[Sidenote: Jackson's second attack on the Bank.]

The President, however, returned to the attack in his message of December 10th, 1830. He also presented, in this message, an elaboration of his idea of a Government bank. His proposition was for a bank as a branch of the Treasury Department, based on the deposits of the funds of the Government and also on those made by individuals, but {199} having no power to issue notes or make loans or purchase property. Its chief purpose would be to do the business of the Government, and its expenses might be met by selling exchange to private persons at a small rate.

[Sidenote: Jackson's plan for a bank.]

The President thought that this scheme avoided all the objections to the existing Bank, and yet preserved all of the latter's advantages.

It would require no charter of incorporation, would have neither stockholders, nor debtors, nor property, would require few officers, and would leave to the Commonwealths the creation of their own local paper currency through their own banks, while the new Government bank would be able to check the issues of the Commonwealth banks through its power to refuse to take their bills on deposit or for exchange, unless they redeemed them with specie. In a sentence, his doctrine now was that banking must be left as far as possible to Commonwealth law, and that such powers as the general Government had received from the Const.i.tution over the subject should be exercised by the Government, if at all, through its own officials, for the benefit of the people, and not be conferred as privileges upon a corporation of private persons, to be exercised for their private gain. This will be at once recognized as a democratic, "States' rights," socialistic scheme in the essential elements of its composition.

[Sidenote: Benton's resolution against the re-charter of the Bank.]

Before the report of the Finance committee of the Senate upon this part of the message was presented Senator Benton offered a resolution, on February 2nd, 1831, which provided that the charter of the Bank ought not to be renewed. In his speech supporting the resolution the senator developed the whole "States' rights," socialistic, democratic argument against the Bank with great elaboration, both in principle and in detail.

{200} It is true that Benton did not go so far as Jackson in the socialistic direction. He said that he was willing to vote for the President's Government bank scheme, since it would subst.i.tute for the existing Bank an inst.i.tution which would be divested of the essential features of a bank, the power to make loans and discounts, but that he would prefer to see the charter of the Bank expire without any subst.i.tute being created for it.

The Senate was not, however, convinced by Mr. Benton's argument, and refused to allow him to introduce his resolution.

[Sidenote: Jackson's challenge to make the continued existence of the Bank the issue in the campaign of 1832.]

In his message of December 6th, 1831, President Jackson referred to what he had said in former messages concerning the Bank, and closed his allusion with the following significant words: "Having thus conscientiously discharged a const.i.tutional duty, I deem it proper, on this occasion, without a more particular reference to the views of the subject then expressed, to leave it for the present to the investigation of an enlightened people and their representatives."

[Sidenote: The challenge accepted.]

This language certainly seemed to imply that the President would, so far as he was able, make the question of the re-charter of the Bank one of the issues of the election campaign of 1832. His opponents so interpreted him, and they gladly accepted the challenge, for they believed the Bank to be popular with the voters. They thought that the Senators and Representatives in Congress, a majority of whom favored the Bank, truly represented the views of their const.i.tuencies, and they calculated to be able to split the Democratic party itself on the issue.

The president and directors of the Bank, however, were most reluctant to have the existence of the Bank made a party question. The leaders of the National {201} Republicans, on the other hand, insisted upon it. Clay, who, six days after the appearance of the President's message, had been nominated by a national convention at Baltimore as the candidate of the National Republicans for the presidency, was certain that under the issue of the renewal of the Bank's charter Jackson would be signally defeated. The Bank's officers yielded to his advice, enforced by that of Mr. Webster, and on January 9th, 1832, sent in the memorial for a re-charter.

[Sidenote: The Bank's pet.i.tion for re-charter.]

Senator Dallas presented the memorial, but said that he personally had discouraged its presentation at that juncture out of apprehension that the question of the re-charter of the Bank might, at the moment, be drawn into real or imagined conflict with "some higher, some more favorite, some more immediate wish or purpose of the American people."

