bank formidable. The States would be strengthened by having in their hands the means of furnishing the local paper currency through their own banks; while the Bank of the United States, though issuing no paper, would check the issues of the State banks by taking their notes in deposite, and for exchange, only so long as they continue to be redeemed with specie. In times of public emergency, the capacities of such an institution might be enlarged by legislative provisions.

These suggestions are made, not so much as a recommendation, as with a view of calling the attention of Congress to the possible modifications of a system which can not continue to exist in its present form without occasional collisions with the local authorities, and perpetual apprehensions and discontent on the part of the States and the people.

No. 83. The Bank Controversy: Jackson's Third Annual Message

December 6, 1831

THE apparent disposition of Jackson, as indicated by his third annual message, to drop the subject of the bank was further emphasized by the annual report of the Secretary of the Treasury, submitted Dec. 7, in which the cause of the bank was advocated at length.

REFERENCES.

- Text of the message in House and Senate Journals, 22d Cong., 1st Sess.; the extract here given is from the Senate Journal, 17. For McLane's report, see House Exec. Doc. 3.

Entertaining the opinions heretofore expressed in relation to the Bank of the United States as at present organized, I felt it my duty, in my former messages frankly to disclose them, in order that the attention of the legislature and the people should be seasonably directed to that important subject, and that it might be considered and finally disposed of in a manner best calculated to promote the ends of the Constitution and subserve the public interests. Having thus conscientiously discharged a constitutional duty, I deem it proper, on this occasion, without a more particular reference to the views of the subject there expressed, to leave it for the present to the investigation of an enlightened people and their representatives.

No. 84. Jackson's Bank Veto

July 10, 1832

THE application of the Bank of the United States for a renewal of its charter was presented to Congress Jan. 9, 1832. In the Senate the memorial was referred to a select committee. March 13 Dallas of Pennsylvania, for the committee, reported a bill for a recharter of the bank; the bill was read a second time May 22, aud debated until June 11, when it passed by a vote of 28 to 20. In the House the petition for a recharter had been referred to the Committee of Ways and Means, which reported Feb. 10, by McDuffie of South Carolina, a bill to renew and modify the charter. On the 23d Clayton of Georgia moved the appointment of a select committee to examine the affairs of the bank. The motion was debated until March 14, when, with an amendment offered by J. Q. Adams, it was agreed to. A majority report, to the effect "that the bank ought not to be rechartered until the debt was all paid and the revenue readjusted," was made by Clayton April 30; minority reports, defending the bank, were presented by McDuffie and Adams May 11 and 14. The Senate bill was not taken up for discussion in the House until June 30; July 3 it was passed with amendments, under suspension of the rules, by a vote of 107 to 86. The Senate concurred in the House amendments, and the bill went to the President, who returned it July 10 without his approval. In the Senate, July 13, the vote on the repassage of the bill stood 22 to 19, less than the required two-thirds; so the bill failed. Only the most important portions of the veto message, which is very long, are here given.

REFERENCES. Text in Senate Journal, 22d Cong., 1st Sess., 433-446; the message is also printed as Senate Doc. 180, and House Exec. Doc. 300. Full reports of the discussions are in the Cong. Debates, and Benton's Abridgment, XI. The text of the bank bill is in the Senate Journal, 451-453. For Clayton's report, see House Rep. 460; the document includes the minority reports, evidence, and papers relating to the Portsmouth controversy. Webster's speeches of May 25 and 28, on the bill, are in his Works (ed. 1857), III., 391-415; speech of July 11, on the veto, ib., III., 416-447. Clay's speech of July 12, on the veto, is in his Life and Speeches (ed. 1844), II., 94-105. Numerous reports and memorials relating to the bank will be found in the House and Senate documents of this session.

. . . I sincerely regret, that, in the act before me, I can perceive none of those modifications of the bank charter which are necessary, in my opinion, to make it compatible with justice, with sound policy, or with the constitution of our country.

Every monopoly, and all exclusive privileges, are granted at the expense of the public, which ought to receive a fair equivalent. The many millions which this act proposes to bestow on the

stockholders of the existing bank, must come directly or indirectly out of the earnings of the American people. It is due to them, therefore, if their Government sell monopolies and exclusive privileges, that they should at least exact for them as much as they are worth in open market. The value of the monopoly in this case may be correctly ascertained. The twenty-eight millions of stock would probably be at an advance of fifty per cent., and command in market at least forty-two millions of dollars, subject to the payment of the present bonus. The present value of the monopoly, therefore, is seventeen millions of dollars, and this the act proposes to sell for three millions, payable in fifteen annual instalments of $200,000 each. . . .

