Chapter XIV · 1837–1840. (continued 2)

I support the President, because he is in favor of a strict and limited construction of the Constitution, according to the true spirit of the Virginia and Kentucky resolutions. I firmly believe that if this Government is to remain powerful and permanent, it can only be by never assuming doubtful powers, which must necessarily bring it into collision with the States. It is not difficult to foresee what would be the termination of such a career of usurpation on the rights of the States.

I oppose the Whig party, because, according to their reading of the Constitution, Congress possess, and they think ought to exercise, powers which would endanger the rights of the States and the liberties of the people. Such a free construction of the Constitution as can derive from the simple power “to lay and collect taxes,” that of creating a National Bank, appears to me to be fraught with imminent danger to the country. I am opposed to the party so liberal in their construction of the Constitution, as to infer the existence of a power in the Federal Government to create and circulate a paper currency for the whole Union, from the clause which merely authorizes Congress “to 407regulate commerce with foreign nations and among the several States, and with the Indian tribes.” Such constructions would establish precedents which might call into existence other alien and sedition laws; and it is such a construction which has given birth to the bill now before the Senate, denying the freedom of speech and of the press to a respectable portion of our citizens.

Should the time ever arrive when these principles shall be carried into practice, and when the Federal Government shall control the whole paper system of the country, either by the agency of a National Bank, or an immediate issue of its own paper, our liberties will then be in the greatest danger. In addition to the constitutional patronage of the President, confer upon him the influence which would result from the establishment of a National Bank, and you may make him too powerful for the people. Such a bank, spreading its branches into every State, controlling all the State institutions, and able to destroy any of them at pleasure, would be a fearful engine of executive power. It would indissolubly connect the money power with the power of the Federal Government; and such an union might, I fear, prove irresistible. The people of the States might still continue to exercise the right of suffrage; all the forms of the Constitution might be preserved, and they might delude themselves with the idea that they were yet free, whilst the moneyed influence had insinuated itself into the very vitals of the State, and was covertly controlling every election.

The personal attachment which bound to General Jackson the most distinguished men of his own party was compounded of something better than a sordid love of office. To them he was always “the old hero.” He was their political chief, and to follow him was of the essence of patriotism. They might sometimes doubt the wisdom of his measures; but they surrendered their own judgments to his, not, as their political adversaries charged, from a slavish fear, but because they regarded him as a great man, honestly and resolutely bent on serving his country. They knew, as well as his opponents, that he had an imperious will. But they knew him better than opponents who never approached him, who held themselves aloof from all contact with his mind, and who formed their ideas of his character from the stories that told how illiterate he was; how he never wrote his State papers; how ignorant he was of constitutional law; how he gave way to his passions, and swore “by the Eternal.” In nothing was the devotion of the leading men of his party to Jackson more fervid, more constant, and more true to their sense of public duty than it was in his warfare against the bank. In the whole of that 408conflict, in its progress and in its close, a band of men, who numbered among them the strongest intellects of the party, stood by him without the smallest sign of flinching. Some defections there were, but the seceders were not persons of much importance. The great body of his strongest supporters shared in his triumphs over the bank, and to the end of their lives it was to them a victory over a monster, as worthy of everlasting commemoration as the victory of St. Michael over the dragon.

In the opposite party convictions were not less strong, and in that party were some of the foremost minds of the age. As a parliamentary leader, Mr. Clay has been equalled by no man in our political history. With a personal fascination and a persuasive eloquence, he united a temper as dictatorial as Jackson’s; and if he had ever become President, he would, probably, have been as tyrannical as he was accustomed to say and as many believed that Jackson was. The massive logic of Webster; his profound knowledge of our constitutional system and of political history; his full equipment in the accomplishments of a statesman; his careful and comprehensive study of every public question on which he had to act; his vast reputation and his majestic presence made him a far more formidable adversary of the administration than Mr. Clay ever was. Clay had never rendered a service comparable to Webster’s defence of the Constitution against the Nullifiers and his patriotic support of General Jackson’s measures in assertion of its authority. In all the political tactics of Mr. Clay—even in his “compromise tariff,” by which he saved Mr. Calhoun and his followers from a great personal humiliation, and from a serious peril which they brought upon themselves—the public suspected, or believed that there might be reason to suspect, some personal motive. Webster, although as anxious to be President as Clay, although, like his great rival, ambitious in that lofty sense of ambition which consists in the desire to render eminent services to one’s country in the highest attainable position, had more than once in the course of his public life given proof that he could rise above party or personal objects, and could support the measures of an administration when he approved of them, and yet refrain from going over to a party against whose course 409in other respects he was bound by his convictions to exert his utmost resistance.

