in the carnival of credit and speculation, for a non-deposit bank could manage its affairs as recklessly as it chose. The deposit banks speedily drew together to try to prevent any more from being admitted to share in the public deposits. The mania for banking was such that formal riots occurred at the subscription to the stock of new banks. The favored few, who could subscribe the whole, sold to the rest at an advance. To be a commissioner was worth from $500 to $1,000.2 There was a notion, borrowed perhaps from the proceedings of the government of the United States in the organization of both national banks, that to make a bank was a resource by which a group of insolvent debtors could extricate themselves from their embarrassments. The Tammany society being in debt, a plan was formed for paying the debt by making a bank. When the great fire occurred in New York, December, 1835, a proposition was made to create a bank, as a mode of relieving the sufferers. "To make a bank," said Niles, "is the great panacea for every ill that can befall the people of the United States, and yet it adds not one cent to the capital of the community." The effect of this multiplication of banks, and of the scramble between them for the public deposits, was that an enormous amount of capital was arbitrarily distributed over the country,

1 42 Niles, 257; 44 Niles, 371. See some of these facts and the use made of them in Brothers's United States, p. 51.

2 46 Niles, 188.

8 Mackeinzie, 70.

4 49 Niles, 298.

according to political favoritism and local influence, and in entire disregard of the industrial and commercial conditions. The public debt was all paid January 1, 1835. After that date the public deposits increased with great rapidity, and there was no occasion to spend them. The state of things was therefore this: an immense amount of capital was being collected by taxes, and then distributed to favored corporations, as a free loan for an indefinite period, on which they could earn profits by lending it at interest. No monster bank, under the most malicious management, could have produced as much harm, either political or financial, as this system produced while it lasted.

November 5, 1834, Secretary Woodbury informed the Bank of the United States that the Treasury would not receive branch drafts after January 1, 1835. This led to a spirited correspondence with Biddle, in which the latter defended the drafts as good, both in law and finance.1 In the message of 1834 Jackson recapitulated the old complaints against the Bank, and recommended that, on account of its "high-handed proceedings," its notes should no longer be received by the Treasury, and that the stock owned by the nation should be sold. The session of 1834-35 was, however, fruitless as to banking and currency. January 12, 1835, on Benton's motion, the Committee on Finance was ordered to investigate the specie transactions of the Bank. Tyler took fire at this,

1 Document J.

because it reflected on the report which he had just made. In view of subsequent history, it is worth while to notice the profession of faith which was drawn from Tyler at this time. He said that he was opposed to any national bank on constitutional grounds, but that he was free from Jacksonism, and that he wanted to be just to the existing Bank. January 10th Polk introduced a bill to forbid the receipt of notes of the Bank of the United States at the Treasury, unless the Bank would pay at once the dividend which had been withheld in 1834. Bills were also proposed for regulating the deposits in the deposit banks. No action resulted.

In the message of 1835 Jackson referred to the war which (as he said) the Bank had waged on the government for four years, as a proof of the evil effects of such an institution. He declared that the Bank belonged to a system of distrust of the popular will as a regulator of political power, and to a policy which would supplant our system by a consolidated government. Here, then, at the end of the Bank war, we meet again with the second. of the theories of the Bank which Ingham formulated in his letter to Biddle of October 5, 1829,1 at the beginning of the Bank war. Ingham said that some people held that theory. The assumption

that the Bank held that theory concerning itself had been made the rule of action of the govern ment, and the laws and administration of the coun

1 See page 276.

try had been made to conform to that assumption as an established fact. At the session of 1835-36 an attempt was made to investigate the transactions of members of Congress with the Bank. It was abandoned when Adams declared that a similar attempt in 1832 had been abandoned, because it cut both ways.

CHAPTER XI

SPECULATION, DISTRIBUTION, CURRENCY LEGISLATION, AND END OF THE BANK OF THE UNITED STATES

Speculation and Inflation. — In the spring of 1835 the phenomena of a period of speculation began to be distinctly marked. There was great monetary ease and prosperity in England and France, as well as here. Some important improvements in machinery, the first railroads, greater political satisfaction and security, and joint stock banks were especially favorable elements which were then affecting France and England. The price of cotton advanced sharply during 1834-35. Speculation seized upon cotton lands in Mississippi and Louisiana, and on negroes. Next it affected real estate in the cities at which cotton was handled commercially. The success of the Erie Canal led to numerous enterprises of a like nature in Pennsylvania, Maryland, Ohio, Indiana, and Illinois. Capital for these enterprises was not at hand. The States endeavored to draw the capital from Europe by the use of their credit. The natural consequence was great recklessness in contracting debt, and much "financiering" by