. had to Discount as It is our business to direct the general state of the operations not occurred.' of an the persons Office, but as we cannot estimate the effect which failures may have over
1
"

Portsmouth

branch

Board

'

The discretion be hazardous to give directions. connected with the office it would Biddle to P. P. F. Degrand, of Boston, June 22, must be left to the local Directors."
"

1826, ibid.. Vol. II, p. 171.

2

Biddle,

Washington,

in writing " Of says :

to

slightest acquaintance.""
3
"

of the candidates there is no one all these gentlemen, Dec. 21, 1823, ibid., Vol. I, p. 85.

James

Lloyd

for the with

whom

presidency at I have the

In the Branches we naturally look to the confidential officers of the Bank by the Parent Board, and the President of the Branch) Cashier who is appointed (the by rotation to nominate to fillthe vacancies they occur as suitable persons and if, inquiry from other independent to distrust their no reason we see sources, after This is the safest general pracjudgment, we generally lean to their nomination. tice,
"

because their

if we

at

distance

place
we

in the Direction

may situation, who already precise pecuniary too much, who wish to borrow too much, borrowed or who have needy friends whose they might urge when successfully while sitting at the Board, claims they may be resisted."" Biddle to John McLean, Jan. 11, 1829, B. P. otherwise

introduce

gentlemen individuals

without
have

knowing

388

THE

SECOND
His

BANK

OP

THE

UNITED

STATES

peculation.1

granted 2 loans unjustifiable which resulted in a loss of $112,000. At Hartford, in 1826, the branch by neglecting management,
from

successor

was

inefficient, and

judicious advice

the president of the bank, incurred a loss sufficient to sweep away all the profits for the firstsix the cashier at Pittsburg months of that year.3 In 1827 flatlydisobeyed orders, not only by neglecting to carry out

his instructions from

the

Philadelphia, but by

branch

directors the instructions

concealing from themselves, and by

failing to notify the central board of his delinquency until the branch months at Louisville afterward.4 In 1834
In 1832 the refused to obey the orders for reduction.5 board at Lexington, in spite of strict instructions to refuse Henry the Hon. all discounts, loaned $5,000 "to secure

Clay

"

was

tion and the university at that place, though the derelicimmediately reported by the cashier.3 An investigation of the Portland office in the same year revealed a

As early as 1829 surprising state of affairs at that branch. the president there was reported as in control of the office its and as having jeopardized discounts, while two directors

appointed
1
"

on

his

recommendation
Cutts, President
the delinquency

had

failed.7 He

was

After Shapley

the
"

'death of Mr.

James

was elected and in 1822 " forwarded here, charges against Parker to the Board clerk na,med him of applying to his own Mr. Cutts, accusing the monies held by him as Loan use, deemed Officer ; but these charges were malicious or frivolous, and disregarded." " Mr. Cutts had chosen the directors of the branch, for the most part [i. they e.,

of the Office at Portsmouth, discovered. at once

Mr.

known." his been much Biddle on chosen recommendation] who have never Boston, Lloyd, Oct. 4, 1824, P. L. B., Vol. I, p. 174; see also Biddle to to James
were
"

Ingham,
2
* a

July 18, 1829, H. R. 460, 22d Cong., 1st Sess., p. 442.

3

Ibid.

Biddle to President

Parsons,

June 17, 1826, P. L. B., Vol. II, pp. 169. 170.

Mcllvaine,
to Biddle,

Cashier

resolution
5
"

Corey, of Pittsburg, to Cashier of Sept. 26, 1826, B. P.; Mcllvaine

determination

Jan. 15, 1827, in respect

Jan. 21, 1827, ibid.

to

The

the the

recent

friends
so

measure

obey of the directors of the Branch Bank of this city to disbank, has been very generally approved, even order of the parent it, because they can approve perceive no necessity for a of the bank harsh and oppressive." Louisville Public Advertiser, C. D., Vol. X,
"

Part
6 1

III, p. 3157.

J. Towler

to Biddle,

private, Aug. 21, 1832, B. P.

Biddle to Cowperthwaite,

March

13, 1829, P. L. B., Vol. Ill, pp. 23-5.

THE "utterly
coarse

BRANCHES

AND

THEIR

ADMINISTRATION

389

unfit for his

manners,

place;

....

ignorant, inefficient,

in

office till one

"

to the and in allrespects an incumbrance The board, called at 11 o'clock, seldom met or never and then seldom organized official
"

letters, when

or perhaps received, rarely communicated, thrown carelessly on the table, to be read by such as chose to no minutes kept and official papers the most read them
" "

in the officeand some irregularly scattered some at his private dwelling."1 This case shows neglect in the officialsat headquarters,

important

"

of the president's three years before the investigation took place. to no however, might have been amenable cases,
since
was

Biddle

informed

incapacity The
other

oversight. The essential difficultylay in the characters of the branch directorates and the branch officers,who were not expert
too, the central board took immediate Thus when made charges were cognizance of complaints. in 1824, the Philadelphia against the cashier at Washington

bankers.

Usually,

board
was

at

once

directors and by made The president of this office,who those at Philadelphia.2 directors, had been forced upon the bank by the branch for inefficiency and failure to give proper attention to the affairs of the office.3 Further about the cashier, however, were not noticed.* complaints Charges made in respect to the Norfolk office were taken up
was

suspended him, and both by the Washington

thorough

investigation

also

removed

in

1827

Cadwalader
report
on

to

Biddle,

Philadelphia,

May

24, 1832, B.

P.,

quoting

Cowper-

thwaite's
2

the office.
pp.
a

SMITH'S cleared

Defense,
Smith by
to President

23, 24, Appendix

board
3

vote

VII, and pp. 29, 30. The Washington board unanimously. of 5 to 1, the Philadelphia Swann,
of Washington, Dec.
10, 1827, P. L. B., Vol.

Biddle

Thomas

II, p. 322.
"
on

Edward

board

longer
"

Jones, writing to Biddle from because it is too subservient been committing

Washington,

to the cashier.

Oct. 31, 1827, declines to sit The cashier has shielded

culprits who
cashier's Jones

$500,000 now

robbery on the bank for three years past ; to the the robbery is chiefly to be attributed." unpardonable negligence June 21, 1826, of business done. The branch lose also complained would B. P. under protest."

have

390
as

THE

SECOND

BANK

OP

THE

UNITED

STATES

soon

as

made

and thoroughly

investigated by the central

board.1
serious than these minor acts of disobedience, the failure to control the inefficiency, and dishonesty was

Much

more

western

and

southern

offices after the

introduction

of

Biddle's plan of exchange operations to support the circulation As the dealings in exchange were of branch notes. almost

wholly

in the hands

of the

branch

executives, the

opportunities for evading the strict regulations of the bank increased under these new were circumstances, and it much
was

inevitable that with directorates composed rant ignoof men of sound banking these opportunities would not be neglected. Furthermore, the enormous expansion of the bank's

business after 1829 made proportionally difficultthe task of investigation, supervision, and control, while the distance of the branches from the central offices,added to the wretched infinitelyaggravated the difficulty. of communication, Finally, as these considerations pressed, the distant offices were occasionally permitted to suspend the rules which had governed
means

their operations in the past,2and thus a further opportunity was afforded for the transaction of reprehensible business. The history of the bank in its later years proves conclusivel south and west loaned large sums on paper, and frequently renewed the loans ; accommodation that they employed much too large a proportion of the bank's that the branches
1

Biddle

to H. Binney,

Jan. 29, 1832, P. L. B., Vol. IV, p. 137, and

H.

R.

460, 22d

Cong., 1st Sess., p. 547.

2
"

The

their discounts
of January,

12th article of the bye-laws to notes having not more

....

for the government of the offices, restricting than sixty days to run, was passed on the 3d

bank,

It has not yet been formally repealed; but, being found impracticable, and not calculated for the business of the country, or the convenience of the have, from I believe, without time to time, been, exception, all the branches
1817,

by special resolutions in fact repealed, Articles 4 and have

undergone

and instructions, exempted though not in form."

"

from

its operation.
so

It is, therefore,

6 for exchange

modifications,

operations by instructions

are

in force, except

far

as

they may
out

to particular

to their respective the exchange operations adapted of 1832, H. R. 460, 22d Cong., 1st Sess., p. 542.

offices, growing localities." Biddle to

"

of

.the

committee

THE

BRANCHES

AND

THEIR

ADMINISTRATION

391

and could not be controlled when to check them.

means,

attempts

were

made

The

became

Cincinnati office furnishes excellent evidence to substantiate When the policy of expansion these assertions. accorded this office effective in 1827, permission was
to former

who had not cleared Early in 1832 Biddle was notified themselves with the bank.1 fluence that some exercising an undue inof the old debtors were
to grant discounts

debtors

the officers,securing loans to which they were not entitled, and speculating in the bank's real estate.2 No taken of these warnings,3 but later notice, apparently, was
over

in the year the Cincinnati counsel of the bank assured Biddle that too many large loans were made, that the directors had

per cent, of the loans every ninety days,4 that the "crisis is full of difficulty,"and that the
decided
to call in 10

branch

to secure doubtful paper on taking mortgages Evidently constant renewal was its renewal.8 the rule at Cincinnati, and the calling in of 10 per cent, every ninety days was considered a drastic measure.
was

The " racesimilar conditions prevailed. horse " bills invented during the administration of William Jones were again extensively employed, and the complaint of the president of the branch
1

At

Nashville

shows

that the cashier,

263-5.

local

Biddle
"

to Cashier

Benson,

May

19, 1827, P. L. B., Vol. II, pp.

The best of my and judgement is, that for several years past, an in the Branch influence has gradually gained the ascendency composed of the old Messrs. Cope and Benson have with great ingenuity managers of 1817-1820, and that
2

information

been

involved

in their toils. That

interests,

the Branch those

has been managed

to

a
"

great

extent

or the Bank of the community at large, has been past almost all the business paper months rejected loans have been made, have been applied in relief of speculators in and whatever few persons has carried them beyond property, and of some zeal to engross, whose Henry Avery to Biddle, March 24,1832, confidential, B. P. their depth."" Same to

of other itself, that for some

"

in favor

than

"

same,
3

Feb. Same

1, 1832, confidential, ibid. May 5, 1832, ibid. to same,

* ^

Bellamy
"

Storer to Biddle, Cincinnati, May

22, 1832, ibid.

In all cases as their legal where the debt is the least doubtful, I recommend, This request on the paper. condition of renewing adviser, that we ask a mortgage, is always granted, and by this means I have saved thousands to the institution."
"

Same

to

same,

Dec. 7, 1832, ibid.

392

THE

SECOND

BANK

OP

THE

UNITED

STATES

appointee, and probably the only cashier of that character in the bank's western aged offices, had secured control and manto suit himself. The matters aggrieved president
wrote

to Biddle:

often hinted to you, in my former letters that Our Cashier Was entirely too fond of Bills of exchange and often on the refusal of billsby, me that he wished to take; I have gotten the
"

I have

"

known to ill-will of my neighbors, as he never of late years was This season refuse a bill of exchange let it be as it would he does Vote against some but not with his Consent it would me ease of a good deal of responsibility if you would drop a hint to
" "

....

"

him

on

this

subject
"

....

he is
"

"

one

ing of the Best officersbelongtoo great risques to

to the Establishment

make

Money

but he would run l please keep this to yourself.

Here

is revealed
an

essential defect of western management: ignorant cashier2 bent on making money at all
the

odds, and willing to take any kind of paper, and a president " tions Instrucill-will his neighbors." who does not wish the of were given to stop the bill business, only to elicitthe The cashier at impossible. response that such action was Nashville was the one instance of the appointment of a cashier from the vicinage of an officeafter the beginning of Biddle's The had been made, Biddle appointment administration.
said, largely on the recommendation of the officer by Andrew It was the irony of fate that precisely there Jackson in 1818.
1
2

J. Nichol to Biddle, Nashville, Nov. 22, 1832, B. P.

The
:

following
"

extract

The

course

has always commanded to the doors of every section of the country, and thus affording the strongest practical of the operations of the Bank of the United proofs of the incalculable importance in the improvement its unrivalled machinery ness, States through of the wealth, happiand

letters will indicate his qualione of Sommerville's fications by the board, in its general diffusion of discounts, pursued benefits my approbation, as thereby it extends its immense from

welfare of the country, in every particular ; passing through every in grade of society, from the wealthiest, in regular gradation, to the poorest man benefitted than the poorest and in this none or more so are the country ; and much general middling classes of our country, and, above all, the agriculturists of every rank and time, with such important denomination at the same ; combining, results, that of for the debts of the institution in the way before described ; and the greater security board had set here, they would, under all I feel fully persuaded that, if the parent in the same have operated that the board has." Nov. way precisely circumstances, H. B. 121, 22d Cong., 2d Sess., p. 158. 26, 1832,
"

THE

BRANCHES

AND

THEIR

ADMINISTRATION

393
have

the most reckless and been done.

reprehensible

banking

should

Cashier

Jaudon

of the New

Orleans office,an

intimate

friend of the bank's president, an old and trusted employee of the central office,later to be its cashier, appears to have been responsible for much of the unsafe bill business in the

West.
"

In April, 1832, Biddle

so

wrote

him

surprized and Orleans extension in of the accounts of the New appearance inland bills of exchange, and instructed him to give up the
much

rarely been

saying that he had " by the as startled

purchase of widely scattered bills and direct his attention to Jaudon returned a long defense, foreign exchange.1 In answer declaring that the office could liquidate billsof exchange drawn bills upon it by the western branches only by drawing more upon them; in other words, by creating "race-horse bills."
Protests from the bank did
not
cease,

Cashier

Mcllvaine

purchases writing Biddle that a large part of the exchange New Orleans " must come by the roots." 2 But up made at they were so deeply planted that getting them up was not an easy matter. It is significant,in regard to the business done became later by the bank, that Jaudon phia cashier at Philadelin July, 1832.

Other
demands
i
"

inability to answer the offices showed equal In 1834 Charleston could not diminof the bank.

rarely been so much surprized and startled as at the appearance of last weekly statements representing such an extension of of discounts bills widely scattered domestic and of circulation which in the present state of the immediately. My surprize has been increased by the cirus upon presses country cumstance in your Mr. Mcllvaine to have that you correspondence seemed with
your

I have

two

understood
preparing
are

completely,

as

you

to act in concert

with

give up Jaudon,
2

entirely at variance domestic scattered

do, our always and were whole plan of operations, but these increases of every branch of your business us, Instructs him to to reduce at once, with that plan." to Biddle to buy foreign exchange, and exchange.
"

April 20, 1832, P. L. B., Vol. IV, p. 256.

aggregate

"The

loans

[of

the
on

New

Orleans

office]appears
more

the 30th day of April, but point at which bills purchased are the domestic the Northern at 60 days upon of ' " To Biddle come them must up by the roots.' at portion of 1832, B.P.

the

same

they stood

almost than

exactly at two-thirds

"

Cities" and a large Washington, June 1,

394

THE

SECOND

BANK

OP

THE

UNITED

STATES

ish its accommodations,1 that a return showing

while it had

the
on

Louisville office made hand large amount a

called "stationary debts," only $648,000 out of what was being payable at maturity.2 The of a total of $2,348,000 offices reveals the same of other western correspondence conditions. In the East the bank authority.
At the New

was

also lax in the assertion of its York office in 1828 Robert Lenox

complained

loaned;3 in 1832 he was money asserted that, in spite of instructions to contract, the board loans to itself expanded its discounts, and in addition made and to brokers.* In 1834 he declared that the cashier would
that too

much

his duty ; that discounts were made after the board charged to the account of bills separated; that loans were mittee permitted; that the comreceivable; that overdrafts were
not

do

exchange was an evil; that its members made loans to themselves; and that the president and his from the bank, half of it being family had large sums
on

domestic

charged

branch to bills receivable.5 In 1828 the Portsmouth by suffering $148,000 proved that it had been badly managed Out to go to protest. out of $460,000 of notes discounted

of this
1
3

sum

$112,000was
to Biddle, March

likely to be lost.6 Renewals

2
*

were

8. D. 17, 23d Cong., 2d Sess., p. 78.

ibid., p. 110.

Lenox

5, 1828, B. P.

Same

to

same,

Feb. 29, 1832, ibid.

" the convince cashier is going to be in Philadelphia, and Biddle must It will occupy to do his duty. time than I more that he is bound of your cashier Suffice for the moment that chose to claim ; to state all that requires amendment. None should be made and the board seperate. discounts should not be made after

The

charged
account

People Bills receivable the by lodging a note under

to
"
"

'

good
more

the overdrawing like the Bank He

be allowed to overdraw their if not discounted they will make promise It need not be stated what In short it is no the result is it is now intended it was to be, than any other and what should
not
" "

'

extremes."

"remind the board to that they are acting contrary and Mr. Eathbone Some directors help themselves. for none these things." but they care of orders, Exchange is a great Evil is done that was Domestic on Committee "Our much Patronage in fact it is a species of Executive intended, and never very much I do not point out the instances." B. Lenox to a day when abused, and seldom
"

"

Biddle, Feb. 15, 1834, ibid.

"

Biddle to Ingham,

July 18, 1829." H. R. 460, 22d Cong., 1st Sess., p. 442.

THE

BRANCHES

AND

THEIR

ADMINISTRATION

395

common

every one The real peril, however, was branches, with the western from the opportunities granted them in dealings and arose
in inland

here, the rule being the collection of 10 per cent, hundred and twenty days.1

exchange,

as

Biddle

he gave utterance when business of the West.2 He knew well that bills were bought. were renewed, and that too many

tacitly admitted in 1834, to his dread of renewing the bill

constantly The

directors, however, and

were

certain
was
as

denied all knowledge of such operations, that the paper discounted was sound.3
so

Such ignorance
them

far from

being

an

excuse

that it condemned

inefficient and
Even

negligent

honorable
have

trust.

been

thoroughly

the executive informed until 1832.*

agents officersdo not

of
seem

an

to

In October,

York cashier at New prove he did not even that understand the custom of that office in respect to the receiving of branch notes.5 On the whole, however, loose methods, wilful disobedience,

1833, Jaudon's

letters to the

dishonesty, and reprehensible transactions were by no in the later years of Biddle' s so common even means administration as they had been in the early years of the
bank. capital was kept localized,though too much of it in the West was and Southwest,6 and though the employed business led to losses,they were not excessive. The total losses The
1 2

Extra
"

Globe, Vol. I, p. 256. in the crop these bills are mainly little afraid of reviving them."" Biddle

Unfortunately
I feel
a

cities,and

exchange of the western to Jaudon, Newport, July

16, 1834, ibid. 3J7. R. 121, 22d Cong., 2d Sess., pp. 58, 77, 89.
*"

which

I should be glad to receive from you an explanation of the business upon bills drawn St. Louis, Natchez, Nashville, Lexington, burgh, Cincinnati, Pittsupon founded, and how far the purchase are and Wheeling of such bills could be

restricted Pittsburg,

injurious consequences." producing without Nov. 10, 1832, ibid., p. 143.

to cashier at

"

Jaudon

to the

cashier

at

5 Jaudon 122, 123. 6

New

York,

Oct. 5, 1833, S. D. 17, 23d Cong., 2d Sess., pp.

New England Middle states

capital

$2,900,000
21,650,000

The

at Philadelphia

South West and ($16,450,000) must have

$2,500,000
Southwest
-

5,950,000

been

largely nominal.

396

THE

SECOND

BANK

OP

THE

UNITED

STATES

before August, 1822,

so $4,600,000, that

were

$3,005,000, while
more

in 1836 they

were

not

than

one-third

of the whole

lost in Biddle's presidency, which covered twoIn the long run thirds of the term of the bank's existence. beyond the figures given, because part of the losses were
had

been

the

debt was The calculation in never suspended paid. furnish an additional loss of 1836 that this would was but the greater part of this would also be due $1,389,000, of the firstfew years. That the so-called " the discounts on personal security was active debt" good, is proved by the fact that the bank sold the "active debt" at par for $15,716,726.' Of this sum of eighteen branches
to the operations
"

"

$8,990,000were

paid

for the

"

active debt

eight western and southwestern were Charleston office$2,073,745

indicate anything resembling losses on the investments.3
1

out of of seven offices, while for that at the paid.3 These figures do not
or

"

insolvency,

even

unusual

Ex. Doc. 118, 24th Cong., 2d Sess., p. 109.

Henry Carey calculated that from 1820 to 1836, inclusive, the loss on the not over security was one-fifth of 1 per cent, per capital loaned on personal "whole in the United States, etc., p. 29. The considerable losses took Credit System annum."
2

Ibid.

place in the South

and

West.
LOSSES

BUSINESS

Norfolk
Fayetteville
-

$ 38,000
....

1822-36 (round numbers) New Orleans

...

$ 12,000
-

91,000 105,000

Nashville

2,000 257,000

Charleston Savannah For

statistics

Lexington

....

81,000

see

H.

R.

460, 22d Cong.,

1st Sess., p. 244, and

Ex.

Doc.

118, 24th

Cong., 2d Sess., pp. 58, 59.

Between at
one

1836, when Natchez, office,probably

March,

cent,

of the
same

whole

debt.

"

this statement was year, made, and July of the same $405,280 the active debt went to protest, or 10 per of Ibid., p. 43. A considerable be lost. part of this would

have existed at some state of affairs must of the other offices. The same That of the office at Cincinnati netted holds as to the suspended debt. conclusion a loss of $140,846 ibid.,. 58); at Pittsburg ( p of $38,050." Ibid., p. 59. The
3

Moreover,
by

administration to $5,943,000, that in 1836 it amounted, so than sufficient to cover more enormously, losses might losses charged to all the heads under which the books of the come on fund bank. Besides this there was a Ibid., over $3,700,000." of surplus profits of losses on banking 83. There was houses. t a similar fund of $1,104,223,o cover p. also established
"

all losses President

were

amply covered Biddle's Cheves.

by

contingent

fund

which increased

this

had been fund

Ibid.
a

This would, of course, than more the surplus which was part of put

cover

any

under

indeed, such losses. The fund was, this head in 1831, with the purpose

THE

BRANCHES

AND

THEIR be

ADMINISTRATION

397

mistake to argue that because the loans were cordanc actually safe, therefore they were made in acing. with the principles of sound and conservative bankThis is not true, and if the bank had been forced to
Nevertheless
it would
a a crisis,such as that of 1819 or commercial pass through that of 1837, no one conversant with its situation can doubt that the losses would have been well-nigh ruinous.

The

office at New Orleans was that city was the emporium

West
other

Vast and Southwest. branches and from the

cause the most important, befor all the trade of the accumulations of funds from
state banks

inevitably took

of produce from place there, as the result of shipments western Pennsylvania, Ohio, Missouri, Kentucky, Tennessee,
and Mississippi.1 New Orleans was consequently the center of exchange dealings for the entire western and southwestern country, while its loans on personal security were always
extensive.

As

it

was

the most

distant office,it

independent

of control, and unusual care was selecting its officers and its board.2 Next in importance Both of these officesat times transacted stood New York.
a

almost in employed

was

that of the bank at Philadelphia, and from the beginning of 1831 to the end of 1834 this was the rule at New Orleans.3 The third branch in importance was

larger business than

" I shall propose this because the size of the surplus from Congress. fund of to increase the surplus fund of $1,750,000 nor the contingent if too ostensible might increase the cupidity of those with whom $2,100,000, which

of concealing I do not wish

we

"

may
1

hereafter

have

to deal."

"

Biddle

to Cadwalader,

Dec.

30, 1831, B. P.

The

being in 1829 34V" per cent, on the capital emcommensurate, ployed." profits were 30, 1830, P. L. B., Vol. Ill, pp. 209, 210. Biddle to C. J. Ingersoll, March

from

"We regard the office at New Orleans from its distance from the parent Bank, its intrinsic importance, and from its being the key of the Western offices,as manding decidedly superior to any other office, and dethe first on the whole establishment, in his fidelity indeed for the Cashier the qualities of perfect confidence
2 even

in

higher

degree

Biddle
3

to R. Gilmor,

in any situation be required would of Baltimore, Jan. 4, 1826, ibid., Vol. II, p. 90. than
TOTALS Jan. 30
"

in the Bank."

"

DISCOUNTS
July 30

AND

EXCHANGE
1831

1827

Jan. 30
-

July

30

Philadelphia New New York

-

$3,568,000 $3,517,000
3,432,000 4,367,000

Philadelphia
New

$5,678,000$8,789,000
3,273,000 4,370,000

York

Orleans

2,822,000

3,011,000

New

Orleans

7,500,000

10,282,000

398

THE

SECOND

BANK

OP

THE

UNITED

STATES

the center of exchange operathat at Charleston, which was tions for the South, though in the later years the officesat

Nashville

Louisville sometimes carried operations than did that at Charleston.

and

on

more

extended

The

centers

of the bank's operations would, therefore, be: Philadelphia and New York for the East, Charleston for the South, New Orleans for the Southwest, the West. In all twenty-six branches were established, though not The first than twenty-five existed at any one time. more located in the firstyear of the bank's existence, eighteen were
and re-established in 1825,1 the Chillicothe branch being discontinued in the latter
the other eight under President branch was discontinued in 1820

and Nashville

and Louisville for

Biddle.

The

nati Cincin-

ferred office in Connecticut was transyear; while the Middletown 2 to Hartford in the same Benton state in 1824. and
others boldly asserted that the Biddle administration setected the locations of the new officesfrom political tions, considerabut there is not a grain of evidence to support these

charges.

Had

such motives swayed

certainly have established many in the applications made by the most tempting inducements state secretary of the treasury, the governors of territories,

the directors, they would for they had more offices,

Compiled
1 2

from

the monthly
p. 176.

reports

of the bank.

NILES,

Vol. XXVIII,

business was to be secured On the ground that more Parsons, April 7, 1824, P. L. B., Vol. I, pp. 143, 144. Enoch

at Hartford.

"

Biddle

to

THE

BRANCHES

AND

THEIB

ADMINISTRATION

399

legislatures, statesmen, congressmen, business men. and prominent

politicians,state officials, One may say without

hesitation that if political motives had controlled, the bank would have established an office at Albany in response to

the petition of Martin Van Buren and the members of the Albany regency in 1826,1 for certainly the establishment at that place, and under such circumstances, would have saved
the bank from
new

for
The

bitter attacks. In all sixty-three applications branches were refused.2

in fact made with the purpose selection of the officeswas business interests and the interests of the of combining than Of offices located rather for government government.

business
more

purposes three may be designated,3 while of those directly beneficial to the bank than to the government
were

of the total of twenty-six offices were established virtually on the seaboard, to New Orleans.5 beginning at Portland, Me., and running located so as to be easily accesIn addition five offices were sible
there
not
more

than six.*

Twelve

out

to the coast;6

one
on

was

the Erie Canal ;8 one

Lake

placed on Champlain

Lake
;9
on one

Erie;7
at the

one source

on

of the Ohio;10 two on the Ohio;11 three and two on tributaries of the Ohio.13 the officesmay be divided Atlantic seaboard and seven with New Orleans as connecting systems.
i

the Mississippi;12

speaking, into nineteen connected with the taries, on the Mississippi and its tribulink between the two

Roughly

S. D. 17, 23d Cong., 2d Sess., pp. 251-3.

3

2/6id.
*

Portland,

Me.,

Norfolk,

Va.,

and

St. Louis.

Buffalo, Utica, Burlington, Portland, Me., Portsmouth, Norfolk,

Lexington,

Natchez,

Cincinnati.
New New

N. H., Boston, Savannah,

Providence,

York,

Philadelphia,

Baltimore,
6
8

Charleston,
Richmond, Vt.
New

Mobile, Natchez.
"

Orleans.
7

Hartford, Utica.

Washington,
9

Fayetteville, lOPittsburg.

Buffalo. Louisville.
the seaboard

Burlington,
and

Cincinnati

and

!2

St. Louis, Natchez,

cities.

Orleans.

The

last is counted

also among

13

Nashville

and

Lexington.

400
In

THE

SECOND
to

BANK
the

OP

THE

UNITED

STATES

regular offices, there were several located at Chillicothe Two were agencies of various kinds. business was to secure the whole and Cincinnati, whose
addition the early years of the bank and superintend sales of real estate. Agents appointed by the central board managed these agencies, and Biddle directed much time and attention to them, evolving a plan of operations for

debts incurred during

In 1823 the suspended debt the liquidation of the debts. $2,528,350. When at Cincinnati was any part of this was regularly paid, the secured by mortgage, and interest was debtor
was

not

disturbed;

the mortgage was usually to be purchased

cient, insuffithe security was where foreclosed and the property sold, by the bank, which then improved

it in whatever way possible. The finaloperation was the sale of the improved property in small parcels at a profit.1 The branch at Cincinnati was re-established as an aid to carrying

result of efficient management of these affairs, the sale of real estate in the West in the end not all the losses of the only secured returns sufficient to cover
out

this policy.

As

closed in Another 1836. agency, consisting of a single individual board, was established at Macon, appointed by the Savannah
were

early years, but yielded an excess.2 The agencies at Cincinnati and Chillicothe

Ga., in 1830, to purchase

4

inland bills of exchange.3

It

was

closed in 1834. The particular advantages of the branch system, evident from the experience of the Bank of the United States, were briefly as follows: The funds of the treasury were collected,
loss, I have been working to avert such a tremendous I determined at it for the great satisfaction of thinking, that every nearly eight years, and I have now Biddle to S. Smith, Nov. 5, 1830, P. L. B., VoL dollar of it will probably be saved."" III, pp. 385, 386. For plan see H. R. 460, 22d Cong., 1st Sess., p. 323.
1
"

*Ez. 3H.
*

Doc. 118, 24th Cong., 2d Sess., pp. 114, 115.

R. 460, 22d Cong., 1st Sess., pp. to John

480, 481.

Biddle

Gumming,

June

19, 1834, P. L. B., Vol. V, p. 237.

THE

BRANCHES

AND

THEIR

ADMINISTRATION

401

transferred, and disbursed only by means of the branches. In the dealings in exchange, both foreign and domestic, the bank's advantage was derived altogether from its system of holds good for the circulaThe same branches. statement tion

Without the branches it would have been of the bank. insignificant in quantity, and could not have been either the system furnished the general or uniform; as it was, country a currency better and cheaper than any other paper
currency branches
more

which
not

had yet existed in the United States. The this paper more convertible, but only made

issued in response to business elastic, since it was in the various localities, and withdrawn demands as the Another consequence of the possession demands died away. of branches to the West them. the supplying of loans at a cheaper rate out and South than would have been possible withA further result of this ability to supply cheap
was

loans

was

an

otherwise

impossible

development

and southern

industries, which was whatever its effect upon the bank

of western beneficial to those sections,

might be.

Again, the

possible only through control of the state-bank issues was the branches, so that the system not only gave the people a from the ravages of a better currency, but protected them It may be added that the branches were much poorer one.
than merely local banks, capable management of more phia at Philadelsince they received the attention of able men as well as that of the local directors; that the branches
sure

facilitatedthe distribution of loanable capital owned but not in one part of the Union and needed in another; employed of the bank much and that the system gave to the managers
valuable information about greater opportunities to secure than any other system could furnish. business and about men nished These various advantages, it is safe to assert, cannot be furin these by any bank without branches, and it was that the Bank of the United States exhibited its superiority

402

THE

SECOND

BANK

OP

THE

UNITED
ever

STATES
in

over

any other United States. The

banking

system

established

the

defects of the system were, however, great and perilous. In the last analysis all resolved themselves into a failure to exercise an adequate control over the offices. To
do this demanded

first-class branch

officials,omplete c

intelligence,

eternal watchfulness, and constant checking of the The conditions rendered operations of the distant branches. The denial of accommodaall this well-nigh impossible. tions
at the branches

made

the bank

there

was

an

and southern business. Loans in a new country are almost certain to be made on real-estate security and at long dates. This is not good Yet the Bank of the United States indulged in it, banking.
"

in the management the nature with a second

overwhelming This difficulty was of them. of western

unpopular, and consequently temptation to be lenient

involved

long loans, and finally of and the practice of renewing even that they would such loans with the understanding making be renewed, inevitably grew up. Stillmore serious was the
character of the branch On the whole they were in sound in determining

officersand the branch directorates. not men of knowledge and experience The president, who had most inbanking. fluence loans, had selected from these be taken from the state in which tion conditions which made the selecto be

directors, who the branch

was

in turn must

established

"

of competent officialsat times impossible. Moreover, had to deal with their neighbors, sometimes their these men holders relatives,and in the handling of the funds of distant stockinclined to care for their friends than for were more
Then, too, the presidents were insufficiently paid, talent could not be secured for meager salaries. and first-class it was In such cases ing almost vain to attempt the checkthe bank.
not until the cashiers were of the boards, and it was local carefully selected that any considerable check upon

THE

BRANCHES

AND

THEIB

ADMINISTRATION

403

banking

necessary and the requisite for a proper control of the offices were excessively difficult to secure because of the remoteness of the offices from the mother bank and the lack of first-ratemeans of
communication.

methods and Finally, the knowledge

reprehensible

loans

possible. investigations

was

It

took

weeks

to

New

Orleans and

the far western

get information from offices. Yet it would not

do to attempt Philadelphia,

of the branches from complete government had that been possible. The needs of even had to be consulted, and only men the local community of these. the place could justly measure The only adequate means these defects of remedying
the erection of a board at Philadelphia entirely separate from the local board, whose whole time of the branches. should have been given to the management

would

have

been

Biddle

made,1 and yet adopted it to the extent of having assistant cashiers appointed at the business was solely with the general parent office whose
when affairs of the bank.

objectedthe suggestion

to

relieved of the necessity of attending to local business at Philadelphia, the results would no doubt have been highly beneficial. Had the central board been confined to general questions of management
tution the instiand supervision, the danger of managing from the point of view of local Philadelphia interests have been avoided, and the opportunities for correcting

Had

he

himself

been

would bad
have

and methods been enormously

prohibiting increased.

unjustifiable
The

loans would difficulties municatio of com-

would have been solved in time by the extension of railroads and the introduction of the telegraph, while the lack of adequate banking knowledge in the local boards would have been remedied
i

by further experience.

The

cashier,

was

business separate, with a separate of keeping the Philadelphia suggestion to Biddle, Wilmington, January 30, 1826, li. P. made by E. J. Dupont

CHAPTER
THE

XVII
OF THE BANK

ISSUES

THE
note

charter of the Bank of the United States limited the circulation of that corporation to thirty-five million

dollars ;* stipulated that all notes

should be paid in specie on demand/ imposing a penalty of 12 per cent, per annum in case of all notes not so paid;3 prohibited the issue of * than five dollars ; and gave the notes of a less denomination
notes

partial legal-tender quality by making in all payments to the United States.6

a

them These

receivable

sions provi-

a evidently intended to render difficult suspension the part of the bank, to hinder it on of specie payments from making excessive issues, to restrict the circulation of and to establish a uniform circulatpaper for small sums, ing

were

for the use of the government. medium Under the various administrations there

was

difference in the management of the bank's presidency of William Jones the use of the notes for many period. The
a

considerable issues. In the

was

experienced of the embarrassments corporation had inaugurated at the beginning

sible responduring that

policy of expansion
issue and

criminate secured through the indiswhich was indiscriminate redemption of its notes

As the course always against of exchange was everywhere. the West and frequently against the South, this permitted the western and southern officesto issue their notes without The consequence was that the whatever. capital of the bank was drawn away to the South and West. tors To put an end to this perilous situation, the board of direcin August, 1818, prohibited the offices from redeeming any limitation
"
"

Charter,
Ibid.,
sec.

sec.

11, Art. 8.
*

See Appendix
Ibid.,
sec.

I.

2 6

ibid., ibid.,

sec.

11, Art. 12. 14.

17.

11, Art. 17.

sec.

404

ISSUES

OF

THE

BANK

405

notes
were

not

issued

by

By presented. of the bank's issues no common there was

to which the particular branch they this order the usefulness and currency
were

seriously impaired.

Once

more

medium and thus the of exchange, firstattempt to give the country a better currency through the agency of the Bank of the United States ended io failure.

policy of refusing to receive the notes except where by an attempt to they were supplemented made payable was a million from restrict the issues, and these fell off by over April to July, 1818, and by over Jones 1819.1 In this month March ary, three millions up to Januforced to retire, and in was

The

Langdon

Cheves

came

into control.

Cheves's policy led to a continuation of the contraction. It is true that the five-dollar notes of the bank were once
more

were

received at all the officesat par,2 but the western offices not permitted to issue any notes,3 and the circulation

lower and lower. In April, 1819, its volume was less than half that of April, 1818, and by December of 1819 it
went

Indeed, only a littleover one-third that of April, 1818. during Cheves's entire administration the issues were so 4 hardly possible to speak of a carefully restricted that it was circulation of the Bank of the United States in many parts
was

In so far, however, as of the country, notably in the West. there was a currency, it was sound and fairly uniform. In January, 1823, Cheves retired and Nicholas Biddle became Biddle was president of the bank. particularly
anxious that the circulation should in the South and West, where be less restricted, especially the advantages of a uniform had not been circulating medium since the enjoyed restrictions were placed upon the bank's issues. To supply
18oo chart,
2
*
*

p. 427.

Beport of the Bank

Ibid.,
sec.

Committee,

Sept. 25, 1818,

sec.

15, F., Vol. IV, p. 908.

U. 1819 to 1823 the average circulation was in $8,400,000 1818. See Appendix

Thus

from

$5,600,000, $4,800,000, $4,400,000,

V.

and

$5,300,000 against as

406

THE

SECOND

BANK

OP

THE

UNITED

STATES

this deficiency became

Biddle's anxious care, and to a great so, extent justly since the bank's profit and the country's equally involved in the restriction of the multiwelfare were farious
From this time the interissues of the state banks. est in the currency of the Bank of the United States centers in which the problem was solved. The around the manner difficulty twofold: the perils incurred by the course was of

exchange namely, the danger of having the capital of the had to be overinstitution shifted to the West and South come had to be found means ; and, in the second place, some It was impossible to to supply the corporation with notes.
" "

furnish notes sufficientfor the supply of the West and South under the provision in the charter that all notes must be signed

Under

the president and cashier of the parent office.1 impossible materially this check to the issues it was

by

to expand

the currency, and it reached a lower average in ties 1823 than in any other year.2 Biddle solved these difficulby his plan of dealing largely in inland exchange while issuing freely the bank's notes. By the buying of billswhen
notes
were were

issued,

fund

was

provided

out

they were presented paid when offices. In this way the danger of having the bank's capital shifted to the West and South was avoided.
notes

of which the at the Atlantic

this plan the note circulation of the bank was The expansion in issues is very easily materially increased. In 1827 the increase was the chart. on Been slight, but in

Under

a the volume of the currency was million and a half dollars larger than in 1826; in 1829 the increase had become

1828

$3,500,000, and
of 1826.3
1
2

in 1831

double the averor $9,500,000, just age

the circulation in five years

By thus doubling

H. R. 460, 22d Cong., 1st Sess., p. 53. In 1824 the average results brought
"

was

before

retired.
3

This supply

was,

higher slightly higher, and in 1825 it was by the reissue of some old notes which about however, Ibid., p. 54. soon exhausted.
"

than

ever

had

been

See Appendix

V and

Appendix

XII.

ISSUES

OP

THE

BANK

407

the currency of the Bank of the United States at last became truly national and fulfilled the purposes for which it was

established. The notes were in excellent repute, and circulated from Montreal to the City of Mexico, the issues of the state banks were restrained, carried on with more and the business of the country was facilitythan at any other time between 1811 and 1860. intended
when
the bank
was

asserted during the bank's existence Yet, if they are compared that its issues were excessive. to which they might have attained under the with the sum excessnever restriction imposed by the charter, they were ive.