It has been urged as an argument in favor of rechartering the present bank, that the calling in its loans will produce great embarrassment and distress. The time allowed to close its concerns is ample; and if it has been well managed, its pressure will be light, and heavy only in case its management has been bad. If, therefore, it shall produce distress, the fault will be its own; and it would furnish a reason against renewing a power which has been so obviously abused. But will there ever be a time when this reason will be less powerful? To acknowledge its force, is to admit that the bank ought to be perpetual; and, as a consequence, the present stockholders, and those inheriting their rights as successors, be established a privileged order, clothed both with great political power, and enjoying immense pecuniary advantages, from their connection with the Government.

The modifications of the existing charter, proposed by this act, are not such, in my view, as make it consistent with the rights of the States or the liberties of the people. The qualification of the right of the bank to hold real estate, the limitation of its power to establish branches, and the power reserved to Congress to forbid the circulation of small notes, are restrictions comparatively of little value or importance. All the objectionable principles of the existing corporation, and most of its odious features, are retained without alleviation. . .

...

Is there no danger to our liberty and independence in a bank, that, in its nature, has so little to bind it to our country? The President of the bank has told us that most of the State banks exist by its forbearance. Should its influence become concentred,

as it may under the operation of such an act as this, in the hands of a self-elected directory, whose interests are identified with those of the foreign stockholder, will there not be cause to tremble for the purity of our elections in peace, and for the independence of our country in war? Their power would be great whenever they might choose to exert it; but if this monopoly were regularly renewed every fifteen or twenty years, on terms proposed by themselves, they might seldom in peace put forth their strength to influence elections, or control the affairs of the nation. But if any private citizen or public functionary should interpose to curtail its powers, or prevent a renewal of its privileges, it cannot be doubted that he would be made to feel its influence.

Should the stock of the bank principally pass into the hands of the subjects of a foreign country, and we should unfortunately become involved in a war with that country, what would be our condition? Of the course which would be pursued by a bank almost wholly owned by the subjects of a foreign power, and managed by those whose interests, if not affections, would run in the same direction, there can be no doubt. All its operations within, would be in aid of the hostile fleets and armies without. Controlling our currency, receiving our public moneys, and holding thousands of our citizens in independance, it would be more formidable and dangerous than the naval and military power of the enemy.

If we must have a bank with private stockholders, every consideration of sound policy, and every impulse of American feeling, admonishes that it should be purely American.

...

It is maintained by the advocates of the bank that its constitutionality in all its features ought to be considered as settled by precedent, and by the decision of the Supreme Court. To this conclusion I cannot assent. Mere precedent is a dangerous source of authority, and should not be regarded as deciding questions of constitutional power, except where the acquiescence of the people and the States can be considered as well settled. So far from this being the case on this subject, an argument against the bank might be based on precedent. One Congress, in 1791, decided in favor of a bank; another, in 1811, decided against it. One Congress, in 1815, decided against a bank; another, in 1816, decided in its favor. Prior to the present Congress, therefore,

the precedents drawn from that source were equal. If we resort to the States, the expressions of legislative, judicial, and executive opinions against the bank, have been, probably, to those in its favor, as four to one. There is nothing in precedent, therefore, which, if its authority were admitted, ought to weigh in favor of the act before me.

If the opinion of the Supreme Court covered the whole ground of this act, it ought not to control the co-ordinate authorities of this Government. The Congress, the Executive, and the Court, must each for itself be guided by its own opinion of the constitution. Each public officer, who takes an oath to support the constitution, swears that he will support it as he understands it, and not as it is understood by others. It is as much the duty of the House of Representatives, of the Senate, and of the President, to decide upon the constitutionality of any bill or resolution which may be presented to them for passage or approval, as it is of the Supreme Judges when it may be brought before them for judicial decision. The opinion of the judges has no more authority over Congress, than the opinion of Congress has over the judges; and on that point, the President is independent of both. The authority of the Supreme Court must not, therefore, be permitted to control the Congress or the Executive when acting in their legislative capacities, but to have only such influence as the force of their reasoning may deserve.

But, in the case relied upon, the Supreme Court have not decided that all the features of this corporation are compatible with the constitution. It is true that the court have said that the law incorporating the bank is a constitutional exercise of power by Congress. But, taking into view the whole opinion of the court, and the reasoning by which they have come to that conclusion, I understand them to have decided that, inasmuch as a bank is an appropriate means for carrying into effect the enumerated powers of the General Government, therefore the law incorporating it is in accordance with that provision of the constitution which declares that Congress shall have power "to make all laws which shall be necessary and proper for carrying those powers into execution." Having satisfied themselves that the word "necessary" in the constitution, means "needful," "requisite," "essential," "conducive to," and that "a bank" is a convenient,