Around each of these two prominent leaders of the Whig party was gathered a body of able men, who were so far united as the bond of thinking alike concerning the Republic can unite a political party, but who, in consequence of the rivalry between their respective chiefs, were never held together so compactly as their opponents, the followers of Jackson. Perhaps Mr. Clay was more fortunate in securing and holding the personal attachment of a larger number of political friends than Mr. Webster. Twice was Clay made the candidate of his party; twice was he magnanimously and vigorously supported by Webster’s powerful aid; and twice he was defeated, the first time by Jackson, in 1832, and the second time by Polk, in 1844. In the interim between these two elections, namely, in 1836 and 1840, the Whig party, mainly in consequence of the unreconciled claims of its two greatest statesmen, resorted to a candidate who was personally and politically insignificant, but whom they succeeded in electing in 1840 through the circumstances of the time. But at the period of General Jackson’s second Presidency, the great Whig opposition was firmly united against all his measures respecting the bank and the currency. It was a period when the leading men on all sides were governed by convictions to a very remarkable degree, notwithstanding the influence which the love of office or the desire for it exerted throughout the inferior ranks of politicians in both parties; and among the Whigs the opinion which held the financial measures of General Jackson to be most injurious to the country, was not less strong and sincere than was the belief of his supporters, that the destruction of the bank was necessary to the public welfare.

After Mr. Buchanan entered the Senate, he became conspicuous among the defenders of Jackson’s financial measures. History, however fairly written, must leave it an undecided question, whether the evils and sufferings produced by Jackson’s hostility to the bank were, in the long run, compensated by its destruction, and by the establishment of the doctrine that such an institution must not be allowed to exist. To one generation at least they were not compensated. It was impossible that the 410connection between the Government and the bank should be severed, as it was severed by Jackson, and be followed by the measures to which he resorted, without causing a wide-spread financial disaster, the bankruptcy and ruin of thousands, and inextricable embarrassment to the Government itself. But it is sufficient for the present purpose to describe the situation in which Jackson left the affairs of the country to his successor, and the troubles through which Mr. Van Buren and his political friends had to grope their way towards a definite solution of the true relation between the Government of the United States and the currency. A short retrospect into the history of the bank will develop the principal grounds of General Jackson’s hostility to it.

There would seem to have been no reason, a priori, why the United States, if regarded simply as a nation, should not have a National Bank, to perform the same kind of functions that have been performed by similar institutions in other countries. In the luminous report made by Alexander Hamilton in December, 1790, on a National Bank, he set forth, with his accustomed ability, the advantage of having one fiscal corporation, which could act as the depositary of the public funds, transfer them from place to place as they are wanted at far distant points, enable the Government to borrow money, and furnish, under proper safeguards, a paper circulation of equally recognized value and security throughout the Union, thus increasing the amount of money available for the uses of legitimate business, and the means of effecting exchanges.^[55] That the Bank of the United States, chartered by Congress in 1816, had down to the year 1833 well fulfilled these functions, there 411could be little doubt. But under the Constitution of the United States, which had established a government of enumerated and limited powers, there had always been a question whether Congress possessed authority to create such a fiscal corporation.

This question involved the fundamental rule of interpretation that ought to be applied to the powers of the Constitution:—a rule on which statesmen had differed from the day of its inauguration, and which came to be the most important dividing line between political parties, as soon as parties were formed. The chief canon of interpretation that was acted upon by those who shaped the measures of Washington’s administration, and to which the sanction of his great name was given by his signature of the first charter of a national bank, was that the express and enumerated powers of the Constitution were described in general terms, for the accomplishment of certain great objects of national concern; and that whatever particular powers are necessary as means to the full execution of the general powers described in the instrument, are to be rightfully regarded as having been granted to Congress, because they were included by an implication, without which the principal powers would be nugatory. This, it was contended, would have been a necessary and logical deduction, even if the Constitution itself had not contained a clause defining the scope of the legislative power of Congress, applicable to all the general powers enumerated in the previous recitals. But with this clause, granting to Congress authority “to make all laws which shall be necessary and proper for carrying into execution the foregoing powers, and all other powers vested by this Constitution in the Government of the United States, or in any Department or officer thereof,” it was claimed that Congress had ample scope for a choice of means in the execution of every enumerated power granted by the Constitution. Hence arose the doctrine of what have been called “implied powers,” namely, those powers of government which result by implication from the grant of authority over certain subjects, and which, from the nature of political sovereignty, may be employed in the accomplishment of any object over which that sovereignty extends. It was not denied that the means resorted to in the exercise of an implied power must have a relation, as a means, to one or more of the 412express powers of the Constitution as its end. By the “strict constructionists,” however, it was claimed, first, that the doctrine of implied powers was too broad to be allowed to a government of a special and limited character; secondly, that the Constitution itself did not grant an unlimited choice of means or instruments for the execution of its enumerated powers, but confined the choice to such as are “necessary and proper,” terms that imported a restriction to those means which are indispensable in fact to the attainment of the end. In reply, it was contended by the advocates of the doctrine of implied powers that the terms “necessary and proper” did not import that the particular means employed should be so indispensable to the execution of some granted authority that the authority could not be exercised without resorting to that means; but that any means could be resorted to, which, in the exercise of a sound legislative discretion, might be found to be appropriate, convenient and conducive to the end. Such, it was argued, was the relation between a bank and certain of the express powers of the Constitution.

