Life of Henry Clay/15 The Removal of the Deposits

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Life of Henry Clay by Carl Schurz
Chapter XV. The Removal of the Deposits.



In June, 1833, General Jackson made a "presidential tour" from Washington by way of Philadelphia to New York and the New England States. His proclamation against the nullifiers was still fresh in men's minds, and the people received him everywhere with demonstrative and sincere enthusiasm. Clay was meanwhile at Ashland; and how he enjoyed his rural life is pleasingly portrayed in a letter to Brooke, in May, 1833: —

"Since my return from Washington, I have been principally occupied with the operations of my farm, which have more and more interest for me. There is a great difference, I think, between a farm employed in raising dead produce for market and one which is applied, as mine is, to the rearing of all kinds of live stock. I have the Maltese ass, the Arabian horse, the Merino and the Saxe-Merino sheep, the English Hereford and Durham cattle, the goat, the mule, and the hog. The progress of these animals from their infancy to maturity presents a constantly varying subject of interest, and I never go out of my house without meeting with some one of them to engage agreeably my attention. Then our fine green yard, our natural parks, our beautiful undulating country, everywhere exhibiting combinations of grass and trees or luxuriant crops, all conspire to render home delightful."

But in spite of all this he informed Brooke that in July he would set out on a journey through Ohio to Buffalo, thence to Canada and New England. He "intended" to travel "with as much privacy as possible." He wanted "repose." He wanted it so much that he had not yet decided whether he would return to the Senate. Only the situation of his Land Bill might determine him to do so.

So Clay had his "progress," too, and after his return he wrote to Brooke: —

"My journey was full of gratification. In spite of my constant protestations that it was undertaken with objects of a private nature exclusively, and my uniformly declining public dinners, the people everywhere, and at most places without discrimination of parties, took possession of me, and gave enthusiastic demonstrations of respect, attachment, and confidence. In looking back on the scenes through which I passed, they seem to me to have resembled those of enchantment more than of real life."

But as to the appearance of the two rivals before the people that summer, Jackson had, no doubt, the advantage. With the old lustre of military heroship, he had the new lustre of the "savior of the Union," the "conqueror of nullification." Clay, indeed, was the "great pacificator," but Jackson was the strong man. However, Clay was delighted with the new evidences of his popularity, and, when he returned to Washington at the opening of the twenty-third Congress, his bucolic pleasures and his yearning for repose were readily forgotten. The session beginning in December, 1833, was to bring the two leaders face to face in a struggle fiercer than any before.

Great things had happened during the summer. As soon as the issue between him and the Bank of the United States was declared, Jackson resolved that the bank must be utterly destroyed. The method was suggested by Kendall and Blair, of the Kitchen Cabinet. It was to cripple the available means of the bank by withdrawing from it and its branches the deposits of public funds. In the message of December, 1832, Jackson had expressed his doubt as to the safety of the government deposits in the bank, and recommended an investigation. The House, after inquiry, resolved on March 2, by 109 to 46 votes, that the deposits were safe. The bank was at that period undoubtedly solvent, and there seemed to be no reason to fear for the safety of the public money in its custody. But Jackson had made up his mind that the bank was financially rotten; that it had been employing its means to defeat his reëlection; that it was using the public funds in buying up members of Congress for the purposes of securing a renewal of its charter, and of breaking down the administration; and that thus it had become a dangerous agency of corruption and a public enemy. Therefore the public funds must be withdrawn, without regard to consequences.

