1810. "Our whole system of Banks is a violation of every honest

Principle of Banks.... A Bank that issues Paper at Interest is a Pickpocket or a Robber. But the Delusion will have its Course. You may as well reason with a Hurricane. An Aristocracy is growing out of them, that will be as fatal as The Feudal Barons, if unchecked in Time.... Think of the Number, the Offices, Stations, Wealth, Piety and Reputations of the Persons in all the States, who have made Fortunes by these Banks, and then you will see how deeply rooted the evil is. The Number of Debtors who hope to pay their debts by this Paper united with the Creditors who build Pallaces in our Cities, and Castles for Country Seats, by issuing this Paper form too impregnable a Phalanx to be attacked by any Thing less disciplined than Roman Legions."[461] Such was the condition even before the expiration of the charter of the first Bank. But, when the restraining and regulating influence of that conservative and ably managed institution was removed altogether, local banking began a course that ended in a mad carnival of roguery, to the ruin of legitimate business and the impoverishment and bankruptcy of hundreds of thousands of the general public. The avarice of the State banks was immediately inflamed by the war necessities of the National Government. Desperate for money, the Treasury exchanged six per cent United States bonds for the notes of State banks.[462] The Government thus lost five million dollars from worthless bank bills.[463] These local institutions now became the sole depositories of the Government funds which the National Bank had formerly held.[464] Sources of gain of this kind were only extra inducements to those who, by wit alone, would gather quick wealth to set up more local banks. But other advantages were quite enough to appeal to the greedy, the dishonest, and the adventurous. Liberty to pour out bills without effective restriction as to the amount or security; to loan such "rags" to any who could be induced to borrow; to collect these debts by foreclosure of mortgages or threats of imprisonment of the debtors--these were some of the seeds from which grew the noxious financial weeds that began to suck the prosperity of the country. When the first Bank of the United States was organized there were only three State banks in the country. By 1800, there were twenty-eight; by 1811, they had more than trebled,[465] and most of the eighty-eight State institutions in existence when the first National Bank was destroyed had been organized after it seemed probable that it would not be granted a recharter. So rapidly did they increase and so great were their gains that, within little more than a year from the demise of the first Bank of the United States, John Adams records: "The Profits of our Banks to the advantage of the few, at the loss of the many, are such an enormous fraud and oppression as no other Nation ever invented or endured. Who can compute the amount of the sums taken out of the Pocketts of the Simple and hoarded in the Purses of the cunning in the course of every year?... If Rumour speaks the Truth Boston has and will emulate Philadelphia in her Proportion of Bankruptcies."[466] Yet Boston and Philadelphia banks were the soundest and most carefully conducted of any in the whole land. If Adams spoke extravagantly of the methods and results of the best managed financial institutions of the country, he did not exaggerate conditions elsewhere. From Connecticut to the Mississippi River, from Lake Erie to New Orleans, the craze for irresponsible banking spread like a contagious fever. The people were as much affected by the disease as were the speculators. The more "money" they saw, the more "money" they wanted. Bank notes fell in value; specie payments were suspended; rates of exchange were in utter confusion and constantly changing. From day to day no man knew, with certainty, what the "currency" in his pocket was worth. At Vincennes, Indiana, in 1818, William Faux records: "I passed away my 20 dollar note of the rotten bank of Harmony, Pennsylvania, for five dollars only!"[467] The continuance of the war, of course, made this financial situation even worse for the Government than for the people. It could not negotiate its loans; the public dues were collected with difficulty, loss, and delay; the Treasury was well-nigh bankrupt. "The Department of State was so bare of money as to be unable to pay even its stationery bill."[468] In 1814, when on the verge of financial collapse, the Administration determined that another Bank of the United States was absolutely necessary to the conduct of the war.[469] Scheme after scheme was proposed, wrangled over, and defeated. One plan for a bank[470] was beaten "after a day of the most tumultuous proceedings I ever saw," testifies Webster.[471] Another bill passed,[472] but was vetoed by President Madison because it could not aid in the rehabilitation of the public credit, nor "provide a circulating medium during the war, nor ... furnish loans, or anticipate public revenue."[473] When the war was over, Madison timidly suggested to Congress the advisability of establishing a National bank "that the benefits of a uniform national currency should be restored."[474] Thus, on April 10, 1816, two years after Congress took up the subject, a law finally was enacted and approved providing for the chartering and government of the second Bank of the United States.[475] Within four years, then, of the refusal of Congress to recharter the sound and ably managed first Bank of the United States, it was forced to authorize another National institution, endowed with practically the same powers possessed by the Bank which Congress itself had so recently destroyed.[476] But the second establishment would have at least one advantage over the first in the eyes of the predominant political party--a majority of the officers and directors of the Bank would be Republicans.[477] During their four years of "financial liberty" the number of State banks had multiplied. Those that could be enumerated in 1816 were 246.[478] In addition to these, scores of others, most of them "pure swindles,"[479] were pouring out their paper.[480] Even if they had been sound, not half of them were needed.[481] Nearly all of them extended their wild methods. "The Banks have been going on, as tho' the day of reckoning would never come," wrote Rufus King of conditions in the spring of 1816.[482] The people themselves encouraged these practices. The end of the war released an immense quantity of English goods which flooded the American market. The people, believing that devastated Europe would absorb all American products, and beholding a vision of radiant prosperity, were eager to buy. A passion for extravagance swept over America;[483] the country was drained of specie by payments for exports.[484] Then came a frenzy of speculation. "The people were wild; ... reason seemed turned topsy turvey."[485] The multitude of local banks intensified both these manias by every device that guile and avarice could suggest. Every one wanted to get rich at the expense of some one else by a mysterious process, the nature of which was not generally understood beyond the fact that it involved some sort of trickery. Did any man's wife and family want expensive clothing--the local bank would loan him bills issued by itself, but only on good security. Did any man wish to start some unfamiliar and alluring enterprise by which to make a fortune speedily--if he had a farm to mortgage, the funds were his. Was a big new house desired? The money was at hand--nothing was required to get it but the pledge of property worth many times the amount with which the bank "accommodated" him.[486] Indeed, the local banks urged such "investments," invited people with property to borrow, laid traps to ensnare them. "What," asked Hezekiah Niles, "is to be the end of such a business?--Mammoth fortunes for the _wise_, wretched poverty for the _foolish_.... Lands, lots, houses--stock, farming utensils and household furniture, under custody of the sheriff--SPECULATION IN A COACH, HONESTY IN THE JAIL."[487] Many banks sent agents among the people to hawk their bills. These were perfectly good, the harpies would assure their victims, but they could now be had at a heavy discount; to buy them was to make a large profit. So the farmer, the merchant, even the laborer who had acquired a dwelling of his own, were induced to mortgage their property or sell it outright in exchange for bank paper that often proved to be worthless.[488] Frequently these local banks ensnared prosperous farmers by the use of "cappers." Niles prints conspicuously as "A True Story"[489] the account of a certain farmer who owned two thousand acres, well improved and with a commodious residence and substantial farm buildings upon it. Through his land ran a stream affording good water power. He was out of debt, prosperous, and contented. One day he went to a town not many miles from his plantation. There four pleasant-mannered, well-dressed men made his acquaintance and asked him to dinner, where a few directors of the local bank were present. The conversation was brought around to the profits to be made in the milling business. The farmer was induced to borrow a large sum from the local bank and build a mill, mortgaging his farm to secure the loan. The mill was built, but seldom used because there was no work for it to do; and, in the end, the two thousand acres, dwelling, buildings, mill, and all, became the property of the bank directors.