Thomas Hart Benton

by Theodore Roosevelt

He had hardly been elected before the ruinous financial policy to which he had been party, but of which the effects, it must in justice be said, were aggravated by many of the actions of the Whigs, began to bear fruit after its kind. The use made of the surplus was bad enough, but the withdrawal of the United States deposits from one responsible bank and their distribution among scores of others, many of which were in the most rickety condition, was a step better calculated than any other to bring about a financial crash. It gave a stimulus to extravagance, and evoked the wildest spirit of speculation that the country had yet seen. The local banks, to whom the custody of the public moneys had been intrusted, used them as funds which they and their customers could hazard for the chance of gain; and the gambling spirit, always existent in the American mercantile community, was galvanized into furious life. The public dues were payable in the paper of these deposit banks and of the countless others that were even more irresponsible. The deposit banks thus became filled up with a motley mass of more or less worthless bank paper, which thus formed the "surplus," of which the distribution had caused Congress so much worry. Their condition was desperate, as they had been managed with the most reckless disregard for the morrow. Many of them had hardly kept as much specie in hand as would amount to one fiftieth of the aggregate of their deposits and other immediate liabilities.

The people themselves were of course primarily responsible for the then existing state of affairs; but the government had done all in its power to make matters worse. Panics were certain to occur more or less often in so speculative and venturesome a mercantile community, where there was such heedless trust in the future and such recklessness in the use of credit. But the government, by its actions, immensely increased the severity of this particular panic, and became the prime factor in precipitating its advent. Benton tried to throw the blame mainly on the bankers and politicians, who, he alleged, had formed an alliance for the overthrow of the administration; but he made the plea more half-heartedly than usual, and probably in his secret soul acknowledged its puerility.

The mass of the people were still happy in the belief that all things were working well, and that their show of unexampled prosperity and business activity denoted a permanent and healthy condition. Yet all the signs pointed to a general collapse at no distant date; an era of general bank suspensions, of depreciated currency, and of insolvency of the federal treasury was at hand. No one but Benton, however, seemed able to read the signs aright, and his foreboding utterances were laughed at or treated with scorn by his fellow statesmen. He recalled the memory of the times of 1818-19, when the treasury reports of one year showed a superfluity of revenue of which there was no want, and those of the next showed a deficit which required to be relieved by a loan; and he foretold an infinitely worse result from the inflation of the paper system, saying:—

Are we not at this moment, and from the same cause, realizing the first part—the elusive and treacherous part—of this picture? and must not the other, the sad and real sequel, speedily follow? The day of revulsion in its effects may be more or less disastrous; but come it must. The present bloat in the paper system cannot continue; violent contraction must follow enormous expansion; a scene of distress and suffering must ensue—to come of itself out of the present state of things, without being stimulated and helped on by our unwise legislation.... I am one of those who promised gold, not paper; I did not join in putting down the Bank of the United States to put up a wilderness of local banks. I did not join in putting down the currency of a national bank to put up a national paper currency of a thousand local banks. I did not strike Cæsar to make Antony master of Rome.

These last sentences referred to the passage of the act repealing the specie circular and making the notes of the banks receivable in payment of federal dues. The act was most mischievous, and Benton's criticisms both of it and of the great Whig senator who pressed it were perfectly just; but they apply with quite as much weight to Jackson's dealings with the deposits, which Benton had defended.

Benton foresaw the coming of the panic so clearly, and was so particularly uneasy about the immediate effects upon the governmental treasury, that he not only spoke publicly on the matter in the Senate, but even broached the subject in the course of a private conversation with the president-elect, to get him to try to make what preparations he could. Van Buren, cool, skillful, and far-sighted politician though he was, on this occasion showed that he was infected with the common delusion as to the solidity of the country's business prosperity. He was very friendly with Benton, and was trying to get him to take a position in his cabinet, which the latter refused, preferring service in the Senate; but now he listened with scant courtesy to the warning, and paid no heed to it. Benton, an intensely proud man, would not speak again; and everything went on as before. The law distributing the surplus among the states began to take effect; under its operations drafts for millions of dollars were made on the banks containing the deposits, and these banks, already sinking, were utterly unable to honor them. It would have been impossible, under any circumstances, for the president to ward off the blow, but he might at least, by a little forethought and preparation, have saved the government from some galling humiliations. Had Benton's advice been followed, the moneys called for by the appropriation acts might have been drawn from the banks, and the disbursing officers might have been prevented from depositing in them the sums which they drew from the treasury to provide for their ordinary expenses; thus the government would have been spared the disgrace of being obliged to stop the actual daily payments to the public servants; and the nation would not have seen such a spectacle as its rulers presented when they had not a dollar with which to pay even a day laborer, while at the same time a law was standing on the statute-book providing for the distribution of forty millions of nominal surplus.

