THE BANKS.—THE PRESERVATION OF THE UNION.

Washington, April 10, 1834.

The drama which has been passing in the United States since the opening of the session, has now reached the end of the first act. The two Houses have had under consideration the subject of the removal of the public deposits from the Bank of the United States to the local banks, by the Executive, and both of them have come to a decision. The Senate has declared, by a majority of 28 to 18, that the reasons alleged by the Secretary of the Treasury in justification of the measure, were neither satisfactory nor sufficient, and, by a majority of 26 to 20, that the conduct of the President in this matter was neither conformable to the constitution nor to the laws. This is the first instance, since the adoption of the Federal constitution, of a censure of the chief magistrate of the nation by the Senate. The House has resolved, on its part, that the charter of the Bank ought not to be renewed, that the public deposits ought not to be restored to it, and that they should remain in the safe-keeping of the local banks. The first resolve passed by a vote of 132 to 92; the majority for the two others was much less, 118 to 103, and 117 to 105. It has been resolved, by a large majority, 171 to 42, that the conduct of the Bank should be made a subject of investigation, but this majority includes many friends of the Bank.

It is to be hoped that the Bank will not be the object of this campaign; the more vigourously it is defended, the more hateful it becomes to the democracy. Those who feel an interest in their country and its institutions, ought to make an effort to turn the debate toward some other point, for both sides have become heated and exasperated in the struggle, and already violence has been threatened. The most brilliant services have been forgotten, the purest characters trampled under foot. The Globe, the avowed organ of the administration, pours forth the vilest slanders on men, such as Messrs Clay, Calhoun, and Webster, of whom any country in the world would be proud. It repeated, and unhappily it reiterates still, that the votes of, the Senate have been bought by the Bank. On the other hand, General Jackson, to whom it is impossible to deny the possession of eminent qualities, has been himself exposed to the vilest indignities; the gray hairs of that brave old man have been insulted in the most scandalous manner. Attempts have even been made to throw ridicule on his victory at New Orleans, the most brilliant affair in the American annals, as if his glory were not the common property of the country. Some hot heads have even talked of recurring to violence; commerce and enterprise have been struck numb; for want of means, the great works of Pennsylvania have been in danger of being brought to a stand. But at present there appears to be a general wish to bring back a calm; the failure of a certain number of individuals, and especially that of some banks, have proved a signal of alarm, which has recalled every one to a sense of the common danger, the general ruin that threatened the country. There has been a failure of a bank in Florida, of one in New Jersey, and of two in Maryland, one of which, that of the Bank of Maryland in Baltimore, has caused a great sensation. The leading men of all parties have set themselves in earnest to search out some means of bringing the commercial crisis to an end. There is room to hope, therefore, that the debate will lose its bitterness, and at the same time will take a wider range; instead of quarrelling about the particular question of the Bank, it were to be wished that the higher questions of political economy should be discussed, such as that of a mixed currency, in which there should be the proper mixture of paper and the metals necessary to give it stability, without keeping, as is the case in Europe, a large unproductive capital in the shape of specie; and that of a system of institutions of credit, banks of loan and discount, of deposit and exchange, powerful enough to serve as a spring and a stay to the industry of the country, and yet so balanced in respect to each other and the powers of the government, as not to be dangerous to the public liberties. A very able speech of Mr Calhoun's has already drawn the general attention to the subject of financial reform, and one of the senators friendly to the administration, Mr Benton, has embodied some of Mr Calhoun's ideas in the shape of a bill.