[490] This incident is illustrative of numerous similar cases throughout the country, especially in the West and South. Niles thus describes banking methods in general: "At first they throw out money profusely, to all that they believe are _ultimately_ able to return it; nay, they wind round some like serpents to tempt them to borrow--... they then affect to draw in their notes, ... money becomes scarce, and notes of hand are _shaved_ by them to meet bank engagements; it gets worse--the _consummation originally_ designed draws nigh, and farm after farm, lot after lot, house after house, are sacrificed."[491] So terrifying became the evil that the Legislature of New York, although one of the worst offenders in the granting of bank charters, was driven to appoint a committee of investigation. It reported nothing more than every honest observer had noted. Money could not be transmitted from place to place, the committee said, because local banks had "engrossed the whole circulation in their neighborhood," while their notes abroad had depreciated. The operations of the bankers "immediately within their vicinity" were ruinous: "Designing, unprincipled speculator[s] ... impose on the credulity of the honest, industrious, unsuspecting ... by their specious flattery and misrepresentation, obtaining from them borrowed notes and endorsements, until the ruin is consummated, and their farms are sold by the sheriff."[492] Some banks committed astonishing frauds, "such as placing a partial fund in a distant bank to redeem their paper" and then "issuing an emission of notes signed with ink of a different shade, at the same time giving secret orders to said bank not to pay the notes thus signed." Bank paper, called "_facility notes_," was issued, but "payable in neither money, country produce, or any thing else that has body or shape." Bank directors even terrorized merchants who did not submit to their practices. In one typical case all persons were denied discounts who traded at a certain store, the owner of which had asked for bank bills that would be accepted in New York City, where they had to be remitted--this, too, when the offending merchant kept his account at the bank. The committee describes, as illustrative of banking chicanery, the instance of "an aged farmer," owner of a valuable farm, who, "wishing to raise the sum of one thousand dollars, to assist his children, was told by a director, he could get it out of the bank ... and that he would endorse his note for him." Thus the loan was made; but, when the note expired, the director refused to obtain a renewal except upon the payment of one hundred dollars in addition to the discount. At the next renewal the same condition was exacted and also "a judgment ... in favor of said director, and the result was, his farm was soon after sold without his knowledge by the sheriff, and purchased by the said director for less than the judgment."[493] Before the second Bank of the United States opened its doors for business, the local banks began to gather the first fruits of their labors. By the end of 1816 suits upon promissory notes, bonds, and mortgages, given by borrowers, were begun. Three fourths of all judgments rendered in the spring of 1818 by the Supreme Court of the State of New York alone were "in favor of banks, against real property."[494] Suits and judgments of this kind grew ever more frequent. In such fashion was the country hastened toward the period of bankruptcy. Yet the people in general still continued to demand more "money." The worse the curse, the greater the floods of it called for by the body of the public. "Like a dropsical man calling out for water, water, our deluded citizens are clamoring for more banks.... We are now taught to believe that legerdemain tricks upon paper can produce as solid wealth as hard labor in the earth," wrote Jefferson when the financial madness was becoming too apparent to all thoughtful men.[495] Practically no restrictions were placed upon these financial freebooters,[496] while such flimsy regulations as their charters provided were disregarded at will.[497] There was practically no publicity as to the management and condition of even the best of these banks;[498] most of them denied the right of any authority to inquire into their affairs and scorned to furnish information as to their assets or methods.[499] For years the Legislatures of many States were controlled by these institutions; bank charters were secured by the worst methods of legislative manipulation; lobbyists thronged the State Capitols when the General Assemblies were in session; few, if any, lawmaking bodies of the States were without officers, directors, or agents of local banks among their membership.[500] Thus bank charters were granted by wholesale and they were often little better than permits to plunder the public. During the session of the Virginia Legislature of 1816-17, twenty-two applications for bank charters were made.[501] At nearly the same time twenty-one banks were chartered in the newly admitted and thinly peopled State of Ohio.[502] The following year forty-three new banks were authorized in Kentucky.[503] In December, 1818, James Flint found in Kentucky, Ohio, and Tennessee a "vast host of fabricators, and venders of base money."[504] All sorts of "companies" went into the banking business. Bridge companies, turnpike companies, manufacturing companies, mercantile companies, were authorized to issue their bills, and this flood of paper became the "money" of the people; even towns and villages emitted "currency" in the form of municipal notes. The City of Richmond, Virginia, in 1815, issued "small paper bills for change, to the amount of $29,948."[505] Often bills were put in circulation of denominations as low as six and one fourth cents.[506] Rapidly the property of the people became encumbered to secure their indebtedness to the banks. A careful and accurate Scotch traveler thus describes their methods: "By lending, and otherwise emitting their engravings, they have contrived to mortgage and buy much of the property of their neighbours, and to appropriate to themselves the labour of less moneyed citizens.... Bankers gave in exchange for their paper, that of _other banks, equally good with their own_.... The holder of the paper may comply in the barter, or keep the notes ...; but he finds it too late to be delivered from the snare. The people committed the lapsus, when they accepted of the gew-gaws clean from the press.... The deluded multitude have been basely duped."[507] Yet, says Flint, "every one is afraid of bursting the bubble."[508] As settlers penetrated the Ohio and Indiana forests and spread over the Illinois prairies, the banks went with them and "levied their contributions on the first stroke of the axe."[509] Kentucky was comparatively well settled and furnished many emigrants to the newer regions north of the Ohio River. Rough log cabins were the abodes of nearly all of the people[510] who, for the most part, lived roughly,[511] drank heavily,[512] were poorly educated.[513] They were, however, hospitable, generous, and brave; but most of them preferred to speculate rather than to work.[514] Illness was general, sound health rare.[515] "I hate the prairies.... I would not have any of them of a gift, if I must be compelled to live on them," avowed an English emigrant.[516] In short, the settlers reproduced most of the features of the same movement in the preceding generation.[517] There was the same squalor, suspicion, credulity, and the same combativeness,[518] the same assertion of superiority over every other people on earth,[519] the same impatience of control, particularly from a source so remote as the National Government.[520] "The people speak and seem as if they were without a government, and name it only as a bugbear," wrote William Faux.[521] Moreover, the inhabitants of one section knew little or nothing of what those in another were doing. "We are as ignorant of the temper prevailing in the Eastern States as the people of New Holland can be," testifies John Randolph in 1812.[522] Even a generation after Randolph made this statement, Frederick Marryat records that "the United States ... comprehend an immense extent of territory, with a population running from a state of refinement down to one of positive barbarism.... The inhabitants of the cities ... know as little of what is passing in Arkansas and Alabama as a cockney does of the manners and customs of ... the Isle of Man."[523] Communities were still almost as segregated as were those of a half-century earlier.[524] Marryat observes, a few years later, that "to write upon America _as a nation_ would be absurd, for nation ... it is not."[525] Again, he notes in his journal that "the mass of the citizens of the United States have ... a very great dislike to all law except ... the decision of the majority."[526] These qualities furnished rich soil for cultivation by demagogues, and small was the husbandry required to produce a sturdy and bellicose sentiment of Localism. Although the bills of the Bank of the United States were sought for,[527] the hostility to that National institution was increased rather than diminished by the superiority of its notes over those of the local money mills. No town was too small for a bank. The fact that specie payments were not exacted "indicated every village in the United States, where there was a 'church, a tavern and a blacksmith's shop,' as a suitable site for a _bank_, and justified any persons in establishing one who could raise enough to pay the _paper maker_ and _engraver_."