It

was

frequently

circulation of notes to the ever out was extent of $35,000,000, and the highest sum The highest an$25,000,000,nd this only for one month. a nual less than two-thirds of the $22,340,000, average was
charter permitted
a

The

three-fourths of the capital stock. Not until 1831, when bank's existence had passed, did the issues average over or $15,000,000, less than one-half the amount of the capital.1

looks, then, to the legislative restriction, and to be admitted that the note issues were this alone, it must though the incitements to note issues never excessive, even If
one

But, much greater at that time than they are now. taking the issues after 1830, it is only if one looks at nothing be said to be but the legislative restriction that they can
were so

limited.

here, indeed, only an illustration of the truth that there is no definite proportion between a bank's has

One

tion capital and its note circulation. The attempt to fix a proporbetween them is absurd. The distribution of the circulation is of interest as showing what parts of the by the bank.

Union
The

currency

chiefly supplied with a do not show figures, of course,

were

of the bank's notes were actually what amount circulating in had been the regions considered, but only what amounts issued by the branches in these sections.
1

See Appendix

V and

Appendix

XII.

408

THE

SECOND

BANK

OP

THE

UNITED
fl

STATES

,"

S-C CO -^55

^ """
i-l

jll
CD
"w
CO

to

J)

.S

O
01

"11 -a
o

.ag
"*

-3
o

""
01

ft*

S sg
01

hj"" "
r-t

a
t^

S
*"*

eO

"O
C-

iO
t-

^"S

t*

si
CC

I
I
"

^J

|| t!

S2S3S?

1
u

ft
-"

m
en
.
.

oi

"

"O

5
as
"

:
;

:S
; as

: ;

"
hw
T3
s

:S"M
to-"-M

"sisgl a
*

^rt^

F.,
ngs,

Ws^JS
^W=1

,1 "

SUSP

-S-S"" fe^-Sg

"t*

-| "
"iH

ISSUES
The New

OP

THE

BANK

409

supplied with any Bank large part of their currency by the of the United States. In September, 1818, the amount of the bank's notes
not

England

states

were

issued in that section the bank's

was

entire note
amount

littleless than one-thirteenth of small relatively circulation. It was

a

to the whole

issued, and

it

was

itself, the

sum

being

$518,415. One

small considered in year later it was much

a

less, but relatively to the entire circulation it was In January, excess of one-ninth of the whole. proportion year it was increased
was

littlein

1823, the of this had not

about one-eleventh, and in December The issues in New England one-tenth.

appreciable extent, either relatively or By September, 1830, the total had absolutely, since 1818. materially increased, but not to anything like the extent that any
At that time it amounted circulation had. By to only one-twentieth of the sum of the bank's issues. issues were England January, 1832, the New about what twenty-ninth part they had been in 1830, and were only one the entire note

to

It is evident, therefore, that New England of the whole. largely outside the sphere of the bank's circulation. It was tion, a favorite field for the operations of the institunever was

Undoubtedly this and it grew less so as time passed. largely due to the excellent system of state banks in was England. There was littleneed operation throughout New
of
a

national bank in these states. In the middle states the issues were

more

extensive.

Yet

even

here they In

were

not

so

large

as

1818, not A year later the proportion issued in this part of the Union. favorable, being about one in three, a result due more was to the contraction of 1818"19 which materially limited the

September,

might naturally be expected. dollar in seven one was

After this time the offices in southern and western issues. issued so large a proportion of the the middle states never from one-fourth to onenote circulation. In 1823 it was

410

THE

SECOND

BANK

OP

THE

UNITED

STATES

In 1830 it was fifth of the whole. still the same, and in 1832 it had not increased to any marked degree. ered Considin themselves, the sums show an increase from about a in 1830, million in the early years to three times that sum and
to five times

that

sum

in 1832.

On

ever, the whole, how-

considering how

in both the middle the issues in these sections was surprisingly smalL1 The truth is that the sphere of the bank's operations was always considered to be rather in the South and West than in the East and North, and the figures show that this the case in respect to its issues. In September, 1818,
was over

extended commercial operations were and New England states, the amount of

by "the half of them were made in the South, meaning " South the branches of the bank located in the states, of the and Dixon's line. A year original thirteen, south of Mason later, after the contraction of 1818-19, the proportion here was a littleless than one-third of the whole, and the total, considered absolutely, had fallen off in a remarkable manner. In January, 1823, the issues
were

culatio again over half the totalcirbut did not reach nearly so high a figure as in 1818. In 1830 the proportion exceeded one-fourth, but the absolute

before. greater than ever of the issues was There is a further large increase in 1832, but the proportion These facts show that the about the same. remained
amount

South

the principal field of the bank's tant operations, and that it remained until the end a very imporfor its smaller relative importance at The reason one.
was

in the beginning

later date is to be found

in the

bank's dealings in the Southwest

great extension and West.

was
was

of the

As regards these sections there course of affairs. The Southwest

slightly different represented in the

a

early years of the institution only by the great officeat New Orleans. Its issues were very extended and usually exceeded
i

See table of figures for the circulation of the bank

at various

periods, p. 408.

ISSUES
the

OF

THE

BANK

411

But it was not of all those made in New England. an especially until after 1827 that the Southwest became In September, territory for the bank's issues. important
sum

total of the note issues was only a little over a half million less than that of the southern offices. In 1832 leans, the same continued to be the case, the officesof New Or-

1830, the

Mobile, and Natchez

notes emitted.

issuing

full fourth of all the

see, strictly speaking, at the Kentucky, Tennesthe issues followed about the same and Ohio branches In September, 1818, they agas in the Southwest. course gregate In the West
"
"

about one-eighth of the whole, being almost equal to the sum of the issues in the middle states. In proportion interests of these new to the population and commercial
states this circulation
was enormous.

It

was

in respect to

the

West,

made total was

therefore, that the most energetic efforts were to restrict the circulation. In September, 1819, the
not one-third that of the year previous, and in proportion less than oneto the entire note circulation was

By January, 1823, the active westfifteenth of the whole. ern and in December of the same officesissued only $45,820, insignificant sums which hardly permit year only $16,785
"

of western issues. After 1827, however, as a plan of result of the invention of branch drafts and the new extensive operations in exchange, the change is remarkable. In September, 1830, the issues were over $3,600,000 an
one

to speak

"

of that issued in the middle states and of those of the middle and New almost equal to the sum The proportion is a little England states taken together.
amount

in

excess

less than one-fourth of the whole, and this proportion is retained in 1832, which year shows a great increase in the being over issues of the West, the amount $5,000,000.
From this analysis it is
seen

that the South

was

for

one-

half the

bank's

existence

the principal field for the note

412

THE

SECOND

BANK

OP

THE

UNITED

STATES

issues.

After 1827 the West

Taking equal importance. their total issues equal about one-half of the whole. Taking South, Southwest, and West together, in comparison with
the New

and Southwest rise to about Southwest and West together,

and the middle states, these sections in September, 1818, had almost four times as great a note circulation littleover in September, 1819, it was a that of the East and from North ; in 1823 it was 1830, it was three times
more

England

tember, than double ; in Sep-

$3,400,000in 1823
was

greater, and had increased to $11,400,000. In 1832 the proportion

the increase since 1830 great, though larger than during any other two years of the bank's was history.
not
so

for this of course, many excellent reasons be given in can state of affairs,but the principal reasons Banking transactions in these regions were one sentence:
There
were,

for note profitable than elsewhere and the demand issues was greater. But at the bottom of these facts lay a
more

serious danger

to the bank.

It will not

escape notice that

at the periods of great expansion, which were also periods to the Bank of the United States, the of embarrassment

of the currency in these sections was especially The two periods of greatest expansion are noteworthy. marked by the years 1818 and 1832, and both these years
expansion hard pressed to get command of its means. In 1818-19, as clearly shown in the second chapter, the note issues of the South and West ran steadily in enormous
saw

the bank

streams

to the

The

southern
means

furnish poured
an

there. and were redeemed branches could not and did not and western for their redemption. On the contrary, they

East

and

North

out ever-increasing volumes

incessant

demand

for

more

of notes in response to This simply meant currency.

that the southern and western borrowers invested the loans improvements, by the bank in permanent made and conse-

ISSUES

OF

THE

BANK

413

these became due.1 quently could not pay their debts when Biddle's Under A similar state of affairs existed in 1832. became thoroughly system, which effective in 1827, the

business of the West enormously, and there

and
was

Southwest

had

been

increased

naturally an immense stimulus to loans which were the note issues. Again virtually permanent mass were made ; again the immense of notes running to the eastern offices embarrassed the bank, which could

only

to with great difficulty find the means with which redeem them ; again the West was called upon to settle,and again immediate settlement was found impossible.

Nashville the cashier of the branch writes that all The situation at bills offered for collection are renewed.2 New Orleans was precisely similar,3while at Louisville the
From
cashier admitted that the embarrassments of the branch were caused by a too great extension of its credit,*and that bills not collected but sent to Louisville for collection were

So, too, the cashier at Cincinnati remarks that bills of exchange as good are offered to be applied 5 to discounted notes they are purchased."
renewed. "as fast

yet, while the West could not discharge its debts, of any sum and while the circulation there was far in excess before attained, the cry was stillfor more it had ever currency.
And

The money" "no and that

of

cashier at Nashville declares that "the scarcity is "unexampled," in Alabama and Tennessee portion of the Union contains a more suffering

than does population, for lack of circulating medium, 6 Yet in April the portion of which this office is the focus." the circulation credited to the Nashville office was $1,609,000 a note circulation greater than that of any other office except those of Philadelphia and New Orleans. The cashier
"

i On April 1, 1819, the debt due 27, and MILES., Vol. XXIII, p. 94.

in Kentucky

and

Ohio

was

CHEVES, $6,351,000."

p.

2"T. R. 121, 22d Cong., 2d Sess., p. 150, Oct. 21, 1832.

*

ibid., p. 47, Nov.

24, 1832.

Ibid., p. 145, Nov. 18, 1832.

ibid., p. 148.

/" id., pp.

150, 151, Oct. 21, 1832.

414

THE

SECOND

BANK

OF

THE

UNITED

STATES

at

Cincinnati

utters

for money" circulation of the Cincinnati branch "demand

like complaints, asserting that the is "enormous,"1 though in April the

was

in

excess

of

$1,100,-

mass of this enormous of notes ? To this question the response was that it had passed to the East. in the West was It is plain, then, that the demand not

000.

What

had become

for
for

circulating medium,

means

permanent
new

but for capital. It was a demand to make what, in the nature of the case, would be investments, for means to assist in developing a

Had the issues fulfilled the real duties of a country. for "a circulatin currency there would have been no such demand The truth was frankly and innocently medium." expressed by Senator Ewing,
of
our

when
"

he said: "In

country, capital accumulated not, and, in the very nature of things, cannot, exist; and there, of all places else, is there need of capital to sustain
"

these sections does capital

the enterprise and aid the industry of the people." Two important questions about any paper of the most Is it elastic? currency are these: Is it truly convertible? The

provisions of the charter show that the paper issues of in specie on demand. legally redeemable were the bank This is convertibility, but there are many degrees of convertibil be redeemable at a distant paper may may be such point ; or the business habits of the community individuals who wish to convert paper into as to embarrass
The

which will hinder from any attempt to get specie for the paper which most men In any of these cases they hold. convertibility is only specie ;
or

means

may

be used by

bank

partial,and in any of them depreciation is likely to result. the conditions under which One must, therefore, examine the paper of the Bank of the United States was redeemable with these considerations in mind.
i"T. R. 121, 22d Cong., 2d Sess., p. 149, Nov.
2

21, 1832.

C. D., Vol. VIII, Part

I, p. 1255, July 11, 1832.

ISSUES

OF

THE

BANK

415

issues of the bank were at their best in the firstyear of its existence. As the bank could not suspend specie payments, and as its notes were receivable in all payments due the

The

government, beginning.

complete. excellent. As all the other officesat par. The results were today everyone accepts a national-bank note without caring to ascertain where it was issued, so at that time everyone of the United States, willingly accepted a note of the Bank because wherever there was at its face value.
a

the credit of these notes was excellent from the A third circumstance made convertibility fairly Each office of the bank received the notes of

branch

the note would such

notes
were

be redeemed
even

Indeed,

superior to specie for the purpose of remittance. these circumstances there could be no depreciation.

Under

conditions existing in the United States were such that this excellent condition of the currency could not continue, and, as already pointed out, the decided in August, 1818, that the universal management the

Unfortunately

business

Henceforth cease. the receivability of the notes should to be redeemed only where issued.1 There were notes were now nineteen distinct currencies of the Bank of the United considerable extent the country lost one of the principal benefits sought in the establishment of the The bank. was not completely currency convertible, and itself in this want of complete convertibility manifested

States, and to

This began with the order condepreciation of the notes. cluding in August, their universal receivability, namely, 1818, and lasted until the bank went out of existence. The depreciation In 1819, for the same. always instance, the bank restored the quality of universal redeemability in respect to its five-dollar notes,2 and this, of course,
was

not

diminished
1
or on

the rate of depreciation materially.

notes

F., Vol. Ill, p. 367.

deposit, any
2

The offices were but their own.

not to pay,

or

receive in payment

of debts,

Order of October

16, 1819, MILES,

Vol. XVII, p. 115 ; F., Vol. Ill, pp. 906, 909, sec. 15.

416

THE

SECOND

BANK

OF

THE

UNITED

STATES

Immediately of each
were

branch

after the order to cease receiving the notes indiscriminately at every branch, the notes

Exact figures are available only quoted at a discount. On September 7, 1818, all in the case of Philadelphia. branch notes were at a discount of 1 per cent, in that city, and they remained at this rate of depreciation until March 1,

1819, when they were quoted July the quotation was even
cent.

at
more

"

On

At this figure they remained March 3, 1823, the depreciation

In per cent, discount. favorable, being " per for the next four years.
at Philadelphia
was

" per per cent., and on the 2d of June in that year it was At this rate it remained cent.1 until July, 1824, when all depreciation on small notes ceased so far as Philadelphia
large notes expired concerned, and the depreciation on due to the policy now with the year. This result was adopted of receiving all notes at par in Philadelphia.2
was

figures given for depreciation during this period are for the branch-bank The issues of Boston, notes generally. count. Middletown, were at an even and Portsmouth greater disThe

In

September,

1820, these

were

depreciated

2 per cent, all through equal until June, 1822.3 On the 4th of that month they were Why in value to other branch notes. the paper of these branches should have suffered greater depreciation than that

cent, in Philadelphia, and

4 per 1821, and

of the others it is not possible to say. The recovery of the complete credit of branch notes at Philadelphia after six years of depreciation was confined to that city. In the other towns and cities where the bank had branches value. Thus the branches
1 "
"

the notes McDuffie,

were

stillworth less than their face though he asserted that the notes of " indiscriminately," everywhere paid
were

See Appendix
"

XI for the figures.

Bank
of the United

1823.

The

States receives the notes

of all its branches."

GOUGE
3

(Cobbett's edition),p. 136.

XI.

See Appendix

ISSUES

OF

THE

BANK

417

a sometimes admitted in his report of 1830 that there was discount, though it was never ing equal to the cost of transportit was specie.1 In 1833 proved conclusively that at

the office had not received the paper of other branches at par from state banks, and the notes had consequently always been at a discount.2 This ceased with Baltimore from

1820

October, 1833, when the bank adopted the policy of receiving all its notes at par from state banks along the Atlantic The condition of affairs in New York was the same. coast.
office refused branch notes from state banks and the For fifteen depreciated ^ per cent. notes were commonly years brokers had bought these notes from state banks at a The discount of from J to ^ per cent., and had then sold them at having duty bonds to pay. a smaller discount to merchants The latter parted with them to the Bank of the United States This was true in respect to all but five-dollarnotes, at par.
which
were

taken
were

at their face value.

"

Notes

because uncurrent," not called Nevertheless so were taken by the such notes received. state banks from individuals at par on deposit, or in payment the same of debt.8 At Mobile in Alabama conditions Nor was this all. It applied to the notes of the branches.4 branches sometimes is certain that some refused to receive the notes of other branches even at a discount, a fact which would tually make such paper, if far from its place of issue, virPresident Biddle's testimony corroboirredeemable. rated
the testimony

of other they were

nominat de-

He declared that all notes of of others. five dollars were received indiscriminately at all the branches were not necessarily, of the bank; notes of a larger denomination
but

usually, received
account

at their
were

face value; all notes of

course

offered
i

on

of government

received at
Ibid., pp. 9-12.

C. D., Vol. VIII, Part

II, p. 1877, and H. R. 358, 21st Cong., 1st Sess., pp. 14, 15.
3

2S. D. 24, 23d Cong., 1st Sess., pp. 6, 7. */6td., p. 4. 4,1833.

Letter

from

branch

of Bank

of the State

of Alabama,

November

418

THE

SECOND

BANK

OF

THE

UNITED

STATES

par; the branch

mand issuing the notes paid all of them on deat par, as also did the parent office at Philadelphia.1 The conclusions which one is justified in deducing from

follows: There was the above facts may be summarized as This depreciation, however, always depreciation after 1818. varied, being greater from 1818 to 1825 than it was later.

Moreover, the paper was depreciated because it wandered far from its place of issue and redemption, not because it was The amount conside irredeemable. of depreciation, however, was in-

^ and ^
moreover,

ranging from 1 per cent, in the early years to per cent, in the later years of the bank.2 All notes, were redeemable at Philadelphia as well as at their

receivable at par place of issue; all notes of five dollars were frequently all notes of all denominations were everywhere; received at all the officesfrom individuals, but not from banks;
all were

receivable in payment

of government
were,

dues.

Finally,

all notes might be, and sometimes

refused, except at the The

places where made payable. Now, this is not true convertibility.

sound

uniform enough ; but a enough ; it was not circulate at its face value except in the immediate borhood neighthe facts when of its place of issue. However,
are

currency was part of it did

justly weighed,
was

bank's existence
were

the matter in the later years of the insignificant. All the five-dollar notes

at par, and these constituted one-sixth of the entire currency equal in value to two-thirds of of the bank, and were

Fives and tens comprised by all odds the greater part of the bank's circulation,so far as the usual transactions between individuals were concerned, and the its ten-dollar notes.3
notes in the hands
1 2

of individuals usually passed at their face

8. D. 98, 22d Cong., 1st Sess., p. 3.

S. D. 79, 22d Cong., 1st Sess., p. 3, and

Except

in the

case

of the New

England

offices.

GALLATIN, Considerations the Currency Banking System on and States, p. 57. See also ADAMS, Gallatin's Writings, Vol. III. This was to suppose 1829. There is no reason that the proportion ever decreased.
3

of the United
for the year

ISSUES

OP

THE

BANK

419

but the state banks took them from their at par; so did the Bank customers of the United States, received all of them at their face value. and the government value.
so,

Not only

Consequently, in ordinary circumstances, depreciation could It might be individuals. hardly have existed as between
then that, though not comconvertibility was plete, concluded five dollars were below par when though notes of over they circulated outside of the immediate vicinity of the branch
as

which

issued them,

This possible under in asserted, saying that the paper of the Bank of England like circumstances suffered an equal depreciation.1 Yet this conclusion is not quite borne out by the facts, for after October, 1833, the bank received its paper from many state its character. banks at par, and this immediately improved The

yet the currency the system in use.

was

as

convertible Gallatin

currency, therefore, admitted of improvement.2 Moreover, there is another important point to be noted in reference to the convertibility of the bank's issues. The
hostile to payments of specie business habits of the day were for bank notes, and it was very unusual for specie to be drawn Raguet complains from banks in exchange for their notes. of this fact in 1820, and declares that while it exists there is no real safeguard against an inconvertible paper currency.3 Crawford also lays stress upon this condition of affairs.*

That it applied in the case its history is well known.

the individual who specie. Banks refused accommodations

1

of the bank and lasted all through Nor would public opinion support demanded the payment of obligations in
to
men

of this class,

Considerations

on

the Currency,

p. 341.

that of their not being receivprincipal objection to the bank's notes was able The charter in 1832 had a clause compelling the bank to the state banks. IV, sec. 4 of debts." See Appendix receive all its notes from state banks in payment the bill. of
from
3

The

RAGUET,

On

Banking,

p. 297, report

to Pennsylvania

senate,

Jan. 29, 1820.

Crawford

to Senate

Committee

on

Finance,

Dec.

29, 1818, F., Vol. Ill, p. 394;

and

report

to House

of Representatives,

Feb. 24, 1820, ibid., p. 496.

420

THE

SECOND

BANK

OP

THE

UNITED

STATES
to stand

and

very few
a

were

bold enough

or

out against

forces of pressure so powerful public opinion and the refusal of bank accommodations.1 bankers themselves. The same conditions existed among

strong enough as the combined

Consequently
upon

there

was

no
"

immediate,
a

automatic

check

the issues of the bank

necessary Otherwise demand

check which is absolutely where a paper currency is almost entirely used. there is nothing to hinder inflation except the

for specie abroad. This was the case with the currency of the United States during the entire existence of The result was that the currency was the bank. apt to be expanded
at
one

time, and, when the foreign check little came, unduly contracted.2 As deposits were used, the suffered severely at whole business of the country commonly

unduly

every contraction and was unhealthily stimulated at every The currency, moreover, was not composed ciently suffiexpansion. of of specie to make it in any degree stable,the amount from about one-sixth to one-eighth of the specie ranging

whole, most of it held by the banks as a reserve.3 It was the opinion of the Senate Committee in 1830, however, that the currency had " for

on

Finance

some

years

past

....

been

improving

of a medium solvent banks in lieu of those of of the paper of more inferior credit ;" and that the inconveniences stillremaining
1

by the infusion into the circulating larger portion of coin, and the substitution

RAQUET, "There

On

Banking,

p. 102.

States. exchange "The

is no example in history of a currency similar It is banknotes issued without restraint, unless when prevails

to that
a

high

of the United rate of foreign

into coin, is specious banknotes existence of a legal right to convert imposing, inviting the judgment to conclude that it must be an effective restraint and to demand possess upon coin is essentially over-issues : but the authority which we in its effects from an indispensable necessity constantly and daily to require different coin."" C. P. White, report 23d Cong., 1st Sess., p. 24.
3

of the Select Committee

on

Coins, Feb. 19, 1834, H. R. 278,

See Triennial

Report

of

the Bank
"

of the

United

States, 1831, NILES, of the precious

Vol. XLI,
"

p.

115.
"

the committee accessible in the banks

Here

the great mass speaks of of the Atlantic cities."

metals

lying

ISSUES
"

OP

THE

BANK
"

421
in

would

be

certainly sounder in that year been since the war of 1812, but no remarkable it became improvement took place, and when certain that period.1 than it had
was

wholly and The currency

insensibly remedied

brief

of the United States would not be re-chartered the increased instead of licentious issues of the state banks
the Bank

diminishing

quoted bank:
Our

rency. of the curcondition of the mass The whole situation is tersely expressed in an oftextract from a speech of Webster's in favor of the the unsound

system, dispenses too far, in my judgment, It is true that our circulating with the use of gold and silver is all redeemable in gold and silver. Legally speaking, paper
system,
as a

it is all convertible into specie at the will of the holder. But a legal convertibilityis not sufficient. There must be an actual, mere practical, never-ceasing convertibility. This, I think, is not, at present, sufficiently secured.2

The process of of that term. too difficult to be persisted in was getting specie on demand depreciated to a slight by most men, and the notes were the extent because payable only where issued. Consequently ment, paper currency of the day admitted of considerable improveand the efforts of men who wished a better currency
"

paper of the bank convertible in the full sense

The

was,

therefore, far from

being

men

of whom But

Benton

was

type

"

were

to

considerable

extent

conditions. it must never be forgotten that, while the paper of the Bank of the United States was not in as good a state have been, it was stillfar preferable to the paper as it might of the state banks, and that the choice at the time lay between In such circumstances the issues of the two systems. The state a sensible man could not hesitate which to choose. banks poured out streams of paper of a smaller denomination than
1 8.

by justifiedthe

$5, even

as

low

as

$1
2

"

paper that

was

redeemable
25, 1832.

D. 50, 22d Cong., 1st Sess., p. 23.

#., vol. VIII, Part I, p. 958, May "?.

422

THE

SECOND

BANE

OF

THE

UNITED

STATES

only at the place of issue, and

elsewhere ; paper which was even where issued; paper of all degrees of credit. On a done and all that had to be faced, just review of all that was States is not censurable for the of the United fact that its paper was The not completely redeemable. currency was infinitelybetter than that supplied before the better than any much establishment of the bank; it was the Bank

which had hardly any currency frequently not redeemable

other paper after that event ; and it was gladly taken everywhere One may justly throughout the country. conclude with Gallatin that the bank was, in the circumstances of that

day, the only The

means

to insure

"a

sound

currency"

and

"a

just performance
banking

of contracts."1 methods of that time

elasticity one of far greater import because the important element of the circulation now consists of the deposits; then it consisted of the note issues of This fact is the significant one in every comparison of banks. banking
more

made the question of than it is nowadays,

but in no consideration is it operations then and now, important than in this of the elasticity of the currency. The bank's advocates always claimed for it the particular

One of the greatest virtue of furnishing an elastic currency. on advantages of its paper, said the Senate Committee Finance in 1830, is "that it bears a proper relation to the
increasing real business and exchanges of the country ; with the wants of the active operations of society, and inactivity."2 diminishing as these subside, into comparative
. .
.

bank's organization its issues much more elastic than those of the made Only present national banks, or than those of state banks. The claim
was

certainly not baseless.

The

through

of the system of branches, such as the Bank United States possessed, can a bank currency be completely
a
1 Gallatin to Robert Vol. II, p. 426.

Walsh,

Jr., April

27, 1830, ADAMS,

Gallatiri's Writings,

8. D. 50, 22d Cong., 1st Sess., p. 23.

ISSUES

OF

THE

BANK

423

diately elastic,for it is only so that the currency needed can immeMoreover, it is be supplied where it is wanted. apparent that a great bank with a large capital under its more much easily and safely control can meet local demands Particularly would such a bank meet small bank. for a currency of small towns and villages a the demands be met. On demand which in many instances cannot now
than
a
"

the other hand, the bank's connection with the government elasticity of its at times seriously affected the complete issues-. Thus, whenever a portion of the national debt was

discharged,

the

bank

was

called upon

for large

sums

specie. At such times a contraction of the issues was seriously interfered with. and the property of elasticitywas Again, when the government revenues yielded a surplus, the bank had on its hands an enormous amount of capital for

of likely,

had to be found. Acting under the stimulus use which some of the necessity, an expansion in the business of the bank then took place, and there were over-issues of its paper. long It may be argued that over-issues could not occur so in specie, or, if was as the currency redeemable on demand corthey could occur, and immediately only a temporary rected The opinion expressed by expansion would ensue.
President

Biddle demand,

was can

that
never

specie

on

paper currency, redeemable be long redundant, because

in
an

to a foreign to redundancy will lead at once approach for the precious metals ; to an exportation of specie ; demand to a rise in its price; to an immediate redemption of notes in order to obtain silver and gold, and hence to an effective

Meanwhile, however, the currency check upon over-issues.1 had been redundant ; a considerable time had been necessary
to correct the exist.
error, were

There

and therefore complete elasticitydid not for this state of affairs: the two reasons
was

public opinion of the country

i

hostile to the practice of

April 10, 1828. See for extracts

Article in the National

Gazette

GOUGE

(Cobbett's edition),pp.

of Philadelphia, 150-55.

424

THE

SECOND

BANK

OF

THE

UNITED

STATES

drawing

specie from the bank, and the rule which allowed specie to be paid out only at the bank and the issuing officesinterfered In these with the frequent presentation of the notes.
circumstances,

unhealthy expansions in the currency were not only probable, but inevitable. Consequently, if the mass to be of the bank's paper was had to be other effective means completely elastic, some found
for returning the note circulation upon the bank when One the transactions upon which it was issued had ceased. to the governwas means provided in the payments made ment.
mous collected at all the seaports ; enorin through sums came the land offices and also were through the post-offices.1 All these payments made into the Bank United States, and most of them in of the
were

Tariff dues

notes issued by that bank.

Here

was

efficientmeans of retiring its issues. the course of trade in the United States.
a

ceaseless and an everAnother resulted from There

flow of the bank's circulation from the West the Atlantic cities of the North and East, a consequence of the commercial relations of these sections to one another, which

always and South to

was

the West and South debtors to the East and North. made J The amount of notes received in a single year at the Atlanfrom houses; 42 land 343 customs government receives its revenues 8,004 post offices ; 134 receivers of internal revenue 37 marshals 33 clerks of ; ; offices; Report of the Finance Committee 29. 1830, S. D. 50, courts."" of the Senate, March

i"The

22d Cong., 1st Sess., p. 21. According to this report the government in the ten years preceding Jan. 1, 1830, $230,068,000. these sources
2

received New

from

Amounts and

of branch Baltimore

notes
:

received

at

the offices at Boston,

York, Philadelphia,

For

1828 to 1831

see

H,

R. 460, 22d Cong., 1st Sess., p. 534; for 1832, S. D. 82, 22d Cong.,

2d Sess., p. 3.

ISSUES largely tic offices,

OP

THE

BANK

425

of the exchanges, was very large. In addition a great deal of paper was received by the inland offices. In these ways millions of dollars in the notes of the bank were retired every month.
as
a

result of the

course

paper taken up in 1832 by offices which had not issued to about forty million dollars.1 What it amounted amount individual issues the offices received is not of their own The

stated.

It must,

however,

note circulation in 1832 it is evident that at least twice its volume was redeemed It is probable that this rule would hold good in that year.

As the have been considerable. lars, averaged about twenty million dol-

for most
a

years.

Thus

there

was

constant

constant

renewal of the issues, which degree of elasticity.

redemption and insured a very considerabl

Speaking
were

generally, then, it can

elastic,and a by the accompanying as revealed chart, will add something The firstevidence, conclusive specific to this general conclusion. in itself as to the elasticity of the note circulation, between the loans of the bank is the close correspondence and its issues. The chart shows that as the loans increased the issues the issues increased, as the loans diminished

said that the issues consideration of the issues and deposits,

be

diminished.

is elasticity. Carrying the analysis a littlefarther, it will be evident that the loans and issues fluctuate generally in a systematic and not in an irregular

This

greater at In the at others. certain periods of the year than it was the demand summer was usually less than during the rest of This was due to the fact that between two crops the year.
credits

manner.

The

demand

for banking

was

diminished. As a the necessity for banking accommodations by the need of credit to a rule determined general rule the crop the circulation increased from grow and to move
" "

October to April, then either remained

1

at the level attained

8. D. 82, 22d Cong., 2d Sess., p. 3.

426

THE

SECOND

BANK

OF

THE

UNITED

STATES

or

rose

slightly until July ; from July These to a considerable degree.

ished to October it diminvariations amount

to

That there are exceptions several millions in a few months. to this general rule goes without saying. Where there are be explained either on the exceptions, however, they can of something ground unusual in the transactions of the bank, or something unusual in the commercial condition of Thus the rule for fluctuation will not apply the country.
at all during the entire period in which

Cheves

The explanation the affairs of the bank. Cheves almost put an end to that part of the bank's business based upon the southern and western trade, in which was

administered is not far to seek.

Necessarily, the fluctuations in other words upon the crop. by demands having the currency could not be determined reference to the crop.
the periods of fluctuation are is only additional evidence of the elasticityof the Again in 1831 the issues did not decrease through months.

That

changed issues.
the
was summer a

The

reason

was

general expansion could not be diminished.1

of such Similarly in 1832"33

that in this year there potency that the issues

there is
a

contraction where regularly there should be an expansion. This is explained by the fact that the bank had to secure a
a stock of specie in order to redeem debt. in 1833"34 Again there was

portion of the public

a

similar contraction, because the bank was operating to create distress. In the nature of the case, deposits are elastic. The line in the chart resulting from shows
a

wonderful

accommodations." word to include the deposits,

deposits and issues correspondence with the line for "total The circulation of the bank, using the

combining

was

certainly elastic in

high

degree.2
1

S. D. 17, 23d Cong., 2d Sess., p. 97.

2 The importance today largely because the very question of elasticity possesses inelastic currency the United States has been productive injury of considerable of It is admitted by most that the evils incito the business interests of the country.

ISSUES

OP

THE

BANK

427

CHART

VI

j-PO
"4dy "mf

3-inr

\'V"0

Widy "1=O

^5 i i

VdyS

ISSUES

AND

DEPOSITS
of each

(Computed

at end

month)

428

THE

SECOND

BANK

OP

THE

UNITED

STATES

That, in considering only the note issues of the bank, all the elements of the circulation have not been touched upon

It is necessary to add to these the goes without saying. bills of bank drafts in circulation, the deposits, and even transferred by indorsement. exchange in so far as these were All these elements were of of importance, but in the case billsof exchange and bank drafts it is impossible to determine
the amounts, and therefore they cannot be considered. Gallatin,indeed, is authority for the statement that the drafts in 1829 were equal to a million dollars in the circulation.1

But while this gives information which is of value for 1829, it does not help in the least toward determining the amount

of that species of currency

for other years. It is only that in the early years of a varying sum, certain that it was to very little, the bank it amounted while after 1829 it continually For increased and was of considerable importance.
in instance, while in 1829 the amount was $24,384,000, the fiscalyear from July 1, 1830, to June 30, 1831, it was $33,-

641,000,2 and in 1832 $45,157,000." The deposits, which constituted by

important

of these elements almost or quite as large a part of the circulation as the note issues. But the really striking matter in regard to them, to
one

all odds the most in the bank's circulation, were

familiar with the importance of deposits today, is that insignificant. It would be difficult to find so now they were

many banks whose deposits do not greatly exceed their note issues, while from 1817 to 1836 the one great bank of the
largely composed to a currency of a fixed amount of greenbacks and the The principal question, inelastic issues of the national banks should be removed. is certainly ground There is as to the remedy to be used. for thinking however, banks with numerous branches be by all odds the that a system of great would
dent
most
1

successful
"

measure.

The

dollars, and

paid within therefore, be estimated amount always in circulation may, Gallatin's Writings, Vol. Ill, p. 296.
2

total annual they are on

amount
an

of those

drafts

average

is about fifteen days

twenty-four
after being at
one

millions of issued. The

ADAMS,

million.""

Ex. Doc. 147, 22d Cong., 1st Sess.,pp. 4-30.

s. D. 17, 23d Cong., 2d Sess., p. 180.

ISSUES held deposits

OP

THE

BANK its note

429

country that

and the larger

about equal to this, too, under the favorable

only

circulation

circumstance

part

of

them

consisted

of

government

deposits.1
conclusion it will not be amiss to point out the one great defect in the paper currency of the second Bank of the The prime defect United States, and to suggest remedies. In
its want of strict convertibility. This in the currency was led to depreciation and to redundant issues, and interfered The remedy for this state with the elasticityof the paper.

certainly not to destroy of affairs was stage of banking then existing that was

the
an

bank.
excess

In the
of folly.

A re-charter should have been granted and the bank should have been compelled to receive all its notes at all its offices. In this respect the bill to re-charter insured great improvement,2 for it compelled the bank to take all its notes in payment due to it from state banks. This would have of debts
is proved by the as met the difficulty, completely result of the bank's adoption of this plan in New York and depreciation in those cities Baltimore in 1833, whereupon

almost

ceased
next

to exist for the

first time

in fifteen years.

In the

place, the state banks as well as the national bank should have been prohibited from issuing notes of a smaller denomination
than
a

$5. This would certainly have brought

"/

into circulation helped to check

larger amount of specie, which would have the tendency to undue fluctuations so common These measures in the currency of that time. would have given the country an excellent paper currency, undoubtedly completely convertible and sufficientlyelastic. Had these things been done, the nation would in all probability have escaped the worst disasters of wild-cat banking, the
mistake

of the greenback

issues, and

perhaps

the free-silver

agitation.
1

For tables of deposits see Appendix V and IV, sec. 4 of the bill. See Appendix

Appendix

XIII.

CHAPTER
THE BANK, THE

XVIII
BANKS,
AND THE

STATE

CURRENCY

the bank relations between and the state banks necessarily fall under consideration in any history of either This is true because the two the bank or the state banks. THE

systems by ties

were
more

intimately associated, not indeed by law, but far-reaching, and less easily evaded. strict,more

In brief,what Bagehot has said of the Bank of England will apply to the Bank of the United States, though not to the It was the center of a " single banking reserve same extent. In the case of the bank this was not the result of system."
in its vaults, but of the fact depositing state-bank reserves no that the state banks made particular efforts to keep an Instead of doin'g so, they trusted to the adequate reserve.

of the United States to protect them in case of an unusual call for the precious metals. Consequently all large for specie finallyfellupon it; all hope of payments demands

Bank

in time

of monetary stringency rested ultimately upon In other words, the Bank of the United States alone

it.
was

capable

alone was The

of preserving the soundness of the currency; it responsible for the continuance of specie payments. for the establishment of the most potent argument found
in the confident expectation

bank

was

the resumption of specie payments, compel banks in leash, and supply " a sound and uniform currency." in the country ascribed such And everyone yet, though

that it would hold the state

any conception of the precise method by which it attained these desirable ends, and fewer had the faintest notion of the actual relations between the still bank and the state banks, while probably Biddle alone had powers
430

to the bank, few had

THE

BANK,

THE

STATE

BANKS,

THE

CURRENCY

431

grasped the idea that the bank held the final specie reserve In an interesting letter to Gallatin in July, of the country.
The exist1830, his appreciation of this fact is apparent. ence of a specie currency, he asserts, depends wholly upon the Bank of the United States, and sixty days after it ceases
to exist. The will likewise cease " strained to state banks almost always have their resources the utmost," and under these circumstances a slight pressure of the United States would bring on a panic, if the Bank
to exist specie payments

did not

stand ready to stave it off.

It becomes thereSuch is the inevitable tendency of the Banks. fore to have amongst them something to which of great importance they can be anchored in these squalls. When arises such a demand and private Capitalistscannot supply the Bank of its accumulations of Bills and its of the United States by means is enabled to weaken the pressure, to extended credits in Europe at rates which ward off from the State Banks supply the demands
as

the local Bankers

for coin to allow them time to diminish their too great a demand issues without ruin to their customers, and by the gradual reduction of their business cure the existing disorder.
"

At such moments the bank is the only safeguard.1 In other sibility words, the local banks traded without any feeling of responthe largest postheir part, anxious only to make sible profits and leaving to the Bank of the United States the problem of keeping up specie payments.
on

in That Biddle's opinions were sound, that the bank was the only guarantor of specie payments, the circumstances that it was expected to take care of the state banks and the

country, is established by specie

reserve
was

number

always much The proportion circulation than that of any other bank. large, being fixed deliberately at one-third of its circulawas tion,2 though in fact it was far in excess of this for much of
1

Its of circumstances. greater in proportion to its

Biddle

to Gallatin, July

Triennial Report
2

of 1831, NILES,

29, 1830, P. L. B., Vol. Ill, pp. 308, 309. Vol. XLI, p. 115.

See also the

Webster,

Feb. 26, 1834, C. D., Vol. X, Part I, p. 737.

432

THE

SECOND The

BANK

OP

THE

UNITED

STATES

Thus such proportion. in 1833, while the Bank of the United States had a circulation and held specie to the extent of $9,000,of $17,000,000 000, the state banks had a circulation of $68,000,000 and

the time.

state banks

held

no

only

$10,000,000or $11,000,000 in

of loans to its capital which as shows just clearly that its responsibilitieswere
even

specie.1 The proportion it felt justifiedmaking in

it ever

if only dimly.

The

largest

sum

had

recognized, loan was on

Even

being twice the $70,000,000,

the directors thought

amount

of its capital

unsafe, while the man of the bank, sober men suggested that a repetition of delphia the offense should be legally prevented,2 and a famous Philabanker, friendly to the bank, in discussing the acts have acted like madmen, of the directors declared: "They them."3 appointed over and deserve to have conservators
Yet
at

this proportion excessive, unwise, and cretion the street raved against the indison

the
two
one

very
and

same
a

moment

the New

York

banks

had

loaned
and
no

half times
them

censured

the amount for doing so.4

of their capital,

This simply meant that everyone looked upon the bank, as and justly, the holder of the ultimate banking reserve,
haps Perthat every state bank acted on that assumption. the most surprising illustration of the extent of this furnished by Girard's Bank. belief was Girard was universally esteemed as a wise and conservative banker, and yet he and

tly

allowed his bank to run along without the slightest to pay its obligations. In 1828 Biddle preparation records his sensation of overwhelming Girard's cashier enter the Bank and had
i

ing at havastonishment of the United States

coolly deliver the astounding information that his bank not enough specie in its vaults to meet a sight draft for
Verplanck,
H. R. 121, 22d Cong.,

2d Sess., p. 5.

