into a satisfactory position. In no single instance, either at the Bank or at any one of its branches, was specie ever refused upon notes or deposits. It could, however, by no means arrest the passion for new Banks, — particularly in the Southern and Western States, which still continued to create them by scores, only to disappear after an ephemeral existence, but not till after they had flooded the country with worthless paper. The consequences of such inflation, with the necessary contraction, were sought to be met by the States with stay-laws, and other expedients to prevent the seizure by law, and the sacrifice of property. A brief sketch of the banking system or operations of the State of Kentucky will suffice for the whole. In 1802, that State chartered a Bank at Lexington, with a capital of $150,000. In 1803, this was followed by the Bank of Kentucky, with a capital of $1,000,000. These Banks appear to have been well-managed and prosperous. In 1815, the State caught the prevailing mania, and increased the capital of the Bank of Kentucky to $3,000,000, with power to create thirteen branches, of which seven went speedily into operation. In 1818, forty-three new Banks were chartered, the greater part of which went into operation. These, for some time, made a show of paying specie; but soon they all suspended, as well as the Bank of Kentucky, which again undertook to resume in 1819, and continued nominally to pay specie for about a year. In the general crash which followed, the common expedient, "stay-laws," was resorted to. To its credit, the Court of Appeals - the highest legal tribunal in the State-pronounced these laws unconstitutional. The people, however, were by no means to be balked. Through the legislature, which they controlled, they established a new Court of Appeals, composed of judges known to be in favor of sustaining the laws. The State at once divided into two most rancorous parties. That favorable to the stay-laws and the new Court remained dominant until 1826, when the opposing party got the upper hand, reversing the action of the one preceding it; but not until almost infinite mischief had been done, both to the moral and material welfare of the State. By the time that reason had resumed its sway, the Banks had almost wholly disappeared. Not a trace of them was to be found in 1830. Mr. Gallatin, in his pamphlet on the currency, puts the number of Banks which failed in this State between 1811 and

1830, at forty-three. He was able to ascertain the capital of only nineteen, which amounted in the aggregate to $6,297,730. The total capital of all the Banks probably equalled $10,000,000. Their circulation and deposits at one time probably equalled their capital. Such was the paper-money debauch in that State. A corresponding exhaustion followed. In all this, Kentucky only stood for an example of Western and Southern States; and shows the perilous sea upon which the second Bank of the United States was launched, and from which it barely escaped complete shipwreck.

In estimating the causes of financial disturbance in the United States, the condition of affairs and the influences at work in other countries are always to be carefully considered. During the whole period, from 1791 to 1811, Europe was convulsed by wars, which created a market at high rates for all the more important products of this country, and gave active employment to her merchant shipping. The "balance of trade," for almost the whole period, continued largely in its favor, and brought into it plentiful supplies of coin. In 1816, peace was restored to Europe, in consequence of which the factitious advantages previously enjoyed by the United States were almost wholly lost. Thenceforth the financial and commercial condition of the country was greatly affected by that of others. The period in England from 1816 to 1826 was the most disturbed and unsatisfactory in her financial history. Resumption there, as in the United States, caused an excessive contraction, to be followed by great speculative movements, which culminated in 1826,- a year alike memorable in both countries for great commercial disasters. The Bank of England resumed in 1821. At that time it seemed sufficiently strong to defy all assault. The resumption of specie payment, and the apparent restoration of its material interests, was followed in that country by a mania for Banks, as widespread and intense as any that ever prevailed in the United States. The consequences were the same in that country as in this. Great numbers of Banks failed, and the Bank of England itself appeared to be brought to the very brink of ruin. As the greatest achievement of society is the effecting of its exchanges by symbols, by the representatives of the articles exchanged, -so the greatest wrong it can do to itself

is to sever the symbol from the constituent, or to accept that as money which has none, either in merchandise or coin. With such a currency, society is in the condition of one whose will exerts no control over his acts. The more violent his action, the greater the harm to which he inevitably comes. Experience has shown that ten years is a very short period in which to recover from the effects of an excessive and long-continued indulgence in the use of paper money which is severed from capital. Hence the criminality of those who wantonly tamper with the currency, or who are instrumental in the imposition of a fictitious one.

The nation had hardly recovered from the disasters consequent upon the refusal to recharter the old Bank, than came the announcement of General Jackson, in his first Annual Message, that:

"Both the constitutionality and the expediency of the law creating this Bank are well questioned by a large portion of our fellowcitizens, and it must be admitted by all that it has failed in the great end of establishing a uniform and sound currency.

"Under these circumstances, if such an institution is deemed essential to the fiscal operations of the government, I submit to the wisdom of the legislature whether a national one, founded upon the credit of the government and its revenues, might not be devised, which would avoid all constitutional difficulties, and, at the same time, secure all the advantages to the government and country that were expected to result from the present Bank."

