And the War on the Second Bank of the United States
By Paul J. Rastatter
« Continued from previous page
Back in Congress
Webster was elected a U.S. Representative from Massachusetts in 1823. He participated in the special Congressional vote for President in 1824. The election was thrown into the House of Representatives, although Andrew Jackson received more popular votes, no one had a majority of votes in the Electoral College: Jackson had 99 votes, Adams 84, Crawford 41 and Clay 37.
Only the top three candidates were eligible, so Henry Clay was out of the running. Many people believe that a secret deal was struck after the public found out that John Quincy Adams had won the election and then chose Henry Clay to be his Secretary of State. Andrew Jackson and his supporters claimed that a “Corrupt Bargain” had been concocted to keep Jackson from winning.
After the election results, Webster seems to have been reconciled to John Quincy Adams and also, Henry Clay. In 1827, Webster was chosen by the Massachusetts Legislature to be its U.S. Senator. As a Senator, Webster gave several impassioned speeches that are known to us as the ‘Webster-Hayne Debate’.
The ‘Debate’ was actually started over a bill to reduce the price of western lands. Senator Thomas Hart Benton of Missouri charged that the Northeast was deliberately trying to keep the price of western lands high and thereby discourage migration to the West. Senator Benton advocated an alliance with Southern interests against the large cities of the Northeast. Senator Robert Young Hayne of South Carolina picked up on Bento’s message. Hayne was favorably inclined for an alliance with the West. Hayne spoke against a protective tariff and for individual ‘states’ rights’. The next day, Daniel Webster was recognized on the floor of the Senate. Webster came prepared to refute Bento’s argument naming several instances of how New England had sponsored legislation like the ‘Ordinance of 1787′ that benefited the new states of the West. Webster also took several swipes at Senator Hayne, defending the North’s protective tariff and arguing for a stronger ‘Unio’ not a weaker one.
Senator Hayne followed Webster’s speech with one of his own in which he introduced on the floor of the Senate, the speculative theory of ‘nullificatio’ whereby an individual state could declare a Federal Law ‘null and void’. Daniel Webster’s rebuttal to Hayne’s doctrine was carried on the front page of newspapers of the day. There is also a famous painting of Daniel Webster debating Hayne, standing among his peers on the floor of the Senate, which hangs today in Fanuiel Hall in Boston. For over a decade, Webster had argued before the Supreme Court against unjustified ‘states’ rights in the Dartmouth case and the Gibbons case. He did so brilliantly again but this time it was on the floor of the Senate.
Daniel Webster’s Relationship with Nicholas Biddle
Throughout the 1820’s, Daniel Webster’s correspondence and relationship with Nicholas Biddle of Philadelphia increased dramatically. Most of the correspondence was professional but a part of it became personal. As the director of the Second Bank of the United States, Nicholas Biddle needed to be apprised of pending Supreme Court litigation. Daniel Webster tried several cases for the Bank of the United States, not just McCullough v. Maryland but also the Bank of the United States v. Dandridge and McGill v. Bank of the United States. Daniel Webster was asked to be on the Board of Directors for the Boston bank and he accepted the position. As time went on, a personal note or two crept into the correspondence. Biddle would request a copy of one of Daniel’s speeches. Or Webster would request that a friend be appointed to the Board of Directors of the Portsmouth, New Hampshire branch. Sometimes, payment would be involved with Daniel requesting his fee be sent to the Boston branch or to request his retainer be paid.
Richard N. Current wrote in 1955, “Webster was connected with the bank as legal counsel, director of the Boston branch, frequent borrower, and Biddle’s friend. His advice Biddle sometimes took, as in appointing Webster’s old friend Jeremiah Mason to head the Portsmouth branch, and sometimes rejected as in refusing a heavy loan to the anti-Jackson National Intelligencer of Washington.
The Bank War
Opinions vary as to why Nicholas Biddle decided to request a renewal of the charter of the Second Bank of the United States as early as January 1832. The Bank’s twenty-year charter did not expire until 1836. Biddle must have thought long and hard about this decision. As the Bank president who stabilized the currency and controlled to a large degree the actions of the lesser state banks, Biddle wanted to continue at his post.
