come there to lick, until they had dug away one side of the hill. Governor Shelby said that for some time after his settlement in Lincoln County he procured most of his meat in this spot. His practice was to hide behind a tree upon the brow of the excavation, rifle in hand, and from the hundreds, and sometimes thousands, of animals collected below, select a young fat buffalo and shoot him down. Sometimes he would take this position for amusement, and, when multitudes had collected, would suddenly show himself and throw a club among them, when the whole herd would take to flight through the forest with a sound like distant thunder, which could be heard for miles. When not in a panic, the buffalo travelled slowly, in broad, beaten paths and in a direct line, departed from only when they met insurmountable obstacles. Though at this time not a buffalo was to be found in Kentucky, one of their roads was still to be seen passing over the very summit of an adjacent knob; for, like many human road-makers, they had not learned that it is often less laborious to go round a hill than over it.

At the session of the legislature commencing in December, 1817, the House of Representatives passed, by a vote of fifty-six to thirty, an act providing for an election of a governor and lieutenantgovernor at the next general election, to be held in August, 1818; but, as had been expected, the Senate refused to concur. Some of the most ardent advocates of a new election proposed to hold one without the sanction of the legislature, on the ground that it was only the exercise of a constitutional right; but the more moderate of the party, including Mr. Kendall, thought that course too hazardous to be adopted, and recommended that a further attempt be made at the next election to secure a majority of the Senate. Their counsels prevailed, and it was resolved again to submit the issue to the people.

Mr. Kendall reported the proceedings of the legislature, including sketches of the leading speeches, and the editors of the " Argus" were elected public printers.

During the spring and summer of 1818 the new election controversy was still carried on, but with less bitterness than in the preceding year. The Democratic, or New Election Party, again carried the House of Representatives by a large majority, but still failed to secure a majority in the Senate.

CHAPTER VII.

IN the mean time a new question had arisen, which began to engross the attention of the people. In 1811 Congress had refused to renew the charter of the Bank of the United States then existing, on the ground that such an institution was incompatible with the Constitution. The financial difficulties of the government, during the war of 1812 with Great Britain, and the suspension of specie payments by most of the State banks, induced many patriotic men, originally opposed to a Bank of the United States, to think such an institution necessary to regulate the currency and internal exchanges, and give additional financial and political strength to the government.

There were in 1812-14 other causes of the weakness of the government than the want of such an institution. The restrictive policy of Jefferson's and Madison's administrations, adopted and persisted in to prevent the United States from becoming involved in the war growing out of the French Revolution, had crippled the trade of the country and alienated the commercial interest which then held most of its available wealth. Had a National Bank then existed, it would have been under the control of men whose feelings and interests were averse to the war, and instead of strengthening the government it might have added greatly to its embarrassments. Experience has shown how fallacious is the idea of regulating the currency by means of a National Bank. Indeed, the scheme of sustaining a paper currency of uniform value throughout a country so commercial and extensive as the United States, is an absurdity. If there be a paper currency equivalent to gold and silver at the commercial centres, as at New York, it will be worth more than gold and silver at distant points, as at Chicago and St. Louis. The obvious reason is, that the difference of exchange between distant points and New York is almost always in favor of that city, and bank-notes equal in value there to specie can be transmitted more cheaply than gold and sil

ver. They in fact answer the purpose of bills of exchange, and will as naturally flow towards those points whence the merchants derive their supplies of goods, as water runs to the ocean. In an extensive commercial community, therefore, a paper currency of equal value everywhere is impracticable. Most absurd is the attempt to establish such a currency in a country full of local banks, whose notes, though equal to gold and silver in their own immediate neighborhood, are below the par of specie at the commercial centres, and cannot be used as bills of exchange. It is a general law of currency, that when two kinds of bank-notes, or any other medium, exist together in the same community, the least valuable is the most current. If a man have notes of several banks, which he esteems of different values, he will first part with those which he thinks least valuable; and as every man acts upon the same principle, it happens that the less valuable currency has the greater circulation. This law accounts for the fact that so little gold and silver circulates in company with ordinary bank-notes. But let bank-notes be issued in the interior which are everywhere equal to specie, and they will at once disappear from circulation, because, being available as exchange, they are in that locality worth more than the local bank-notes or specie itself, and are hoarded for sale or remittance. The result would be the same if there were no local bank-notes in existence.

