The same step must be again taken as on the former occasion. The party aggrieved, must be misrepresented in the public eye. Popular prejudices must be excited against all Banks; all advocates of Banks must be denounced; and all Bank bills must be spoken of as 66 rags," mere rags. All efforts to obtain a wholesome Banking System must be again represented as a contest of the rich against the poor. It is thus attempted to give a certain tone to public opinion, to silence the voice of common sense. A tone which popular opinion, of itself, never could adopt; for perhaps no course could be pursued more calculated to make the rich, richer, and the poor, poorer, than that which we have supposed to have been so pertinaciously pursued, by those directing the efforts mad,-first, to the destruction of the National Bank; and afterwards, to that of all Banks.

The case we have imagined, is a difficult one indeed, for the sagacious manager, who, with a skill worthy of a better cause, may be supposed to have been pulling the wires of all this machinery. He has done his part, the monster is destroyed, the public deposits have been removed. Certain State Banks have enjoyed a monopoly of the government agency, at least for a time; certain political friends have had the use of government moneys and He too has received his reward. By the aid of those who, from their connection with these state Banks, were led to yield him their best services, his highest ambition has been gratified. But he is still pledged to maintain the course he has pursued; that is, he is pledged, come what will, to prevent the re-existence of a National Bank.

The position however, in which he is placed, obliges him to use his power against the friends to whom he owes his elevation. There is no other alternative. A National Bank on the one hand, or a hard currency and sub-treasury system on the other. The last operates indeed more severely on the state Banks, than a National Bank could have done. But he must go forward. The same legal advisers formerly engaged in drawing up special pleas to justify a breach of public faith towards the late national institution, if they are now keepers of his conscience, may as dexterously show him how his own plighted faith to his state Bank friends may be preserved, while he is aiming a most fatal blow at their prosperity. They may show him, how a pledge to destroy the adversary of his friend, does not prevent him from destroying the friend also. His scruples are overcome. "He kicks the ladder down by which he had ascended,"―hoists the sub-treasury standard, and joins in the popular cry of his own creation: Down with the Banks.

When the government deposits were removed, as we have supposed, from the National Bank to other Banks; and when these other Banks were made, the agents of government for paying and receiving, there was a withdrawal of so many millions of dollars from one channel of circulation to be directed into other channels; producing distress in one case; and superabundance, for the most part untimely, in another. This may be supposed to have operated of course unfavorably, and hardly, upon the customers of the National Bank, and those dependent upon them, yet at least it may have been a subject of rejoicing with the customers of the other Banks. But when the hard money, and sub-treasury system is adopted, there is a withdrawal of so many millions, deposit and circulation, from active employment altogether. No Bank has the deposits, and no Bank gives out its bills in lieu of specie, in payment of public debts, consequently, there is here an entire diminution of the capital in trade, which

does good to no one. No one has cause of rejoicing at it, while the spasm which this contraction occasions, is a cause of suffering to all.

Not only this, when a specie circular is issued by government, requiring all its dues to be paid in hard money, the parties having to pay, resort immediately to the Banks for the specie required. The Banks have recourse to their customers, and the customer of the Bank falls back upon all who are in debt to him. The Banks, perhaps, apprehending more than they have occasion to fear, and not knowing who will pay, and who may disappoint them, call for three or four times the amount absolutely necessary, the borrowers of the Bank are equally alarmed, and press in proportion upon all indebted to them. As the pressure increases, disappointments, and complaints, and excuses are multiplied, and in proportion to these, confidence and credit diminishes. A panic ensues, and with the appearance of panic, all confidence disappears.

In the condition of unlimited extension in which we have supposed the Banks all over the country to have placed themselves, in consequence of their freedom from restraint; and with the increase of their numbers which may have doubled during the period in contemplation, it is easy to imagine the sudden, and almost universal insolvency into which the whole community must be plunged by such a panic, such loss of confidence, and such general embarrassments. A state of distress follows, in which all may be supposed to be convinced of the error in the administration of public affairs, by which this distress has been brought about. To meet the case, public opinion, or rather the opinions of a portion of the public, must be wrought upon and it is for this end, that this pretended voice of the people is raised, and still continued against what are called Bank rags, and Bank barons.

