Chapter LX

BANK OF THE UNITED STATES--ILLEGAL AND VICIOUS CURRENCY.

In his first annual message, in the year 1829, President Jackson, besides calling in question the unconstitutionality and general expediency of the Bank, also stated that it had failed in furnishing a uniform currency. That declaration was greatly contested by the Bank and its advocates, and I felt myself bound to make an occasion to show it to be well founded, and to a greater extent than the President had intimated. It had in fact issued an illegal and vicious kind of paper--authorized it to be issued at all the branches--in the shape of drafts or orders payable in Philadelphia, but voluntarily paid where issued, and at all the branches; and so made into a local currency, and constituting the mass of all its paper seen in circulation; and as the greatest quantity was usually issued at the most remote and inaccessible branches, the payment of the drafts were well protected by distance and difficulty; and being of small denominations, loitered and lingered in the hands of the laboring people until the "wear and tear" became a large item of gain to the Bank, and the difficulty of presenting them at Philadelphia an effectual bar to their payment there. The origin of this kind of currency was thus traced by me: It was invented by a Scotch banker of Aberdeen, who issued notes payable in London, always of small denominations, that nobody should take them up to London for redemption. The Bank of Ireland seeing what a pretty way it was to issue notes which they could not practically be compelled to pay, adopted the same trick. Then the English country bankers followed the example. But their career was short. The British parliament took hold of the fraud, and suppressed it in the three kingdoms. That parliament would tolerate no currency issued at one place, and payable at another.

The mode of proceeding to get at the question of this vicious currency was the same as that pursued to get at the question of the non-renewal of the charter--namely, an application for leave to bring in a joint resolution declaring it to be illegal, and ordering it to be suppressed; and in asking that leave to give the reasons for the motion: which was done, in a speech of which the following are some parts:

"Mr. Benton rose to ask leave to bring in his promised
resolution on the state of the currency. He said he had given
his notice for the leave he was about to ask, without concerting
or consulting with any member of the Senate. The object of his
resolution was judicial, not political; and he had treated the
senators not as counsellors, but as judges. He had conversed
with no one, neither friend nor adversary; not through contempt
of counsel, or fear of opposition, but from a just and rigorous
regard to decorum and propriety. His own opinion had been made
up through the cold, unadulterated process of legal research;
and he had done nothing, and would do nothing, to prevent, or
hinder, any other senator from making up his opinion in the
same way. It was a case in which politics, especially partisan
politics, could find no place; and in the progress of which
every senator would feel himself retiring into the judicial
office--becoming one of the _judices selecti_--and searching
into the stores of his own legal knowledge, for the judgment,
and the reasons of the judgment, which he must give in this
great cause, in which a nation is the party on one side, and a
great moneyed corporation on the other. He [Mr. B.] believed
the currency, against which his resolution was directed,
to be illegal and dangerous; and so believing, it had long
been his determination to bring the question of its legality
before the Senate and the people; and that without regard to
the powerful resentment, to the effects of which he might be
exposing himself. He had adopted the form of a declaratory
resolution, because it was intended to declare the true sense
of the charter upon a disputed point. He made his resolution
joint in its character, that it might have the action of both
Houses of Congress; and single in its object, that the main
design might not be embarrassed with minor propositions. The
form of the resolution gave him a right to state his reasons
for asking leave to bring it in; the importance of it required
those reasons to be clearly stated. The Senate, also, has its
rights and its duties. It is the right of the Senate and House
of Representatives, as the founder of the bank corporation, to
examine into the regularity of its proceedings, and to take
cognizance of the infractions of its charter; and this right has
become a duty, since the very tribunal selected by the charter
to try these infractions had tried this very question, and
that without the formality of a _scire facias_ or the presence
of the adverse party, and had given judgment in favor of the
corporation; a decision which he [Mr. B.] was compelled, by
the strongest convictions of his judgment, to consider both as
extrajudicial and erroneous.

