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CHAPTER V.
ACTUAL SUSPENSION OF THE BANKS: PROPAGATION OF THE ALARM

None of the public meetings, and there were many following the leading one in New York, recommended in terms a suspension of specie payments by the banks. All avoided, by concert or instinct, the naming of that high measure; but it was in the list, and at the head of the list, of the measures to be adopted; and every thing said or done was with a view to that crowning event; and to prepare the way for it before it came; and to plead its subsequent justification by showing its previous necessity. It was in the programme, and bound to come in its appointed time; and did – and that within a few days after the last great meeting in New York. It took place quietly and generally, on the morning of the 10th of May, altogether, and with a concert and punctuality of action, and with a military and police preparation, which announced arrangement and determination; such as attend revolts and insurrections in other countries. The preceding night all the banks of the city, three excepted, met by their officers, and adopted resolutions to close their doors in the morning: and gave out notice to that effect. At the same time three regiments of volunteers, and a squadron of horse, were placed on duty in the principal parts of the city; and the entire police force, largely reinforced with special constables, was on foot. This was to suppress the discontent of those who might be too much dissatisfied at being repulsed when they came to ask for the amount of a deposit, or the contents of a bank note. It was a humiliating spectacle, but an effectual precaution. The people remained quiet. At twelve o'clock a large mercantile meeting took place. Resolutions were adopted by it to sustain the suspension, and the newspaper press was profuse and energetic in its support. The measure was consummated: the suspension was complete: it was triumphant in that city whose example, in such a case, was law to the rest of the Union. But, let due discrimination be made. Though all the banks joined in the act, all were not equally culpable; and some, in fact, not culpable at all, but victims of the criminality, or misfortunes of others. It was the effect of necessity with the deposit banks, exhausted by vain efforts to meet the quarterly deliveries of the forty millions to be deposited with the States; and pressed on all sides because they were government banks, and because the programme required them to stop first. It was an act of self-defence in others which were too weak to stand alone, and which followed with reluctance an example which they could not resist. With others it was an act of policy, and of criminal contrivance, as the means of carrying a real distress into the ranks of the people, and exciting them against the political party to whose acts the distress was attributed. But the prime mover, and master manager of the suspension, was the Bank of the United States, then rotten to the core and tottering to its fall, but strong enough to carry others with it, and seeking to hide its own downfall in the crash of a general catastrophe. Having contrived the suspension, it wished to appear as opposing it, and as having been dragged down by others; and accordingly took the attitude of a victim. But the impudence and emptiness of that pretension was soon exposed by the difficulty which other banks had in forcing her to resume; and by the facility with which she fell back, "solitary and alone," into the state of permanent insolvency from which the other banks had momentarily galvanized her. But the occasion was too good to be lost for one of those complacent epistles, models of quiet impudence and cool mendacity, with which Mr. Biddle was accustomed to regale the public in seasons of moneyed distress. It was impossible to forego such an opportunity; and, accordingly, three days after the New York suspension, and two days after his own, he held forth in a strain of which the following is a sample:

"All the deposit banks of the government of the United States in the city of New York suspended specie payments this week – the deposit banks elsewhere have followed their example; which was of course adopted by the State banks not connected with the government. I say of course, because it is certain that when the government banks cease to pay specie, all the other banks must cease, and for this clear reason. The great creditor in the United States is the government. It receives for duties the notes of the various banks, which are placed for collection in certain government banks, and are paid to those government banks in specie if requested. From the moment that the deposit banks of New York, failed to comply with their engagements, it was manifest that all the other deposit banks must do the same, that there must be a universal suspension throughout the country, and that the treasury itself in the midst of its nominal abundance must be practically bankrupt."

This was all true. The stoppage of the deposit banks was the stoppage of the Treasury. Non-payment by the government, was an excuse for non-payment by others. Bankruptcy was the legal condition of non-payment; and that condition was the fate of the government as well as of others; and all this was perfectly known before by those who contrived, and those who resisted the deposit with the States and the use of paper money by the federal government. These two measures made the suspension and the bankruptcy; and all this was so obvious to the writer of this View that he proclaimed it incessantly in his speeches, and was amazed at the conduct of those professing friends of the administration who voted with the opposition on these measures, and by their votes insured the bankruptcy of the government which they professed to support. Mr. Biddle was right. The deposit banks were gone; the federal treasury was bankrupt; and those two events were two steps on the road which was to lead to the re-establishment of the Bank of the United States! and Mr. Biddle stood ready with his bank to travel that road. The next paragraph displayed this readiness.