SSelden, of New sCamberleng,

*

York, quoting

in the House,

Feb. 3, 1834, C. D., Vol. X, Part

II, p. 2589.

letter of Feb. 16, 1832, ibid., pp. 2380, 2381.

Selden,

loc. cit.

THE

BANK,

THE

STATE

BANKS,

THE

CURRENCY

433

$57,000. Biddle
loaned the Girard

at

once

Bank

alone remained to do: he $50,000 in specie.1 When in 1831

did what

Girard died, Biddle made the stillmore astounding discovery dollars in coin to that his bank held only a few thousand
for large sums. The Bank specie liabilities forward, this time with a of the United States again came loan of $100,000,to protect the Girard Bank.2 The situation was made more much perilous because of
meet

immediate

the complete lack of unity between the bank and the state banks, and because the actual elements in the situation were The lack of unity, and the general failure not plainly admitted.

any common policy or any concerted action on the part of the bank and the This was probably the most serious state banks impossible. defect in the banking system of that day, yet it was unavoidable.

to recognize the actual status, made

States made overtures for united action, it would have been to the state banks repelled, for such a proposal would immediately have aroused the suspicion that it was an attempting to secure advantage.
Therefore well as it could without such agreement. So long as all was fair and debts were promptly to the last dollar allowed by paid, the state banks expanded the law and by the Bank of the United States; but as soon
as

Even

had the Bank

of the United

it had to do

panic threatened, cover each and to throw the burden on the others. "The action of the Banks among themselves," " has been compared to that of so many drunken said Gouge,
as
a or

demand

for specie arose hastened to get under

commercial

passing along the street together, occasionally supporting one one another, and occasionally knocking another 3 down." "If the Banks here," wrote Lenox in 1825, "were
men

faithful to each other there would have reason to believe they we

i

not
are

but any difficulty, * It would have not." be

Dec. 29, 1831, ibid.

Memorandum

of Biddle

in B. P.

2 "

Biddle to Cadwalader,
Lenox

Cobbett's edition, p. 135.

to Biddle, Dec. 8, 1825, B. P.

434
been

THE

SECOND

BANK

OP

THE

UNITED

STATES

to believe strange, indeed, if there had been reason anything else. In December, 1827, he again wrote that, as a consequence of unusual demands for specie, the New York

exercising "great caution and a city banks were trial of skill to keep from being debtor Banks, and every the on and abroad to get demands engine used at home
....

doing its best the branch was which of course to evade.1 In February, 1828, Biddle noted that the Philadelphia banks in the presence of a distressing stringency den were reducing and declining to bear their share of the burBranch," of relief.2 The inevitable result at such times was stillfurther to tress, diminish confidence, increase the force of commercial disand throw the burden finally on the Bank of the

United States, which had no means of evading it. Thus in 1825 the bank had kept off the panic so disastrous in that year to England, and in 1828 everyone looked to it for
similar services, and complained bitterly because it did not discount freely and relieve the pressure. Biddle in answer published a long articleexplaining that it was the duty of the bank to take care of itself, and that the state banks were at fault in overtrading.3 That he felt compelled to defend
the bank is significantof the position ascribed to it in popular

opinion.

Granted

that

the bank

might

be justly

looked to

for

assistance in time of pressure, it follows, as a matter of in attempting to that it would be perfectly justified course, interests,as well as in the restrain the state banks in its own For its own interests of the country. sake it was still further bound to do so, because in case of suspension it must on all its pay interest at the rate of 12 per cent, per annum
1 2

Same

to

same,

Dec. 20, 1827, ibid. Feb. 12, 1828, P. L. B., Vol. II, p. 344.
Gazette.

Biddle to Lenox,

3 Article of April 10, 1828, in the National bett's edition),pp. 150-55.

For extracts

see

GOCGE

(Cob-

THE

BANK,

THE

STATE

BANKS,

THE

CURRENCY

435

notes and deposits, not

immediately

redeemed

in specie

on

demand.1

of control over the state banks did it possess ? How could it restrain their discounts ? How could it put an end to the depreciation of their paper ? The process was simplicity itself The bank merely presented the notes of the :
means

What

state banks

for payment

when

they fell into its hands.

As

Biddle succinctly and clearly expressed it: "A branch bank is near a local bank the branch notes are more valuable
"

for the local notes the local notes are exchanged branch notes at the branch bank, which thus becomes the creditor of the local bank, and makes it pay itsdebts, and thus
than
"

reduce its circulation this relation to the bank

Almost

and briefly, the process consisted " in latin put it even more ing receiving the notes of all those which are solvent and requirfrom time to time, without suffering the balance payment due by any to become this
that
measure we

all State banks stand in its branches."2 Or, as Gal-

too large."

The

importance

Gallatin emphasized
say that
on

by adding:

"We

of think

this operation, which requires particular attention and vigilance and must be carried on with sively great firmness and due forbearance, depends almost exclu' ing Accordthe stabilityof the currency of the country." may
to these explanations

the bank

became

the state banks

and then immediately arise:

forced them

the creditor of to pay. Two questions

Was

the bank

actually always

creditor bank? and, How The bank undoubtedly

at almost every moment

could it become so and remain so? was the creditor of the state banks

by its returns, which against them.4

it received
i

of its existence, as is clearly proved ances show that it habitually held large balThese
enormous

balances resulted because paper

in payment

more

state-bank

of its

Biddle pointed this out to Gallatin July 23, 1830." P. L. B., Vol. Ill, p. 299. 2ff. R. 460, 22d Cong., 1st Sess., p. 363.
3

ADAMS,

GallatMs

Writings,

Vol. Ill, p. 336.

*See Appendix

V.

436

THE

SECOND

BANK

OF

THE

UNITED

STATES

debts than the state banks received of its paper, so that after debted an remain inexchange of notes the state banks would still
and be compelled

What

amount

of

to discharge the balance in specie. state-bank notes the bank took in it is

impossible to say, but in 1832 it received $20,047,815.30 of the such notes in places where it had no office.1 Whatever Niles calculated in 1829 that as a consequence of its sum, branch banks
able to present to the state system the bank was for redemption their notes to five times the amount

that they could present of the bank's in return.2 Whether or this calculation was was not correct, it is certain that the bank received more of the paper of state banks than they received of its paper, and was consequently almost always the creditor. It only remains, therefore, to explain how
it became

the of obtaining this result was dealings. It follows exercise of proper restraint in its own that if the bank discounted less and as a matter of course issued fewer notes than the state banks, it would probably of debts due to it receive more of their notes in payment This result than the state banks would receive of its notes.
certain- by its collecting all the revenues of the to it in state-bank paper. government, much of which came
was

The

and how fundamental means

so,

it remained

so.

made

Thus

it secured

an

immediate

and a means of keeping down the principal sources of the bank's power, and either of them alone would have sufficed.

claim upon them for specie, their discounts.3 These were

of exercising control besides that other means ments of presenting the state-bank notes for specie. In all paythe state banks had to satisfy the to the government There
were

equivalent of the United States that their notes were to specie,before the government would receive them,4 and if Bank
1 S. 3
*

D. 82, 22d Cong., 2d Sess., p. S. to J. A. Hamilton,

NILES, Vol. XXXVI,

p. 254.

p. 210.

Isaac Bronson
Rules and

April 4, 1833, Reminiscences,

Regulations

for

the Government

Art. of the Offices, 24. See Appendix

X.

THE

BANK,

THE

STATE

BANKS,

THE

CURRENCY

437

the government refused them, a source tion of extensive circulaimmediately closed.1 Further, the bank would not was the receipt of notes by the government, but it would not itselfreceive them, and when neither the government nor the bank took the notes of a state bank, they would only stop
not

be received by

individuals.

Hence

the

Bank

of the

United States could keep the state banks on a specie-paying basis and restrict their business, or destroy the credit of their
notes.2

able to keep its immediate demands for specie from the state banks in excess of those of the state banks upon it,by refusing the receipt of its branch paper in settlement of balances.3 The notes of the state

The

bank,

moreover,

was

banks

circulated for the most part in the neighborhood their issues, while branch notes circulated everywhere the United

of in

consequently easy for the bank to collect and present for redemption the paper of the state it was banks; impossible for a state bank to sometimes
was

States.

It

present the notes of the branch in its vicinage, and seldom even when it had a possible to do this for a large amount hand, for there considerable quantity of branch notes on probably be but few of the notes of the neighboring Moreover, to make them. certain that the office among branches should keep the state banks in debt, it was customary
would
to receive from
1

individuals the notes of state banks

case

Extensive

circulation in the

took only because the government internal land payments, office receipts,
2

banks was posof most southern and western sible tariff dues, posttheir notes in payment of
revenue,

etc.

"

are excluded at Louisville in 1832 writes that "all other notes" " from circulation " because the branch refuses to receive the notes cept of any bank exH. R. 121, 22d Cong., 2d Sess., the Bank of the United States and its branches."

The

cashier

"

p. 146.

The banks,
measures as

however, desired by state refusal to receive their notes was, sometimes it left them absolutely free from all control. "Among the great variety of to a up which we have been obliged to resort to to keep the State Banks

standard, it has generally been found that not to take their Notes, is what desired, since in this way is often most they escape control."" Biddle to Gallatin, July 23, 1830, P. L. B., Vol. Ill, p. 297.
proper
3

This

was

not

infrequently done." 8. D. 24, 23d Cong., 1st Sess., pp. 2-4, 9-12.

438
on

THE

SECOND

BANK

OF

THE

UNITED

STATES In
case

deposit and pay the deposit in branch drawn branch notes were not at once

notes.1

the

out,

no

immediate

demand
at
once

while, even if they were created upon the office, withdrawn, no equivalent demand would be created,
was

because

in the natural course of trade most of these notes Meanwhile would be carried to Philadelphia for payment. the state-bank notes became an immediate demand for specie

upon

At times the bank even furnished its the state banks. own notes to a branch with instructions to issue them for a result would be attained. state-bank notes, when the same bank's control was immediately its action was for specie did not mean of paper for the payment The efficacious,and rendered more and keenly felt,because a call simply the retirement of a dollar of
a

the specie, the state banks were their debtors, and these, whenever possible, paid in state-bank Consequently, Taney calculated notes instead of in coin. in specie the circulation would that to collect $1,000,000 have
to be

dollar in coin. To forced to call upon

secure

diminished
state bank

four
was

against the

five millions.3 A therefore an engine

or

balance

mendous of tre-

potency in compelling these banks to restrict their dealings. So potent, indeed, that one is safe in accepting few banks Biddle's assertion that there were "very
which

might not have been destroyed by an exertion of the * power of the bank." On the other hand, the Bank of the United States was

itself constantly restrained by the state banks. This was the inevitable outcome, for otherwise it would fall into debt
tinning

The president of the Fayetteville branch speaks of the impossibility of con" to receive Local Bank Notes in deposit, repayable in notes of this office." To Biddle, July 29, 1826, B, P. See Biddle, H. R. 460, 22d Cong., 1st Sess., p. 363.
1
"

Feb. 20, 1830, P. L. B., Vol. Ill, p. 183. In both cases Biddle to Gumming, immediate demand the bank would the state bank upon create an above demand itself, upon remote usually payable at Philadelphia.
2

noted and
a

Ex. Doc. 2, 23d Cong., 1st Sess., p. 9.

D.
on

""

remarks

50, 22d Cong., 1st Sess., p. 25. Report of March 29, 1830. bank in 1829, Vol. XXXVI, the position of the p. 209.

See

Niles's

THE
to them

BANK,

THE

STATE

BANKS,

THE

CURRENCY

439

lose its commanding position, with the added risk of creating a pressure so intense as to lead to its own bankruptcy. Control, therefore,was reciprocal. The advantage and
of the Bank of the United States lay in knowing what to attain its wishes without it wanted, in having the means contracting its business, in possessing branches, unduly

and in having a unified policy. It is evident that the bank could easily secure against the state banks, that it usually held such
and

balances balances,

that it had various other means of exerting pressure It can be as little doubted that it did upon the state banks. Biddle asserted, the state banks exert pressure upon them. The pressure exerted and the complained, that it did so. control attained, however, varied at different periods during its existence.
the years 1817-18 the bank failed ignobly to tion perform its duty in this respect. True, it secured a resumpby an of specie payments agreement with the state

During

banks,

to and it established a rule by which they were But having a week."1 settle for their notes "at least once done these things it seemed to lose all control, not only of the state banks, bat of itselfas well.2 The failure to hold the state banks in check
was

one

report of the congressional responsible for many of the embarrassments bank was then involved.

of the items of censure committee of 1819,3 and

in the it was the

in which

the administration of Cheves the bank issued a notes, using instead the very limited quantity of its own discounts. Cheves notes of the state banks when it made thus surrendered
1

During

the

"

"

most

efficientmeans

of supplanting

Rules

and

Regulations

for

the Government

Art. 25. See Appendix of the Offices,

X.
2 The

balances V.

dne from

the state banks

at

no

other period

averaged

so

high.

See Appendix

3f.,Vol.

Ill, p.307.

440

THE

SECOND

BANK

OF

THE

UNITED

STATES
a

the issues of the state banks and of furnishing

sound

and

uniform currency,1 and gave state-bank notes a wider currency by issuing them instead of demanding their immediate redemption. On the other hand, the failure to issue its own
the state banks notes increased the corporation's power over to an extraordinary degree, since it received their notes in

large quantities, notes could not be secured while its own by them as an offset to the demand As a conupon them. sequence
the of balances payment in the possession of the Bank of the United after its issuing of large quantities of state-bank upon the
insistence

remaining States,even
notes,
was

Out of this almost intolerable to the state banks. In banks. the disputes with the Savannah situation arose " 1821 they were severely crippled by the measures of the
Bank
"

" of the United States which 2 All this,too, when absolute ruin."

threatened the Bank

a

them

with

States was
funds
excess

permitting them to hold of $100,000 and demanding

once
a

of the United permanent credit in its payment only

of the

president he at plan to repress the issues of the state banks to the depreciation of their notes, with the

of that sum Biddle When

week.
once

became

adopted
an

and put

end

of object

expanding

the business of the Bank of the United States while at time giving a sound and uniform currency to the the same To adopt a rule to collect balances was nothing country.

put the rule into effect once more; and for the most part he kept it. The results were notable. In 1824 the Virginia banks were forced to reduce.3
new, its most surrendered efficient means of said Biddle, the bank ennial Triennial Report of 1828, NILES, Vol. XXXV, p. 74; Tricontrol over the currency."" Report of 1831, ibid.. Vol. XLI, p. 111. Gouge asserts that Cheves's policy
i

to keep it was.

Biddle

la this way,

"

helped

to delay the renewal (Cobbett's p. edition), 104.

2

of specie payments

in South

Carolina until 1823." GOUGE

The

president

of the Planters'

Bank

to

Crawford,

July 21, 1821, F., Vol. IV,

pp. 1068, 1069.

3

C. J. Nicholas

to Biddle, Richmond,

Aug.

10, 1824, B. P.

THE

BANK,

THE

STATE

BANKS,

THE

CURRENCY

441

In 1825 the constant settlement of balances was general1 bama, In 1826 the bank undertook to correct the currency of Alaavowing that purpose when establishing a branch at Mobile2

and instructing it to adopt "frequent and regular settlements with the State Bank of Alabama," and to insist of the balances in specie or payment upon the immediate paper equivalent to specie,3with the result that the state bank was compelled to yield and Alabama notes ceased to be depreciated.4 In 1825 the state banks of North Carolina, offenders, which had refused specie payments old and hardened
at pleasure since 1822,5
were was

ten months'

struggle the attempt

taken in hand, but after given up because it was

impossible to continue it " without a further supply" of branch notes.8 It was made only in 1827 that this deficiency was last gave good by the invention of branch drafts, which at the bank the
means

exchanging
an

branch

of securing control by the process of As a consenotes for state-bank notes. quence

the North

making
to

Carolina state banks yielded in 1828, with the Bank of the United States agreement regularly.7 This of branch drafts

pay

marks
1

specie and settle their balances the moment through the use when
97, 98.

See pp.
"

its affairs as to be unable to meet its bank should so mismanage to the continued issue of its notes would be injurious the community, engagements, In such an event, the directors of the Bank of the United deem States would a sound themselves faithless to their great duty to the country, the preservation of if they did not control an institution thus insolvent and mischievous. And currency, ance, forbearthis duty they would endeavor to perform with great gentleness and great
2
....

But if any

but with great decision." 1826, NiLEa, Vol. XXXII, p. 125.

" *

"

Biddle

to Governor

Murphy

of Alabama,

Oct. 6,

Resolution of the Bank

Biddle
to Joseph

of the United

States, July 24, 1829, B. P.

Hemphill,

the bank
are now

has corrected
at par.

the evils of the issues of the state bank,

p. 309, for beginning

Feb. 8, 1830, P. L. B., Vol. in, p. 174, declares that and that its notes of failure. North Carolina notes were Vol. XXXIV, pp. 153, 154.

NILES,

Vol. XXIII,

all depreciated
6 1

in 1828." Ibid., Vol. XXXIII,

p. 331, and

John Biddle

Huske,

president of the Fayetteville branch, to Biddle, July 29,1826, B. P. April 17, 1828, says the plans are being worked out. A littlelater Cowperthwaite was the arrangement sent to make Carolina banks, and did so to the effect stated in the text.
Huske,
"

to John

P. L. B., Vol. II, p. 374.

with the North

442

THE

SECOND

BANK

OF

THE

UNITED

STATES

Biddle at last brought to a successful conclusion his plan of keeping state banks in debt, compelling payment ances, of balreducing their business, diminishing their issues, and making their notes as good as specie. Biddle himself claimed in this very year that the plan had been everywhere perfectly successful,1and his assertion was corroborated by others. Thus in 1830 McDuffie expressed
the belief that North
at
a

Carolina
were

discount, and
a

these

the only ones depreciated only 1 or 2 per

notes
were

year earlier they had been at 5 to 8 and 12 Even Gouge admits that the Bank to 14 per cent.3 of the United States had succeeded in North Carolina.* In Missouri
cent.,2 while

asserted that the depreciated currencies of the state had been completely driven out of existence by the establishment of the branch at St. Louis in 1829,5 while
it was

Congressman

Hardin

declared that the bank

had done

this

The truth of the assertion as to Misfor the entire West.6 souri is not open to question, for Benton urged it as a subject In the Southern Review in 1831 President of complaint.7 the same unfriendly to the bank, makes admissions relative to the southern states, asserting that the banks of the South had "been rigidly kept to cash payments

Cooper, though

by the Bank

"nothing of the United States," and he saw unfair in this,although the cash of the district" was "almost We by the branches. should be wanting in monopolized
i
"

of this plan the effect followed, that without causing the failure of any bank, or of without private or general suffering to the bank individual ; and without inconvenience any of the United States, the have been brought under an efficient control ; and banking operations of the country
a

By

gradual

and judicious execution

"

large amount of the notes of the bank of the United States have been gradually so injurious to-the was which substituted for the depreciated or doubtful currency,
a

southern
2
*

and western

states.""

Triennial Report

of 1828, NILES,
3 "

Vol. XXXV,

p. 74.

H. J?., 358,21st Cong., 1st Sess., p. 18, April 13, 1830.

NILES, Vol. XXXIV,

p. 154.

GOUGE
"

(Cobbett'sedition), 162. p.
Bank
of the United

C. D., Vol. X, Part II, p. 2782.

The

and substituted, in its stead, its own on account of its portable quality." silver
paper,
"

States has cleared the whole country of that kind of paper, which is preferable to gold and Ibid., Part III, p. 3406, April 3, 1834.

Ubid.,

Vol. VIII, Part I, p. 127, Jan. 20, 1832.

THE
honest

BANK,

THE

STATE
he

BANKS,
"not

THE

CURRENCY

443

candor,"

continues,

currency of this country by its operations, and is, in consequence of them, amended in a state, not perfect indeed, but not reasonably to be complained of."1 One thing is open to no dispute. In some
the paper

to acknowledge that has been wonderfully

vastly improved between way the state-bank currencies were It may be that the Bank of the United 1823 and 1830. States was not wholly responsible for this result,but certainly Biddle and be so; and
countless others, friends and foes, believed it to had been diligently toiling to attain as the bank

to attain this end, and actually used a multitude of means it,the most reasonable conclusion is that the corporation was

responsible. is evident from a How was great the actual improvement In 1823 review of the status of bank paper before 1830.
the Illinoisand Kentucky state-bank currencies were worth half their face value.2 In 1824 Tennessee less than bank paper at from 26 to paper was at 30 per cent.,3 and Alabama

per cent, below par.* For the years 1824-25 " In Kentucky, up the situation as follows : summed 28
was

Gouge society

In Alabama nessee, anarchy. and Tenbelow par. the paper of the local banks was much Ohio, Indiana, Illinois, and Missouri, had not recovered from The currencies of Georgia the effects of the relief system.
in
a

state bordering

on

and North Carolina were of Kentucky specie was

very vacillating."5 In 1825 in parts at 60 and 100 per cent, premium,6 paper was worth only fifty while Bank of the Commonwealth the dollar.7 In August, 1826, it was cents on announced
that "all the banks
in Nashville"
were

"about

to

resume

specie payments;"8
1

and it is significant that in this year the

p. 342.
5

Southern

Review,

Vol. VIII, p. 24.

3

2
*

NILES, Vol. XXIII, p. 96 ; Vol. XXIV, NILES, Vol. XXVI, NiLEa, Vol. XXVIII,
p. 200.

GOUGE

(Cobbett's edition ),p. 97. (Cobbett'sedition), p.

Commonwealth,
p. 416, Aug.

GOUGE

145.

6 ^

p. 304, July 9, 1825, quoting

the Versailles

Ibid., Vol. XXIX,

p. 4,

Sept. 3, 1825.

ibid., Vol. XXX,

12, 1826.

444

THE

SECOND

BANK

OP

THE

UNITED

STATES

bank established a branch at Nashville. In 1827 there were Missouri, local banks in Kentucky, Indiana, Illinois, or no while there was but one in each of the states of Tennessee, In 1830, as already noticed, Mississippi, and Alabama.1 McDuffie Carolina notes were asserted that only North depreciated. From

1823

to 1830, therefore, the

notes

of

the state banks everywhere, with an exception in the case of North Carolina, had been either driven out of circulation or made redeemable in specie on demand.

Not only

was

there

an

improvement

had the currency, but its amount Gallatin states that from 1816 to 1820 the marked degree.

in the character of in a been diminished

total circulation of all the state banks had fallen from $66,000,000 to less than $44,000,000.2From that time to 1829,

littlemore than treble capital they" had "added eight millions to their issues," while the Bank of the United from November, 1819, to States had added about $11,000,000
"with
a

rency" whole amount of the paper curhad in that time been increased about 45 per cent., a of which increase the state banks issued less than one-half wonderful improvement, which Gallatin attributes wholly to "The
"

November,

1829.

the bank.3
as

During

paper as had almost doubled and commercial incalculably.*

much Admitting do this to
as

its existence the state banks they issued in 1816, though

never

issued

dealings had

population increased

that the bank restricted the state banks, did it great an extent as should have been done ? Did
possible? The

it bring the currency into as good a condition as was Was it as strict as circumstances demanded?

fact that the state banks always had such large credits at the
1

GOUGE
ADAMS,

(Cobbett'sedition), p.

97.
9

Gallatin'a Writings, Vol. Ill, p. 334.

Ibid.
was

* The (mostly paper) in circulation per capita amount of money Woodbury's in 1819, $7.75 in 1829, $6 ; and from 1829 to 1834, $6.35." ; 23d Cong., 2d Sess., p. 64.

in 1816

$11;

tables, 8. D. 13,

THE

BANK,

THE

STATE

BANKS,

THE

CURRENCY

445

national bank not the case.

would be prima facieevidence that this was " It is obvious," said Gallatin," that it is only

by keeping

its discounts at a lower rate than those of the state banks that these can be its debtors ; and that it is only keep by enforcing the payment of the balances that it can them

Now within bounds and thus regulate the currency."1 the bank, even when attempting to restrict the state banks, did not enforce the payment of balances as strictly as it

should have

done.

administration of of Nicholas Biddle.

to be too rigid in

This failure existed, not only under the Jones and Cheves, but also under that

more In 1825 he writes the cashier at Baltithat he held it "good policy" for the time being "not
our

the state banks.2 In 1826 York branch not to he instructs the president of the New call for specie, unless firstcalled on for specie,3and in 1832

drafts"

on

he laid particular emphasis upon the virtue of forbearance in demanding specie from the state banks.* Insufficientexercise of its power is also apparent in the of the state-bank paper. continued worthlessness of some

In
were were

June, 1829, the New

asserted that there "a great many bills in circulation" in that city which " worth literallynothing at all," and Niles adds that

York

Herald

state of affairs exists in Philadelphia, Boston, and in many Baltimore.5 Moreover, of the states notes of a

the

same

denomination
1
"

as

low

as

$1
and

circulated, and
Currency,"
ADAMS,

specie
Gallatin's

was

paid
Vol.
opinion.

Suggestions

on

the Banks

Writings,

Ill, p. 395.
2

See also 8. D. 13, 23d Cong., 2d Sess., pp. 29, 30, for Woodbury's
to John

Biddle

White,

April 19, 1825, P. L. B., Vol. II, p. 15.

Feb.
8, 1826, ibid., p. 127. The for the board, March
same

Biddle

to Lawrence,

instructions

were

repeated
*

in March."

Cope
as we

to Lawrence
are,

23, 1826, ibid., p. 142.

the 1st of October when we will inevitably become in Banks we ought to forbear from pressing them now our to deserve and to ensure a reciprocal forbearance relative situations when order change, and our whole effort should be to keep the State Banks at their ease, so that to curtail they may if we are and in the meantime place compelled supply our

"Approaching,

largely in debt

to the State

"

devote

all our NILES,

3 per cents.""
5

to the purchase and the redemption surplus means of exchange July 1, 1832, B. P. Biddle to Cadwalader, Washington,

of the

Vol. XXXVI,

p. 251, quoting

the New

York

Herald.

446

THE

SECOND
sums

BANK

OF

THE

UNITED

STATES

only for
"

less than

one

dollar, while in the two Carolinas

other parts of the Union, notes for twenty-five six and onecents, for twelve and one-half cents, and even J " Now, while the bank might "current." were quarter cents have checked this by putting pressure upon the banks issuing and
some

did not choose to do so,2 because it did not care to suffer the certain unpopularity Hence it perwhich would have followed drastic measures. mitted
sums

for less than

$5,it apparently

circulation of notes of less value than $5 calculated, indeed, at almost one-fourth of the amount of currency issued by the state banks.3 Yet it would be grossly to censure the management
an

immense

"

unjust

of the bank without first considering the enormous The restraints placed upon the state obstacles in its way. bitterly resented, and the difficultyof keeping banks were this up The
in the face of a Democratic opposition which supported local banks must be too obvious to need comment. the

struggle of the bank with the banks of Georgia and with the state of Georgia, with the banks of Ohio and with the state of Ohio; the opposition of the southern and western states
the presidency of Cheves, will not be forgotten. Similarly, during Biddle's administration, the opposition of Alabama to the establishment of a bank was equally strenuous. all through of Maryland protested against the action of the bank in attempting to force payment for its notes.4 The bank was forced to yield, for such opposition

Again, in September, 1831, the Bank

at that moment

re-charter.
1

Perhaps
Inquiry

for might be fatal to the chances the best illustrationof its difficulties,
of the American
Banking System,
p. 21.

GOUGE, It was

An
even

into the Principles

argued that, since the Bank of the United States did not take bills " constitute nearly a quarter of the circulation of the state and since these under $5, Remarks the Bank banks," the bank could not control the state banks. upon of the 30. If, however, by a Merchant, the state banks issued bills of $5, United States p.
2
"

which quite

were
as

received
no

by the Bank
matter

effectively
.,

how

States, they might be controlled of the United issued. fractional currency was much
4

loc. cit.

Biddle to E. Oliver, Sept. 10, 1831, B. P.

THE however,

BANK,

THE

STATE

BANKS,

THE

CUBEENCY

447

in its strifewith the Bank of the State of Up to December South Carolina in 1832. of that year the Charleston branch of the Bank of the United States had

is found

to take the notes of any of the branches been accustomed from this bank in payment of debts.1 This was certainly a favor to the Bank of the State, and one which prevented

In December, any stringent restraint of its business. 1832, however, the officebegan to refuse the receipt of the notes of other branches and also declined to take the notes of other state banks from the Bank of the State of South McDuffie, Carolina.2 Great excitement resulted: Hayne, protested, while the latter assured Biddle and Hamilton
that South Carolina would nullify the bank charter as well Governor as the tariff of 1832 if redress was not accorded.3

actually risked his popularity by his exertions to stay instructed hostile action by the legislature.4 Biddle at once Hayne
the president at Charleston

complaint.5 Such events carefully of Biddle' s assertion that, while the state banks were " " forced kept never within proper limits," they were

to put an end to the causes of aid in measuring the significance

" ances to pay specie, if it could " be avoided," and that the bal" the debtor were "suffered to lie occasionally until

bank

On the whole, the bank is deserving could turn round." of high praise for the control actually exercised in such
"

circumstances. There was,

another extremely serious aspect of demand for specie was very unpoputhe situation. The mere lar. for specie," wrote Lenox, "it fixes an "If you call
1 J.

however,

Hamilton,

Jr., to Biddle, Dec. 20, 1832, ibid. Johnson

of the Charleston

2 Biddle to President 23d Cong., 2d Sess., p. 310.

office,Dec.

25, 1832, S. D. 17,

3
*

J. Hamilton,
Hayne Biddle

Jr., to Biddle, Dec. 20, 1832, B. P.

to Biddle, Dec. 15, 1832, ibid. to Johnson, Dec. 25, 1832, S. D. 17, 23d Cong., 2d Sess., p. 310.

5
6

Eeport

of the Senate

committee,

March

29,1830, 8. D. 50, 22d Cong., 1st Sess., p. 25.

448

THE

SECOND

BANK

OP

THE

UNITED

STATES

odium upon us,"1 and no doubt Biddle enunciated a trite "never truth when he asserted that the state banks were forced to pay specie,if it can be avoided." Equally true was it that the Bank of the United States never paid specie if it

could be avoided. Biddle in 1828 instructed Lenox that no coin was to be paid out for exportation if possible to evade it,2 there is a draft from an "Whenever and in 1823 he wrote:
the State Banks are made individual for specie to any amount to pay it if the Balances allow it."8 In 1829 the branch at

Baltimore in selling a draft upon the parent officestipulated "that it was not to be used as a specie demand upon the The habit of avoiding specie demands in Bank."* was, fact,universal in the United States. "It is quite amusing," wrote an Englishman who had resided in America, "to observe the care which merchants in America take to prevent runs on The result was banks, and keep hard money out of use."6 twofold: specie was kept out of circulation, and it was so that the business of the country was necessarily subscarce ject to those vibrations which Biddle constantly mentioned6 Perhaps, too, such shocks were emphasized. necessarily incident to the industrial conditions of a new sible: country, and the American temperament was partly responand

Gouge

"want

"Our active and energetic countrymen," wrote Biddle, no stimulant to over exertion. They always carry so

that the man at the wheel, must try to keep his hand sail, 7 of specie strong and his head cool." Moreover, the amount

much

in the country
i
3
*

was

very small, and for the most

2

part lay in
Feb. 27, 1828, ibid.

Lenox

to Biddle, Feb. 28, 1828, B. P.

Biddle to Lenox,

To C. P. White,

of New

York, Feb. 3, 1823, P. L. B., Vol. I, p. 6.

John

White

to Biddle, Baltimore,
An

March

4, 1829, B. P. Debit
or

BEDWAKD
p. 31, note
6
"

CLIBBOEN,

Outline

of the American

Banking

System,

1.

In the active commercial business of this country, there are constant vibrations."" Biddle, H. B. 460, 22d Cong., 1st Sess., p. 333. Also in his article of April 10
Gazette.

in the National
i

Biddle to Senator

Smith,

Nov. 14, 1830, P. L. B., Vol. Ill, p. 392,

THE

BANK,

THE

STATE

BANKS,

THE

CUKBENOY

449

the banks along tlieAtlantic seaboard.1 The cause of this slender stock lay not only in the pernicious habit of evading and in the public disfavor meted out to those who specie calls, demanded

specie, but also in the unusual facilities given by the state laws for the emission of small notes. Under these circumstances, the problem of neutralizing Biddle's "constant vibrations" and of checking an incipient Biddle declared to Galone. panic became a very difficult latin that the Bank of the United States was essentialto the country in this respect, that it alone possessed the power of and that it did this warding off constant shocks to commerce, by buying and selling foreign exchange and thus preventing 2 No doubt the bank's services the exportation of specie.
in this respect were important, but it would be sometimes for it to draw bills unless it had accumulated funds difficult As Biddle pertinently put it during the pressure abroad.

of 1828: "How

this drawing

accumulated In case

is to be performed without having cated."3 any fund to draw upon, is not clearly indifailed,as it was to do this method sure

during

commercial crisis, there remained several other means of checking the panic. Stock might have been sold abroad, and thus a store of specie secured, or the time of
a

discounts might have been shortened, and the English method of a rise in the rate of discount might have been adopted. Unfortunately, the bank could not raise its rate, because

by its charter to loan at 6 per cent. Even had it been able to vary its rate, the idea of doing this would hardly have occurred at that time. The other methods were
it was

bound

employed, therefore. Thus in 1825 United States stocks

i
"

were

Now the basis of our circulation medium, from its being chiefly in the vaults of Banks at the seaports, is liable to sudden and extensive redaction, often compelling the banks to extensive and equally sudden reductions in their discounts and circulation. Outline of a Plan for a National Bank, p. 13.
"

See pp. Ill, 112.

Gazette, April 10, 1828. See for extracts
GOUGE

3 Article in the National bett's edition), pp. 150-55.

(Cob-

450

THE

SECOND

BANK

OP

THE

UNITED

STATES

sold, specie secured, and the bank continued to loan.1 But discharged in 1834, and indeed this the national debt was method of meeting an emergency ceased early in 1832, so far Even in 1828 it could not sell concerned. it was stocks for cash. In such circumstances compelled brisk trading to shorten its term of discounts after seasons of and try to collect from its debtors.2 These measures would
as

the bank

was

be effectivein saving the bank, but they would only intensify the panic and carry commercial ruin farther. Still,in a season of great stringency one could hardly expect the bank
to dispense loans without

there been-

an

regard for the consequences. understanding with the state banks and
have

Had
concerted

action, loans could

But when each thus checked. ruin, the Bank others and tried to avoid its own of the United States cannot be severely censured for its policy. It is surprising, on the whole, that the corporation had
as such drastic methods seldom the administration of Jones such occasions

been made, and the panic bank jealously watched the

to adopt

as
came

it did.

After

once

in 1828

and

once

in 1831-32.
to injury

In both

cases

only twice : the bank

got through

without

itself, and the business of the

country was not seriously checked. The correction of the evil would have involved, therefore, for specie the training of the public to make demands and the passage of laws prohibiting the issue of small notes.

Biddle frequently gave it as his opinion that the "metallic

basis" of the currency should be widened, and he suggested, as did Gallatin and Webster, the abolitionof the use of small notes and the laying of heavy penalties for a refusal to pay specie.3

compelled to withdraw all their notes below the denomination of $5 the currency would be vastly improved.4 Undoubtedly the view was correct.
were
i

He

believed that if the banks

See p. 107.
R. 460, 22d Cong., 1st Sess., p. 367.

See Biddle in the National

Gazette.

3H.
*

Biddle to Gallatin, Sept. 9, 1830, P. L. B., Vol. Ill, pp. 340, 341.

THE

BANK,

THE

STATE

BANKS,

THE

CURRENCY

451

bank's control varied greatly with the location of the state bank, with the business habits of the community, with the state of public opinion, and with its own tion. circulait would have littlecontrol, for it did a very restricted business. In the large cities banking were much better understood and the community methods

The

In New

England

would support it in its attempts to restrain bad banking; but in the country districts, and in the far South and West, the task was almost insuperably difficult.
its upon actually did brought down head the violent enmity of the state banks. This was so because the bank, in reducing the business of the state banks,
not only hindered

What

the Bank

from engaging in tions, operaunjustifiable but actually diminished their legitimate business by the conattracting this to its own offices. So powerful was sequent them

opposition that in 1832, when the new charter was before Congress, the friends of the bank were forced to accept an amendment which would have gone far to deprive the currency, for it allowed the the bank of its control over
state banks to present any of the notes of the bank to any

of the branches in payment of debts.1 Gallatin was of the opinion that the bank
to

regulate the currency as early as those years its discounts and issues were excessive.2 The fact that the state banks were indebted to the national bank

lost its power 1832-33, because in

The all through these years shows that this was an error. bank lost its power only in 1835, in which year the balances ran against it for much of the time and ranged from $62,000
to

$3,987,000. The removal of the deposits had been the

is shown
1

firstblow, but this

as

effective, by the history of the years 1833-34, when the

was

by

no

means

immediately

Dallas's speech
2
"

See the fourth section of the bill to renew IV. See also the charter. Appendix in introducing the bill, May 23, 1832, C. D., Vol. VIII, Part I, p. 948. Suggestions
on

the Banks

and

Currency,"

ADAICS, QallatMs

Writings,

Vol.

Ill, p. 394.

452 bank blow

THE
was was
a

SECOND

BANK

OF

THE

UNITED

STATES

payment 1835 ; yet

heavy creditor of the state banks. The second the prohibition of the receipt of branch drafts in of government dues, which took effect in January,
even

robbed bank of its mastery had it chosen to exercise it. But by the its this time it was beginning to settle its affairs, system was broken
own

these two

measures

would not

have

up, and

the state banks

were

allowed

to

run

their

course.

CHAPTEK
THE BANK

XIX
AGENCY

AS

GOVERNMENT

THE

ment charter of the bank denned its duties to the governand the privileges accorded it for their performance.
bound
to transfer public funds from to another, without making
on

It

was

Union
or

part of the any charge for exchange

one

for transportation;

the

same

terms

it

was

to act

as

commissioner of loans when required by Congress, and to pay the public creditors.1 It paid to the government a bonus of $1,500,000, was bound at the demand of the treasury to and

transfer to the United

States any stocks subscribed

to its

capital at the price of the stock when subscribed.2 In return, certain valuable privilegeswere bestowed upon to be legal tender in all the corporation. Its notes were payments to the United States;3 it might sell government
stocks to the amount of $2,000,000 annually, provided that first given the option of the secretary of the treasury was purchasing;* the public funds had to be deposited in its vaults in every state in which it established an office,5 and the United States contracted not to create any other national bank during its existence.8 The

financial embarrassments

the government

rapidly overcome the bank at once

almost overwhelmed just prior to the erection of the bank were after it began operations. The notes of

which

supplied the government with a common medium of exchange in which it paid its debts and received In January, 1817, the bank loaned the government itsdues.
1

Charter,

sec.

15.
see

See

Appendix

I.

of loans,
2

Statutes

at Large,

In relation to the bank's Vol. Ill, p. 360.

duties

as

commissioner

Charter,
Ibid.,
sec.

sees.

5 and

6. Including
*

the $7,000,000tock subscription of the government. s

s

14.

Ibid., sec. 5.

ibid.,

sec.

16.

" Ibid., sec.

21.

