Your friend sincerely,
Andrew Jackson.
P.S.—We all present you with the joys of the season.
The bill to authorize the issue of treasury notes was passed at the extra session of Congress in 1836. The bill to establish the sub-treasury was passed in the Senate but failed in the House. The Bank of the United States, unable to obtain from Congress a prolongation of its charter, had procured a charter of incorporation from the Legislature of Pennsylvania. This new corporation became the assignee of the assets of the old one. It was now, therefore, in a singular and unprecedented attitude. As a Pennsylvania corporation, it had power to issue its own notes. As a trustee for winding up the affairs of the old corporation, it had in its possession the notes of the old bank. It re-issued these notes, without any authority to do so, used them in the Southern States, in exchange for the depreciated local currency, with which it bought cotton for exportation, or to pay its debts abroad, or purchased specie to replenish its vaults at home. It had thus created an obstacle to the resumption of specie payments. On the 23d of April, 1838, Mr. Buchanan made a very able speech in the Senate, in support of a bill to prevent the Pennsylvania Bank from re-issuing and circulating the notes of the old bank, giving the causes which produced the suspension of specie payments, and those which might affect a resumption.
Mr. Buchanan said there was but one consideration which could induce him, at the present moment, to take any part in the discussion of the bill now before the Senate. He felt it to be his duty to defend the legislature of the State which he had, in part, the honor to represent, from the charge which had been made against them by the Senator from New Jersey [Mr. Wall] and other Senators, and by many of the public presses throughout the country, that, in rechartering the Bank of the United States, they had conferred upon it the powers of a great trading company. This charge was wholly unfounded in point of fact. The charter had not constituted it a trading company; and he felt himself bound to make the most solemn and public denial of that charge. If this bank had become the great cotton merchant which was represented, and he did not doubt the fact, it had acted in express violation of its charter. He therefore rose, not to criminate, but to defend the legislature of his native State.
The Democratic party of Pennsylvania had been, unfortunately, divided in 1835; and the consequence was the recharter of the Bank of the United States. Of the wisdom or policy of this measure (said Mr. B.) the Senate of the United States are not constituted the judges. I shall never discuss that question here. This is not the proper forum. I shall leave it to the sovereign people of the State. To them, and to them alone, are their representatives directly responsible for this recharter of the bank. As a citizen of the State, I have on all suitable occasions, both in public and in private, expressed my opinion boldly and freely upon the subject. In a letter from this city, dated on the 30th June, 1836, which was published throughout the State, I have presented my views in detail upon this question; and I feel no disposition to retract or recant a single sentiment which I then expressed. On the contrary, experience has only served to confirm my first convictions.
My task is now much more agreeable. It is that of defending the very legislature who renewed the charter of the bank, from the charge which has been made and reïterated over and over again, here and throughout the country, of having created a vast corporation, with power to deal in cotton, or any other article of merchandise. A mere reference to the charter, will, of itself, establish my position. It leaves no room for argument or doubt. The rule of common reason, as well as of common law, is, that a corporation can exercise no power, except what has been expressly granted by its charter. The exercise of any other power is a mere naked usurpation. On the present occasion, however, I need not resort to this rule. The charter not only confers no such power of trading, but it contains an express prohibition against it. It was approved by the Governor on the 18th day of February, 1836, and the fifth fundamental article contains the following provision: “The said corporation shall not, directly or indirectly, deal or trade in any thing except bills of exchange, gold and silver bullion, or in the sale of goods really and truly pledged for money lent and not redeemed in due time, or goods which shall be the proceeds of its lands.” In this particular, it is but a mere transcript from the charter granted to the late bank by Congress on the 10th of April, 1816, which was itself copied from the charter of the first Bank of the United States, established in the year 1791. I have not recently had an opportunity of examining the charter of the Bank of England, but I believe it contains a similar provision. The Senate will, therefore, at once perceive there is as little foundation for charging the legislature of Pennsylvania with conferring upon the existing bank the enormous powers of a great trading company, as there would have been for making a similar charge against the first or the last Congress which chartered a Bank of the United States. It is true that the bank, under its existing charter, can deal much more extensively in stocks than it could have done formerly; but this power does not touch the present question.
The bank, by becoming a merchant and dealing in cotton, has clearly violated its charter, and that, too, in a most essential particular. Either the legislature or the Governor may direct a scire facias to issue against it for this cause; and, if the fact be found by a jury, the Supreme Court of the State can exercise no discretion on the subject, but must, under the express terms of the act creating it, adjudge its charter to be forfeited and annulled. Whether the legislature or the Governor shall pursue this course, is for them, not for me, to decide. This bank has already so completely entwined itself around our system of internal improvements and common school education, that it doubtless believes it may violate its charter with impunity. Be this as it may, the sin of speculating in cotton lies at the door of the bank, and not at that of the legislature.
Heaven knows the legislature have been sufficiently liberal in conferring powers upon this institution; but I doubt whether a single member of that body would have voted to create a trading company, with a capital of $35,000,000, in union with banking privileges. Let us pause and reflect for a moment upon the nature and consequences of these combined powers. A bank of discount and circulation, with such an enormous capital, and a trading company united! By expanding or contracting its discounts and circulation, as a bank, it can render money plenty or money scarce, at its pleasure. It can thus raise or depress the price of cotton, or any other article, and make the market to suit its speculating purposes. The more derangement that exists in the domestic exchanges of the country, the larger will be its profits. The period of a suspension of specie payments is its best harvest, during which it can amass millions. It is clearly the interest of this bank, whatever may be its inclination, that specie payments should continue suspended, and the domestic exchanges should continue deranged as long as possible. The ruin of the country thus becomes its most abundant source of profit. Accordingly, what do we find to have been its course of policy? I have heard it described by several gentlemen[gentlemen] from the South and Southwest, some of whom are members of this body. It has gone into that region of the Union with these resurrection notes of the old bank, the reissue of which this bill proposes to prohibit; and, in some States, it has exchanged them, the one-half for the depreciated local currency, and the other half for specie. With this local currency it has purchased cotton, and sent it to England for the purpose of paying its debts there, whilst with the specie it has replenished its vaults at home. In other States it has exchanged these dead notes of the old bank for the notes of the local banks, receiving a large premium on the transaction, and with the latter has purchased cotton on speculation. A general resumption of specie payments would at once put an end to this profitable traffic. It has, then, first violated the charter from Congress by reissuing the notes of the old bank, and then violating the charter from Pennsylvania by speculating in cotton. During the suspension of specie payments, these notes have been the only universal paper circulation throughout the country; and thus, by reissuing them, in defiance of the law, the present bank has been enabled to accumulate extravagant profits.
This charge against the bank of speculating in cotton has never, to my knowledge, been contradicted. We have heard it from the other side of the Atlantic, as well as from the South and Southwest. The Whig press of our country has commended, nay, almost glorified the bank for going into the cotton market, when that article was depressed, and making large purchases, and its friends in England have echoed these notes of praise. Its example has produced a new era in banking. We find that the Southern and Southwestern banks have also become cotton merchants; and, from present appearances, the trade in this great staple of our country is no longer to be conducted by private merchants, but by banking corporations.