VII

“The times will be hard, and the struggle a great one,” wrote Van Buren to Hamilton, “but the patriotism and fortitude of the people will triumph.”[662] And Nicholas Biddle did not propose that the inconvenience should be slight. He was delighted with the order for the removal. He was convinced that out of the distress in business circles would come an irresistible demand, not only for the restoration of the deposits, but for the rechartering of the Bank. This last act of Jackson’s was the golden opportunity. The advantage would be followed. The public, which had sustained Jackson at the polls, was to be punished, or “disciplined,” as Webster mildly described the process. “This discipline,” wrote the orator to Biddle, who was his client as well as his party colleague, “it appears to me, must have very great effects on the general question of the rechartering of the Bank.”

The “disciplining” of the people began with the Bank’s first curtailments on August 13, 1833, and practically ended on July 11, 1834, although it continued to some extent until September. The first move—a proper one—was to issue an order that the amount of money loaned on discounts was not to be increased, and that bills of exchange should be drawn only at short dates and on the Eastern offices. These orders meant inevitable contraction, but of the sort that could be justified. But immediately after Taney had issued his order, the Bank adopted additional measures—the reduction of discounts, the application of the order of restriction on the drawing of bills to all the offices of the Bank, the collection of the balances against the State banks, and the restriction of the receipt of State bank notes. The historian of the Bank truly says that “on the whole, nothing but peril to the Bank could excuse such measures.”[663] But even this second step seemed all too mild to the officers and directors in the marble front building on Chestnut Street, and three weeks later a third step was taken. The branch banks in the West were ordered to persevere in “the course of measures already prescribed,” and instructed that an extraordinary effort should be made to keep down circulation, and to avoid drafts on the northern Atlantic offices.[664] One month later, Philip Hone, the New York banker and business man, was recording in his diary that the “ill-advised and arbitrary step of the President” was “producing an awful scarcity of money, with immediate distress and melancholy forebodings to the merchants and others who require credit to sustain them”; and that “stocks of every description have fallen—Delaware and Hudson from one hundred and twenty-five to one hundred and fourteen, Boston and Providence from one hundred and fifteen to one hundred and three,” and that “money cannot be had on bond and mortgage at 7 per cent, and I am told that good notes will hardly be discounted at 9 per cent.”[665]

Just about the time Hone was recording these conditions, Biddle was offering the notorious Samuel Swartwout, the Jacksonian Collector in New York, whose irregularities in office were to be unmercifully exploited by the Whigs, a directorship in the Bank, and the latter, declining because of the onerous duties of his office, advised that since “the Bank’s power has been shown” in the distress, it might be well now to manifest mercy.[666] Where Niles had found money scarce in September and October without being able to conceive a reason, he wrote in November of “a most severe pressure for money” and the prospect of a “collapse of business.” That month State bank notes began to depreciate and loans were at eighteen per cent per annum. With the convening of Congress and the President’s uncompromising Message in December, Biddle increased the pressure for the purposes of “discipline.” Business men were unable to get credit. Factories were shutting down because of the inability of manufacturers to get loans, and laborers were thrown out into the street. The Christmas season found New York “gloomy” with “times bad,” stocks still falling, and a panic prevailing “which will result in bankruptcies and ruin in many quarters where, a few short weeks ago, the sun of prosperity shone with unusual brightness.”[667] And three days later the Lord Holland of the American Whigs, in his misery and apprehension, was beginning to suspect that politics and the Bank, as well as Jackson’s “ill-advised and arbitrary step,” might be playing a part, and concluding that “between them both the community groans under the distress which these misunderstandings have created.” “A plague on both your houses,” he wrote, his impartial castigation springing, perhaps, from the fact that he had lost $20,000.[668]

In January the crash came. Business houses began to fail in New York, Philadelphia, and Washington, and by the end of the month loans could not be had in New York and Baltimore at less than one and a half per cent discount per month. Wages decreased, along with prices, with laborers out of employment and the real estate values on the slump. And at this time, with the Opposition in Congress working in hearty coöperation with the Bank to create the fear that fed the panic, Jackson sat in the White House one Sunday morning writing to Hamilton: “There is no real distress. It is only with those who live by borrowing, trade on loans, and gamblers in stocks. It would be a godsend to society if all such were put down.... I must stop. The church bells are ringing and I must attend.”[669] This theory that it would be a “godsend” to rid the country of the men who live on borrowing was to be used with considerable effect against Jackson by his congressional enemies.

