TH

CHAPTER V.

THE SECOND ADMINISTRATION-CONCLUSION.

HE campaign of 1832 was an easy one for Jackson, by reason of the division in the opposition, caused by the murder of Morgan, the Batavia bricklayer. William Wirt for president, Amos Ellmaker for vicepresident, was the ticket of the anti-masons. Clay was the regular National Republican candidate, while Jackson, supported by a united, organized, and well disciplined army, was at the head of the Democratic ticket.

The direct issue made by the Republicans, under the leadership of Clay, was the preservation of the United States bank, and was met by the Democrats, led by Jackson, by a determination to overthrow and destroy it. Jackson loved a fight. He was a formidable adversary in any conflict, whether political or military, in which he chose to take a part. He never was more in earnest than in his opposition to the bank. The campaign became a struggle in which the popularity of Jackson was arrayed against the popularity of the bank. Charges were formulated against it about as follows: (1.) Usury. (2.) Using branch drafts as currency. (3.) Sales of coin by weight. (4.) Sales of public stocks, against charter prohibition. (5.) Gifts to roads, canals, etc. (6.) Building houses to rent or sell. These were the particulars in which the bank was alleged to have acted illegally. It was also charged with: (a) subsidizing the press; (b) favor itism; (c) exporting specie and interfering with its normal movement; (d) improper increase of its branches; (e) improper expansion of the circulation; (f) failure to serve the public; (g) with mismanagement of the public deposits; (h) postponement of payment of three per cent securities; (i) incomplete number of directors; (j) large expenditures for printing; (k) large contingent expenditures; (1) loans to members of Congress in advance

of appropriations; (m) refusal to give a list of Connecticut stockholders for purposes of taxation; (?) usurpation of control of the bank by exchange committee of the board of directors to the exclusion of the other directors.

The election resulted in an overwhelming victory for Jackson, who received 219 electoral votes, to 49 for Clay, while the popular vote was 707,217 for the former, but 328,561 for the latter, and 254,720 for Wirt.

The project finally adopted by Jackson, was to replace the bank of the United States as a public depository, by distributing the monies of the people among state banks in the leading cities, selecting a Washington bank as the central depository and correspondent. The Bank of the Metropolis, of Washington, was chosen as this central fiscal agent, but refusing to admit a representative of the government among its officials, the idea of a central bank was given over and R. M. Whitney was named as financial agent of the treasury, with the duty of corresponding with and overseeing the various banks of deposit. This gave him tremendous and dangerous power which it was later discovered he grossly abused.

The first cause of Jackson's enmity to the Bank of the United States, was ostensibly that it had been a political engine; really that it had been made a political engine against himself. This new system was from its conception intended to form a strong and connected Jackson organization; the hundreds of letters received from banks applying for deposits, since they became public property, had, as the burthen of their claim, not the financial. strength and safety of the institutions, but the fealty of their officers and stockholders to the cause of Jackson. These applications were considered, accepted or dismissed as a political matter, and, if the Bank of the United States had soiled its garments with the smut of partizanship, Jackson dragged the whole financial system of the United States through the mire.

When all was done, how did the Government stand under the new system? Before, the Bank of the United States, chartered by Congress. and under the direct supervision and control of the Government, had paid a heavy bond for the privilege of acting as custodian of the public funds. This bank was unquestionably solvent, so safe that its stock fell but one and one-half per cent. upon the announcement of Jackson's intention of withdrawing the deposits, and almost immediately recovered. It had its abuses, but these were not serious, and, such as they were, could have been readily remedied by the provisions of a rechartering act. bond would have been promptly, if not willingly, paid, and the issue of branch drafts was susceptible of easy regulation. The new system placed the funds of the United States in the custody of more than twenty banks, in almost as many states, chartered under various laws, some solvent and responsible, some questionable, some clearly unsafe. The relations of the Government with the Bank of the United States were slow in being classed; the business of years could not be settled in a day. Jackson feared that

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the old bank would take revenge upon the new depositories by peremptorily demanding a settlement of balances. This very simple and proper demand was then considered an act of cruelty and injustice. To guard against possible injury by such action, he caused to be delivered to the various banks, heavy drafts of the treasury against the balance of Government deposits still remaining with the old bank. No such revengeful effort was made, but there was great abuse of these drafts on the part of the state banks. The president of the Union bank of Maryland cashed a Government draft of one hundred thousand dollars, and used the proceeds in stock speculations; the Manhattan Company used one of the drafts for five hundred thousand dollars, and other banks of doubtful solvency carried the drafts among their assets, in order to make such a showing as to be entitled to receive the deposits. All these wrongful acts the administration did its best to conceal, and only the inquisitiveness of Congress finally exposed them. On the 9th of December, 1833, the Bank of the United States memorialized Congress against the removal of the deposits. Its champion in the Senate was Henry Clay, while Thomas Benton led the administration party in opposition. For a time the friends of the bank were in the majority in both houses, defeating all measures in regard to the removal of the deposits, and succeeded in adopting a resolution offered by Clay censuring Jackson for assuming power and authority not conferred by the Constitution and the laws, but derogatory to both; but later, in 1836, Benton succeeded in obtaining the adoption of a resolution expunging the record of censure from the journal of the Senate. Thus was Jackson vindicated. It was a source of great gratification to him to be thus exonerated.

The deposits were finally removed from the Bank of the United States and distributed among state banks, which came to be called "pet banks." Thus did Jackson gain his point. The charter of the United States bank expired March 3d, in 1836. The Pennsylvania legislature was induced to grant the bank a state charter. The act was dated February 18, 1836. It is conceded that this legislative enactment was consummated through fraud and corruption, as the bank agreed to pay for its charter the sum of two million five hundred thousand dollars as a bonus, one hundred thousand dollars per year for twenty years for school purposes, to loan the state a million a year at four per cent., and subscribe six hundred and forty thousand dollars to railroads and turnpikes. These unwise engagements ultimately caused its ruin. The bank failed three times in the five years succeeding that of its state charter, viz: May 10, 1837; October 9, 1839; and February 4, 1841, when it was wholly ruined. The stockholders lost every dollar of their investment.

The common verdict has been that the ultimate failure and ruin of the bank proved that Jackson was right in the unrelenting war which he waged against this at one time great and really valuable financial institution. Up