Of all the cities of the Union, the peaceful Philadelphia is the most disturbed by the Bank question, because it is the seat of the mother bank. The State of Pennsylvania also, of all the States, suffers the most from the financial crisis, because it is the most deeply in debt, and is obliged to borrow more, either to finish its canals and railroads, or to pay the interest on its existing debt. Conceive of the situation of a State, whose population amounts to only 1,500,000 souls, loaded with a debt of twenty and a half millions, whose ordinary expenditures are less than 600,000 dollars, but which must raise one million to pay interest already accrued, and nearly two millions and a half, for the next summer, under penalty of seeing her great works, executed at an enormous expense, go to ruin, and who knows not whither to turn. This is not all; some old loans must be reimbursed next May, or in three months, and, to crown the whole, the capitalists who contracted last year for a loan of three millions, to be employed on the public works, are, in consequence of the present crisis, unable to fulfil their contracts. The local banks, which are bound by their charters to lend the State at the rate of 5 per cent., rather stand in need of assistance themselves. To these public embarrassments is added the private distress, and thus this country, which Cobbett, who always shows talent, and occasionally gleams of good sense, dubs the Anti-Malthusian, exhibits for the present the spectacle of a superabundance of labourers. In the manufacturing districts of Pennsylvania, many of the operatives are without work.
The condition of the rest of the country is not, in general, any more favorable. I am very ready to believe that the Anti-Jackson newspapers, for so they call themselves, exaggerate the distress; but making all due allowance for rhetorical flourishes, it is still undeniable that there is much distress, especially among the commercial class. Bare figures are more eloquent than the best advocates of the Bank, and it is a notorious fact, that excellent paper has been discounted at the rate of 18 per cent. per annum, and at even higher rates, in New York, Philadelphia, and Baltimore. The price currents and the state of the stock-market, show a general fall in prices of 15, 20, 30, and even 40 per cent. Thus far the efforts of the President to fell the hydra of the moneyed aristocracy, the Mammoth, the Monster, have had no other effect than to blast credit and the commercial prosperity of the country; for the Bank has been administered with so much ability, especially since the presidency of Mr Biddle, one of the most distinguished men in the country, that notwithstanding the abrupt removal of the public deposits, notwithstanding the unexpected and unfair assaults upon some of the branches, particularly that of Savannah[M], it is beyond comparison the most solvent and safe of all the financial institutions in the Union. At this critical moment it has as much specie (ten millions) as all the other 500 banks taken together, and I know from good authority, that many Jackson men (this is the epithet adopted by themselves), have been very glad to be sprinkled with a few drops of the venom of this dangerous reptile.
If what is now taking place in this country were to occur in any European monarchy, those persons who insist upon all nations having a government cast in the republican mould, whatever may be the condition of their territory and population, their wealth and knowledge, their character and manners, would not fail to make it the text of their harangues against monarchical governments; holding up to view the picture of an unparallelled commercial prosperity, checked of a sudden by the caprice of the sovereign, they would prove that such is one of the unavoidable consequences of an opposition between the interest of the ruler and the welfare of the nation; they would demonstrate by geometrical syllogisms, that it is the essence of monarchy to place authority in the hands of the weak and the foolish, who, to gratify their personal malice, would not hesitate to hazard the happiness of millions. They would raise the cry of secret influence, of intrigue, which, according to them, is one of the attributes of monarchies. Unluckily for this theory, it is belied by facts under my own eyes, in the most thorough and flourishing republic that has ever existed. The selfishness of royalty, or more correctly speaking of courts, has hitherto begot much mischief and will continue to do so in future; but it has met with its match in the bosom of republics, and above all under a system of absolute equality, which distributes political power in absolutely equal quantities to the intelligent and the ignorant, to the most eminent merchant and author, and the brutal and drunken peasant of Ireland, who is but just enrolled in the list of citizens. An absolute people, as well as an absolute king, may reject for a time the lessons of experience and the councils of wisdom; a people as well as a king, may have its courtiers. A people on the throne, whose authority is limited by no checks, may blindly and recklessly espouse the quarrels of the minions of the day; let those who doubt it come here and see it. Ignorance of the true interests of the country is not the exclusive prerogative of monarchies. The official papers of the Federal Executive in the affair of the Bank, so far as concerns a knowledge of the principles of government and the springs of the public welfare, are on a level with the measures of the government of Spain or Rome. And yet this Executive is the creature of the popular choice in the largest sense. It is not merely in monarchies, that a dancer is to be seen in the post that belongs to a mathematician. The camarilla! Never have I heard it so much talked about, as since I have been in this country. It is here called the Kitchen Cabinet, and admitting a fourth of what is said by the opposition to be true, it is difficult not to believe that its influence upon public affairs is greater than that of the ministerial cabinet.
