discount. Indiana, Illinois and Missouri were still suffering from the relief' system (stay laws against the collection of debts, etc.) The New York and Boston banks were fighting the country issues. The bank of the United States increased its issues over $3,000,000."*

* *

CRASH OF 1825.

In the latter part of 1824 and beginning of 1825 the Bank of England found it necessary to curtail its discounts, in order to check the outflow of bullion. This occasioned another terrible crisis in that country. Seventy banks failed and nearly two thirds of the merchants and manufacturers stopped payment, causing great distress among the working classes. Gold began to flow from the United States, and the banks were obliged to suspend specie payments. Fifty failures occurred in New York before December, and banks went under all over the country. The crisis, however, was not felt so severely in the United States as it was in England, because the banks had not yet had sufficient time to inflate their credit and circulation to the greatest extent. Here and there throughout the country industrial activity was stimulated somewhat during the next few years by the high tariff of 1824 and 1828, and by the building of railroads, which began in 1830; but business generally continued to suffer from the rotten monetary system which had been fastened upon the country, and distress was more or less

common.

THE WAR WITH THE UNITED STATES BANK.

The fight between President Jackson and the United States Bank, which occupied the attention of the people for years, now began. The specie basis system had been in operation for over a quarter of a century, and during the whole time the country had never once enjoyed the advan*Sumner's History of American Currency.

tages of a sound currency. Pecuniary distress, periodical returns of expansion and contraction, deranged currency, ruined exchanges, and panics and convulsions had characterized the entire period. The banks, although based on "hard money," and professing to pay coin, were in a state of chronic suspension. The press of the country was completely subsidized; Congress, as well as State legislatures, bowed in abject submission to the mandates of the money power; and even the Supreme Court of the United States. did not escape its contaminating influence. The people were perfectly helpless, and the 'outlook of American freedom and independence was dark indeed. It is worthy of mention that Pitt, in 1791, when Hamilton brought forward his funding and banking scheme, said: "Let the Americans adopt their funding system and go into their banking institutions, and their boasted independence will be a mere phantom." But fortunately for the country the election of 1828 resulted in the choice of Andrew Jackson as President of the United States, and the people found in him a leader, as fearless as he was patriotic. In his first message to Congress, December 8, 1829, in language of extreme moderation, he called public attention to the United States Bank, and expressed himself as unfavorable to its continued existence. He said:

11

The charter of the Bank of the United States expires in 1836, and its stockholders will probably apply for a renewal of their privileges. In order to avoid the evils resulting from precipitancy in a measure involving such important principles, and such deep pecuniary interests, I feel that I cannot, in justice to the parties interested, too soon present it to the deliberate consideration of the legislature and the people. Both the constitutionality and expediency of the law creating this bank are well questioned by a

large portion of our fellow citizens; and it must be admitted by all that it has failed in the great end of establishing a uniform and sound currency."

The bank immediately began preparations for war. Through its branches and its control over State banks, its power extended into every part of the country. Millions of dollars (belonging, as it subsequently appeared, to depositors and stockholders) were squandered for the purpose of corrupting the people. Statesmen, Congressmen, brawling politicians, editors, all succumbed to its influence, very much in the same way as they are seen bowing to the power of the National Banks at the present day. After a careful survey of the field and a thorough canvass of Congress, it was determined by the bank that a renewal of its charter should be applied for during the session of Congress immediately preceding the next general election in 1832. The bill passed Congress by a majority of eight in the Senate and twentytwo in the House. As was expected, it was returned with the President's veto, on the 10th of July, 1832. The contest was then transferred to a wider field and carried on with excessive virulence. The money power everywhere went to work to defeat Jackson. In Philadelphia, for example, "the bank would order the business men to hold public meetings in its behalf in order that it might ascertain who were its friends, and who were courageous enough to stand by the government in its efforts to redeem the people, and then, in turn, would appoint places for the assembling of the different trades, in order that the employers might see who of their workmen had opinions which they dared maintain." The masses, however, rallied to the support of the President, and the capacity of the American people for self-government was triumphantly vindicated. President

་་་

*From Speech of Hon. W. D. Kelley, at Indianapolis, Aug., 1875.

Jackson was re-elected, defeating Mr. Clay by a vote of 228 to 49 in the electoral college. Upon examination it will be found that the principles involved in the contest between General Jackson and the United States Bank are precisely identical with those which underlie the impending contest between the people and the National Banks. The subject is, therefore, worthy of more than a passing notice. Benton, in his "Thirty Years in the United States Senate," in commenting upon some errors of Mons. de Tocqueville "in relation to the Bank of the United States, the President and the people," gives a clear and comprehensive analysis of the principles and purposes involved in the contest, from which we quote as follows:

*

"This passage was the grand feature of the message, rising above precedent and judicial decisions, going back to the Constitution and the foundation of party on principle; and risking a contest at the commencement of his adminis tration, which a mere politician would have put off to the last. The Supreme Court had decided in favor of the constitutionality of the institution; a democratic Congress, in chartering a second bank, had yielded the question, both of constitutionality and expediency. Mr. Madison, in signing the bank charter in 1816, yielded to the authorities. without surrendering his convictions. But the effect was the same in behalf of the institution, and against the Constitution, and against the integrity of party founded on principle. It threw down the great landmark of party, and yielded a power of construction which nullified the limitations of the Constitution, and left Congress at liberty to pass any law which it deemed necessary to carry into effect any granted power. The whole argument for the bank turned upon the word 'necessary' at the end of the enumerated

*See page 134.

powers granted to Congress; and gave rise to the first division of parties in Washington's time-the federal party being for the construction which would authorize a national bank; the democratic party (republican, as then called,) being against it.

"It was not merely the bank which the democracy opposed, but the latitudinarian construction which would authorize it, and which would enable Congress to substitute its own will in other cases for the words of the Constitution, and do what it pleased under the plea of 'necessary'-a plea under which they would be left as much to their own will as under the 'general welfare' clause. It was the turning point between a strong and splendid government on one side, doing what it pleased, and a plain economical government. on the other, limited by a written Constitution. The construction was the main point, because it made a gap in the Constitution through which Congress could pass any other measures which it deemed to be 'necessary;' still there were great objections to the bank itself. Experience had shown such an institution to be a political machine, adverse to free government, mingling in the elections and legislation of the country, corrupting the press, and exerting its influence in the only way known to the moneyed power-by corruption. General Jackson's objections reached both heads of the case the unconstitutionality of the bank and its inexpediency. It was a return to the Jeffersonian and Hamiltonian times of the early administration of General Washington, and went to the words of the Constitution, and not to the interpretations of the administrators for its meaning.

"Such a message, from such a man—a man not apt to look back when he had set his face forward-electrified the democratic spirit of the country. The old democracy felt as if they were to see the Constitution restored before they