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THE BANK BILL PASSED.

market, giving a salary to the VicePresident, etc.*

Perceiving the weakness of their position, the Anti-Federalists tried to find other grounds for objecting. They said that the States had ample authority to establish and to prevent the establishment of banks, but could not maintain State banks in opposition to the National Bank. Manifestly, the latter was unconstitutional, for, unless expressly allowed by the Constitution, the rights of the States could not be curtailed. They claimed also that by Article I., Section 9, Paragraph 5 of the Constitution, Congress was prohibited from favoring any particular place, yet the place where the headquarters of the bank should be located would have an advantage over all others. Nevertheless, and in spite of all opposition, the bill was passed February 8, 1791, by a vote of 39 to 20. The principal reasons given for its adoption were" that it would be conducive to the successful conducting of the national finances, give facility to the obtaining of loans for the use of the government, in sudden emergencies," and that it would also "be productive of considerable advantage to trade and industry in general." The

* Marshall gives a careful resumé of the arguments on both sides of this important constitutional question. See also Tucker, Life of Jefferson, vol. i., pp. 341-346; McMaster, vol. ii., pp. 3032; Bolles, Financial History, chap. vii.; White, Money and Banking, bk. ii., chap. iv.

† Benton, Abridgment of Debates, vol. i., pp. 275, 285.

Von Holst, Constitutional and Political History, vol. i., p. 106.

bill was not presented to the President until February 14, and received his signature February 25.*

There was almost as much diversity of opinion among the members of the Cabinet as there was in the House. Jefferson and Randolph opposed the establishment of the Bank, while Hamilton and Knox advocated it.‡ Washington requested each member of the Cabinet to state his views in writing, and, after carefully perusing these opinions and deliberating upon the subject, he affixed his signature to the act. When he signed the bill he was not fully convinced as to the justice of either argument, but signed it on the principle that where opinion was equally divided, he would sup

*The text of the act will be found in United States Statutes-at-Large, vol. i., pp. 191–196; Annals of Congress, 1st Congress, 3d session, vol. ii., pp. 2312-2317.

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Jefferson's opinion of February 15, 1791, is probably the best concise statement of the "strict constructionist view of the powers of the Federal government. See Jefferson's Works, vol. vii., pp. 555-561; Ford's ed. of Jefferson's Writings, vol. v., pp. 284-289; also MacDonald, Select Documents, pp. 76-81.

Hamilton's refutation (February 23, 1791) of the arguments of Jefferson and Randolph will be found in Hamilton's Works, vol. iv., pp. 104138; MacDonald, Select Documents, pp. 81-98.

Lodge, George Washington, vol. ii., pp. 107109; McMaster, vol. ii., pp. 35-37; Gordy, Political History, vol. i., p. 135 et seq. See also Matthew S. Clarke and David A. Hall, Legislative and Documentary History of the Bank of the United States, pp. 15-112; W. G. Sumner, History of Banking in the United States, vol. i., pp. 22-57; Horace White, Money and Banking, pp. 258-262; C. A. Conant, History of Modern Banks of Issue, pp. 288-294; Accounts of the First Bank, in Quarterly Journal of Economics, vol. vi., pp. 471-474; C. F. Dunbar, in Quarterly Journal of Economics, vol. iii., pp. 54-58.

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SUBSCRIPTIONS TO BANK STOCK.

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* Mason, Veto Power, Harvard Historical Monographs, no. i., p. 25. Madison says that Washington was in great doubt as to the constitutionality of the bill, and that at his request he prepared a draft of a veto message, in case the President finally decided to veto the bill. See Rives, Life of Madison, vol. iii., p. 171.

Life of Washington, vol. ii., p. 206. Pitkin, writing in 1827, is also worth quoting: "Experience has proved the expediency, if not the absolute necessity, of an institution of this kind, to enable the government to manage its great concerns; and has likewise evinced the profound, and almost unerring judgment of that great man, who, as chief magistrate, gave it his sanction. Though this question, for many years afterwards, agitated the public mind, and divided the national councils; yet the late establishment of a national bank (1816), with a capital of $35,000,000, with the approbation and consent of those, heretofore opposed to it on constitutional grounds, must rescue the names of the authors of the first bank, from the reproach then cast upon them, for a violation of the Constitution; and has, it is presumed, put the question at rest."