But to return to the Bank. Congress met on the 3d of December; and most of the State Legislatures are now in session. Every where, and above all in Congress, the great, not to say the only question agitated, is that of the Bank. The subject of the discussions is the removal of the public deposits, which the President has withdrawn from the Bank after a military fashion, having previously, in the same spirit, removed from office the Secretary of the Treasury, Mr Duane, who, although opposed to the Bank, considered the President's course illegal and rash. Thus far, the manifestations of public opinion and the deliberative assemblies are extremely various and discordant. In New Jersey, a small and unimportant State, the Assembly has adopted, by a large majority, resolutions approving the acts of the administration, and instructing its delegates in Congress to support the President; notwithstanding which, Mr Southard, one of the Senators from that State, has made an excellent speech on the other side of the question. The Assembly of New York, the first State in wealth and population, has adopted similar resolutions by a vote of 118 to 9. Some persons to be sure, assert that this is because New York would like to have the Mother Bank.[N] The youthful State of Ohio, whose growth borders on the miraculous (it now contains eleven hundred thousand inhabitants, although but 50 years ago it had not six thousand), Ohio, the Benjamin of the democracy, has strongly expressed the same wishes. The little State of Maine has done the same. The administration party lately had a brilliant opportunity of displaying its sympathies and its hatred. The 8th of January, the anniversary of the battle of New Orleans, was celebrated by innumerable public dinners, at each of which numerous toasts were drank. President Jackson was the hero, and the Bank was the scape-goat, of the day. It would be impossible to imagine the flood of accusations, insults, and threats, which was poured upon it, mingled with jests in the taste of the country upon Mr Biddle; thus, at one of these dinners, the Bank was toasted, as being governed by Young Nick according to the principles of Old Nick.
But the population of New England, particularly that of Massachusetts, is opposed to the administration. In Virginia the same opinions seems to prevail, and it is the same with several of the old Southern States. The merchants and manufacturers of New York, Philadelphia, Baltimore, Boston, and a hundred other places, have held meetings and adopted resolutions, strongly censuring the conduct of the government towards the Bank, and accusing it of having caused the present crisis. Most of the Philadelphia Banks have petitioned in favor of the Bank. Several Banks at Boston and in Virginia have refused to take the public money in deposit; those of Charleston have been unanimous in this measure. The majority of persons of intelligence, experience, and moderation, and most of the merchants and manufacturers, are in favour of the Bank. The country, particularly in the Middle and Western States, and the operatives in the towns, go for General Jackson.
In Congress the majority of the Senate is friendly to the Bank, and the majority of the House is on the side of the Administration. The superiority in debate belongs to the defenders of the Bank. In the Senate, the three greatest statesmen in the country, Messrs Clay, Webster, and Calhoun, are on this side of the question, and the speeches of Messrs Clay and Calhoun have made a strong impression. In the House Mr Binney, of Philadelphia, and Mr McDuffie have pleaded the same cause with ability. On the other side there has been more highflown declamation than reasoning. I have been struck with the resemblance between most of the speeches and newspaper essays directed against the Bank, and our republican tirades of 1791 and 1792. There are the same declamatory tone, the same swollen style, the same appeal to the popular passions, with this difference, that the allegations made here are vague, empty, and indefinite, while with us fifty years ago the grievances were real. Most generally the pictures presented in these declamations, are fantastical delineations of the moneyed aristocracy overrunning the country with seduction, corruption, and slavery in its train; or of Mr Biddle aiming at the crown. Amidst this swarm of speeches and essays, one hardly ever meets with any indications of serious study or a tolerable knowledge of the subject; but I have been struck with the speech of Mr Cambreleng, who has put forth some prudent suggestions as to the reforms required in the present system of banking. For it must be confessed, that this animosity of the President and the body of the people against the Bank of the United States, blind and unreasonable as it is, is founded on a real necessity, namely, that of a complete reorganization of the banking system. When Congress renewed the charter of the Bank of the United States without modification, in 1832, it committed an error. It should have seized this opportunity to place the currency of the country on a more solid basis; and if General Jackson had abode by the terms of his veto message, in which he declared that he was not opposed in principle to the establishment of a National Bank, but that the present Bank could not be retained without some modification, he might have become the benefactor of his country. He would not, indeed, have received Cobbett's congratulations, but he would have obtained the approbation of all statesmen and men of sense in the Old and the New World. However, whatever his friends may say, as the President did not foresee the distress, which has befallen American commerce, and as nobody can doubt his patriotism, we need need not yet despair of seeing him adopt this wise course.