Satisfied by the powerful intellect and luminous pen of Hamilton that this was a correct construction of the Constitution, Washington, on the 25th of February, 1791, approved the bill which chartered the first Bank of the United States. The paper drawn up by Mr. Jefferson, on the same occasion, controverted the doctrine of implied powers with singular acuteness, and embodied those stricter principles of constitutional interpretation for which the party that he afterwards founded, and that which claimed to be its political successors, have generally contended.^[56]

The charter of the first Bank of the United States expired in the year 1811, and those who had originally opposed it then defeated a bill for its renewal. In 1814–15, during the administration of Mr. Madison, while we were engaged in the war with England, it was supposed that the exigencies of the country required a national bank. A bill to create one was passed by the two houses, in January, 1815, but it was “vetoed” by Mr. Madison, and was not passed over his veto. His objections 413related to the details of the charter. As to the constitutional power to create a national bank, he considered that the repeated acts of all branches of the Government and a concurrence of the general will of the nation, had settled the question, although his personal opinion was adverse to the power. But in 1816, a new charter, which incorporated the last Bank of the United States, was passed by both houses and received the signature of Mr. Madison. This charter was limited to twenty years, and was consequently to expire in 1836.^[57] In 1819 the question of its constitutional validity came before the Supreme Court of the United States, and the great mind of Chief Justice Marshall formulated in a judicial decision the doctrine of implied powers, and the bank was declared to be an instrument to which Congress could legitimately resort for the execution of certain of the powers enumerated in the Constitution.^[58]

When President Jackson, in 1832, vetoed a bill for renewing the charter of the bank, it might, perhaps, have been wiser for him to have acquiesced, as Mr. Madison did, in the weight of authority and precedent on the question of constitutional power, especially since that weight had been greatly augmented by the decision of the Supreme Court. It was doubtless then, as it always must be, a delicate question whether a President is officially bound, in approving laws, by the opinion of the Judicial Department that such laws are constitutional. General Jackson considered that in his legislative capacity he was not so bound, but that while it was his duty to give due consideration to the reasoning on which the judicial decision rested, it was equally his duty to exercise his own judgment, upon a question of constitutional power, when asked to approve of a law. All his personal convictions, and the convictions of his official advisers, were adverse to the construction on which the constitutional validity of the bank charter depended; and perhaps he and they, believing that the bank, with a large capital and with certain practical powers over the whole paper circulation of the country, had entered the political field in hostility to his administration, did not choose to forego the use of any 414weapon that could be wielded against it. Aside from his personal interests as a candidate for re-election, it is but justice to believe that he honestly regarded the bank as a dangerous institution, and that he discerned, or thought he discerned, that the constitutional objection was the strongest club with which the Hydra could be assailed. In choosing this weapon, however, as his principal reliance, he enabled his opponents to represent him as a man who chose to set up his own arbitrary will against the judgment of two Congresses, two Presidents of great authority, the Supreme Court of the United States and the general acquiescence of the nation for a period of twenty years, on a question of constitutional construction. Had he placed his veto upon the renewal of its charter on grounds of expediency alone, the bank might have been compelled to wind up its concerns in a manner that would have produced less mischievous consequences to the country than those which ensued.

His next step, the removal from the bank of the public deposits, in the summer of 1833, followed by his selection of certain State banks as the keepers of the public money, and, to a certain extent, as the fiscal agents of the Government, led to a singular train of evils. Doubtless an institution, whose legal existence was to expire in three years, and which could not obtain from Congress a prolongation of its charter without using its power as a moneyed corporation to affect the politics of the country, had by this time become an unfit custodian of the public funds. Still, there was no sufficient warrant of law for placing the public funds in the custody of State banks, at the time when they were so transferred, nor had any system been matured by the executive for the consideration of Congress, which might furnish a substitute for that which had been in operation so long. The selection of certain State banks as the depositaries of the public money, was a tentative experiment, through which the country had to pass, with various disasters, before any safe and efficient substitute could be found.