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eral weeks would pass before all the shares could be allotted to purchasers, but scarcely a half hour had passed from the time the doors were opened on the morning of July 4 before subscriptions for 24,000 shares had been offered. The books were then closed, and the committee in charge held a meeting in order to determine what should be done with the bids for the extra 4,000 shares. Only a few payments had been made, and it was determined to ask each subscriber to accept a pro rata reduction upon his subscription, so that every one who had made a bid might secure some stock.*

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This arrangement was made, but immediately a clamor arose among those who were unfortunate enough not to be numbered among the successful bidders, or those who, living in distant cities, had not been able to get their bids in on time.† Hence they denounced the Bank as a job put up in the interests of the Philadelphians, +

McMaster, vol. ii., pp. 37-38. Various reports relating to the early operations of the bank are in American State Papers, Finance, vol. i. p. 349.

See Ford's ed. of Jefferson's Writings, vol. v., When Jefferson and Madison saw that among those selected for directors of the bank were members of Congress who had most enthusiastically supported the bank; when they saw that Hamilton's financial policy had put him at the head of a party which was willing to follow him almost without question; and because they knew that Hamilton believed it was only by appealing to pecuniary interests that the great majority of men could be induced to support measures in themselves right and proper; it was only natural that they should think his whole purpose was to create friends for the government and especially

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GAMBLING IN BANK SCRIPS.

but it was shown that more than half the bank scrip was owned in Massachusetts and New York, very little of it having been bought in the South. In the face of the wild speculation in the stock that now took place, (particularly at Boston, New York, and Philadelphia) the grumbling gradually gave way. All classes began to gamble in the scrip, with the result that merchants and tradespeople began to complain of slow trade, this gambling interfering with general business. conditions.* By August of the same

to put at the disposal of the Secretary of the

year the scrip was much above par at New York, where on the 10th it reached 280, the next day fell to 205, rose again on the 12th to 220, on the 13th sold at 206 to 212, on the 16th at 160 to 172, and on the 26th averaged 200. In Philadelphia the same scrip sold on the 12th at 141 to 161, and on the 14th at 307 to 312, and, if forty-five days' credit were given, at 315.* The high prices induced the possessors of the stock to sell, and so much was placed on the market that the prices quickly dropped, thereby causing considerable loss to certain

Treasury a party which would be a willing tool speculators who had purchased in the

On

in promoting his anti-republican schemes. July 10, 1791, Madison wrote to Jefferson from New York as follows: "The bank shares have risen as much in the market here as in Philadelphia. It seems admitted on all hands now that the plan of the institution gives a moral certainty of gain to the subscribers, with scarce a physical possibility of loss. The subscriptions are, consequently, a mere scramble for so much public plunder, which will be engrossed by those already loaded with the spoils of individuals.

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Of all the shameful circumstances of this business, it is among the greatest to see the members of the legislature who were most active in pushing this job openly grasping at its emoluments. Schuyler [Hamilton's father-in-law] is to be put at the head of the directors, if the weight of the New York subscribers can effect it. Nothing new is talked of here. In fact, stockjobbing drowns every other subject. The CoffeeHouse is an eternal buzz with the Gamblers." A month later (August 8) he wrote to Jefferson: "The stock-jobbers will become the Pretorian band of the government, at once its tool and its tyrant; bribed by its largesses, and overawing it by clamors and combinations."- Madison's Works (Congress ed.), vol. i., pp. 538, 541.

Writing to Edward Rutledge August 29, 1791, Jefferson said: "What do you think of this scrippomany? Ships are lying idle at the wharfs, buildings are stopped, capitals withdrawn from commerce, manufactures, arts & agriculture, to be employed in gambling; and the tide of public

hope of higher prices. "Every day exhibit[ed] new victims, and open[ed] new scenes of usury, knavery, and folly." Though they railed. at the government, the public had little sympathy for the speculators, who were forced to comfort themselves with the dubious consolation that they might have lost more. In October the first choice of directors of the Bank was made, and with no amiable feel

prosperity almost unparalleled in any country is arrested in its course, and suppressed by the rage of getting rich in a day. No mortal can tell when this will stop, for the spirit of gambling when once it has seized a subject is incurable. The taylor who has made thousands in one day, tho' he has lost them the next, can never again be content with the slow & moderate earnings of his needle."- Ford's ed. of Jefferson's Writings, vol. v., pp. 375-376; Parton, Life of Thomas Jefferson, pp. 396-397. See also his letter of April 19, 1792, to Thomas M. Randolph, in Ford, vol. v., pp. 508-510.

McMaster, vol. ii., pp. 39-41.

Madison to Pendleton, April 9, 1792, Madison's Works (Congress ed.), vol. i., p. 552, also to Henry Lee, April 15, ibid, p. 553.

