Part 8 (1/2)

Van Buren's bearing in the crisis was admirable. Even those who have treated him with animosity or contempt do not here refuse him high praise. ”In this one question,” says Von Holst, ”he really evinced courage, firmness, and statesmanlike insight.... Van Buren bore the storm bravely. He repelled all reproaches with decision, but with no bitterness.... Van Buren unquestionably merited well of the country, because he refused his cooperation, in accordance with the guardians.h.i.+p principle of the old absolutisms, to accustom the people of the Republic also to see the government enter as a saving _deus ex machina_ in every calamity brought about by their own fault and folly.... Van Buren had won a brilliant victory and placed his countrymen under lasting obligations to him.”[13]

Van Buren met the extra session with a message which marks the zenith of his political wisdom. It is one of the greatest of American state papers. With clear, unflinching, and unanswerable logic he faced the crisis. There was no effort to evade the questions put to him, or to divert public attention from the true issue. The government could not, he showed, help people earn their living; but it could refuse to aid the deception that paper was gold, and the delusion that value could arise without labor. The masterly argument seems long to a sauntering reader; but it treated a difficult question which had to be answered by the mult.i.tudes of a democracy many of whom were pinched and excited by personal distresses and anxiety and who were sure to read it. Few episodes in our political history give one more exalted appreciation of the good sense of the American ma.s.ses, than that, in this stress of national suffering, a skillful politician should have appealed to them, not even sweetening the truth, but resisting with direct and painful sobriety their angry and natural impulses; this, too, when most of the talented and popular leaders were promoting, rather than reducing or diverting the heated folly of the time.

Van Buren quietly began by saying that the law required the secretary of the treasury to deposit public moneys only in banks that paid their notes in specie. All the banks had stopped such payment. It was obvious therefore that some other custody of public moneys must be provided, and it was for this that he had summoned Congress. He then began what was really an address to the people. He pointed out that the government had not caused, and that it could not cure, the profound commercial distemper. Antecedent causes had been stimulated by the enormous inflations of bank currency and other credits, and among them the many millions of foreign loans, and the lavish accommodations extended ”by foreign dealers to our merchants.” Thence had come the spirit of reckless speculation, and from that a foreign debt of more than thirty millions; the extension to traders in the interior of credits for supplies greatly beyond the wants of the people; the investment of thirty-nine and a half millions in unproductive public lands; the creation of debts to an almost countless amount for real estate in existing or antic.i.p.ated cities and villages; the expenditure of immense sums in improvements ruinously improvident; the diversion to other pursuits of labor that should have gone to agriculture, so that this first of agricultural countries had imported two millions of dollars worth of grain in the first six months of 1837; and the rapid growth of luxurious habits founded too often on merely fancied wealth. These evils had been aggravated by the great loss of capital in the famous fire at New York in December, 1835, a loss whose effects, though real, were not at once apparent because of the s.h.i.+fting and postponement of the burdens through facilities of credit, by the disturbance which the transfers of public moneys in the distribution among the States caused, and by necessities of foreign creditors which made them seek to withdraw specie from the United States. He pointed out the unprecedented expansion of credit in Great Britain at the same time, and, with the redundancy of paper currency[14] there, the rise of adventurous and unwholesome speculation.

To the demand for a reestablishment of a national bank, he replied that quite a contrary thing must be done; that the fiscal concerns of the government must be separated from those of individuals or corporations; that to create such a bank would be to disregard the popular will twice solemnly and unequivocally expressed; that the same motives would operate on the administrators of a national as on those of state banks; that the Bank of the United States had not prevented former and similar embarra.s.sments, and that the Bank of England had but lately failed in its own land to prevent serious abuses of credit. He knew indeed of loud and serious complaint because the government did not now aid commercial exchange. But this was no part of its duty. It was not the province of government to aid individuals in the transfer of their funds otherwise than through the facilities of the post-office. As justly might the government be asked to transport merchandise. These were operations of trade to be conducted by those who were interested in them. Throughout Europe domestic as well as foreign exchanges were carried on by private houses, and often, if not generally, without the a.s.sistance of banks.

Our own exchanges ought to be carried on by private enterprise and compet.i.tion, without legislative a.s.sistance, free from the influence of political agitation, and from the neglect, partiality, injustice, and oppression unavoidably attending the interference of government with the proper concerns of individuals. His own views, Van Buren declared, were unchanged. Before his election he had distinctly apprised the people that he would not aid in the reestablishment of a national bank. His conviction had been strengthened that such a bank meant a concentrated money power hostile to the spirit and permanency of our republican inst.i.tutions.