"In the midst of these disorders the Bank of the United States occupies a peculiar position, and has special duties. Had it consulted merely its own strength it would have continued its payments without reserve. But in such a state of things the first consideration is how to escape from it – how to provide at the earliest practicable moment to change a condition which should not be tolerated beyond the necessity which commanded it. The old associations, the extensive connections, the established credit, the large capital of the Bank of the United States, rendered it the natural rallying point of the country for the resumption of specie payments. It seemed wiser, therefore, not to waste its strength in a struggle which might be doubtful while the Executive persevered in its present policy, but to husband all its resources so as to profit by the first favorable moment to take the lead in the early resumption of specie payments. Accordingly the Bank of the United States assumes that position. From this moment its efforts will be to keep itself strong, and to make itself stronger; always prepared and always anxious to assist in recalling the currency and the exchanges of the country to the point from which they have fallen. It will co-operate cordially and zealously with the government, with the government banks, with all the other banks, and with any other influences which can aid in that object."

This was a bold face for an eviscerated institution to assume – one which was then nothing but the empty skin of an immolated victim – the contriver of the suspension to cover its own rottenness, and the architect of distress and ruin that out of the public calamity it might get again into existence and replenish its coffers out of the revenues and credit of the federal government. "Would have continued specie payments, if it had only consulted its own strength" – "only suspended from a sense of duty and patriotism" – "will take the lead in resuming" – "assumes the position of restorer of the currency" – "presents itself as the rallying point of the country in the resumption of specie payments" – "even promises to co-operate with the government: " such were the impudent professions at the very moment that this restorer of currency, and rallying point of resumption, was plotting a continuance of the distress and suspension until it could get hold of the federal moneys to recover upon; and without which it never could recover.

Indissolubly connected with this bank suspension, and throwing a broad light upon its history, (if further light were wanted,) was Mr. Webster's tour to the West, and the speeches which he made in the course of it. The tour extended to the Valley of the Mississippi, and the speeches took for their burden the distress and the suspension, excusing and justifying the banks, throwing all blame upon the government, and looking to the Bank of the United States for the sole remedy. It was at Wheeling that he opened the series of speeches which he delivered in his tour, it being at that place that he was overtaken by the news of the suspension, and which furnished him with the text for his discourse.

"Recent evils have not at all surprised me, except that they have come sooner and faster than I had anticipated. But, though not surprised, I am afflicted; I feel any thing but pleasure in this early fulfilment of my own predictions. Much injury is done which the wisest future counsels can never repair, and much more that can never be remedied but by such counsels and by the lapse of time. From 1832 to the present moment I have foreseen this result. I may safely say I have foreseen it, because I have presented and proclaimed its approach in every important discussion and debate, in the public body of which I am a member. We learn to-day that most of the eastern banks have stopped payment; deposit banks as well as others. The experiment has exploded. That bubble, which so many of us have all along regarded as the offspring of conceit, presumption and political quackery, has burst. A general suspension of payment must be the result; a result which has come, even sooner than was predicted. Where is now that better currency that was promised? Where is that specie circulation? Where are those rupees of gold and silver, which were to fill the treasury of the government as well as the pockets of the people? Has the government a single hard dollar? Has the treasury any thing in the world but credit and deposits in banks that have already suspended payment? How are public creditors now to be paid in specie? How are the deposits, which the law requires to be made with the states on the 1st of July, now to be made."

This was the first speech that Mr. Webster delivered after the great one before the suspension in New York, and may be considered the epilogue after the performance as the former was the prologue before it. It is a speech of exultation, with bitter taunts to the government. In one respect his information was different from mine. He said the suspension came sooner than was expected: my information was that it came later, a month later; and that he himself was the cause of the delay. My information was that it was to take place in the first month of Mr. Van Buren's administration, and that the speech which was to precede it was to be delivered early in March, immediately after the adjournment of Congress: but it was not delivered till the middle of that month, nor got ready for pamphlet publication until the middle of April; which delay occasioned a corresponding postponement in all the subsequent proceedings. The complete shutting up of the treasury – the loss of its moneys – the substitution of broken bank paper for hard money – the impossibility of paying a dollar to a creditor: these were the points of his complacent declamation: and having made these points strong enough and clear enough, he came to the remedy, and fell upon the same one, in almost the same words, that Mr. Biddle was using at the same time, four hundred miles distant, in Philadelphia: and that without the aid of the electric telegraph, not then in use. The recourse to the Bank of the United States was that remedy! that bank strong enough to hold out, (unhappily the news of its suspending arrived while he was speaking:) patriotic enough to do so! but under no obligation to do better than the deposit banks! and justifiable in following their example. Hear him:

"The United States Bank, now a mere state institution, with no public deposits, no aid from government, but, on the contrary, long an object of bitter persecution by it, was at our latest advices still firm. But can we expect of that Bank to make sacrifices to continue specie payment? If it continue to do so, now the deposit banks have stopped, the government will draw from it its last dollar, if it can do so, in order to keep up a pretence of making its own payments in specie. I shall be glad if this institution find it prudent and proper to hold out; but as it owes no more duty to the government than any other bank, and, of course, much less than the deposit banks, I cannot see any ground for demanding from it efforts and sacrifices to favor the government, which those holding the public money, and owing duty to the government, are unwilling or unable to make; nor do I see how the New England banks can stand alone in the general crush."

