Martin Van Buren

by Edward Morse Shepard

CHAPTER IX
PRESIDENT.—SUB-TREASURY BILL

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 coöperation, in accordance with the guardianship 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 multitudes 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 masses, 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 anticipated 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 shifting 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 reëstablishment 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 embarrassments, 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 assistance of banks. Our own exchanges ought to be carried on by private enterprise and competition, without legislative assistance, 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 reëstablishment 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 institutions.

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 circumstances 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 disbursement 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 accumulated 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 disbursement 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 institutions, capable of ministering to the interests of men in points where they were most accessible to corruption, was more liable to abuse than his constitutional 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 embarrassments 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 institutions. It was not intended to confer special favors on individuals, or on any classes 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 prone to do so especially at periods of sudden embarrassment 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 assist 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 passionate declamation in the furious gust of folly. It was a favorite delusion that government was a separate entity 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 statesmanship. 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 establishing 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