Most historians are of the opinion that the decision to recharter the bank was a political one aimed at discrediting Andrew Jackson and forcing the voters to decide on either the bank or General Jackson in the election of 1832. Jean Alexander Wilburn, a professor of Economics from Barnard College, writes that Biddle, Webster and most informed political observers believed that Jackson was sure to win reelection in 1832. Biddle’s reasoning for the early re-charter, according to Wilburn are two-fold: 1) “There was a faint hope that Jackson might sign the new charter if presented before the election but the conviction was held that after reelection, Jackson was sure to veto the bill, and 2) Biddle thought that the two-thirds of the candidates for Congress would be forced to express themselves and override Jackso’s veto.”
In a Senate speech, Webster explained that his motives in supporting the recharter bill were “not drawn from any local considerations.” The banks in Massachusetts were sound although they did benefit from favorable exchanges through the B.U.S. with other states. No one mentioned Webster’s loans or the fact that Webster was a director of the Boston branch. In any case, the bill to recharter passed in the summer of 1832 with House members voting: 107 for and 85 against and Senate members voting: 28 for and 20 against.
In July of 1832, Martin Van Buren called at the White House and found President Jackson lying ill. Clutching his lieutenant by the hand, Jackson told him, “The bank, Mr. Van Buren is trying to kill me, but I will kill it!” A week later, Jackson vetoed the recharter bill, condemning the Bank as “unauthorized by the Constitution, subversive to the rights of the States, and dangerous to the liberties of the people.”
Jean Alexander Wilburn, the economist from Barnard College, who’s book goes into great detail on why members of Congress voted the way that they did for the recharter bill, mentions the political overtures of the Bank vote coming right after the refusal to admit Martin Van Buren to an Ambassadorship to England. When Vice-President Calhoun cast the negative deciding vote against Van Buren, it forced many Jacksonian Democrats who may have been pro-Bank to put their party first and vote against the bank.
Harry L. Watson book, Liberty and Power, on the politics of Jacksonian America, begins his chapter on the bank war by mentioning the political capital that Jackson reaped from his veto of the Maysville Road bill. Watson writes, “Just as many (citizens) had opposed a federal role in transportation development, not everyone supported the federal bank.”
In 1957, Bray Hammond published Banks and Politics in America: From the Revolution to the Civil War. Hammond’s work is by far the most exhaustive research on the subject of the Bank war. As a prelude to the 1832 veto, Hammond writes that the Jacksonians at first, desired not to destroy the Bank but to bring it within the party as “spoils of victory”. Names of eligible Democrats were furnished to Mr. Biddle as potential directors. Biddle refused to let party membership influence his decisions. Several letters exist between Biddle and Secretary of the Treasury, Ingham, a fellow Pennsylvanian.
Jackso’s next step towards the bank is mentioned in a letter to Senator Felix Grundy where he mentions a possible wholly new “national bank” to replace the existing one. But according to Hammond, not until Martin Van Buren joined the Cabinet was the idea of destroying the bank mentioned. Although putting an end to the bank would be difficult; there was not a popular hatred of the B.U.S. as there was five years before.
In November 1829, Biddle paid a short visit to President Jackson. Jackson voiced his reservations about the bank after having read the history of the “South Sea Bubble” but Jackson was also grateful to the bank in its services in retiring the national debt. In his annual address of 1830, Jackson voiced his concerns over the constitutionality of the Bank and stated that, “it has failed in the great end of establishing a uniform and sound currency.” Hammond points out that several economists have disputed this failure with most agreeing that the period of 1826-1832 as a high water mark for a sound currency.
After the veto, Daniel Webster exclaimed in the Senate, “It manifestly seeks to inflame the poor against the rich. It wantonly attacks whole classes of the people, for the purpose of turning against them the prejudices and the resentments of other classes.” In a rebuttal to Jackso’s aversion to foreign capital in the B.U.S., Webster again spoke in the Senate, “Every dollar brought from abroad, and put into the mass of active capital at home, …diminishes the rate of interest and therefore benefits all the active and trading classes of society, at the expense of the American capitalist.”
Just as Jackson had judged correctly in the Maysville road veto, his veto of the banking bill was a popular measure and he overwhelmingly defeated Henry Clay in the election of 1832. During the winter of 1832-1833, the nullification crisis came to a boil and confused the political scene. John C. Calhoun was no longer the Vice-president but was now a Senator from South Carolina. On the floor of the Senate, Webster debated Calhoun on the merits of ‘nullificatio’ as troops were being raised in South Carolina. Webster supported Andrew Jackson and the use of force to suppress the rebellion. Henry Clay meanwhile, sided with John C. Calhoun and tried to work out a compromise. Webster came away from the crisis as the great ‘Defender of the Constitutio’.
