THE FINAL COMPROMISE.

381

Clay an opportunity to lead back again into the path of compromise the house, which had already, thanks to the members hostile to compromise, rejected a motion to strike out the offensive clause. The two houses finally agreed to allow the state admission, provided its legislature "by a solemn public act shall declare the assent of the said state to the fundamental condition" that a right should never be deduced from this clause to pass a law and that a law should never be passed "by which any citizen of either of the states in this Union shall be excluded from the enjoyment of any of the privileges and immunities to which such citizen is entitled under the constitution of the United States." The legislature complied with this condition and therewith the Missouri conflict ended.

Three constitutional questions-two of them of cardinal importance had been discussed. Men had fought shy of all three for the moment, and for this reason the originators of the compromise claimed that they had postponed the decision to the Greek calends. From a legal point of view, only one positive result had been reached, and this was on a point concerning which no legal question existed. The northern majority had indirectly renounced the right of congress to forbid slavery, as far as the territory lying south of the line of 36° 30′ was concerned, and it had agreed to this renunciation, because the southern minority had renounced, on its side, its claims to having the questions of law involved decided now in its favor,-provided its concrete demands, which it based upon its interpretation of the constitution, were complied with.

This was the true nature and the substance of the "compromise" which gave Henry Clay the first claim to the proud name of "the great peace-maker.

I Stat. at L., III., p. 645.

CHAPTER X.

DEVELOPMENT OF THE ECONOMIC CONTRAST BETWEEN THE FREE AND SLAVE STATES.

The Missouri compromise produced no change in party relations. Monroe was re-elected president by all the electoral votes except one. The "era of good feeling," which had begun to dawn just after the end of the war with England, now really commenced. The people, wearied by the feverish excitement of the last years, abandoned politics to the politicians and the latter had to content themselves with routine business, since there was, for the moment, no burning question and no noteworthy opposition. But as yet a peace had not been made; only a truce had been concluded. New questions appeared, which sprang from the self-same roots as the earlier ones. Their germs could be traced back to the first year of the existence of the new constitution and their development had kept pace with the industrial development of the country. If their full importance was not yet appreciated, this could be partly ascribed to purely accidental circumstances and it was partly due to the fact that the opposition of principles in the industrial life of the two sections was less and less understood as it assumed a concrete form in the different industrial regions. A little while therefore elapsed before the party-programmes became clear, and meanwhile the parties. became more and more geographical ones. This time of transition was rich in strange transmutations in partyrelations. Leading statesmen changed their positions in the most barefaced manner.

'Deb. of Cong., VI., p. 706.

During the first presidency of Madison, the bank-question again arose, although it was still partially clad in the old party-robe which it was soon to lose entirely. The national bank called into life by Hamilton, in 1791, presented a petition for the renewal of its twenty-year charter. Since the Republicans, who had not yet lost their old dislike of the institution, formed the majority of congress, the request was refused. At the moment the government did not need the support of the bank; the cry against the "monopoly of the money-aristocracy and the speculators" could reckon, now as twenty years before, upon a favorable reception with the masses; numerous capitalists were only waiting until this dangerous competition should be taken out of the way in order to start banks under state charters; and the constitutional objections brought forward in 1791 were again vigorously urged, especially by Clay.' The reasons were too many for the influence of the bank to

overcome.

In three years, the picture had completely changed. One of the most effectual means which the Republicans used in the struggle against the Federalists had been the constant cry against high taxes. When they came into power they had to pay some attention to this in their financial management and, owing to the general prosperity, they could easily do this without causing any immediate damaging results. After the embargo-policy had begun to weigh heavily upon the whole industrial life of the nation, the weak points of the new financial system were soon apparent. The system itself, moreover, was not so different from that of Hamilton as the earlier utterances of Jefferson and his secretary of the treasury, Gallatin, might have led people to suppose. The war destroyed the plan. The reproach of the Federalists that a contest with the greatest maritime power of the world had been entered into wholly

Deb. of Cong., IV., pp. 279, seq., and 311.

without preparation was trner from no point of view than from that of the finances. The heavier capitalists, who could have made the more important contributions, belonged for the most part to the dissatisfied states of the northeast, and the Republican party did not dare to vote taxes which would have laid the financial strength of the country under heavy contributions, for fear of injuring its popularity. So the government laboriously slipped along from month to month by means of small loans which were only placed with the greatest difficulty, by the issue of treasury notes, and by other palliatives. All government securities quickly depreciated, gold and silver constantly became more scarce, paper money more abundant and more worthless, and the credit of the nation was smaller every day. The country was rich all the while, but the government was rapidly approaching bankruptcy.

Under these circumstances the project of a national bank was again brought before congress by the petition of New York. Eppes, the son-in-law of Jefferson, brought in a report as chairman of the committee on ways and means, Jan. 10, 1814, which denied to congress the power 'to create corporations" within the limits of the states without their consent. This was the first change in the party's position on the constitutional question. The orig. inal Republican doctrine was that congress could create no corporations at all. Calhoun at once sought to take advantage of this first breach made by the English cannon in the party principles. He moved the appointment of a committee to consider the propriety of founding a national bank in the District of Columbia.2 The motion was agreed to without opposition, but the matter ended there.

Late in the summer of the same year affairs took a new turn. After the capture of Washington (August 24), all the banks incorporated by the states, with the exception of

'Deb. of Cong., V., p. 122.

2 Ibid, V., p. 171.

those of New England, suspended specie payments.1 The fearful confusion of all financial affairs which resulted from this bore hard upon the treasury. The secretary of the treasury, Dallas, declared in a report of Oct. 17, 1814, to the committee of ways and means: "The monied transactions of private life are at a stand, and the fiscal operations of government labor with extreme inconvenience. It is impossible that such a state of things should be long endured." And the sum and substance of his reasoning was that, "after all," a national bank was the "only efficient remedy." At the end of the report he touched upon the constitutional question, and came to the conclusion that "discussion" must cease and "decision" become "absolute"; that the judgment of a congress must be recognized as settling the question; and that a national bank was "necessary and proper for carrying into execution some of the most important powers constitutionally vested in the government." The man who had said, in 1791 or 1798, that a member of a Republican cabinet would ever use such language, would have been looked upon as crazy. The crown was set to this change of parts, however, by the accompanying provisions: The capital of the bank was to be fixed at $50,000,000; the United States were to subscribe $20,000,000 of this; the bank was to be obliged to loan the United States $30,000,000; of the fifteen directors, five, the president among them, were to be named by the president of the United States; the bank was not to be taxed, except on its real estate, by the general government or the different states; the obligation of redeeming its notes with specie was not to exist, but other means were to be tried in order to prevent their deprecia

1

See the details in Ingersoll, Second War between the United States and England, II., p. 251.

'Life and Writings of A. J. Dallas, p. 236. Annals of XIII. Congress, p. 1285.