The American Quarterly Review, No. 17, March 1831

by Various

2. The next objection is, that the bank possesses a "formidable" influence on the community. It must be admitted, that this complaint of bank influence is not now brought forward for the first time. It was a favourite theme of the demagogue, from the time the first Bank of the United States was established, until its charter expired, when it appeared that its influence was not equal to its own preservation.

If, indeed, no other corporation had the right to issue notes of circulation, then the power of enlarging or contracting the common currency at pleasure would be a very great one—greater than ought to be put into the hands of any others than persons chosen by the people, or their representatives, and responsible to them. But as the bank and its offices are every where surrounded by competitors, some of which have a yet larger capital than themselves, they have no such exclusive control over the amount of money in circulation, and their influence, whatever it may be, can be exerted only as to its quality. It is precisely on this last influence that the friends of the bank mainly rely for the public favour.

Let us inquire a little further into the extent of the bank's influence. The principal functions of this institution, except the services it renders the government, consist in discounting promissory notes, selling or buying bills of exchange, and receiving deposits of coin, or of its own notes, for safe keeping. It has no exclusive privilege of doing either of these acts, as every state bank may do, and actually does the same. But by means of its superior capital, and consequently its superior credit and resources, it can, in some of its operations, either undersell the other banks, or command a preference in the market;—aye, there's the rub. The banks in some of the large cities have persuaded themselves that if this "formidable" rival was out of the way, they would be able to buy and sell more bills, and upon better terms than at present. But if this consideration should make them an object of dread and dislike to the state banks, it should also recommend them to the favour of the public. Their notes, too, are generally preferred by travellers, and for distant remittances. But neither does this fact furnish any ground of dread to the community, whatever it may to their rivals.

It thus appears that they have the same advantage over other banks, which one tradesman or mechanic occasionally has over others of the same calling. He who does his work best, and sells it cheapest, will always get the most and best custom; and it would be just as reasonable for his rivals in business to complain of his making better wares, of being more accommodating, and of underselling them, as for the other banks to complain of the Bank of the United States. It is clear, that if the rival banks are losers, the public is a gainer, unless they can succeed in persuading the people, that competition, which is so salutary and beneficial to the public in every other business, should be mischievous only in this. The argument thus used against the Bank of the United States, is precisely that which might have been used, and, we presume, was used, by the owners of the Albany sloops against steam-boats; and which might be used against canals and rail-roads, by those who would find employment for their wagons in the former more expensive modes of conveyance.

But by an influence which is supposed to be so "formidable," is meant, perhaps, a political and corrupt influence. If there be such a one, it must be seen and felt; and we would ask in what way does it exert itself? Does the bank use its money in the elections? If so, its accounts must show it; and as there are men of all parties who own, or may own, shares in the stock, let those who suspect this abuse scrutinize those accounts for the purpose of detecting it. But those who manage the banks, know very well, and so do those who accuse them, that nine-tenths, or rather ninety-nine hundredths of the stockholders, would not have given a five dollar note to get the president elected, or to get him turned out. Your office-seekers, indeed, might pay pretty liberally for such service, but they are seldom stockholders. These are, for the most part, thrifty, cautious men, who choose to vest their money in some fund which gives them regular returns; and they are content that they shall be small, provided they be certain. The rest are widows, guardians of orphan children, trustees of public institutions, and merchants who have more capital than they can safely and profitably employ. Now, who of these would allow a president and directors to squander their money in a matter in which they felt little interest, and that probably a divided one. No body believes this, and yet it is not easy to say in what other mode they could exercise a corrupt influence.

But if the stockholders were disposed to spend their money in electioneering, can they be prevented from acting so foolishly by putting down the bank? If the charter is not renewed, their money will be returned to them, and they would then have both the power and the inducement to use it for political purposes, which they cannot have while it is supplying a currency to the country, and invigorating its industry and commerce. But, in truth, it is well known, that those persons do not make ducks and drakes of their money now, and are not likely to do it then.

It is true, that in case of an extraordinary demand for money, beyond the means of supply by the state banks, the Bank of the United States may sometimes prefer discounting the note of one man to that of another—the paper of A to that of B; and that some of the directors might have given the preference to A, because he was a neighbour—others by his being a friend or relative, and others again by mere party sympathies. But we believe that none of these things go very far at bank. The object of its directors being to make money, they prefer the paper of a rich man they hate, to that of a poor friend. Nor do they widely differ from the rest of the world in this particular. But granting that moral and political considerations do influence the bank in its loans, who does not see that they could have no effect, except when the supply of money for loan was not equal to the demand, and that the mischief would be increased by putting down the richest and most substantial bank in the country?

Upon the whole, this cry against the influence of the bank, resolves itself into that of wealth and property. These do exert a certain influence in the community on some occasions, and it is more than counteracted on others, by the jealousy and ill will it engenders. Whatever influence wealth may have, it is inseparable from our present condition, as we presume the United States are not yet prepared for the Agrarian system, and every man will be permitted to enjoy the fruits of his own industry, or that of his ancestors; but be it little or much, we cannot reasonably expect to see it exerted more harmlessly or more beneficially than in a solid, well managed bank. If, however, in spite of all these considerations, the power of these institutions be thought too great, and too liable to abuse, then there is no more effectual way of weakening it than by diffusion. As most of the state banks are more or less under the control of the state authorities, who may use the influence of these banks for political purposes, it must be desirable to all those who wish the public mind as free and unbiassed as possible, to see this influence weakened, if not neutralized; and there seems no more effectual mode of doing this than establishing a rival bank, over which the state politicians could exercise no sort of authority. Let us, for example, suppose that a system of banking was adopted for a state, by which, under the colour of guarding the public against their insolvency, those institutions were subjected to a surveillance and control which were calculated to make them feel their dependence on the state government, and when the plan was matured, to make them obsequious to its will. Would not every friend to the political purity of the state, and the independent spirit of its citizens, wish to see a scheme of this character frustrated? and what means so conducive to this end as the Bank of the United States, which, in the first place, by bringing so much capital into the market for loans, lessens the influence of all banks, and, in the next, may perform its several functions without regard to the smiles or frowns of any politicians whatever.

This is probably the influence which is really objected to in the Bank of the United States, that of disenthralling the people from an utter dependence on the state banks for the various accommodations those institutions afford—an influence which it appears to us no true friend to his country should wish to see diminished, however inconvenient it may be to those who would make banks and every thing else subservient to their purposes.

3. But the Bank of the United States, it seems, must be brought into collision with the local authorities, and occasion perpetual apprehensions and discontent on the part of the states and the people. We know not upon what facts the president or his advisers have made this statement. It is in direct contradiction to that made by the committee of ways and means, who say—