[528] Not only did these chartered manufactories of currency multiply, but private banks sprang up and did business without any restraint whatever. Niles was entirely within the truth when he declared that nothing more was necessary to start a banking business than plates, presses, and paper.[529] Often the notes of the banks, private or incorporated, circulated only in the region where they were issued.[530] In 1818 the "currency" of the local banks of Cincinnati was "mere waste paper ... out of the city."[531] The people had to take this local "money" or go without any medium of exchange. When the notes of distant banks were to be had, the people did not know the value of them. "Notes current in one part, are either refused, or taken at a large discount, in another," wrote Flint in 1818.[532] In the cities firms dealing with bank bills printed lists of them with the market values, which changed from day to day.[533] Sometimes the county courts fixed rates of exchange; for instance, the County Court of Norfolk County, Virginia, in March, 1816, decreed that the notes of the Bank of Virginia and the Bank of South Carolina were worth their face value, while the bills of Baltimore and Philadelphia and the District of Columbia were below par.[534] Merchants had to keep lists on which was estimated the value of bank bills and to take chances on the constant fluctuations of them.[535] "Of upwards of a hundred banks that lately figured in Indiana, Ohio, Kentucky, and Tennessee, the money of two is now only received in the land-office, in payment for public lands," testifies Flint, writing from Jeffersonville, Indiana, in March, 1820. "Discount," he adds, "varies from thirty to one hundred per cent."[536] By September, 1818, two thirds of the bank bills sent to Niles in payment for the _Register_ could not "be passed for money."[537] "Chains" of banks were formed by which one member of the conspiracy would redeem its notes only by paying out the bills of another. Thus, if a man presented at the counter of a certain bank the bills issued by it, he was given in exchange those of another bank; when these were taken to this second institution, they were exchanged for the bills of a third bank, which redeemed them with notes of the first.[538] For instance, Bigelow's bank at Jeffersonville, Indiana, redeemed its notes with those of Piatt's bank at Cincinnati, Ohio; this, in turn, paid its bills with those of a Vincennes sawmill and the sawmill exchanged its paper for that of Bigelow's bank.[539] The redemption of their bills by the payment of specie was refused even by the best State banks, and this when the law positively required it. Niles estimated in April, 1818, that, although many banks were sound and honestly conducted, there were not "half a dozen banks in the United States that are able to pay their debts _as they are payable_."[540] All this John Marshall saw and experienced. In 1815, George Fisher[541] presented to the Bank of Virginia ten of its one-hundred-dollar notes for redemption, which was refused. After several months' delay, during which the bank officials ignored a summons to appear in court, a distringas[542] was secured. The President of the bank, Dr. Brockenbrough, resisted service of the writ, and the "Sheriff then called upon the by-standers, as a _posse comitatus_," to assist him. Among these was the Chief Justice of the United States. Fisher had hard work in finding a lawyer to take his case; for months no member of the bar would act as his attorney.[543] For in Virginia as elsewhere--even less than in many States--the local banks were the most lucrative clients and the strongest political influence; and they controlled the lawyers as well as the press. In June, 1818, for instance, a business man in Pennsylvania had accumulated several hundred dollars in bills of a local bank which refused to redeem them in specie or better bills. Three justices of the peace declined to entertain suit against the bank and no notary public would protest the bills. In Maryland, at the same time, a man succeeded in bringing an action against a bank for the redemption of some of its bills; but the cashier, while admitting his own signature on the notes, swore that he could not identify that of the bank's president, who had absented himself.[544] Counterfeiting was widely practiced and, for a time, almost unpunished; a favorite device was the raising of notes, usually from five to fifty dollars. Bills were put in circulation purporting to have been issued by distant banks that did not exist, and never had existed. In a single week of June, 1818, the country newspapers contained accounts of twenty-eight cases of these and similar criminal operations.[545] Sometimes a forger or counterfeiter was caught; at Plattsburg, New York, one of these had twenty different kinds of fraudulent notes, "well executed."[546] In August, 1818, Niles estimates that "the notes of at least ONE HUNDRED banks in the United States are counterfeited."[547] By the end of the year an organized gang of counterfeiters, forgers, and distributors of their products covered the whole country.[548] Counterfeits of the Marine Bank of Baltimore alone were estimated at $1,000,000;[549] one-hundred-dollar notes of the Bank of Louisiana were scattered far and wide.[550] Scarcely an issue of any newspaper appeared without notices of these depredations;[551] one half of the remittances sent Niles from the West were counterfeit.[552] Into this chaos of speculation, fraud, and financial fiction came the second Bank of the United States. The management of it, at the beginning, was adventurous, erratic, corrupt; its officers and directors countenanced the most shameful manipulation of the Bank's stock; some of them participated in the incredible jobbery.[553] Nothing of this, however, was known to the country at large for many months,[554] nor did the knowledge of it, when revealed, afford the occasion for the popular wrath that soon came to be directed against the National Bank. This public hostility, indeed, was largely produced by measures which the Bank took to retrieve the early business blunders of its managers. These blunders were appalling. As soon as it opened in 1817, the Bank began to do business on the inflated scale which the State banks had established; by over-issue of its notes it increased the inflation, already blown to the bursting point. Except in New England, where its loans were moderate and well secured, it accommodated borrowers lavishly. The branches were not required to limit their business to a fixed capital; in many cases, the branch officers and directors, incompetent and swayed by local interest and feeling,[555] issued notes as recklessly as did some of the State banks. In the West particularly, and also in the South, the loans made were enormous. The borrowers had no expectation of paying them when due, but of renewing them from time to time, as had been the practice under State banking. The National branches in these regions showed a faint gleam of prudence by refusing to accept bills of notoriously unsound local banks. This undemocratic partiality, although timidly exercised, aroused to activity the never-slumbering hostility of these local concerns. In the course of business, however, bills of most State banks accumulated to an immense amount in the vaults of the branches of the Bank of the United States. When, in spite of the disposition of the branch officers to extend unending and unlimited indulgence to the State banks and to borrowers generally, the branches finally were compelled by the parent Bank to demand payment of loans and redemption of bills of local banks held by it; and when, in consequence, the State banks were forced to collect debts due them, the catastrophe, so long preparing, fell upon sections where the vices of State banking had been practiced most flagrantly. Suits upon promissory notes, bonds and mortgages, already frequent, now became incessant; sheriffs were never idle. In the autumn of 1818, in a single small county[556] of Delaware, one hundred and fifty such actions were brought by the banks. In addition to this, records the financial chronicler of the period, "their vaults are loaded with bonds, mortgages and other securities, held _in terrorem_ over the heads of several hundreds more."[557] At Harrisburg, Pennsylvania, one bank brought more than one hundred suits during May, 1818;[558] a few months later a single issue of one country newspaper in Pennsylvania contained advertisements of eighteen farms and mills at sheriff's sale; a village newspaper in New York advertised sixty-three farms and lots to be sold under the sheriff's hammer.[559] "Currency" decreased in quantity; unemployment was amazing; scores of thousands of men begged for work; throngs of the idle camped near cities and subsisted on charity.[560] All this the people laid at the doors of the National Bank, while the State banks,[561] of course, encouraged the popular animosity. Another order of the National concern increased the anger of the people and of the State banks against it. For more than a year the parent institution and its branches had redeemed all notes issued by them wherever presented. Since the notes from the West and South flowed to the North and East[562] in payment for the manufactures and merchandise of these sections, this universal redemption became impossible. So, on August 28, 1818, the branches were directed to refuse all notes except their own.