It is now universally agreed, that to obtain a solid and stable currency, it is necessary to keep a certain quantity of gold and silver in the country; it is seen that while there are paper dollars, the silver dollars will disappear, that ten-dollar notes necessarily expel the eagles, and that half-eagles will not stay where there are five-dollar bills. It is, therefore, proposed to abolish the issue of notes of less than ten or even twenty dollars, but all that Congress can do without the aid of a National Bank, is to prohibit the reception, by the collectors of the customs, of the bills of any bank which has in circulation notes of less than ten or twenty dollars; for Congress has no direct power over the local banks. This measure, however, would be insufficient; for the amount of money paid for customs bears a very small proportion to the whole circulation of the country, and consequently would not affect the circulation in districts remote from the sea coast. The Administration does not deny the necessity of a police for controlling and regulating the banks; it seems disposed to effect it by means of some of the local banks, which should act under the direction of the Secretary of the Treasury, and to which should be granted certain privileges, such as that of being the depositories of the public money without paying interest. But this plan has some disadvantages; it would invest the Secretary, that is the President, with a great discretionary power, which is wholly at war with the political maxims of American government. It is a received truth in the United States, that the sword and the purse ought not to be in the same hands. Beside it is doubtful whether this control would be sufficiently powerful and sufficiently enlightened, and finally it would be difficult by means of this chain of local banks to answer one of the most pressing wants of the country, facility of exchange; because they are, and must be as slightly connected with each other, as the sovereign States from which they hold their charters. To exterminate small bank-notes the surest agent would be a National Bank, and Congress has the power to establish one. This power, which is disputed because all its powers are disputed, would not be contested, if it were stipulated that the Bank should obtain the consent of each State, before establishing a branch within its limits. It would then be sufficient that the Bank should not receive the bills of any other bank, which issued notes of less than 10 or 20 dollars, or which received the bills of other banks, that issued notes less than the same minimum. In fine, a National Bank is an admirable instrument of exchange, and the most influential friends of the Administration are convinced of the necessity of an institution of the sort. I cannot believe that the President, and especially the Vice-President, are really as much opposed to one, as they have the air of being. As it is possible to conceive of a combination of circumstances, which may reconcile its existence with the interests and views of Mr Van Buren (such would be, for instance, the creation of a Bank of which the seat should be New York, instead of Philadelphia), it may be hoped that sooner or later, under one form or another, Mr Van Buren may yield to the necessity of the case. It is true that out of hatred to the present Bank, the prejudices of the multitude have been excited against the establishment of any bank at all, and it is much more easy to rouse the popular passions than to control them when once let loose; this kind of game has resulted in the self-murder of many a man's popularity. But in this matter the voice of the public interest and of individual interest will speak so loud, that it would be astonishing if it did not make itself heard by a people, so much more sensible and reflecting than most of the European people. There is, then, in short, still some chance for a Bank of the United States.

The following are the principal features, in which both parties seem to me to be at present tacitly agreed. The capital of the Bank to be about 50 millions. The shares of the present Bank, representing a capital of 35 millions, to be exchanged at par for shares in the new bank; the rest of the capital to be subscribed by the individual States, thus giving the Bank a more truly national character: The rate of discount to be reduced from 6 to 5 per cent.; Mr Forsyth, a Senator friendly to the administration, has demanded this modification: The laws relative to public and private deposits to be changed in conformity with the propositions of Mr Cambreleng: The seat of the mother bank to be transferred to New York: The operations of the Bank to be subjected to more strict regulations than those of the old Bank have been: The Bank to be required to keep on hand a larger amount of reserved profits, or some other provision borrowed from the bank of England to be adopted, in order to give more security to the institution.

It would not, probably, be impossible to unite a majority of the two Houses in favour of a plan which should embrace these features. But there is another subject about which little is said, and upon which no one has yet publicly declared himself, although there are many who have thought much about it, and it will not be easy to reconcile opinions upon it. How shall the Bank be governed? What relation shall there be between the administration of the Bank, and the Federal and State governments? How and by whom shall the President of the Bank be chosen? This subject, about which there is a total silence, appears to me to be of so vital importance, that I am convinced that what has occurred in the United States during the last six months, would never have taken place, if the nomination of the President of the Bank had been lodged with the President of the United States. In Europe and particularly in France, the government of the banks is more or less in the hands and under the control of the king and the ministers. In America, conformably with the principles of self-government, the Bank, like all the other industrial and financial institutions, has, up to this time, governed itself. The Federal government, owning one fifth of the shares, names one fifth of the directors; its powers stop there. The American axiom, which forbids the union of the sword and the purse in the same hand, is opposed to the exercise of a controlling influence over the choice of the President of the Bank by the President of the United States; and yet I am persuaded that the democratic party will not be willing to hear of a Bank, in the government of which it could not interfere.

The upper classes (bourgeoisie) are not here what they are in Europe; while in Europe they rule, here they are ruled. Democracy takes its revenge in America for the unjust contempt with which it has been so long treated in Europe. Now it is to these upper classes, that the private share-holders of the Bank belong; it is the merchants, manufacturers, and capitalists, who will always derive the most direct benefit from a National Bank, although all classes must indirectly derive great advantages from it. From the time when the upper classes sanctioned a completely universal suffrage, without making any exception in favour of natural superiority, whether industrial or scientific, from the day when they consented that number should be every thing, and knowledge and capital nothing, they have signed their own abdication. It is too late to agitate the questions, whether this is absolutely a good or an evil, or whether it is well, in the agricultural States, with a scattered population, such as Ohio, Indiana, and Illinois, and bad in large and populous cities, the seats of a vast commerce, such as Philadelphia and New York. This is a matter already settled past recall; when the sword is surrendered, the vanquished must submit to take the law from the victor. In case, then, of the creation of a new National Bank, the share-holders must consent to receive their head, either from the President and Senate, as other public functionaries are appointed, or from the House of Representatives alone, or from some other similar source. If in a new or a somewhat modified Bank, the Federal and local governments should be stockholders to a large amount, this participation of the President or the House of Representatives, or of special delegates chosen by the States, in the government of the Bank, would appear altogether natural, even in the eyes of the most exclusive partisans of self government. It remains to be seen, whether in this case, the Bank would not be more likely to become the instrument of party, a den of intrigue and corruption, a golden calf, a monster, as it is so often unjustly called, than in the present state of things.

