alarming were the consequences of his teachings, and so insidious and untiring his efforts to undermine the government, that Washington, who had wholly retired from public life, which he hoped never again to enter, was forced to forego his determination, and appear once more in the political arena. The Virginia Resolutions were passed in the latter part of December, 1798. No sooner had the knowledge of this reached him, than he made an earnest appeal to Patrick Henry, who had now become a supporter of the Constitution, to consent to become a member of the State legislature, in order to be in a position in which he could exert his great influence to defeat a movement aimed at the very life of the nation: "It would be a waste of time," said Washington, "to attempt to bring to the view of a person of your observation and discernment the endeavors of a certain party (referring to Jefferson) among us, to disquiet the public mind with unfounded alarms, to arraign every act of the administration, to set the people at variance with their government, and to embarrass all its measures. Equally useless would it be to predict what must be the inevitable consequences of such a policy, if it cannot be arrested. "Unfortunately, and extremely do I regret it, the State of Virginia has taken the lead in this opposition. I have said the State, because the conduct of its legislature in the eyes of the world will authorize the expression; and because it is an incontrovertible fact, that the principal leaders of the opposition dwell in it, and that, with the help of the chiefs in other States, all the plans are arranged and systematically pursued by their followers in other parts of the Union; though in no State except Kentucky, that I have heard of, has legislative countenance been obtained beyond Virginia. At such a crisis as this, when every thing dear and valuable to us is assailed; when this party hangs upon the wheels of government as a dead weight, opposing every measure that is calculated for defence and self-preservation; when measures are systematically and pertinaciously pursued which must eventually DISSOLVE THE UNION, OR PRODUCE COERCION, I say, when these things have become so obvious, ought characters (like yourself), who are best able to rescue the country from the pending evil, to remain at home? Rather ought they not to come forward, and by their talents and influence stand in the breach which such conduct has made on the peace and happiness of this country, and oppose the widening of it? And "Vain will it be to look for peace and happiness, or for the security of liberty or property, if civil discord should ensue. what else can result from the policy of those among us who, by all the measures in their power, are driving matters to extremity, if they cannot be counteracted effectually? . . . If their conduct is viewed with indifference,-if there are activity and misrepresentation on one side, and supineness on the other, their numbers accumu -- lated by intriguing and discontented foreigners under proscription, who are at war with their own governments, and the greater part of them with all governments, they will increase, and nothing short of Omniscience can foretell the consequences. . . . Your weight of character and influence in the House of Representatives would be a bulwark against such dangerous sentiments as are delivered there at present. It would be a rallying-point for the timid, and an attraction to the wavering. In a word, I conceive it to be of immense importance at this crisis that you should be there; and I would fain hope that all minor considerations will be made to yield to the measure. "If I have erroneously supposed that your sentiments on these subjects are in unison with mine, or if I have assumed a liberty which the occasion does not warrant, I must conclude, as I began, with praying that my motives may be received as an apology. My fear that the tranquillity of the Union, and of this State in particular, is hastening to an awful crisis, has extorted them from me." 1 Which of the two came to the rescue when the "legislature of Virginia took steps for an armed organization of the State, and old and long-cherished sentiments adverse to the Union. were renewed," the author of these hostile steps and sentiments, or he who saw in them a meaning of such terrible import; who exerted himself so strenuously for their defeat, and who foresaw, if they could not be arrested by an appeal to public opinion, the terrible catastrophe of the civil war, -in which, when it did come, half a million of lives and ten thousand millions of property were sacrificed? The amazing untruthfulness with which history has been written in this country is in itself a most striking illustration of the hold which Jefferson has had upon the public mind. The charter of the Bank expired on the 4th of March, 1811. In view of such expiration, its stockholders, in 1808, memorialized Congress for its renewal. The bill for this purpose, although strongly supported by Mr. Gallatin, then Secretary of the Treasury, was defeated in the House by a single vote, and in the Senate by the casting vote of its President. The ground on which the extension of the charter of the Bank was refused was the unconstitutionality of the measure; in other words, the grounds upon which Jefferson opposed the first Bank, and to which he clung with unyielding 1 Letter to Patrick Henry, Sparks' Life of Washington, vol. xi. pp. 388-91. tenacity. The Bank having ceased to exist, the government was, from necessity, driven to the employment of State Banks. It used them as depositories of the revenues, and received their notes in payment. No sooner, however, was it seen that the charter of the United States Bank was not to be renewed, than all the States vied with each other in the rage for the creation of local Banks.1 In 1812, the nation found itself involved in a war with Great Britain. In 1814, all the Banks of the country, with the exception of those of New England, suspended payment. The government was speedily reduced to a most mortifying and dangerous position. The expenses of the war could only be met by loans made payable in bank-notes greatly depreciated and rapidly sinking in value. Specie was not to be had. Their decline was much more rapid in the outset than that of the Revolutionary currency. For the former, the whole wealth of the nation was assumed to be pledged, and it derived an additional value from being made legal-tender. The notes of the State Banks had no such support. They might be, and a great many of them