[563] Thus the Bank, "like an _abandoned_ mother, ... BASTARDIZED its offspring,"[564] said the enemies of the National Bank, among them all State banks and most of the people. The enforcement of redemption of State bank bills, the reduction of the volume of "currency," were the real causes of the fury with which the Bank of the United States and its branches was now assailed. That institution was the monster, said local orators and editors; its branches were the tentacles of the Octopus, heads of the Hydra.[565] "The 'branches' are execrated on all hands," wrote an Ohio man. "We _feel_ that to the policy pursued by them, we are indebted for all the evils we experience for want of a circulating medium."[566] The popular cry was for relief. More money, not less, was needed, it was said; and more banks that could and would loan funds with which to pay debts. If the creditor would not accept the currency thus procured, let laws be passed that would compel him to do so, or prevent him from collecting what his contract called for. Thus, with such demands upon their lips, and in the midst of a storm of lawsuits, the people entered at last that inevitable period of bankruptcy to which for years they had been drawing nearer and for which they were themselves largely responsible. Bankruptcy laws had already been enacted by some States; and if these acts had not been drawn for the benefit of speculators in anticipation of the possible evil day, the "insolvency" statutes certainly had been administered for the protection of rich and dishonest men who wished to escape their liabilities, and yet to preserve their assets. In New York[567] the debtor was enabled to discharge all accounts by turning over such property as he had; if he owed ten thousand dollars, and possessed but fifty dollars, his debt was cancelled by the surrender of that sum. For the honest and prudent man the law was just, since no great discrepancy usually existed between his reported assets and his liabilities. But lax administration of it afforded to the dishonest adventurer a shield from the righteous consequences of his wrongdoing. The "bankruptcies" of knavish men were common operations. One merchant in an Eastern city "failed," but contrived to go on living in a house for which he "was offered $200,000 in real money."[568] Another in Philadelphia became "insolvent," yet had $7000 worth of wine in his cellar at the very time he was going through "bankruptcy."[569] A merchant tailor in the little town of York, Pennsylvania, resorted to bankruptcy to clear himself of eighty-four thousand dollars of debt.[570] In their speculations adventurous men counted on the aid of these legislative acts for the relief of debtors. "Never ... have any ... laws been more productive of crime than the insolvent laws of Maryland," testifies Niles.[571] One issue of the _Federal Gazette_ contained six columns of bankruptcy notices, and these were only about "one-third of the persons" then "'going through our mill.'" Several "bankrupts" had been millionaires, and continued to "_live in splendid affluence_, ... their wives and children, or some kind relative, having been made rich through their swindlings of the people."[572] Many "insolvents" were bankers; and this led Niles to propose that the following law be adopted: "'Whereas certain persons ... _unknown_, have petitioned for the establishment of a bank at ----: "'Be it enacted, that ... these persons, ... shall have liberty to become BANKRUPTS, and may legally swindle as much as they can.'"[573] In a Senate debate in March, 1820, for a proposed new National Bankruptcy Act,[574] Senator Harrison Gray Otis of Massachusetts moderately stated the results of the State insolvency laws. "Merchants and traders ... are harassed and perplexed by twenty different systems of municipal laws, often repugnant to each other and themselves; always defective; seldom executed in good faith; prolific in endless frauds, perjuries, and evasions; and never productive of ... any sort of justice, to the creditor. Nothing could be ... comparable to their pernicious effects upon the public morals."[575] Senator Prentiss Mellen, of the same State, described the operation of the bankruptcy mill thus: "We frequently witness transactions, poisoned throughout with fraud ... in which _all_ creditors are deceived and defrauded.... The man _pretends_ to be a bankrupt; and having converted a large portion of his property into money ... he ... closes his doors; ... goes through the form of offering to give up all his property, (though secretly retaining thousands,) on condition of receiving a discharge from his creditors.... In a few months, or perhaps weeks, he recommences business, and finds himself ... with a handsome property at command."[576] Senator James Burrill, Jr., of Rhode Island was equally specific and convincing. He pictured the career of a dishonest merchant, who transfers property to relatives, secures a discharge from the State bankruptcy courts, and "in a few days ... resumes his career of folly, extravagance, and rashness.... Thus the creditors are defrauded, and the debtor, in many cases, lives in affluence and splendor."[577] Flint records that "mutual credit and confidence are almost torn up by the roots."[578] It was soon to be the good fortune of John Marshall to declare such State legislation null and void because in violation of the National Constitution. Never did common honesty, good faith, and fair dealing need such a stabilizing power as at the moment Marshall furnished to the American people. In most parts of the country even insolvency laws did not satisfy debtors; they were trying to avoid the results of their own acts by securing the enactment of local statutes that repealed the natural laws of human intercourse--of statutes that expressed the momentary wish of the uncomfortable, if honest, multitude, but that represented no less the devices of the clever and unscrupulous. Fortunate, indeed, was it for the United States, at this critical time in its development, that one department of the Government could not be swayed by the passion of the hour, and thrice happy that the head of that department was John Marshall. The impression made directly on Marshall by what took place under his very eyes in Virginia was strengthened by events that occurred in Kentucky. All his brothers and sisters, except two, besides numerous cousins and relatives by marriage, lived there. Thus he was advised in an intimate and personal way of what went forward in that State.[579] The indebtedness of Kentucky State banks, and of individual borrowers to the branches of the National Bank located in that Commonwealth, amounted to more than two and one half millions of dollars.[580] "This is the _trifling_ sum which the people of Kentucky are called upon to pay in _specie_!"[581] exclaimed a Kentucky paper. The people of that State owed the local banks about $7,000,000 more, while the total indebtedness to all financial institutions within Kentucky was not far from $10,000,000.[582] The sacrifice of property for the satisfaction of mortgages grew ever more distressing. At Lexington, a house and lot, for which the owner had refused $15,000, brought but $1300 at sheriff's sale; another costing $10,000 sold under the hammer for $1500.[583] Even slaves could be sold only at a small fraction of their ordinary market price. It was the same in other States. Within Marshall's personal observation in Virginia the people were forced to eat the fruits of their folly. "Lands in this State cannot now be sold for a year's rent," wrote Jefferson.[584] A farm near Easton, Pennsylvania, worth $12,500, mortgaged to secure a debt of $2500, was taken by the lender on foreclosure for the amount of the loan. A druggist's stock of the retail value of $10,000 was seized for rent by the landlord and sold for $400.[585] In Virginia a little later a farm of three hundred acres with improvements worth, at the lowest estimate, $1500, sold for $300; two wagon horses costing $200 were sacrificed for $40. Mines were shut down, shops closed, taxes unpaid. "The debtor ... gives up his land, and, ruined and undone, seeks a home for himself and his family in the western wilderness."[586] John Quincy Adams records in his diary: "Staple productions ... are falling to ... less than half the prices which they have lately borne, the merchants are crumbling to ruin, the manufactures perishing, agriculture stagnating, and distress universal in every part of the country."[587] During the summer and autumn of 1818, the popular demand for legislation that would suspend contracts, postpone the payment of debts, and stay the judgment of courts, became strident and peremptory. "Our greatest real evil is the question between debtor and creditor, into which the banks have plunged us deeper than would have been possible without them," testifies Adams. "The bank debtors are everywhere so numerous and powerful that they control the newspapers throughout the Union, and give the discussion a turn extremely erroneous, and prostrate every principle of political economy."[588] This was especially true of Kentucky. Throughout the State great assemblages were harangued by oratorical "friends of the people." "The reign of political quackery was in its glory."