"The resolution, continued Mr. B., which I am asking leave to
bring in, expresses its own object. It declares against the
legality of these orders, AS A CURRENCY. It is the currency
which I arraign. I make no inquiry, for I will not embarrass
my subject with irrelevant and immaterial inquiries--I make
no inquiry into the modes of contract and payment which
are permitted, or not permitted, to the Bank of the United
States, in the conduct of its private dealings and individual
transactions. My business lies with the currency; for, between
public currency and private dealings, the charter of the bank
has made a distinction, and that founded in the nature of
things, as broad as lines can draw, and as clear as words can
express. The currency concerns the public; and the soundness
of that currency is taken under the particular guardianship of
the charter; a special code of law is enacted for it: private
dealings concern individuals: and it is for individuals, in
making their bargains, to take care of their own interests. The
charter of the Bank of the United States has authorized, but not
regulated, certain private dealings of the bank; it is full and
explicit upon the regulation of currency. Upon this distinction
I take my stand. I establish myself upon the broad and clear
distinction which reason makes, and the charter sanctions. I
arraign the currency! I eschew all inquiry into the modes of
making bargains for the sale or purchase of bills of exchange,
buying and selling gold or silver bullion, building houses,
hiring officers, clerks, and servants, purchasing necessaries,
or laying in supplies of fuel and stationery.

"1. I object to it because it authorizes an issue _of currency
upon construction_. The issue of currency, sir, was the great
and main business for which the bank was created, and which it
is, in the twelfth article, expressly authorized to perform, and
I cannot pay so poor a compliment to the understandings of the
eminent men who framed that charter, as to suppose that they
left the main business of the bank to be found, by construction,
in an independent phrase, and that phrase to be found but once
in the whole charter. I cannot compliment their understandings
with the supposition that, after having authorized and defined
a currency, and subjected it to numerous restrictions, they had
left open the door to the issue of another sort of currency,
upon construction, which should supersede the kind they had
prescribed, and be free from every restriction to which the
prescribed currency was subject.

"Let us recapitulate. Let us sum up the points of
incompatibility between the characteristics of this currency,
and the requisites of the charter: let us group and contrast the
frightful features of their flagrant illegality. 1. Are they
signed by the president of the bank and his principal cashier?
They are not! 2. Are they under the corporate seal? Not at all!
3. Are they drawn in the name of the corporation? By no means!
4. Are they subject to the double limitation of time and amount
in case of credit? They are not; they may exceed sixty days'
time, and be less than one hundred dollars! 5. Are they limited
to the minimum size of five dollars? Not at all! 6. Are they
subject to the supervision of the Secretary of the Treasury?
Not in the least! 7. The prohibition against suspending specie
payments? They are not subject to it! 8. The penalty of double
interest for delayed payment? Not subject to it! 9. Are they
payable where issued? Not at all, neither by their own terms,
nor by any law applicable to them! 10. Are they payable at
other branches? So far from it, that they were invented to
avoid such payment! 11. Are they transferable by delivery? No;
by indorsement! 12. Are they receivable in payment of public
dues? So far from it, that they are twice excluded from such
payments by positive enactments! 13. Are the directors liable
for excessive issues? Not at all! 14. Has the holder a right
to sue at the branch which issues the order? No, sir, he has
a right to go to Philadelphia, and sue the directors there! a
right about equivalent to the privilege of going to Mecca to
sue the successors of Mahomet for the bones of the prophet!
Fourteen points of contrariety and difference. Not a feature
of the charter in the faces of these orders. Every mark a
contrast; every lineament a contradiction; all announcing, or
rather denouncing, to the world, the positive fact of a spurious
progeny; the incontestable evidence of an illegitimate and
bastard issue.

"I have now, Mr. President, brought this branch bank currency
to the test of several provisions in the charter, not all of
them, but a few which are vital and decisive. The currency
fails at every test; and upon this failure I predicate an
argument of its total illegality. Thus far I have spoken upon
the charter, and have proved that if this currency can prevail,
that instrument, with all its restrictions and limitations, its
jealous, prohibitory constitution, and multiplied enactments for
the safety of the public, is nothing but a blank piece of paper
in the hands of the bank. I will now have recourse to another
class of arguments--a class extrinsic to the charter, but close
to the subject--indispensable to fair examination, and directly
bearing upon the illegal character of this currency.