The suspension was now complete; and it was evident, and as good as admitted by those who had made it, that it was the effect of contrivance on the part of politicians, and the so-called Bank of the United States, for the purpose of restoring themselves to power. The whole process was now clear to the vision of those who could see nothing while it was going on. Even those of the democratic party whose votes had helped to do the mischief, could now see that the attempt to deposit forty millions with the States was destruction to the deposit banks; – that the repeal of the specie circular was to fill the treasury with paper money, to be found useless when wanted; – that distress was purposely created in order to throw the blame of it upon the party in power; – that the promptitude with which the Bank of the United States had been brought forward as a remedy for the distress, showed that it had been held in reserve for that purpose; – and the delight with which the whig party saluted the general calamity, showed that they considered it their own passport to power. All this became visible, after the mischief was over, to those who could see nothing of it before it was done.

CHAPTER VI.
TRANSMIGRATION OF THE BANK OF THE UNITED STATES FROM A FEDERAL TO A STATE INSTITUTION

This institution having again appeared on the public theatre, politically and financially, and with power to influence national legislation, and to control moneyed corporations, and with art and skill enough to deceive astute merchants and trained politicians, – (for it is not to be supposed that such men would have committed themselves in her favor if they had known her condition,) – it becomes necessary to trace her history since the expiration of her charter, and learn by what means she continued an existence, apparently without change, after having undergone the process which, in law and in reason, is the death of a corporation. It is a marvellous history, opening a new chapter in the necrology of corporations, very curious to study, and involving in its solution, besides the biological mystery, the exposure of a legal fraud and juggle, a legislative smuggle, and a corrupt enactment. The charter of the corporation had expired upon its own limitation in the year 1836: it was entitled to two years to wind up its affairs, engaging in no new business: but was seen to go on after the expiration, as if still in full life, and without the change of an attribute or feature. The explanation is this:

On the 19th day of January, in the year 1836, a bill was reported in the House of Representatives of the General Assembly of Pennsylvania, entitled, "An act to repeal the State tax, and to continue the improvement of the State by railroads and canals; and for other purposes." It came from the standing committee on "Inland navigation and internal improvement;" and was, in fact, a bill to repeal a tax and make roads and canals, but which, under the vague and usually unimportant generality of "other purposes," contained the entire draught of a charter for the Bank of the United States – adopting it as a Pennsylvania State bank. The introduction of the bill, with this addendum, colossal tail to it, was a surprise upon the House. No petition had asked for such a bank: no motion had been made in relation to it: no inquiry had been sent to any committee: no notice of any kind had heralded its approach: no resolve authorized its report: the unimportant clause of "other purposes," hung on at the end of the title, could excite no suspicion of the enormous measures which lurked under its unpretentious phraseology. Its advent was an apparition: its entrance an intrusion. Some members looked at each other in amazement. But it was soon evident that it was the minority only that was mystified – that a majority of the elected members in the House, and a cluster of exotics in the lobbies, perfectly understood the intrusive movement: – in brief, it had been smuggled into the House, and a power was present to protect it there. This was the first intimation that had reached the General Assembly, the people of Pennsylvania, or the people of the United States, that the Bank of the United States was transmigrating! changing itself from a national to a local institution – from a federal to a State charter – from an imperial to a provincial institution – retaining all the while its body and essence, its nature and attributes, its name and local habitation. It was a new species of metempsychosis, heretofore confined to souls separated from bodies, but now appearing in a body that never had a soul: for that, according to Sir Edward Coke, is the psychological condition of a corporation – and, above all, of a moneyed corporation.