[589] Why the scarcity of money when that commodity was most needed? Why the lawsuits for the collection of debts, the enforcement of bonds, the foreclosure of mortgages, instead of the renewal of loans, to which debtors had been accustomed? Financial manipulation had done it all. The money power was responsible for the misery of the people. Let that author and contriver of human suffering be suppressed. What could be easier or more just than to enact legislation that would lift the burden of debt that was crushing the people? The State banks would not resist--were they not under the control of the people's Legislature? But they were also at the mercy of that remorseless creature of the National Government, the Bank of the United States. That malign Thing was the real cause of all the trouble.[590] Let the law by which Congress had given illegitimate life to that destroyer of the people's well-being be repealed. If that could not be done because so many of the National Legislature were corruptly interested in the Bank, the States had a sure weapon with which to destroy it--or at least to drive it out of business in every member of the Union. That weapon was taxation. Let each Legislature, by special taxes, strangle the branches of the National Bank operating in the States. So came a popular determination to exterminate, by State action, the second Bank of the United States. National power should be brought to its knees by local authority! National agencies should be made helpless and be dispatched by State prohibition and State taxation! The arm of the National Government should be paralyzed by the blows showered on it when thrusting itself into the affairs of "sovereign" States! Already this process was well under way. The first Constitution of Indiana, adopted soon after Congress had authorized the second Bank of the United States, prohibited any bank chartered outside the State from doing business within its borders.[591] During the very month that the National Bank opened its doors in 1817, the Legislature of Maryland passed an act taxing the Baltimore branch $15,000 annually. Seven months afterward the Legislature of Tennessee enacted a law that any bank not chartered under its authority should pay $50,000 each year for the privilege of banking in that State. A month later Georgia placed a special tax on branches of the Bank of the United States. The Constitution of Illinois, adopted in August, 1818, forbade the establishment of any but State banks. In December of that year North Carolina taxed the branch of the National Bank in that State $5000 per annum. A few weeks later Kentucky laid an annual tax of $60,000 on each of the two branches of the Bank of the United States located at Lexington and Frankfort. Three weeks before John Marshall delivered his opinion in M'Culloch _vs._ Maryland, Ohio enacted a statute placing a yearly tax of $50,000 on each of the two National Bank branches then doing business in that State.[592] Thus the extinction of the second Bank of the United States by State legislation appeared to be inevitable. The past management of it had well deserved this fate; but earnest efforts were now in operation to recover it from former blunders and to retrieve its fortunes. The period of corruption was over, and a new, able, and honest management was about to take charge. If, however, the States could destroy this National fiscal agency, it mattered not how well it might thereafter be conducted, for nothing could be more certain than that the local influence of State banks always would be great enough to induce State Legislatures to lay impossible burdens on the National Bank. Such, then, was the situation that produced those opinions of Marshall on insolvency, on contract, and on a National bank, delivered during February and March of 1819; such the National conditions which confronted him during the preceding summer and autumn. He could do nothing to ameliorate these conditions, nothing to relieve the universal unhappiness, nothing to appease the popular discontent. But he could establish great National principles, which would give steadiness to American business, vitality to the National Government; and which would encourage the people to practice honesty, prudence, and thrift. And just this John Marshall did. When considering the enduring work he performed at this time, we must have in our thought the circumstances that made that work vitally necessary. One of the earliest cases decided by the Supreme Court in 1819 involved the Bankrupt Law of New York. On November 25, 1817, Josiah Sturges[593] of Massachusetts sued Richard Crowninshield of New York in the United States Circuit Court for the District of Massachusetts to recover upon two promissory notes for the sum of $771.86 each, executed March 22, 1811, just twelve days before the passage, April 3, 1811, of the New York statute for the relief of insolvent debtors. The defendant pleaded his discharge under that act. The judges were divided in opinion on the questions whether a State can pass a bankrupt act, whether the New York law was a bankrupt act, and whether it impaired the obligations of a contract. These questions were, accordingly, certified to the Supreme Court. The case was there argued long and exhaustively by David Daggett and Joseph Hopkinson for Sturges and by David B. Ogden and William Hunter for Crowninshield. In weight of reasoning and full citation of authority, the discussion was inferior only to those contests before the Supreme Bench which have found a place in history. On February 17, 1819, Marshall delivered the unanimous opinion of the court.[594] Do the words of the Constitution, "Congress shall have power ... to establish ... uniform laws on the subject of bankruptcies throughout the United States" take from the States the right to pass such laws? Before the adoption of the Constitution, begins Marshall, the States "united for some purposes, but, in most respects, sovereign," could "exercise almost every legislative power." The powers of the States under the Constitution were not defined in that instrument. "These powers proceed, not from the people of America, but from the people of the several states; and remain, after the adoption of the constitution, what they were before, except so far as they may be abridged" by the Nation's fundamental law. While the "mere grant of a power to Congress" does not necessarily mean that the States are forbidden to exercise the same power, such concurrent power does not extend to "every possible case" not expressly prohibited by the Constitution. "The confusion resulting from such a practice would be endless." As a general principle, declares the Chief Justice, "whenever the terms in which a power is granted to Congress, or the nature of the power, required that it should be exercised exclusively by Congress, the subject is as completely taken from the state legislatures as if they had been expressly forbidden to act on it."[595] [Illustration: _John Marshall_ _From the bust in the Court Room of the United States Supreme Court_] Does this general principle apply to bankrupt laws? Assuredly it does. Congress is empowered to "establish uniform laws on the subject throughout the United States." Uniform National legislation is "incompatible with state legislation" on the same subject. Marshall draws a distinction between bankrupt and insolvency laws, although "the line of partition between them is not so distinctly marked" that it can be said, "with positive precision, what belongs exclusively to the one, and not to the other class of laws."[596] He enters upon an examination of the nature of insolvent laws which States may enact, and bankrupt laws which Congress may enact; and finds that "there is such a connection between them as to render it difficult to say how far they may be blended together.... A bankrupt law may contain those regulations which are generally found in insolvent laws"; while "an insolvent law may contain those which are common to a bankrupt law." It is "obvious," then, that it would be a hardship to "deny to the state legislatures the power of acting on this subject, in consequence of the grant to Congress." The true rule--"certainly a convenient one"--is to "consider the power of the states as existing over such cases as the laws of the Union may not reach."[597] But, whether this common-sense construction is adopted or not, it is undeniable that Congress may exercise a power granted to it or decline to exercise it. So, if Congress thinks that uniform bankrupt laws "ought not to be established" throughout the country, surely the State Legislatures ought not, on that account, to be prevented from passing bankrupt acts. The idea of Marshall, the statesman, was that it was better to have bankrupt laws of some kind than none at all. "It is not the mere existence of the power [in Congress], but its exercise, which is incompatible with the exercise of the same power by the states. It is not the right to establish these uniform laws, but their actual establishment, which is inconsistent with the partial acts of the states."[598] Even should Congress pass a bankrupt law, that action does not extinguish, but only suspends, the power of the State to legislate on the same subject. When Congress repeals a National bankrupt law it merely "removes a disability" of the State created by the enactment of the National statute, and lasting only so long as that statute is in force. In short, "until the power to pass uniform laws on the subject of bankruptcies be exercised by Congress, the states are not forbidden to pass a bankrupt law, provided it contain no principle which violates the 10th section of the first article of the constitution of the United States."[599] Having toilsomely reached this conclusion, Marshall comes to what he calls "the great question on which the cause must depend": Does the New York Bankrupt Law "impair the obligation of contracts"?