WASHINGTON'S MESSAGE TO CONGRESS.

ings the anti-bank men beheld the election of Rufus King, Fisher Ames, William Smith, and John Lawrence, -all men who had helped the bank bill through Congress. George Cabot, the new Massachusetts Senator, was offered the presidency, but declined, and Thomas Willing, of Philadelphia, formerly president of the Bank of North America, was chosen instead.*

On October 24, 1791, the first session of the Second Congress convened. During the summer a new House had been elected and a third of the Senators also were new, owing to the retirement of those who had previously held office. To the House came General Artemus Ward, William Findley, and Anthony Wayne,- the last sent by Georgia to take the place of Jackson. But Jackson protested the election of Wayne and made out so strong a case that finally Wayne was unseated.† In the Senate were several new members, Roger Sherman, George Cabot, and Aaron Burr,

the last replacing Philip Schuyler. Jonathan Trumbull, of Connecticut, was chosen Speaker of the House.

On the 25th Washington made his third annual address to Congress. After speaking of the prosperity of the country, he said:

"Your own observations in your respective districts will have satisfied you of the progressive

Schouler, United States, vol. i., p. 198; Bolles, Financial History, p. 129.

McMaster, vol. ii., pp. 47-48. See also the index to Annals of Congress, under "Protested Elections."

Richardson, Messages and Papers, vol. i., 103 et seq.

P.

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state of agriculture, manufactures, commerce, and navigation. In tracing their causes you will have remarked with particular pleasure the happy effects of that revival of confidence, public as well as private, to which the Constitution and laws of the United States have so eminently contributed; and you will have observed with no less interest new and decisive proofs of the increasing reputation and credit of the nation."

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He then went on to speak of the Indian war and the measures taken for the defence and security of the Western frontier." He said that, in order to advance the happiness of the Indians and to attach them firmly to the United States," it was necessary that justice be impartially administered, the mode of alienating their lands be properly defined and regulated, commerce with them be promoted "under regulations tending to secure an equitable deportment toward them," and that laws should be passed to inflict adequate punishment upon those who infringed the treaties. He said "that a system corresponding with the mild principles of religion and philanthropy, toward an unenlightened race of men whose happiness materially depends on the conduct of the United States, would be as honorable to the national character as conformable to the dictates of sound policy." He spoke also of the progress made on the new capital city, the completion of the first census, and the negotiation of two loans of 2,500,000 and 6,000,000 florins, respectively. He referred to the Senate for ratification two treaties with the Cherokee Indians and the Six Nations, concluding his message by calling the atten

124

AFFAIRS OF THE POST-OFFICE.

tion of the legislative body to the needs of "the militia, the post office and post roads, the mint, weights and measures, a provision for the sale of the vacant lands of the United States."* Though not expressing themselves in as warm terms as formerly, the answers of the two Houses showed sincere regard and esteem for Washington.f

The affairs of the post-office were now taken under consideration. Samuel Osgood had resigned the office of Postmaster-General, and Timothy Pickering had been appointed his successor. The time consumed in transporting mail was exasperating,|| and certain classes of mail were excluded, or else carried at the pleasure of the postmaster and the post-riders. Washington therefore desired to hasten the mails, and requested Jefferson to confer with Pickering as to the best methods to accomplish this object. Washington desired that let ters should travel 100 miles in 24 hours, and in order to reduce expenses planned to have all stage wagons of the post-office carry also passengers. A motion to that effect was made in Congress, but it was feared that this course would infringe on the rights

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of the States, and the motion was lost. However, an act was passed and approved February 20, 1792, fixing the rates of postage, allowing the franking privilege to Congressmen and heads of departments, and making newspapers mail matter. By this act the postage on a letter for any distance up to 30 miles was 6 cents; from 30 to 60 miles, 8 cents; 60 to 100 miles, 10 cents; 100 to 150 miles, 122 cents; from 150 to 200 miles, 15 cents; from 200 to 250 miles, 17 cents; from 250 to 350 miles, 20 cents; from 350 to 450 miles, 22 cents; and above 450 miles, 25 cents. These rates applied to single letters, i. e., letters written on but a single sheet of paper, no matter how large or small (two sheets counting as a double letter, etc.) The charge for newspapers was 1 cent per paper for any distance up to 100 miles, and a cent and a half above that.*

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The tax on newspapers was opposed as being a tax on knowledge, as being too high, and as being too high, and as "an insidious forerunner of something worse," t while the franking privilege was characterized as an aristocratic distinction; but the opposition was feeble and the tax soon came to be seen in the light of a good revenue producer. From October 1, 1789, to June 30, 1791, the gross revenues were $71,295.93; from the latter date until De

*Annals of Congress, 2d Congress, 1st session, pp. 1333-1341; McMaster, vol. ii., pp. 60-61.

Madison to Jefferson, June 12, 1792, Madison's Works (Congress ed.), vol. i., p. 561. See also letter to Pendleton, December 6, 1792, ibid, vol. i., p. 572.

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