He then turned to those state banks which had held government deposits.

At all times they had held some of the federal moneys, and since 1833 they had held the whole. Since that year the utmost security had been required from them for such moneys; but when lately called upon to pay the surplus to the States, they had, while curtailing their discounts and increasing the general distress, been with the other banks fatally involved in the revulsion. Under these circ.u.mstances it was a solemn duty to inquire whether the evils inherent in any connection between the government and banks of issue were not such as to require a divorce.

Ought the moneys taken from the people for public uses longer to be deposited in banks and thence to be loaned for the profit of private persons? Ought not the collection, safe-keeping, transfer, and disburs.e.m.e.nt of public moneys to be managed by public officers? The public revenues must be limited to public expenses so that there should be no great surplus. The care of the moneys inevitably acc.u.mulated from time to time would involve expense; but this was a trifling consideration in so important a matter. Personally it would be agreeable to him to be free from concern in the custody and disburs.e.m.e.nt of the public revenue. Not indeed that he would shrink from a proper official responsibility, but because he firmly believed the capacity of the executive for usefulness was in no degree promoted by the possession of patronage not actually necessary. But he was clear that the connection of the executive with powerful moneyed inst.i.tutions, capable of ministering to the interests of men in points where they were most accessible to corruption, was more liable to abuse than his const.i.tutional agency in the appointment and control of the few public officers required by the proposed plan.

Thus was announced the independent treasury scheme, the divorce of bank and state, the famous achievement of Van Buren's presidency. He argued besides elaborately in favor of the specie circular. An individual could, if he pleased, accept payment in a paper promise or in any other way as he saw fit. But a public servant should in exchange for public domain take only what was universally deemed valuable. He ought not to have a discretion to measure the value of mere promises. The $9,367,200 in the treasury for deposit with the States in October, or rather for a permanent distribution to them, he desired to retain for federal necessities. This would doubtless inconvenience States which had relied on the federal donation; but as the United States needed the money to meet its own obligations, there was neither justice nor expediency in generously giving it away. Van Buren here left the defensive with a menace to the banks that a bankruptcy law for corporations suspending specie payment might impose a salutary check on the issues of paper money.

The President finally spoke in words which seem golden to all who share his view of the ends of government. ”Those who look to the action of this government,” he said, ”for specific aid to the citizen to relieve embarra.s.sments arising from losses by revulsions in commerce and credit, lose sight of the ends for which it was created, and the powers with which it is clothed. It was established to give security to us all, in our lawful and honorable pursuits, under the lasting safeguard of republican inst.i.tutions. It was not intended to confer special favors on individuals, or on any cla.s.ses of them; to create systems of agriculture, manufactures, or trade; or to engage in them, either separately or in connection with individual citizens or organizations.... All communities are apt to look to government for too much.... We are p.r.o.ne to do so especially at periods of sudden embarra.s.sment and distress.... The less government interferes with private pursuits, the better for the general prosperity. It is not its legitimate object to make men rich, or to repair by direct grants of money or legislation in favor of particular pursuits, losses not incurred in the public service.” To avoid unnecessary interference with such pursuits would be far more beneficial than efforts to a.s.sist limited interests, efforts eagerly, but perhaps naturally, sought for under temporary pressure. Congress and himself, Van Buren closed by saying, acted for a people to whom the truth, however unpromising, could always be spoken with safety, and who, in the phrase of which he was fond, were sure never to desert a public functionary honestly laboring for the public good.

An angry and almost terrible outburst received this plain, honest, and wise declaration that the people must repair their own disasters without paternal help of government; and that, rather than to promote the extension of credit with public moneys, the crisis ought to afford means of departing forever from that policy. Most of the able men who to this generation have seemed the larger statesmen of the day, joined with pa.s.sionate declamation in the furious gust of folly. It was a favorite delusion that government was a separate ent.i.ty which could help the people, and not a mere agency, simply using wealth and power which the people must themselves create. Webster, in a speech at Madison, Indiana, on June 1, 1837, professed his conscientious convictions that all the disasters had proceeded from ”the measures of the general government in relation to the currency.” He ridiculed the idea that the people had helped cause them. The people, he thought, had no lesson to learn.