So far that spring, Andrew Jackson had not withdrawn any government deposits from the B.U.S.. A rapprochement was possible between Biddle, Webster and possibly Jackson. In the early summer 1833, Jackson toured New England and received an honorary degree from Harvard College, much to the disgust of John Quincy Adams. Webster for his part toured the West. “Wherever he goes,” the Louisville Journal reported, “the friends of the Administration are peculiarly zealous to do him honor. The very men who, a year ago, were daily denouncing him as a Hartford convention traitor and a corrupt hireling of the Bank are now proud of the privilege of touching the hem of his garment.”
In September 1833, Jackson finally succeeded in getting a new Secretary of the Treasury, Roger B. Taney, who would carry out his orders for removing the deposits from the Bank of the United States. Biddle gave up hope of an alliance with Jackson and sought other measures. Webster for his part hesitated about choosing sides. If he went with Biddle’s group, he would have to join forces with the nullifier, Calhoun and he would also, have to submerge his presidential ambitions beneath those of Clay. If he stayed with Jackson, he could possibly displace Martin Van Buren and win the presidency.
Webster had one immediate problem to consider. He was out of money. Webster sent this note to the banker, Biddle, “Since I have arrived here, I have had an application to be concerned professionally, against the Bank, which I have declined, of course, although I believe my retainer has not been renewed, or refreshed as usual. If it be wished that my relation to the Bank should be continued, it may be well to send me the usual retainers.”
Biddle, the central banker, decided to take matters into his own hands. He would tighten credit controls and force as many people out of work as he could thereby forcing the Jackson administration to reverse itself. Biddle also lent money to several newspaper firms including the anti-Jackson Intelligencer in Washington. In the subsequent recession, Daniel Webster read memorials into the Congressional Record of workingmen from his State who were thrown out of work. Pressure was building on the Jacksonians. Some memorials to Congress demanded “a restoration of deposits as a key to renewed prosperity.” At the height of the uproar over the recession and the Bank, Henry Clay and other leading politicians started calling themselves ‘Whigs’, a name taken from the party in English politics that was in opposition to the crown.
Much later, Henry Cabot Lodge wrote a book that was very eloquent in his support of Daniel Webster. Lodge, a fellow New Englander, fails to mention Nicholas Biddle while summarizing the veto of the banking bill. Lodge wrote in 1890:
The session of 1831-1832, when the country was preparing for the coming presidential election, marks the beginning of the fierce struggle with Andrew Jackson which was to give birth to a new and powerful organization known in our history as the Whig party, and destined, after years of conflict, to bring overwhelming defeat to the “Jacksonian democracy.”.
After Congress adjourned for the summer, Biddle was forced to acknowledge that his credit tightening had not achieved its desired results. In the midst of Biddle’s Panic, state legislatures had chartered an astounding 347 new state banks and for a short while, business conditions rebounded and prospered.
Webster did one last hurrah on behalf of the bank. He sponsored a new recharter bill that would run for only six years and prohibit bank notes in denominations of less than twenty dollars. With competing recharter bills from Calhoun and Clay, none of the measures ever left the Senate.
In summation: by ending the Second Bank of the United States, Andrew Jackson did the country a disservice. The growing United States could have used the sound monetary policies that the B.U.S. provided. Although President Jackson can not be totally blamed for his skillful use of politics and playing the common laborer off against the wealthy businessman.
Daniel Webster’s role in the Bank crisis is perhaps, a little muddled. He was dependent upon the Bank for at least part of his income. He defended the Bank in speeches before the Senate. He urged Biddle to apply for his recharter in 1832 although it was really Clay who stood the most to gain.
Was Webster acting out of purely selfish motives or was he representing his constituents? I think it was a little of both reasons. Webster’s ideology was certainly pro-Hamiltonian. His pocketbook and his lucrative Supreme Court law business certainly stood to gain from a renewed charter. Was his one letter written to Biddle, an extortion note? Perhaps, but I think forces around Jackson would not have tolerated Webster for very long. The pay-off if there was one helped Webster to make up his mind to finally join the Whigs, of which much of New England belonged.
As a fellow partisan of Webster’s, I identify with his humble origins. I agree with his ideology of Nationalism and the Bank. I think of Daniel Webster is a great hero, a ‘Defender of the Constitution’ and one of our great founding fathers.