And at the same time, Biddle was writing to the president of his Boston branch[670] that “the ties of party allegiance can only be broken by the actual conviction of existing distress,” and that “nothing but the evidence of suffering abroad will produce any effect in Congress”; and to Major Jack Downing in New York that “if the bank were to suffer itself to be misled into the measure of making money plentiful, it will only give to its enemies the triumph of having robbed it with impunity.”[671] Thus the evidence is abundant that the Bank exerted its power to the utmost to bring the country to the verge of ruin, and so compel it to consent to a recharter. The fact that the majority of its victims were among its most zealous supporters did not interest Mr. Biddle.[672] Two days after writing the letter to Downing, Biddle determined upon a further contraction in discounts to the amount of $3,320,000, with orders that this should be made within thirty or sixty days, and the largest reductions were to be made in the Western and Southwestern banks. Not content with this, he made another increase in the rates of exchange, and here again discriminated frankly against the West. Thus, in eight months the Bank planned a reduction in discounts to the amount of $13,300,000, which Catterall describes truly as “a preposterously large sum.”[673] When to this is added the further restrictions of as much as $5,000,000 through the breaking up of the exchange dealings of the Bank, the contraction in eight months amounted to at least $18,300,000.

Had the Bank acted honorably, there would have been an inevitable depression for the time because of the removal order, but the panic was the Bank’s panic, deliberately conceived, and cruelly produced, with the frankly avowed purpose of blackmailing the American people into granting another charter. In his letter to the president of the Boston branch, Biddle had bluntly confessed his purpose. “I have no doubt,” he wrote, “that such a course will ultimately lead to a restoration of the currency, and the recharter of the Bank.”[674]

During this time there were certain unscrupulous speculators, the buzzards of the panic, whispering commendation into Biddle’s ear while feathering their own nests through the distress of the people.[675] But Webster, alarmed at the havoc, had urged Biddle, through Horace Binney, “that the Bank ought to reduce as slowly and moderately as they can—and occasionally to ease off—where it is requisite to prevent extreme suffering.”[676] This advice aroused the banker’s ire and resulted in no good. It was Biddle’s idea that the Bank’s senatorial champions, instead of suggesting a policy of moderation, should be using the distress as an argument for a new charter. “The relief,” he wrote Joseph Hopkinson, the distinguished lawyer and jurist, “to be useful or permanent, must come from Congress, and from Congress alone. If that body will do its duty, relief will come—if not, the Bank feels no vocation to redress the wrongs of these miserable people. Rely upon that. This worthy President thinks that because he has scalped Indians and imprisoned Judges, he is to have his way with the Bank. He is mistaken.”[677]

VIII

Meanwhile the Bank was encouraging, inspiring, arranging indignation meetings of the people, where Jackson was arraigned for bringing ruin upon the community, and petitions were drawn asking for the restoration of the deposits. Clay, eager to lash the people into fury, had suggested the plan. “It would be well,” he wrote, “to have a general meeting of the people to memorialize Congress in favor of a restoration of the deposits. Such an example [in Philadelphia] might be followed elsewhere; and it would be more influential as it might be more general.”[678] The artificial nature of many of the petitions was well understood by the Jackson leaders, and the usually elegant John Forsyth had referred to them in the Senate as “these pot-house memorials,” much to the astonishment of Adams.[679] These petitions, according to the plan, were, in many instances, taken to Washington by committees that waited upon the President before presenting them to Congress. Here they were presented in lugubrious speeches calculatingly designed further to fan the fears of the people and keep the panic going. When the New York merchants adopted a memorial and secured the signatures of three thousand people, Tammany Hall ordered meetings in every ward in the city to approve of Jackson’s actions.[680] A few days later, between twelve and fifteen thousand friends of “sound currency by means of a national bank” met at noon in the park. When Hone, selected to preside, reached the park, he found an “immense crowd” composed in large part “of the most respectable mechanics and others of the city—men of character, respectability, and personal worth, with a few miscreants who went, perhaps, of their own accord, but were probably sent there to excite disturbances.” In truth, “the rabble had gotten possession of the chair,” and it required “some hard thumps” from the men of character, respectability, and personal worth to clear the way sufficiently for the presiding genius of the Whig dinner table to reach the platform. When he attempted to speak, the “yells of the mob” rendered all the chairman’s efforts “unavailing”; so he “put the question upon the resolutions which were carried by an immense majority,” and the meeting adjourned. Unhappily the “mob” did not disperse for some time afterwards.[681]