“What sort of an institution, sir, is this? It looks less like a bank than like a department of government. It will be properly the paper-money department. Its capital is government debts; the amount of issues will depend on government necessities; government in effect absolves itself from its own debts to the bank, and by way of compensation absolves the bank from its own contracts with others. This is indeed a wonderful scheme of finance. The government is to grow rich because it is to borrow without the obligation of repaying, and is to borrow of a bank which issues paper without the liability to redeem it.... They provide for an unlimited issue of paper in an entire exemption from payment. They found their bank in the first place on the discredit of government, and then hope to enrich government out of the insolvency of the bank.”
Webster was a master of antithesis, and the proposed bank was in effect what he described; but had he been a member of the British Parliament he might have made the same objections, with little alteration, to the Bank of England. The Hartford Convention was in session while he spoke. Every word of his speech was a shock to the government and the Union, for his only suggestion was equivalent to doing nothing. He moved to instruct the committee to report a bill creating a bank with thirty millions of capital, composed one fourth of specie and three fourths of government securities; without power to suspend specie payments, and without obligation to lend three fifths of its capital to the government. To such a bank he would give his support, “not as a measure of temporary policy, or an expedient to find means of relief from the present poverty of the Treasury,” but as an institution most useful in times of peace.
The House came to a vote the same day, and divided eighty-one to eighty. Then the Speaker, Langdon Cheves, rose, and after denouncing the proposed bank as “a dangerous, unexampled, and he might almost say a desperate resort,” gave his casting vote against the bill.
No sooner had the House struck this blow at Dallas than it shrank back. The next day, amid complaints and objections, it reconsidered its matured decision by the sudden majority of one hundred and seven to fifty-four. Once more the bill was recommitted, and once more reported, January 6, in the form that Webster proposed. Weary of their own instability, the majority hastened to vote. Most of the Federalists supported the bill; but Grosvenor of New York, one of the ablest, frankly said what every one felt, that the proposed institution could not be a specie bank, or get a million of its notes into circulation. “The government relying on it would be disappointed, and ruin soon stare them in the face.” With this understanding the House passed the bill, January 7, by a vote of one hundred and twenty to thirty-eight; and the Senate, after a struggle with the House, accepted it, January 20, by a vote of twenty to fourteen.
Dallas was not a man to be easily daunted even in so desperate a situation. After ten days deliberation, the President sent to Congress a veto message.
“The most the bank could effect,” said Madison, “and the most it could be expected to aim at, would be to keep the institution alive by limited and local transactions ... until a change from war to peace should enable it, by a flow of specie into its vaults and a removal of the external demand for it, to derive its contemplated emoluments from a safe and full extension of its operations.”
“I hope this will satisfy our friends,” wrote Webster to his brother,[369] “that it was not a bank likely to favor the Administration.” Either with or without such a bank, the Administration was equally helpless. The veto left the Treasury, February 1, without a resource in prospect. The unsatisfied demands reached nearly twenty millions. The cash balance, chiefly in bank-credits, was little more than six millions. A further deficit of forty millions remained to be provided above the estimated revenue of 1815. United States six-per-cents commanded only a nominal price, between fifty and sixty cents on the dollar,[370] and were quoted in Boston at a discount of forty cents.[371] Treasury notes being in demand for taxes, were worth about seventy-five cents in the dollar. Dallas had no serious hope of carrying on the government. In a letter to the Committee of Ways and Means, dated January 17, he could only propose to add six millions more to the taxes, issue fifteen millions in Treasury notes, and borrow twenty-five millions on any terms that could be obtained. In making these recommendations he avowed in grave words his want of confidence in their result:[372]—
“In making the present communication I feel, sir, that I have performed my duty to the Legislature and to the country; but when I perceive that more than forty millions of dollars must be raised for the service of the year 1815, by an appeal to public credit through the medium of the Treasury notes and loans, I am not without sensations of extreme solicitude.”
Young George Ticknor of Boston happened to be in the gallery of the House of Representatives when Eppes read this letter, January 21, and the next day he wrote,[373]—
“The last remarkable event in the history of this remarkable Congress is Dallas’s report. You can imagine nothing like the dismay with which it has filled the Democratic party. All his former communications were but emollients and palliations compared with this final disclosure of the bankruptcy of the nation. Mr. Eppes as Chancellor of the Exchequer, or Chairman of the Committee of Ways and Means, read it in his place yesterday, and when he had finished, threw it upon the table with expressive violence, and turning round to Mr. Gaston, asked him with a bitter levity between jest and earnest,—