[600] What is the effect of that law? It "liberates the person of the debtor, and discharges him from all liability for any debt previously contracted, on his surrendering his property in the manner it prescribes." Here Marshall enters upon that series of expositions of the contract clause of the Constitution which, next to the Nationalism of his opinions, is, perhaps, the most conspicuous feature of his philosophy of government and human intercourse.[601] "What is the obligation of a contract? and what will impair it?"[602] It would be hard to find words "more intelligible, or less liable to misconstruction, than those which are to be explained." With a tinge of patient impatience, the Chief Justice proceeds to define the words "contract," "impair," and "obligation," much as a weary school teacher might teach the simplest lesson to a particularly dull pupil. "A contract is an agreement in which a party undertakes to do, or not to do, a particular thing. The law binds him to perform his undertaking, and this is, of course, the obligation of his contract. In the case at bar, the defendant has given his promissory note to pay the plaintiff a sum of money on or before a certain day. The contract binds him to pay that sum on that day; and this is its obligation. Any law which releases a part of this obligation, must, in the literal sense of the word, impair it. Much more must a law impair it which makes it totally invalid, and entirely discharges it. "The words of the constitution, then, are express, and incapable of being misunderstood. They admit of no variety of construction, and are acknowledged to apply to that species of contract, an engagement between man and man, for the payment of money, which has been entered into by these parties."[603] What are the arguments that such law does not violate the Constitution? One is that, since a contract "can only bind a man to pay to the full extent of his property, it is an implied condition that he may be discharged on surrendering the whole of it." This is simply not true, says Marshall. When a contract is made, the parties to it have in mind, not only existing property, but "future acquisitions. Industry, talents and integrity, constitute a fund which is as confidently trusted as property itself. Future acquisitions are, therefore, liable for contracts; and to release them from this liability impairs their obligation."[604] Marshall brushes aside, almost brusquely, the argument that the only reason for the adoption of the contract clause by the Constitutional Convention was the paper money evil; that the States always had passed bankrupt and insolvent laws; and that if the framers of the Constitution had intended to deprive the States of this power, "insolvent laws would have been mentioned in the prohibition." No power whatever, he repeats, is conferred on the States by the Constitution. That instrument found them "in possession" of practically all legislative power and either prohibited "its future exercise entirely," or restrained it "so far as national policy may require." While the Constitution permits States to pass bankrupt laws "until that power shall be exercised by Congress," the fundamental law positively forbids the States to "introduce into such laws a clause which discharges the obligations the bankrupt has entered into. It is not admitted that, without this principle, an act cannot be a bankrupt law; and if it were, that admission would not change the constitution, nor exempt such acts from its prohibitions."[605] There was, said Marshall, nothing in the argument that, if the framers of the Constitution had intended to "prohibit the States from passing insolvent laws," they would have plainly said so. "It was not necessary, nor would it have been safe" for them to have enumerated "particular subjects to which the principle they intended to establish should apply." On this subject, as on every other dealt with in the Constitution, fundamental principles are set out. What is the one involved in this case? It is "the inviolability of contracts. This principle was to be protected in whatsoever form it might be assailed. To what purpose enumerate the particular modes of violation which should be forbidden, when it was intended to forbid all?... The plain and simple declaration, that no state shall pass any law impairing the obligation of contracts, includes insolvent laws and all other laws, so far as they infringe the principle the convention intended to hold sacred, and no farther."[606] At this point Marshall displays the humanitarian which, in his character, was inferior only to the statesman. He was against imprisonment for debt, one of the many brutal customs still practiced. "The convention did not intend to prohibit the passage of all insolvent laws," he avows. "To punish honest insolvency by imprisonment for life, and to make this a constitutional principle, would be an excess of inhumanity which will not readily be imputed to the illustrious patriots who framed our constitution, nor to the people who adopted it.... Confinement of the debtor may be a punishment for not performing his contract, or may be allowed as a means of inducing him to perform it. But the state may refuse to inflict this punishment, or may withhold this means and leave the contract in full force. Imprisonment is no part of the contract, and simply to release the prisoner does not impair its obligation."[607] Following his provoking custom of taking up a point with which he had already dealt, Marshall harks back to the subject of the reason for inserting the contract clause into the Constitution. He restates the argument against applying that provision to State insolvent laws--that, from the beginning, the Colonies and States had enacted such legislation; that the history of the times shows that "the mind of the convention was directed to other laws which were fraudulent in their character, which enabled the debtor to escape from his obligation, and yet hold his property, not to this, which is beneficial in its operation." But, he continues, "the spirit of ... a constitution" is not to be determined solely by a partial view of the history of the times when it was adopted--"the spirit is to be collected chiefly from its words." And "it would be dangerous in the extreme to infer from extrinsic circumstances, that a case for which the words of an instrument expressly provide, shall be exempted from its operation." Where language is obscure, where words conflict, "construction becomes necessary." But, when language is clear, words harmonious, the plain meaning of that language and of those words is not "to be disregarded, because we believe the framers of that instrument could not intend what they say."[608] The practice of the Colonies, and of the States before the Constitution was adopted, was a weak argument at best. For example, the Colonies and States had issued paper money, emitted bills of credit, and done other things, all of which the Constitution prohibits. "If the long exercise of the power to emit bills of credit did not restrain the convention from prohibiting its future exercise, neither can it be said that the long exercise of the power to impair the obligation of contracts, should prevent a similar prohibition." The fact that insolvent laws are not forbidden "by name" does not exclude them from the operation of the contract clause of the Constitution. It is "a principle which is to be forbidden; and this principle is described in as appropriate terms as our language affords."[609] Perhaps paper money was the chief and impelling reason for making the contract clause a part of the National Constitution. But can the operation of that clause be confined to paper money? "No court can be justified in restricting such comprehensive words to a particular mischief to which no allusion is made." The words must be given "their full and obvious meaning."[610] Doubtless the evils of paper money directed the Convention to the subject of contracts; but it did far more than to make paper money impossible thereafter. "In the opinion of the convention, much more remained to be done. The same mischief might be effected by other means. To restore public confidence completely, it was necessary not only to prohibit the use of particular means by which it might be effected, but to prohibit the use of any means by which the same mischief might be produced. The convention appears to have intended to establish a great principle, that contracts should be inviolable. The constitution therefore declares, that no state shall pass 'any law impairing the obligation of contracts.'"[611] From all this it follows that the New York Bankruptcy Act of 1812 is unconstitutional because it impaired the obligations of a contract. The opinion of the Chief Justice aroused great excitement.[612] It, of course, alarmed those who had been using State insolvent laws to avoid payment of their debts, while retaining much of their wealth. It also was unwelcome to the great body of honest, though imprudent, debtors who were struggling to lighten their burdens by legislation. But the more thoughtful, even among radicals, welcomed Marshall's pronouncement. Niles approved it heartily.