453

454

THE

SECOND
as a

BANK

OP

THE

UNITED

STATES

$500,000

fund out of which to pay its most urgent liabilitie and began immediately afterward to discount notes of merchants having duty bonds to pay.2 Finally, by entering into the agreement of the 1st of February with the state contracted to pay specie for their notes, it virtually established the resumption of specie payments. The treasury thenceforth could accept either notes banks, by
which

they

of the Bank of the United States or those of the large state banks without loss or annoyance to itself. But while relief was given, its extent varied in different

parts of the Union.

currency
was

In the West

much secretary of the treasury believed it expedient, indeed necessary, that the United States should accept large quantities of This state-bank paper in payments on government account. necessity existed because in many parts of the interior notes of the Bank of the United States could not be supplied, and consequently so long as large amounts account of direct taxes, internal revenue, paid in, on and the sale of had to be received.3
were

and South, for instance, the depreciated, yet in these sections the

public lands, the paper of state banks in Yet even so, most of the difficulties of the government the West and South also disappeared for the time, because the
of the United States received almost all state-bank notes, and credited them to the treasury as cash.* But while the receipt of state-bank paper terminated the Bank

of the treasury, it initiated of the embarrassments The discovery was early made that the those of the bank. paper received was not equivalent to gold and silver. Conpart major
1 2 3 *

Smith

to Crawford,

Jan. 4, 1817, F., Vol. IV, p. 764.

Resolution Crawford
"

of the board, to Jones, May

Jan. 9, 1817, ibid., p. 766.

6, 1817, ibid., p. 524.

States, were The notes of all such banks, in the western received by the land deposited as specie in the offices of the Bank of the United States and in officersand as offices of deposit." Crawford, report to a committee the State banks, employed the House of Representatives, Feb. 24, 1823, ibid., p. 262. of
"

THE

BANK

AS

GOVERNMENT

AGENCY

455

forced to abrogate the custom soon sequently the bank was rior.1 of receiving the notes of most of the state banks of the intethat the Since Secretary Crawford still thought treasury could not collect the taxes without accepting these notes, the bank's action threw the public funds into some increased in the fall of 1818, much confusion, which was the bank, out of regard for its own safety, refused to receive as specie the issues of all the western state banks,

when

though
was

special deposits.2 This measure in October, 1819, by an order prohibiting supplemented branches from making the western any further note
it accepted them
as

issues.3

As
was

treasury

to the result the usefulness of the bank being comimpaired, the government much pelled
ever

to receive larger quantities than of state banks in payment of government

of the paper dues in the West

and South.4 In 1820 another arrangement was made, by which the bank was to receive the notes of certain specified state banks
in payment of government banks in the immediate

dues.

The

notes

of the number, but were among receiving the public moneys on taken only on were condition that if not redeemable should be responsible for their presentation the government

neighborhood

of the western the branches

these facts in view, we culpable to involve the should be extremely this institution with the obligations of banks in remote credit and responsibility of tain parts of the country, of whose capacity, credit, and good disposition we have no cerimpose upon The public interest may knowledge. the Government the necessity by receiving the paper of such banks, of facilitating the collection of the revenue or funds of equal but until it shall be converted into lawful money, value, the
i"With
....

of the United 1818, ibid., p. 846.

Bank

States cannot

assume

it

as

cash."

"

Jones

to Crawford,

May

29,

"

This

of 1818, when
same

arrangement time it declared

own

state of collision and irritation continued increasing until the autumn its that it could no longer execute the bank notified the Department the essential interests of the institution; at the without sacrificing
"

its

its determination to receive from the land offices nothing but ford Crawthe current coin of the Union, except as special deposit." notes and to a committee the House, Feb. 24, 1823, ibid., p. 262. of

3
*

Resolutions Crawford
to

of Sept. 25, 1819,

a

sec.

14, ibid., p. 908.

committee

of the House,

Feb. 24, 1823, ibid., pp. 262, 283.

456

THE

SECOND

BANK

OF

THE

UNITED

STATES

This arrangement payment.1 existed until the removal of the deposits.2 The receivers deposited the notes in the
credited by the of the United States, and these were bank to the government as cash, making them immediately use.3 available for government

Bank

bank had also materially assisted the government in known as the collection of what were "special deposits." These
were

The

immediately them

deposits of state-bank notes which were not convertible into specie, because the bank issuing
was so

either had ceased to pay specie, or the place at which the notes had been could not be conveniently notes could not be used as
was

distant from

received that they Such presented for redemption. cash, though their eventual payment
the bank

expected.

When

began

large quantity of " special deposits" was at the various state banks throughout

operations, a credited to the government

the Union, and the directors made arrangements with the United States to collect these and convert them into cash for the government by presenting them to the institutions which had issued

difficult and thankless one. insecure little bank attempted to pass off its notes
them.4
was a

The task

Every
as

while banks which

entered
1
"

as

held government funds which had cash to the credit of the government years before,
that the bank
agrees

cash, been

to your proposition concerning however, the receipt of western that if not paid on presentnotes,' on condition, ment, be charged to the Treasury."" Che ves to Crawford, July 28, 1820. they shall
am
'

instructed to say

F., Vol. IV, p. 939.

Crawford

accepted

this condition."

July 31, ibid., p. 671.

2 Thus Secretary Rush in 1826 and in 1827 issued instructions to the receivers at the land offices designating the state-bank paper which might be received in payments Circular of Feb. 22, 1826, S. D. 193, 20th Cong., 1st Sess., pp. 57-9. to government."

by prohibiting the receipt of This lasted until Jan. 1, 1828, when it was the changed local or State bank not established or existing in the State or Territory notes of any instruction of Aug. 22,1827, by Office is situated." Supplementary the Land where Secretary Rush, ibid., pp. 59, 60.
"

"

interior,

the State banks paid on public account by placing it to the credit of the United well elsewhere, and the public service may as require."" cash, renders it available wherever Dec. 9, 1828, 8. D. 7, 20th Cong., 2d Sess., p. 10. report,
3

"It

receives

the

paper

of

in the States

as

as

Rush's

See the arrangement

finally made."

Jones

to Crawford,

Feb. 28, 1817, F., Vol.

IV, p. 773.

THE

BANK

AS

GOVERNMENT

AGENCY

457

now

tried to have
1

deposits."

taken off their hands as "special In the face of these obstacles, the bank managed
them

April 11, 1817, and December 4, 1818, It then abandoned the task8 the sum of $3,278,710.98.a because of the trouble and annoyance caused by the attempt
to collectbetween

to collectand the bitterfeeling aroused among the state banks.4 The bank lost a considerable sum as a result of its labors.5 The receipt of state-bank paper on government account
was

only

Bank
a

tions part of a general plan to simplify the operainstrumentality of the of the treasury through the tion, of the United States. This plan included, in addione

close relation with a number of state banks selected in keeping by the bank to act as agents of the government the public deposits and performing the duties of commissioners of loans and pension agents in those states where the bank

had

no

branches.

By

October 31, 1817, thirty-

four state banks had been selected for this purpose.8 The kept with the accounts of the public money in these were bank instead of with the treasury, as had been the custom previously,7 thus materially simplifying the accounts
1
"

of the
is
now

Even

the

acknowledged
as

to be passed attempted ibid., p. 776.

2

cash deposit at the Bank of Chambersburg special deposit."" Jones to Crawford, March

12, 1817,

The

United
Jan.

amounts States were

to the credit of the treasury of the of the "special deposits" b follows: in Jan., 1817, $3,031,459.36;y July 1, $3,072,652.89; as

July 1, $803,976.59 ; Jan. 1, 1820, Jan. 1, 1821, $548,663.23;an. 1, 1822, $564,962.92; J was $679,778.04;on the amount and on I Jan. 1, 1823, it was $333,504.66."bid., pp. 303-21 and pp. 353, 354. As a result of accepting banks in payments cial to government the notes of southern the "speand western
1, 1818,

$1,991,818.88 ; on ; Jan. 1, 1819, $666,959.24

deposit"
"

account

was

increased

Ibid., p. 352. after 1817 by $635,304.60."

s I have instructed the Treasurer to transfer by drafts to the Bank of Columbia the amount of special deposit returned by the Bank of the United States to his credit Crawford to Smith, Dec. 4, 1818, ibid., p. 600. on the 23d ultimo, being $468,588,37."" * 6

See evidence
"

ibid., pp. 855-7. of difficulties,

loss sustained by the bank I cannot I should willingly compromise estimate. S. D. 50, Finance to Senate Committee, a loss of only $200,000." Biddle 22d Cong., 1st Sess., p. 25. The for
"

Jones

to Crawford,

Oct. 25, 1817, F., Vol. IV, p. 820

and

same

to same,

Oct. 31,

1817, ibid., p. 821.

7

"Pursuant

to arrangements

"weekly returns

of the

money

made deposited

States, the of the United with the Bank in the several offices and State banks

458

THE

SECOND

BANK

OP

THE

UNITED

STATES

department

mitted saving it much expense.1 The bank transurer weekly statements to the secretary and to the treasreceived by it, as did also its branches of the sums and

the state banks which acted as its agents, specifying from which the payments In this way sources came.2 knew precisely what dues were the treasury officials paid, on and the paid, at what places they were paid, nished available. They were and at what places they were also furwith a means of checking the accounts of the collectors in and receivers, for these officers turn were obliged to forward to the treasury accounts of the moneys they had paid in,
what
account
were

they

which had to agree with the returns made by the bank.3 Under this system there was little opportunity for fraud on the part of individuals, and after the funds had passed into the possession liable for their safety to the of the bank, it was extent of its entire capital
for that purpose employed have heretofore been made of that bank." Cong., 1st Sess., p. 521.
"

to the credit of the Treasurer or the United States, which to this Department, to be made hereafter to the Cashier are Crawford's circular to the deposit banks, April 29, 1817, S. D. 50, 22d

See the plan suggested

with modifications
"

by Jones.

"

Jones

to Crawford,

April 17, 1818, ibid., p. 782.

Accepted
2

by Crawford,

April 22, 1817." Ibid., p. 519.

returns to this office and to the Treasurer of the United States will, the United States, and from the branch therefore, be required from the Bank of banks, of the amount lectors, of the public money paid to them, respectively, by the Colthe time of each successive statement. the aggregate amount at showing to the bank should be distinguished under three heads, The payments made

Weekly

....

viz: customs,
"

internal

revenue,

and

direct tax."

"

Crawford

to Jones, Jan.

16, 1817,

ibid., pp. 496, 497. from must receipt given for public money of revenue show the branch to the Bank The weekly statement it has accrued, the United of made which Crawford's States must strictly correspond with those receipts." circular to the deposit banks, April 29, 1817, ibid., pp. 521, 522.

Every

....

"

3 "According to the existing regulations, the Collectors of Customs are required by them and paid into the amount revenue to make weekly statements of of received States the banks ; weekly returns to this office and to the Treasurer of the United therefore, be required from the Bank of the United States, and from the branch will,

lectors, banks, of the amount of the public money paid to them, respectively, by the Colthe aggregate the time of each successive statement. at amount showing as checks These statements are the returns of the Collectors, and to upon necessary the officer charged with keeping the accounts of the Secretary of the Treasury enable
to correct
any
errors

which

may

result from

irregularities

in the returns

lectors."" of the Col-

Crawford

to Jones, Jan. 16, 1817, ibid., pp. 496, 497.

TEE

BANK

AS

GOVERNMENT

AGENCY

459

In accordance the treasury were

transactions of with this plan the numerous conducted through the cashier of the Bank

in from customs, came of the United States. The revenue direct taxes, land sales, the post-offices, the marshals of the United States courts, and a number of miscellaneous sources.

These funds, paid in at ten thousand different places throughout the country, were all deposited by the officials receiving branch or state bank to the order of the cashthem in some ier, who gave credit for them to the treasurer of the United
he for whatever sums The them. and at whatever wanted points he wanted The govis apparent. advantage of such an arrangement ernment and it got complete control of all its funds at once,

States, who

then drew

upon

the bank

could command The treasurer

their services immediately wherever needed. simply drew drafts upon the cashier of the

bank, designating the officeor state bank at which payment was required, and sent the drafts to the officeswhere the money warded paid, abstracts of these drafts being forevery week to the bank, which then placed the sum its books to the debit of the United States.1
was

to be

on

It
banks
1
"

was

discovered, however, that the agent state depositories to abused their privileges as government very
soon

1st. The transactions of the Treasury shall be conducted through the Cashier Bank of the United States. of the " deposited in any of the offices or banks employed 2d. All public money in lieu be entered to the credit of the Bank of the United States for the use of offices shall of the United States. of the Treasurer
" 3d. Corresponding the books of upon credits shall be given to the Treasurer States, according to the weekly Bank of the United the statement of every such office or bank rendered to the said bank

" 4th. All drafts of the Treasurer shall be drawn the Cashier of the Bank upon States, designating the United the office or bank at which of payment shall be The drafts, however, will not be sent to the Cashier of the United States required. drawn Bank, but weekly abstracts of all warrants by the Treasurer the several upon

to the Cashier of the Bank of the United offices and State banks will be transmitted States. And all drafts paid by the offices and State banks shall be returned, through Crawford to Jones, April 22, 1817, ibid., pp. 519, 520. the mother bank, to the Treasury."" Bonds "The to the Collector, who about they are collected, go immediately as
once

for debentures, transfers a week, in the large cities, after receiving the money his funds to the credit of the Treasurer United States."" Biddle to N. Silsbee, of the Dec. 28, 1833, P. L. B., Vol. V, p. 62.

460
secure

THE

SECOND

BANK

OP

THE

UNITED

STATES

profits at the expense of the Bank of the United States.1 While doing this they never ceased complaining of bank.2 the alleged acts unjust and oppressions of the national Consequently, there were endless irritation and constant collisions between them and the Bank of the United States, and the irritation was heightened by the necessity the bank was ern under of transforming into specie the western and southFinally, state-bank notes received on public account.* the directors were astounded by discovering that Secretary considered the institution legally responsible for deposits in the agent state the safety of the government

Crawford

banks.*

The

bank

could not, with any regard

over

to its

own

safety, continue

to incur such

relinquished all control that a new and demanded

responsibility. It therefore state banks holding deposits

arrangement should be made.5 Accordingly, on the 30th of June, 1818, this part of the to plan of simplifying the operations of the treasury came The state banks holding government funds were an end. directly responsible to the secretary, and
Jones to Crawford,
March
"

made
l

the moneys

12, 1817, F., Vol. IV, p. 776.

J Crawford the complaints of the State banks employed as officesof speaks of deposit that the Bank States acted oppressively the United of and capriciously towards them, by subjecting them to all the inconveniences incident to the relation they held, and depriving them of most of the advantages which they had a right to

expect

from

that relation."

"

Ibid., p. 262.

3 Crawford are says : "As the transfers of the pnblic money made by the Bank by the demand for specie, or funds the United States, the excitement of produced be remitted, consequent that can upon such transfers, has been directed against in particular parts of the the community, that institution. All the evils which from its as well as country, has suffered from the sudden decrease of the currency, depreciation, have been ascribed to the Bank of the United States, which, in transferring the public funds, has been a passive agent in the hands of the Government." Report to the House, Feb. 12, 1820, ibid., Vol. Ill, p. 508.
"

"

have been selected by the Bank of the United States, and the correspondence that institution and this Department shows that the bank considers deposited in the State banks selected for that itself responsible for the money

The banks

between

purpose."

"

Crawford

to Jones, June

3, 1818, ibid., VoL

IV, p. 584 ;

same

to

same,

June

30, 1818, ibid., p. 587.

6

The

bank
as

"

hereby

employed them hereafter.""

banks

expressly relinquishing all control over deposit and the public money may of which Jones to Crawford, June 23, 1818, ibid., p. 853.

the

State banks in

be deposited

THE held by them

BANK

AS

GOVERNMENT

AGENCY

461

to urer, made subject the drafts of the treasand not to those of the cashier of the Bank of the kept up this connection United States.1 The government
were

with the state banks all through the existence of the bank, but it was excessively annoying, and the Treasury Department would have been glad to discontinue it. Secretary Rush, in 1826, complained

of the inability of the state banks to sired by them, and dethe duties assumed perform satisfactorily deposits should be intrusted that all the government of the Bank of the United States.2 At this time the number of state banks employed as depositaries was small, and Rush thought that if the bank would establish
to the keeping

branches in Maine, Alabama,

Michigan, and Missouri, all the public treasure could be placed in its charge.8 Later the bank did establish branches at Portland, Mobile, Natchez, Buffalo, St. Louis, largely for the convenience of the treasury, and at that department's solicitation. But the needs of the treasury constantly increased, and the necessity of using
and

local banks
had
1

no

in states where the Bank of the United States branch was always present. Consequently, when the
arrangement

"

The

officesof deposit was States, by agreement,

subsequent the United

deposited in the State banks as by "which the public money to the drafts of the Cashier of the Bank of the United subject deposited in such banks All sums expired on the 30th ultimo. to that time may be entered, as heretofore, to the credit of the Bank of
States, and shall be drawn, from time to selected state banks, July 1, 1819,

to time, by the

States, for the use of the United Treasury drafts."" Crawford

ibid., p. 588.

From the want of punctuality that has been manifested by some of the State banks, in regard to their engagements the Treasury, and from the risks to which with if it would it be ultimately they have been found to be generally subject, seems as to dispense altogether with the agency necessary of those institutions ; indeed the adoption of this course, would chief difficulty that presents itself to the immediate if there were be removed, the Bank of the United States at those points offices of
venience, too great inconthe public deposites in different quarters might, without Secretary Bush to Biddle, Jan. 26, 1826, 8. D, 17, 23d be concentrated."" Cong., 2d Sess., p. 254.
at which
3 "It is believed that the establishment of these three offices [at Detroit, Mobile, and St. Louis] and one in Maine, which the bank is understood to have long had in view, would remove the necessity of employing any other than the Bank of

"

the United

United

States and its offices as depositaries of the public moneys States."" Ibid., p. 255.

throughout

the

462

THE

SECOND
were

BANK

OP

THE

UNITED

STATES
were

deposits

in October, 1833, there removed thirteen state banks which held funds and made for the government.1

still

payments
transfers to the

The

arrangement

of government bank, because the treasury

entered into in 1817 for making funds soon became embarrassing

was

funds whenever which they were.

distances, across

to call for the it wished them, regardless of the places in Transfers having to be made over vast

accustomed

tion country where the means of transportawere so wretched that it took six weeks to travel from Orleans, it was Philadelphia to New absolutely impossible
a

for the bank

being

to meet

the demand

allowed time to make drew for large sums complained that the government out withgiving previous notice to the institution, and that it was beyond the bank's power to meet these demands.2 Crawford replied that the treasury kept its accounts, not with the branches or the agent banks, but with the Bank of the United States alone, which therefore must be ready to pay the public funds at the points designated by the treasurer, no matter where the funds were collected and deposited.3 The
Dec. 12, 1834,8. D. 13, 23d Cong., 2d Sess., p. 45. by this arrangement was annoyance caused the government considerable, for it in poorer but also in actual loss. From 1817-34, inclusive, service, resulted not only became by the failure of deposit state banks, and in 1834 $1,764,235.05 unavailable were $920,260.16 stilldue." Ibid., p. 50.
1

of the treasury without the transfers. Cashier Smith

Beport of Secretary

Woodbury,

The

There is not a sum sufficient to the credit of the Treasurer in this bank to his draft this day received for eleven millions of dollars. It was meet expected that the interests of the public required an accumulated sum one at any when point in favor of the Bank of the United States on the drafts would have been drawn
2

"

in lieu of offices,from whence Cashier, payable at such offices, or banks employed have enabled this bank to have intended to be drawn, which would was the money Smith to Treasurer Tucker, Aug. 13, 1817, at the point desired." placed the money Vol. IV, pp. 813, 814. .F., 3 " The Treasurer keeps no account with the officesand State banks employed in that character by the United States Bank The drafts of the Treasurer,
"

since the firstembarrassments

the United States Bank was enveloped have the public interest requires, without referwherever ence to the existence of public funds at such place, as the bank is by charter bound to transmit the Government Crawford the public funds whenever requires them." to Smith, Sept. 25, 1817, ibid., p. 550. passed
away,
are

by which

made

payable

"

THE

BANK

AS

GOVERNMENT

AGENCY

463

became drafts of the government during the panic of 1818-19.

still more

embarrassing

In October, 1819, therefore, Cheves

ford transmitted to Craw-

the draft of a new arrangement to date from November 1 of that year. The time to be allowed for transferring funds

follows : from and to New Orleans, no matter what the four months ; from the West to the Atlantic cities, other office, four months; from offices south of Washington and vice versa,
was
as

to those north, and vice versa, sixty days ; and from to offices south of that city, or offices south of Washington

from officesnorth of it to offices north, thirty days.1 Nor the treasury to draw on an office unless it had funds was deposited there.
A change was also made at this time in the mode of keeping the accounts of the treasury with the bank. to keep separate accounts Henceforth the department was

instead of a single account with the with the individual offices, accepted by Crawparent office.2 These modifications were
1
"

1. That

....

the bank

to the notes received, to debentures.

"

shall pay, at the places of receipt, without reference (whether of the offices receiving, or others,)except in relation

2. That the Treasury, when it desires to use its funds otherwise than whore be deposited, shall direct the bank to transfer to the specific offices where they may it shall want its funds, from the specific office where be deposited, and they may to effect these transfers within that the bank shall be bound periods to be agreed that for the present, the following periods be established : upon,
.... ....

"

1. From

the western
to New

offices to the Atlantic

offices, respectively, and

vice

versa,

four months. " 2. From and

"

3. From sixty days. "4. From days. " 5. From days.

"

the offices south

four months. Orleans, in all cases, to the offices north of Washington, of Washington of Washington
to offices north

and vice

versa,

offices north offices south

of Washington, of Washington,

thirty thirty

to offices south

3. That the Government (unlessin circumstances which shall be the subjectof special arrangement) shall only draw on offices to the amount of its funds in those offices, respectively, except the office at Washington, where it shall draw at pleasure, as heretofore.
on the the Government under special understanding, shall draw grant a office not having funds to meet the draft, it shall simultaneously draft in favor of the bank or the office on the bank or such office where it shall have
"

5. When,
an

bank

or

funds

as

the bank

shall designate, to
there

cover

such

drafts.""

Resolutions

of Sept. 25,

1819, sec.
2
"

16, ibid., p. 909.

At present

is no The

account

between

the Treasury has

the office at Washington.

bank

at Philadelphia

and the offices, except credit with the offices for

464

THE

SECOND

BANK

or

THE

UNITED

STATES

ford.1

The treasury thereafter gave notice of the transfers that would be needed by transmitting to the bank a weekly list of the drafts drawn, and from June 26, 1829, a daily

listof the warrants issued,2 stating the sums which would be needed by the government, the places at which they would be to be paid. The they were needed, and the times when bank
were

thus always prepared to make payments when they called for, and thenceforth the monetary affairsof the
was

were government managed without inconvenience the bank or to the treasury.

either to

specific acts which the bank had to perform as a treasury agent were the following: (1)it received and kept the funds of the government, (2)it transferred the money derived ; whatever source of the nation from any part of disbursements the nation to any other part; (3) it made from the government funds to the holders of the public similarly (4)it paid almost all the pensioners of All this it did without compensation. the government. The firstinquiry which naturally arises is whether or not and
the bank
was a

The

from

debt;

perfectly safe depositary. To this inquiry answer was ever given, and that an affirmative one. only one Secretary Woodbury, a bitter opponent of the bank, in his report of February 11, 1841, admitted that the government had not lost a single dollar through the agency of the Bank of the United States,while losses from state banks, counting
3 $15,492,000. The explanation principal and interest, were It was of the bank's safety as a public depositary is simple. funds to the extent of its responsible for the government

the use of the Treasury, and is debtor to the Treasury for the aggregate amount ; is rather a fiction than a reality. The offices are this mode of keeping the account really debtor, and have the means of paying, and with them, respectively, the Ibid. accounts ought to be kept."
"

Crawford

to Cheves,

Oct. 8, 1818, F., Vol. IV, p. 644.

Nov. 5, 1833, H.
R. 313, 23d Cong.,

to Campbell, zjaudon Nov. 15, 1833, ibid., p. 27.

1st Sess., p. 24; and

38. D. 180, 26th Cong., 2d Sess., p. 4.

THE

BANK

AS

GOVERNMENT

AGENCY

465

entire capital,and it could be reached easily by legal process through the courts of the United States if the need arose. Moreover, the bank was under the strict supervision of

the Treasury

Department,

secretary every week

to make empowered fit. Besides all this, either house of Congress could saw This state of affairs order an investigation at any time. the difference in the degree of responsibility reveals at once

its affairsbeing placed before the and every month, and that officerbeing he a special examination whenever

between the Bank

of the United States and the state banks. Over the latter the government had no control ; they were amenable to state laws, and the strictness of these laws varied quently with the state ; there was seldom rigid supervision, and freHence the government supervision whatever. incurred great risks in employing state banks, no risk whatever in employing the national bank.
no

was of the revenue received through The entire amount the customs-houses. toms collected from cusduring the bank's custody of the public funds was over
as
now,

Then,

most

$358,000,000,hile w
which
sums

the

sum

of all the government

was

the bank

ever

held

about

moneys $410,000,000. The

received from the sale of public lands were next in for the whole time that the bank amount, being $35,700,000 held the public deposits, while the receipts from direct taxes, and miscellaneous sources revenue, were internal

meager, being from 1817-33, inclusive, only $11,900,000.' Adherents of the bank were wont to magnify its services
in making transfers for the government.2 Its opponents, on the other hand, belittled the claims, and asserted positively that it possessed no special virtues in this particular. Polk, in his minority
1

report of March,
of the Secretary
1817-36. Writings,

1833, asserted that the

1893, pp. cxxii, czziii, for the

See the Report

of the Treasury,

government
2

receipts during
Gallatin's

ADAMS,

Clay, Vol. V, p. 615; Webster's

Works,

Vol. Ill, pp. 328,329,345,346; COLTON, Works Vol. HI, pp. 401, 402; Vol. IV, p. 201.

of

466

THE

SECOND

BANK

OP

THE

UNITED

STATES

bank rendered no special service in transferring government funds.1 in 1834, argued that the Secretary Woodbury, transfers were phlet profitableto the bank,2 and Gouge, in a pamthe

issued in 1837, made bank as a necessary,

He

an
or

elaborate argument
even a

agent.

convenient, held that its services in this capacity had been

against treasury

grossly overrated; that at those points where the transfers incurred risk or expense the government was compelled to be its own carrier; and that a private merchant occupying a position similar to that of the bank fortune.3 immense In making

would

have

made

an

these criticisms the whole truth was sometimes either not told or else obscured. For instance, Woodbury, while arguing that the bank made few transfers for the government, revealed in a passing sentence that this had been the case only within a few years, and that earlier the had been considerable.* Both advantages to the government his opinions and those of Polk were based entirely upon the figures for 1834, which seemed to show that collections and disbursements were principally made at the same points, and

hence that few transfers

was
mere

were

in Woodbury's argument report, without noting his admission of the bank's previous bury's usefulness. A listof transfers for 1832 proves that Woodtwo, for in that year they "few years" were not over
were numerous
l H.
3

Gouge seeming. figures and the accompanying

necessary. fellinto error

of this by accepting these

most

Even

and large.5
23. D. 13, 23d Cong., 2d Sess., pp. 10-12, 54-62.

R. 121, 22d Cong., 2d Sess., p. 42.

An

GOUGE,

Inquiry

into the Expediency

of Dispensing
derived

with Bank

Agency

....

in the Fiscal
*
"

Concerns

of the Country,

etc., pp. 24, 38.

The This

United

States' Bank, had

benefits, supposed to have from performing

been

by this department
were,
"

from

the

that operation,

years past." ceased to be so "for some report, Dec. 12, 1834, S. D, 13, 23d Cong., 2d Sess., p. 12.
5

time, considerable." Secretary Woodbury's

at
one

The

from

S. was $16,100,000." D. 17, 23d Cong., 2d Sess., p. 181. whole sum The average is from 1815 to 1827 is 28 millions." now twenty

"

The average to twenty-

five millions." Biddle to Gallatin, Sept. 9, 1830, P. L. S.,Vol. Ill, p. 344.

THE Yet,

BANK

AS

GOVERNMENT

AGENCY

467

even

admitting that Woodbury

absolutely accurate made a profit on the transfers, still the conclusion that the transfer of the funds was not a great convenience and saving
to the government, would not follow. to argue that, because the bank could

and the others were in their statements, and that the bank

It

was

not

correct

and

realize a profit in making them, any other institution,or that the government could itself transfer the funds without expense. Neither of these things
It will be readily admitted that if the government its funds without depositing them in some wished to move bank, it would have to pay for the transfers, and there
was so.

the transfers make this could be done by

As to the state advantage. would be no compensating banks, the national bank possessed at least three very definite Its notes, checks, drafts, and bills them. advantages over treal of exchange were willingly received everywhere from Monto the City of Mexico. A credit so extensive made of which possible a system of domestic exchange by means the funds of the government were transported from place to place, always at a very low rate, and frequently with a profit In the third place, all this was to the bank.1 made easier ciency and the system of exchange rendered of the highest effiby the organization of the bank, with its twenty-five branches scattered through the Union. Not one of these

advantages

possessed by a state bank, and yet the resulting efficiencyand the consequent profit on the exchanges could be attained by no other means.
was

The

sum

saved
some

calculated with

to the government on transfers may be approximation to the truth. The bank

charged
i

on

an

average

^ of

1 per cent, for making

transfers

"The transfer of the money of the United States by the Treasury, from one part to another, would be attended with great risk and some The bank is expense bound to draw the money to of the United States from any one part of the Union
any other, without any allowance considerable saving to the United risk of transport and fraudulent

for loss of exchange. States in the exchange,

agents

The

This, it is presumed, is a and a security against the exchange always is in. almost

468

THE

SECOND

BANK

OP

THE

UNITED

STATES

for private individuals. The transfers for the treasury from 1815 to 1827, inclusive, averaged $28,000,000 a year, and
at
* 1 per cent, the sum saved yearly would be $60,186.56. tary For the seventeen years that the bank was the public deposithis would give a saving of $1,023,161.52, and this is probably not excessive. amount

" of

When

the disbursements

are

examined

they

are

found to

fallunder several heads : There were count payments made on acof the public debt, principal and interest; of pensions ; of the army and navy ; and of the civillist. The bank incurred
no

cept great expense in making any of the disbursements, exthose in connection with the public debt and pensions.2 An inquisition into the disbursements on account of all In respect to the is, therefore, unnecessary. other

subjects

public debt and pensions, the bank not only acted as disbut, in accordance burser for the government, with the terms of the charter, had imposed upon it the duties of commissioner of loans and pension agents.3 During the period of the bank's possession of the government deposits the sum paid in discharge of pensions $34,424,000. Not all of this was disbursed by the

was

bank, since in states where it had neither a branch nor an were made through private agents. agency the payments These exceptions were unimportant,* however, and the conis believed to be from 2 to 4, and difference of exchange is a saving to the United States ; not a positive loss to cent, which sometimes itself by the purchase the bank, because it may, and probably does save of bills of Europe, which it can sell in the Atlantic States, without loss ; an operaon exchange tion favor of New

Orleans

The

5 per

which would be very difficultand expensive (and perhaps dangerous, from bad Report of the Finance Committee of the agents) for the Treasury to perform." Senate, May 13, 1828, S. D. 195, 20th Cong., 1st Sess., p. 3.
"

1 2

Biddle to Gallatin, Sept. 9, 1830, P. L. B., Vol. Ill, p. 344.

Thus than
from
1817 to 1835, inclusive, out to the payment

amount
more

devoted

of a total expenditure of the public debt and pensions

the of $481,983,000,
was

$243,744,000, or

one-half.
at Large,

3 Statutes
*

Vol. Ill, pp. 360, 361, chap, xxxviii.

expended
on

Thus

in 1826 the amount

pensions

was
was

$1,556,000, of which out

$976,000, out of which
the Treasury

the the

bank bank

disbursed

in $1,003,514.50; 1827 the whole amount See Report of the Secretary disbursed $926,343.70.

of

for expend!-

THE

BANK

AS

GOVERNMENT

AGENCY

469
the total

that jecture the

bank disbursed

$30,000,000 out of

will not be far astray. The sum saved to the government may be calculated on the basis of 2 per cent., that being the commission allowed to individual pension agents.1 The
2 saved would be, therefore, $600,000. whole amount large, The sums paid on account of the public debt were $212,202,000 from 1817 to 1835, inclusive. aggregating

The expenses of disbursing at least $200,000,000 this total of fellupon the bank. These expenses to the government before the establishment

$31,000a
to
a

of the bank had ranged from $26,000to year, while after its establishment they were reduced

trifle over

$2,000.s It may

the bank saved the government this item.4 Adding this to the saving on the pension payments and that on the transfers,the totalis at least$2,120,000. by actthe nation large sums ing as paymaster of pensions and the public debt, but it the government would otherwise the risks which assumed
Not only did the bank
save

be concluded, therefore, that from $500,000to $600,000 on

have been compelled to incur. It occasionally suffered losses Thus the president at Portsmouth defrauded as a result. from the pension the government taking the sum of $20,000, funds, and the bank
tures

was
1893, pp.

obliged to replace it.5 In 1828 the

pendix Apcxxvi, cxxvii; for bank's disbursements, Finance May 13, 1828, S. D. 195, 20th Committee,

of the government, B, report of the

Senate

Cong., 1st Sess., p. 7. 1 " The rate of commissions allowed for paying pensions, where any are allowed to agents or institutions other than the Bank of the United States and its branches, is 2 per cent." Ibid.
"

-"At
as

follows:

1816, $31,345.21; 1817, $30,675.80; 1818, $2,042,30." $31,584.51; Appendix C, ibid., p. 8. See the Report of the Secretary of the Treasury, 1893, pp. cxxvi, from 1817 to 1837. czxvii, for the expenditures of the government * In February, declared that the sum Biddle 1829, President ment saved the governby the bank was $50,000annually on payment of pensions and public debt. This

pensions " 1814, $26,578.01; 1815,

this rate [i. e.,2 per cent.] the annual amount of commissions wonld bo 1827, $18,526.87."" Ibid. The sums 1825, $21,143.20; 1826, $20,070.29; paid in during these years were less than the annual average.

would

S. the total saving about $900,000." D. 92, 20th Cong., 2d Sess., p. 6. make had originally the misfortune to have at its head a The office at Portsmouth Mr. Cutts, who ended by defrauding the United States of upwards of $20,000of the
5
"
"

pension fund, which the bank was obliged to replace." 1829, H. B. 460,22d Cong., 1st Sess., p. 442.

Biddle

to Ingham,

July 18,

470

THE

SECOND

BANK

OP

THE

UNITED

STATES

fraud committed on it in payment of part of the funded debt ; in 1829 it was being sued for $5,000 which had been lost through the failure of its
institution lost

$3,000 by

agents.1 Biddle mentions a case in which the bank suffered by paying out pension moneys without having complied with all the formalities of the Treasury Department,2 and after the
sued for $24,907, expiration of the charter the bank was which had been retained by presidents at the branches.3 The duties of commissioners of loans were ous, evidently hazardfrom the is known onerous and that they were tions objecby the state banks to performing them/ made When the charter was framed there was a general expectation that the bank would enhance the credit of the state

by absorbing into its capital much

government,
moreover, was

of the public stock. The given the further advantage of

redeeming

this stock at any time at its valuation when subscribed, The expecno matter what the market quotations. tations were three-fifths of the bank's realized. Almost

capital subscribed by individuals was in stock, to which was at added the government's subscription of $7,000,000 5 per conout of a total of $35,000,000 cent. Thus $22,386,000 sisted

of government entire public debt

1

securities, and almost one-fifth of the was absorbed into the bank's capital.5

it the last year, in paying on "The bank lost $3,000by a fraud committed the for another to the amount interest thereon, and are $5,000. prosecuted of have failed, and the loss is had fraudulently The parties who received the money, if the Commissioners have been to the Government, to the bank, which would of S. D. 92, 20th Cong., 2d Sess., p. Loans, (as formerly) had transacted that service."

debt,

or

"

6, Feb. 20, 1829.

York, at New .25 as pension agents. and Cincinnati, to reimburse them for duties performed Report Both the bank and these officers were of Secretary Ewing, June 14, sued. D. 1841, fif. 22, 27th Cong., 1st Sess., pp. 2, 3. Richmond,
"

Biddle to Cass, Jan. 23, 1834, 8. D. 71, 23d Cong., 1st Sess., p. 15, 3 $24,907 had been retained by the presidents of the branches
2

* President Fleming, Mechanics' York Bank, New Department, city, to War Jan. 27, 1834, 8. D. 71, 23d Cong., 1st Sess., pp. 37, 38; and President Schott, Girard Bank, Philadelphia, Jan. 22, 1834, ibid., p. 39.

whole T $123,491,965.he

The

debt on Jan. 1,1816, was $127,334,933, nominal and bank held $22,386,964.93. For the figures in regard
F., Vol. Ill, p. 269.

on

Jan. 1, 1817,
the bank's

to

subscriptions

see

THE

BANK

AS

GOVERNMENT

AGENCY

471

This stock rapidly appreciated, and hereupon the government took advantage of its right to purchase the stock at the subscriptio price,and in 1817 redeemed almost all held by the

bank, excepting

its

own

gain to the government

stock paid for bank shares.1 The cannot be calculated,but it was considerabl

The government the enjoyed further advantage of being able through the bank to procure loans at the best possible
terms.

A
8

loan of

1820;
of

another

$2,000,000at 6 per cent, was made in at of $4,000,000 5 per cent, in 1821 ; a third
*

$5,000,000 4" at

$5,000,000at 4"

per cent, in 1824 ;5 and a fourth of per cent, in 1825.6 The bank's greatest

ence usefulness in this direction was never proved, since its existwas passed entirely in time of peace. A war would have thoroughly tested its efficiency,and it is probably one of

the misfortunes of this country that no Bank of the United States existed at the outbreak of the Civil War.

In addition to securing long loans, the government was temporarily by the bank. always certain of being accommodated
The first corporate act of the Bank of the United States was a loan of $500,000to the government to pay running expenses.7 In the firstquarter of 1831 the treasury account was overdrawn
in the fourth quarter of 1824, $518,910.8 In 1832 President Biddle loaned the secretary of war ),000 without charging interest. These were matters of

$1,044,539,nd a

to Jones, May 8, 1817, F., Vol. IV, pp. 525, 526. The government $20,886,000 the public debt in 1817. Of this amount over $13,000,000 were of purchased from the Bank of the United States." Ibid., Vol. Ill, p. 228.

'Crawford

redeemed
2

Biddle gave as an instance the 3 per cents. Of these there were subscribed to The governthe bank's capital $1,556,156.04 on the 100, worth at par $2,934,086.23. at 65 ment the rest of the 3 per cents. got this at 65, though it paid dollar for dollar on

Profit, $l,397,930.19.-ToL. Williams,

SNILES,
*
5 7 8

Feb. 12, 1833, P. L. B., Vol. V, pp. 320, 321.

to Cheves,

Vol. XVIII,

p. 314; Crawford

June

22, 1820, F., Vol. IV, p. 665.

Cashier Wilson

to Crawford,

April 11,1821, ibid., p. 952.

6

Ibid., Vol. V, p. 180. Smith

to Crawford,

H. R. 460, 22d Cong., 1st Sess., p. 335.

Jan. 4, 1817, F., Vol. IV, p. 764.

Report

of the treasurer, Jan. 12, 1829, 8. D. 44, 20th Cong., 2d Sess., p. 2.

472
no was

THE

SECOND

BANK

OP

THE

UNITED
how

STATES
the bank

great moment,
The

but they show

convenient

to the government.

tages country as a whole derived direct pecuniary advanfrom the bank. It is well known that under the present system large payments on account of the public debt are apt by throwing on to embarrass the community commerce
immense

of money for which there is no demand, while mous at other times the treasury has locked up in its vaults enorsums which ought to be in circulation. Inevitable and
sums severe

disturbances in trade result. During the existence of the Bank of the United States these disturbances were, for
The government the most part, avoided. funds locked up, because the bank

had its surplus them in employed

never

making

loans.

