President of the Bark.) The importance of the destruction of the United States Bank cannot be overestimated. In no other way could the government have been rescued from the domination of the money power, which was sparing no pains to subvert the liberties of the people. John Randolph warningly said: "Charter a bank with thirty-five millions of capital; let it establish and learn its power; and then find, if you can, means to 'bell the cat.' It will be beyond your power; it will overawe your Congress, and laugh at your laws." His words were fully verified. Even Clay, who had said, in 1811, "I conceive the establishment of this bank (National Bank) as dangerous to the safety and welfare of this republic," and Webster, who had declared his hostility to bank currency repeatedly, as "one of the greatest of political evils," and "a contrivance for cheating the laboring classes of mankind," were both dragooned into the support of the United States Bank, in its application for a renewal of its charter; and all this power over the monetary and political affairs of the country was developed by the bank while it was yet in its infancy and rotten, financially, to the core.

We have dwelt at some length upon the subject of the United States Bank, because the country is now undergoing a similar ordeal. The money power is seeking to again secure control of the monetary and political affairs of the country through the instrumentality of the National Banks. The monster is now hydra-headed. Its political tools of both parties, in and out of Congress, pretend to be in favor of specie circulation-of "hard money," "honest money," etc. It is a mere pretense. If they were honestly for “hard money," and opposed to "paper money," their first step would be to suppress the paper money of the banks, because, of all forms of paper money, that is the worst and most dangerous. Benton, the great champion of hard money,

could tolerate United States Treasury notes, and even voted for a bill authorizing their issue; but, unlike these hypocrit ical champions of hard money of the present day, he left no one in doubt in regard to his views upon the question of banks of issue. In his speech, on the Divorce of Bank and State, in 1837, he said: "Banks of circulation are banks of hazard and of failure. It is an incident of their nature. Those without circulation rarely fail. That of Venice has stood seven hundred years; those of Hamburg, Amsterdam, and others, have stood for centuries. The Bank of England, the great mother of banks of circulation, besides an actual stoppage of a quarter of a century, has had her crisis and convulsion in average periods of seven or eight years, for the last half century-in 1783, '93, '97, 1814, '19, '25, '36— and has only been saved from repeated failure by the pow erful support of the British government, and profuse supplies of exchequer bills. Her numerous progeny of private and joint stock banks of circulation have had the same convulsions; and not being supported by the government, have sunk by hundreds at a time. All the banks of the United States are banks of circulation; they are all subject to the inherent dangers of that class of banks, and are, besides, subject to new dangers peculiar to themselves. From the quantity of their stock held by foreigners, the quantity of other stocks in their hands, and the current foreign balance against the United States, our paper system (bank currency) has become an appendage of that of England.. * The power of a few banks over the whole presents a new feature of danger in our system. It consolidates the banks of the whole Union into one mass, and subjects them to one fate, and that fate to be decided by a few, without even knowledge of the rest. (This was strikingly illustrated by the almost general suspension of the National Banks in 1873.) An unknown

*

divan of bankers sends forth an edict which sweeps over the empire, crosses the lines of States with the facility of a firman, prostrating all State institutions, breaking up all engagements, and leveling all laws before it. This is a kind of consolidation which the genius of Patrick Henry had not even conceived. But while this firman is thus potent and irresistible for prostration, it is impotent and powerless for resurrection. It goes out in vain, bidding the prostrate banks to rise. A veto power intervenes. One voice is sufficient to keep all down; and thus we have seen one word from Philadelphia* annihilate the New York proposition for resumption and condemn the many solvent banks to the continuation of a condition as mortifying to their feelings as it is injurious to their future interests. Again from the mode of doing business among our banks-using each others notes to bank upon, instead of holding each other to weekly settlements, and liquidation of balances in specie, * * our banks have all become links of one chain, the strength of the whole being dependent on the strength of each. A few govern all. Whether it is to fail, or to resume, the few govern; and not only the few but the weak. A few weak banks fail; a panic ensues, and the rest shut up; many strong ones are ready to resume; the weak are not ready, and the strong must wait. Thus the principles of safety, and the rules of government, are reversed. The weak govern the strong; the bad govern the good; and the insolvent govern the solvent. This is our system, if system it can be called, which has no feature of consistency, no principle of safety, and which is nothing but the floating appendage of a foreign and overpowering system." Who can doubt as to where Jackson and Benton would stand to-day, if they were alive, in regard to the issue now pending, whether the government and people of the United

*See page 150.

States shall use United States Treasury notes, or National Bank notes, nominally redeemable in gold, for their circulating medium? It was impossible in Jackson's time for the administration to suppress State banks of issue, so deeply had they become rooted in the structure of American society, but everything possible was done to curtail their power for mischief. The first step taken in this direction was the publication, July 11, 1836, of the famous "specie circular," ordering agents for the sale of public lands to take nothing in payment but specie. This circular was based on a law passed in 1816, requiring the Secretary of the Treasury to take nothing but specie, Treasury notes, or the notes of specie paying banks. The notes of eastern banks at this time were sent West for a "good circulation," and "coon-box banks" were set up in the Western States, which issued notes in easy loans to land speculators.* The title to land was passing rapidly to speculators, and the treasury was being filled with worthless paper. Ten millions of bank currency of this sort was arrested by the circular on its way to the land office at Washington. The money power was highly indignant, and Congress, then as now its suppliant tool, at its next session passed a bill rescinding the circular, but it was not signed by the President and failed to become a law. This led to the establishment of the Independent Treasury system, of which more will be said hereafter. The number of specie basis banks in existence during this period were as follows:

The country was flooded with a depreciated currency,

based on "hard money," and commercial crashes and money

*History of American Currency.

panics occurred with almost as much regularity as the ebb and flow of the tides.

THE CRASH OF 1837.

In the latter part of 1836 several large failures occurred in Great Britain. This was the beginning of a crisis which convulsed both Europe and America. Early in May one bank in New York City and three in Buffalo failed. On the 10th of May all the banks in New York suspended specie payments, under a law passed by the legislature allowing them to suspend for one year. The banks throughout the country soon followed their example. The distresses of the year were aggravated by a failure of the wheat crop. The New York banks being required by law to resume May 10, 1838, contracted their circulation as rapidly as possible. It was reduced over $12,000,000, or one-half, during the year 1837. The banks of New England were in a bad condition, the best of them having only $1 in specie to redeem $11 in notes. A meeting of bank delegates in New York was called for November 27, 1837, to confer in regard to resumption, but the United States Bank refusing, the convention did not meet. The New York Banks resumed on the 10th of May, 1838, and nearly all the banks throughout the country soon followed, at least nominally, except those of Philadelphia. Towards the end of the year the Bank of England again became involved in trouble, producing the usual effect in America.

CRASH OF 1839.

On the 10th of October, 1839, the Bank of the United States closed its doors, and was followed by nearly all the banks in the South and West. The banks in New York and New England made a show of holding out, but to no purpose. According to Sumner, 343 out of 850 banks closed