Expansion and Conflict

by William Edward Dodd

Before the great conflict between the manufacturers and the planters had been brought to a lame conclusion in the force bill and the tariff compromise of 1833, so unsatisfactory to everybody, Jackson had taken up the Bank problem, in which the West was particularly interested. The annual message of 1832 indicated his intention to close up the business in accordance with what seemed to him to be the decree of the people. But while the President regarded an election as settling the matter, it soon became clear that Nicholas Biddle and the leaders of the United States Senate were far from that opinion. Having combined to defeat the “old Indian scalper,” as Biddle was wont to term Jackson, in his plan to bring South Carolina to terms, these able men continued their operations to balk him on the Bank question.

The Bank of the United States had a capital stock of $35,000,000, its twenty-nine branches ramified the commerce of the country, and its total volume of business was about $70,000,000, or more than the amount of the national exports each year. It practically controlled the currency, and it could increase or diminish the amount of money in circulation by about one third at any time. Nicholas Biddle, a trained financier and strong-willed aristocrat, who put little faith in popular elections and plebiscites, was the head of the Bank, and all the presidents and directorates of the subordinate banks were his appointees; he controlled absolutely all the departments and all the directors of the parent bank in Philadelphia, going so far in 1833 as to deny the government directors their lawful right to attend the board meetings. There has never been another financial leader in the United States who was so powerful or so much feared as was Nicholas Biddle in 1833.

Both sides prepared for a renewal of the struggle for or against a new charter. Jackson sent Secretary of State Livingston as Minister to France early in 1833, and transferred Secretary McLane from the Treasury to the State Department. It was known that both Livingston and McLane opposed the President in his plan of overthrowing the Bank, and this shift was made to avoid another break-up of the Cabinet and to enable Jackson to get a Secretary of the Treasury who would support him. William J. Duane, of Pennsylvania, accepted the vacant portfolio in January, 1833, knowing well the President's purpose, which was to withhold from the Bank the federal deposits. Agents were sent out to ascertain what state banks were in a condition to receive the proposed government funds, and of course a strong banking support was thus secured for the contemplated policy.

Biddle laughed at Jackson's message of 1832 which denounced the Bank. He expected to receive from Congress in due time the charter which the President had denied. More than fifty members of that body, including Clay, Webster, George McDuffie,—Calhoun's ally and the chairman of the House Committee on Ways and Means,—and the famous Davy Crockett, were borrowers from the Bank on the easiest of terms. The greater newspaper editors of New York, Philadelphia, Baltimore, Washington, and Richmond were either opposed to the President or on Biddle's list of beneficiaries; while scores of hack writers all over the country received their stipends from the “Monster,” as Jackson designated the Bank. It might have been an easy matter for Biddle and Clay to secure their charter from the Congress which sat in its closing session in the winter of 1833. But the great thing before them at that time was the nullification-tariff problem, which threatened civil war, and the friends of the Bank joined the protectionists and, under Clay's deft leadership, as we have seen, defeated Jackson's plan for tariff reform. The short session drew to a close, and Biddle, Clay, and Webster prepared for renewing their fight when Congress came together in December.

When the lines began to tighten in the summer of 1833, Duane weakened and finally refused to withhold the government deposits from the Bank. He was dismissed from office and Roger B. Taney, the Attorney-General, took the vacant place and agreed to do Jackson's bidding. From October 1, 1833, the income of the Treasury was placed as it accrued in the custody of the state banks which had been made ready for the new policy. Jackson declared that the National Bank had become unsafe and therefore an unfit place for the keeping of $10,000,000 of the people's money, the amount then on deposit. But the real reason of the change was social and political. The President desired to weaken the Bank, lest its representatives, its masterful lobbyists, and the financial pressure it was bringing to bear should wrest from Congress a charter which the people had repudiated.

Meanwhile Biddle had begun his campaign to compel both Jackson and the people to yield. On August 1, two months before the Treasury began to place its receipts in the state banks, Biddle ordered a curtailment of the loans of the National Bank and its branches. In the South and West, where large sums were needed at that moment to move the cotton and grain crops, the curtailment was double that of the East. This led to immediate financial stringency; National Bank notes, the standard money of the time, became scarce; and gold or silver was absolutely wanting. The state banks were naturally forced to withhold their accustomed loans and the anticipated government deposits could not be drawn upon. Business failures became frequent and laborers were discharged. It was a panic in the midst of prosperity. The program was executed with callous heartlessness by Biddle, and with the approval of men like Clay and Webster, till Congress met in December.