The

bank

occasioned by throwing on quantities of money in payment of the public debt, by making In the same the payments gradually. way it avoided the pressure consequent upon a sudden large demand upon the money market for funds to be used in paying the debt. It the frequent boast of President Biddle that these evils was averted by the bank's good management, and the secretaries of the treasury at that day admitted that this was The bank early received notification of the debt to be so.1 always
were
i See the subject treated at length 7, 20th Cong., 2d Sess., pp. 10, 11.
"

also avoided the embarrassments the market at a single instant huge

in Secretary

Rush's

report,

Dec.

9, 1828, S. D.

To prepare
should thing,
so

Bank
same

for this payment curtail its discounts, that

a

by accumulating
which would

scarcity of money would immense an the first day of July, when be amount pressure, of money until would thrown into the market to seek investment, causing as sudden a rise in the funds as depression. To avoid these fluctuations the Bank has there had been a previous

funds, would require that the to do the oblige the State Banks be produced, an extreme perhaps

when there will be a said to the fund holders instead of waiting for the last moment, for investment, look about you and wherever ment, you find an object of investgreat press the Bank cannot bring your stock to the Bank ; and although the purchase it will lend the amount on your note payable on the 1st of July, secured collatstock, erally by a pledge of the certificate, and it will lend it to you at 5 per cent., as it only
on the Bank. in fact cashing the drafts of the Government This is a great facility to the fund holders, and they availed themselves of it counting diswere to a considerable extent, so that on the 1st of July, the several Branches
"

on

the stock, which

was

thus melting

away,

tillon

the day of payment,

the

THE

BANK

AS

GOVEBNMENT

AGENCY

473

discharged, and at once began discounting on the stocks to be paid off,holding them until the time of redemption came. In this way the holders got a bank discount for their stock, Hence, when the government loan replacing another. cured ordered the payment to be made, the bank had already proThere was then merely a change most of the stock. getting of credits on the books of the bank, the government
one

the stock, and the bank getting ownership of a part of the in its possession. It is public deposits which before were true, however, that these gradual payments were not always

possible. The

objectionsometimes

funds

were

urged that if the government intrusted to banks, difficulty might be found in

is

securing them promptly when

wanted. This objection is valid, and necessarily must be where banks are permitted to use the funds of the government with no stipulation in they
were

favor of holding would

certain

sums

subject

to order.

The difficulty

in times of crises, and almost certainly occur in the case it did occur of the Bank of the United States. Thus, as a consequence of the panic of 1819, the bank was forced to ask the government to postpone the payment of the

Louisiana stock to the amount the interest on the sum.1

the of $2,000,000, bank paying The case of the 3 per cents, in

It may be concluded, then, similar character. that there was inconvenience to the government occasionally Bank United States,but such inconveniunder the of the

1832

was

of

modations relieved from the heaviest pressure, and was enabled to continue its accomThis is to the community up to the very day of payment. undiminished day a pay one of the most beautiful of our operations, enabling the Bank to go over millions of dollars without the slightest change in its daily business of six or seven Biddle to F. Hopkinson, Nov. 2, the least shock to the business of the country." or

Bank

was

"

1830, P. L. B., Vol. Ill, pp. 378, 379. " It has thus become part of the settled policy of the bank, at the approach of to begin its preparations for a long period in advance, so as to any large payment, as wide a space over collect its means gradually, and to distribute its disbursements
as

possible."" Beport
i

of the Committee

of Exchange,

H.

R. 121, 22d Cong., 2d Sess.,

p. 161.

Crawford

to Gallatin, April 26,1819, ADAMS,

Gallatin'*

Writings,

Vol. II, p. 98.

474

THE

SECOND
as

BANK

OF

THE

UNITED
could

STATES

ences

were

near

minimum

as

be justly

expected.

There is no

system which will completely meet the case. The direct profit which accrued to the United States through the connection with the bank consisted of the bonus
of dividends from the bank's profitsover the interest paid on the government's stock note, and, thirdly,of the advance in the price of this stock when the of t $1,500,000,hen of the
excess

The total of these sums bank settled with the government. 1 was $6,093,67.07.1 To this must be added at least $2,100,000 more, being the amount saved by the bank's performance

of loans and pension of the duties of commissioner The whole profit, agent and its transfers of public funds. therefore, was something like $8,193,000. This is a definite
and calculable benefit was of
sum.
an

In the nature of things, the greater intangible kind, but none the less real.

appreciation in the public securities had a money value, even though it could not be measured, and so had the insurance of the public funds which the bank's custody

An

furnished. duties The value today of a bank performing the same for the government would be far in excess of the value of The charges for the large government transfers, the old bank.
the expenses of the independent treasury, of the government agency of the national banking system, of the
1
CREDIT

Bonus Dividends paid by bank

moneys
....

$ 1,500,000.00
7,118,416.29 paid

Proceeds

of stock sold and other the bank to the United States Total
DEBIT

by
9,424,750.78

$18,043,167.07

Five per cent, stock Interest paid on this stock

$ 7,000,000.00
4,950,000.00

Total
Profit of government
"

$11,950,000.00

$6,093,167.07
Knoz,
1876, p. xiii.

Report

the United

of Comptroller States, p. 79.

See also his History

of Banking

in

THE

BANK

AS

GOVERNMENT

AGENCY

475

greenback issues, of treasury notes, the losses by fire,by theft,by the bad faith of public servants would all vanish. To the business community at large and the community valuable still. such a bank would be more
"

not all on one side. The Bank of advantages were But an the United States certainly enjoyed equivalent. that equivalent cost the country nothing, and the advantages bestowing it could not have been made profitable except as

The

granted to

the government received from the bank was pure gain, what it gave to the bank was no loss. The great benefit of the connection to the bank consisted in its right to use the public deposits.
some or

individual

corporation. What

The

amount

of these, The

as

already stated, must

have

been

near somewhere bank held them.

$410,000,000for
bank's

the whole time profits on this sum

that the
can

be

calculated only by finding a monthly or quarterly average of in its vaults. Such an average was the amounts worked out by Secretary Taney for every month in the year from 1819 It to 1833, inclusive,and was given as $6,717,253.' is certainly
fair to compute the bank's profits on this sum 6 as the government's per cent, for the whole time that it was depositary. Employing this computation, it is seen that the

the gainer to the extent of $403,035.18 each year From a total of $6,448,562.28. this from 1818 to 1834" For calculation are omitted the years 1817 and 1834^35. bank
was

obtainable; for 1834-35 the monthly average of United States funds held was $1,570,000, for two years at 6 per cent, would yield $188,400. which sum 1817
accurate

figures

are

not

The bank's entire profits,therefore,from this item alone be set down at not less than $6,636,962.28.
As 'in the there
were case

can

of the government,

so

enormous

in terms
1

advantages which The monopoly of money.

in that of the bank, could not be measured of national banking

S. D. 16, 23d Cong., 1st Sess., pp. 4, 5.

476
was

THE

SECOND

BANK

OP

THE

UNITED

STATES

the principal of these; the partial legal -tender quality of its notes was another; the advantage over the state banks deposits was a secured by the possession of the government

third. tween War, the connection bebenefit immense the bank and the government was an But having to both, but particularly to the government.
as stated this conclusion, there is a corollary which is just inevitable. With the growth of the Union, with the increase of national wealth and of population, the bank would have

Up

to the period of the Bank

been progressively useful. From this point of view, it becomes obvious that Jackson and his supporters committed an offense The they destroyed the bank. against the nation when and enormity of that offense can only be faintly is certainly justifiedsaying that few in realized, but one greater enormities are chargeable to politicians than the magnitude
destruction of the Bank overthrow of this country
"

a a

machine

the of the United States. It was capable of incalculable service to

can

service which

not

similarly organized. nation if it could command

Would

be rendered by no bank it not be better for the

that service today ? Why should it be almost unanimously admitted that a bank of this type importance to the finances and commerce is of paramount of England, France, Germany, Austria, Russia, and yet denied that

similar bank would be of equal value to the United No answer to this question can be found in our States? tutions, instiin the nature of American politicalorganization, none
a none

in the history of
as

our

country,

none a

in

the

citizens of a republic, none political power; for the bank possessed no In truth, there is no answer.
nature of
men

in such

bank's

political power.

it If,finally, is necessary to acknowledge, in the words of Daniel Webster, that this form of a bank for the United

States is an

"obsolete idea," it ought, at least,to be

so

much

THE

BANK

AS

GOVERNMENT
to

AGENCY

477

the easier to understand such an institution once

and

admit

the services which

performed at so great a profit to the people; it ought to be easy to give the due meed of due measure blame. When than the of praise, and no more that the old this is done, it will have to be acknowledged far superior to bank, in its services to the government, was any other banking system known in this country.

APPENDICES

APPENDIX

I
to the Bank

AN ACT to incorporate
States.
Be

the subscribers

of

the United

it enacted, "c., That

shall be established, with divided into three hundred

of the United States of America a capital of thirty-five millions of dollars, hundred and fifty thousand shares, of one
a

bank

to the sum dollars each share. Seventy thousand shares, amounting of dollars, part of the capital of the said bank, shall be seven millions of after hereinsubscribed and paid for by the United States, in the manner ing specified; and two hundred shares, amountand eighty thousand dollars, shall be subscribed to the sum of twenty-eight millions of

and paid for by individuals, companies, hereinafter specified.

or

corporations,

in the

manner

[SEC.2 specifies the times, places, and mode of receiving subscriptions to the capital stock.] SEC. 3. And be it furtherenacted, That it shall be lawful for any
to subscribe for any corporation, or State, three of shares of the capital of the said bank, not exceeding number so thousand subscribed shares, and the sums shall be payable, and in the manner following: that is to say, seven lars millions of dolpaid, thereof in gold or silver coin of the United States, or in gold coin

individual, company,

....

of Spain,

or
....

the dominions

silver coin
or

silver coin, or the time of the subscriptions

or in other foreign gold or of Spain, and twenty-one millions of dollars thereof in like gold in the funded debt of the United States contracted at
....

what stocks may be of the said subscriptions

[The section then specifies subscribed, and at what rates.]And the payments
respectively.

shall be made and completed by the subscribers, in the manner following: that is to respectively, at the times and the time of subscribing there shall be paid five dollars on each say, at in share, in gold or silver coin as aforesaid, and twenty -fivedollars more coin as aforesaid, or in funded debt as aforesaid; at the expiration of six after the time of subscribing, there shall be paid the calendar months
further of ten dollars on each share, in gold or silver coin as aforesaid, in coin as aforesaid, or in funded debt twenty-five dollars more and from the time aforesaid; at the expiration of twelve calendar months
sum

as

of subscribing, there shall be paid

the further

sum

of ten dollars,on

479

480
each
more

THE

SECOND

BANK

OF

THE

UNITED

STATES

share, in gold or silver coin as aforesaid, and twenty -five dollars in coin as aforesaid, or in funded debt as aforesaid. in which the subscriptions shall be [SEC.4 regulates the manner
"

directors and company of of the Bank be the United States," and provides that reasonable compensation shall to superintend the " commissioners the subscriptions."] appointed paid SEC. 5. And be it furtherenacted, That it shall be lawful for the

transferred to the

President

the funded debt subscribed to the redeem and at capital of the said bank, at the rates aforesaid,1 in such sums in any act or acts of times, as shall be deemed expedient, anything such And it shall also be Congress to the contrary thereof notwithstanding.

United

States to pay and

lawful for the president, directors, and sell and always,

company,

transfer for gold and silver coin, or to the capital of the said bank subscribed

said bank, to bullion, the funded debt

of the
as

That they shall not sell more dollars in any one year; nor of the United States, without within

aforesaid: Provided thereof than the sum of two millions sell any part thereof at any time previously giving notice of their

to the intention to the Secretary of the Treasury, and offering the same United States for the period of fifteen days, at least, at the current price, not exceeding the rates aforesaid.

at the opening of subscription to the capital stock of the said bank, the Secretary of the Treasury to be subscribed, on behalf of the United shall subscribe, or cause

SEC. 6. And

be it

further enacted, That,

States, the said

seven or

number dollars millions of in stock of the United

per annum;
....

as

centum

to thousand shares, amounting to be paid in gold or silver coin, aforesaid, States, bearing interest at the rate of five per and the principal of the said stock shall be

of seventy

which to sell and transfer for gold and directors, and company, president, They shall not sell silver coin or bullion at their discretion; Provided, in any one year. more than two millions of dollars thereof

redeemable shall deem

in any fit

sums,

and

periods, which the Government said stock it shall be lawful for the said
at any

SEC. 7. And
said Bank

be it

further

of the United and be, and are hereby, created a corporation and body politic, assigns, shall by the name and style of "The president, directors, and company, of the Bank of the United States," and shall so continue until the third

the subscribers enacted, That States of America, their successors

to the

day of March, in the year one thousand eight hundred and thirty-six, able and capable, in shall be, and are hereby, made and by that name law, to have, purchase, receive, possess, enjoy,and retain, to them and lands, rents, tenements, hereditaments, goods, chattels, their successors, kind, nature, and quality, to an amount not and effects, of whatsoever exceeding,
i The

in the

whole,

fifty-fivemillions of dollars, including

was

the

rates at which

the stock

subscribed.

APPENDICES

481

to sell, grant, of the capital stock aforesaid; and the same amount demise, alien or dispose of; to sue and be sued, plead and be impleaded, answer and be answered, defend and be defended, in all State courts having competent jurisdiction, and in any circuit court of the United

States: and also to make,

to break, alter, and renew, and put in execution,
as

have, and use, a common at their pleasure: and

seal, and the same also to ordain, establish,

they shall deem

of the said corporation, or to the laws of the United

ordinances, and regulations, for the government necessary and convenient not being contrary to the constitution thereof,

such

by-laws,

and

States; and generally to do and execute

and

and singular
may

the

acts, matters,

to do; appertain subject, restrictions, limitations, and provisions, hereinafter

all it shall or to them things, which nevertheless, to the rules, regulations, prescribed

and

declared.
be it furtherenacted, That, for the management of the be twenty-five directors, five affairs of the said corporation, there shall dent being stockholders, shall be annually appointed by the Presiof whom,

SEC. 8. And

of the United

States, by and with

the

Senate, not more than three of whom State; and twenty of whom shall be annually elected at the bankinghouse in the city of Philadelphia, on the firstMonday of January, in each year, by the qualified stockholders of the capital of the said bank
other than

advice and consent of the shall be residents of any one

States, and by a plurality of votes then and there actually given, according to the scale of voting hereinafter to be prescribed: That no person, being a director in the Provided always,
the United
of the United

Bank
any

States,

or

any of its branches,

other bank; and should any such in the direction other bank, it shall forthwith vacate his appointment Bank of the United States. And the directors, so duly appointed of the

shall be a director of director act as a director in any

and elected, shall be capable of serving, by virtue of such appointment in the month of January of each and choice, from the first Monday in the month year, until the end and expiration of the firstMonday of

January

of the next year ensuing the time of each annual election to be held by the stockholders the board of directors, as aforesaid. And annually, at the first meeting after their election in each and every of the directors to be president of the corporation, who shall hold the said office during the same period for which the directors are appointed and elected as aforesaid: [The section then provides for the election of the firstpresident and directors; year, shall proceed to elect
one

for shall not be dissolved if an appointment for directors does not take] effect on any day president or an election but it to take effect, of this act, they ought when, in pursuance

and that the corporation

....

shall be lawful at any

hold such

other elections, (asthe

time
case

to make
may

and to appointments, such be,)and the manner of holding

482

THE

SECOND

BANK

OP

THE

UNITED
and

STATES
ordinances
of the

the elections shall be regulated

by the by-laws

or said corporation: and until such appointments elections be made, the directors and president of the said bank, for the time being, shall in the presidency, the in office: [that in case of a vacancy continue

directors shall " elect another president," and in case of vacancies in the directorate, other directors shall be appointed either by the President
of the United

States in

case

of government

directors

or

by the stockholders
sum

of private directors]. SEC. 9. And be itfurtherenacted, That as soon dollars in gold and thousand millions four hundred
case

in

as

the

silver coin, and

of eight in

the public debt, shall have been actually received on account of the subscriptions to the capital of the said bank (exclusively the subof scription the part of the United States) [thefirstdirectors shall be elected, and the president of the bank appointed by them]. SEX;.10. And be it furtherenacted, That the directors, for the time aforesaid,
on

to appoint such officers, being, shall have power clerks, and servants, them, as shall be necessary for executing the business of the said under for their services, such compensation corporation, and to allow them

shall be reasonable ; and shall be capable of exercising such other powers and authorities for the well governing and ordering of the officers of the said corporation as shall be prescribed, fixed, and
respectively,
as

determined,

rules, restrictions,limitations, and provisions, shall form and be fundamental articles of the constitution of the said corporation, to wit : 1. The number of votes to which the stockholders shall be entitled,

by the laws, regulations, and ordinances, of the same. be it further enacted, That SEC. 11. And the following

in voting for directors, shall be according to the number she, or they, respectively, shall hold, in the proportions

of shares he, following, that

is to say, for one than two shares, one share and not more vote ; for two shares above two, and not exceeding ten, one vote ; for every every four shares above ten, and not exceeding thirty, one vote ; for every six shares above thirty, and not exceeding sixty, one vote ; for -every eight

shares above sixty, and not exceeding hundred, one every ten shares above one
or

one

hundred,
no

one

vote ; and

for

person, copartnership, be entitled to a greater number than thirty politic,shall votes ; and after the first election, no share or shares shall confer a holden three calendar right of voting, which shall not have been to the day of election. And months previous stockholders actually

vote ; but

body

resident within the United by proxy.

2. Not
more

States, and

none

other, may

vote in elections

than three-fourths of the directors elected by the stockholders, than four-fifths of the directors appointed by the and not more President of the United States, who shall be in office at the time of an annual election, shall be elected or appointed for the next succeeding

APPENDICES

483

than three years out of year ; and no director shall hold his officemore four in succession ; but the director who shall be the president at the
time of an may be.

election may

always

be reappointed

or

re-elected, as the

case

shall be but the

but a stockholder, resident citizen of the United States, director ; nor shall a director be entitled to any emolument a ; directors may make to the president, for such compensation his extraordinary to them at the bank, as shall appear attendance

3. None

directors shall constitute a board for the the president shall always be one, transaction of whom in case of sickness or necessary absence ; in which case his place except he, by writing, under his may be supplied by any other director whom And the director so deputed may hand, shall depute for that purpose.
seven

reasonable. 4. Not less than

of business,

do and transact all the necessary business, belonging to the officeof the of the sickpresident of the said corporation, during the continuance ness or necessary the president. absence of
of stockholders, not less than sixty, who, together, thousand shares or upwards, shall be proprietors of one shall have power at any time to call a general meeting of the stockholders, for purposes to the institution, giving at least ten weeks' notice in two relative

5. A

number

of the place where the bank is seated, and specifypublic newspapers ing in such notice the or object objectsof such meeting. 6. Each cashier or treasurer, before he enters upon the duties of his office, sureties, to shall be required to give bond, with two or more less than fiftythousand the satisfaction of the directors, in a sum not dollars, with a condition for his good behavior, and the faithful performance

which it shall be lawful for the said corporation to hold, shall be only such as shall be requisite in relation to the convenient transactfor its immediate ing accommodation to of its business, and such as shall have been bona fide mortgaged
it by way
of security,
or

of his duties to the corporation. 7. The lands, tenements, and hereditaments,

contracted
upon

in the

judgments which
8. The

to it in satisfaction of debts previously its dealings, or purchased course of at sales, have been obtained for such debts. shall

conveyed

total amount of debts which the said corporation shall at any time owe, whether by bond, bill,note, or other contract, over and above deposited in the bank, shall not exceed debt or debts due for money the the
sum

greater

of thirty -fivemillions of dollars, unless the contracting debt shall have been previously authorized by law

of any of the

United

States.

In

case

of

excess,

it shall happen,

shall be

the directors under whose tration adminisliable for the same in their natural

in such case be and private capacities ; and an action of debt may brought against them, or any of them, their or any of their heirs, execu-

484
tors
or

THE

SECOND

BANK

OF

THE

UNITED

STATES

administrators, in any court of record of the United States, or either of them, by any creditor or creditors of the said corporation, and be prosecuted to judgment and execution, any condition, covenant, may
or

agreement shall not be

tenements, and
may
or was

But this provision contrary notwithstanding. to exempt the said corporation or the lands, construed from being also liable for, goods, or chattels of the same
to

the

chargeable have been

may

with, the said excess. absent when the said dissented from
or

Such
excess

of the said directors, who

was
or

contracted

or

who

so

from

act whereby created, may contracted respectively exonerate themselves being so liable, by forthwith giving notice of the fact, and of their
or

have

the resolution

created, the same

absence

dissent, to the President

a

of the United

States, and

to the
to call

stockholders, at for that purpose.

9. The

general meeting, which

they shall have power

shall not, directly or indirectly, deal or said corporation in anything except bills of exchange, gold or silver bullion, or in trade lent and not for money the sale of goods really or truly pledged in due time, or goods which shall be the proceeds of its redeemed

lands.

annum

It shall not be at liberty to purchase any public debt whatsoever, it take more than at the rate of six per centum nor per shall for or upon its loans or discounts.

loan shall be made by the said corporation, for the use or on of the United States, to an amount ing exceedaccount of the Government five hundred dollars, or of any particular State to an thousand 10. No
amount

exceeding

fifty thousand authorized

dollars, or
by
a

of any

foreign

Prince

or

law of the United States. 11. The stock of the said corporation shall be assignable and transferable, according to such rules as shall be instituted in that behalf, by the laws and ordinances of the same.

State, unless previously

bills,obligatory and of credit, under the seal of the said to any person or persons, shall be corporation, which shall be made thereupon, under the hand or hands of such assignable by endorsement his, her, or their executors or administrators, or person persons, and
and his, her transfer and their assignee vest the property
or or

12. The

assignees, and so as absolutely thereof in each and every assignee

to
or

assignees successively, and his, her or their executors thereupon

in his, her
or

assignee or assignees, and an or action administrators, to maintain That name or : Provided, names their own

to enable

such

any bill obligatory, or of credit, or shall not make less than five of a sum other obligation under its seal for the payment dollars. And the bills or notes which may be issued by order thousand of the said corporation, signed by the president, and countersigned by

said corporation

the principal cashier to any person money

or or

the payment thereof, promising of persons, his, her or their order, or to bearer,

treasurer

APPENDICES
not under

485

the seal of the said corporation, shall be binding in like manner, and with like force and and obligatory upon the same, or persons, if issued by him, her or any private person effect, as upon them, in his, her or their private or natural capacity or capacities, and although if they were as so shall be assignable and negotiable in like manner issued by such private person or persons ; that is to say, those which shall be payable to any person or persons, his, her or their order, shall in like manner, be assignable by endorsement, and with the like effect now are are as foreign bills of exchange ; and those which payable to bearer shall be assignable and negotiable by delivery only : Provided,
That

all bills

made
a sum

notes, so to be issued by said corporation, shall be demand, of other than bills or notes for the payment payable on dollars each, and payable to the order less than one hundred not
or

of

some

person

or

persons,

which

corporation to make the date thereof.

payable

bills or notes it shall be lawful for said at any time not exceeding sixty days from

dividends shall be made of so much of the profitsof in every to the directors advisable; and once the bank as shall appear three years the directors shall lay before the stockholders, at a general of the meeting, for their information, an exact and particular statement
13. Half-yearly
shall have remained after the expiration of the unpaid original credit, for a period of treble the term of that credit, and of the If surplus of the profits,if any, after deducting losses and dividends.

debts which

there shall be a failure in the payment of any part of any sum subscribed to the capital of the said bank, by any person, copartnership or body politic, the party failing shall lose the benefit of any dividend such payment, which may have accrued prior to the time for making

and during the delay of the same. 14. The directors of the said corporation shall establish a competent any officeof discount and deposit in the District of Columbia, whenever law of the United States shall require such an establishment; also one
office of discount and deposite in any State in which two thousand be held, whenever, or upon may shares shall have been subscribed Legislature of such State, Congress by law, may, application of the such Provided, the directors aforesaid shall not be bound require the same: to establish such office before the whole of the capital of the bank shall have been paid up. And it shall be lawful for the directors of the said corporation to establish offices of discount and deposite, wheresoever they shall think fit,within the United States or the Territories thereof, the management and to commit of the said offices,and the business thereof, respectively, to such persons, and under such regulations, as deem proper, not being contrary to law or the constitution of they shall

Or, instead of establishing such offices,it shall be lawful for from time to time, to employ any the directors of the said corporation
the bank.

486

THE
or

SECOND

BANK

or

THE

UNITED

STATES

other bank

banks, to be firstapproved by the Secretary of the Treasury, at any place or places that they may deem safe and proper, to manage transact the business proposed as aforesaid, other than for the and
of discount, to be managed and transacted by such offices, under to such regulations, as they shall deem agreements, and subject
proper.

purposes

such

justand

Not

more

than thirteen, nor

less than

seven

managers

as or directors, of every office established aforesaid, shall be annually one year; they shall appointed by the directors of the bank, to serve

president from their own number; each of them shall be a citizen of the United States, and a resident of the State, Territory, or district,wherein such office is established; and not more than threedirectors, in office at the time of an fourths of the said managers or choose
a

appointment, shall be reappointed for the next succeeding year; than three years out of four, and no director shall hold his office more be always reappointed. in succession; but the president may 15. The of the officer at the head of the Treasury Department annual

United States shall be furnished, from

often as he may once a week, with statements of the amount require, not exceeding of the capital stock of the said corporation and of the debts due to the deposited therein; of the notes in circulation, and same; of the moneys time to time,
as

of the specie in hand; accounts in the books

Provided,

That

and shall have a right to inspect such general of the bank as shall relate to the said statement: ing this shall not be construed to imply a right of inspect-

the account of any private individual or individuals with the bank. 16. No stockholder, unless he be a citizen of the United States, shall vote in the choice of directors.
note shall be issued of less amount SEC. 12. And be it further enacted, That

17. No

than five dollars.

if the said corporation, or same, shall deal or trade
or

persons, any person in buying or selling goods, wares, to the provisions contrary

or

for

or

to the

use

of the

merchandise, of this act,

commodities

[a penalty

ever, whatsoof treble the

amount

so

[Sec.13 enacts
or of $500,000,

dealt in shall be imposed upon the persons responsible]. States, in excess that in case of loans to the United
to any

state in

excess

State," without previous treble value shall be imposed upon the persons responsible.] SEC. 14. And be it further enacted, That the bills or notes of the shall have become said corporation originally made payable, or which
or

Prince,

to " any foreign or of $50,000, by law, a penalty of authorization

payable

to the United shall be receivable in all payments States, unless otherwise directed by act of Congress. SEC. 15. And be it furtherenacted, That during the continuance of this act, and whenever required by the Secretary of the Treasury, the
on

demand,

facilitiesfor transferring the said corporation shall give the necessary public funds from place to place, within the United States, or the Ter-

APPENDICES
ritories thereof, and for distributing the
same

487
in payment
of the public

on or allowance claiming charging commissions creditors, without difference in exchange, and shall also do and perform the account of of Loans for the several and respective duties of the Commissioners

required by law. of them, whenever several States, or of any one or more SEC. 16. And be it furtherenacted, That the depositesof the money

States, in places in which the said bank and of the United in said bank or thereof may be established, shall be made

branches branches

thereof, unless the Secretary of the Treasury shall at any time otherwise direct; in which case the Secretary of the Treasury shall order and immediately lay before Congress, if in session, and if not, immediately
or

after the commencement direction.

of the next session, the

reasons

of such order

shall in gold or silver,of any of or not at any time suspend refuse payment its notes, bills,or obligations; nor of any moneys received upon deposite in said bank, or in any of its officesof discount and deposite. [In
of any such note, bill,or obligation, or the person or persons entitled to demand and receive such as aforesaid, shall respectively be entitled to receive and recover moneys interest on the said bills,notes, obligations, or moneys, until the same
case

SEC. 17. And

be it furtherenacted,

That the said corporation

of such suspension

or

the refusal] holder

shall be fully paid and satisfied,at the from the time of such demand annum

per rate of twelve per centum That Provided, as aforesaid:

Congress

may

[hereafternact laws e

in jurisdiction such cases in any the States]. of [SEC.18 prescribes penalties

....

for carrying out this clause, vesting of the courts of the United States, or
for counterfeiting
"

order check" bill or note altering "any order or its cashiers ; or for passing, or attempting any of
....

or

any

or

on

the bank,

or

note its cashiers; or for any of the bank or upon check"

any to pass, such
or

bill

or

or

such

altered checks

or

orders;

or

for selling

counterfeits dealing in such

counterfeits.] [SEC.19 prescribes penalties

counterfeiting
"

notes or paper adapted to the making of bank the paper used by the bank, with intent to use

the

"

for engraving bills of the bank,

"

plates to be used for for having in posor session or bills," notes similar to

such paper

for counterfeiting.]

SEC. 20. And

be it further enacted,

That
by

exclusive privileges and benefits conferred bank, the president, directors, and company

in consideration of the this act upon the said

to the

thereof, shall pay

United States, [$1,500,000].

in the enacts that no other bank, excepting local banks " District of Columbia, shall be created by Congress during the continuance the corporation hereby created," and that the bank shall of

[Ssc. 21

488

THE

SECOND

BANK

OF

THE

UNITED

STATES

have the space of two years after the expiration of its charter in which to settle its

affairs.]

does not begin operations by the firstMonday in April, 1817, Congress may declare the charter " null and void."] be it furtherenacted, That it shall, at all times, be SEC. 23. And
22. If the bank [SEC. lawful for
of either House of Congress, appointed for that committee into the proceedings of purpose, to inspect the books, and to examine the corporation hereby created, and to report whether the provisions of
a

any violated or not; and whenever find and report, or the President of the committee, as aforesaid, shall United States shall have reason to believe that the charter has been
same,

this charter have been, by the

violated, it may

be

lawful

for Congress

to direct, or

the President

to

order a scire faciasto be sued out of the circuit court of the district of Pennsylvania, in the name States, (which shall be of the United the president of the corporation for the time being, at executed upon least fifteen days before the commencement calling on the said corporation to show hereby
of the term
cause

of said

court,)

granted, shall not be declared for the said court, upon the return of the said scire facias, examine to into the truth of the alleged violation, and if such violation be made to
appear, then to pronounce

wherefore the charter, forfeited; and it shall be lawful

annulled: joined between be tried by

and

Provided, the United And

and adjudge that the said charter is forfeited however, Every issue of fact which may be

States and the corporation aforesaid, shall it shall be lawful for the court aforesaid to jury. the production of such of the books of the corporation as it may require deem facts; and necessary for the ascertainment of the controverted
the final

in the aforesaid, shall be examinable Supreme Court of the United States, by writ of error, and may be there reversed or affirmed, according to the usages of law. Approved, April 10, 1816.

judgment of the court

at Large, Vol. Ill, pp. 266 ff., chap, xliv, and "Statutes Sess.,Vol. I, pp. 1812 ff.

A.

of C., 14th Cong., 1st

APPENDIX

II

Propositions respectfully submitted to the convention of State banks by the committee on the part of the Bank of the United

States:
1. That

the incorporated

banks

engage, on and Richmond, and for all demands thenceforth to continue, specie payments upon them. 2. That in the liquidation of the balances which may be due by the receiving banks, the Bank of'the United States will credit those banks,

of New York, Philadelphia, the 20th instant, to commence,

more, Balti-

APPENDICES

489

banks which may of their checks upon respectively, with the amount be parties to this agreement. 3. That the whole of the public balances in the receiving Banks in New York, Philadelphia, Baltimore, and Virginia, be transferred to the
the 20th of this month, and retained by the same the said bank until the 1st of July next, when shall be paid interest thereon. off,together with the 4. The payment of the balances which may accumulate against the

Bank

of the United

States

on

to the transfer of the balances first mentioned subsequently by the Bank of the United States until be demanded shall not for individuals the said bank and its branches shall have discounted

aforesaid banks

(other than
instant
the

those

having
sums,

duties

to

pay) subsequently
For those
in New

to

the York,

19th
two

following

to wit:

more, millions; for those in Philadelphia, two millions; for those in Baltithouone sand and a half million; for those in Virginia, five hundred

dollars; provided, that if the said bank shall be willing to discount, of good paper offered and shall not have the required amount delphia, the term of sixty days from the 20th instant at New York, Philawithin
term after the operations and Baltimore, and within the same bank in Virginia shall have commenced, the of the officesof the said banks shall, at the expiration of that time, at the aforesaid aforesaid

places, respectively, pay to the Bank due by them respectively. 5. That the Bank of the United

of the United

States the balance

to discount

States will engage

good
paper

the

required amount in the preceding shall be offered.

6. That branches

at the

respective places, and within articles,provided

the time

mentioned

to that amount

in the

event of the Bank

a

of the

United

States and

its

of good paper offered at the sufficient amount in the fourth article within the period respective places mentioned therein stipulated, then the Bank of the United States will engage to

not having

discount

for the

said

banks

respective places, according banks respectively. 7. That

the amount to the amount

deficiency at the the capitals of the said of

of the

United

the aforesaid banks shall exchange with the Bank of the States and its branches, from day to day, all such notes of

either as the said banks may receive; and an interest account from the 20th instant to the 1st of July shall be liquidated and settled in the
usual manner. 8. That
of New

the Bank

of the United

York,

Philadelphia,

pledges

faith and the credit of the aforesaid banks or the branches of which may menace the United States Bank, will cheerfully contribute their resources to any of good

States, and the incorporated banks Baltimore, and Virginia, will interchange friendly offices,and upon any emergency

490

THE

SECOND

BANK

OP

THE

UNITED

STATES

thereof the Bank extent in support of the United States confiding in the justice and discretion of the State banks, respectively, to circumscribe their affairs within the just limits indicated by their
reasonable
"

respective capitals

as

soon

as

the interest and convenience

of the community

will admit. 9. That upon the mutual agreement of the parties to these stipulations, be submitted to the Secretary of the Treasury for the same shall his decision upon those points which involve the public balances, and when approved by him shall be obligatory
upon

all the contracting

^

parties.

_Feb

^ 1817" F

Vol

APPENDIX
The first rules of the bank revised (Biddleto Hugh
as were

III

were

adopted in 1816. In 1832 they McElderry, January 24, 1832, P. L.

B., Vol. IV, p. 123), and (Biddleto John McKim,

revised went into effect May 3, 1833 May 3, 1833, ibid.,p. 478). The rules here given are the revised rules of 1833. Wherever these differ from those of 1816, the differences are noted in brackets.
AND

RULES

REGULATIONS OF
THE BANK

FOR OF
THE

CONDUCTING
UNITED
"

THE

NESS BUSI-

STATES

and Hours of business. The Bank shall be kept open for the transaction of business, from nine o'clock in the morning until three o'clock in the afternoon every day in the year, except Sundays, Rule
1. Days

day, the First of January, and the Fourth of July. The Bank Rule 2. Deposits. shall take charge of the cash of all such persons as shall choose to place it there, free of expense, and shall keep itsubject to the order of the depositor, payable at sight ; and shall also receive special deposits of ingots of gold, bars of silver,wrought

Christmas

"

plate, and other valuable articles of small bulk, for safe keeping, at the risk of the depositor.
Rule
3. Days

of Discount.

"

on shall be delivered into Bank and and laid before the Board of Directors, on the succeeding Tuesday Friday, [rules 1816 add: "at ten o'clock in the morning,"]together of

All bills and notes offered for discount, in each week, Monday and Thursday

of the funds and situation of the Bank; on which days with a statement the discounts shall be settled,and such as shall be admitted shall be counted, passed to the credit of the applicants on the day on which they are dis-

and

may

be drawn

o'clock; and the notes or " time after twelve [1816,

for at anytime " after twelve [1816,one"] discounted, shall be returned at any bills not

one

"] o'clock of the

same

day.

APPENDICES
Rule
4. Discounts,

491

Discounts shall not be accommodation. (the firm upon personal security without two responsible names made of a house being considered as one name only;)but if stock of this Bank, debt of the United States, or such other property as shall be funded
and
"

approved
to

by the Board,
secure

be deposited

with " But no accommodation taken. e. [1816 note (i. " note, adds: maybe be placed to the credit of the drawer) shall the proceeds of which are to be secured by a deposit of the stock be discounted, unless its payment
of this Bank,

the payment,

and pledged to an amount responsible all damages, one

cient suffiname

debt of the United States, or such other of funded by the Board ; together with an express property as shall be approved at any authority to the Bank to sell the deposit in case of non-payment time after the note shall become due."]
or

On each application for discounts. may be present, shall be application for discount, every Director who held to give his opinion for or against the same. And no discount shall be made without the consent of three-fourths of the directors present ;
Rule
5. Mode

of decision

on

"

and all notes and billsdiscounted shall be entered in a book, to be called to discover to the Board, at one the Credit Book, in such manner as for which any person is indebted view, on each discount day, the amount
to the Bank, amount

either
any

as

payer,

discounter,

or

indorser.
or

[1816reads: "the
to the

which
as

person

is discounter,

is indebted

Bank,

either

day, the name of every person have overdrawn the Bank the last discount day, since who shall be reported to the Board ; and no person while he remains an shall And overdrawer, shall have any note or bill discounted at this Bank.
Rule
"

payer or as indorser."] 6. Overdrafts. On every discount

instance will this Bank give a release or discharge to any debtor every officerwho shall where the debt arises from an overdraft. And comthe Bank, without on knowingly suffer an overdraft to be made municating " missed it to the President or [1816, and "] Cashier, shall be disin
no

the service of the Bank. Rule 7. Protest." It any bill or note belonging to this Corporation, day of shall not be paid before the shutting of the Bank on the last grace, such bill or note shall be forthwith protested ; and while such bill or note remains shall be unpaid, no discount or accommodation Bills and granted to any drawer, acceptor, or indorser of the same. notes deposited for collection, at any time before the commencement
from of the of grace, shall be proceeded with, ; unless the person depositing the same in writing ; provided, that in case of non-payment

days

as

bills and

notes

discounted

shall otherwise son and protest, the per-

direct

shall pay the charges of protest. Every person who opens an account, Rule 8. Books of Signatures. in a his name and transacts business with this Bank, shall subscribe lodging the
same
"

492

THE

SECOND

BANK

OF

THE

UNITED

STATES

for that purpose, to be called The book of signatures, " the persons who compose any house, keeping any [1816, an "] and all and the signature account with this Bank, shall subscribe their names, of the firm, in this book, if residing in Philadelphia.

book, to be kept

by a cash account of individuals not to be examined No director, without special authority, shall be permitted to Director. inspect the cash account of any person with this Bank.
Rule
9. The
"

and Bank shall be regularly balanced [1816, accounts of the " " Monday in January and July in each year; and [1816, at which time"] "] in said the half-yearly dividends shall be declared, on the first Monday " in said the first Monday on and published months, [1816omits
"

Rule

10.

Times

for

balancing

the

books,

books ""c. The the firstday on

months,"]

and immediately

in the city of Philadelphia : in at least three of the newspapers " the books of transfer shall be shut for ten [1816,twenty "]days
"

for declaring the preceding each of the days appointed " half yearly dividends. [1816 reads : appointed for balancing the books Bank and declaring the half-yearly dividends."] of the the Bank on Rule 11. Cashier may receive the dividends shares, and

interest

of the funded

debt

of the

United

States.

