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

The bank was denounced as a monster, aiming, as was declared, to rob the people of their liberties, and to subvert the government of the country. The bank to subvert the government! Why, how could the bank continue to exist, after the overthrow of that government to which it was indebted for its existence, and in virtue of whose authority it could alone successfully operate? Convulsions, revolutions, civil wars, are not the social conditions most favorable to bank prosperity; but they flourish most when order, law, regularity, punctuality, and successful business prevail.

Rob the people of their liberties! And pray what would it do with them after the robbery was perpetrated? It could not put them in its vaults, or make interest or profit upon them—the leading, if not sole object of a bank. And how could it destroy the liberties of the people, without, at the same time, destroying the liberties of all persons interested or concerned in the bank? What is a bank? It is a corporation, the aggregate of whose capital is contributed by individual shareholders, and employed in pecuniary operations, under the management of official agents, called president, directors, cashier, tellers, and clerks. Now all these persons are usually citizens of the United States, just as much interested in the preservation of the liberties of the country as any other citizens. What earthly motive could prompt them to seek the destruction of the liberty of their fellow-citizens, and with it their own.

The fate of the bank of the United States clearly demonstrated where the real danger to the public liberty exists. It was not in the bank. Its popularity had been great, and the conviction of its utility strong and general, up to the period of the bank veto. Unbounded as was the influence of president Jackson, and undisguised as his hostility was to the bank, he could not prevent the passage through congress of a bill to recharter it. In such favor and esteem was it held, that the legislature of Pennsylvania, in which his friends had uncontrolled sway, almost unanimously recommended the recharter. But his veto came; he blew his whistle for its destruction; it was necessary to sustain his party, which could only be done by sustaining him, and instantly, and every where, down with the bank and huzzah for the veto, became the watch words and the rallying cry of his partisans. That same legislature of Pennsylvania, now, with equal unanimity, approved the destruction of an institution which they had believed to be so indispensable to the public prosperity, and deluded people felt as if they had fortunately escaped a great national calamity!

The veto notwithstanding, the house of representatives, by a large majority, resolved that the public deposits were safe in the custody of the bank of the United States, where they were placed, under the sanction and by the command of the law; and it was well known at Washington, that this resolution was passed in anticipation, and to prevent the possibility of their removal. In the face and in contempt of this decision of the representatives of the people, and in violation of a positive law, the removal was ordered by the president a few months after, the secretary of the treasury having been previously himself removed, to accomplish the object. And this brings me to consider the effect produced upon the business and interests of the country, by the

Second event to which I alluded. It is well known to be the usage of banks, to act upon the standing average amount of their deposits, as upon a permanent fund. The bank of the United States had so regulated its transactions upon the deposits of the United States, and had granted accommodations and extended facilities, as far as could be safely done on that basis. The deposits were removed and dispersed among various local banks, which were urged by an authority not likely to be disregarded, especially when seconding, as it did, their own pecuniary interests, to discount and accommodate freely on them. They did so, and thus these deposits performed a double office, by being the basis of bank facilities, first in the hands of the bank of the United States, and afterwards in the possession of the local banks. A vast addition to the circulation of the country ensued, adding to that already so copiously put forth and putting forth, by the multitude of new banks which were springing up like mushrooms. That speculation and overtrading should have followed, were to have been naturally expected. It is surprising that there were not more. Prices rose enormously, as another consequence; and thousands were tempted, as is always the case in an advancing market, to hold on or to make purchases, under the hope of prices rising still higher. A rush of speculators was made upon the public lands, and the money invested in their purchase, coming back to the deposit banks, was again and again loaned out to the same or other speculators, to make other and other purchases.

Who was to blame for this artificial and inflated state of things? Who for the speculation, which was its natural offspring? The policy of government, which produced it, or the people? The seducer or the seduced? The people, who only used the means so abundantly supplied, in virtue of the public authority, or our rulers, whose unwise policy tempted them into the ruinous speculation?

Third. There was a measure, the passage of which would have greatly mitigated this unnatural state of things. It was not difficult to foresee, after the veto of the bank, some of the consequencesthat would follow—the multiplication of banks, a superabundant currency, rash and inordinate speculation, and a probable ultimate suspension of specie payments. And the public domain was too brilliant and tempting a prize, not to be among the first objects that would attract speculation. In March, 1833, a bill passed both houses of congress, to distribute among the states the proceeds of sales of the public lands. It was a measure of strict justice to the states, and one of sound policy, as it respects the revenue of the United States; but the view which I now propose to take of it, applies altogether to the influence which it would have exerted upon circulation, and speculation. It was the constitutional duty of the president to have returned the bill to congress with his objections, if he were opposed to it, or with his sanction, if he approved it; but the bill fell by his arbitrarily withholding it from congress.

Let us here pause and consider what would have been the operation of that most timely and salutary measure, if it had not been arrested. The bill passed in 1833, and in a short time after, the sales of the public lands were made to an unprecedented extent; in so much, that in one year they amounted to about twenty-five millions of dollars, and in a few years, to an aggregate of about fifty millions of dollars. It was manifest, that if this fund, so rapidly accumulating, remained in the custody of the local banks, in conformity with the treasury circular, and with their interests, it would be made the basis of new loans, new accommodations, fresh bank facilities. It was manifest that the same identical sum of money might, as it in fact did, purchase many tracts of land, by making the circuit from the land offices to the banks, and from the banks to the land offices, besides stimulating speculation in other forms.

Under the operation of the measure of distribution, that great fund would have been semi-annually returned to the states, and would have been applied, under the direction of their respective legislatures, to various domestic and useful purposes. It would have fallen upon the land, like the rains of heaven, in gentle, genial, and general showers, passing through a thousand rills, and fertilizing and beautifying the country. Instead of being employed in purposes of speculation, it would have been applied to the common benefit to the whole people. Finally, when the fund had accumulated and was accumulating in an alarming degree, it was distributed among the states by the deposit act, but so suddenly distributed, in such large masses, and in a manner so totally in violation of all the laws and rules of finance, that the crisis of suspension in 1837 was greatly accelerated. This would have been postponed, if not altogether avoided, if the land bill of 1833 had been approved and executed.

To these three causes, fellow-citizens, the veto of the bank ofthe United States, with the consequent creation of innumerable local banks, the removal of the deposits of the United States from the bank of the United States, and their subsequent free use, and the failure of the land bill of 1833, I verily believe, all, or nearly all, of the pecuniary embarrassments of the country are plainly attributable. If the bank had been rechartered, the public deposits suffered to remain undisturbed where the law required them to be made, and the land bill had gone into operation, it is my firm conviction that we should have had no more individual distress and ruin than is common, in ordinary and regular times, to a trading and commercial community.