But the law provided that the public funds should be deposited in the Bank of the United States or its branches, unless the Secretary of the Treasury should otherwise "order and direct," and in that case the Secretary should report his reasons for such direction to Congress. A willing Secretary of the Treasury was therefore needed. In May, 1833, Jackson reconstructed his Cabinet for the second time. Livingston, the Secretary of State, was sent as Minister of the United States to France. McLane, the Secretary of the Treasury, the same who in December, 1831, had made a report favorable to the bank, was made Secretary of State. For the Treasury Department Jackson selected William J. Duane of Philadelphia, who was known as an opponent of the bank. Jackson, no doubt, expected him to be ready for any measure necessary to destroy it. In this he was mistaken. Duane earnestly disapproved of the removal of the deposits as unnecessary, and highly dangerous to the business interests of the country. He also believed that so important a change in the fiscal system of the government was a matter of which the Executive should not dispose without the concurrence of Congress. Nor was his opinion without support in the administration. A majority of the members of the Cabinet thought the removal of the deposits unwise. Even one of the members of the Kitchen Cabinet, Colonel Lewis, Jackson's oldest friend, entertained the same opinion. In fact, it was held by almost every public man who was consulted upon the subject. The exceptions were very few. In the business community there seemed to be but one voice about it. The mere rumor that the removal of the deposits was in contemplation greatly disturbed the money market.

But all this failed to stagger Jackson's resolution. The important question, what to do with the public funds after the removal from the United States Bank, — whether state banks could be found to which they could be intrusted safely and upon proper conditions, — puzzled and disquieted others, but not him. He was firm in the belief that the United States Bank used the public money to break down the government, and must therefore be stripped of it without unnecessary delay. But Duane refused. Jackson argued with him in vain. Duane knew that his position was at stake. He knew, as he afterwards said, that there was an "irresponsible cabal" at work, an "influence unknown to the Constitution and to the people," which took advantage of President Jackson's hot impulses. He would not become a party to a scheme the execution of which, in his opinion, would plunge the fiscal concerns of the country into "chaos."

On September 18th Jackson caused to be read to the assembled Cabinet a paper, setting forth why the deposits should be removed, and declaring that he was firmly resolved upon that step as necessary to preserve the morals of the people, the freedom of the press, and the purity of the elective franchise. He announced the measure to be his own; he would take the responsibility. This paper was written by Taney, and evidently intended not only for the members of the administration, but for the public. The Cabinet, with the exception of the Secretary of the Treasury, bowed to Jackson's will. But Duane would not shelter himself behind the President's assumed responsibility to do an act which, under the law, was to be his act. He also refused to resign. If he had to obey or go, he insisted upon being removed. Jackson then formally dismissed him, and transferred Roger B. Taney from the attorney generalship to the treasury. Benjamin F. Butler of New York, a friend of Van Buren, was made Attorney General.

Taney forthwith ordered the removal of the deposits from the Bank of the United States; that is to say, the public funds then in the bank were to be drawn out as the government required them, and no new deposits to be made in that institution. The new deposits were to be distributed among a certain number of selected state banks, which be came known as the "pet banks." The amount of government money at that time in the United States Bank, which was to be gradually drawn out and not to be replaced by new government deposits, was $9,891,000. The bank resolved to curtail its loans to the extent of nearly $7,000,000, which sum had been the average of government deposits for several years. The money market became stringent. Many failures occurred. The general feeling in business circles approached a panic. The whole country was in a state of excitement.

The twenty-third Congress, which met under these circumstances on December 2, 1833, became distinguished by the unusual array of talent in its ranks, as well as the stormy character of its proceedings. It was then that the great duel between Clay and Jackson, as the leaders of the opposing forces, reached its culmination; and by Clay's side stood, — now for the first time united in open opposition to Jackson, — Webster and Calhoun. Jackson's supporters were in the minority in the Senate, but commanded a large majority in the House of Representatives. In his annual message the President announced that he had urged upon the Treasury Department the propriety of removing the deposits from the Bank of the United States, and that accordingly it had been done. He denounced the bank as having attempted to corrupt the elections with money, and as being "converted into a permanent electioneering machine." The question was presented, he said, whether true representatives of the people or the influence of the bank should govern the country. He accused the bank of attempting to force a restoration of the deposits, and to extort from Congress a renewal of its charter, by curtailing accommodations and hoarding specie, thus creating artificial embarrassment and panic.

