Volume IV Part 19 (1/2)

Like a dropsical man calling out for water, water, our deluded citizens are calling for more banks. (Jefferson.)

Merchants are crumbling to ruin, manufactures peris.h.i.+ng, agriculture stagnating and distress universal. (John Quincy Adams.)

If we can believe our Democratic editors and public declaimers it [Bank of the United States] is a Hydra, a Cerberus, a Gorgon, a Vulture, a Viper. (William Harris Crawford.)

Where one prudent and honest man applies for [bankruptcy] one hundred rogues are facilitated in their depredations. (Hezekiah Niles.)

Merchants and traders are hara.s.sed by twenty different systems of laws, prolific in endless frauds, perjuries and evasions.

(Harrison Gray Otis.)

The months of February and March, 1819, are memorable in American history, for during those months John Marshall delivered three of his greatest opinions. All of these opinions have had a determinative effect upon the political and industrial evolution of the people; and one of them[437] has so decisively influenced the growth of the Nation that, by many, it is considered as only second in importance to the Const.i.tution itself. At no period and in no land, in so brief a s.p.a.ce of time, has any other jurist or statesman ever bestowed upon his country three doc.u.ments of equal importance. Like the other fundamental state papers which, in the form of judicial opinions, Marshall gave out from the Supreme Bench, those of 1819 were compelled by grave and dangerous conditions, National in extent.

It was a melancholy prospect over which Marshall's broad vision ranged, when from his rustic bench under his trees at Richmond, during the spring and autumn of 1818, he surveyed the situation in which the American people found themselves. It was there, or in the quiet of the Blue Ridge Mountains where he spent the summer months, that he formed the outlines of those charts which he was soon to present to the country for its guidance; and it was there that at least one of them was put on paper.

The interpretation of John Marshall as the constructing architect of American Nationalism is not satisfactorily accomplished by a mere statement of his Nationalist opinions and of the immediate legal questions which they answered. Indeed, such a narrative, by itself, does not greatly aid to an understanding of Marshall's immense and enduring achievements. Not in the narrow technical points involved, some of them diminutive and all uninviting in their formality; not in the dreary records of the law cases decided, is to be found the measure of his monumental service to the Republic or the meaning of what he did. The state of things which imperatively demanded the exercise of his creative genius and the firm pressure of his steadying hand must be understood in order to grasp the significance of his labors.

When the Supreme Court met in February, 1819, almost the whole country was in grievous turmoil; for nearly three years conditions had been growing rapidly worse and were now desperate. Poverty, bankruptcy, chicanery, crime were widespread and increasing. Thrift, prudence, honesty, and order had seemingly been driven from the hearts and minds of most of the people; while speculation, craft, and unscrupulous devices were prevalent throughout all but one portion of the land. Only New England had largely escaped the universal curse that appeared to have fallen upon the United States; and even that section was not untouched by the economic and social plague that had raged and was becoming more deadly in every other quarter.

While it is true that a genuine democratizing evolution was in progress, this fact does not explain the situation that had grown up throughout the country. Neither does the circ.u.mstance that the development of land and resources was going forward in haphazard fas.h.i.+on, at the hands of a new population hard pressed for money and facilities for work and communication, reveal the cause of the appalling state of affairs. It must frankly be said of the conditions, to us now unbelievable, that they were due partly to the ignorance, credulity, and greed of the people; partly to the spirit of extravagance; partly to the criminal avarice of the financially ambitious; partly to popular dread of any great centralized moneyed inst.i.tution, however sound; partly to that pest of all democracies, the uninformed and incessant demagogue whipping up and then pandering to the pa.s.sions of the mult.i.tude; partly to that scarcely less dangerous creature in a Republic, the fanatical doctrinaire, proclaiming the perfection of government by word-logic and insisting that human nature shall be confined in the strait-jacket of verbal theory. From this general welter of moral and economic debauchery, Localism had once more arisen and was eagerly rea.s.serting its domination.

The immediate cause of the country's plight was an utter chaos in banking. Seldom has such a financial motley ever covered with variegated rags the backs of a people. The confusion was incredible; but not for a moment did the millions who suffered, blame themselves for their tragic predicament. Now praising banks as unfailing fountains of money, now denouncing banks as the sources of poisoned waters, clamoring for whatever promised even momentary relief, striking at whatever seemingly denied it, the people laid upon anything and anybody but themselves and their improvidence, the responsibility for their distress.

Hamilton's financial plans[438] had proved to be as successful as they were brilliant. The Bank of the United States, managed, on the whole, with prudence, skill, and honesty,[439] had fulfilled the expectations of its founders. It had helped to maintain the National credit by loans in antic.i.p.ation of revenue; it had served admirably, and without compensation, as an agent for collecting, safeguarding, and transporting the funds of the Government; and, more important than all else, it had kept the currency, whether its own notes or those of private banks, on a sound specie basis. It had, indeed, ”acted as the general guardian of commercial credit” and, as such, had faithfully and wisely performed its duties.[440]

But the success of the Bank had not overcome the original antagonism to a great central moneyed inst.i.tution. Following the lead of Jefferson, who had insisted that the project was unconst.i.tutional,[441] Madison, in the first Congress, had opposed the bill to incorporate the first Bank of the United States. Congress had no power, he said, to create corporations.[442] After twelve years of able management, and in spite of the good it had accomplished, Jefferson still considered it, potentially, a monster that might overthrow the Republic. ”This inst.i.tution,” he wrote in the third year of his Presidency, ”is one of the most deadly hostility existing, against the principles & form of our Const.i.tution.... An inst.i.tution like this, penetrating by it's branches every part of the Union, acting by command & in phalanx, may, in a critical moment, upset the government.... What an obstruction could not this bank of the U.S., with all it's branch banks, be in time of war?”[443]

The fact that most of the stock of the Bank had been bought up by Englishmen added to the unpopularity of the inst.i.tution.[444] Another source of hostility was the jealousy of State banks, much of the complaint about ”unconst.i.tutionality” and ”foreign owners.h.i.+p” coming from the agents and friends of these local concerns. The State banks wished for themselves the profits made by the National Bank and its branches, and they chafed under the wise regulation of their note issues, which the existence of the National system compelled.