If this quarrel should be terminated by a compromise, we may expect that it will be effected on the basis above stated. The upper classes will, perhaps, consider the conditions as hard, but they should beware of rejecting them. It would be a great gain to them to obtain, under any form, a decisive sanction of a National Bank, connected with the government, and therefore incorporated with the interests of the country. Not only are numbers at present against the Bank, and numbers give the law here, but the Opposition is not so well organised as the democratic party. The Opposition has, indeed, three leaders, who do not always agree; the views of Mr Calhoun of South Carolina do not coincide with those of Messrs Clay and Webster on the subjects of the tariff and States' rights; and Mr Clay, the son of the west, and Mr Webster, who comes from Boston, the focus of Federalism, differ on several constitutional questions. The democratic party, on the contrary, is better disciplined; the two heads, General Jackson and Mr Van Buren, present a formidable union of qualities and faculties. The old General is firm, prompt, bold, energetic; Mr Van Buren, who sets up for the American Talleyrand, is mild, conciliating, prudent, and sagacious; his adversaries call him the little magician. While the pretensions of Messrs Clay, Calhoun, and Webster are scarcely to be reconciled with each other, and neither of them is willing to be second, Mr Van Buren is ready to serve under General Jackson for the purpose of becoming his successor in the elections of 1836. Every kingdom divided against itself cannot stand. But, if no compromise can be made, if the democracy is too untractable, and the upper classes persist in claiming more than their position authorises them to do, if the feelings, kept in a state of excitement, become exasperated on both sides, and the contest be too much prolonged, the most frightful consequences may ensue; even the Union may be endangered.

At the close of the war of Independence, the American Confederacy occupied only a narrow strip along the Atlantic. Since that time the wave of an active, enterprising, and rapidly increasing population, has rolled over the Alleghanies, the Ohio, the Mississippi, more recently over the Missouri, the Red River, the Arkansas, and I know not how far. Toward the South it is already sweeping over the Sabine, and covering Texas, while toward the West, it has topped the Rocky Mountains, and is approaching the Pacific shore. Instead of thirteen States, there are twentyfour, and the number will soon be increased to twentysix. By the side of the old Atlantic strip, two other vast tracts with a more fertile soil, have yielded up their riches to civilised man; one, at the west, comprises the great triangle lying between the Ohio, the Mississippi, and the lakes, and the other at the south, includes the fertile regions of Florida and Louisiana, which, under the French and Spanish rule, were a solitary wilderness. The geographical centre of the Union fifty years ago was on the banks of the Potomac, on the spot where the city of Washington—that paper capital—now stands; it is now at Cincinnati, and will soon be near St Louis. In proportion as the territory of the Confederacy has been extended, the Federal bond has been weakened. It was nearly snapped asunder during the Nullification crisis, occasioned by the resistance of South Carolina to the tariff adopted under the influence of New England, in order to protect her growing manufactures. If Congress had not satisfied the demands of South Carolina, Virginia would have made common cause with the latter, and her example would have carried the whole South. The patriotic eloquence of Mr Webster, the moderation of Mr Clay and his prodigies of parliamentary strategy, the efforts of Mr Livingston, then Secretary of State, the firm, and, at the same time, conciliatory conduct of the President, who, for the first time, heard a bold defiance with patience, and the calm attitude of the Northern States, prevented for the moment a general dissolution of the Union; but the germ of mischief remains; the charm is broken; the ear has become familiar with the ominous word SEPARATION. A habit has grown up of thinking, and even of declaring, whenever the interests of the North and the South jar, that the cure-all will be a dissolution of the Union.