The Secretary of the Treasury, Taney, in his report to Congress, argued that under the law he had the right to remove the deposits whenever in his opinion the public interest would be benefited by it, no matter whether the deposits were safe or not, and that Congress had divested itself of all right to interfere. He had, as an executive officer of the government, subject to the direction of the President, removed the deposits for reasons of public interest. By implication he admitted that the bank was solvent and the deposits safe. But, he argued, the bank, by asking Congress four years before the expiration of its charter for a renewal thereof, had submitted itself to the popular judgment at the presidential election which was then impending. The people had pronounced against the bank. A renewal of the charter being therefore out of the question, it was best to begin with the removal of the deposits at once, instead of leaving it to the last moment of the legal existence of the depository. He enlarged upon the President's message in criticising the conduct of the bank. Finally, he preferred state banks as depositories.

Clay opened the attack on December 10. He offered a resolution calling upon the President to inform the Senate whether a paper concerning the removal of the deposits, purporting to have been read to the Cabinet on September 18, 1833, and alleged to have been published by the President's authority, was genuine or not, and, if genuine, to furnish a copy of it to the Senate. The resolution passed. This was an ill-considered movement, for it gave Jackson an opportunity for administering a smart snub to the Senate without leaving the Senate anything to reply. "I have yet to learn," he said in his special message, "under what constitutional authority that branch of the legislature [the Senate] has a right to require of me an account of any communication, either verbally or in writing, made to the heads of departments acting as a cabinet council." He added: "Feeling my responsibility to the American people, I am willing upon all occasions to explain to them the grounds of my conduct," — a sentiment which, since his reëlection, appeared frequently, and, as we shall see, in a much more significant form. The statesmen of the Senate shook their heads, but Jackson had altogether the best of the encounter in the eyes of the masses.

This, however, was merely a preliminary skirmish. On December 26 Clay introduced two resolutions, one declaring that, by dismissing a Secretary of the Treasury because that officer would not, contrary to his sense of duty, remove the deposits, and by appointing another for the purpose of effecting that removal, the President had "assumed the exercise of a power over the Treasury of the United States not granted to him by the Constitution and laws, and dangerous to the liberties of the people;" and the other declaring that the reasons assigned by the Secretary of the Treasury for the removal of the deposits were "unsatisfactory and insufficient."

The speech with which he opened the debate on these resolutions deserves to be studied as a piece of good debating, although the constitutional theory set forth in it was based upon a fiction. "We are," he began, "in the midst of a revolution, hitherto bloodless, but rapidly tending toward a total change of the pure republican character of the government, and the concentration of all power in the hands of one man." This he sought to prove by showing that President Jackson had assumed power over the Treasury which the Constitution had withheld from the Executive and expressly conferred upon Congress.

During the revolutionary period, and among the men who had grown up under the influence of its reminiscences, the great danger threatening free institutions in America was thought to be that the Republic would be turned into a monarchy by a change in the character of the Executive. The spectre of a "king" haunted their imaginations in a variety of shapes. In Jefferson's mind, it was a sort of British king of Hamiltonian pattern. Clay's king was a successful military chieftain like Jackson; and Benton's a "money king," with a monster bank at his command. In the writings and speeches of that time we constantly meet dismal predictions that, if this or that were done or permitted, the king would surely come. In the legislation of the first Congress under the Constitution, organizing the government, there were also traces of an anxious desire to withdraw all financial concerns as much as possible from the influence of the Executive, — sprung, perhaps, from the memories, familiar to all Americans, of the struggles in England against the royal pretension to hold both the sword and the purse, as well as of the revolutionary fight against taxation without representation. Thus it was not only provided in the Constitution that Congress should have the exclusive power to lay and collect taxes, duties, imposts, and excises, to pay debts, and to borrow money on the credit of the United States, to coin money and regulate the value thereof, but the first Congress, creating the State, War, and Treasury Departments, made a remarkable distinction between them. While the State and the War Departments were, in the language of the law, called "executive departments," the Treasury Department received no such designation. The Secretaries of State and of War were commanded by the law "to perform and execute such duties as shall, from time to time, be enjoined on or intrusted to them by the President of the United States." The Secretary of the Treasury was not commanded by the law to perform such duties as might be in trusted to him by the President, but was commanded to perform certain duties enumerated in the act, and to make report, not to the President, but directly to Congress.

