ported. Dearborn said that the tax on hemp had closed every rope-walk in Boston. Adams said that the House Committee on Manufactures would reduce the duties prospectively; that is, to take effect when the debt should be paid. Clay wanted to stop paying the debt in order to take away the administration "cry." Adams took sides with Jackson on the point of paying the debt. He thought public opinion favored that policy. He also thought Clay's programme would appear like defying the South. Clay said that he did not care whom he defied. "To preserve, maintain, and strengthen the American system he would defy the South, the President, and the Devil." We may say what we like of the nullifiers, but, so far as they met with and knew of this disposition on the part of Clay and his supporters, they would not have been free men if they had not resisted it; for it must not be forgotten that the real question at issue was whether their property should be taken away from them or not.

In the annual message for 1831 Jackson recommended that the tariff be amended so as to reduce revenue. February 8, 1832, McDuffie reported a bill making the taxes on iron, steel, sugar, salt, hemp, flour, woollens, cottons, and manufactures of iron twenty-five per cent for a year after June 30, 1832, then eighteen and three fourths per cent for a year, and then twelve and one half per cent for an indefinite period. All other goods which were taxed over twelve and one half per cent at

the time of passing the bill were to be taxed twelve and one half per cent after June 30, 1832. April 27, 1832, the Secretary of the Treasury (McLane) presented a tariff bill in answer to a call by the House. It was planned to raise twelve millions of revenue. It was proposed to collect fifteen per cent on imports in general, with especial and higher rates on the great protected commodities. This was the administration plan. The House Committee on Manufactures reported a bill May 23, which was taken up instead of the others. The battle reopened, and ranged over the whole field of politics and political economy. The act, as finally passed (July 14, 1832), reduced or abolished many of the revenue taxes. It did not materially alter the protective taxes. The tax on iron was reduced, that on cottons was unchanged, that on woollens was raised to fifty per cent; wool costing less than eight cents per pound was made free, other wool was taxed as before. Woollen yarn was now first taxed. This was the position of tariff and nullification when the presidential election was held.

IX. National Bank. In the United States the democratic element in public opinion has always been jealous of and hostile to the money power. The hostility has broken out at different times in different ways, as an assault on banks, corporations, vested rights, and public credit. Sometimes it seems as if the "money power" were regarded superstitiously, as if it were a superhuman entity,

with will and power. The assaults on it are mingled with dread, as of an enemy with whom one is not yet ready to cope, but whose power is increasing rapidly, so that the chance of ultimate victory over him is small. This antagonism is but a premonition of the conflict between democracy and plutocracy, which is the next great crisis which the human race has to meet. We are now to study one of the greatest struggles between democracy and the money power.

After a renewal of the charter of the first Bank of the United States had been refused, in 1812, a great number of local banks were organized, especially in the Middle States. This movement unfortunately coincided with the second war with England. The combination of bank mania and war financiering produced a very extravagant banknote inflation. The party in power was forced to imitate measure after measure of Hamilton's financial system, which they had so vigorously denounced twenty years before. At last they came to a national bank also. The Senate wanted to make a Bank to suit the administration, that is, one which could make loans to the Treasury; one, therefore, which was not bound to pay specie. The House strenuously resisted the creation of such a mere paper-money machine. Madison vetoed, in January, 1815, a bill which had been passed in conformity with the ideas of the House. Another bill was introduced at once, which provided for a bank to conform to the wishes of the administra

tion. This bill was before the House on the day on which news of the treaty of Ghent was received at Washington (February 13). Pitkin says that the news was received at the moment of voting.1 The bill was laid aside and was never revived.

At the next session (1815-16) the proposition came up for a national bank, not as a financial resource for the Treasury, but to check the local banks and force a return to specie payments. The charter became a law April 10, 1816. It was a close imitation of Hamilton's Bank. In this Bank also the government had a big stock note for seven millions of dollars of stock, which it had subscribed for as a resource to pay its debts, not as investment for free capital. The Bank was chartered for twenty years. Its capital was thirty-five millions, seven subscribed by the United States in a five per cent stock note, seven by the public in specie, and twenty-one by the public in United States stocks. It was to pay a bonus of one and one half millions in two, three, and four years. It was not to issue notes under $5.00, and not to suspend specie payments under a penalty of twelve per cent on all notes not redeemed on presentation. Twenty directors were to be elected annually by the stockholders, and five, being stockholders, were to be appointed by the President of the United States and confirmed by the Senate. The federal government was to charter no other bank during the period of the charter of this. The 1 Pitkin, 427.

Secretary of the Treasury might at any time redeem the stocks in the capital of the Bank, including the five per cent subscription stock. He might remove the public deposits if he should see fit, but must state his reasons for so doing to Congress at its next meeting. The Bank engaged to transfer public funds without charge. At first it undertook to equalize the currency by receiving any notes of any branch at any branch, but it was soon forced to abandon the attempt. The old Bank had never done this.1 Two things were mixed up in this attempt: (1) The equalization of the different degrees of depreciation existing in the bank-notes of different districts. This the Bank could not have corrected save by relentlessly presenting all local notes for redemption, until they were made equal to specie or were withdrawn. So far as the Bank did this, it won the reputation of a "monster" which was crushing out the local banks.1 (2) The equalization of the domestic exchanges. This was impossible and undesirable, since capital never could be distributed in exact proportion to local needs for it. The failure of the Bank to "equalize the exchanges," and its refusal to take any notes at any branch, earned it more popular condemnation than anything else.

The Bank charter contained a great many faults. To mention only those which affected its career: The capital was too large. There was no reason for lending its capital to the government, i. e., 1 See page 156.

1 Carey's Letters, 55.