We have supposed the preceding circumstances, in order to account for the manner in which a prejudice has been created in the minds of some, both against a National Bank, and against all Banks. This prejudice is called an objection of the people. Let the people judge whether it is their objection or not. Let the people judge for themselves, how nearly the circumstances detailed, resemble those which have actually taken place in this country within a year. And let the laboring classes especially enquire, what they have gained, either by the hard money currency, or by the sub-treasury system: and what objection they can now have, either to a National Bank, or to a well regulated system of state Banks, checked and balanced by a National Bank.

SECTION VI.

Objections arising from the management of the late United States Bank. Stock speculation-Fluctuations in trade-Expansion and reaction.

The partial distress occasioned by the sudden rise and fall of the stock of this Bank, soon after its first going into operation, in what has been called "the Baltimore Speculation," is alleged in proof of the abuse to which the powers of a National Bank must always be liable.

By the act of incorporation, the directors possessed the power of lending the money of the Bank upon the securities of its own stock. A few individuals taking advantage of this circumstance, engaged in a specu

lation of buying up the shares, by borrowing of the Bank itself, to the extent of their purchases. The higher the price quoted in the market, the more money the Bank lent upon the stock; and the more money the Bank was known to lend upon this security, the higher the price rose. If the Bank lent the par value, purchasers were willing to give more than par. If the Bank lent twenty-five per cent. more than par, purchasers would give still more. Every one calculating, that by paying the small difference between what the Bank lent, and the price of the shares, he should make a profit on the whole amount of his purchase. If the stock rose five per cent., a thousand dollars in this way might procure him the advantage of this five per cent. upon ten thousand, being a profit of five hundred dollars, upon the one thousand cash investment. The speculation was commenced and carried on chiefly by some of the directors of the principal Branches, the Bank lending perhaps one hundred and twenty-five or one hundred and thirty upon its own stock, not really worth at the time, one hundred. If the Bank, however, lent so much, other persons would lend still more. Some, because they really thought the securities good, and others, because they wished to produce a certain effect upon the market. Private lenders, however, generally required some individual security besides the stock, to guard against a fall; but the Bank lent or may have been made to lend to some of its own directors on the security of the stock alone. The price of the shares rose to one hundred and fifty or one hundred and sixty. A few knowing ones, who sold out in time, made a profit, but at length the bubble burst. The Bank in some cases was left in the lurch, and sustained a heavy loss, and numbers of speculators, or rather stock-jobbers, with those who had unwearily placed confidence in them, were ruined. All this however resulted from an abuse of power, of which the directors of any banking institution, with the same privileges, might have been guilty. Similar mismanagement having indeed occurred in state institutions, as in the conspiracy cases in the city of New York, some years since. The difference being only this, that as the capital of the Bank was very large, these speculations were large, and the disasterous result in the same proportion. The whole, however, of this misconduct, with its consequences, might have been provided against, by a clause in the act of incorporation, now common in the charters of our state Banks, prohibiting the institution from lending upon the security of its own stock; at least from lending beyond a certain proportion of its par value.

In the getting up of moneyed institutions, there are always certain persons, who take shares, and seek to become directors, for no other purpose than that of speculating upon the rise of the stock. These knowing ones subscribe-talk much of the immense advantages of the institution-procure the insertion of newspaper paragraphs, to the same effect; and having created an imaginary value, sell out, resign, and care no more about the matter, except to pocket their differences. This perhaps they have a right to do, but the institution itself should not be made to become a party to their operations; and to provide against this, must be the care of legislators, in drafting the statute by which the Bank is incorporated.

The fluctuations in trade, during the twenty years term of the Bank, have also, by some, been charged to the management of its conductors. Very few however, urge this objection seriously.

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There are certain fluctuations in trade, and in the money market, necessarily arising, as it is easy to perceive from the nature of things.