"

required, the Cashier shall accept powers of attorney due, on any shares in this Bank, interest or dividend due, or to become or on any funded debt of the United States payable in Philadelphia ;
which interest
or

In all cases when for receiving any

dividend

shall be held by the Bank,

subject to the
"

order of the proprietor, free of charge. lost Rule 12. How are certificates

If any person to be renewed. lost or claims a certificate of Bank stock to be issued in lieu of one destroyed, he shall make an affidavit of the fact, and state the circumstances loss or destruction ; and he shall advertise in one or more of the
of the

public
an

newspapers

six weeks, and

account its number,

in the city of Philadelphia, for the space of of the loss or destruction, describing the certificate to show cause calling on all persons why a new

certificate shall not issue in lieu of that lost ; and he shall transmit to before mentioned, the Bank his affidavit, and the advertisements and a bond or more to the Bank of indemnity, with one sureties if give dollars, for each share to be renewed) against any damage which may arise from issuing the new the Cashier shall,six months after the notice by certificate: whereupon of certificate, the same number advertisement as aforesaid, issue a new required, (in the
sum

of

two

hundred

and tenor with that said to be lost or destroyed, and is in lieu thereof.
Rule
13. Committees.
"

specifiying that it

A Committee

members, shall be appointed have special charge of the situation and concerns of the several shall in relation Offices and Agencies, with authority to report such measures

the Offices consisting of five by the President every three months, who
on

APPENDICES
thereto
as

493
said Committee shall have election of

they may

deem

beneficial. The

like charge of all matters relating to the Directors for the several Offices.

nomination

and

A Committee appointed
charge
at the

on same

Exchange

of all matters Exchange Offices, in Foreign and Domestic and Bullion for the purchase of Domestic shall act as a daily Committee

shall be consisting of three members have special in like manner, time and who shall to the operations of the Bank and its relating
"

and who Exchange

at the Bank. A Committee

the State of the Bank consisting of five members time be appointed by ballot, who shall have charge of shall at the same from as may such matters relative to the local business of the Bank by the Board ; they shall at least time to time be referred to them
on

once

their time of service examine and count the discounted the amount thereof with the balance of the amount notes, and compare in the General Ledger; they shall also count the of bills discounted during
cash, and
"

in the possession of the paper printed and unprinted the evidences of the public debt and property of Cashier examine to be compared the Corporation, make an inventory of the same with to the the books in order to ascertain their agreement, and report
the

Board.

[1816reads:
appointed duty
weeks

shall, weekly and in rotation, be as a committee especial of Directors for the week; whose more during their respective it shall be, to attend at the Bank

"Two

Directors

of service, as often as their convenience will permit ; and when requested by the President, to afford their aid and advice in all cases And a Committee on relative to the interest and business of the Bank.

the State of the Bank, shall be appointed by ballot every three months, the amount to examine and count the discounted notes, and compare thereof with the balance of the amount of billsdiscounted in the general ledger; they shall also count the cash, and the printed and the possession of the President, and examine evidences of the public debt and other property of the Corporation, and to be compared with the books in order make an inventory of the same to ascertain their agreement, and make a report to the Board."]

unprinted

paper

in the

notice shall be given by the Cashier in at least two of the daily newspapers of Philadelphia, and within one week of each annual election for Directors of the Bank; Directors for the time being, shall appoint by the the same, preceding

Rule

14. Election

of Directors." Thirty days'

ballot five Stockholders, not being Directors, to be Judges of the election, the same, at ten commencing and regulate who shall conduct of January. o'clock, A.M. on the firstMonday But
in
case on

completed

election of Directors shall not begin, or shall not be the Judges shall adjourn the same the said firstMonday,
an

494
from

THE

SECOND

BANK

OP

THE

UNITED

STATES

day to day, not exceeding shall

on

five days until the said election shall be

on

completed. The Judges shall have the Bank,

after the election been completed, at the furthest, transmit to the Cashier of an authentic certificate of the persons elected : and the

the forenoon

the day

forthwith give notice to all of the said Directors at six who shall be within convenient distance, to meet at the Bank day for the purpose o'clock in the evening of the same of choosing a President. preceding each annual election for Directors of this Bank, the Directors for the time being shall appoint by ballot five stockholders, not being Directors, to be judges of the election

Cashier shall thereupon

[1816 reads

"

On

the Friday

; who

shall conduct

and

regulate the

same,

commencing

at ten

o'clock A.M."] Rule 15. Mode

In every election by this Board, there shall to an office(exceptthat of the President) be a previous nomination of the candidate at least one week before the may be dispensed election : Provided, that such previous nomination

of electing officers of

the Bank,

"c.

"

[1816, unanimous vote of the Directors present: proviso and every President, Cashier and Assistant Cashier [1816 omits omitted] Assistant Cashier," placing an "and" between President and "and
with
by
an
"

Cashier]of this Bank, shall take and subscribe,

I to the following effect, to wit: knowledge I will to the best my
"
"

an

oath
swear

or

affirmation,

do and in
me,

that (or affirm)

of

assigned the United

to, and

the trust reposed States.

abilities, perform the duties as of the Bank of

It shall be the duty of the President to take into his custody at the Bank, the Seal of the Bank to be affixed to all instruments and documents which he shall cause when so ordered by the Board; and to sign all bills and notes issued by Rule
16. Duties

of

the President.

"

the Corporation. He shall preside at all meetings of the Board, except in cases of convene the Directors on special occasions, and serve necessary absence, as a member of the Board. of all committees
"It shall be the duty of the President to take into his paper; to moulds, and bank custody at the Bank, the plates, paper the printing of all bills or notes ordered by the Directors superintend in his to be printed; and to keep a regular account paper of the Bank

[1816 reads:

custody,

the quantity ordered from time to time for impression, mittee which account shall be checked by quarterly examinations by the comHe shall also sign all bills and notes the state of the Bank. on issued by the Corporation; and have in his custody the seal of the

and

which he shall cause documents as the Directors Bank,

to be

affixed to all such

instruments

and

shall

order."]

APPENDICES
Rule 17. Duties
to be signed

495
It shall be the duty
of the bills of

of

the

Cashier.

"

all bills,notes, certificates of stock, and by the President, or by order of the Board: He exchange shall take into his custody at the Bank, the plates, paper-moulds, bank note paper, unprinted and printed until issued, blank certificates of

Cashier to countersign

supstock, and bills of exchange, superintend the printing of whatever plies these may from time to time be considered necessary for the use of the Bank and Offices; keep a regular account of all the articles in his of

custody, which the Committee

account
on

shall be checked the State of the Bank;

by quarterly examinations by he shall attend all meetings

of the Board, keep a fair and regular record of its proceedings, furnish be as may officialextracts therefrom, and give all such information required by the Board or any Committees.

shall correspond with the Officers of the several Offices,as the organ of the Board or Committees of the Board, in directing the general tic operations of the Bank, in stock and bullion, and in foreign and domesHe
he shall also correspond in exchange; with the Agents of the Bank Europe, and with all other persons doing business with the Bank on his department; he shall carefully observe the subjectsconnected with

conduct of all persons employed under him, and report to the Board such instances of neglect, incapacity or bad conduct as he may discover in any of them, and generally shall perform all such other services as
may

of the Cashier, to countersign, at the Bank, all bills or notes to be signed by the President, or by order of the Board: carefully to observe the conduct of all persons employed incaunder him, and report to the Board such instances of neglect, pacity,

be required of him by the Board. [1816reads: "It shall be the duty

he may discover in any of them: daily to the settlement of the cash accounts to take the Bank: examine of disagrees with the the actual amount charge of the cash, and whenever balance of the cash account, report the same to the President and
or

bad

conduct

as

"

"

Directors

to attend all meetings of the Board; keep a fair and regular record of its proceedings; give such information to the Board as may be required; consult with committees when requested, by the Board; and also to perform such other seron vices subjectsreferred be required of him by the Board."] as may

without

delay:

"

It shall be the duty of the First Assistant Cashier to take charge of the local operations of in Philadelphia in the same the Bank manner and with the same Rule
18. Duty

Assistant of the first

Cashier.

"

duties,

the Cashiers of the offices do of the concerns of their respective Offices, except when otherwise provided by the by-laws or directed
as

by the Board;

under

carefully to observe the conduct of all persons employed him, and report to the President and Cashier such instances of
or

neglect, incapacity

bad conduct

as

shall

come

to his knowledge,

daily

496

THE

SECOND
the

BANK

OF

THE

UNITED

STATES

to examine

settlement

of the

charge of the cash, and whenever balance of the cash account report the same Cashier without delay, and generally to perform be required of him by the Board, the President,
Rule
19. Duty

of the Bank, to take cash accounts the actual amount, disagrees with the to the

President
as

and

or
"

such services the Cashier.

shall

of Second

Assistant

Cashier.

of the Second

Assistant Cashier

and accounts Offices,the accounts

States, the foreign exchange accounts, and the returns of all foreign or domestic bills purchased at the Offices. On all these subjects he shall correspond the Offices and the parties concerned, under the special with of the President and Cashier; and generally perform superintendence
such other services or Cashier. Rule
20. Duties
as

charge the Bank; the accounts of of the United with the Government

to take

It shall be the duty of the general statements between the several

may

be required

by the Board

or

by the President

of

the third Assistant

Cashier.

duty of the third Assistant Cashier to take charge Debt and the Real Estate of the Bank and the several Offices,and correspond thereon with the Officers and Agents of the Bank and the under the special superinwith other parties concerned tendence Cashier, and generally perform the President and of such be required by the Board, or by the President or as may other services the Cashier.
" It shall be the duty of rule 18 for 18, 19, 20, as follows: the duties of the Cashier, in case the Assistant Cashier to perform of his sickness or absence; to superintend the opening and keeping of the

It shall be the of the Suspended

"

Offices,and

has [1816

to observe the conduct stock ledgers, and all other books of the Bank; him, and report to the Cashier such under of all those employed instances of neglect, incapacity or bad conduct to his as shall come

knowledge;
of him Rule

and generally to perform by the Board, the President,

21

such services as shall be required or the Cashier."]

the Cashier and Assistant Cashiers [1816, to be elected. In the election of Cashier, or Assistant cashier "] are " Cashiers, [1816, Cashier "]the ballots shall be first taken for all the candidates, and if no one shall have a majority of the votes of all the
"
"

[1816, 19],How

" Directors present, [1816, present omitted]then the three candidates be voted for again; and if no one shall having the highest number shall be elected, the ballots shall be then taken on the two highest.

"

Rule 22

[1816,0].Security 2
....

"c.
omits
"

"

The

before

to be given by the Cashier and other cers, offiCashier before he enters upon the duties of his office[1816 his office"]shall give bond to the President, Directors

and

Company,

seventy thousand the faithful performance

with two or dollars, with

of

of sureties, in the sum behaviour, and a condition for his good The First his duties to the Corporation.
more

approved

APPENDICES
Assistant

497

Cashier,

[1816 omits

"

First

"] and the Cashier at each Office,

sum

in the shall give bond, in like manner, with the same condition. The Second in the sum in like manner shall give bond

and

dollars, of fiftythousand Third Assistant Cashiers lars dol-

condition. ing paywith the same twenty thousand dollars the receiving Tellers, in the sum of and Discount Book-keepers, Clerks, Note Clerks, and other each: The five thousand dollars each; and the Porters in in the sum Clerks, of the
sum

of twenty-five thousand this sentence omitted.] The [1816,

dollars each, with the same of two thousand condition. having an account Rule 23 [1816, Clerks, cfcc. 21]. prohibited from,
"

No Clerk or Porter in this institution shall be permitted with the Bank. have an account with the Bank, but shall receive his salary quarto terly, "from or the Cashier, or his Assistant: "] [1816 adds: monthly.
And

Clerk and servant of the Bank shall take, and subscribe, an I do swear oath or affirmation to the following effect, to wit: I will to the best that or (affirm) and abilities,perof my knowledge form the duties assigned to, [1816 the trust reposed in me omits to] and
every
"

as

of the
Rule
24
"

Bank

of the

United States, and the present

or

keep secret the business be altered or shall be repealed

or

thereof. [1816, 2}. How 2

a

rules, "c. may

repealed.
or

rules regulations the Directors vote for the repeal altered, unless majority of all a alteration, nor unless upon at motion offered for that purpose previous meeting of the Board. Rule
25

None

of the foregoing

the proceedings of the Board o/ Directors The proceedings to be governed." are of the Board of Directors, when by their business as a deliberative body, shall be governed conducting the following articles. 1. When the President

[1816, 23].How

takes

the chair, the

members

shall take

their seats. 2. The Discounts

shall be settled, and

" minutes of the preceding meeting, shall read before the Board proceeds to any other business; and no debate shall be admitted, nor question taken, at such reading, except as to

[1816omits these words] the then "] be then [1816omits

errors

[1816 adds: and inaccuracies. then be read, and the discounts

3. The President immediately Board. shall be

"The

state of the Bank

shall

settled."]
his decisions

the judge of order, and

shall be appeal

to the

otherwise provided, or he shall call special meetings business may require it,or

to, unless two members require an submitted He shall name all Committees, unless herein unless the Board shall otherwise determine; and of the Board,
on

whenever in his opinion the the request of three members of the

a

Board.
4. Every
member presenting
paper

to the

chair, shall first state

498

THE

SECOND
purport;

BANK
and
every

OP

THE

UNITED
who

STATES

its general
offer
a

resolution, or speak on and address the President. 5. No debate shall be entered into on any motion, or resolution, the chair; and all motions until it shall be stated from shall, if be reduced to writing; requested by the President or by two members, than twice upon any one quesshall speak more tion and no member without leave from the Board. 6. While a resolution is under consideration, no motion shall be it: But it shall be or postpone made, except to amend, divide, commit to take the previous in order, at any time, on the call of three members,
" Will the Board this subat this time act on question., which shall be ject?" and if it shall be decided in the affirmative,the debate may be A motion to adjourn,shall always be in order, but shall be continued. decided without debate.

shall make a motion, or any subject under discussion, shall rise

member

7. A

where destroy

member the sense

the

call for the division of a question or resolution which tends to will admit of it; but no amendment of the clause of a resolution shall be general sense
may

admitted. 8. If business

of different kinds

shall be will

called for, at the

same

time, by different members,

the Board

judge and give

preference

accordingly. 9. The yeas and nays shall be taken on by two members previous to the decision

any question, if called for on such question; but no

motion for reconsideration shall be permitted, unless made and seconded in the majorityon the original question. by members who were 10. At the request of any two of the Board, the names of the members

who

make

and second

motion

shall be entered

on

the minutes.

and place of publication unknown. from the Massachusetts State Library.

Date

Pamphlet

secured

APPENDIX
AN ACT to

IV

modify and
continues

porate continue the Act entitled "An Act to incorthe subscribers to the Bank of the United States."
the original charter hereinafter
to

[SEC.1

for fifteen years

with

"

the

modifications and changes SEC. 2. And be it furtherenacted, corporation shall have

power

expressed."]
That the directors of the said
two
or more

authority to sign and which

with officers, nominati the notes thereof, the deall countersign any dollars; hundred of each of which shall be less than one respectnotes, when signed and countersigned by the said officers,
appoint
or

APPENDICES

499

ively,shall, to all intents and purposes, be binding and obligatory upon had been signed by the President, the said corporation as if the same by the principal Cashier or Treasurer thereof; and it and countersigned
shall be the duty of the directors of the said corporation to make known, be, to the Secretary of the Treasury, the in writing, and as soon as may names of the officers who shall be appointed by virtue of the provision:
and after the third day of March, one thousand and thirty-six,no branch bank draft, or other bank paper not payable at the place where issued, shall be put in circulation, as nation currency, by the bank, or any of its offices, except notes of the denomi-

Provided,

That

from

eight hundred

greater sum. of fiftydollars, or of some be it furtherenacted, That it shall not be lawful for the said corporation to issue, pay out, or put in circulation, any note or

SEC. 3. And

less than fiftydollars, which shall not, upon the notes of a denomination faces thereof, respectively, be payable at the bank or office of discount and deposite whence they shall be issued, paid out, or put in circulation.

SEC. 4. And

be it

further enacted,
the
same

That

the notes

said corporation, although

be, upon

bills of the the faces thereof, respectively,

or

place only, shall, nevertheless, be received made payable at one by the said corporation at the bank, or at any of the officesof discount ance of any baland deposite thereof, if tendered in liquidation or payment

balances due to said corporation, or to such officeof discount and deposite, from any other incorporated bank. SEC. 5. And be it furtherenacted, That it shall not be lawful, after
or

the said third day of March, in the year one thousand eight hundred and thirty-six,for the said corporation to hold, keep, and retain, for a period exceeding five years after the date of acquiring the same, any
or or judgment lien in right, title, interest, except by way of mortgage security of debts, to any lands, tenements, and hereditaments, other than in relation to the convenient those requisite for its accommodation

transacting

of its business; and it shall be the duty of said corporation, the aforesaid period of five years, to sell,dispose of, or otherwise within bona fide divest itselfof all right, title,and interest to any lands, tenements,
previously of its dealings, or purchased at sales upon judgments which shall have been obtained for such debts; and for any and every violation of this provision, the said corporation shall be subjectto a penalty of ten thousand dollars, to be recovered in the name

and

hereditaments,
in the

conveyed

to it in satisfaction of debts

contracted

course

of the United States of America, by a qui-tam action of debt instituted in any court of the United States having jurisdiction the same of ; onehalf of which shall enure to the benefit of the informer, and the other

half to the

use

SEC. 6. And

of the United States. be it further enacted,

one

That

tenth day of April, in the year

thousand

and after the said hundred eight and thirty-

from

500

THE

SECOND

BANK

OP

THE

UNITED

STATES

six, it shall not

be lawful

for the

have, establish, or retain, more in any State: Provided, That the said corporation
from

directors of the said corporation to than two offices of discount and deposite nothing herein contained shall prevent of the branches which are now

retaining any

established. SEC. 7. And

be it furtherenacted, That, in consideration of the exclusive benefits and privileges continued by this act to the said corporation for fifteen years as aforesaid, the said corporation shall pay to the

United

lars thousand dolof two hundred in each ; which said sum shall be paid on the fourth day of March and every year, during the said term of fifteen years. SEC. 8. And be itfurtherenacted, That itshall be lawful for Congress

States the annuity

or

yearly

sum

to provide, by law, that the said bank shall be restrained, at any time thousand eight hundred after the third day of March, in the year one and thirty -six,from making, issuing, or keeping in circulation, any notes or bills of said bank, or any of its offices, or denomination of a less sum

than twenty

dollars.
be it

SEC. 9. And

further enacted,

That

the

Cashier

of the

bank

of all shall, annually, report to the Secretary of the Treasury the names stockholders who are not resident citizens of the United States ; and, mit on application of the Treasurer of any State, shall make out and trans-

to such

Treasurer

list of stockholders

such

State, with the amount

[SEC.10.
present

of stock owned consist All acts supplementary to the original charter and " not in" to continue in force during the term of the with this act of the bank
"

residing by each.

in, or citizens of,

act.] [SEC.11. The president and directors

of the United

the President
"

States their acceptance

signify to of this act by the

must

"

firstday of the next session of Congress."]

A. STEVENSON,
Speaker

of the

House

of Representatives.

J. C. CALHOUN,
Vice President

of the United

States

and

President

of

the Senate.

(Endorsed.)
I,certify, that this act did originate in the Senate.

WALTER

LOWBIE,
Secretary.

"

Senate

Journal,

22d Cong., 1st Sess., p. 451.

APPENDICES

501

APPENDIX
GENERAL
STATEMENT
OP THE

V
OF THE

BANK

UNITED

STATES, 1817-36

502

THE

SECOND
STATEMENT
OP

BANK
THE

OP

THE

UNITED
THE

STATES
STATES, 1317-36
"

GENERAL

BANK

OP

UNITED

Continued

iA

minus

sign prefixed indicates that the balances

were

against the bank.

APPENDICES
GENERAL
STATEMENT
OP THE

503
THE

BANK

OP

UNITED

STATES,

1817-36

"

Continued

from 8. D. 17, 23d Cong., 2d Sess., pp. 204-24 ; S. D. 128, 25th Cong., 2d Compiled Sess., pp. 208-11 ; and the monthly reports of the bank.
"

504

THE

SECOND

BANK
PROFITS

OF

THE

UNITED
BANK

STATES

OP

THE

"8.

D. 17, 23d Cong., 2d Sess., p. 194.

APPENDICES

505

APPENDIX
EXCHANGE TRANSACTIONS
ANNUAL PURCHASED
"

VI
TOTALS
i

OP

INLAND

BILLS

APPENDIX
RATES
OP

VII
1829-32 Bills purchased or collected, its Offices of Discount and

EXCHANGE,

At which Draughts are sold, and Domestic by the Bank of the United States and Deposit.

'The aggregated totals for the years do not show as much as could be wished. They do show a very large business in exchange, and they show a great increase in the business done, but they do not tell how was money much actually invested in bills of exchange and drafts. This they do not do because the reports are for each drawn for two, three, four, and siz months. Consequently month, while the bills were All things the same transactions must appear repeatedly in the different reports. be the average probably considered, 105 days, or three and a half months, would bills were bought. Therefore, dividing by three and a half, the period for which dealt in by the aggregates of exchange will probably give the yearly amounts yearly here given shows figures for each bank. The first column the sum of the monthly is the firstdivided by three The second column year as given in the bank reports. is fairly accurate, as is evident where a comof computation parison and a half. This method with the figures of others is possible.

506

THE

SECOND
RATES
OP

BANK

OF

THE

UNITED
"

STATES

EXCHANGE,

1829-32

Continued

"

H. ". 358, 21st Cong., 1st Sess., pp. 34-7, Appendix

2.

APPENDICES
RATES
AT

507
is

WHICH

DOMESTIC

EXCHANGE

PURCHASED

"

S. D. 392, 24th Cong., 1st Sess., pp. 6, 8.

APPENDIX
EXCHANGE
TRANSACTION
OP THE

VIII
BANK
OP
THE

UNITED

STATES

(OOO's omitted)

before 1824. These figures Returns for the individual office are not complete figures for the year. They do not express the totals of the monthly anything but The real totals would be found the relative increase of the operations. approximately by dividing by 3Mi.
are

508

THE

SECOND
EXCHANGE

BANK

OP

THE

UNITED
NEW

STATES

TRANSACTIONS

AT

ORLEANS

APPENDIX
DISTRIBUTION
OP
THE

IX
BANK'S

STOCK

Total amount
i

of stock, 350,000 shares.

by United States citizens. Mostly pledged, and owned For 1820, 1821, 1822, NILES, Vol. XXI, p. 355; 1823, ibid., Vol. XXV, p. 326, and ; F., Vol. IV, p. 369; 1828, NILES, Vol. XXXV, p. 73 (Sept.27, 1828) 1831, ibid., Vol. XLI, p. 112; 1832, S. D. 31, 22d Cong., 1st Sess.
"

APPENDICES

509

APPENDIX
RULES
AND

X
FOR THE
AND

REGULATIONS OFFICES
OF

GOVERNMENT DEPOSIT

OF

THE

DISCOUNT

It has not been possible to procure a copy of the Rules and Regulations for the Offices. The following have been collected
from various
ART.
sources:

States shall of the United appoint the cashiers of the officesof discount and deposit. ART. 5. It shall be the duty of the cashier carefully to observe the employed under him, and report to the board conduct of all persons instances of neglect, incapacity, or bad conduct as he may discover such
4. The of the in any of them ; daily to examine the settlement of the cash account of the office; take charge of the cash, and whenever the actual amount disagrees with the balance of the cash account, report the same to the

directors

Bank

president and directors without delay ; to attend all meetings of the board ; keep a fair and regular account of its proceedings ; give such information to the board as may be required ; consult with committees requested, on subjects referred by the board ; and also to perwhen form
such other services as may be required of him by the board. ART. 12. There discount day in each week, shall be at least one the directors shall be assembled ; a majority of the members when except for the purpose of settling shall be required to form a quorum, discounts, for which five shall constitute a quorum, and no bill or note be discounted the unexpired term of which exceeds sixty days. shall ART. 14. All bills and notes offered for discount shall be laid before of directors by the cashier on the days assigned for discount, for together with a statement of the funds and situation of the office, information. their

the board

ART. 15. Discounts

two
name

shall not be made on personal security without (the firm of a house being considered as one responsible names only); but if the stock of the Bank of the United States, funded

debt of the United States, or such other property as shall be approved by the board, be deposited and pledged to an amount sufficient to be one the payment, secure with all damages, responsible name may But no accommodation e. note (i. a note, the proceeds of which to be placed to the credit of the drawer) shall be discounted, unless be secured by a deposit of the stock of this bank, or of its payment debt of the United States, or such other property as shall be funded
taken.
are

approved by the board ; together with an express authority to the bank to sell the deposit in case of non-payment at any time after the note due. shall become

510

THE

SECOND

BANK

OP

THE

UNITED

STATES

each application for discount, every director who may be present, shall be held to give his opinion for or against the same. And no discount shall be made without the consent of three-fourths of the directors present ; and all notes and bills discounted shall be
to as entered in a book, to be called the Credit Book, in such manner discover to the board, at one view, on each discount day, the amount of either as which any person is discounter, or is indebted to the office,
payer

ART. 16. On

of every person who shall have overdrawn the officesince the last discount day shall be reported to the board ; and no person while he remains an over-drawer, shall have any note or bill discounted by the offices. And in no instance will the debt this bank give a release or discharge to any debtor when

endorser. ART. 17. On every discount

or

as

day, the

name

overdraft. And every officerwho shall knowingly suffer it to the an without communicating overdraft to be made on the office, be dismissed from the service of the office. president and cashier, shall
arises from
an

by

ART. 21. A committee on the state of the office, shall be appointed ballot every three months, to examine and count the discounted

thereof with the balance of the amount the amount compare discounted in the general ledger, they shall also count the cash, of bills and examine the evidences of the other property of the bank, and make inventory of the same to be compared an with the books in order to
notes, and

ascertain their agreement, and make report to the board. 22. The Presidents and Cashiers of offices, ART. scribe shall take, and subto the following effect, to wit : I or an oath, affirmation

do

and abilities, the trust reposed in me as perform assigned of the officeof discount and deposit of the Bank of the United States. ART. 24. The officesof discount and deposite shall receive in payment
the duties to, and
"

swear

that I will,to the best of my knowledge (oraffirm)

of the
as

revenue

of the United

States the notes of such

State banks

engagements with specie, and provided they are the notes of banks located in the city or place where the officereceiving is established. And them also the notes of such other banks, as a as the Secretary of the special deposite on behalf of the Government,

redeemed

their [?]

Treasury

may require. 25. The offices of discount and deposite shall, at least once ment every week, settle with the State banks for their notes received in payindividuals to the bank, or for the engagements the revenue, of of

ART.

so

as

to prevent

the balance due to the office from

swelling to

an

venient incon-

in every week, make out respective officesshall, once and transmit to the directors of the Bank of the United States, a distinct abstract of the state of their funds ; which abstract shall ascertain the
amounts
amount of the debts and credits of the office,

amount. ART. 27. The

of notes issued

APPENDICES

511

by the office, of cash on hand ; and and then in circulation, the amount of cash on hand, how much shall likewise distinguish in the account nating thereof isin specie, and how much in the several kinds of bank notes, desig-

the notes of the parent bank, and those of each officeparticularly. to form ART. 31. The directors of the offices shall be empowered ment and establish all other rules and regulations for the interior managebe not repugnant to law, or to the offices; provided, the same of
the rules and regulations of the Bank of the directors thereof. of the United

States, or the resolutions

APPENDIX
PRICES
OF

XI
BRANCH NOTES
AT

UNITED
1818

STATES

BANK

PHILADELPHIA'

1821 1
1 1 1

September
October 5 November
December

7 2 7 1819

d. d. d. d.

Boston

and New Hampshire Branches

2

January-December
1822

d,

January-February
March-April May

d.

January-December
Boston

%d.

to

June July-December
1820

%d. %d. %d. %d.

and New Hampshire Branches 2 d,

January-May June-December
1823

%d,
%d. %d.
.
.

January-December
Boston Branch

%d.
March-May
4. 2

January-February

September-October
November-December Middletown

d. d.

June-December

l"d.

1824

Branch
2 d.

January-June July-September Oct.-Nov., small, par; large,

December

%d.
par

September-December
1821

J^d.
par

January-December
1 8.

J^d.

D. 457, 25th Cong., 2d Sess., pp. 10-29.

512

THE

SECOND

BANK

OF

THE

UNITED

STATES

APPENDIX
YEARLY
AVERAGE

XII
CIRCULATION

The

average

for 1817 is of little value and

a as
a

as

an

average,
were

for the bank

too
meager

began

in this year, the year to make

consequence

its dealings February,

operations until late in

real average.
a

In 1836 only months the bank

two
was

and months, January state institution.

are

averaged.

After

these

APPENDIX
YEARLY AVERAGE

XIII
DEPOSITS

BIBLIOGRAPHY1
BOOKS

History of the United States of America during Adams, Henry. the Administrations of Jefferson and Madison. 9 vols. New York, Scribner, 1889-91.

Adams,

John

Quincy.

Vols. V-IX, passim. Memoirs of John Quincy Adams,

ing Compris-

Portions of His Diary from 1795 to 1848. Edited by Charles Francis Adams. 12 vols. Philadelphia, Lippincott, 1876. Anonymous. Hampshire. of Isaac Hill, of New N. H., published by John F. Brown, 1835. Biography

cord, Con-

Baltimore Losses and Conspiracy Cases. An Exhibit of the Losses Sustained at the Office of Discount and Deposit, Baltimore, to which is appended a Report on the Conspiracy Cases.
....

Baltimore, Murphy,
1800-1855.

1823. in the Life of Jacob 1855.

[Barker, acob.] Incidents J

Washington,

Barker

....

James Gordon.] Memoirs [Bennett,

His Times, by
1855.
ton, Thomas [Ben
a

Journalist.

of James Gordon Bennett and New York, Stringer " Townsend,

Hart.] Thirty

Years' View;

Working New

of the American Government York, Appleton, 1854.

A History of the for Thirty Years. 2 vols.

or,

Bolles, Albert S.
3 vols.

The

Financial

History

of the United

States.

New

York, 1879-86.

Calhoun,

John

Caldwell.
.

Correspondence

Edited by J Franklin Jameson.

Printing Office,1900.

of John C. Calhoun. torical Report of the American His-

Association, 1899, Vol. II.

Washington,

Government

Calhoun, John Caldwell. The Works of John C. Calhoun. [Edited by R. K. Crall6.] vols. New York, Appleton, 1853-55. 6 Clark, M. St. Clair, and Hall, D. A. Legislative and Documentary
History of the Bank of the United States. Washington, 1832. Clay, Henry. The Works of Henry Clay. Edited by Calvin Colton.
i

6 vols. New

York, A. S. Barnes, 1855.

complete.

This bibliography

is only approximately

513

614

THE

SECOND

BANK
History

OF

THE

UNITED
Banks
Webster.

STATES
of Issue. New

Conant, Charles A.
York, Putnam,

of Modern

1896. 2 vols. New

Curtis,George Ticknor. Life of Daniel York, Appleton, 1870.

Dallas, George Dallas.

Mifflin. Life and Writings Philadelphia, Lippincott, 1871.

of Alexander James

Correspondence concerning the Removal of the Deposites, and Occurrences Connected Therewith. Philadelphia, 1838. Jonathan. Funding System of the United States and Great Elliot, Britain. Washington, Blair " Rives, 1845. Gallatin, Albert. The Writings of Albert Gallatin. Edited by
3 vols. Philadelphia, Lippincott, 1879. H. A General History of the Most Prominent Goddard, Thomas Banks in Europe; The Use and Progress of the Bank of Henry
....

W [Duane,illiam John.] Narrative and

Adams.

A Full History of the Late and Present Bank New York, H. C. Sleight, Clinton of the United States, Hall, G. " C. " H. Carvill,1831.
North America:
....

A Short History of Paper Money and BankGouge, William M. ing in the United States to which is prefixed an Inquiry into the Principles of the System with Considerations of its
....

Effects

on

Morals

and Happiness
Reminiscences

Philadelphia, T. W. ton; of James A. HamilAbroad, during Three

Ustick, 1833. Hamilton, James

or,

Alexander.

Men
a

Quarters of
Hone, Philip.
an

and Events, at Home and Century. New York, Scribner, 1869.

Diary of Philip Hone, 1828-51. Edited, with 2 vols. New York, introduction, by Bayard Tuckerman. The

Dodd, Mead " Co., 1889. Hunt, Charles Haven. Life of Edward Appleton, 1864.
Ingersoll, Charles Jared.
between the United

Livingston.

New

York,

Historical Sketch

States of America vols. Philadelphia, Lea " Blanchard, 1845^19. Kearny, John Watts. A Sketch of American Finances,
1835.
New

of the Second War and Great Britain. 2

1789-

York, Putnam, Autobiography

1887.

Kendall,

Amos.

son-in-law, William King, Rufus. The Life and Correspondence of Ruf New York, Putnam, by Charles R. King.
course

of Amos Kendall. Edited by his Stickney. Boston, Lee " Shepard, 1872.
us

King.

Edited
In

1894-1900.

of publication; 6 vols. published.

BIBLIOGRAPHY
Knox,

515
in United

John

Jay.

York, Bradford
Leggett, William.

History of Banking Rhodes " Co., 1900.

States.

New

A Collection of the Political Writings of William Selected and arranged with a preface by Theodore Leggett. Sedgwick, Jr. 2 vols. New York, Taylor " Dodd, 1840. William Butler,
Lyon.
....

Mackenzie,
1845.

Franklin

and Jesse Hoyt. and

The

Lives

of Benj. Boston, Cook " Co.,

Opinions

Madison, James Mayo,

James.

Selections from
from

the Private Correspondence

of

Madison,

1813 to 1836.

Washington,

published

by J. C. McGuire Robert.

for private distribution,1853. Years in Washington.

of Eight Baltimore, Fielding Lucas, Jr.,1839.

M.

Political Sketches

Meigs, William

Life of Charles Jared Lippincott, 1897. The

F.

Ingersoll.

Philadelphia,

Miller,Stephen

and Bar of Georgia; Memoirs and Sketches. 2 vols. Philadelphia, Lippincott, 1858. History of the Banks Legislative and Documentary Moulton, R. K. of the United States from the Time of Establishing the Bank
The Bench of North America, 1781 to Oct. 1834; with notes and comments. New York, Carvill,1834.

Parton,

James.

Mason

Life of Andrew Brothers, 1861.

Jackson.

vols. New

York,

Presidents' Messages

A Compilation of the Messages and Papers. ity and Papers of the Presidents 1789-1897. Published by author10 vols. Washington, Congress by James D. Richardson. of Government
Printing Office,1896-99. Treatise
on

Raguet,

Condy.

Commerce

and

Banking.

delphia, Phila-

Grigg " Elliott,1839. Sargent, Nathan. Public

Men of Mr. Monroe's Mr. Fillmore's Administration Lippincott, 1875.

ment and Events from the CommenceAdministration in 1817 to the Close of

in 1853. 2 vols. Philadelphia,

Scott, Nancy
Scott.
Sumner,

of H. L. White. Philadelphia, Lippincott, 1856.

N.

Memoirs

Edited

by Nancy Public

N.

William

Graham.

Andrew

Jackson

as

Man.

Revised edition. Boston, Houghton, Mifflin " Co., 1899. in the United States, Vol. I Banking Sumner, William Graham. in a History of Banking in All Nations. 4 vols. New York,
Journal

of Commerce

and

Commercial

Bulletin, 1896.

516

THE

SECOND
William

BANK

or

THE

UNITED

STATES
Currency.
New

Sumner,

Graham.
The
Theory

History of American

York, Holt, 1876. Tucker, George. Tyler, Samuel. Murphy,

von

Boston, Little " Brown, Memoirs 1872.

of Money 1839.

and
Brook

Banks
Taney.

Investigated.
Baltimore,

of

Roger
The

Constitutional and Political History of the United States (translation). 7 vols. Chicago, Callaghan, 1877-92.
The Private Correspondence Edited
by Fletcher Webster.

Hoist, Hermann

Edouard.

Webster, Daniel.
" Co., 1857. Webster, Daniel.
Little,Brown

of Daniel Webster. 2 vols. Boston, Little, Brown

6 vols. Boston, Boston,

of Daniel Webster. " Co., 1851. Autobiography.

The Works

Weed,

Thurlow.

Edited by H. A. Weed.

Houghton,

Mifflin " Co., 1884.

CONTRIBUTIONS
TO

PERIODICALS

Bancroft, George.
Review,

The The

Bank

Vol. XXXII,

of the United States. North January, 1831. National Gazette,

can Ameri-

Biddle, Nicholas. Conrad, Robert T.

Currency.

phia, Philadel-

April 10, 1828. Sketch of Nicholas Biddle. National Portrait Gallery of Distinguished Americans, Vol. Ill, p. 12. 3 vols.
Southern Barton.
Review

Philadelphia, Rice, Rutter " Co., 1867.

Cooper, Thomas.
Dawson, Henry

for November,
Magazine,

1831.

Historical

2d Series, Vol. IX,

Banking

January, 1871. Gallatin, Albert. System Considerations

on

the Currency

and

QuarterlyReview, of the United States. American November, 1830. Also in Gallatin's Writings, Vol. III.
Haskell, Louisa P.
Report

Langdon

Cheves and the United States Bank.

Association,

of

American

Historical

1896, Vol. I.
American

Washington,

Government

Printing Office, 1897.

Jackson, Andrew.

Some
Some
New

Historical Magazine,

Letters of Andrew Jackson. Vol. IV. Nashville, 1899.

Jackson Andrew.
Bulletin Knox, 1900.

of the
Jay.

Letters of Andrew Jackson. [FordMSS.] tember, York Public Library, Vol. IV, No. 9, Sepin the United

John

Banking

States.

Cyclopedia

of

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Political Science, Political Economy
the United

517
and
the History

of

of

States. Edited by John

J. Lalor.

3 vols. Chicago,

Rand, McNally
North American

" Co., 1881-84. Bank

Review,

Vol. I, pp. 204-22. April, 1831.

Perkins, T. H.
Massachusetts account

Branch

of the United States at Boston, 1824 Historical Collections, 3d series, Vol. I. An

corner

of the laying of the

stone and

description of

the edifice. Wharton, F. Banking Examiner,

tian and the Bank of the United States. ChrisVol. XXXI, p. 1, 1842.
DECISIONS
OF
v.

THE

COURTS

Bank
Bank

of the United Wheaton, 333.

States

Bank

of the State of Georgia,

10

Bank Bank
Bank Bank Bank Bank Bank Bank Bank Bank Bank Bank Bank
Bank

of the United States v. Brent, 2 Cranch C. Ct.,696. of the United States v. Dunn, 6 Peters, 51. of the United States v. Leathers, 8 B. Monroe, 126. of the United States v. Lyman, 1 Blatchford, 297.

of the United States v. McKenzie, 2 Brockenbrough, of the United States v. Magill, 1 Paine, 661.
of the United States of the United States
v.

393.

Martin, 5 Peters, 479.

v.

Northumberland,

Union and Columbia

Bank, 4 Washington, of the United States of the United States

108; 4 Conn., 333.

v. v. v.
v.

Norton, 3 A. K. Marshall, 422.

Norvell, 2 A. K. Marshall, 101. Owens, 2 Peters, 527.

Planters' Bank of Georgia, 9 Wheaton,

of the United States of the United States 904.

of the United States 728, 729.

v.

Roberts, 4 Conn., 323; 2 Federal Cases,

5 of the United States v. Sill, Conn., 106. of the United States v. Stearns, 15 Wendell, 314.

Bank

of the United States

v.

v.

United

States, 2 Howard,
9 Peters, 378.

711 and

appendix. Bank of the United States

Bulow
v.

Waggener,

City Council, 1 Nott " M., 527.

142. 44.

City of Louisville v. Bank of the United States,3 B. Monroe, Commonwealth v. Morrison, 2 A. K. Marshall, 75. Findlay's Executors
Fleckner
v.

Bank

of the United States, 2 McLean, of the United States,8 Wheaton, 338.

v.

