Part 25 (2/2)
[Sidenote: Bank bill of 1814.]
[Sidenote: The Bank Act.]
Since the re-charter bill of 1811 had failed by only one vote, Dallas, Secretary of the Treasury in 1814, again proposed a national bank.
Congress accepted the principle, but an amendment proposed by John C.
Calhoun so altered the scheme that upon Dallas's advice Madison cast his first important veto against it on Jan. 30, 1815. What Dallas desired was a bank which would lend money to the government; what Congress planned was a bank which would furnish a currency based on specie. In the next session of Congress Madison himself urged the creation of a bank, and this time Calhoun supported him. The Federalists, headed by Daniel Webster,-- remnants of the party which had established the first national bank,-- voted against it on the general principle of factious opposition. A small minority of the Republicans joined them, but it was pa.s.sed without much difficulty, and became a law on April, 10, 1816.
[Sidenote: Bank charter.]
The bank was modelled on its predecessor (-- 78), but the capital was increased from $10,000,000 to $35,000,000, of which the United States government held $7,000,000. It was especially provided that ”the deposits of the money of the United States shall be made in said bank or branches thereof.” In return for its special privileges the bank agreed to pay to the government $1,500,000. The capital was larger than could safely be employed; it was probably intended to absorb bank capital from the State banks. The prosperity of the country, aided by the operations of the bank, secured the renewal of specie payments by all the sound banks in the country on Feb. 20, 1817.
[Sidenote: Loose construction accepted.]
The striking feature in the bank was not that it should be established, but that it should be accepted by old Republicans like Madison, who had found the charter of a bank in 1791 a gross perversion of the Const.i.tution. Even Henry Clay, who in 1811 had powerfully contributed to the defeat of the bank, now came forward as its champion.
121. INTERNAL IMPROVEMENTS (1806-1817).
[Sidenote: Local improvements.]
[Sidenote: c.u.mberland road.]
[Sidenote: Gallatin's scheme.]
Side by side with the bank bill went a proposition for an entirely new application of the government funds. Up to this time internal improvements--roads, ca.n.a.ls and river and harbor improvements--had been made by the States, so far as they were made at all. Virginia and Maryland had spent considerable sums in an attempt to make the Potomac navigable, and a few ca.n.a.ls had been constructed by private capital, sometimes aided by State credit. In 1806 the United States began the c.u.mberland Road, its first work of the kind; but it was intended to open up the public lands in Ohio and the country west, and was nominally paid for out of the proceeds of those public lands. Just as the embargo policy was taking effect, Gallatin, encouraged by the acc.u.mulation of a surplus in the Treasury, brought in a report, April 4, 1808, suggesting the construction of a great system of internal improvements: it was to include coastwise ca.n.a.ls across the isthmuses of Cape Cod, New Jersey, upper Delaware and eastern North Carolina; roads were to be constructed from Maine to Georgia, and thence to New Orleans, and from Was.h.i.+ngton westward to Detroit and St. Louis. He estimated the cost at twenty millions, to be provided in ten annual instalments. Jefferson himself was so carried away with this prospect of public improvement that he recommended a const.i.tutional amendment to authorize such expenditures. The whole scheme disappeared when the surplus vanished; but from year to year small appropriations were made for the c.u.mberland road, so that up to 1812 more than $200,000 had been expended upon it.
[Sidenote: Calhoun's Bonus Bill.]
[Sidenote: Madison's veto.]
The pa.s.sage of the bank bill in 1816 was to give the United States a million and a half of dollars (Section 120). Calhoun, therefore, came forward, Dec. 23, 1816 with a bill proposing that this sum be employed as a fund ”for constructing roads and ca.n.a.ls and improving the navigation of watercourses.” ”We are” said he, ”a rapidly--I was about to say a fearfully--growing country.... This is our pride and danger, our weakness and our strength.” The const.i.tutional question he settled with a phrase: ”If we are restricted in the use of our money to the enumerated powers, on what principle can the purchase of Louisiana be justified?” The bill pa.s.sed the House by eighty-six to eighty-four; it was strongly supported by New York members, because it was expected that the general government would begin the construction of a ca.n.a.l from Albany to the Lakes; it had also large support in the South, especially in South Carolina. In the last hours of his administration Madison vetoed it. His message shows that he had selected this occasion to leave to the people a political testament; he was at last alarmed by the progress of his own party, and, like Jefferson, he insisted that internal improvements were desirable, but needed a const.i.tutional amendment. The immediate effect of the veto was that New York, seeing no prospect of federal aid, at once herself began the construction of the Erie Ca.n.a.l, which was opened eight years later.
[Sidenote: State improvements.] Other States attempted like enterprises; but the pa.s.ses behind the Susquehanna and Potomac rivers were too high, and no permanent water way was ever finished over them.
122. THE FIRST PROTECTIVE TARIFF (1816).
[Sidenote: Increase of duties.]
[Sidenote: Jefferson's att.i.tude.]
The protection controversy had hardly appeared in Congress since the memorable debate of 1789 (Section 76). From time to time the duties had been slightly increased, and in 1799 a general administrative tariff act had been pa.s.sed. The wars with the Barbary powers had necessitated a slight increase of the duties, known as the Mediterranean Fund, and this had been allowed to stand. Up to the doubling of the duties in 1812 the average rate on staple imports was only from ten to fifteen per cent, and the maximum was about thirty per cent. The whole theory of the Republican administration had been that finance consisted in deciding upon the necessary expenses of government, and then in providing the taxes necessary to meet them. This theory had been disturbed by the existence of a debt which Jefferson was eager to extinguish; and he therefore permitted the duties to remain at a point where they produced much more than the ordinary expenditure of the government.
[Sidenote: The manufacturers.]
[Sidenote: The West.]
A change had now come over the country. The incidental protection afforded by the increase of duties, and then by the war, had built up manufactures, not only in New England, but in New York and Pennsylvania. In these strongholds of capital and trade there was a cry for higher duties, and it was much enforced by the att.i.tude of the Western members. There were a few staple crops, particularly hemp and flax, which could not be produced in the face of foreign compet.i.tion, and for which Western States were supposed to be adapted. Hence a double influence was at work in behalf of a protective tariff: the established industries pleaded for a continuance of the high duties which had given them an opportunity to rise; and the friends of young industries asked for new duties, in order that their enterprises might be established.
[Sidenote: Dallas's tariff bill.]
[Sidenote: Opponents.]
[Sidenote: Advocates.]
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