The theory was, therefore, adhered to by many that the Secretary of the Treasury was not, like the heads of other departments, under the direction of the Executive, but that he was the agent of Congress, and that Congress substantially should control the Treasury Department. Clay held to this theory; and, as the law creating the Bank of the United States provided that the public funds should be deposited in that institution, "unless the Secretary of the Treasury should otherwise order and direct," and that, if he did otherwise order, he should promptly report the reasons to Congress, Clay concluded that the matter was left exclusively to the Secretary of the Treasury under the supervision of Congress; and that, if the President interfered with the Secretary's conception of his duty in the premises, it was an unwarranted interference with a department which the Constitution had placed under the special supervision of Congress, and therefore a revolutionary attempt to overthrow the constitutional system.

The answer suggesting itself was that, after all, the Constitution had intrusted the power of appointing the Secretary of the Treasury, not to Congress, but to the President; that the law, as construed, recognized the power of the President to remove that officer, giving the President in these respects the same power over the Secretary of the Treasury as over other officers of the government; that, therefore, the President, having the power to remove the Secretary of the Treasury for reasons of his own, was practically intrusted with a supervision over the official conduct of that officer, and that, in effectually exercising that supervision through the power of removal, Jackson had technically acted within his constitutional authority.

On the other hand, Congress, when making the law by which the Bank of the United States was created, had undoubtedly intended that the bank should have the public deposits; that the Secretary of the Treasury should be empowered to remove them only for weighty reasons; that those reasons should be as promptly as possible reported to Congress, not to satisfy mere curiosity, but to enable Congress to judge of them and to sanction or disapprove the act; that it was certainly not contemplated to give, either to the President or to the Secretary, power to effect so great a change in the fiscal system of the government as was involved in the transfer of the public deposits from the United States Bank to a number of hastily selected state banks, without consulting Congress; and that in these respects the action of President Jackson in removing the deposits was a very high-handed proceeding. Clay's review of the reasons given by the Secretary for the removal was crushing, and remained in almost all points entirely unanswered.

It is interesting that in the course of his speech Clay quoted Gallatin as authority, adding, "who, whatever I said of him on a former occasion, — and that I do not mean to retract, — possessed more practical knowledge of currency, banks, and finance than any man I have ever met in the public councils." He did not retract what he had said before, but it looked as if he had become ashamed of it.

The debate on Clay's resolutions lasted, with some interruptions, three months, calling out on Clay's side the best debating talent of the Senate, — Webster, Calhoun, Ewing, Southard, and others. The resolutions had to undergo some changes, to the end of obviating constitutional scruples, and were finally, on March 28, adopted, the one declaring the reasons given by the Secretary of the Treasury for the removal of the deposits "unsatisfactory and insufficient," by 28 to 18; and the other, "that the President, in the late executive proceeding in relation to the public revenue, has assumed upon himself authority and power not conferred by the Constitution and laws, but in derogation of both," by 26 to 20. Clay subsequently offered a joint resolution requiring the public deposits to be restored to the Bank of the United States, which passed the Senate, but failed in the House of Representatives.

Meanwhile petitions had been pouring in from all sides setting forth that production and transportation were hampered; that an enormous number of laboring men were without work; that business was suffering fearfully from the inability of business men to obtain the necessary bank accommodations; that there was general distress; and that all this was attributable to the derangement of the banking business by the removal of the deposits. In the Senate these "distress petitions," which formed a great feature of the session, were presented with great pomp of eloquence, especially by Webster and Clay.