"1. In the first place, I must insist that these orders cannot
possibly serve for currency, because they are subject to the
law of indorsable paper. The law which governs all such paper
is too universally known to be enlarged upon here. Presentation
for acceptance and payment, notice of default in either, prompt
return of the dishonored paper; and all this with rigorous
punctuality, and a loss of recourse for the slightest delay at
any point, are the leading features of this law. Now it is too
obvious that no paper subject to the law of indorsement can
answer the purposes of circulation. It will die on the hands
of the holders while passing from one to another, instead of
going to the place of payment. Now it is incontestable that
these orders are instruments negotiable by indorsement, and by
indorsement alone. Whether issued under the charter, or under
the general laws of the land, they are still subject to the law
of indorsable paper. They are the same in either case as if
drawn by one citizen upon another. And this is a point which I
mean to make clear: for many worthy people believe there is some
peculiar law for bank paper, which takes it out of the operation
of the general laws of the land. Not so the fact. The twelfth
fundamental article of the bank constitution declares that the
bills or notes to be issued by the bank shall be negotiable
in the same manner as if issued by a _private person_; that
is to say, those payable to a named person or his _order_, by
_indorsement_, in like manner and with the _like effect_ as
foreign bills of exchange; and those made payable to _bearer_
shall be negotiable by _delivery_ alone; in the same manner,
we may add, as a silver dollar. So much for these orders, if
drawn under the charter; if not drawn under it, they are then
issued under the general law of the land, or without any law
at all. Taken either under the charter or out of it, it comes
to the same point, namely, that these orders are subject to
the same law as if drawn by one private person upon another.
This is enough to fix their character, and to condemn them as
a circulating medium; it is enough for the people to know; for
every citizen knows enough of law to estimate the legal value
of an _unaccepted order_, drawn upon a man five hundred or one
thousand miles off! But it has the word _bearer_ on the back!
Yes, sir, and why not on the face as easily as on the back?
Our school-time acquaintance, Mr. President, the gentleman
from Cork, with his coat buttoned behind, had a sensible,
and, I will add, a lawful reason for arraying himself in that
grotesque habiliment; but what reason can the bank have for
putting bearer on the back of the order, where it has no effect
upon its negotiable character, and omitting it on the face,
where it would have governed the character, and secured to the
holder all the facilities for the prompt and easy recovery of
the contents of a paper transferable by mere delivery? The only
effect of this preposterous or cunning indorsement must be to
bamboozle the ignorant--pardon the low word, sir--to bamboozle
the ignorant with the belief that they are handling a currency
which may at any time be collected without proof, trouble, or
delay; while in reality it is a currency which reserves to the
bank all the legal defences which can be set up to prevent
the recovery of a parcel of old, unaccepted, unpresented,
unauthorized bills of exchange.

"2. I take a second exception to these orders as a currency.
It is this, that being once paid, they are done with. A note
transferable by delivery, may be reissued, and its payment
demanded again, and so on forever. But a bill of exchange, or
any paper subject to the same law with a bill of exchange, is
incapable of reissue, and is payable but once. The payment
once made, extinguishes the debt; the paper which evidenced it
is dead in law, and cannot be resuscitated by any act of the
parties. That payment can be plead in bar to any future action.
This law applies to checks and orders as well as to bills of
exchange; it applies to bank checks and orders as well as to
those of private persons, and this allegation alone would
annihilate every pretension of these branch bank orders to the
character of currency.