1 Fuess, Daniel Webster, 7-11. Ebenezer Webster’s Revolutionary War Record. There is an anecdote of a supposed quote from Gen. Washington after a brief mutiny of New Jersey and Pennsylvania troops and how glad the General was to have Captain Webster’s men guarding him!
2 McMaster, Daniel Webster, 11. “$300 a year as Lay Justice of the Court of Common Pleas.”
3 Fuess, D.W., 84. Admitted to the Bar in Suffolk County in 1805.
4 The Correspondence of Daniel Webster Vol. 1, 37. Father’s quote: “You have come to nothing.”
5 Fuess, D.W., 89. Josiah Burnham hanged on August 12, 1806.
6 Fuess, D.W., 95. Rockingham Memorial sent to Pres. Madison in opposition to the War.
7 McMaster, D.W., 89. Quote about the fire in Portsmouth.
8 Correspondence of Daniel Webster Vol. 1, 145. Quote from D.W. “the safety of my family compensates (for) the loss of property.
9 Fuess, D.W., 118. Quote from Fuess on frugality of Yankees.
10 Lewis, Speak for Yourself, Daniel, 37. Quote from Judge and later Governor Smith on “he was born for more than hoarding money bags.”
11 Fuess, D.W., 162. D.W.- “futile projects of invasion.”
12 Current, D.W. and the Rise of National Conservatism, 18. Third ‘bank’ bill signed by Monroe.
13 Fuess, D. W., 189. Quote for why Webster turned down Randolph duel.
14 Baxter, One and Inseparable- D.W and the Union., 128. Quote from Sen. Hoar on Webster as the best lawyer in the country.
15 Fuess, D.W., 212. Facts relating to the case of the two brothers accused of hijacking.
16 Fuess, D.W., 231. Dartmouth College Quote “there are those who love it”
17 Fuess, D.W., 224. U.S. Constitution- “…expost facto law, or law impairing the obligation of contracts.”
18 Henry Cabot Lodge, Daniel Webster, 96. Dartmouth College Case…’cited over a thousand times in subsequent legislation.”
19 Fuess, Daniel Webster, 250. “the power to destroy” quote
20 Beveridge, Marshall, IV, 290. Marshall wrote a draft of opinion before trial!
21 U.S. Constitution… “to regulate commerce among the several states.”
22 Beveridge, Marshall, IV, 429. Gibbons v Ogden – “the acts of New York must yield to Congress”
23 Fuess, D.W., 289-290. Summary of the Plymouth oration.
24 Benson, Daniel Webster, 159. Quote from the ‘Bunker Hill’ speech.
25 Wiltse, ed., The Papers of Daniel Webster-Correspondence Vol. 2, 83, 144, 157. Letters to and from Biddle.
26 Current, Daniel Webster and the Rise of National Conservatism, 76. Biddle refused loan to National Intelligencer.
27 Wilburn, Jean Alexander, Biddle’s Bank, 5. Reasons why Biddle chose 1832 vote.
28 Current, D.W., 77. Massachusetts banks in good shape.
29 Watson, Liberty and Power, 143. Quote from Jackson ‘The bank is trying to kill me…’
30 Remini, Andrew Jackson and the Bank War, 158. Quote on Jackso’s veto message.
31 Wilburn, Biddle’s Bank,7. Van Bure’s loss of the Court of St. James
32 Hammond, Banks and Politics, 369. Early Jacksonian policy — ‘spoils of victory’.
33 Hammond, Banks and Politics in America, 371. Letter to Sen. Felix Grundy — “a wholly new ‘national’ bank.
34 Hammond, Banks and Politics, 374. Not true-1826 to 1832 ‘high water mark for a sound currency’.
35 Current, D.W. and the Rise of National Conservatism, 77. Quote from Webster after the bank veto.
36 Current, D.W., 79. Quote from the Louisville Journal on Webster.
37 Current, D.W., 81. Letter to Biddle requesting retainer.
38 Watson, Liberty and Power, 158. Memorials demand restoration of Bank deposits.
39 Watson, Liberty, 159. Origin of the party name ‘Whigs”.
40 Lodge, Daniel Webster, 208-209. Quote from Lodge on formation of Whigs.
41 Watson, Liberty, 159. 347 new State banks chartered.
42 Current, D.W., 86. New recharter bill for B.U.S.