A Biography of Henry Clay, the Senator from Kentucky / Containing Also, a Complete Report of All His Speeches; Selections From His Private Correspondence; Eulogies in the Senate and House; and a Poem, by George D. Prentice, Esq.

by Unknown

That there has been some speculation and over-trading, may be true; but all have not speculated and over-traded; whilst the distress reaches, if not in the same degree, the cautious and the prudent, as well as the enterprising and venturous. The error of the argument consists in mistaking the effect for the cause. Whatproduced the over-trading? What was the cause of speculation? How were the people tempted to abandon the industrious and secure pursuits of life, and embark in doubtful and perilous, but seducing enterprises? That is the important question.

Now, fellow citizens, I take upon myself to show that the people have been far less to blame than the general government, and that whatever of error they committed, was the natural and inevitable consequence of the unwise policy of their rulers. To the action of government is mainly to be ascribed the disorders, embarrassment, and distress, which all have now so much reason to deplore. And, to be yet more specific, I think they are to be fairly attributed to the action of the executive branch of the federal government.

Three facts or events, all happening about the same time, if their immediate effects are duly considered, will afford a clear and satisfactory solution of all the pecuniary evils which now unhappily afflict this country.

The first was the veto of the recharter of the bank of the United States. The second was the removal of the deposits of the United States from that bank to local banks. And the third was the refusal of the president of the United States, by an arbitrary stretch of power, to sanction the passage of the land bill. These events all occurred, in quick succession, in 1832–3, and each of them deserves particular consideration.

First. When the bank of the United States had fully recovered from the errors of its early administration, and at the period when it was proposed to recharter it, it furnished the best currency that ever existed, possessing not merely unbounded confidence in the United States, but throughout the whole commercial world. No institution was ever more popular, and the utility of a bank of the United States was acknowledged by president Jackson in his veto message, in which he expressly stated, that he could have suggested to congress the plan of an unexceptionable charter, if application had been made to him. And I state as a fact, what many, I am sure, will here remember and sustain, that in the canvass then going on for the presidency, many of his friends in this state gave assurances that, in the event of his reëlection, a bank of the United States would be established.

It was held out to the people that a better currency should be supplied, and a more safe and faithful execution of the fiscal duties towards the government would be performed by the local banks than by the bank of the United States.

What was the immediate effect of the overthrow of that institution? The establishment of innumerable local banks, which sprung up every where, with a rapidity to which we cannot look back without amazement. A respectable document which I now hold in my hand, I believe correctly states, that ‘in 1830 the aggregate banking capital of the union was one hundred and forty-fivemillion, one hundred and ninety thousand, two hundred and sixty eight dollars. Within two years after the removal of the deposits, the banking capital has swollen to three hundred and thirty-one million, two hundred and fifty thousand, three hundred and thirty-seven dollars, and in 1837 it reached four hundred and forty million, one hundred and ninety-five thousand, seven hundred and ten dollars. Whilst the United States bank was in existence, the local banks, not aspiring to the regulation of the currency, were chartered with small capitals, as occasion and business required. After 1833 they were chartered without necessity, and multiplied beyond example. In December, 1837, there were no less than seven hundred and nine state banks. Nearly four hundred banks sprung up upon the ruins of the United States bank, and two hundred and fifty million dollars of capital was incorporated, to supply the uses formerly discharged by the thirty-five million dollars capital of the bank of the United States. The impulse given to extravagance and speculation by this enormous increase of banking capital, was quickened by the circulars of the treasury department to these pet state banks that were made the custodiers of the national revenue.’

A vast proportion of these new banks, more, I believe, than four fifths, were chartered by legislatures in which the democratic party had the undisputed ascendancy. I well remember that, in this state, the presses of that party made a grave charge against me, of being inimical to the establishment here of state banks; and I was opposed to their establishment, until all prospect vanished of getting a bank of the United States.

The effect upon the country of this sudden increase, to such an immense amount, of the banking capital of the country, could not fail to be very great, if not disastrous. It threw out, in the utmost profusion, bank notes, post notes, checks, drafts, bills, and so forth. The currency thus put forth, the people had been assured, was better than that supplied by the bank of the United States; and, after the removal of the deposits, the local banks were urged and stimulated, by the secretary of the treasury, freely to discount and accommodate, upon the basis of those deposits. Flooded as the country was, by these means and in this way, with all species of bank money and facilities, is it surprising that they should have rushed into speculation, and freely adventured in the most desperate enterprises? It would have been better to have avoided them; it would have been better that the people should have been wiser and more prudent than government; but who is most to blame, they who yielded to temptation so thrown before them—they who yielded confidence to their rulers—they who could not see when this inordinate issue of money was to cease, or to become vitiated—or government, that tempted, seduced, and betrayed them?

And now, fellow-citizens, do let us, in calmness and candor,revert for a moment to some of the means which were employed to break down the bank of the United States, and to inflict upon the country all the sad consequences which ensued. I shall not stop to expose the motives of the assault upon that institution, and to show that it was because it refused to make itself basely and servilely instrumental to the promotion of political views and objects.