Senator Dallas was a Bank Democrat. The more favorite wish to which he referred was the re-election of Jackson, and the inference to be drawn from his words was that the Bank Democrats did not want to be obliged to choose between the Bank and Jackson at the next election.

The Senate referred the pet.i.tion for re-charter to a committee composed of Mr. Dallas, Mr. Webster, Mr. Ewing, Mr. Hayne, and Mr.

Johnston.

[Sidenote: Benton's charge of illegal practices.]

Before the committee made its report Mr. Benton made another attack upon the Bank. This time he charged it with illegal practices in issuing drafts which pa.s.sed as currency. The Senate, however, repelled the attack and refused to allow Mr. Benton to introduce his resolution declaring such drafts illegal.

[Sidenote: Pa.s.sage of the bill for re-charter.]

On March 13th Mr. Dallas brought in the bill from his committee for the re-charter of the Bank for fifteen years from the expiration of its existing charter in 1836.

{202} While the bill was pa.s.sing through the Senate a demonstration against the Bank was in progress in the House. Mr. Clayton, of Georgia, an enemy of the Bank, secured the appointment of a committee by the Speaker of the House, Mr. Stevenson, another enemy of the Bank, to inquire into the affairs of the Bank, and make report thereof to the House. A majority report was offered by Mr. Clayton severely criticising the Bank, and a minority report by Mr. McDuffie defending the Bank most ably and vigorously, and, if we may judge from the vote of the House upon the Senate bill for re-charter, which had pa.s.sed the Senate, and appeared at this moment in the House for concurrence, most successfully. The House pa.s.sed the Senate bill, with a few immaterial changes, by a vote of one hundred and seven to eighty-five.

The National Republicans felt sure that they had driven Jackson into a blind alley. But the "Old Hero" stood his ground and hurled a veto at the bill, which both killed it and conquered the National Republican party in the election of 1832 with its own chosen weapon.

[Sidenote: The veto of the Bank Bill.]

[Sidenote: The Bank and foreign powers.]

The veto message was a curious _pot-pourri_ of strength and weakness, of sound statesmanship and cheap demagogism, of shrewd politics and silly commonplaces. We may arrange its score of points under five princ.i.p.al heads, or rather ends in view. The first was the attempt to rouse the national spirit against the Bank, on account of the fact that some eight millions of dollars' worth of the stock was in the hands of foreigners. The President made out that this was a great danger to the United States, both in war and peace. In war, he said, the Bank would be an internal enemy, more terrible than the army and navy of the external foe. Just how the possession of the certificates of stock by foreigners, whose money, which had been paid for {203} them, was in the United States, and therefore under the control of the United States Government, could endanger the United States in case of a war between the United States and the country or countries to which these foreign stockholders belonged, the President failed to explain.

It would seem to the ordinary mind that this would be an advantage to the United States, in that the Government of the United States would have within its grasp a part of the money power of the enemy.

Moreover, the Bank law prevented the foreign stockholders from voting in the election of the directors of the Bank. How these stockholders could possibly exercise any hostile influence then, except by selling their stock to citizens of the United States, and taking the money which they might receive for it out of the country, was not only not explained but is inexplicable.

[Sidenote: The Bank and the West.]

The second object was apparently the excitement of the West against the East. The President declared that the West was being made financially tributary to the East by the Bank. He presented the statistics of stockholding and interest-paying throughout the different sections of the country in proof of this statement. He affirmed that thirteen millions five hundred and twenty-two thousand dollars' worth of the stock was owned in the Northeastern and Middle Commonwealths, that five millions six hundred and twenty-three thousand dollars' worth of it was held in Virginia, the Carolinas, and Georgia, and that only one hundred and forty thousand and two hundred dollars' worth of it was held in the nine Western Commonwealths; while one million six hundred and forty thousand and forty-eight dollars of the profits of the Bank came from these Western Commonwealths, one million four hundred and sixty-three thousand and forty-one dollars of them {204} from the Northeastern and Middle Commonwealths, and three hundred and fifty-two thousand and five hundred and seven dollars of them from the Southern Commonwealths. This seems to ordinary intelligence to prove that the Bank was accommodating Western borrowers with Eastern money; and as the Bank was limited by its charter to a maximum of six per centum interest on its loans, it seems that the accommodation was being rendered upon quite moderate consideration. But the President said it proved that the "Eastern money power" was oppressing the West, and the West was quite willing to believe anything against the persons or inst.i.tutions to whom or to which it owed money.

