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 anticipation 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 institution. Following the lead of Jefferson, who had insisted that the project was unconstitutional,[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 institution," he wrote in the third year of his Presidency, "is one of the most deadly hostility existing, against the principles & form of our Constitution.... An institution 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 institution.[444] Another source of hostility was the jealousy of State banks, much of the complaint about "unconstitutionality" and "foreign ownership" 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 institution, it was said; its profits were too great; it was a creature of Federalism, brought forth in violation of the Constitution. 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]
Petitions to Congress denounced it and demanded its extinction. One from Pittsburgh declared "that your memorialists are 'the People of the United States,'" and asserted 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 institution. Such resolutions came from Pennsylvania, from Virginia, from Massachusetts.[448]
The State banks were the principal 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 associate of Spencer Roane and Thomas Ritchie, was the president of this State institution, 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 Assembly 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 embarrassed 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 assailed the character of every public man who spoke in behalf of so vile and dangerous an institution.[456] It was also an ideal object of assault 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 institution 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 quantities 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 institutions, 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.