”Over-trading, over-buying, over-selling, over-speculation, over-production,”--these, he said, were terms he ”could not very well understand.” In his speech of December, 1836, on the specie circular, he had given a leonine laugh at the idea of there being inflation. If he were asked, he said, what kept up the value of money ”in this vast and sudden expansion and increase of it,” he should answer that it was kept up ”by an equally vast and sudden increase in the property of the country.” That this amazing utterance upon the dynamics of national economy might be clear, he added that the vast and sudden increase was ”in the value of that property intrinsic as well as marketable.” No speculator of the day said a more foolish thing than did this towering statesman. There were, he admitted, ”other minor causes,” but they were ”not worth enumerating.” ”The great and immediate origin of the evil”

was ”disturbances in the exchange ... caused by the agency of the government itself.” At the extra session Webster described the shock caused him by the President's ”disregard for the public distress,” by his ”exclusive concern for the interest of government and revenue, by his refusal to prescribe for the sickness and disease of society,” by the separation he would draw ”between the interests of the government and the interests of the people.” For his part he would be warm and generous in his statesmans.h.i.+p. He resisted the bill to suspend the ”deposit” with the States; he would in the coming October pay out the last installment, stricken though the treasury was. He would again sweeten the popular palate with government manna, bitter as it had proved itself to the belly. It was the duty of the government, he said, to aid in exchanges by establis.h.i.+ng a paper currency; he and those with him preferred the long-tried, well-approved practice of the government to letting Benton, as he said, ”embrace us in his gold and silver arms and hug us to his hard money breast.” As if this were not a time for soberness over its shameful abuses, credit, and the banks and bank-notes which aided it were almost apotheosized. At St. Louis in the summer, Webster, in a speech which he did not include in his collected works, said that help must come ”from the government of the United States, from thence alone;” adding, ”Upon this I risk my political reputation, my honor, my all.... He who expects to live to see all these twenty-six States resuming specie payments in regular succession once more, may expect to see the restoration of the Jews. Never! He will die without the sight.”

John Quincy Adams had told his friends at home that the distribution of the public moneys among the state banks was the most pernicious cause of the disaster, although, differing from Webster, he admitted that ”the abuse of credit, especially by the agency of banks,” and the unrestrained pursuit of individual wealth, were the proximate causes of the disaster, for history had testified

”Peace to corrupt, no less than war to waste.”

He would punish suspension of specie payments by a bank with a forfeiture of its charter and the imprisonment of its president and officers. A national bank, he said, was ”the only practicable expedient for restoring and maintaining specie payments.” In the extra session he showed that the deposit banks of the South already held more money of the government than their States would receive, if the last installment of distribution should be paid, while the Northern banks held far less of that money than the Northern States were to receive. He denounced as a Southern measure the proposition to postpone this piece of recklessness. Should the Northern States hail with shouts of Hosanna ”this evanescence of their funds from their treasuries,” or be ”humbugged out of their vested rights by a howl of frenzy against Nicholas Biddle,” or be mystified out of their money and out of their senses by a Hark follow! against all banks, or by a summons to Doctors'

Commons for a divorce of bank and state?

That skillful political weatherc.o.c.k, Caleb Cus.h.i.+ng, told his const.i.tuents at Lowell that private banking was the ”s.h.i.+nplaster system;” and asked whether we wished to have men who, like the Rothschilds, make ”peace or war as they choose, and wield at will the destiny of empires.” The plan of the administration was like that of ”a cowardly master of a sinking s.h.i.+p, to take possession of the long boat and provisions, cut off, and leave the s.h.i.+p's company and pa.s.sengers to their fate.” To the plausible cry of separating bank and state he would answer, ”Why not separate court and state ... or law and state ... or custom-house and state.” It was ”the new nostrum of political quackery.”

Clay delivered a famous speech in the Senate on September 25, 1837. He was appalled at the heartlessness of the administration. ”The people, the States, and their banks,” he said in the favorite cant of the time, ”are left to s.h.i.+ft for themselves,” as if that were not the very thing for them to do. We were all, he said,--”people, States, Union, banks, ... all ent.i.tled to the protecting care of a parental government.” He cried out against ”a selfish solicitude for the government itself, but a cold and heartless insensibility to the sufferings of a bleeding people.” The subst.i.tution of an exclusive metallic currency was ”forbidden by the principles of eternal justice.”

For his part he saw no adequate remedy which did ”not comprehend a national bank as an essential part of it.” In banking corporations, indeed, ”the interests of the rich and poor are happily blended;” nor should we encourage here private bankers, Hopes and Barings and Rothschilds and Hottinguers, ”whose vast overgrown capitals, possessed by the rich exclusively of the poor, control the destiny of nations.”