An extraordinary scene occurred on March 7, when Clay, presenting a petition of workingmen of Philadelphia, the "builders memorial," and speaking of the President's power to afford relief, suddenly turned upon the Vice-President, Van Buren, in the chair, and, as if involuntarily, moving down to the Vice-President's desk, apostrophized him personally in a most impressive burst of eloquence: —

"Those who in this chamber support the administration [he said] could not render a better service than to repair to the executive mansion, and, placing before the chief magistrate the naked and undisguised truth, prevail upon him to retrace his steps and abandon his fatal experiment. No one, sir, can perform that duty with more propriety than yourself. You can, if you will, induce him to change his course. To you, then, sir, in no unfriendly spirit, but with feelings softened and subdued by the deep distress which pervades every class of our countrymen, I make the appeal. Go to him and tell him, without exaggeration, but in the language of truth and sincerity, the actual condition of his bleeding country. Tell him it is nearly ruined and undone by the measures which he has been induced to put in operation. Tell him that in a single city more than sixty bankruptcies, involving a loss of upward of fifteen millions of dollars, have occurred. Tell him of the alarming decline of all property, of the depreciation of all the products of industry, of the stagnation in every branch of business, and of the close of numerous manufacturing establishments which, a few short months ago, were in active and flourishing operation. Depict to him, if you can find language to portray, the heart-rending wretchedness of thousands of the working classes cast out of employment. Tell him of the tears of helpless widows, no longer able to earn their bread; and of unclad and unfed orphans who have been driven by his policy out of an honest livelihood."

So he went on, through the whole catalogue of misery, with increasing urgency impressing upon the Vice-President the solemn message. It would have been a deeply affecting scene but for the circumstance that it was Martin Van Buren who received the pathetic commission. Benton describes it thus: —

"During the delivery of this apostrophe the Vice-President maintained the utmost decorum of countenance, looking respectfully and even innocently at the speaker all the while, as if treasuring up every word he said, to be faithfully repeated to the President. After it was over and the Vice-President had called some Senator to the chair, he went up to Mr. Clay and asked him for a pinch of his fine maccaboy snuff, and, having received it, walked away."

But elsewhere the matter was taken more seriously. At a public meeting in Philadelphia a resolution was adopted "that Martin Van Buren deserves and will receive the execration of all good men, should he shrink from the responsibility of conveying to Andrew Jackson the message sent by the Hon. Henry Clay."

This storm of hostile demonstrations did not stagger Jackson's indomitable spirit in the least. Having been made to believe that the business disturbances in the country were wholly owing to the malicious curtailment of bank accommodations by the "monster," he met "distress delegations" which waited upon him, sometimes with cold courtesy, sometimes with explosions of wrath, telling them that, if they wanted money to set the business of the country moving again, they should go to Nicholas Biddle, who was treacherously shutting up millions upon millions in his bank. Clay's resolutions of censure, adopted by the Senate, he answered by sending, on April 17, 1834, a formal "protest," which he demanded should be entered upon the journal.

It was an extraordinary document. He denounced not only the adoption, but also the discussion, of the resolutions by the Senate, as "unauthorized by the Constitution," and in every respect improper, because it was, in his opinion, in the nature of an impeachment trial without the observance of any of the prescribed constitutional rules and forms. He censured particularly, for having supported the resolutions, the Senators from states whose legislatures had approved the conduct of the administration. He affirmed that the President was the "direct representative of the American people;" that he was responsible for the entire action of the executive department, and must therefore have a free choice of his agents and power to direct and control their doings; that it was his sworn duty to protect the Constitution, if it must be, for the people against the Senate; and that, if the people allowed "the practice by the Senate of the unconstitutional power of arraigning and censuring the official conduct of the executive," it would "unsettle the foundations of the government," and "the real power of the government would fall into the hands of a body holding their offices for long terms, not elected by the people, and not to them directly responsible."

The protest was at once denounced as a gross breach of the privilege of the Senate, and a resolution pronouncing it to be such, and declaring that it should not be entered upon the journal of the Senate, was offered by Poindexter of Mississippi. Jackson, no doubt, believed in all sincerity that by destroying the United States Bank he was doing the American people a great service, and that he was fully warranted by the Constitution in all he had done. He therefore felt himself very much aggrieved by the resolution of censure adopted in the Senate. But the pretension set up in his protest, that the Senate, because it might have to sit as a judicial body in case of impeachment, had, as a legislative body, no constitutional right to express an unfavorable opinion about an act of the Executive, — nay, that neither House of Congress had such a right except in case of impeachment, — was altogether incompatible with the fundamental principles of representative government. The Constitution, indeed, authorizes the President to do certain things in his discretion; but this fact does certainly not take from the legislature, or from either house, the right to inquire whether in a given ease the President has acted within that constitutional discretion, or whether that discretion has been wisely exercised for the public good. The Senate is, indeed, a judicial body when it tries impeachments. But it is also a legislative body, and as such it can certainly not be stripped of the necessary privilege of discussing and criticising the conduct of public officers on the ground that such officers might possibly be impeached for the acts criticised.