No effort was made to stave off even so much of the impending disaster as was at that late date preventable; and a few days after Van Buren's inauguration the country was in the throes of the worst and most widespread financial panic it has ever seen. The distress was fairly appalling both in its intensity and in its universal distribution. All the banks stopped payment, and bankruptcy was universal. Bank paper depreciated with frightful rapidity, especially in the West; specie increased in value so that all the coin in the country, down to the lowest denomination, was almost immediately taken out of circulation, being either hoarded, or gathered for shipment abroad as bullion. For small change every kind of device was made use of,—tokens, bank-bills for a few cents each, or brass and iron counters.

Benton and others pretended to believe that the panic was the result of a deep-laid plot on the part of the rich classes, who controlled the banks, to excite popular hostility against the Jacksonian Democracy, on account of the caste antagonism which these same richer classes were supposed to feel towards the much-vaunted "party of the people;" and as Benton's mental vision was singularly warped in regard to some subjects, it is possible that the belief was not altogether a pretense. It is entirely unnecessary now seriously to discuss the proposition that it would be possible to drag the commercial classes into so widespread and profoundly secret a conspiracy, with such a vague end in view, and with the certainty that they themselves would be, from a business stand-point, the main sufferers.

The efforts made by Benton and the other Jacksonians to stem the tide of public feeling and direct it through the well-worn channel of suspicious fear of, and anger at, the banks, as the true authors of the general wretchedness, were unavailing; the stream swelled into a torrent and ran like a mill-race in the opposite way. The popular clamor against the administration was deafening; and if much of it was based on good grounds, much of it was also unreasonable. But a very few years before the Jacksonians had appealed to a senseless public dislike of the so-called "money power," in order to help themselves to victory; and now they had the chagrin of seeing an only less irrational outcry raised against themselves in turn, and used to oust them from their places, with the same effectiveness which had previously attended their own frothy and loud-mouthed declamations. The people were more than ready to listen to any one who could point out, or pretend to point out, the authors of, and the reasons for, the calamities that had befallen them. Their condition was pitiable; and this was especially true in the newer and Western states, where in many places there was absolutely no money at all in circulation, even the men of means not being able to get enough coin or its equivalent to make the most ordinary purchases. Trade was at a complete stand-still; laborers were thrown out of employment and left almost starving; farmers, merchants, mechanics, craftsmen of every sort,—all alike were in the direst distress. They naturally, in seeking relief, turned to the government, it being almost always the case that the existing administration receives more credit if the country is prosperous, and greater blame if it is not, than in either case it is rightfully entitled to. The Democracy was now held to strict reckoning, not only for some of its numerous real sins but also for a good many imaginary ones; and the change in the political aspect of many of the commonwealths was astounding. Jackson's own home State of Tennessee became strongly Whig; and Van Buren had the mortification of seeing New York follow suit; two stinging blows to the president and the ex-president. The distress was a godsend to the Whig politicians. They fairly raved in their anger against the administration, and denounced all its acts, good and bad alike, with fluent and incoherent impartiality. Indeed, in their speeches, and in the petitions which they circulated and then sent to the president, they used language that was to the last degree absurd in its violence and exaggeration, and drew descriptions of the iniquities of the rulers of the country which were so overwrought as to be merely ridiculous. The speeches about the panic, and in reference to the proposed laws to alleviate it, were remarkable for their inflation, even in that age of windy oratory.

Van Buren, Benton, and their associates stood bravely up against the storm of indignation which swept over the whole country, and lost neither head nor nerve. They needed both to extricate themselves with any credit from the position in which they were placed. In deference to the urgent wish of almost all the people an extra session of Congress was called especially to deal with the panic. Van Buren's message to this body was a really statesmanlike document, going exhaustively into the subject of the national finances. The Democrats still held the majority in both houses, but there was so large a floating vote, and the margins were so narrow, as to make the administration feel that its hold was precarious.