[613] Gradually, surely, Marshall's simple doctrine grew in favor throughout the whole country, and is to-day a vital and enduring element of American thought and character as well as of Constitutional law. As in Fletcher _vs._ Peck, the principle of the inviolability of contracts was applied where a State and individuals are parties, so the same principle was now asserted in Sturges _vs._ Crowninshield as to State laws impairing the obligation of contracts between man and man. At the same session, in the celebrated Dartmouth College case,[614] Marshall announced that this principle also covers charters granted by States. Thus did he develop the idea of good faith and stability of engagement as a life-giving principle of the American Constitution. FOOTNOTES: [437] M'Culloch _vs._ Maryland, see _infra_, chap. VI. [438] See vol. II, 60, of this work. [439] Sumner: _History of American Currency_, 63. [440] See Memorial of the Bank for a recharter, April 20, 1808 (_Am. State Papers, Finance_, II, 301), and second Memorial, Dec. 18, 1810 (_ib._ 451-52). Every statement in these petitions was true. See also Dewey: _Financial History of the United States_, 100, 101. [441] See vol. II, 70-71, of this work. [442] _Annals_, 1st Cong. 2d. Sess. 1945. By far the strongest objection to a National bank, however, was that it was a monopoly inconsistent with free institutions. [443] Jefferson to Gallatin, Dec. 13, 1803, _Works_: Ford: X, 57. [444] "Fully two thirds of the Bank stock ... were owned in England." (Adams: _U.S._ V, 328.) [445] Dewey, 127; and Pitkin: _Statistical View of the Commerce of the United States_, 130-32. [446] Adams: _U.S._ V, 328-29. [447] _Annals_, 11th Cong. 3d Sess. 118-21. [448] _Ib._ 153, 201, 308; and see Pitkin, 421. [449] Adams: _U.S._ V, 327-28. "They induced one State legislature after another to instruct their senators on the subject." Pitkin, 422. [450] Ambler: _Ritchie_, 26-27, 52. [451] _Ib._ 67. [452] _Branch Hist. Papers_, June, 1903, 179. [453] _Annals_, 11th Cong. 3d Sess. 145. [454] "It is true, that a branch of the Bank of the United States ... is established at Norfolk; and that a branch of the Bank of Virginia is also established there. But these circumstances furnish no possible motive of avarice to the Virginia Legislature.... They have acted ... from the purest and most honorable motives." (_Annals_, 11th Cong. 3d Sess. 200.) [455] Pitkin, 421. [456] The "newspapers teem with the most virulent abuse." (James Flint's Letters from America, in _Early Western Travels_: Thwaites, IX, 87.) Even twenty years later Captain Marryat records: "The press in the United States is licentious to the highest possible degree, and defies control.... Every man in America reads his newspaper, and hardly any thing else." (Marryat: _Diary in America_, 2d Series, 56-59.) [457] "The Democratic presses ... have ... teemed with the most scurrilous abuse against every member of Congress who has dared to utter a syllable in favor of the renewal of the bank charter." Any member supporting the bank "is instantly charged with being bribed, ... with being corrupt, with having trampled upon the rights and liberties of the people, ... with being guilty of perjury." According to "the rantings of our Democratic editors ... and the denunciations of our public declaimers," the bank "exists under the form of every foul and hateful beast and bird, and creeping thing. It is an _Hydra_; it is a _Cerberus_; it is a _Gorgon_; it is a _Vulture_; it is a _Viper_.... "Shall we tamely act under the lash of this tyranny of the press?... I most solemnly protest.... To tyranny, under whatever form it may be exercised, I declare open and interminable war ... whether the tyrant is an irresponsible editor or a despotic Monarch." (_Annals_, 11th Cong. 3d Sess. 145.) [458] _Annals_, 11th Cong. 3d Sess. 826. [459] _Ib._ 347. [460] Pitkin, 430. [461] Adams to Rush, Dec. 27, 1810, _Old Family Letters_, 272. [462] Sumner: _Andrew Jackson_, 229. [463] Dewey, 145. [464] Twenty-one State banks were employed as Government depositories after the destruction of the first Bank of the United States (_Ib._ 128.) [465] Dewey, 127. [466] Adams to Rush, July 3, 1812, _Old Family Letters_, 299. [467] William Faux's Journal, _E. W. T._: Thwaites, XI, 207. [468] Speech of Hanson in the House, Nov. 28, 1814, _Annals_, 13th Cong. 3d Sess. 656. [469] Catterall: _Second Bank of the United States_, 13-17. [470] Calhoun's bill. [471] Webster to his brother, Nov. 29, 1814, Van Tyne, 55. [472] Webster's bill. [473] _Annals_, 13th Cong. 3d Sess. 189-91; Richardson, I, 555-57. [474] Richardson, I, 565-66. Four years afterwards President Monroe told his Secretary of State, John Quincy Adams, that Jefferson, Madison, and himself considered all Constitutional objections to the Bank as having been "settled by twenty years of practice and acquiescence under the first bank." (_Memoirs, J. Q. A.: Adams_, IV, 499, Jan. 8, 1820.) [475] _Annals_, 14th Cong. 1st Sess. 280-81. [476] _Annals_, 1st Cong. 2d and 3d Sess. 2375-82; and 14th Cong. 1st Sess. 1812-25; also Dewey, 150-51. [477] Catterall, 22. [478] Dewey, 144. [479] Sumner: _Hist. Am. Currency_, 70. [480] In November, 1818, Niles estimated that there were about four hundred banks in the country with eight thousand "managers and clerks," costing $2,000,000, annually. (Niles, XV, 162.) [481] "The present multitude of them ... is no more fitted to the condition of society, than a long-tailed coat becomes a sailor on ship-board." (_Ib._ XI, 130.) [482] King to his son, May 1, 1816, King, VI, 22. [483] King to Gore, May 14, 1816, _Ib._ 23-25. [484] Niles, XIV, 109. [485] _Ib._ XVI, 257. [486] Niles, XVI, 257. [487] _Ib._ XIV, 110. [488] _Ib._ 195-96. [489] "Niles' _Weekly Register_ is ... an excellent repository of facts and documents." (Jefferson to Crawford, Feb. 11, 1815, _Works_: Ford, XI. 453.) [490] Niles, XIV, 426-28. [491] Niles, XIV, 2-3. [492] "Report of the Committee on the Currency of this [New York] State," Feb. 24, 1818, _ib._ 39-42; also partially reproduced in _American History told by Contemporaries_: Hart, III, 441-45. [493] "Report of Committee on the Currency," New York, _supra_, 184. [494] Niles, XIV, 108. [495] Jefferson to Yancey, Jan. 6, 1816, _Works_: Ford, XI, 494. [496] Dewey, 144; and Sumner: _Hist. Am. Currency_, 75. [497] Niles proposed a new bank to be called "THE RAGBANK OF THE UNIVERSE," main office at "_Lottery-ville_," and branches at "_Hookstown_," "_Owl Creek_," "_Botany Bay_," and "_Twisters-burg_." Directors were to be empowered also "to put offices on wheels, on ship-board, or in balloons"; stock to be "one thousand million of old shirts." (Niles, XIV, 227.) [498] Dewey, 144. [499] _Ib._ 153-54. [500] Flint's Letters, _E. W. T._: Thwaites, IX, 136; and see "Report of the Committee on the Currency," New York, _supra_, 184. [501] Tyler: _Tyler_, I, 302; Niles, XI, 130. [502] Niles, XI, 128. [503] _Ib._ IV, 109; Collins: _Historical Sketches of Kentucky_, 88. These were in addition to the branches of the Bank of Kentucky and of the Bank of the United States. Including them, the number of chartered banks in that State was fifty-eight by the close of 1818. Of the towns where new banks were established during that year, Burksville had 106 inhabitants; Barboursville, 55; Hopkinsville, 131; Greenville, 75; thirteen others had fewer than 500 inhabitants. The "capital" of the banks in such places was never less than $100,000, but that at Glasgow, with 244 inhabitants, had a capital of $200,000, and several other villages were similarly favored. For full list see Niles, XIV, 109. [504] Flint's Letters, _E. W. T._: Thwaites, IX, 133. [505] Niles, XVII, 85. [506] John Woods's Two Years' Residence, _E. W. T._: Thwaites, X, 236. [507] Flint's Letters, _E. W. T._: Thwaites, IX, 133-34. [508] _Ib._ 136. [509] Niles, XIV, 162. [510] Woods's Two Years' Residence, _E. W. T._: Thwaites, X, 274-78: and Flint's Letters, _ib._ IX, 69. In southwestern Indiana, in 1818, Faux "saw nothing ... but miserable log holes, and a mean ville of eight or ten huts or cabins, sadly neglected farms, and indolent, dirty, sickly, wild-looking inhabitants." (Faux's Journal, Nov. 1, 1818, _ib._ XI, 213-14.) He describes Kentucky houses as "miserable holes, having one room only," where "all cook, eat, sleep, breed, and die, males and females, all together." (_Ib._ 185, and see 202.) [511] For shocking and almost unbelievable conditions of living among the settlers see Faux's Journal, _E. W. T._: Thwaites, XI, 226, 231, 252-53, 268-69. [512] "We landed for some whiskey; for our men would do nothing without." (Woods's Two Years' Residence, _ib._ X, 245, 317.) "Excessive drinking seems the all-pervading, easily-besetting sin." (Faux's Journal, Nov. 3, 1818, _ib._ XI, 213.) This continued for many years and was as marked in the East as in the West. (See Marryat, 2d Series, 37-41.) There was, however, a large and ever-increasing number who hearkened to those wonderful men, the circuit-riding preachers, who did so much to build up moral and religious America. Most people belonged to some church, and at the camp meetings and revivals, multitudes received conviction. The student should carefully read the _Autobiography of Peter Cartwright_, edited by W. P. Strickland. This book is an invaluable historical source and is highly interesting. See also Schermerhorn and Mills: _A Correct View of that part of the United States which lies west of the Allegany Mountains, with regard to Religion and Morals._ _Great Revival in the West_, by Catharine C. Cleveland, is a careful and trustworthy account of religious conditions before the War of 1812. It has a complete bibliography. [513] Flint's Letters, _E. W. T._: Thwaites, 153; also Schermerhorn and Mills, 17-18. [514] "Nature is the agriculturist here [near Princeton, Ind.]; speculation instead of cultivation, is the order of the day amongst men." (Thomas Hulme's