The immediate effect of the withdrawal of the Government funds from the Bank of the United States, was a diminution of its loans and a consequent contraction of the currency. The immediate effect of placing those funds in a few selected State 415banks, was a wild speculation by their managers and other favored individuals, leading to their ruin. The assembling of Congress in December, 1833, was followed by Mr. Clay’s attack upon the President, and a session through which the Senate was constantly engaged in the discussion of questions growing out of the situation in which the Government, the country, the Bank of the United States and the State banks had been placed by the executive. At length the Whigs forced from the friends of the administration a disclosure of the President’s purpose to keep the public moneys in the State banks, to collect the public revenues through their agency, not to have any present legislation on the subject, and not to allow another national bank of any kind to be created. The adoption of Mr. Clay’s resolutions censuring the President was followed, on the 17th of April, 1834, by the President’s Protest, a document of singular ability and dignity, setting forth his views of the executive authority over all public officers, including the Secretary of the Treasury, in relation to the custody of the public funds. The Whig majority of the Senate recorded their rejection of these doctrines; but as the administration held a majority in the House of Representatives, the session terminated without any legislation to control in any way the financial experiment which the President had determined should be tried.

In the session which began in December, 1834, when Mr. Buchanan entered the Senate, the Whig majority was still unchanged, but it was destined to be overthrown by the effect of General Jackson’s constantly increasing popularity and influence, which his conduct of the foreign relations of the country greatly tended to strengthen, while in domestic affairs a majority of the people, although beginning to suffer from his measures, still approved of his course in regard to the national bank. Nothing was done, however, at this session, to develope a more definite relation of the Government to the currency; it was a session in which both parties were much occupied with the selection of candidates for the Presidency. The result was, that with the aid of General Jackson’s powerful influence, Mr. Van Buren became the Democratic candidate. In the autumn of 1836, he was elected by a majority of forty-six 416electoral votes, against General Harrison, the candidate of the Whigs.^[59]

The last of the executive measures of General Jackson, in relation to the finances and monetary affairs of the country, was the so-called “Specie Circular,” issued by the Secretary of the Treasury on the 11th of July, 1836. It directed that after a certain period, nothing but gold and silver should be received at the land offices in payment for the public lands. The purpose of this measure was to prevent payment for the public lands in the depreciated paper of the State banks. But in the actual condition of things, its effect was to draw the specie of the country into the vaults of the deposit banks, through the land offices; and as there was then no efficient means by which the Government could transfer its funds from place to place, as they were wanted, by any paper representative of money of equal credit through the Union, specie had to be moved to and fro in masses. The State banks which were not depositaries of the Government funds were thus weakened by the want of specie; they had to curtail their loans, and a great scarcity of money ensued in many quarters. Before Congress assembled in December the internal exchanges of the country were entirely deranged, and a general suspension of specie payments by the banks was not unlikely to take place in the not distant future.

It is not improbable that at this juncture the disasters which ensued in the next year might have been averted, if the political opponents of the administration on the one hand and its friends on the other could, by mutual concessions, have found a common ground of action. To remove the obnoxious Specie 417Circular was evidently necessary. A bill was passed for this purpose by the two houses, before the end of the session, but at so late a period that the President did not return it, and it failed to become a law. The two opposing parties might have agreed on some provision for the necessities of the Government and the wants of the people,—some mode of providing a regulator of the paper currency,—but for two great obstacles which kept them apart, the one of which was to a great extent the consequence of the other. In the large commercial cities, the principal merchants and bankers were still in favor of the establishment of a national bank, as the true remedy for existing disorders, and thence these classes almost universally acted with the Whigs. General Jackson had resolutely determined that no such institution should ever again be allowed to exist. Although, by the first use which he made of banking corporations in the fiscal concerns of the Government, he seemed to admit the power of the Government to create such corporations, his hostility to a national bank led him and his political friends to seek for the means of divorcing the fiscal concerns of the Government from all connection with banks of any kind, and to deny that the Government of the United States had any duty to perform towards the paper currency, or to provide any currency but gold and silver. Had not the question of a national bank, in consequence of the attitude of so many of the Whigs, entered largely into the issues of the approaching Presidential election, it is not improbable that the two parties, in the session of 1836–7, might have discovered and carried out some means of averting the catastrophe which followed the election. But the result was that General Jackson turned over the Government to his successor on the 4th of March, 1837, without anything having been done for the remedy of existing disorders, and with an imperative necessity for an extra session of Congress. It was summoned by Mr. Van Buren for the 4th of September, 1837. Before that day arrived, every bank in the country had ceased to pay specie.

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