Equally startling was the assumption that "the President is the direct representative of the American people;" that he possesses original executive powers, and absorbs in himself all executive functions and responsibilities; and that it is his especial office to protect the liberties and rights of the people and the integrity of the Constitution against the Senate or the House of Representatives, or both together.

It is more than probable that Jackson, although at the moment giving full rein to his hot impulses, never understood all the bearings of the doctrines to which he put his name; but it may certainly be said that in the history of the Republic no document has ever come from any President so inconsistent in its tendency with republican institutions as was Jackson's "protest." Clay did not go much too far when, in a fiery speech which he made on the occasion, he described Jackson as animated by "the genuine spirit of conquerors and conquest," which "lives by perpetual, agitating excitement, and would die in a state of perfect repose and tranquillity," — a spirit attacking in turn "the Indians, the Indian policy, internal improvements, the colonial trade, the Supreme Court, Congress, the bank," and now presenting himself "as a dictator to rebuke a refractory Senate," and preparing to attack and annihilate the Senate itself.

After a debate of three weeks, which called forth the heaviest thunders of Clay, Webster, and Calhoun on one side, and of Benton and Silas Wright on the other, the resolutions condemning the protest as an unconstitutional assertion of power and a breach of the privileges of the Senate, and refusing to put it on the journal, passed by 27 to 16 votes.

The war between the President and the majority of the Senate was carried on with unprecedented bitterness and all available weapons. In one of the short addresses, with which he presented "distress petitions," Clay laid down certain rules to be followed by Senators who meant "to oppose to all encroachments, and to all corruption, a manly, resolute, and uncompromising resistance," in acting upon nominations for office. He said: —

"In the first place, to preserve untarnished and unsuspected the purity of Congress, let us negative the nomination of every member for office, high or low, foreign or domestic, until the authority of the Constitution and laws is fully restored. And, in the next place, let us approve of the original nomination of no notorious, brawling politician and electioneerer, but especially of the reappointment of no officer presented to us who shall have prostituted the influence of his office to partisan and electioneering purposes."

With alacrity the Senate rejected the nomination for reappointment of four government directors of the Bank of the United States. Jackson repeated the same nominations, soundly scolding the Senate for having rejected them; but they were rejected again. The Speaker of the House of Representatives, Stephenson of Virginia, was nominated for the mission to England, apparently as a reward for ardent partisanship, and was sternly voted down. Roger B. Taney had been put into the Treasury Department more than two months before the meeting of Congress, and Jackson did not send in his nomination until six months after the opening of the session. It was promptly rejected, which infuriated Jackson beyond measure. He nominated Levi Woodbury in Taney's place, and Taney was subsequently put on the bench of the Supreme Court.

Congress adjourned in June. Few sessions had ever been so prolific of exciting debates. Crowds of people, gathered from far and near, went day after day to the galleries of the Senate as they would go to a play. But few sessions also had been so barren of practical results. The brilliant arraignment of the President's course, combined with the business depression, was indeed not altogether without effect. In the spring of 1834 there seemed to be a strong current of popular sentiment running against the administration. The anti-Jackson men won in several local elections. It was at this period that the opposition began to call itself the Whig party. "In New York and Connecticut," wrote Niles in April, "the term Whigs is now used by the opponents of the administration when speaking of themselves, and they call the Jackson men by the offensive name of Tories." Clay had used the term with great emphasis already in March, in one of his "distress" speeches, commenting upon an anti-administration success in a municipal election in New York city.