This announcement created all the astonishment of a clap of thunder in a cloudless sky. It was received with mingled feelings of indignation, ridicule, and contempt. The Bank had never stood higher in popular estimation. The question of its constitutionality was supposed to have been for ever set at rest. The attack did not excite alarm, as it was believed that it would be utterly futile, in view of the experience and precedent of the past. By the usual courtesy, that part of the message relating to the Bank was referred to the Committee of Ways and Means of the House; consisting of Mr. McDuffie, of South Carolina, the chairman, Mr. Verplanck, of New York, Mr. Dwight, of Massachusetts, Mr. Smyth, of Virginia, Mr. Ingersoll, of Connecticut, Mr. Gilmore, of Pennsylvania, and Mr. Overton, of Louisiana. A large majority of

the Committee was friendly to the administration, as were two-thirds of the House. As the greater number of which the Committee was composed were personally familiar with the operations of both Banks, of the period between the two, and with all the political and material questions involved; and as these were discussed with a fulness, ability, and conclusiveness never surpassed in the discussion of a similar subject in this or any other country; and as we must yet return to a National Bank, founded on the model of Hamilton, before we can hope to restore the financial condition of the country,copious extracts are given from the report of the Committee, not only for the information they contain, but for the reason that they carry much more force than would any summary or

abstract.

"There are few subjects," says the report, "having reference to the policy of an established government, so vitally connected with the health of the body politic, or in which the pecuniary interests of society are so extensively and deeply involved. No one of the attributes of sovereignty carries with it a more solemn responsibility, or calls in requisition a higher degree of wisdom, than the power of regulating the common currency, and thus fixing the general standard of value for a great commercial community composed of confederated States.

"Such being, in the opinion of the Committee, the high and delicate trust exclusively committed to Congress by the Federal Constitution, they have proceeded to discharge the duty assigned to them, with a corresponding sense of its magnitude and difficulty. "The most simple and obvious analysis of the subject, as it is presented by the Message of the President, exhibits the following questions for the decision of the National Legislature:

"1. Has Congress the constitutional power to incorporate a Bank, such as that of the United States?

"2. Is it expedient to establish and maintain such an institution? "3. Is it expedient to establish a National Bank, founded upon the credit of the government and its revenues?

"If the concurrence of all the departments of the government at different periods of our history, under every administration, and during the ascendency of both the great political parties into which the country was divided, soon after the adoption of the present constitution, shall be regarded as having the authority ascribed to such sanctions by the common consent of all well-regulated communities, the constitutional power of Congress to incorporate a Bank may be assumed as a postulate no longer open to controversy. In little more than two years after the government went into operation, and at a period when most of the distinguished members of the Federal Convention were either in the executive or legislative councils, the Act incorporating the first Bank of the United States

passed both branches of Congress by large majorities, and received the deliberate sanction of President Washington, who had then recently presided over the deliberations of the Convention. The constitutional power of Congress to pass the Act of Incorporation. was thoroughly investigated, both in the executive cabinet and in Congress, under circumstances in all respects propitious to a dispassionate decision. There was, at that time, no organization of political parties; and the question was, therefore, decided by those who, from their knowledge and experience, were peculiarly qualified to decide correctly, and who were entirely free from the influence of that party excitement and prejudice which would justly impair, in the estimation of posterity, the authority of a legislative interpretation of the constitutional charter. No persons can be more competent to give a just construction to the Constitution than those who had a principal agency in framing it; and no administration can claim a more perfect exemption from all those influences which sometimes pervert the judgments even of the most wise and patriotic, than that of the Father of his Country during the first term of his service.

"Such were the circumstances under which all the branches of the National Legislature solemnly determined that the power of creating a National Bank was vested in Congress by the Constitution. The Bank, thus created, continued its operations for twenty years,

the period for which its charter was granted; during which time public and private credit were raised from a prostrate to a very elevated condition, and the finances of the nation were placed upon the most solid foundation.

"When the charter expired, in 1811, Congress refused to renew it; principally owing, as the Committee believe, to the then existing state of political parties. Soon after the Bank was chartered, the two great parties that have since divided the country began to assume an organized existence. Mr. Jefferson and Mr. Madison, the former in the executive cabinet and the latter in Congress, had been opposed to the establishment of the Bank, on constitutional grounds; and, being placed at the head of the party most unfavorable to the extension of the powers of the government by implication, the bank question came to be regarded as in some degree the test of political principles.

"When Mr. Jefferson came into power, upon the strong tide of a political revolution, the odium of the Alien and Sedition Laws was in part communicated to the Bank of the United States; and, although he gave his official sanction to an Act creating a new branch of that institution at New Orleans, and to another to punish the counterfeiting of its bills, yet, when the question of renewing the charter came before Congress, it was discussed as a party question. And, though some of the most distinguished Republicans including Mr. Gallatin, then Secretary of the Treasury, and Mr. Crawford, then a member of the Senate. were decidedly in favor of the renewal, sustaining the measure by able arguments, the votes in both branches of Congress were distinctly marked as party votes.