[Sidenote: The Bank and the rich.]

The third object to which the President addressed himself in the message was to call the attention of the poor to the proposition that the Government was favoring the rich through the Bank. The President called the Bank a monopoly, which means privilege conferred by Government on a few at the expense of the many. He calculated that the privilege to be granted to the existing stockholders by the re-charter of the Bank was worth seventeen millions of dollars, while the bonus which they would be required to pay was but three millions. Fourteen millions of dollars would thus be presented by the Government to the Bank, which sum the Government must take by taxation from the people.

He arrived at these statistics and results by a.s.suming that the Bank stock, after the re-charter and in consequence of it, would be worth about one hundred and fifty dollars for one hundred par, that some other body of stockholders could be found who would pay seventeen millions for the charter, and that the money thus acquired from the supposed stockholders by the Government would effect the remission of just so much taxation upon the people. The President saw also, {205} with Senator Benton, that the use of the Government deposits by the Bank was a source of income to the stockholders at the popular expense. And he denounced the feature in the new bill, which allowed the Commonwealth banks to pay their indebtedness to any branch of the United States Bank with the notes of any other branch, but did not accord the same privilege to individuals, as favoring the rich and powerful against the poor and weak.

The entire argumentation in this part of the message seems extravagant and exaggerated, to say the least, but it sounded convincing and sympathetic to the ma.s.ses. It was something which brought the question home to each one of them, and made it appear related to each one's personal interest. The statement was a powerful vote-catcher. It took wonderfully.

[Sidenote: Structure and powers of the Bank.]

The fourth proposition, as we have arranged them, was the criticism on the structure and powers of the Bank provided in the new bill. The President objected to the unnecessarily large amount of the capital stock, to the right to be given the Bank to locate its own branches, to the power of the Government, as a stockholder, to own real estate for general purposes, and to the power of the Bank to coin money, as he called the power to issue its notes.

[Sidenote: Jackson on executive independence.]

The final division of the message, according to our arrangement, contains the disquisition upon the relation of the departments of the Government to each other in operating the Const.i.tution, and the relation of the general Government to the Commonwealths in regard to jurisdiction over the business of banking. The President held, upon the first of these points, that "if the opinion of the Supreme Court,"

in the case of McCulloch and Maryland, "covered the whole ground of this act, it ought not to control the {206} co-ordinate authorities of the Government." "The Congress, the Executive, and the Court," he said, "must each for itself be guided by its own opinion of the Const.i.tution. Each public officer who takes an oath to support the Const.i.tution swears that he will support it as he understands it, and not as it is understood by others. It is as much the duty of the House of Representatives, of the Senate, and of the President, to decide upon the const.i.tutionality of any bill or resolution which may be presented to them for pa.s.sage or approval, as it is of the Supreme Judges when it may be brought before them for decision. The opinion of the Judges has no more authority over Congress than the opinion of Congress has over the Judges; and, on that point, the President is independent of both. The authority of the Supreme Court must not, therefore, be permitted to control the Congress or the Executive when acting in their legislative capacities, but to have only such influence as the force of their reasoning may deserve."

The President also said that he could have furnished a plan for a bank, had it been requested of him, which would have been equal to all the duties required by the Government, a plan which might have been enacted by Congress without straining or overstepping its powers, and without infringing the powers of the Commonwealths; and he complained that the Bank, as an agent of the Executive Department, should be thrust upon the Department without the Department being consulted as to whether it needed or wanted any such agent.

[Sidenote: Von Holst's criticism of the veto message.]

[Sidenote: The President's real meaning.]