The manufacturer having sold his years' stock of goods to advantage, is encouraged next year, to manufacture a greater quantity. His neighbor does the same, for he has done equally well. The two have no understanding together, as to the increase about to be made by each. Members of any and every branch of trade may combine to restrict each other as to price; but they never restrict each other as to the quantity to be produced. The farmer may bind himself not to sell his wheat for less than he did the previous year: but he will not agree that his land shall not yield more wheat next year than it did the last. What is true of these persons, is equally true of all others. All having done well one year, are encouraged to manufacture or produce more next year, consequently this next year, there may be more goods than are wanted, and it is a losing year. All are now discouraged, and all again restrict their operations. And as manufacturers restrict their operations, the raw material, brought forward to meet their expected wants, proves to be too abundant. Thence follows a losing season for producers. So it is with communities, or nations. Three, four, or five years of good business, lead to a too rapid increase of engagements, on one hand, and of production on the other. The supply exceeds the demand, or the ability to remunerate, and then follows a period of embarrassment. Such changes we find have occurred in this country every five, six, or seven years. When they do occur, corresponding fluctuations take place in the money market. The pressure for money, however, or the want of this pressure, is the effect, and not the cause of these fluctuations in trade. The operations of a National Bank are no more chargeable with these changes, than the rise and fall of the mercury in the thermometer are chargeable with the changes of the weather. These fluctuations would have taken place had there been no United States Bank in existence; and the probability is, that the action and reaction would have been much greater, if, during the same period, the state Banks had not been checked in their issues, and in their disposition to expand, by the regular and inflexible action of a National Bank.

When the charter of the late United States Bank was about expiring, and the conductors of the institution were anxious to obtain a renewal of its privileges, they may well be supposed to have pursued a course calculated to render the corporation popular with the commercial public. They could not do otherwise. At such a time, it was to be expected that they would make their greatest efforts to accommodate all applying to them for aid, in order to furnish as little ground of complaint as possible. But, with all this disposition on the part of officers, and directors, the Bank could not go beyond its proper limits. It was obliged to retain a certain amount of specie in its vaults; and was obliged to hold itself prepared for any demand made upon it. And this especially, with the knowledge that there were not wanting, those who were ready to put its strength to the test whenever an opportunity presented itself. Probably to the borrowers. of the Bank, its liberality did not appear equal to their wants. Others, however, opposed to the institution, complain that it did at this time enlarge its issues beyond measure; and that it lent one year, some mililions more than it had ever done before. This being put forth as an objection the power of such a corporation, enabling it, they say, to make

money scarce, or plenty, according as it may be expedient to influence the public mind for political or party purposes.

In reply to this objection, let us bear in mind that the proper business of a Bank being that of lending money, it is the direct, and imperative duty of its conductors, to keep every dollar of its available means employed, drawing interest as far as possible. The Bank ought to lend always as much as it can lend, and it can at no time do more. It would be absurd to suppose, that such an institution would keep several millions of dollars idle for a certain period, in order to make money scarce and it is equally absurd to suppose that having lent to the extent of its ability, it could go still further in order to make money plenty.

merous.

Accordingly, if there were any time, when the directors of the late National Bank lent more than they did at another, it was not because their disposition to lend was greater; but because more was called for. If they lent less than their means, it was because less was called for the opportunities for using money advantageously, not being so great or so nuIt is to be remembered, too, that money is not always most plenty, when the Banks lend most. More money may then be called for, and obtained, from the Banks, because the prospects of profit are more encouraging. In such times, directors and others, who have most influence with their respective institutions, borrow all they can. Those who do not occupy the same favorable position will not be able to borrow so easily. The discount line of the Banks may then be larger than usual, while money with a certain class of borrowers, is much scarcer; and the rate of interest in the market much higher. So when a Bank lends less, it may be because privileged persons care less about borrowing. Others who have no particular influence with the institution, then borrow more easily; and money is said to be plenty, although the discount line of the Bank may be less than usual.

Whatever the disposition of the conductors of the late National Bank might have been they could not scatter its money amongst the voters at the polls, or amongst the people individually. Neither could they so order the circumstances of any, as to make them desirous of borrowing. The several Branches could only lend to those who asked; and those who asked, were only those who thought they could employ the money advantageously; and those who thought this, were led to it, at the period in question, by the peculiarly prosperous appearance of the times; prompting every one, as it did, to think that what was purchased one month, could certainly be sold the next at a profit.

Whatever the expansion of the United Sates Bank may have been at this time, however, it was no more than in proportion to that of all the state Banks. If the Bank lent twenty millions more than it had done at any previous time, this twenty millions was to be divided amongst twentysix different states; and was after all equal only to about four or five per cent. of the whole amount loaned by all the Banks together. The great rise in prices at this period, could not therefore have been caused by the increased loans of the United States Bank; for this would not have justified a rise of more than about five per cent. Neither could this expansion have caused the expansion of all the other Banks; on the contrary, it is certain that the amount of state Bank loans would have been much more increased than it was, if there had been no National Bank in operation : the operation of the United States Bank on the other Banks, in the nature of the case, unavoidably tending to check the spirit of speculation.