For several years these State banks had been growing in number and activity.[445] When, in 1808, the directors of the Bank of the United States asked for a renewal of its charter, which would expire in 1811, and when the same request was made of Congress in 1809, opposition poured into the Capital from every section of the country. The great Bank was a British inst.i.tution, it was said; its profits were too great; it was a creature of Federalism, brought forth in violation of the Const.i.tution. Its directors, officers, and American stockholders were Federalists; and this fact was the next most powerful motive for the overthrow of the first Bank of the United States.[446]

Pet.i.tions to Congress denounced it and demanded its extinction. One from Pittsburgh declared ”that your memorialists are 'the People of the United States,'” and a.s.serted that the Bank ”held in bondage thousands of our citizens,” kept the Government ”in duress,” and subsidized the press, thus ”thronging” the Capital with lobbyists who in general were the ”head-waters of corruption.”[447] The Legislatures of many States ”instructed” their Senators and ”earnestly requested” their Representatives in Congress to oppose a new charter for the expiring National inst.i.tution. Such resolutions came from Pennsylvania, from Virginia, from Ma.s.sachusetts.[448]

The State banks were the princ.i.p.al contrivers of all this agitation.[449] For instance, the Bank of Virginia, organized in 1804, had acquired great power and, but for the branch of the National concern at Richmond, would have had almost the banking monopoly of that State.

Especially did the Virginia Bank desire to become the depository of National funds[450]--a thing that could not be accomplished so long as the Bank of the United States was in existence.[451] Dr. John Brockenbrough, the relative, friend, and political a.s.sociate of Spencer Roane and Thomas Ritchie, was the president of this State inst.i.tution, which was a most important part of the Republican machine in Virginia.

Considering the absolute control held by this political organization over the Legislature, it seems probable that the State bank secured the resolution condemnatory of the Bank of the United States.

Certainly the General a.s.sembly would not have taken any action not approved by Brockenbrough, Roane, and Ritchie. Ritchie's _Enquirer_ boasted that it ”was the first to denounce the renewal of the bank charter.”[452] In the Senate, William H. Crawford boldly charged that the instructions of the State Legislatures were ”induced by motives of avarice”;[453] and Senator Giles was plainly embarra.s.sed in his attempt to deny the indictment.[454]

Nearly all the newspapers were controlled by the State banks;[455] they, of course, denounced the National Bank in the familiar terms of democratic controversy and a.s.sailed the character of every public man who spoke in behalf of so vile and dangerous an inst.i.tution.[456] It was also an ideal object of a.s.sault for local politicians who bombarded the Bank with their usual vituperation. All this moved Senator Crawford, in his great speech for the rechartering of the Bank, to a scathing arraignment of such methods.[457]

In spite of conclusive arguments in favor of the Bank of the United States on the merits of the question, the bill to recharter that inst.i.tution was defeated in the House by a single vote,[458] and in the Senate by the casting vote of the Vice-President, the aged George Clinton.[459] Thus, on the very threshold of the War of 1812, the Government was deprived of this all but indispensable fiscal agent; immense quant.i.ties of specie, representing foreign bank holdings, were withdrawn from the country; and the State banks were given a free hand which they soon used with unrestrained license.

These local inst.i.tutions, which, from the moment the failure of the rechartering of the National Bank seemed probable, had rapidly increased in number, now began to spring up everywhere.[460] From the first these concerns had issued bills for the loan of which they charged interest.

Thus banking was made doubly profitable. Even those banks, whose note issues were properly safeguarded, achieved immense profits. Banking became a mania.

”The Banking Infatuation pervades all America,” wrote John Adams in 1810. ”Our whole system of Banks is a violation of every honest Principle of Banks.... A Bank that issues Paper at Interest is a Pickpocket or a Robber. But the Delusion will have its Course. You may as well reason with a Hurricane. An Aristocracy is growing out of them, that will be as fatal as The Feudal Barons, if unchecked in Time....

Think of the Number, the Offices, Stations, Wealth, Piety and Reputations of the Persons in all the States, who have made Fortunes by these Banks, and then you will see how deeply rooted the evil is. The Number of Debtors who hope to pay their debts by this Paper united with the Creditors who build Pallaces in our Cities, and Castles for Country Seats, by issuing this Paper form too impregnable a Phalanx to be attacked by any Thing less disciplined than Roman Legions.”[461]

Such was the condition even before the expiration of the charter of the first Bank. But, when the restraining and regulating influence of that conservative and ably managed inst.i.tution was removed altogether, local banking began a course that ended in a mad carnival of roguery, to the ruin of legitimate business and the impoverishment and bankruptcy of hundreds of thousands of the general public.