The present crisis abundantly proves the wretched condition of the currency, for the original cause of it was quite slight; it was merely the transfer from the vaults of one bank to those of another of ten millions, an inconsiderable sum relatively to the amount of the business of the country. If the local banks, in spite of the control exercised by the Bank of the United States, had not previously passed all bounds, they would have been able, when the Bank of the United States was obliged to contract its discounts by the withdrawing of the public money, to have enlarged their own in the same proportion, since those same funds were transferred to their vaults. But the framework of these banks is so badly put together, that it shakes at the slightest breath. The slight motion in the political and commercial atmosphere caused by the President's blow at the Bank, in removing the public deposits, was enough to make them totter. They are like a colossus with clay feet, which should have feet of gold, or in other words, specie in their vaults.
The proportion of metals, of which we have an excess in France, is here extremely small. In many States, among others New York, there is an enormous quantity of bills of one, two, and three dollars. In South Carolina there are 25 cent, and even 12 1-2 cent bills. In Pennsylvania, Virginia, and some other States, there are none of less than five dollars. The Bank of the United States emits none of less than that sum; but this minimum is too low. Most political economists, and particularly the English, lay it down as an axiom, that the most perfect money is paper; this is true, if we suppose a nation in which any disturbance of industry, in consequence or apprehension of war, from foolish speculations, from glut or panic, is impossible. In such a land of cockayne, such a terrestrial paradise, an unshaken confidence would prevail in all transactions, and consolidate all interests. The metals would only serve to strike medals and to preserve inscriptions intended to commemorate this ineffable bliss. Paper would there be on a par with gold, and even higher, as some English writers have maintained it should be. I do not know if there will ever be a nation in such a state of heavenly happiness; but I doubt it, because in the world of finance, as well as in the world of passion, I consider the Tender River a fable, and pastorals a sport of fancy; but it is very evident that no such people exists now, or will for some time to come. Now in the United States, the present banking system, like that of England from 1797 to 1821, or even 1825, is founded on this theory of the most perfect money. It is provided, indeed, that the banks shall pay gold for their paper on demand; but by the side of this clause, which tends to keep a certain quantity of the metals in the country, is inserted another, which neutralises it; it is the power of emitting bills in any number, and of the sum of 1, 2, 3, or 5 dollars. In prosperous times, the emission of paper is abundant, indefinite; as the necessity of a metallic standard ceases to be felt, in proportion to the confidence which prevails, the metals disappear before the excess of paper; there is scarcely any left in the country. Since I have been in the United States, I have not seen a piece of gold except in the mint. No sooner is it struck off, than the gold is exported to Europe and melted down. When a crisis comes on, the demand for the precious metals increases rapidly, because every one attaches more value to a positive standard than to paper, and the later the application of the remedy for the scarcity of metals, the longer does the crisis last, and the more serious does it become.
In a new country, where capital cannot, of course, be abundant, for capital of all kinds, whether of articles of food or precious metals, is the accumulated produce of labour, it is natural, that the proportion of paper money should equal and surpass that of metallic money. The existence of paper money is even a great benefit to any country. In France we have the enormous sum of 600 million dollars in specie; (see Note 10, at the end of the volume); in the United States 40 millions are sufficient for all the transactions of a commerce nearly as extensive as our own. In England the amount of specie at present does not exceed 220 millions, mostly in gold. Bank notes in circulation, which constitute the rest of the currency, amount at this time, in the United States, to 100 million, that is, two and a half times the amount of specie; in England to about the same as the specie, which gives for the whole circulation of