Journal, E. W. T.: Thwaites, X, 62; see Faux's Journal, _ib._ XI, 227.) [515] Faux's Journal, _ib._ 216, 236, 242-43. [516] _Ib._ 214. [517] See vol. I, chap, VII, of this work. [518] Flint's Letters, _E. W. T._: Thwaites, IX, 87; Woods's Two Years Residence, _ib._ X, 255. "I saw a man this day ... his nose bitten off close down to its root, in a fight with a nose-loving neighbour." (Faux's Journal, _ib._ XI, 222; and see Strickland, 24-25.) [519] The reports of American conditions by British travelers, although from unsympathetic pens and much exaggerated, were substantially true. Thus Europe, and especially the United Kingdom, conceived for Americans that profound contempt which was to endure for generations. "Such is the land of Jonathan," declared the _Edinburgh Review_ in an analysis in 1820 (XXXIII, 78-80) of a book entitled _Statistical Annals of the United States_, by Adam Seybert. "He must not ... allow himself to be dazzled by that galaxy of epithets by which his orators and newspaper scribblers endeavour to persuade their supporters that they are the greatest, the most refined, the most enlightened, and the most moral people upon earth.... They have hitherto given no indications of genius, and made no approaches to the heroic, either in their morality or character.... "During the thirty or forty years of their independence, they have done absolutely nothing for the Sciences, for the Arts, for Literature, or even for statesman-like studies of Politics or Political Economy.... In the four quarters of the globe, who reads an American book? or goes to an American play? or looks at an American picture or statue? What does the world yet owe to American physicians or surgeons? What new substances have their chemists discovered? or what old ones have they analyzed? What new constellations have been discovered by the telescopes of Americans?--what have they done in the mathematics...? under which of the old tyrannical governments of Europe is every sixth man a Slave, whom his fellow-creatures may buy and sell and torture?" [520] Nevertheless, these very settlers had qualities of sound, clean citizenship; and beneath their roughness and crudity were noble aspirations. For a sympathetic and scholarly treatment of this phase of the subject see Pease: _Frontier State_, I, 69. [521] Faux's Journal, _E. W. T._: Thwaites, XI, 246. [522] Randolph to Quincy, Aug. 16, 1812, _Quincy_: Quincy, 270. [523] Marryat, 2d Series, 1. [524] See vol. I, chap, VII, of this work. [525] Marryat, 1st Series, 15. [526] Marryat, 2d Series, 176. [527] Woods's Two Years' Residence, _E. W. T._: Thwaites, X, 325. [528] Niles, XIV, 2. [529] See McMaster, IV, 287. This continued even after the people had at last become suspicious of unlicensed banks. In 1820, at Bloomington, Ohio, a hamlet of "ten houses ... in the edge of the prairie ... a [bank] company was formed, plates engraved, and the bank notes brought to the spot." Failing to secure a charter, the adventurers sold their outfit at auction, fictitious names were signed to the notes, which were then put into fraudulent circulation. (Flint's Letters, _E. W. T._: Thwaites, IX, 310.) [530] _Ib._ 130-31. [531] Faux's Journal, Oct. 11, 1818, _E. W. T_.: Thwaites, XI, 171. Faux says that even in Cincinnati itself the bank bills of that town could be exchanged at stores "only 30 or 40 per centum below par, or United States' paper." [532] Flint's Letters, _E. W. T_. Thwaites, IX, 132-36. [533] In Baltimore Cohens's "lottery and exchange office" issued a list of nearly seventy banks, with rates of prices on their notes. The circular gave notice that the quotations were good for one day only. (Niles, XIV, 396.) At the same time G. & R. Waite, with offices in New York, Philadelphia, and Baltimore, issued a list covering the country from Connecticut to Ohio and Kentucky. (_Ib._ 415.) The rates as given by this firm differed greatly from those published by Cohens. [534] _Ib._ X, 80. [535] Sumner: _Jackson_, 229. [536] Flint's Letters, _E. W. T._: Thwaites, IX, 219. [537] Niles, XV, 60. [538] Niles, XIV, 193-96; also XV, 434. [539] _Ib._ XVII, 164. [540] _Ib._ XIV, 108. [541] A wealthy Richmond merchant who had married a sister of Marshall's wife. (See vol. II, 172, of this work.) [542] A writ directing the sheriff to seize the goods and chattels of a person to compel him to satisfy an obligation. Bouvier (Rawle's ed.) I, 590. [543] Richmond _Enquirer_, Jan. 16, 1816. What was the outcome of this incident does not appear. Professor Sumner says that the bank was closed for a few days, but soon opened and went on with its business. (Sumner: _Hist. Am. Currency_, 74-75.) Sumner fixes the date in 1817, two years after the event. [544] Niles, XIV, 281. [545] _Ib._ 314-15. [546] _Ib._ 333; and for similar cases, see _ib._ 356, 396-97, 428-30. All these accounts were taken from newspapers at the places where criminals were captured. [547] Niles, XIV, 428. [548] _Ib._ XVI, 147-48; also, _ib._ 360, 373, 390. [549] _Ib._ 179. [550] _Ib._ 210. [551] _Ib._ 208. [552] _Ib._ 210. [553] See Catterall, 39-50. [554] The frauds of the directors and officers of the Bank of the United States were used, however, as the pretext for an effort to repeal its charter. On Feb. 9, 1819, James Johnson of Virginia introduced a resolution for that purpose. (_Annals_, 15th Cong. 2d Sess. III, 1140-42.) [555] See Catterall, 32. [556] New Castle County. [557] Niles, XV, 162. [558] _Ib._ 59. [559] _Ib._ 418. [560] Flint's Letters, _E.W.T._: Thwaites, IX, 226. [561] They, too, asserted that institution to be the author of their woes, (Niles, XVII, 2.) [562] Catterall, 33-37. [563] _Ib._ 51-53; and see Niles, XV, 25. [564] Catterall, 33. [565] Monster, Hydra, Cerberus, Octopus, and names of similar import were popularly applied to the Bank of the United States. (See Crawford's speech, _supra_, 175.) [566] Niles, XV, 5. [567] Act of April 3, 1811, _Laws of New York_, 1811, 205-21. [568] Niles, XVI, 257. [569] _Ib._ [570] _Ib._ XVII, 147. [571] "I have known several to _calculate_ upon the 'relief' from them, just as they would do on an accommodation at bank, or on the payment of debts due to them! If we succeed in such and such a thing, say they--very well; if not, we can get the benefit of the insolvent laws.... Where one prudent and honest man applies for such benefit, one hundred rogues are facilitated in their depredations." (Niles, XVII, 115.) [572] _Ib._ [573] _Ib._ XV, 283. [574] The bankruptcy law which Marshall had helped to draw when in Congress (see vol. II, 481-82, of this work) had been repealed in 1803. (_Annals_, 8th Cong. 1st Sess. 215, 625, 631. For reasons for the repeal see _ib._ 616-22.) [575] _Annals_, 16th Cong. 1st Sess. 505. [576] _Ib._ 513. [577] _Ib._ 517-18. [578] Flint's Letters, _E.W.T._: Thwaites, IX, 225. In reviewing _Sketches of America_ by Henry Bradshaw Fearon, an Englishman who traveled through the United States, the _Quarterly Review_ of London scathingly denounced the frauds perpetrated by means of insolvent laws. (_Quarterly Review_, XXI, 165.) [579] None of these letters to Marshall have been preserved. Indeed, only a scant half-dozen of the original great number of letters written him even by prominent men during his long life are in existence. For those of men like Story and Pickering we are indebted to copies preserved in their papers. Marshall, at best, was incredibly negligent of his correspondence as he was of all other ordinary details of life. Most other important men of the time kept copies of their letters; Marshall kept none; and if he preserved those written to him, nearly all of them have disappeared. [580] Niles, XV, 385. [581] _Ib._ [582] _Ib._ XVI, 261. [583] _Ib._ XVII, 85. [584] Jefferson to Adams, Nov. 7, 1819, _Works_: Ford, XII, 145. [585] Niles, XVII, 85. [586] Niles, XVII, 185. [587] _Memoirs, J. Q. A._: Adams, May 27, 1819, IV, 375. [588] _Ib._ 391. [589] Collins, 88. [590] "The disappointment is altogether ascribed to the Bank of the U.S." (King to Mason, Feb. 7, 1819, King, VI, 205.) King's testimony is uncommonly trustworthy. His son was an officer of the branch of Chillicothe, Ohio. [591] See Article X, Section 1, Constitution of Indiana, as adopted June 29, 1816. [592] See Catterall, 64-65, and sources there cited. [593] Spelled _Sturgis_ on the manuscript records of the Supreme Court. [594] 4 Wheaton, 192. [595] 4 Wheaton, 192-93. [596] 4 Wheaton, 194. [597] _Ib._ 195. [598] 4 Wheaton, 196. [599] "No State shall ... emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; pass any ... ex post facto Law, or Law impairing the Obligation of Contracts." [600] 4 Wheaton, 196-97. [601] For the proceedings in the Constitutional Convention on this clause, see vol. III, chap. X, of this work. [602] 4 Wheaton, 197. [603] _Ib._ 197-98. [604] 4 Wheaton, 198. [605] 4 Wheaton, 199. [606] _Ib._ 200. [607] 4 Wheaton, 200-01. [608] 4 Wheaton, 202. [609] _Ib._ 203-04. [610] 4 Wheaton, 205. [611] _Ib._ 206. [612] Niles, XVI, 76. [613] "It will probably, make some great revolutions in property, and raise up many from penury ... and cause others to descend to the condition that becomes _honest men_, by compelling a payment of their debts--as every honest man ought to be compelled to do, if ever able.... It ought not to be at any one's discretion to say when, or under what _convenient_ circumstances, he will _wipe off_ his debts, by the benefit of an insolvent law--as some do every two or three years; or, just as often as they can get credit enough to make any thing by it." (Niles, XVI, 2.) [614] See _infra_, next chapter.