Bank

518

THE

SECOND

BANK

OP

THE

UNITED

STATES

Ludlow v. Kidd, 3 Ohio, 48. McCulloch v. The State of Maryland, 4 Wheaton, Magill v. Parsons, 4 Conn., 317.
Martin
v.

316.

of the United States, 4 Washington, 253. Osborn v. Bank of the United States, 9 Wheaton, 738. Sill v. Bank of the United States, 5 Conn., 102. Smith v. Frye, 5 Cranch C. Ct.,515. Bank State
State State
ex
v.

rel. Berney

v.

Collector,2 Bailey, 654.

Buchanan, Common

5 Har. " J., 362.

v. v.

Pleas, 3 Ohio, 49. Bank of the United States, 5 Howard, Brewster, 7 Peters, 164.
1 Baldwin, 292. 382.

State

Tutt, 2 Bailey, 44.

v.
v.

United States United States United States United States United States
United States

v.
v. v. v.

Hinman,

Noble, 5 Cranch

C. Ct., 371.

Shellmire, 1 Baldwin, 370.

Shire, 1 Baldwin, 510.

Turner, 7 Peters, 132.
GOVERNMENT

United States

v.

DOCUMENTS

Annals of Congress.

Congressional Debates. Congressional Globe. House

Executive Documents:

No. 63, 21st Cong., 2d Sess.

Monthly

reports of the bank

for

1830. No. 3, 22d Cong., 2d Sess. No. 8, 22d Cong., 2d Sess.

22d Cong., 2d

(identical with Sess.).

Senate

Document

4,

No. 98, 22d Cong., 1st Sess. No. 147, 22d Cong., 1st Sess. No. No.
2, 23d 12, 23d

Cong.,

1st Sess.

Reports
Reports

of

the government

directors to President Jackson. Cong.,

1st Sess.

of the government

directors to President Jackson.

No. 78, 23d Cong., 1st Sess. No. 320, 23d Cong., 1st Sess. No. 479, 23d Cong., 1st Sess. No.
523, 23d Cong., 1st Sess.

Monthly

reports

of the bank

from January, 1831, to June, 1834.

BIBLIOGRAPHY

519

Vols. Ill, IV, and V, passim, 23d Cong., 1st Sess. No. 21, 23d Cong., 2d Sess. The French billand branch drafts. No. 42, 23d Cong., 2d Sess. Branch drafts.
No.

Letter from the secretary of the treasury in relation to the official roceedings of the government p directors of the Bank of the United States, December
45, 23d

Cong., 2d Sess.

29, 1834.

exchange and rates of collection by the Bank of the United States and itsbranches. No. 79, 23d Cong., 2d Sess. Circular letter of the secretary of the treasury stopping receipt of branch No. 204, 24th Cong., 1st Sess.,pp. 2-13.

No. 46, 23d Cong., 2d Sess. No. 71, 23d Cong., 2d Sess. Domestic

drafts after 1834. Monthly reports of

information
on

the bank, February and March, 1836. No. 118, 24th Cong., 2d Sess. Valuable
bank House House
in 1835-1836.

the

Journals. Reports:

25, 1818, No. 92, 15th Cong., 2d Sess. Investigation, November Pp. 493. See also folio State by the committee of the House.

Papers. No. 358, 21st Cong., 1st Sess. No. 312, 22d Cong., 1st Sess. No. 460, 22d Cong., 1st Sess.,April 30, 1832. Investigation of 1832 by Mr. Clayton, on behalf of the committee of the Washington, 1832. Pp. 568. Abstract of monthly House. reports, January, 1829-May, 1832, pp. 331 S. Polk's report.

McDuffie's report.

No. 121, 22d Cong., 2d Sess. No. 263, 23d Cong., 1st Sess.
No. 313, 23d Cong., 1st Sess. No. 481 23d Cong., 1st Sess. No. 272, 24th Cong., 2d Sess.

No. 306, 24th Cong., 2d Sess.

Reports

on

the Finances, Vols. I and II.

Senate Documents:
No. 193, 20th Cong., 1st Sess.
No. 195, 20th Cong., 1st Sess. No. 7, 20th Cong., 2d Sess. No. 44, 20th Cong., 2d Sess.

520

THE

SECOND

BANK

OP

THE

UNITED

STATES

No. 92, 20th Cong., 2d Sess.

No. 104, 21st Cong., 2d

Sess.

Report

on

the finances by

Samuel

Smith, 1829.

No. 31, 22d Cong., 1st Sess.

No. 50, 22d Cong., 1st Sess. No. 79, 22d Cong., 1st Sess. No. 98, 22d Cong., 1st Sess.
No. 4, 22d
Document

Cong., 2d Sess.
8, 22d

(Identical with Cong., 2d Sess.)

House

Executive

No. 82, 22d Cong., 2d Sess. No. 2, 23d Cong., 1st Sess. No. 16, 23d Cong., 1st Sess. No. 17, 23d Cong., 1st Sess. No. 24, 23d Cong., 1st Sess.

No. 71, 23d Cong., 1st Sess.

No. 92, 23d Cong., 1st Sess. No. 238, 23d Cong.; 1st Sess. No. 333, 23d Cong., 1st Sess. No. 2, 23d Cong., 2d Sess.

Correspondence between

the bank

on the French bill. and the Treasury Department No. 8, 23d Cong., 2d Sess. Monthly statements of the bank,

June-December,
No. 13, 23d
treasury
on

1834.

Cong., 2d

Sess.

present system public money in comparison

of the secretary of the of keeping and disbursing the with the former agency of the
15, 1834.

Report

of the United States, December No. 17, 23d Cong., 2d Sess. Report

Bank

on of the Committee 18, 1834. 8vo, pp. 1Finance, with documents, December 340 and 1-9. Abstract of monthly reports, 1818-34 (October),

pp. 208-24.

No. 312, 24th Cong., 1st Sess.

Monthly

reports of the bank

October, 1835-February, 1836. No. 392, 24th Cong., 1st Sess.

No. 2, 24th Cong., 2d Sess. No. 201, 24th Cong., 2d Sess. No. 208, 24th Cong., 2d Sess. No. 128, 25th Cong., 2d Sess. Monthly
1-61.
reports of the bank Also abstract, 1817-36

January-October,

1835, pp.

pp. 208-11. No. 230. 25th Cong., 2d Sess.

BIBLIOGRAPHY
No. 457, 25th Cong., 2d Sess.

521

Prices of state-bank notes at

Philadelphia, 1817-37. No. 78, 25th Cong., 3d Sess.

No. 142, 25th Cong., 3d Sess.

Average circulationof the bank.

No. 180, 26th Cong., 2d Sess. No. 22, 27th Cong., 1st Sess.

Senate Journals. State Papers, folio edition: Finance, Vols. Ill, IV, V, passim. the following: are Correspondence with the Treasury
495-1077.
7, 1820, of the Bank of the United States,December Vol. Ill, pp. 586 ff. Monthly reports of the bank: for 1817, Vol. Ill, pp. 319 ff.,

The

most

important

contents

Department,

Vol. IV, pp.

Memorial

321 ff., 345 ff.;for 1824, 1825, 1826, 1827, Vol. IV, pp. 183 ff., 548 ff 902 ff. .,

Keport Report

of the Bank of the United States, of the Committee September 25, 1819, Vol. IV, pp. 906 ff. of 1819, Vol. Ill, pp.

of the Investigating Committee 306-91.

State Papers, octavo edition: No. 138, 15th Cong., 2d Sess.

others, 1819. No. 93, 20th Cong., 2d Sess.
1828. No. 13, 21st Cong., 1st Sess. 1829.
PENNSYLVANIA

Memorial of William
Monthly Monthly

Gray and
for for

reports of the bank reports of the bank

DOCUMENTS

Pennsylvania

on of the Committee Banks in the House of Representatives of Pennsylvania, etc., by M. Learning, chairman. Harrisburg, 1833.

House

Committee.

Report

Pennsylvania

Senate Document,

July 12, 1842.

Committee
Been

of Investigation, Appointed Pennsylvania, to Investigate Whether

Report of the Joint by the Legislature of

Corrupt

Means

Had

Used

to Procure

Legislation Favorable

to the Banks

from 1836 to 1841. Pennsylvania

Harrisburg, 1842. Substitute for the Report

on

Senate Report.

Committee

of the Senate of Pennsylvania,

of the the Memorial of

522

THE
Sundry made

SECOND
Banks

BANK

OF

THE

UNITED

STATES

of the City and County of Philadelphia, etc., by Mr. Petrickin, February 4, 1834. Harrisburg, 1834.
MANUSCRIPT
MATERIAL

President's Letter Books, President Nicholas

P. L. B. initials

Vols. I-V. Biddle.

letter books of official Referred to in the notes by the

The

The Biddle Papers.

Letters to and from Nicholas Biddle. B. P. to in the notes by the initials

NEWSPAPERS

Referred

Blair, Francis Preston.

January 17, 1835.

Extra Globe.

Vol. I. June

28, 1834, to

Blair, Francis Preston. Gales, Joseph,

26 numbers. Washington. The Globe. Washington, 1831-36. The National Intelligencer. Baltimore, 1813-41. New

and Seaton, William. Washington, 1813-36.

The

Niles, Hezekiah.

Weekly

Register.

The Courier and Enquirer. Noah, M. M., and Webb, J. W. 1828-36. York [consolidated in 1831],

Walsh, Robert.
was [This

The

National Gazette.

Philadelphia, 1820-41.

the organ of the

bank.]

PAMPHLETS

Adams, Charles Francis. Further Reflections upon the State of the Currency in the United States. Boston, Ticknor, 1837. Dr. dressed Aegles (pseudo.). Watkins, Tobias.] Letters of Aegles Ad[
to the Hon.

John

C. Spencer.

Baltimore, John

D.

Toy, 1819.

Anonymous.

duced of the Principal Causes That Have Prothe Present Extraordinary Advance of the Stock of the United States Bank. [Philadelphia, 1818.]
A View Brief Review of the Bank Conclusions

Anonymous. Anonymous.
Anonymous.

istration of the Origin, Progress, and Adminof the United States. Philadelphia,1819.
Which

Tend

to Prove

that the United

States Bank

is Necessary.

New

Haven,

1828. States.

Observations on the Bank of the United Annapolis, Jonas Green, printer, 1819.

Anonymous.
1833.

dental Outline of a Plan for a National Bank, with InciRemarks on the Bank of the United States. New York,

BIBLIOGRAPHY
Anonymous.

523

State of the Currency in the United States. Boston, Ezra Lincoln, 1837. Remarks Anonymous. upon Mr. Appleton's Remarks on Currency Reflections upon
the Present and Banking. Press, 1841.
Anonymous. By
a

disinterested witness.

Boston, Eastburn's

1831. Anonymous.
Anonymous.

Report of the Bank of the United States,September, Philadelphia, 1831. 8vo, pp. 31. Review of the Veto. The Conduct of the Administration. Reprinted from
Daily Advertiser and Patriot.

the Boston

Boston, 1832.

Appleton, Nathan.

Appleton

on

Currency and

Banking.

3d edition.

Boston, Eastburn's Press, 1857.

Thos. Aristides (pseudo.). [McKenney, Jacksonism

as

the Spiritof Exemplified in its Deadly Hostility to the Bank

L.]

Essays

on

of the United States. Philadelphia, Jesper Harding, 1835. Baker, Henry F. Banks and Banking in the United States. Part I. Boston, Ticknor, Reed " Fields, 1853. Part II. Cincinnati, H. W. Derby, 1854.

Bank

of Maryland Conspiracy as Developed in the Report to the Ellicott,Trustee of Said Bank. Philadelphia, Creditors,by Thomas 1839. Letters to John
Two Letters

Biddle, Nicholas.
25, 1841.

M. Clayton, April 8 to April Embracing

Philadelphia, 1841.
....

Biddle, Nicholas.

History of the Re-charter of the Bank of the United States, and a View of the Present Condition of the Currency. London, 1837.
a

Bollman, Eric.

cerns ConPlan of an Improved System of the Money Philadelphia, January, 1816. of the Union. Bronson, Isaac. Inquiry into the Causes of the Present State of
the Circulating Medium.

Philadelphia, August, 1815.

to the

Carey, Henry Currency?

C.

Answers
are

Questions:What

Constitutes

What

and What Blanchard, 1840. Carey, Henry

1838. C.
The

rency? the Causes of Unsteadiness of the Curis the Remedy? Philadelphia, Lea "
in France, Great

Credit System

the United

States. Philadelphia, Carey, Lea

Britain and " Blanchard,

March,

Carey, Mathew.
1816.

Letters to the Directors of the Banks. Exposition of the Affairs of the Bank

[Cheves, Langdon.]

during

524

THE

SECOND

BANK

OP

THE

UNITED
Preceded

STATES
by
a

Report of mittee of the United States by the Com1st October, 1822. of Inspection and Investigation Adopted by the stockholders. Philadelphia, William Fry, 1822. Clibborn, Edward. An Outline of the American Debit or Banking
....

the Presidency of Langdon the Condition of the Bank

Cheves.

System.

London,
An

1837.

Degrand,

P. P. F.

Address to the People of the United States.

on

[Boston, 1841.]
Gallatin, Albert.
System

Considerations

the Currency

and

Banking

of the United States. corrections, from the American

Published, with additions and Review. phia, PhiladelQuarterly

Carey " Lea, 1831.

Also in Gallatin's Writings, Vol. III.

Gallatin, Albert, and others. Report of the " Union Committee " appointed by the meeting of the signers of the memorial to Congress, held on February 11, 1834. New York, 1834.
T [Gordon,homas

F.]

The

War

on

the Bank

of the United States.

Philadelphia, Key Gouge, William M.

" Biddle, 1834. An

with Bank of the United States. Philadelphia, Stavely, 1837. Government Directors. The Memorial of Henry D. Gilpin, John

Inquiry into the Expediency ing of DispensAgency and Bank Paper in the Fiscal Concerns

T. Sullivan, and Peter Wager, of Pennsylvania, and Hugh McElderry, of Maryland, Directors of the Bank of the United by the President, by and with the Advice and Consent of the Senate. 1841. [Henshaw, David.]Remarks upon the Bank of the United States. By
a

States, Appointed

Merchant.

Boston, True " Greene, 1831.

Letter to Governor Morton
on

Hildreth, Richard.

Banking

and the

Currency. Boston, Kidder " Wright, 1840. Judicial Decisions upon the Cases of Habeas Corpus, Brought by phia, the Late Officers the Bank of the United States. Philadelof
J. Perry, 1842.
Publius Remarks (pseudo.).
on

the Currency

and Present State and Future York, Wiley " Putnam, 1840.

of the United States Prospects of the Country. New

Report of

of Directors of the Bank of the United States. [Philadelphia, 1833.]Answer to the president'spaper of the 18th September.
a

Committee

Report of the Bank of the United States to the Committee of Ways and Means of the House of Representatives, January 28, 1833.

BIBLIOGRAPHY
Report of the Committee

525

ing of Investigation, appointed at the meetary the stockholders of the Bank of the United States,Januof 4, 1841. Philadelphia, 1841.
....

Report of the Joint Committee Ohio, on the Communication

....

of the General Assembly of of the Auditor of the State upon Proceedings of the Bank the of the United States, against the Officersof State, in the United States Circuit Court. 1821. Concord, [N.H.],

Report of the Proceedings of the Triennial Meeting of the United States, of the Bank of September, 1828. Philadelphia, 1828.
....

holders of the StockFirst Day

Review

of the Report of the Committee of Ways and Means; and of the President of the United States,Relative of the Message Philadelphia, Carey " Lea, 1831. to the United States Bank.

Andrew Jackson and the Bank of the United Royall, William L. 1880. Economic York, Putnam, Monograph, States. New No. XIX. Rules and Regulations for Conducting the Business of the Bank. Philadelphia, 1816 [1833]. Rules and Regulations for the Government of the Offices of the Bank of the United States. Schreiner and
honest the Honest Vote Won others. How against DisHistorical Narrative of the Money Fight between Money. cago, ChiPresident Andrew Jackson and the United States Bank. 1896. Smith, Richard.
by Weightman. To the Stockholders

States. Washington, Smith, Thomas.

Swann,
Van

August

of the Bank of the United 26, 1825. Defense against charges

An

Essay

on

Currency

and

Banking.

phia, Philadel-

Jesper Harding, Thomas.

1832.

States.
Buren,

To the Stockholders of the Bank of the United Alexandria, August 27, 1825, Henry Pittman, printer.

Martin.

Letter from

Hon.

Martin

Van

Buren, Vice-

President of the United States,Relative to the Bank of the United States, with an Explanatory Introduction. London,
Part of letter to Sherrod Williams. Virginian [pseudo.]. Reflections Excited by the Present State of Banking Operations in the United States. By a Virginian.

John

Miller, 1836.

Washington,
Virginian

1818.

The [pseudo.].

Second

War

of the Revolution;

or,

The

526

THE

SECOND

BANK

OF

THE

UNITED

STATES

Great Principles Involved in the Present Controversy between Parties.

By
a

Virginian.

Washington,

1839.

Weightman,
Bank.

Roger

C.
M.

to [Letter] [W. Duane]a

Stockholder in the

Washington,
Reuben

1825.

Whitney,

M. Whitney to the of Reuben Honorable House of Representatives, United States,in Relation to the Charges Made against Him before the Committee of Investigation

Memorial

into the Affairs of the Bank Washington, 1832. Young,

of the United

States.

S.

Considerations on the Bank

STATUTES

of the United States. 1832.

Statutes at Large.

Vols. II, III, IV, V, passim.

STATUTES
OF STATES

Acts of Kentucky Laws of Georgia Laws Laws

(Slaughter). (Dawson'scompilation). (Lamar,1810-19)

.

of Maryland. of Tennessee

Statutes of Ohio

(Scott's ed.). (Chase).

INDEX
JOHN ADAMS. QUINCT: convinced of 145 ; on source bank s imprudence, of Jackson's nostility to bank, 173;_member of committee of investigation in 1832, 230 ; on advancing salaries to con253 ; on the 3 per cents., 273 ; reaks friendship with Richard Rush, 355.

of, 1-7; plans of, 10-12, 14-18; bill to charter, passed, 21; subscriptions ducements to capital stock of, 22 ; inAGENCIES, 42, 400. to banks offered state ALABAMA: opposes of establishment by, 25, 26, 454 ; condition of, in resume branch, 165 ; State Bank of, 441. 1817-18, 28-37; speculation and fraud BenATTACKS ON (see Barbonr, at, 39 ; condition of, in 1818-19, 57, 58, .BANK to save 61, 68-70, 412, 413; measures ton, House, Jackson, Kendall, Senate, Cheves, 71-80; trials of officers Webb.) under of, 78, 79 ; state of business at, under WALTER, 430. BAQEHOT, Cheves, 80-82; hatred of, 84; services 35, 36, 51, WITH BANKS, BALANCES STATE ness of 1825, 106-8; busiof, in stringency 57, 62, 63, 84-6, 97, 318, 322, 324, 445, 446. at, in 1823-28, 110-13; controls fit foreign exchange BALTIMOBE, 39, 40, 42. after 1827, 112 ; beneof, of, to the West, 130-31 ; success BRANCH BALTIMORE (see Branches; by July, 1831, 133; expansion of, in Branches, southern) : established in 1831-32, 136, 137, 142, 145, 147, 413, 414; 1816, 23: frauds at, 39, 45-50; officers of. in 1831-32, 146-51, embarrassments of, 42 ; business at, in 1817-18; 43, 44 ; 153, 160; forces tending to destroy, 164, directors of, 45, 46 ; curnegligence of tailments 165, 167; forces tending to conserve, of discounts, 51, 52, 150; 167, 168 ; hold of, on popular favor, 169, taxed, 64 ; capital of, 1819, 55 ; losses at, 338, 339; applies for re-charter, 221,223, new 66; refuses to make curtailment 224 ; relations of, with the press, 256-67 ; directors and officers in 1819, 68, 69 ; new contraction of, in 1833-34, 298, 299, 313 ; capital assigned of, 78 ; no permanent in 1834, 336-38; plans to re-charter to, in 1823, 80 ; Democrats appointed loses favor in 1834, 338-40; popular directors at, 246; receipt or branch r6sume of transactions of, in 1835, 359 ; notes at, 310-12 : depreciation of notes up, 368, 371, 372; state of, at winding 417; sold, 366, of other branches at, Bevan becomes president of, 372, 373; note 9, 368. committee of, 259, 262, 273, exchange BANK : attempts to establish an opposition, 279-84 ; position of president of, under 213, 289. rules of 1833, 274; difficulties of, with BANK BILLS (seeAppendices I and IV) : in state banks, 27, 84-9, 382, 383, 446, 447, 360; center of a single banking 1813-16: first,7, 8; second, 8, 9; third, reserve 10, 11 ; fourth, 14 ; fifth,15, 16 ; sixth, 17 ; system, 430, 432, 434 ; only guarantor of 430, 431 ; amount specie payments, of seventh, 18, 20 ; in 1832, 235, 236 ; in 1834, held by, 431, 432 ; lack of 336-8. specie reserve unity between state banks and, 433, BANK: to settle affairs of, commission 434, 450 : control of state banks by, 434373. 43, 451, 452 ; method stateof improving BANK DEMOCRATS (seeDemocrats). bank paper by, 435-8 ; state-bank notes BANK IN POLITICS (see Charges against received byt 436, 455, 456 ; difficultiesof, in transferring government funds, 462, : the bank, and the individual oilicos) 463 ; specific acts of, as treasury agent, party and affiliations of directors 464; advantages on munity, appointed of, to business comofficers,174 ; Democrats directorates, 181, 182, 186, 189, 200, 245472, 473 ; no evidence of corruption 252, 255 ; becomes Bank 47 ; destiny of bank linked with that of at, 243, of 372. National Republicans, 222. the UnitedStates of Pennsylvania,

fressmen.

Exchange, Government, Relations of to, Investigations bank of. Issues Loans Jones, of, Losses of, of, SurReal Notes estate, of. Panic, debt. Stock, fund, Suspended leading to estockholders) : events tablishme

"lus

BANK UNITED STATES, First, 1, OF THE 18, 21. BANK UNITED STATES, Second OP THE Bank bills, (see Agencies, Balances, in politics, Bank Bank Biddle, war, Board, Parent, charges against Bank, Cheves, Circulation, Constitutionality, Discounts, Curtailment, Dividends,

BANK

STOCK

(seeStock, bank).

BANK : cause WAR of, 232 ; beginning of, 242; consequences of struggle for reposits, charter, 285; and removal of the deindemnity 287-97; and French bill, 299-302; and "transfer drafts/' funds, 305-8 ; and 302-5 ; and pension directors, 308-10. acts of government

527

528
BANKING
BAEBOUR,
HARBOUR,

THE
HOUSES

SECOND
:

BANK

OP

THE

UNITED

STATES

sale of, 369.

dreads

J. S., 17. P. P., 169.

BROTHERS, WILLIAM
146, 270-72.

BARING

BARRY, BENNETT,

T., 182, 295.

JAMES

GORDON,

257, 258.

BENTON,

HART THOMAS : presents tions resoludeposits, in regard to government 170; presents resolutions against recharter, 205 ; attacks branch drafts, 12022, 127-31 ; resolves on investigation of bank, 228, 229 ; asserts that offices are located from political considerations, 398; complains of bank's action in Missouri, 442 : and removal of deposits, 296 ; asserts that bank seeks to embarrass state banks, 310; on the panic of 327, 349. 1833-34,

ness, bill busiof western renewal 395; attitude of, toward press. to expend 257, 258, 263-7; permitted funds without giving vouchers, 265; tees, proxies held by, 274 ; appoints commit275; loans on his own responsibility, 278; controls the board, 279; debt and of suspended management branch notes, real estate by, 400 ; on 417, 418: on elasticity of currency, 423; bank as on guarantor ments, of specie pay430. 431 ; on power of bank over proving state banks, 438; on methods of imvantages currency, 450; on bank's adto business community, 472 1; charges by directors, and note against, 282, 283 ; not responsible for downfall of bank, 284: becomes dent presiStates of of Bank of the United Pennsylvania, 372. T. " Co., 273, 275, 277, 278.
RECEIVABLE,

BEVAN, BIDDLE,

MATTHEW,

262, 347, 372, 373.

BIDDLE, BILLS

NipnoLAa: character, 93, 274, director, 275; appointed government 93 ; elected president of bank, 93 ; policy, 94-7, 99-101, 383, 384, 405, 406: evolves for control of branches, 101-5 measures foresight of, 384; conservatism and in 1825, 106J-8; plan of, for keeping branch capitals localized, 114, 115, 406 ; lays branch-draft before proposition Binney and Webster, 117 ; on character of branch drafts, 125 ; neglects charges
office, against president of Portland 389 ; on bank's duty in 1828, 434; reports July, 1831, 132; success of his measures,

281.

HORACE: BINNEY, member of central board, 117, 118; asserts legality of branch drafts,118 ; agent of bank during for re-charter, 224, 251; struggle 2 79; supcommittee, upholds exchange ports Calhoun's plan for re-charter in 1834, 336. BLAIR,

nati Cincinconcerning neglects warnings branch, 391; dismayed Biddle, BOARD, PARENT (see Bank, at New Cheves, Jones) : political complexion Orleans bill purchases, 157, 162 ; opposes to politics at boards, 171, 243-7, 250, 251, of, 22, 244; invites state banks branches, 24; proposals discuss resumption, 285; repels charges to against 176, 178, 187, 188; correspondence of, state banks, in 1817, 26; mismanagement by, 1817-18, 28-33, 35 ; ignorance 172-9, 288; correspondence with Ingham, Lewis, 182, 184, 186-9, of, with of, in 1817 and 1832, 32t 395 ; discounts 191, 200, 246, 247; appoints Democrats stock loans, 32 ; resolutions of August, directorates, 181, 182, 186, 189, 200, 1818, 35, 41, 51, 52; complicity in fraud on 245-7; refuses to place Democrats on 40-42: establishes speculation, and London 42 ; collects special Louisville board, 247 ; submits plan for agency, debt, 190, 191 ; deposits, 456, 457 ; selects state banks extinction of government interview of, with Jackson, 192, 193; as treasury agents, 457, 458 ; and stock loans at branches, 47, 48; calls for 199,205 ; secures circulates publications, Gallatin, 199, 200; attiin 1818, 51, 52, 62; retreatise from tude curtailment formed Cheves, 78j 82; appeals under of, January to May, 1831, 206, 207 ; for Congress to McLane and of unites with Livingston modifications Jackson's to reto secure assent charter, 75, 91, 116, 117; strengthened Biddle, 102; takes government under charter, 208-10; decides to apply for loans, 73, 454, 471 ; directors of, sit at re-charter, 214, 215, 217, 221; loans to branch boards in cities where resident, Girard's bank, 432, 433; procures 102, 103 ; creates assistant cashiers, 104 ; petitions and resolutions for re-charter, loans on six months' 224 ; willing to frame bill to suit Jaekpaper, permits last attempt 225-7; makes to se109 ; sellsforfeited shares of bank stock, cure son, 109 ; authorizes issue of branch drafts, Jackson's assent, 232; on the veto rows, to secure 119; attempts state stock, message, 241; relations of, with Burdealings in West 134; extends Webb, and Noah, 258-64 ; and the and Southwest, 134, 137 ; orders contraction 3 268-73; denounces per cents., formed in 1831, 146, 147 ; applies for re-charter, McLane, 286, 287: inJackson and 221, 223,224; circulates veto message, its, concerning of deposremoval 241 ; policy of, unchanged to government 292, 294; opposed after campaign directors in 1834, 309, 810 ; insists upon of the of 1832, 285 ; postponement 269-73, 473; orders in 1833-34, 314, 316, 329-31, 8 per cents., contraction Webster's 339; supports port contraction of 1833-34, 298, 299, 313 ; replan for reof of, on removal of committee charter in 1834, 336; public interest in, house, 356; deposits, 316 ; petitions for restoration 353; fortifies bank and

PRESTON FRANCIS : charges complicity of branches in politics, 171 ; editor of Globe, 199 ; loans to, 256 ; urges removal of deposits, 287, 295 ; founds Extra Globe in 1834, 355; points out for bank's overthrow, 357. reasons

INDEX

529

of deposits, 335 ; policy in 1835, 360, 362, of of, 379, 399; advantages 365, 367, 268; petitions for settlement branch 376, 400-402, 422, 423, system. in 1837, 374; redeems 467 ; defects of branch system, 402, 403 ; with government in bank, 372-75; government shares remedies for defects of branch system, 403. bills of exchange, on charges premium favors 138; grants to congressmen, BRANCHES, eastern (see Boston. Buffalo, 252-5; contributes to public improvements, Burlington, Hartford, Middletown, 255; small attendance of, at Portland, New York, Philadelphia. 279; authorizes meetings, exchange ness Portsmouth. Providence, Utica) : busito make loans, 280, 281 ; recommittee sponsible in 1818, 34, 55, of nearly destroyed for bank's ruin, 281^1 ; and 56 ; contract in 1832, 148, 151 ; receipt of branches, the 376-9, 384, 387-95; branch at, 1833, 310-12; issues notes takes cognizance of charges against of, 409, 410. branch officials, 178, 389, 390 ; attitude BRANCHES, SOUTHERN (see Baltimore, of, toward state banks, 97, 440, 443, 446-8. Norfolk, Charleston, Fayetteville, BOSTON BRANCH (seeBranches, eastern): Richmond, Savannah,Washington) : officers in 1816, 23; discounts at, established and and boards of, incompetent 34, 55, 125, 150; capital, in 1819, 56; depreciation disobedient, 32, 33, 35; fail to reduce, 416; attempted of notes, 52, 54, 148 ; excessive issues, 54 ; capital removal of deposits at, 202; closing issue of in 1819, 55, 56 ; directed to cease 367, 368. up, notes, 70, 81, 82; investigated under BRANCH DRAFTS: by John Cheves, 79; expansion at, in 1832. 147; suggested Forsyth, 117 ; Binney, Webster, directed to curtail, in 1832, 147 ; issues and Wirt affirm legality of, 118; invented of, 34, 410-12. in 1827, 132; issue of, authorized, 119; BRANCHES, SOUTHWESTERN (see Mobile, form of, 119 and note 2; accepted by Natchez, New Orleans) : dealings in exchange treasury, 119; decision of court concerning, at, 142, 144 ; directed to curtail 120, 121; status of, 120^5, in 1832, 147, 162; issues of, 410-12. 131 ; convertibility of, 125-7 ; opinion BRANCHES, WESTER_N (see Chillicothe, 125-7, concerning, of W. G. Sumner Louisville, Cincinnati, Lexington, issued, 128, 129; branches 130; amount Nashville, Pittsburg, St. Louis) : officers issuing, 128, 129 ; used to restrain stateincompetent obedient, and boards and disbank issues, 441, 442; forbidden in bill 32, 33, 35 ; fail to reduce, 54 ; by government of 1832, 119; receipt excessive issues, 54 ; capital in 1819, 56 ; officials, prohibited, 119, 452. directed to cease issue of notes, 70, 81, BRANCHES Boston, (see Baltimore, to issue 82, 404, 405, 415, 455 ; permitted Branch drafts, Buffalo, Burlington, five-dollar notes, 75, 81 ; investigated branches, Capitals Charleston, of in exCheves, 79; dealings change, under Chillicothe, Cincinnatij Fayetteville, in 1832, 147 ; 142-4 ; expansion Hartford, Issues, Lexington, ville, Louisdirected to curtail in 1832, 147, 162; Mobile, Middletown, Nashville, perilous business of, 395, 413; issues New Natchez, New Orleans, York, of, 34, 411, 412. Norfolk, Notes of branches, phia, PhiladelISAAC, 291. BRONSON, Pittsburg, Portland, Portsmouth, Richmond, A. : president Balti Providence, St. Louis, Savannah, BUCHANAN, JAMES Utica, Washington) : charter more of parent office, 42; director 376, 377 ; estabboard, 43; speculates in stock, 40, 43, provisions concerning, lishment 44; fraudulent transactions of, 45-50; of, 23, 379, 384, 385, 398; settlement of accounts resigns, 78 ; tried for conspiracy, 79. of, 30; administration Jones, 379, 380 ; of, under BUFFALO BRANCH (see Branches, eastern): taxed, 64, 65, 89, 90 ; restrictions on, under established, 384, note 6; closed, Cheves, 76, 380, 381, 405, 426 ; attempt 366, 79; control of. to reduce or, number TRISTRAM, 349. BURGESS, Biddle, 95-7, 101-5, 383-95; Tinder difficultiesof management 390, 392 ; BURLINGTON BRANCH (seeBranches, eastof, ern): directors of, how chosen, 101, 102; duties established, 384, note 5; closed, 103, 104 ; presidents 366. of cashiers of, by assistant of, 102, 384, 387 ; oversight SILAS E., 224, 257-62. BURROWS, board, 104, 384 ; suscashier of parent pension BUSINESS, dustry) OF STATE (see Trade and in390; orof rules governing, dered to curtail in 1831, 146; charges F., 301. BENJAMIN 171-3, 248-51 ; contraction BUTLER, against, at, 1833-34, 316-22; closed, 366, 367-9; CABINET, 193, 207, 219, 295. remaining unsold in 1835, 367; rules THOMAS Ingham cor: on CADWALADER, respondenc and regulations of, 377 and Appendix 177; bank's at agent X ; cashiers of, 103, 377, 378, 384 ; knowledge 217-21 ; on Washington, the veto, 238, board concerning, 377, of central 240: postponement of the 3 per cents, 378 ; under influence of politics,381, 382 ; and, 269-72. for establishment reasons of, 384, 385 ; JOHN C. : suggests boards CALHOUN, ment establishauthority of branch and officers, importance 885-7; relative of of, of bank in District, 7 ; member Dal397, 398; applications for, 398, 399; location committee bank, 8; opposes on
_

"

530

THE

SECOND

BANK

OP

THE

UNITED

STATES

las's plan, 11, 12, 15 ; plan for a hank, 12; member to of Select Committee bill, 13, 18; Calhounconsider bank LowndesFederalist 15, compromise, 16 ; brings in bill of 1816, 18 ; opinion of hostility to bank, source of Jackson's 113,173; complains of political activity branch, 250; supports of Charleston bank in 1834,338; plan for re-charter in 1834, 336-8 ; bitter against Jackson,
349.

CHTVES,

CAMBEELENO,

C. C., 228.
OP

CAMPAIGN CAMPBELL, CAPITAL

1832, 285.

GEORGE
OF BANK
:

W., 1, 3, 4, 9.

tirely specie part of, not enernment of govpaid, 41, 58, 59 ; amount stock subscribed to, 470 ; shifts to South and West in 1818, 35, 55, 56, 74, 404; distribution of, 56, note 1; 80, note 5 ; management of, under Cheves, 72, 73, 108 ; assignment of, to branches, 73, 77, 80 ; restored by January, 1821, 80 ; proportion of circulation to, 407 ; proportion of loans to, 432.
: deemed FIXED by Jones, 30 ; assigned, 73, to keep fixed, 74-7, 77, 80; measures 114, 115, 406.

LANGDON: speaker, 9; opposes Dal las's plan, 11,15; character of, 70; reforms in bank makes management, 71-80 ; restricts note issues. 70, 75 ; effect of measures of, on bank's business, 80,81; aims of, 72; as a banker, 72,82, 83, 380-S3; asks Crawford not to receive branch paper in payment ernment of govdues,75; secures new arrangements for transfers, 463, 464 ; restrains state banks, 77,78, 439, 440; places restriction branches, 76, 380, 381, 405. on 426; attempts to reduce or number branches, 79; issues under, 81 ; difficulties with the Georgia state banks, 84-9, 382, 383 ; pays out state-bank notes, 97, 439, 440; resigns, 91, 92.
AGENCY,
BRANCH
: established

CHILLICOTHE CHILLICOTHE

400.

western)
taxed, 398.

(see Branches, in 1817, 23, note 3 ; in 1825, 65,89, 90; discontinued

AGENCY,
BANKS

CINCINNATI
CINCINNATI

400. 5 (state),1, 52, 62,63. (seeBranches, western)

CAPITALS

OF

BRANCHES

unnecessary

CAREY,

MATTHEW,

266.

CASS, LEWIS,

295, 306.
THE

CHARGES

AGAINST

BANK

IN

1818-19,

99,110, 115, 116, 133, 136; reduction of, branches from political establishing in 1833-34, 324; in 1835, 359, 265; wide 398, 399; of corrupt reconsiderations, lations dispersion of, 407 ; inflation of, 420, 423, bing with the press, 256-67 ; of job424 ; various elements of, 428 ; proportion in 3 per cent, stock, 267-73 ; by R. 431, 432. of, to specie reserve, M. Whitney, 275-7 ; of granting illegal to exchange CLAY, HENRY 279: speaker powers committee, of the house, 8 ; " to favorable 84; in Jackson's 296, 297 ; of a paper," committee appoints to embarrass bank in 1815, 18; attitude on question state banks, seeking 310. of application for re-charter in 1830-32, 1833, 335-8 ; 215-17 ; tactics in December, CHARLESTON BRANCH (see Branches, Webster's opposes re-charter bill in in 1816, 23 ; capi: established tal southern) Jackson, 345, over 1834, 338; triumphs of, in 1819,56; losses at, in 1819, 66; 346. 346 ; injures the bank's cause, cannot reduce, 150, 326, 393, 394 ; charges AUGUSTINS., 138, 228, 229, 249, portance CLAYTON, of political activity, 171, 249, 250; im333. of, 397, 398 ; and the Bank of the State of South Carolina, 447 ; closed, DE WITT, 65. CLINTON, 369, note 9, 368. COLT, R. L., 94. CHARTER Jack(see Bank bills, Biddle, son) quire HOUSE, Select: to inOF : passage COMMITTEES of, in 1816, 21 ; text of, I ; provisions of, respecting Appendix into expediency of establishing a bill embodying bank's 453, bank, 8; to consider relations to government, 13 ; 465 ; provisions of, respecting branches, Calhoun's plan with amendments, 15 ; to to reconsider Dallas's measure, 376, 277 ; provisions of, respecting issues, in18 ; of vestigat 115, 404 ; provisions message, of, respecting relaconsider Madison's tions tion in 1818, 58, 138 ; of investigato treasury, 288, 465; provision in in 1832, 230; or investigation of, respecting purchase of government 1834, 342. Ways and Means : supports stock, 267,.268; act additional to, 60; bank petitions for modifications in, 75, bill to erect bank in District, 8; reports for national bank 91, 116, 117 ; provisions with of bill of 1832, resolution ably 232-8, 451; nope in branches, 10 ; refuses to report favorof securing new, 1833-4, 329-31, 336-8, 346; from sylvania, Pennon petition of bank, 117 ; reports 359, 367, 371, 372. in favor of bank in 1830, 198 ; reports

to ex58-60 ; of using bills of exchange tort ing usurious rates, 138-40 ; of expandfrom political moand contracting tives, 160, note 2; of trying to secure Jackson's defeat in 1828, 171 ; of political action at the branches, 248-51 j of

CINCINNATI BRANCH in 1817, 23, note 3: : established discounts of, in June, 1818, 34; capital of, in 1819, 56; taxed, 65, 89, 90; withdrawn in October, 1820, 79, 80, 398 ; reestablis in 1825, 398; embarrassments at in 1832, 151 ; loose business of, in 1832, 155, 391, 413; issues of, 414; charges against officials of, neglected, in 1835, 366. 391 ; loans of, cease CIRCULATION OF BANK (see Issues, Notes) : in March, 1817, 28; in 1818, 30; in 1818-19, 53, 54; under reduction Cheves, 81, 96, 97 ; under Biddle, 96, 98,

INDEX
deposits are safe in that government bank, 289; resolutions of, in 1834, 334, 341. Finance: SENATE, OF THE COMMITTEES bank's right to hold governsupports ment deposits without compensation, 170; in 1830, 198; in 1834, 255, 264,265,
335, 356, 358.