The bill for the independent treasury was firmly pressed by the administration. It did not deceive the people with any pretense that banks and paper money would stand in lieu of industry, economy, and good sense. The summer elections, then far more numerous than now, had, as Clay warningly pointed out, gone heavily against Van Buren. The bill pa.s.sed the Senate, 26 to 20. In the House it was defeated. Upon the election of speaker, the administration candidate, James K. Polk, had had 116 votes to 103 for John Bell. But this very moderate majority was insecure. A break in the administration ranks was promptly shown by the defeat, for printers to the House, of Francis P. Blair and his partner, who in their paper, the ”Was.h.i.+ngton Globe,” had firmly supported the hard money and anti-bank policy. They received only 107 votes, about fifteen Democrats uniting with the Whigs to defeat them. Van Buren was unable to educate all his party to his own firm, clear-sighted views.

There was formed a small party of ”conservatives,” Democrats who took what seemed, and what for the time was, the popular course. The independent treasury bill was defeated in the House by 120 to 106.

Van Buren's proposal was carried, however, to postpone the ”deposite,”

as it was called, the gift as it was, of the fourth installment of the surplus. On October 1, Webster and Clay led the seventeen senators who insisted upon the folly of the national treasury in its dest.i.tution playing the magnificent donor, and further debauching the States with streams of pretended wealth. Twenty-eight senators voted for the bill; and in the House it was carried by 118 to 105, John Quincy Adams heading the negative vote.

The administration further proposed the issue of $10,000,000 in treasury notes. It was a measure strictly of temporary relief. Gold and silver had disappeared; bank-notes were discredited. The government, whose gold and silver the banks would not pay out, was disabled from meeting its current obligations; and the treasury notes were proposed to meet the necessity. They were not to be legal tender, but interest-bearing obligations in denominations not less than $50, to be merely receivable for all public dues, and thus to gain a credit which would secure their circulation. This natural and moderate measure was a.s.sailed by those who were lauding a paper currency to the skies. The radical difference was ignored between a general currency of small as well as large bills, without intrinsic value, adopted for all time, and a limited and perfectly secure government loan, to be freely taken or rejected by the people, in bills of large amounts, to meet a serious but brief embarra.s.sment. ”Who expected,” said Webster in the Senate, ”that in the fifth year of the experiment for reforming the currency, and bringing it to an absolute gold and silver circulation, the Treasury Department would be found recommending to us a regular emission of paper money?” He voted, however, for the bill, the only negative votes in the Senate being given by Clay and four others. In the House it was carried by 127 to 98.

Such was the substantial work of the extra session. To the experience of that crisis and the wisdom with which it was met may not improbably be ascribed the hard-money leaven which, thirty or forty years later, prevented the great disaster of further paper inflation, and brought the country to a currency which, if not the best, is a currency of coin and of redeemable paper, whose value, apart from the legal-tender notes left us by the war and the decision of the Supreme Court, depends upon the best of securities, coin or government bonds, deposited in the treasury, and a currency whose amount may therefore safely be left to the natural operations of trade.

Clay's appeal for a great banking inst.i.tution, which should accomplish by magic the results of popular labor and saving, was met by a vote of the House, 123 to 91, that it was inexpedient to charter a national bank, many voting against a bank who had already voted against an independent treasury. The Senate also resolved against a national bank by 31 to 14, six senators who had voted against an independent treasury voting also against a bank. The temporary expedient adopted by the treasury on the suspension of the banks was therefore continued, and public moneys were kept in the hands of public officers.

Calhoun now rejoined the Democratic party. It was only the year before he had denounced it as ”a powerful faction held together by the hopes of public plunder;” and early in this very year he had referred to the removal of the deposits as an act fit for ”the days of Pompey or Caesar,”

and had declared that even a Roman Senate would not have pa.s.sed the expunging resolution ”until the times of Caligula and Nero.” But Van Buren, Calhoun now said, had been driven to his position; nor would he leave the position for that reason. He referred to the strict construction of the powers of the government involved in the divorce of bank and state. There was no suggestion that Van Buren had become a convert to nullification. But Calhoun could with consistency support Van Buren. The independent treasury scheme was plainly far different from the removal of the deposits from one great bank to many lesser ones. The reasons for political exasperation had besides disappeared. Van Buren was chief among the _beati possidentes_, and could not for years be disturbed. His tact and skill left open no personal feud; he had not yet conferred the t.i.tle of Caesar; no successor to himself was yet named by any clear designation. Calhoun joined Silas Wright and the other administration senators; but he still maintained a grim and independent front.

The extra session ended on October 16. Besides the issuance of $10,000,000 in treasury notes and the postponement of the distribution among the States, the only measure adopted for relief was a law permitting indulgence of payment to importers upon custom-house bonds.