The mystified members demanded explanations; and it was a case in which explanations could not be denied. Mr. Biddle, in a public letter to an eminent citizen, on whose name he had been accustomed to hang such productions, (Mr. John Quincy Adams,) attributed the procedure, so far as he had moved in it, to a "formal application on the part of the legislature to know from him on what terms the expiring bank would receive a charter from it;" and gave up the names of two members who had conveyed the application. The legislature had no knowledge of the proceeding. The two members whose names had been vouched disavowed the legislative application, but admitted that, in compliance with suggestions, they had written a letter to Mr. Biddle in their own names, making the inquiry; but without the sanction of the legislature, or the knowledge of the committees of which they were members. They did not explain the reason which induced them to take the initiative in so important business; and the belief took root that their good nature had yielded to an importunity from an invisible source, and that they had consented to give a private and bungling commencement to what must have a beginning, and which could not find it in any open or parliamentary form. It was truly a case in which the first step cost the difficulty. How to begin was the puzzle, and so to begin as to conceal the beginning, was the desideratum. The finger of the bank must not be seen in it, yet, without the touch of that finger, the movement could not begin. Without something from the Bank – without some request or application from it, it would have been gratuitous and impertinent, and might have been insulting and offensive, to have offered it a State charter. To apply openly for a charter was to incur a publicity which would be the defeat of the whole movement. The answer of Mr. Biddle to the two members, dexterously treating their private letter, obtained by solicitation, as a formal legislative application, surmounted the difficulty! and got the Bank before the legislature, where there were friends enough secretly prepared for the purpose to pass it through. The terms had been arranged with Mr. Biddle beforehand, so that there was nothing to be done but to vote. The principal item in these terms was the stipulation to pay the State the sum of $1,300,000, to be expended in works of internal improvements; and it was upon this slender connection with the subject that the whole charter referred itself to the committee of "Inland navigation and internal improvement;" – to take its place as a proviso to a bill entitled, "To repeal the State tax, and to continue the improvements of the State by railroads and canals;" – and to be no further indicated in the title to that act than what could be found under the addendum of that vague and flexible generality, "other purposes;" usually added to point attention to something not worth a specification.

Having mastered the first step – the one of greatest difficulty, if there is truth in the proverb – the remainder of the proceeding was easy and rapid, the bill, with its proviso, being reported, read a first, second, and third time, passed the House – sent to the Senate; read a first, second, and third time there, and passed – sent to the Governor and approved, and made a law of the land: and all in as little time as it usually requires to make an act for changing the name of a man or a county. To add to its titles to infamy, the repeal of the State tax which it assumed to make, took the air of a bamboozle, the tax being a temporary imposition, and to expire within a few days upon its own limitation. The distribution of the bonus took the aspect of a bribe to the people, being piddled out in driblets to the inhabitants of the counties: and, to stain the bill with the last suspicion, a strong lobby force from Philadelphia hung over its progress, and cheered it along with the affection and solicitude of parents for their offspring. Every circumstance of its enactment announced corruption – bribery in the members who passed the act, and an attempt to bribe the people by distributing the bonus among them: and the outburst of indignation throughout the State was vehement and universal. People met in masses to condemn the act, demand its repeal, to denounce the members who voted for it, and to call for investigation into the manner in which it passed. Of course, the legislature which passed it was in no haste to respond to these demands; but their successors were different. An election intervened; great changes of members took place; two-thirds of the new legislature demanded investigation, and resolved to have it. A committee was appointed, with the usual ample powers, and sat the usual length of time, and worked with the usual indefatigability, and made the usual voluminous report; and with the usual "lame and impotent conclusion." A mass of pregnant circumstances were collected, covering the whole case with black suspicion: but direct bribery was proved upon no one. Probably, the case of the Yazoo fraud is to be the last, as it was the first, in which a succeeding general assembly has fully and unqualifiedly condemned its predecessor for corruption.

The charter thus obtained was accepted: and, without the change of form or substance in any particular, the old bank moved on as if nothing had happened – as if the Congress charter was still in force – as if a corporate institution and all its affairs could be shifted by statute from one foundation to another; – as if a transmigration of corporate existence could be operated by legislative enactment, and the debtors, creditors, depositors, and stockholders in one bank changed, transformed, and constituted into debtors, creditors, depositors and stockholders in another. The illegality of the whole proceeding was as flagrant as it was corrupt – as scandalous as it was notorious – and could only find its motive in the consciousness of a condition in which detection adds infamy to ruin; and in which no infamy, to be incurred, can exceed that from which escape is sought. And yet it was this broken and rotten institution – this criminal committing crimes to escape from the detection of crimes – this "counterfeit presentment" of a defunct corporation – this addendum to a Pennsylvania railroad – this whited sepulchre filled with dead men's bones, thus bribed and smuggled through a local legislature – that was still able to set up for a power and a benefactor! still able to influence federal legislation – control other banks – deceive merchants and statesmen – excite a popular current in its favor – assume a guardianship over the public affairs, and actually dominate for months longer in the legislation and the business of the country. It is for the part she acted – the dominating part – in contriving the financial distress and the general suspension of the banks in 1837 – the last one which has afflicted our country, – that renders necessary and proper this notice of her corrupt transit through the General Assembly of the State of Pennsylvania.