531
for. in 1833-34, 298, 299;

bank

counts justified in, in 1833, 314, 315; of disin 1833-34, 316, 319-22; restrictions in 1833-34, bills of exchange 317, 319-22 ; amount and distribution of, in 1833-34, 321, 322; effect on tion, circuladeposits, and supply of specie, in 1834, 324, 325 ; effect on public opinion in 1834, 348, 349, 351 ; bank strengthened by, in 1834, 325, 326 ; suffering occasioned by, in 1834, 326-8 ; purpose of the bank in, 328-31, 339; relieved by the bank, March, 1834, 344 ; end of, 1834, 347, 348.
on

COMPKOMISE
CONGRESS Senate,

298. Committees (see of House and House, Senate) : refuses to recharter bank in 1811, 1 ; fails to provide bond 1 ; authorizes revenue, war a ALEXANDER J. : appointed secDALLAS, retary issues 1812-14, 2; authorizes emission terest pajr inof treasury, 9 ; cannot of treasury notes, 3; increases taxes, 4; debt, 6; believes on national bank bill,21 ; jointresolution of passes for disordered bank national only remedy April 30, 1816, 23; creates bank commissioner finances, 10 ; plan for bank, 10, loans and pension agent, of 14, 15, 17 ; annihilates Calhoun's plan, in 1819, 58-60 ; rebank 305 ; supports fuses 13 ; final plan in 1815, 18 ; favors Jones to modify bank charter, 75 ; refuses for president of bank, 22, 244 ; proposes to allow signers of additional to state banks, 23. resumption for renotes, 91, 116, 117; application M., 221, 223-5, 232. GEORGE DALLAS, charter in, 224 ; position of parties in, to, DEBT, in 1833, 332-4; bank's memorial NATIONAL (seeNational debt). for restoration of the deposits, 335; DEMOCRACY, 167, 175, 248, 296. to, 1834, 335, 354; adjourns memorials DEMOCRATS: branch on appointed in 1834 without taking action, 347 ; empowers boards, 181, 182, 186, 189, 200, 245-7 ; attitude Woodbury to settle with the bank, 175, 296, 351 ; positoward tion bank, 1836, 373, 375.
TARIFF,
:

CONGRESSMEN CONNECTICUT:

208, 252-5.
attempts to tax

in 1833, 332, 333 : of Pennsylvania, desert the bank in 1834, 340.

bank

DEPOSITS:

stock, 165. 7, 9, CONSTITUTIONALITY THE OF BANK, 12, 16, 19, 164, 184, 198, 202, 205, 333, 334.

amount of, compared with circulation, 422, 428, 429 ; elasticity of, 427.
GOVERNMENT:

DEPOSITS,
concerning,

arrangement

CONTINGENT "CONTINGENT CONTRACTION COOPER,

FUND

UNDER

BIDDLE, 302-5.

133.

DRAFTS,"

(see Curtailment,

Panic,

Stringency).
THOMAS,
AT

273, 333, 334, 442, 443.

BANK
:

CORRUPTION
243, 252, 255.

no

evidence

of,

COURIER

AND

ENQUIRER,

180, 256, 258,

in 1817, 26; "special," 455170; early 57; resolutions concerning, to remove, 177, 202, 206; reattempts moval of bank of, 287-97, 335; accounts treasury 457-60; concerning, with amount of, held by bank, 465 : difficulty from bank, 473, of securing promptly 474 ; safety of, in bank, 458, 464, 465. 99, 111, 134, 136, 324. DEPOSITS, PRIVATE,
DESHA, DICKINS, DISCOUNTS DIVIDENDS

259, 263, 264.

JOSEPH,
ASBURY,

165. 178, 179, 254, 255, 268.

CRAWFORD,
the

WILLIAM H. : secretary of 23 ; circular treasury, to state 23; sanctions banks, tween beagreement

(seeLoans
OF

bank and state banks regarding of 4 per cent., January, semi-annual, 25; resumption, objects to bank's in London, 1818, 29; foreign, payable on 138; charging premium exchange, 41 : payment delinquent to stockholders, in payments receives state-bank notes 58, 59: not to be paid until to government, 454, 455; holds bank responsible original capital intact, 72; of V/2 per for safety of public funds in July, 1821, 80 ; stockcent, declared holders banks, 460; refuses Cheves's request state dissatisfied with smallness of, in to receive branch paper not Biddle, 111. 109 ; under dues, 75. payment of government DOMESTIC EXCHANGE (see Exchange, CRSCKETT, DAVID, 254.

BANK

and discounts). (see Appendix V)

inland).

CROWNINSHIELD, CURRENCY
:

B. W., 245.

37, 421, 443-6; state of, 5, 29Ji8, improvement Biddle, 99, 443, under 444; lack of, in 1832, 151, 152; amount of, in circulation, 444 ; methods ing of improvsuggested, 450.

DRAFTS: of the bank, bank, given by the banks, 302-5. DRAFTS, DUANE,
BRANCH

74, 76, 141-3; "on Taney to state

(see Branch

drafts).

WILLIAM

J., 292-4, 296, 300.

CURTAILMENT

ure : in 1818-19, 51-4, 57 ; failthe of, in 1819, 54-8; effect on country in 1819, 61-3 ; continued, in 1819^ 20, 71; ordered in 1831, 146, 147, 162; failure of, in 1831-32, 147-51 ; responsibility

ELECTIONS

the (see Charges against in 1832, 241, 242, 285; in 1834, 355, spring, 345 ; in 1834, congressional, 356.

bank):

EPPES,

JOHN

W., 7, 8, 10.

532
EWINQ,

THE
THOMAS,

SECOND
237, 350.
OF,

BANK

OP

THE

UNITED

STATES

EXCHANGE. 279-84. EXCHANGE,

COMMITTEE
FOREIGN,

259, 262, 273,

111, 112.

principal of French Bill,300; declines to receive by bank, state bank notes not approved 436, 437 ; connection with state banks, 454,460-62.
cents., 146; pays

Indemnity

EXCHANGE, INLAND : restrictions regarding leans bills of, 76 ; operations at New Orput on safer footing, 96 : dealings in early years, 140; under Biddle, 98, 112, 133, 136, 140-44, 147, 157, 406; equalization of term, 137 ; slight of, meaning dealings in, by banks, 138; used as device to evade laws, 138-40; usury "race-horse" bills,32, 158, 159 ; bank's in securing, 140, 141 ; rates advantages ing of, 141, 142, 315, 317, 319, 320; durof 1833-34, 314-17, 319contraction 22; in 1835, 360, 362, 370; part of the circulation, 428 ; use of, in transfer of funds, 467. government

GOVERNMENT

FAYETTEVILLE
note

1, 379 ; taxed, cashier's accounts,

branch established, 30, 64, 65, deficiency in 79 ; closing up, 366.

291, 308-10. DIRECTORS, GOVERNMENT: the relations of, with bank, reasons for government connection, 19; charter provisions concerning, 20, 453; stock subscribed to bank, 470; in early advantages of connection to years, 27, 28, 453-60; loans of bank 28, 73, 454,471 ; bank, comgovernment, missioner agent, of loans ana pension 305; arrangement of 1820 regarding notes, 455, 456; accounts state bank ernment with the trftasury, 457-9, 463. 464 ; govliquidates stock note of $7,000,000in 1831, 134; stock in bank redeemed by bank, 372-5; usefulness of bank's notes to government, 453, 454 ; funds, 76, 77, transfer of government
462-8; safety of government funds, 458, 464, 465 ; government's means of control, 465 ; disbursements by bank, 468, made 469: profit to government from connection, 467, 469, 471, 474; profit to bank from 475, 476; losses to connection, bank, 469, 470; disadvantages to bank, 74, 75, 310-12; government account 471 ; difficulty of securing overdrawn, deposits, prompt payment of government 473, 474; probable benefit of bank to government today, 474-6.

FEDERALISTS:
14, 15;

Dallas's plan, 11, oppose Calhoun's approve plan, 12;

Lowndes's support attack on Calhoun's final plan, 18 ; share plan, 13 ; oppose in firstdirectorate of the bank, 22.

FINANCES,
1-7.

state of during

war

of 1812,
tempore

FISHER, JAMES C. : president pro of the bank, 60. FISK, JONATHAN, 8, 10, 12, 13.

JOHN : approves FORSYTE, Dallas's plan, 13; 12; member of Select Committee, first points out possibility of issuing large sum branch drafts, 117 ; borrows from bank, 253; opposes bank in 1834, 335. FRENCH FUNDED
134.
INDEMNITY DEBT UNDER BILL,

GREEN, GRUNDY,

DUFF,

199, 256, 267. 8.

FELIX, JAMES

HAMILTON,
HAMILTON,

ALEXANDER,

JR., 194, 345.

A., 183, 196, 213, 288, 291. 256.

HARDING,

JESPER,

299-302, 374.
110, 133,

BIDDLK, 256, 257.

GALES

AND

SEATON,

HARTFORD BRANCH (see branches, eastern), established In 1824, 398; losses at, June, 1835, 366. 388 ; closed HAYNE, Y., 250, 447. ROBERT

GALLATIN,

from ALBERT: the resigns HILL, ISAAC, 171-5, 177. Treasury, 1 ; on bank's dealings in exchange, HOUSE REPRESENTATIVES OF (see Bank bank, 199, 200, 138; treatise on bills,Committees integrity in 205: oelieves in bank's of House, Congress): initiates bank legislation, 7, 8, 10, 12, 15, matter of 3 per cents., 273; opposes 18; Dallas bill lost in, 15; debate in, deposits, 291: chairman of removal investigation of 1818, 58-60 : refuses over in 1834, 343; on relation union committee to pass bills modifying to state banks, 435, 445, charter, 116; of bank to 451. sell government rejects motion shares in bank, 169, 289; rejects resolutions 13, 14. GASTON, WILLIAM, against constitutionality of : state banks GEORGIA of, 84-9, 440. 202; passes bill to re-charter, bank, declares deposits safe in bank in D., 308. 235 ; GILPIN, HENRY 1833, 289 ; votes of, in regard to bank in 22, 145, 432, 433. GIRARD, STEPHEN, Jackson in pen1834, 334, 341 ; supports sion BANK, 302-4, 432, 433. GIRARD 306, 307 : attacks upou controversy, 285, 286, 327, 353. in, 319, 350. Jackson GLOBE, 199, 256,

CHARLES INGERSOLL, J. : labors in behalf M., 61, 433, 466. of the bank, 206, 225. 226, 251 ; criticises serts policy of bank publications, 266; deGOVERNMENT (seeDeposits, Government, 340; feeling the bank's cause, Relations of bank to) : war stock of, to in 1834, 354, against, in Philadelphia be subscribed to bank, 10 ; stock held by 355. bank, 28, 134; redeems na$13.000,000f tional o INGHAM, SAMUEL D. : approves debt in 1817,28 ; demands $2,000,000 Dallas's of its deposits in specie, 57; demands plan, 12; member of select committee to in $6,000,000 1831 to discharge the 3 per selectCalhoun's plan, 13; complains GOUGE,
WILLIAM

GLOBE,

extra, 355.

INDEX

633

tention " paper " of, on to Biddle of Mason, 172 ; disclaims inof deposits, removal Duane, to convert bank into party ma293, 296, 297 ; and 292-4 ; penchine, sion funds and, 303 ; threatens to pro173 ; correspondence hibit with Biddle for 172-9, 288; objects to commission government receipt of branch funds abroad, drafts, 312; holds bank responsible for transferring government 178 ; suggests mous anonyremoval of deposits, 288. panic of 1833-34, 328; receives letters, 353 ; censure of, by Senate, IN 1818-19 : 58INVESTIGATION OF BANK 335,345. 346; public feeling against in 60 ; of Western and Southern offices, ; 79 1834. 349, 350, 352; raves the against demanded by Clayton in 1832, 229 : report bank, 351, 352; message of, in 1834, 358, in 1832, 230 ; by of committee of, 372; message of, in 1835, 373; message directors, 308; attempt by government of, m 1836, 374 ; offense of, in destroying directors thwarted, 310; in government bank, 476. by bank, 342 in 1834, by 1834, thwarted
;

finance, 356, 358. Senate committee on JAUDON, leans OrSAMUEL: cashier of New branch, 157,393; interview of,with ISSUES OF THE BANK (seeCirculation, Jackson, 188; cashier at Philadelphia, Notes) : legal provisions concerning, 393 ; ignorant of methods 404 ; under Jones, 404, 405, 415 ; under at New York 395 ; remonstrates Cheves, 75, 81, 405; under Biddle, 147, against use of office, drafts, 305; upholds "transfer" con405, 406, 407 ; maximum traction amount of, 407 ; highest annual average bution of 1833-34,289,329; willing to of, 407 ; distrirelax, July, 1834, 348. of, 407-14; convertibility of , 414, 415, 418r21j429; elasticity of, 414, 422-6; JOHNSON, R. M., 171, 254. depreciation importance of, 415-18; treasury, JONES, WILLIAM : resigns from of, compared with deposits, 422, 428, 1 ; elected president of bank, 22 ; mistaken 429; soundness of, 421, 422; credit of, of bank's manageconception ment, 467 ; means 424, 425 ; of redemption of, 30, 380; administration of fluctuations of, 425, 426; principal defect by, 379. 380, v!5; system branches of 429 ; remedies for defect of, 429. of, banking. 30, 33; complicity of, in stock JACKSON, ANDEEW : origin of hostility to frauds, 40, 41, 47; resigns presidency of bank, 182-85 ; recommends bank, 48, 60, 78. officers for Nashville branch poses about 1818, 183 : opAMOS: charges complicity of KENDALL, law taxing repeal of Tennessee branches in politics, 171 ; believes in a branches. 183; dissuaded from attacking in bank directorates, "just equilibrium" bank in first inaugural, 183, 184; 175 ; furnishes Webb with queries in suspects of branches complicity of relating to bank, 180, 181; removal politics, 172, 184 ; effect of Portsmouth deposits and, 292, 293, 295. 179, 180, 195 ; believes bank upon, affair 6 BANKS (state),3. unconstitutional, 184, 192, 194, 195 : jects KENTUCKY obto bank as a monopoly and undemocratic, KENTUCKY BRANCHES (see Branches, 195 ; thinks bank should be western ;Lexington, Louisville) : taxed, 187; believes unpartisan, charges 65 : politics at, 248, 382 ; alleged political ed, against New Orleans branch unfoundaction of, 171, 248-51 ; charges rebutted, 188; friendly relations with Bid172, 187, 188. die, 188, 190; letter to Biddle, 191, KINO, JAMES G., 343. Biddle, 192, 193; 192; interview with " KING, JOHN P., 333, 337. suspects Biddle, 193 ; pledged against the bank," 193; message of, in 1829, 194, KING, RUFUS, 20, 41. 195; idea of bank, 196-8, 203, 226; resents KITCHEN 193. CABINET, McDuffio's interpretation of his Duff Green, LEGISLATION OF bank p_lan, 199; censures STATES CONCERNING 199 ; objects to holding of bank stock BANKS, 64, 65, 88-90, 165, 206, 224, 235. by foreigners, 201, 202; message of, in LENOX, ROBERT, 94, 253, 296, 394. by newspaper 1830, 203; angered cism, critiWILLIAM: LEWIS, believes in a "just -' 204; willing to assent to old bank " in bank directorates, 175, 203, 208-13; equilibrium modified charter, with 247; correspondence Biddle, of, with modifications of charter required by, 182, 184, 186-9, 191, 200, 246, 247; advises 211, 212,225,226,and note 4 ;message of, in in 1831 against application for 1831,212,213; will not give assurances 219; names re-charter, of a modified members of approving charter, 218; Nashville boards, 246, and Lexington offended by application for re-charter 247 ; wishes to place Democratic members in 1832, 223; connection ton's of with ClayLouisville board, 247. on resolution, 228, 229; effect upon, LEXINGTON BRANCH (seeBranches, westof investigation of 1832, 231, 232 ; veto ern branches) : established mess_age ; Kentucky of, 231, 239-41; re-elected 242; justification his attiin 1817, 23, note 3; discounts of, in 1818, president, of tude 34; Democratic toward bank after 1832, 242 ; compoliticians appointed directors at, 246; capital of, in 1819, 56 ; of printing expenditures of ings dealank, 265 ; determined on annihilation charges against, 171 ; exchange lieves of bank, 286 ; message of 1832, 286 ; beof, 143; cashier of, urges loans to in the bank guilty of bribery, 287 ; on, help Clay candidate, 251 ; run 1832, 299; disobeys instructions, 388; removal of deposits and, 287, 297 ; government directors and, 291, 308-10; closed 1825, 366.

Elains

634

THE

SECOND

BANK

OP

THE

UNITED

STATES

LIVINGSTON, EDWABD by Biddle : asked to see Jackson concerning re-charter, 201 ; secretary cf state, 207 ; acts with Biddle and McLane to secure assent of for re-charter, 208-10; thinks Jackson Jackson will consent to re-charter, 209; Jackson's assent in to secure attempts 1832, 2i5, 226 ; on investigation of 1832, Biddle, 232; on 229; interview with Jackson's veto 232. LLOYD,
JAMES, 94.

conditions, 229; interview with Biddle, 233; loan to, 254; protests branch, against action of Charleston bank in 1834, 333, 334, 349, 447 ; supports 354. MclLVAiNE, WILLIAM: cashier bank, 1826-1832, 105: on signing notes, 116, 117 ; on New Orleans bill business, 162, 393 ; on board meetings, 279.

McKiM,

JR., JOHN, 94, 244.

McLANE, Louis: secretary of treasury, LOANS, administration wishes to secure, 207 ; acts with Biddle and Livingston by creating a bank, 11. to re-charto secure assent of Jackson ter, in LOANS AND 208-10 j report of, creates sensation, DISCOUNTS OF THE BANK 212 ; positive that Jackson will refuse 1817. 28, 29: rapid increase of in 1818, 30; large loans to individuals, 33; on re-charter in 1832, 219; confers with McDuffie Smith restock, 40, 41 ; reduction of, in 1818-19, concerning and Bid53; under Cheves, 81, 133; under charter, 220; argues against application die, 98, 99, 133, 136; nature for re-charter, 222; offended by of paper Biddle, 99, 100; natdiscounted Biddle's decision to apply for re-charure ter, under 158, 159; to 1524, 223; joins with to Livingston of Western, Webb men, 259-63; to Congresssecure and Noah, modified bill in 1832, 225, 226; interview with Biddle, 232; suggests 253-55; for long terms and on 253, 254 ; in 1833-34, 316, 319inquiry into bank's security, 286; apmortgages, points Toland 322 ; in 1835, 359, 363 ; loans to the govto examine ernment, affairs of by the bank, 289: opposes 73, 454, 471; made deposits, of removal Committee, 279, 280; on 292; becomes Exchange secretary of state, "other 292. security" in 1835, 362, 363, 370; proportion of, to capital, 432. MCLEAN, JOHN, 171, 175. LOANS 1812-14, 2, 3. OF GOVERNMENT, MACON 400, AGENCY,

LONDON
LOSSES
IN EARLY

AGENCY, OF
THE

42.
BANE AT
THE

MADISON,
BRANCHES

ford, : 32, 65, 66, 67 ; at HartYEARS 388; at Portsmouth, 387,388,394, in 1835 and 395, 469; at the branches 1836, 161; total, 396; as government agent, 469, 470.

JAMES: vetoes bill of 1815,16; in his annual bank a message, 1815, 17: signs bill, 21; names directors, 22, 242; favors government Jones for president of bank, 21, 244; letters of, 1831, 205.
suggests

LOUISVILLE
western

BRANCH

(see Branches,

MANAGEMENT OF THE BANK (See Biddle, Board, Parent, Cheves, Jones). MANGUM,

branches) : estab; Kentucky lished in 1817, 30, note 1 ; capital of, in 1819, 56; reforms at, in 1819, 79: overtrading at, in 1832, 153, 154, 413 ; charges against, 171 ; state of, in 1834, 160, 326, tance 394 ; disobeys instructions, 388 ; impornew making of, 398; ceases loans March, 1835, 366, 368.
LOWNDES, J. : member of committee bank, 8; of plan, 13; chairman objects to Calnoun's to consider of select committee back to Calnoun's plan, 13; reports Calnoun's House ments amendplan with to 13, 14; moves unchanged, 1 reduce capital to $35,000,000,3 ; votes indefinite 15 ; moves for Dallas measure, poses postponement of bill, 17 ; probank after war of 1812, 17. T. W., 270. LUDLOW, timore W. : cashier of BalJAMES McCuLLOCH, branch, 42; speculates in stock, 43, 44; fraudulent transactions, 45-50; 49, 78; tried for conspiracy, removed,
WILLIAM
on

WILLIE, WILLIAM

233.

MARCY,

L., 341, 344.

vs.,

MARYLAND, MCCULLOCH, Bank of, 302, 303.

MASON,

65: Union

JEREMIAH,

20, 172-4, 176, 178.

expediency

BIDDLE'S, MEMORANDUM, of interview 209, note 2. with McLane, MIDDLETOWN BRANCH (See Branches, eastern) : established in 1817, 23, note 3, 379 ; reductions at, 52 ; cashier of, sued for defalcation, 79; depreciation of notes of, 416; transferred to Hartford, 398.
83; currency of, 442. branches, southMOBILE BRANCH (see eastern): established, 384, note 3, 444; dealings of, 143; cannot reexchange duce, 1831-32, 150; receipt of branch ciation notes at, 310, 311 ; issues of, 411 ; depreat, of notes of other branches 417 ; sold, 367, note 1, 368. MONROE, JAMES, 93, 205.

MISSOURI,

BANK

OF,

79.

NASHVILLE
vs.

MCCULLOCH McDuFFiE,

MARYLAND,

65.

GEORGE: report of, on the Bank, 198, 205, 442; advises application for re-charter, 220; chosen to present for re-charter,223; allows memorial investigation of 1832 under unfavorable

BRANCH (see Branches, established in 1827, 384, note dealings of 143 ; overtrad4; exchange ing at, in 1832, 150, 155-7 ; embarrassments of, in 1832, 151, 152 ; loose methods of, in 1832, 391-3, 413; ordered to bills,162; Democratic cease purchasing

western)

INDEX
directors at, 246 ; politicians appointed portance cashier of, a local appointee, 392 ; imof, 398 ; issues of, 413 ; closed, 366,367.

535

sign sufficient, 98, 115; not issued by Savannah branch, 1819-24, 84; few small in circulation, 115, 116; restrictions on receipt of, at Atlantic offices, 311, 312; furnished by the removed, NATCHEZ BKANCH (seeBranches, southwestern) parent board, 379; good repute of, 407; 384, note 3 : ex: established, change 311, 417; not universally uncurrent, dealings of. 143 ; cannot reduce, asserreceived, 415-17, 437; Biddle's tions 150, 326; issues of, 411 ; closed, 366, note concerning, 417, 418; at par, 418, 9,368. 419; varying demand for, 425, 426; usefulness NATIONAL charging, DEBT : Biddle's plans for dissued to government of, 453, 454 ; isin 189-92; on, payments by Bank of the United States of 268, 269; effects of payments 1832, on, Pennsylvania, 372. disburseupon note elasticity, 423; ments NOTES 4, 5, 37, 38, 97, OF BANKS, STATE of funds by bank in payment of, 435-40, 457.
469. 454,

NATIONAL

urge application for re-charter, 213, 214 ; place bank in platform in 1831, 215, 216 ; bound to bank, 218 ; believe application support for re-charter will defeat Jackson, 222 ; insist on pushing bank bill.231 ; position of, in 1833, 332, 333. HAMPSHIRE NEW 172, 206. LEGISLATURE,

REPUBLICANS

NULLIFIERS OFFICES. OHIO, STATE OLIVER, OSBORN STATES,

support BANKS

bank

in 1834, 333.

(See Branches.)
against

islation OF : 27, 51, 62, 63 ; legbank, 65.

94.
OF THE

ROBERT,
vs.

BANK 65, 89-91.

UNITED

PANIC (see Curtailment, Stringency) : of BRANCH (see Branches, in 1825, 1818-19, 37, 47, 61-4 ; prevented in 1816, 23 ; established 106-8, 449 450; of 1833-34, 297, 299, 326-9, charges against, 171, 249, 250; charges 341; bank's 449, methods of meeting, iticians polagainst repelled, 188 ; Democratic 450. directors at, 246; appointed PARENT operations at, 96, 143, 144, exchange BOARD (See Board, parent.) 162 ; overtrading at, in 1832, 150, 157-9, PARTON, JAMES, 182, 256. 393, 413 ; issues of, 411 ; importance of, PATTERSON, ROBERT, 94, 238, 239. 397, 399; closed, 366, 368. PENNSYLVANIA: importance NEW YORK 24, 25, 166, 302, 304. BANKS, of, in election of 1832, 222, 223: deserts the bank NEW YORK in 1816, BRANCH : established in 1834,339,340; legislature of, 65,206, 23; discounts at, in 1818,34: reduction 224, 235, 340 ; state banks of, 24, 25, 27, 63. discounts at, in 1819, 55 ; in 1832, 150; of PENSIONS AND 176, 206, FUNDS, PENSION of policy capital of in 1819, 56 ; change 306-8, 469. at, 95_,99, 100 ; Democratic politicians " to PET BANKS," 302, 311. appointed directors at, 246 ; attempt funds from, 206, 306; remove pension PEYTON, BALIE, 350. depreciation of notes of other branches PHILADELPHIA OFFICE (see Board, parat, 417 ; receipt of branch notes at, 310, ent) : curtailment 312 ; lax management of discounts at, 51, of, 394 ; loans in 54, 150; closing up, 367. 1835,364, 365; importance of, 397 Closing up, 367, 368. PITTSBURG BRANCH (see Branches, ern) west: established in 1817, 23, note 3; disobedience NEW YORK LEGISLATURE, 65, 206, 260. 388 ; overtradof cashier of, ing NICHOL, JOSIAH, 201, 202. at, in 1832, 154; character of exchange NILES, HEZEKIAH, 61, 230, 326, 327, 339. business at, 162, 163 ; sold, 367, note 1. NOAH, M. M., 256, 263. PLANTERS' BANK OF GEORGIA, 84-9. NORFOLK Branches, BRANCH (see southern) : established in 1817, 23, note 3 ; cur-' POINDEXTER, GEORGE, 350. tailment called for at, 51; losses at, POLK, JAMES K., 341, 465, 466. 1819, 66; charges of political activity, PORTER, ALEXANDER, 158, 159. 249,250; charges against, investigated, 389, 390 ; closed, 367. note 1. PORTLAND BRANCH (see Branches, eastern) : established, 384, note 5; mismanNORTH CAROLINA, STATE agement BANKS OF, 63, at, 388, 389; closed, 367, note 1, 64, 83, 441, 442, 444. PORTSMOUTH BRANCH (see Branches, NOTES OF THE AND BANK BRANCHES (see Circulation, Issues): receivability of eastern) : established in 1817, 379 ; losses preciatio and frauds at, 387, 388, 394, 395, 469; deJones, 33, 34. 404, 415 ; receipt of, under forbidden by branch issuing, of notes of, 416; Mason's except 176; 54; embarrassments management of, by govcomplaints ernment caused reagainst, 171-7, 249, 250; attempted 74, 75; issues of moval receipt of,funds from, 177, 306 ; of pension certain offices prohibited, 15, 404, 405, Biddle investigates, 178; Democratic 415, 455: western offices to issue only five dollar,75 ; of five dollars received politicians appointed on board at, 246 indiscriminately, 81, 405, 415, 417, 418; closed in June, 1835, 366. inability of president and cashier to POTTER, JOHN, 94.

NEW

ORLEANS

western) :

536

THE

SECOND

BANK

OF

THE

UNITED

STATES

PRESIDENT OF BANK (see Bevan, Biddle, Cheves, Fisher, Jones) : position of, under rules of 1833, 274. PRESS : relations of bank with, 256, 267.

PRESTON,
PROVIDENCE

WILLIAM
BRANCH
:

C., 333.

eastern)
PROXIES,

established
1.

(see Branches, in 1817, 23, note 3;

closed, 367, note 274.

BILLS,

initiated in, 233; bill passed by, 235; fails to pass bill over president's veto, 241 ; supports bank in pension controversy, 306; rejects nomination ernment of govdirectors and of Taney, 309; debate in, in 1833-34, 335; censures Jackson, 335, 345, 346; passes resolutions to restore the deposits, 346; attacks in 1834,353, 354; attacks in, upon, in, 349, 350. Jackson upon

RACE-HORSE
RANDOLPH,

32, 138, 159.

SERGEANT,
336.

JOHN,

194, 217, 218. 251, 290,

JOHN,

18.

SMITH AND BUCHANAN, 42. REAL ESTATE OF BANK : holdings of, in SMITH, DENNIS, 40, 43, 45-50. Ohio, 67; loans on, forbidden, 100; assistant to take SMITH, JONATHAN, 23, 47, 78. appointed cashier charge of, 104; sale of, 369, 400. SMITH, SAMUEL, 218-20, 254, 255. RE-CHARTER OF BANK (see Bank bills, SOUTH CABOLINA banks of, 63, 83, : state Bank States, Biddle, of the United 197, 447; legislature, 65, 181; taxes bank Charter, Jackson).
165.

REDUCTION RELIEF

(see Curtailment).
83, 89, 165.

SPECIAL

DEPOSITS,

445-47.

insufficient supply of, held by SPECIE: REMOVAL 287-97, 335. OF THE DEPOSITS, bank in 1817, 28, 29, 34, 35 ; premium on, by in 1817 and 1818, 37, 38; imported 32, 33, 45, 46, 54, 57, 370. RENEWALS, in bank, 37, 52, 56, 57 ; efforts to secure, REPORTS (see Committees of House and 1818 and 1819, 56, 57, 69, 70; holding of, Senate, Investigation). by bank Biddle, 111, 134, 136; under REPUBLICAN for exPARTY : responsible istence movement out of the of, 130 ; running in 1831-32, 145, 146; effect of of bank, 1,20, 21 ; for and against country Dallas'* plan, 11, 12 ; share in direction contraction supply of, of 1833-34, on 324: in 1835, 359; in 1836, 371; difficulty of bank when organized, 22. in demanding, 36 ; leniency in demanding, RESOLUTIONS (seeCommittees of House 445 ; difficulty in obtaining mand, deon and Senate, Congress, House, Senate, insufficient 419, 420, 447-49; and the separate states). supply of, in the United States, 420, RICHMOND BRANCH (seebranches, ern) south421, 448, 449; reserve of. by state banks, in 1817, 23, note 3: : established 432 ; effect of demand for, upon note for, 51, 52; capital curtailment called of, by the circulation, 438; reserve in 1819, 56; deficit at, 79; president of, bank, 431, 432. of, resigns, 79; ordered to cease making loans, March, 1835, 366. in 1814, 4, SPECIE PAYMENTS : suspended new 9; bank's efforts to secure resumption 256. RITCHIE, THOMAS, of, in 1817, 23; articles of agreement ROBBINS, ASHER, 350. between bank and state banks securing RUSH, RICHARD, 252, 355, 461. resumption of, 25, 26, 454 ; penalty of bank in case of failure to pay notes in, 166. SAFETY SYSTEM, FUND 38; suspensions of, in 1819, 83; failure ST. Louis BRANCH (see Branches, ern) westof, in 1819-22, 83; bank of resumption in 1829, 384, note 4, : established the only guarantor of, 430, 431. 442; ceases loans in March, making new SPENCER, JOHN C., 58. 1835,366.

SYSTEM,

SAVANNAH

BRANCH

in 1817, 23, note 3; established capital of, in 1819, 56 ; taxed, 64 ; losses at, 1819, 66 ; trouble with Georgia state banks, 84-9 ; hostile legislation against, 88; tax repealed, 89; business of, suspended, 88, 382,383 ; reprehensible practices at, 382 : cannot reduce in 1831-32, 150 ; demand on, for specie in 1833, 299 ; to cease loans, new ordered making March, 1835, 366, 367.

(seebranches, southern):

STATE and

SENATE (see Committees of, Congress) : legislation, 14, 17; atinitiates bank tempts to amend House bill, 16 ; supports bank after investigation of bills modifying 1818-19, 60; passes 116; resolution charter, concerning deposits in, 170; regovernment leave to introduce Benton's ruses resolution, 206; bill for re-charter

BANKS (see Notes of state banks, separate states): suspend specie loans to 4; make temporary payments, in to resume 7 ; unwilling government, 1816. 23, 24; convention of, in 1817 with bank, 24; approve ment articlesof agreefor resumption, 25, 26, 454; proposals to, by concerning oank, deposits 'in, transfer of government in 1817, 26, 27; selected by bank as treasury privagents, 457, 458; abuse ileges depositories, 459, as government 460; difficultiesof, with bank, 27, 84-9, 382, 383, 446, 447, 460; depreciated currencies of, 33, 37, 38, 83, 327; currencies 443, 444; balances of, of, improved, with bank, 35, 51, 57, 62, 63, 84-6, 97, 318, 36, 322, 324, 445, 446; leniency toward, 445, 446; difficulty in restraining, 446, in 1815-18, for chartering, 447; mania 39; in 1818-19, 62-4; restrained under

INDEX
of, 89, 166, 446, 447, 460; as deposit banks, 302-5, 311; attitude of bank in 1833-35. 318, 323, 324; number toward, of, in 1830 and 1834, 364; sale of branch assets to.369 ; issues and loans of, 99, 364, 421, 422 ; keep no adequate reserve, 430; proportion of, to of circulation of loans of, specie of, 432; proportion to capital of, 432 ; control of, by bank, 434-43, 451, 452; restrain bank, 438, 439; bank lack of unity between and, 433, 434, 450; government connection with, 457, 458, 461, 462; advantages of bank funds, in transferring government over, 467.
to bank,

537
the secretary of treasury, 295 ; removes deposits, 295 ; and the "transfer drafts," for specie, 438. 302-5 ; on demands

Cheves, 77,78, 439, 440; opposition

TAXATION OF BRANCHES 65, 89, 90, 165. TAYLOE,

BY

STATES,

64,

JOHN,

8.

legislates against bank in in 1819 1817, 64 ; state banks of, suspend 1821, 83; law repealed, and against bank 1827, 165. 146, 151, 191, 269-73, THREE CENTS.: PEE 286, 473. TENNESSEE: TOLAND, HENRY,
289. TRADE AND INDUSTRY : in 1817-18, 27 ; in 1825, 106, 107; in 1827, 109; in 1825-31, 135, 136; in 1832, 152, 153; in 1833-34, 326-8; in 1834, 363, 364.

165; STATE Alabama, LEGISLATURES: 65; New Georgia, 64, 88, 89; Kentucky,

York, 65, 206; Hampshire. 172, 206; New OF GOVEENMENT sylvania, TEANSFERS FUNDS, 76, North Carolina, 64, 65; Ohio, 65; Penn77, 462-8. lina, Caro65, 206, 224, 340 ; South 64, 165; 65, 165, 181; Tennessee, TREASURY (see Crawford, Dallas, Duane, reVirginia, 65; attitude of, toward Ingham, Government. McLane, Rush, charter, 206. Taney, Woodbury). 333, 334. PARTY, STATE EIGHTS 3-6, 10, 12. TREASURY NOTES,

STATES (see separate states): opposed to bank, 164-6, 446, 447 ; attitude of, on recharter, 235; note issues of bank in, 408-12. 229, 230. ANDEEW, STEVENSON,

TREASURY, bank, over 288. TRIALS 78, 79.

OF

SECRETARY

OF:

465 ; authority
OFFICERS
AND

over

authority sits, depo-

DIEECTOES,

to capital, bank STOCK: subscriptions TYLER, JOHN, 255, 267, 356. 22; falls,60, 169,195, 295; forfeited, retained UTICA BRANCH (see Branches, eastern) : by Cheves, 72; sale of, forfeited, 384, note 6; Democratic established, to sell government 109; motion shares board at, 246; on politicians appointed shares of, paid up, of, 169 ; government closed in June, 1835, 366. 134; government shares of, redeemed, MARTIN, 165, 204, 399. VAN BUEEN, 372, 375; value of, in 1836, 373, 374, GULIAN C., 253, 273. VEEPLANCK, THE OP BANK : first elecSTOCKHOLDERS tion by, 22 ; illegal votes by, 58, 59 ; in 16, 239. BILLS, VETOES OF BANK 39; 38; in Baltimore, Philadelphiat mand dividends paid to delinquent, 59 ; delarger dividends, 109; number tions. elecof, in 1831, 168; will not attend 274; proxies of, 274; triennial meetings of, 133, 208.

VIRGINIA : legislature of, 65 ; state banks of, 24, 25, 27, 440. H. E., 182. VON HOLST, WALSH, ROBERT,
256.
BRANCH

WASHINGTON

STOCK STOCK

LOANS,

32, 33, 44-6, 48.

IN

SPECULATION

BALTIMORE

AND

(see Branches, in 23, note southern) : established in 1817, district, 51; 3; calls for balances

PHILADELPHIA,

38.
MONETAEY
:

STRINGENCY,

ment, (see Curtailin 1818, 58; in 1825, 106-8; in 1828, 110, 449,450; in 1832, 151, 152; in

Panic)

1833-34, 326-9, 344.

SUMNEE,

WILLIAM

G.

: on

branch

drafts,

125-7, 130; on in 1829, 164 ; on 274

question constitutional bank's loans to brokers,

losses at, 66 ; charges against cashier of, 389 ; president of, 248, 249, 389 ; ceases loans, March, 1835, 366. new making JOHN, 230, 267. WATMOUGH, WATSON JAMES WEBB, (see Webb and Noah) : 180, 181, 330, 345, 355. NOAH, 256-63. WEBB AND WEBSTER, DANIEL : considers ment establish3; opposes bank necessary, Dallas's plan, 14 ; plan of, for bank, 15 ; final plan, 18, 20 ; joint resolution opposes visor adof, April 30, 1816, 23; acts as of of bank at Boston, 94 ; member in 117, 118; concurs board, central branch Binney's opinion concerning son's drafts, 118 ; opinion of source of Jackhostility to bank, 173; friend of loans to Gales 173, 174; urges Mason, and Seaton, 257; advises application for re-charter in 1831, 218; powerless in of deposits, 290; matter of removal the pension to give up bank urges
or

SURPLUS none FUND: provided under Cheves, 106; efforts of Biddle to secure. 106; in 1823-28, 111; in 1831, 133; in 1836,
371.

SUSPENDED

DEBT OF BANK: THE ant assistto take charge cashier appointed Bidof, 104 ; at Cincinnati, 400 ; under die, 111, 133; sale of, 369, 370.

TANEY,

ROGER

219, 226 ; and 300; prepares

removal

of

B. : against re-charter, Bill, French Indemnity "paper" Jackson's on deposits, 296; appointed

538

THE

SECOND

BANK

OP

THE

UNITED

STATES

WIET, WILLIAM, 118. funds, 307, 306; remonstrates against traction WOLF. SIMON, Governor of Pennsylvania, opposition to individuals, 309 ; on conof 1833-34 and re-charter, 329889,340. 31 ; report by, on removal of deposits, LEVI: desires Mason reWOODBUEY, moved, 335; plan for re-charter in 1834, 336-38; 172, 173; believes in a "just bank, 357, 358; on to support ceases directorates, for bank equilibrium" 421, 450. state of the currency, 175 ; supports removal of deposits, 295 ; demnity 356, 357. THUELOW, French inWEED, on declines to pay damages for bank bill, 300; censures WHIGS, 347, 356, 357. retaining dividend, 301 ; report of 1834, WHITE, C. P., 245. 308; negotiates redemption of government E. M., 27S-77 and note 5, 292, WHITNEY, stock by bank, 372-75: censures 295. the bank, 1836, 374 ; prohibits receipt of branch drafts, 452 ; admits safety of 307. WILLIAM, WILKINS, depository, 464; as bank government 40, 43, 45-50, 78, 79. GEOEGE, WILLIAMS, declares government transfers profitable to bank, 466. 105, 276. THOMAS, WILSON,

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