were, issued without any provision for their redemption. The amount of their notes outstanding in 1811, as estimated by Mr. Gallatin, equalled $22,700,000; those of the Bank of the United States, $5,400,000: making a total of $28,100,000. The amount of notes of the State Banks outstanding in 1816 was estimated by Mr. Crawford, Secretary of the Treasury, at the time of his report upon the "currency," under date of Feb. 12, 1820, made in obedience to a resolution of the House of Representatives passed March 1st, 1819, at $110,000,000.2 These notes were 1 "A Committee of the Senate of Pennsylvania, appointed in December, 1819, to inquire into the extent and causes of the present general distress, ascribed it to the improvident creation of so many Banks, as will appear from the following extract from their report: "At the following session, the subject was renewed with increased ardor; and a bill authorizing the incorporation of forty-one banking institutions, with capitals amounting to upwards of $17,000,000, was passed by a large majority. This bill was also returned by the Governor, with additional objections; but, two-thirds of both houses (many members of which were pledged to their constituents to that effect) agreeing on its passage, it became a law on the 21st of March, 1814; and thus was inflicted upon the Commonwealth an evil of a more disastrous nature than has ever been experienced by its citizens. Under this law, thirty-seven Banks, four of which were established in Philadelphia, actually went into operation.'” - Considsiderations on the Currency, by Albert Gallatin, p. 50. 2 Mr. Gallatin, in his " Considerations upon the Currency," written in 1830, depreciated all the way from 10 to 30 per cent, and were constantly declining in value. No wonder that the nation stood appalled at the thought of the volcano beneath its feet, which might at any moment burst forth and overwhelm government and people in a common ruin. By universal consent, the only mode of escape was another Bank of the United States. The memory of the advantages secured by the former was still fresh in the minds of all. For the instant, in the face of a supreme necessity, Jefferson and his construction were wholly forgotten. Hamilton was again in the ascendent. With the approbation of Mr. Madison, then President of the United States, who had been one of the most determined opponents, upon constitutional grounds, of the old Bank, and who delivered in Congress the ablest argument made on his side of the question, a bill was brought in. This was vetoed by him, not from the unconstitutionality of the proposed measure, that, he said, having been finally disposed of by repeated precedents of the government, and of the tribunal of last resort in the interpretation of the Constitution (the Supreme Court of the United States),- but for the reason that it was not properly adapted to its objects. The bill was vetoed too late in the session to allow time for maturing another. At the following session, one was brought in and passed; receiving the signature of the President on the 10th of April, 1816. The capital of the Bank was increased to $35,000,000. Like that of the previous one, its charter was to run for twenty years. When the first Bank was chartered, there were but three State Banks in operation, whose joint capital did not exceed $2,000,000. They had been prudently conducted, and the currency was in a sound condition. This, at the time, consisted chiefly of specie. The new Bank, consequently, was only an additional instrument in advancing the general prosperity. As its loans were confined to the discount of bills, they could not be made in excess. New State Banks were created from time to time, as called for by the wants and the increasing business operations of the country. There does not appear to have been any excessive issue or speculative movement of any considerable magnitude during estimates the amount of the notes of the State Banks in circulation in 1816 at $68,000,000. He gives no reason for differing so widely from Mr. Crawford, who certainly was in a position to be the better informed of the two. This the whole period of the existence of the first Bank. was the brightest and most satisfactory one in the financial history of the nation. The system in operation was based upon the soundest principles, and conducted in the most prudent and competent manner. When the second Bank went into operation, the fountains of the great deep had been broken up. In the frenzy for paper money, it was as if a vast mob, guided by the most lawless impulses, had taken possession of the land, had subverted all law and order, and well-nigh its moral and material prosperity. Such was the condition of affairs which the second Bank was created to remedy. It went manfully to work; but the very foundations for a proper system of currency had to be laid. The paper money of the State Banks had driven the greater part of the specie out of the country. As speedily as possible, and in less than two years, the Bank brought back $7,311,750 from Europe, to serve as its reserves, - at a loss, including interest, of $525,247. It could not, however, hope for permanent success, unless the monetary condition was in a measure restored. For that purpose, it undertook to help such Banks as were deserving of aid. One great obstacle in the way of resumption by the State Banks was their indebtedness to the government, arising out of a deposit of the public money and unpaid proceeds of loans, the only means for the discharge of which was their depreciated paper. The United States Bank assumed such debts to the amount of $10,807,410; of which, $3,336,491 were in the form of special deposits, giving a credit to the State Banks sufficient for the realization of their assets. By such measures, progress was steadily made; so that by 1820 most of the Banks in the Eastern States had resumed. The United States Bank, at the same time, undertook to extend large accommodations to Southern and Western States which were without any adequate system of their own; in consequence of which it made very heavy losses. It also made a loss, soon after it went into operation, of $1,671,221, by the mismanagement of the Baltimore branch. The total losses made within two years after it went into operation were estimated at $3,500,000. These, together with the extensions of loans it was compelled to make, so very seriously crippled it that grave apprehensions were at one time felt that it would be compelled to suspend. It, however, weathered the storm, and gradually worked itself |