But not only was the country led to expect a paper currency everywhere of equal value from a Bank of the United States, but this institution was expected also to equalize the domestic exchanges, a process almost as difficult, if not so absurd. It would involve the necessity of an organization with offices in every considerable city and town in the United States, with authority in each to draw bills on every other office, and transmit specie to meet constantly accruing balances. Could all the trade between the different sections of the country be carried on both ways by bills of exchange, there would be no necessity for any considerable transportation of specie under ordinary circumstances. There is a visible flow of funds in large volumes from the West to the East for the purchase of commodities for Western consumption; yet the West is not drained. The funds return, not in so grand a volume, but still with certainty, to keep up the ever-running stream towards the East. The process may be compared to the perpetual flow of the Mississippi River, ever draining the great West, which

yet is never drained, because that which we see departing in mighty floods returns in dews, snowflakes, and raindrops. So the volume of funds, which perpetually flows from the West to the East, is fed by funds carried from the East to the West by emigration and by the trade in horses, hogs, cattle, hemp, grain, and other products. No doubt an organization is practicable which shall approximate an equalization of the exchanges between different sections of the country, requiring, under ordinary circumstances, very little transportation of specie; but how are its expenses to be paid, and who is to guarantee the fidelity of such an army of officers and agents as it would require?

In April, 1816, an act of Congress was passed establishing a Bank of the United States. The arguments in favor of such an institution were as follows:

1. That it would greatly facilitate the fiscal operations of the Treasury of the United States.

2. That it would regulate the currency by compelling the State banks to resume and continue specie-payment.

3. That it would equalize exchanges.

4. That it would furnish, in its notes, a currency everywhere in the United States of uniform value.

In every one of these objects, except the first, the United States Bank of 1816 was a total failure.

As the failure was perhaps more signal in Kentucky than anywhere else, its operations in that State, intimately connected as they are with this narrative, will illustrate its operations elsewhere with sufficient precision.

It not only failed in Kentucky as it did elsewhere "to regulate the currency by compelling the State banks to resume and continue specie-payments," but it compelled the State banks to suspend specie-payments after they had resumed.

After the close of the war of 1812 with Great Britain, the Bank of Kentucky went to work, honestly and earnestly, in curtailing its issues, and in the spring of 1817 resumed the payment of specie.

About the same time a branch of the Bank of the United States began operations in Lexington, and subsequently another was located at Louisville. They issued very few notes, and such as they did issue, instead of entering into general circulation, were snatched up and sent East to pay for goods, the branches receiving the notes

of the Bank of Kentucky for exchange; in all their transactions they soon accumulated heavy balances, which that bank, not being able to obtain the notes of the branches, found it impossible to pay otherwise than with its specie. The withdrawal of its notes from circulation, first to enable it to resume specie-payments, and then to sustain it in that ability under the adverse operation of the United States branch banks, began to operate disastrously on the prices of property and the means of debtors to pay their debts, and a cry for relief went up to the legislature. It was answered at the session of 1817-18, by the establishment of forty-three independent banks, scattered over the whole State. Their aggregate capital was fixed at $ 5,670,000, to be composed of specie or the notes of the Bank of Kentucky. During the year 1818 about half of these banks went into operation, and threw out their notes. For the moment this measure gave an impulse to speculation, though it greatly aggravated the trouble which ensued. Men reasoned that the establishment of banks would enhance the value of property in the towns where they were located, and they made extensive purchases of town property, borrowing notes from the banks to make the first payment, and relying on sales at advanced prices to meet the subsequent ones, and to yield them a profit. The operation ended in the ruin of most of those who had embarked in it. The United States branch banks received the notes of such of the new banks as were convenient to them and were supposed to be prudently managed, thus restricting their issues as well as those of the Bank of Kentucky; while the unchecked independent banks threw out their notes in profusion, filling the State with a depreciated currency. The failure of the Bank of the United States to "regulate the currency" was now conspicuous. It checked banks which needed no check, forced them to take in their notes, and furnished no substitute, thus leaving the field of circulation to the inferior banks at home and in other States.

The Bank of the United States at first made an attempt to furnish a currency everywhere of uniform value, which was one of the principal objects of its creation. It received everywhere in deposits and payments the notes of the principal bank and all its branches. The consequence was that the notes of the Western branches, being remitted Eastward as exchange, accumulated in the principal bank and Eastern branches, raising balances against the Western branches which at that time they had no means of