The people were beginning to see what a power they had attacked. Rates of interest rose from six to fifteen per cent; farms and crops were sold under the sheriff's hammer at absurdly low prices. The outlook was anything but bright when the next annual message of the President called upon the national legislature to aid him in his struggle. Petitions were pouring into Washington by the thousand, and delegations of business men appeared almost daily at the White House, asking Jackson to restore the deposits and surrender to the great corporation, thus acknowledging the subordination of the country to one of its interests.

Under these circumstances and awaiting confidently the effect of the Bank's drastic pressure upon public opinion, Clay began in January, 1834, the work of compelling the President to restore the deposits. For weeks and even months the Senate was the scene of the most extraordinary denunciations, and the press of the country was burdened with the attacks and counter-attacks of the parties to this fierce and unrelenting struggle. In the East business failures, the closing of the doors of manufacturing establishments, and the discharge of small armies of employees furnished all the proof necessary that the distress was real. From all sections of the country cries of distress, memorials, and petitions came up to Washington. Biddle and his friends had no thought of relenting, but continued the curtailment of the financial business of the country far beyond what might have seemed necessary on account of the removal of deposits; they were certain that only a few months more of pressure and of increased suffering on the part of the people would compel Jackson to yield or Congress to grant the desired charter over the head of the President.

But the Congress which was elected in 1832 and which sat from December, 1833, to March, 1835, was not so pliable as that which arranged the peace with South Carolina. Still, the Senate sustained the Bank by a decided majority, and in March it formally censured Jackson for his removal of the deposits. In this Clay was conspicuous, and Webster and Calhoun were his sympathetic allies. On the other hand, Benton, Silas Wright, of New York, and John Forsyth, of Georgia, made a most spirited defense of Jackson and of the cause of the people, as they insisted. In the House the situation was reversed, and all Biddle's energy and resolute lobbying failed to secure a favorable vote. It became clear early in the spring that the President could not be moved, and that impeachment, which had been the hope and talk of many, would be impossible. When the weight of public opinion inclined visibly to the side of Jackson at the end of spring, Clay, who had for some time doubted the loyalty of Biddle, and who was especially anxious to regain his former popularity in the West, refused to continue the fight; Webster, too, lost interest and advised the directors of the Bank that the cause was lost. Calhoun, who had supported Clay and Webster to humiliate Jackson, could not retreat; he was again isolated, and he felt his position bitterly. McDuffie resigned his seat and his chairmanship in the House in utter disgust. To all but the president of the United States Bank the case seemed hopeless when Congress adjourned in early summer without passing any act bearing on the situation. Biddle's remark in a letter to a friend in Baltimore, "If the Bank charter were renewed or prolonged, I believe the pecuniary difficulties of the country would be immediately healed," shows his attitude; and by this time the people seem to have come to the conclusion that it was not a war of Jackson upon the Bank so much as a war of the Bank upon the country to compel the reissue of a charter which was about to expire. Petitions now poured into Biddle's office and delegations from Middle States cities urged a change of the Bank's policy; even Albert Gallatin, long a defender and ardent friend, deserted Biddle. And at last, after the nation's currency of some hundred millions had been reduced by one third, and when money rates in New York were running as high as twenty-four per cent, the order went out to the branch banks to suspend the stringent punitive measures in order that “We may save our beloved country from the curse of Van Burenism,” as one of the directors described it.

The decline of the power of the Bank was now rapid. In the state and congressional elections of 1834 the President of the United States was everywhere sustained, even the Whigs quietly taking the same ground. The friendship of the Bank was now enough to damn any party; Biddle realized the danger of his situation, and on election day sent his family out of town and barricaded his house and office. The legislatures of Pennsylvania and New York, where his flag had flown triumphantly for years, denounced him and planned to issue bonds for the relief of the people. The autumn saw a complete reversal of policy on the part of the Bank, and business at once resumed its normal course. Money became easy, prices rose to the former level, and the wheels of industry began to turn. Nothing seemed more conclusively shown than that most of the trouble had been due to the demand on the part of a few men for a continuation of financial privileges.