"The bank went into operation with the beginning of the year
1817; established eighteen branches, half a dozen of which in
the South and West; issued its own notes freely, and made large
issues of notes payable at all these branches. The course of
trade carried the branch notes of the South and West to the
Northeast; and nothing in the course of trade brought them back
to the West. They were payable in all demands to the federal
government; merchants in Philadelphia, New-York, and Boston
received them in payment of goods, and gave them--not back
again in payment of Southern and Western produce--but to the
collectors of the customs. Become the money of the government,
the bank had to treat them as cash. The fourteenth section
of the charter made them receivable in all payments to the
government, and another clause required the bank to transfer the
moneys of the government to any point ordered; these two clauses
(the transfer clause being harmless without the receiving one
contained in the fourteenth section) laid the bank under the
obligation to cash all the notes of all the branches wherever
presented; for, if she did not do it, she would be ordered to
transfer the notes to the place where they were payable, and
then to transfer the silver to the place where it was wanted;
and both these operations she had to perform at her own expense.
The Southern and Western branch notes flowed to the Northeast;
the gold and silver of the South and West were ordered to
follow them; and, in a little while, the specie of the South
and West was transferred to the Northeast; but the notes went
faster on horses and in mail stages than the silver could go in
wagons; and the parent bank in Philadelphia, and the branches
in New-York and Boston, exhausted by the double operation of
providing for their own, and for Southern and Western branch
notes besides, were on the point of stopping payment at the
end of two years. Mr. Cheves then came into the presidency; he
stopped the issue of Southern and Western branch paper, and
saved the bank from insolvency! Application was then made to
Congress to repeal the fourteenth section of the charter, and
thus relieve the bank from this obligation to cash its notes
every where. _Congress refused to do so._ Application was made
at the same time to repeal a part of the twelfth fundamental
article of the constitution of the bank, for the purpose of
relieving the president and principal cashier of the parent
bank from the labor of signing the five and ten dollar notes.
_Congress refused that application also._ And here every thing
rested while Mr. Cheves continued president. The Southern and
Western branches ceased to do business _as banks_; no bank
notes or bills were seen but those bearing the signatures of
the president and his principal cashier, and none of these
payable at Southern and Western branches. The profits of the
stockholders became inconsiderable, and the prospect of a
renewed charter was lost in the actual view of the inactivity
and uselessness of the bank in the South and West. Mr. Cheves
retired. He withdrew from an institution he had saved from
bankruptcy, but which he could not render useful to the South
and West; and then ensued a set of operations for enabling the
bank to do the things which Congress had refused to do for
it; that is to say, to avoid the operation of the fourteenth
section, and so much of the twelfth fundamental article as
related to the signature of the notes and bills of the bank.
These operations resulted in the invention of the _branch bank
orders_. These orders, now flooding the country, circulating
as notes, and considered every where as gold and silver
(because they are _voluntarily_ cashed at several branches, and
_erroneously_ received at every land office and custom-house),
have given to the bank its present apparent prosperity, its
temporary popularity, and its delusive cry of a sound and
uniform currency. This is my narrative; an appalling one, it
must be admitted; but let it stand for nothing if not sustained
by the proof.

"I have now established, Mr. President, as I trust and believe,
the truth of the first branch of my proposition, namely, that
this currency of branch bank orders is unauthorized by the
charter, and illegal. I will now say a few words in support of
the second branch of the proposition, namely, that this currency
ought to be suppressed.

"The mere fact of the illegality, sir, I should hold to be
sufficient to justify this suppression. In a country of laws,
the laws should be obeyed. No private individual should be
allowed to trample them under foot; much less a public man,
or public body; least of all, a great moneyed corporation
wielding above one hundred millions of dollars per annum, and
boldly contending with the federal government for the sceptre
of political power--_money is power!_ The Bank of the United
States possesses more money than the federal government; and
the question of power is now to be decided between them. That
question is wrapped up in the case before you. It is a case
of clear conviction of a violation of the laws by this great
moneyed corporation; and that not of a single statute, and by
inadvertence, and in a small matter, which concerns but few, but
in one general, sweeping, studied, and systematic infraction
of a whole code of laws--of an entire constitution, made for
its sole government and restraint--and the pernicious effects
of which enter into the revenues of the Union, and extend
themselves to every moneyed transaction between man and man.
This is the case of violated law which stands before you; and
if it goes unpunished, then do I say, the question of political
power is decided between the bank and the government. The
question of supremacy is at an end. Let there be no more talk
of restrictions or limitation in the charter. Grant a new one.
Grant it upon the spot. Grant it without words! Grant it in
blank! to save the directors from the labor of re-examination!
the court from the labor of constructions! and yourselves from
the radation of being publicly trampled under foot.

