When the adjourned convention met on the 11th April, a letter was presented from the Philadelphia banks declining to attend, on the ground that the banks and citizens of New York had already acted independently in announcing their intention to resume on the 10th May, and that the banks of Philadelphia “do not wish to give any advice in regard to the course which the banks of the city of New York have resolved to pursue; they do not wish to receive any from those banks touching their own course.” One might have supposed that after this defection of Pennsylvania there would have been no difficulty in controlling the action of the adjourned convention when it met on the 11th April; but this proved no easier matter than before. Mr. Gallatin’s object was to fix the earliest possible day for general resumption, since New York placed herself in a very critical position so long as she stood alone. But the convention could not even be persuaded to fix the first Monday in October for the day. The utmost that could be got from New England was to name the 1st January, 1839.
1839.
Left thus isolated, Mr. Gallatin and his associates went directly on their course alone. The New York banks resumed specie payments on the 10th May, as they had pledged themselves to do. They resumed in good faith and in full; the resumption was effected without the slightest difficulty; and it is but just to add that the other banks made no attempt to impede it. Then came the inevitable struggle between the solvent and the insolvent institutions. Boston acted better than she talked, and all New England resumed in July. Public opinion, operating first on the Governor of Pennsylvania, compelled the United States Bank to resume in the course of the same month. The South and West followed the example. For something more than a year the insolvent banks managed to crawl on, and then at last, in October, 1839, the United States Bank went to pieces in one tremendous ruin, and carried the South and West with it to the ground. A long and miserable period of liquidation generally followed, but New England and New York maintained payments, and Mr. Gallatin had once more, almost by the sheer force of his own will and character, guided the country back to safe and solid ground.
In the year following, on June 7, 1839, he at length resigned his post as president of the National Bank of New York, and retired from all forms of business. His last considerable effort as a financier and economist was the publication of a pamphlet supplementary to his “Considerations on Currency.” This essay of one hundred pages, entitled “Suggestions on the Banks and Currency of the several United States,” was printed in 1841. Its value is principally that of continuing the history of our financial condition, more particularly as respects currency and banks; and, taken in connection with the earlier essay, it forms a hand-book of American finance down to the year 1840.[169]
Doubtless the students of to-day, who turn their attention to these papers upon which the reputation of Mr. Gallatin, as an author and theorist in finance, principally rests, will find that the point of view has considerably changed, and that a wider treatment of the subject has become necessary. Not less the circumstances than the thought of that generation naturally tended to attribute peculiar and intrinsic powers to currency; a tendency quite as prominent among the English as among the American economists. Mr. Gallatin’s writings dealt mainly and avowedly with the currency, because he believed that the condition of the currency was the responsible cause of much if not most of the moral degradation of his time, and that a return to a sound metallic medium of exchange was a means of purifying society. The later school of economists would perhaps lay somewhat less stress upon currency as in itself an active cause, and they would rather treat it as a symptom, an instrument operating mechanically and incapable in itself of producing either all the evil or all the good then attributed to it. The following letter, at all events, shows Mr. Gallatin’s opinions on the subject:
1841.
GALLATIN TO JONATHAN ROBERTS.
New York, 3d June, 1841.
Respected Friend,—I received your welcome letter of the 27th May, and return in answer my essay on currency.
I sometimes flatter myself that we old men labor under the disease incident to our age, and that we think that the world has grown worse than it was in former days, because, when young, the vices of the times had become familiar to us, and that we are shocked by those of new growth. Thus, for instance, though you and I were temperate, we were less severe towards drunkards than the present generation.