One of the most celebrated historians of American politics has indulged in a very severe criticism upon this part of the message, claiming that President Jackson virtually a.s.serted therein the power to initiate legislation, full co-ordination with the Houses of Congress in legislation, and an {207} independence of Congress, and especially of the Judiciary, which, in practice, would render const.i.tutional law an impossibility. An impartial examination of the text of the message in all its parts will hardly warrant any such conclusions. It is quite clear, from such examination, that the President meant that in the formation of administrative measures by the Congressional committees in charge of the same, the views of the Administration ought to be obtained; that the President is not limited by the Const.i.tution to any cla.s.s of subjects in the use of his veto power upon proposed legislation; and that when the Congress and the President are legislating they are not obliged to re-enact a law simply because the Judiciary have declared it const.i.tutional, nor even prevented from repealing a law, simply because the Judiciary have declared it const.i.tutional, and certainly not prohibited from differing in opinion with the Judiciary in regard to the const.i.tutionality of any law already on the statute book, or any proposed measure. Conservative American lawyers, jurists, and publicists approve all of this as not only the letter but also the spirit of the Const.i.tution.

[Sidenote: Jackson's vindication of executive independence.]

Instead of destroying the Const.i.tution in theory by the doctrine of this veto, it looks more as if the President did something to rescue the "check and balance" system of government, provided in the Const.i.tution, from the threatened domination of a single department over the others in it. The fact is, Congress had succeeded, during the regime of the old Republican party in American politics, in winning a power over the President which the Const.i.tution did not authorize. The members of Congress had selected all of the Presidents, from Jefferson to Jackson, either by nomination or by actual election. {208} The machinery constructed by the Const.i.tution for the election of the President was wanting in its most necessary part. It contained no means of connection between the electoral colleges in the several Commonwealths in voting for the President and Vice-President, at the same time that it required a majority of all the electoral votes to elect. The members of Congress being the only national a.s.sembly of persons in the country, and being the chosen political leaders from the different Commonwealths, naturally glided into the habit of const.i.tuting themselves, in caucus, the connecting link between the electoral colleges in the several Commonwealths, and thus the Congressional caucus, or caucuses, as the case might be, became the nominating body or bodies to the electoral colleges. If the caucus nominated anybody, it left to the electors the alternative of ratifying the nomination, or of so scattering their votes as to give no person a majority, in which latter case the election of the President pa.s.sed into the hands of the members of the House of Representatives. If, on the other hand, the caucus did not nominate anybody, the electors were nearly sure to fail to unite a majority of their votes upon the same person, in which case again the House of Representatives obtained possession of the election. With such an increasing control over the tenure of the President, it is not astonishing that the Congress, and even the individual members of Congress, exercised an ever increasing control over his acts and his policy. The encroaching legislature was fast developing the principle of parliamentary government as the principle of the American system, while the Const.i.tution provides the principle of executive independence and presidential administration.

Again, the judicial department had appeared to a.s.sume the position that it possessed the supreme {209} interpreting power of the Const.i.tution upon every point. It had not then, as it has now, clearly confined itself to questions immediately involving questions of private rights. It appeared to be claiming jurisdiction in regard to questions primarily of political science, public law, and even public policy.

The President's Bank veto called a halt in these tendencies, and exerted an influence for the restoration of executive independence, and of the "check and balance" system, provided in the Const.i.tution; and it called the people into a closer and more immediate relation to the President than they had before occupied, in that the President now appealed to them to decide the question between him and the Congress, in the election which was then about to take place.

These were the political principles contained in the Bank veto, and whether they, or the more democratic principle of anti-monopoly, or the more socialistic principle of government banking, moved the ma.s.ses, certainly they were profoundly moved. Had the popular vote been taken, the day before the appearance of the veto, upon the question of the Bank's re-charter, it is altogether probable that an overwhelming majority would have been found in its favor. Against the veto, however, no sufficient majority could be united in Congress, and when the results of the presidential election became known, it was found that Jackson had carried the country with him in the unequal contest, and that the people had made the principles of the Jacksonian democracy the ruling spirit of the Const.i.tution.

{210}

CHAPTER X.