"I do insist, Mr. President, that this currency ought to
be suppressed for illegality alone, even if no pernicious
consequences could result from its circulation. But pernicious
consequences do result. The substituted currency is not the
equivalent of the branch bank notes, whose place it has usurped:
it is inferior to those notes in vital particulars, and to the
manifest danger and loss of the people.

"In the first place, these branch bank orders are _not payable
in the States in which they are issued_. Look at them! they are
nominally payable in Philadelphia! Look at the law! It gives the
holder no right to demand their contents at the branch bank,
until the order has been to Philadelphia, and returned. I lay
no stress upon the insidious circumstance that these orders are
now paid at the branch where issued, and at other branches. That
voluntary, delusive payment may satisfy those who are willing
to swallow a gilded hook; it may satisfy those who are willing
to hold their property at the will of the bank. For my part, I
want law for my rights. I look at the law, to the legal rights
of the holder, and say that he has no right to demand payment at
the branch which issued the order. The present custom of paying
is voluntary, not compulsory; it depends upon the will of the
bank, not upon law; and none but tyrants can require, or slaves
submit to, a tenure at will. These orders, even admitting them
to be legal, are only payable in Philadelphia and to demand
payment there, is a delusive and _impracticable right_. For the
body of the citizens cannot go to Philadelphia to get the change
for the small orders; merchants will not remit them; they would
as soon carry up the fires of hell to Philadelphia; for the bank
would consign them to ruin if they did. These orders are for
the frontiers; and it is made the interest and the policy of
merchants to leave them at home, and take a bill of exchange at
a nominal premium. Brokers alone will ever carry them, and that
as their own, after buying them out of the hands of the people
at a discount fixed by themselves.

"This contrivance, Mr. President, of issuing bank paper at one
place, payable at another and a distant place, is not a new
thing under the sun; but its success, if it succeeds here, will
be a new thing in the history of banking. This contrivance, sir,
is of European origin. It began in Scotland some years ago, with
a banker in _Aberdeen_, who issued promissory notes payable in
_London_. Then the Bank of Ireland set her branches in _Sligo_,
_Cork_, and _Belfast_, at the same work; and they made their
branch notes payable in _Dublin_. The English country bankers
took the hint, and put out their notes payable in _London_. The
mass of these notes were of the smaller denominations, one or
two pounds sterling, corresponding with our five and ten dollar
orders; such as were handled by the laboring classes, and who
could never carry them to _London_ and _Dublin_ to demand their
contents. At this point the British Imperial Parliament took
cognizance of the matter; treated the issue of such notes as a
vicious practice, violative of the very first idea of a sound
currency, and particularly dangerous to the laboring classes.
The parliament suppressed the practice. This all happened in the
year 1826; and now this practice, thus suppressed in _England_,
_Scotland_, and _Ireland_, is in full operation in our
_America!_ and the directors of the Bank of the United States
are celebrated, as the greatest of financiers, for picking up
an illegal practice of Scottish origin, and putting it into
operation in the United States, and that, too, in the very year
in which it was suppressed in Great Britain!"

Leave was not given to introduce the joint resolution. The friends of the bank being a majority in the Senate, refused the motion, but felt themselves bound to make defence for a currency so illegal and vicious. Further discussion was stopped for that time; but afterwards, on the question of the recharter, the illegality of this kind of currency was fully established, and a clause put into the new charter to suppress it. The veto message put an end to the charter, and for the necessity of the remedy in that quarter; but the practice has been taken up by local institutions and private bankers in the States, and become an abuse which requires extirpation.