"It was a brilliant and signal triumph of the Whigs [he said]. And they have assumed for themselves, and bestowed on their opponents, a denomination which, according to all the analogy of history, is strictly correct. It deserves to be extended throughout the whole country. What was the origin among our British ancestors of these appellations? The Tories were the supporters of executive power, of royal prerogative, of the maxim that the king could do no wrong, of the detestable doctrine of passive obedience and non-resistance. The Whigs were the champions of liberty, the friends of the people, and the defenders of their representatives in the House of Commons. During the Revolutionary war the Tories took sides with the king against liberty, the Whigs against royal executive power and for freedom and independence. And what is the present but the same contest in another form? The partisans of the present executive sustain his power in the most boundless extent. The Whigs are opposing executive encroachment, and a most alarming extension of executive power and prerogative. They are contending for the rights of the people, for free institutions, for the supremacy of the Constitution and the laws."

The name of "Whig" remained, but Clay did not succeed in fastening the name of "Tory" upon their adversaries. The Whig party was strengthened by the accession of men from the Democratic side who were alarmed at Jackson's proceedings and sought refuge among the opposition. Thus it received in its ranks a mixture of incongruous elements which were destined, in the course of events, to break out in distracting divergences of opinion. Moreover, the common opposition to Jackson had brought them into relations of alliance with Calhoun and his following of nullifiers. This was a source of great discomfort to Clay. On every possible occasion Calhoun pushed his nullification principles to the foreground, and began to taunt Clay with having been obliged to fall back upon the aid of the nullifiers to save protection. Clay treated Calhoun with great courtesy, but the companionship galled him. "The nullifiers are doing us no good," he wrote to Brooke, in April, 1834. The alliance was felt on both sides to be an unnatural one that could not endure.

The anti-Jackson current in the local elections, which cheered the Whigs so much, did not last long. The business panic caused by the removal of the deposits was for a time genuine and serious enough. But, as people became aware that the removal of the deposits did not mean the immediate breaking down of everything, the crisis gradually subsided, and the opposition lost much of their political capital. It became evident that the defection from Jackson, which his high-handed course had caused in the upper political circles, had not reached the masses. The spokesmen of the Jackson party very adroitly persisted in representing the opposition of the leaders of the Senate to the President's policy as a mere incident of the great struggle going on between the "old hero" and the "monster." Clay saw this very clearly; "but," said he, "it was in vain that we protested, solemnly protested, that that [the bank] was not the question; that the true question comprehended the inviolability of the Constitution, the supremacy of the laws." Such protests were of no avail. It may then have dawned upon Clay's mind how unwise it had been to make the bank a political issue and to fasten it like a clog to his foot.

The very business distress, which at one time seemed to become so dangerous to Jackson, was at last made to tell against the bank. The great mass of mankind can easily be induced to believe evil of a powerful moneyed institution. It was not difficult, therefore, to spread the impression that the whole calamity had really been inflicted upon the country by the bank, the heartless monopoly, which without necessity curtailed its loans, pinched all business interests, and ruined merchants, manufacturers, and laborers, in order to bring an enormous pressure upon the President and Congress for the purpose of extorting from them the restoration of the deposits and the grant of a new charter. A monopoly so malicious and tyrannical must, of course, be in the highest degree dangerous to the public welfare and to popular liberty: it had to be put down, and there was nobody to put it down save the old hero; he was willing, and it was for this that the "minions of the money power," the "slaves of the monster monopoly," the "subjects of the bank," in the Senate, were persecuting him.

With the first session of the twenty-third Congress the struggle about the Bank of the United States was substantially decided. The great parliamentary cannonade in the Senate had availed nothing. The storm of distress petitions had been without effect. Jackson had remained firm. The House of Representatives had passed by large majorities a series of resolutions reported by James K. Polk, that the deposits should not be restored, and that the bank charter should not be renewed. Popular sentiment ran in the same direction. The bank was doomed. Jackson went on denouncing it in his messages, and distressing it with all sorts of hostile measures; but all energy of resistance was gone. It would have been well for Clay and his party had they recognized the fact that not only this Bank of the United States could not be saved, but that no other great central bank, as the fiscal agent of the government, could be put in its place with benefit to the country.

