remained unredeemed. President Jackson, in his
messages of the two preceding years, had looked
forward with much exultation to the final liquid-
ation of the debt happening under his administra-
tion: during the last four years that the executive
power had been confided to his charge, $58,000,000
had been applied towards the attainment of this
object. "If Providence permits me to meet you
in another session," he says, in his message of
December, 1833, "I shall have the high gratifica-
tion of announcing to you that the National Debt
is extinguished. I cannot refrain from expressing
the pleasure I feel at the near approach of that de-
sirable event. The short period of time within which
the public debt will have been discharged is strong
evidence of the abundant resources of the country,
and of the prudence and economy with which the
government has heretofore been administered. We
have waged two wars since we have become a nation
with one of the most powerful kingdoms in the
world;
both of them undertaken in defence of our
dearest rights both successfully prosecuted and
honourably terminated; and many of those who
partook in the first struggle, as well as the second,
will have lived to see the last item of the debt
incurred in those necessary but expensive conflicts
faithfully and honestly discharged; and we shall
have the proud satisfaction of bequeathing to the
public servants who follow us in the administration
of the government the rare blessing of a revenue
sufficiently abundant, raised without injustice or
oppression to our citizens, and unincumbered with

CHAP.
I.

CHAP. any burdens but what they themselves shall think proper to impose upon it."

I.

Accumulation and distribution

of the surplus

revenue.

The surplus revenue beginning after this to accumulate rapidly, the most advantageous disposal of it became a question of considerable difficulty: the administration and its supporters were anxious to apply the money to military purposes, by extending the means of national defence; but the opposition introduced a bill, which was finally passed on the 23d of June, 1836, enacting, that the money which should be in the Treasury on the 1st of January, 1837, should, after reserving the sum of $5,000,000, be distributed among the several states of the Union. The distribution was to take place according to the respective representation of the states in the Senate and House of Representatives, and was to be made in quarterly instalments; but it was declared to be in the nature of a deposit" only, to be resumed should the exigencies of the Treasury require it. The sum to be divided (which at the passing of the Act was stated by a Report from the Secretary of the Treasury as likely to amount to $22,000,000) eventually proved to be $37,468,859.*

66

Although the literal provisions of the Act of the 23d June expressly directed that the money should be" deposited" with the states, yet it was argued that the intention of those who passed it was to secure a permanent distribution of the surplus revenue; and in accordance with this view, though

See Appendix, letter D

in defiance of the obligations of the Deposit Act, the amount received has in most of the states been appropriated in a permanent manner; many of them having expended it in works of internal improvement, or in paying debts previously incurred for this purpose. In some instances it has been lent upon mortgage to the citizens of the states; and in one case, against every principle of justice, since it had not been equally contributed, it was divided numerically among all the inhabitants of the state.

I.

difficulties

and susthe fourth

pension of

instalment.

The last instalment, however, was not paid: a Financial series of events, which it will be necessary to detail, so disordered the financial department of the general government before the distribution was completed that, after the first three payments had been made to the different states, it became necessary to have recourse to a new act of Congress, which was passed on the 2d of October, to direct the postponement of the transfer of the remaining fourth till the 1st of January, 1839.* A subsequent act has since been passed to postpone the payment indefinitely.

The events alluded to, which thus checked the course of the nation in its onward career, have had such a widely extended influence on its general prosperity, that before entering on the detail proposed, a retrospect of the causes which led to them will be attended with advantage.

* This law further provided that the amount deposited should remain with the states until otherwise directed by Congress.

CHAP.

I.

First National Bank in the U. S.

The first National Bank in the United States after the adoption of the constitution, was established in 1791, under the presidency of General Washington: the charter was granted for twenty years. Its establishment was strongly resisted at the time by the opponents of the government, and especially by Mr. Jefferson and Mr. Madison, who contended that Congress had no powers under the constitution to incorporate such institutions.

Before the expiration of the charter, the republican party, who thus opposed it, had come into power, Mr. Madison being President; and a renewal of the charter was refused, but chiefly owing, it would appear, to the then existing state of political parties; for Mr. Madison himself had waved the point of constitutional law, "as being precluded, in his opinion, by repeated recognitions, under varied circumstances, of the validity of such an institution in acts of the legislative, executive, and judicial branches of the government, accompanied by indications, in different modes, of a concurrence of the general will of the nation." * The Bank, in consequence, ceased to exist in 1811, when its period of twenty years was completed.

The war with England commenced in the following year, and occasioned great commercial dis

* One of the objections made was, that seven tenths of the stock belonged to British subjects. The proposition for renewing the charter was lost only by the casting vote of the President of the Senate, and by a majority of a single vote in the House of Representatives.

I.

tress, which it was soon seen was much aggravated CHAP. by the disorganised state of the currency, arising from the want of a controlling power to regulate the exchanges between the states. The govern

the U.S.

ment, who were conscious of this, in order to remedy these evils, nobly sacrificing the pride of consistency to the good of the country, resorted again to the expedient of a national institution; and a new bank was established in 1816, during the Bank of second presidency of Mr. Madison, with a charter very similar to that of the one that preceded it. The charter of the new bank extended to 1836; and the institution appears to have fully answered the purposes for which it was established. Public

and private credit were raised from a prostrate to a very elevated condition; the finances of the nation were placed upon a solid foundation; and a great reduction as well as a greater degree of steadiness was effected in the rate of the commercial exchanges of the country.* General Jackson, Opposition however, in the year 1829, being then in the President second term of his presidency, expressed, in his annual message to Congress, a different opinion, and at the same time revived the question of the constitutional powers of Congress to grant incorporations.

The general feeling was certainly against him in both points. Mr. Gallatin, who had been Secre

* These advantages had more especially been attained since the year 1819, previous to which time some imprudence was exhibited in the management of the bank.

of the

to the re

renewal of the

charter.