South Carolina keeps her militia organised, and exacts from the State officers a special oath of allegiance. Georgia and Alabama contest the validity of treaties concluded between the Federal government and the Cherokee and Creek nations. (See Note 11.) Most of the States seek to extend the limits of their individual sovereignty. The doctrine of State rights has even insinuated itself into the bosom of orthodox Philadelphia, for I see by the journals, that a States' rights dinner is announced there. These symptoms may become full of danger in a moment of universal excitement. When the passions are at the helm, there is no pause in the course. What, for instance, would be the event, if Nullification should find an echo in the same States of the North, where it has lately been so firmly rejected? It is they that have the most direct interest in the establishment of a National Bank; it is they that suffer most from the financial combinations of General Jackson, and from the objections of Southern statesmen against the constitutionality of a bank. Although no allusion is made to this danger, it is evident that the solicitude of many persons has been aroused by it, and it is fortunate that it is so, for a more general disposition to conciliatory measures is the consequence.

The principle of separation is engaged in a deadly conflict with the spirit of centralisation or consolidation; hardly was the constitution signed, when twelve additional articles or Amendments were immediately adopted, almost all of which contained restrictions on the powers and attributes of the Federal government. At the same time the authority of Congress to charter a Bank, and give it powers within the territories of the States, was contested; on this point, however, the principle of union was victorious, and the Bank was established. Next, the right of engaging in Internal Improvements was denied to Congress, which, after a long struggle, has been compelled to resign its claims; General Jackson willed it, and it was done. The National Road, which extends from Washington to the western wilderness, and for which appropriations have been annually voted, each professing to be the last, shows what the Federal government could do and wished to do. Even the uniform system of weights and measures, seems to be on the point of being broken up, in spite of the express provisions of the constitution. Pennsylvania has undertaken, nobody knows why, to establish regulations on this point contrary to the general usage.[P] The public debt is now paid; that is one Federal tie the less. The Bank, assailed afresh, is on the point of falling; that is an immense loss to the Federal principle. The Supreme Court of the United States, one of the bulwarks of the Union, is assaulted. The vast domain of the West, (see Note 12,) the national property, seems in danger of being given up to individual States, for this disposition is one of the favorite topics of the democratic party.

But if centralisation comes off the worse in Federal politics, it has the better within the States. The principal States are engaged in constructing vast systems of internal communication; they are establishing for themselves financial systems, and many of them are about to set up great banks, which shall exercise within their respective limits the salutary influence possessed by the Bank of the United States throughout the whole Union. Thus each State, as it detaches itself from the Federal Union, organises more fully its own powers, and binds more firmly together its imperfectly combined elements. But, on the other hand, industry and the spirit of enterprise restore to the Union the strength, of which political jealousy and party quarrels tend to deprive it. There is not a family at the North, that has not a son or a brother in the South; the community of interests daily grows stronger; commerce is a centripetal force; along the whole Atlantic coast there is only one mart, New York; there is only one of importance on the Gulf of Mexico, New Orleans; and the relations of New York and New Orleans make these two cities, instead of rivals, mutual supports. The railroads and the steamboats spread over the country the meshes of a net not easily broken; great distances vanish; before long it will be easy to go from Boston to New Orleans in eight days, less time than is generally required to go from Brest to Marseilles. When we reflect on the extent of the Roman empire for ages, we cannot doubt the possibility of maintaining a certain degree of unity on the American territory, immeasurably vast as it appears to an eye accustomed to the divisions of the map of Europe. The Romans had not attained that degree of perfection in the means of intercourse which we possess; not only had they no knowledge of steamboats and railroads, and the telegraph, but they had few highways, and were unacquainted with the use of carriages hung on springs. The progress of commercial and financial arts, makes it more easy to manage the financial concerns of the universe now, than it was to administer those of a province in the time of CÆsar. I cannot, therefore, make up my mind to believe, that the Union will be broken up into fragments, driven in different directions and dashing one against another.

And yet it is very possible, that the Union will not continue long on its present footing. Are the relations established between the States by the constitution of 1789, the most perfect that can be devised now? Ought not the unforeseen formation of the two great groups of the West and the Southwest be followed by some modification of those relations? Would not the subdivision of the general confederacy into three subordinate confederacies, conformable to the three great territorial divisions, the North, the South, and the West, with a more intimate union between the members of each group, have the effect of satisfying the advocates of State rights, without endangering the principle of union? Would not this arrangement be the means of giving more elasticity to the Union? Could not the existence of three partial confederacies be reconciled with that of a central authority, invested with the undisputed powers of the present Federal government, one army, one navy, one diplomatic representation abroad, one common right of citizenship, one Supreme Court, and, as far as possible, one system of customs, and one Bank? These are questions, which it will, perhaps, be worth while to examine some day, and even at no distant day. But it would be desirable, that they should be approached and discussed with calmness. If they should be unexpectedly raised in a period of irritation and bad feelings, they would be the signal of a deplorable catastrophe. Union gives strength; North America, once parcelled out into hostile fragments, would be of no more weight in the balance of the world, than the feeble republics of South America.