When Jackson became President the bank was financially sound. The management was not faultless, but very fair. It did not meddle with politics. A financial institution of that kind is not naturally inclined to become a political agency. Its stockholders, who are anxious for the safety of their investments and desire to draw regular dividends, do not wish it to involve itself in the fortunes and struggles of political parties. This was the disposition of the United States Bank under Nicholas Biddle. Jackson's first attack upon the bank in that respect was therefore wanton and reckless. But it is also true that an institution whose interests depend upon the favor of the government is always apt to be driven into politics, be it by the exactions of its political friends, or by the attacks of its political enemies. Its capacity for mischief will then be proportioned to the greatness of its power; and the power of a central bank, acting as the fiscal agent of the government, disposing of a large capital, and controlling branch banks all over the country, must necessarily be very large. Being able to encourage or embarrass business by expanding or curtailing bank accommodations, and to favor this and punish that locality by transferring its facilities, it may benefit or injure the interests of large masses of men, and thereby exercise an influence upon their political conduct, — not to speak of its opportunities for propitiating men in public position, as well as the press, by its substantial favors. So it was in the case of the Bank of the United States. Although Jackson's denunciations of its corrupting practices went far beyond the truth, there can be no doubt that, when it at last fought for the renewal of its charter and against the removal of the deposits, it did use its power for political effect.

It might be said that it did so in self-defense, and that, had there not been so violent a character in the presidential office, it would not have been obliged to defend itself. This would be an unsafe conjecture. A great central banking institution, a government agent, enjoying valuable privileges, will always have the flavor of monopoly about it — and there is nothing more hateful than the idea of monopoly among a democratic people. It will always excite popular jealousy by the appearance of offering to a limited circle of persons superior opportunities of acquiring wealth at the public expense. It will always arouse popular apprehensions with regard to the harm it might do as a great concentrated money power. These apprehensions and jealousies will, in a democratic community, at any time be apt to break out, cause an attack upon the institution, and oblige it to "fight" in self-defense. Being attacked on the political field it will, in obedience to a natural impulse, try to protect itself on the political field, and thus easily become a dangerous and demoralizing factor in politics.

An institution like the Bank of the United States, whatever its temporary usefulness may have been, is therefore not a proper fiscal agent for the government of a democratic country; and the American people have reason to remember with gratitude Salmon P. Chase and the Congress of 1863 for having, in the greatest crisis of public affairs, given the country a national banking system equal to the United States Bank in efficiency, superior to it in safety, avoiding the evils of a concentrated money power, and, as subsequently perfected, entirely free from that flavor of monopoly which made the old bank in its time so odious. Andrew Jackson's severest critics will have to admit that his war upon the United States Bank appealed to a sound democratic instinct, and negatively served a good end. But his most ardent admirers will hardly deny that the manner in which he accomplished the overthrow of the bank was utterly reckless, not only on account of the violence which was done to the spirit of the law, but also on account of the disposition which was made of the public funds. They were distributed among state banks, without any system, unless it be called a system that political favoritism had much to do with the selection, and that the deposit of the public funds became to a great extent a part of the executive patronage. Capital in the shape of bank deposits was arbitrarily located in different parts of the country, to be liberally used for bank accommodations, and this in constantly increasing sums as the public debt disappeared and the revenue surplus grew larger. Great rivalry sprang up among the state banks for a share of the deposits. New banks were started by aspiring individuals who hoped to be among the favored ones. Banks multiplied in all directions. Upon the business depression followed one of those expansions of credit which are so exhilarating in the beginning and so sure to end in disaster, and the scattering of the deposits served to make that expansion more and more reckless.

Thus the seed of a great disaster was sown broadcast. We shall see the harvest. But at first it looked like a suddenly growing crop of prosperity and wealth. Jackson was more popular and powerful than ever. Clay came out of the struggle about the United States Bank defeated, but with the honors of war. His friends clung to him with increased admiration of his courage and brilliant abilities, and he was ready for new conflicts.