THE AMERICANS DEFENDED.

MY DEAR E

SOME of your inquiries show that you feel concerned on a subject that warmly engages my own feelings, the reputation of the United States. If I cannot furnish the means of repelling, at once, the odium that we suffer, you will, at least, have the satisfaction of perceiving that it is not entirely deserved; for I think I can convince you that it has not arisen from any intention to defraud, on the part of our people.

UNITED STATES BANK.

You will want to know something of that great bank which failed, called "the Bank of the United States." It is a matter of deep concern in Europe, for a large portion of its stock was owned there. I must remind you that our national government is formed by a combination among the people of different independent states, each of which manages its own domestic concerns, while all of them choose to be represented together, as one, in their intercourse with the rest of the world. The powers necessary for this latter purpose were given to that government, and it was the intention of the several states that it should have no more. One of the first questions which arose in its administration was, whether the power to establish a bank had been given. It was not expressed but Washington thought a necessary incident, and a bank was established for a limited time, in opposition to the opinions of a numerous class of politicians. When the limited time expired, this class of men had prevailed. A renewal of the bank was refused. Its affairs were brought to a close; and every stockholder received back his share of the capital, in full. After some years, it was concluded that, on the whole, the bank had been useful. Some men changed their opinions; and a new bank was created, also for a limited term. When that term drew near its close, President Jackson, who was in power, declared himself opposed to a renewal; and finally refused his consent, without which it could not be obtained. The bank, therefore, prepared to

bring its affairs to a close, as was done in the former case. I was at that time a director in one of its branches, and I speak from personal observation. My position did not enable me to get complete information; but I believe that the bank was then sound; and that if the stockholders had chosen to receive back their capital, as they were at liberty to do, each one would have had his share of it entire. It is true that, in the earnest discussions that preceded, an unexpected prominence was given to Mr. Biddle, the president of the bank; and he may have used some part of its funds injudiciously or improperly, to increase its strength, in a contest somewhat of a political character. But I think there is sufficient proof, that if there were any deficiency then, it must have been a very small one; and that, in the final division, if the stockholders had chosen to have it, they would have found that the investment had, on the whole, been a good one for them.

When the term expired, my duty, and that of my fellow directors, ceased. The portion of the capital used in our branch was returned entire, after yielding large profits; and we have had no connection with the affairs of the institution since. There then ceased to be a national bank; and, from that time to this, we have had no such bank in this country.

But Mr. Biddle was determined not to lose the importance which his position had given him. If he could not be the head of a national bank, he thought a substitute might be found in a bank of his own state. He therefore represented

to the legislature of the state of Pennsylvania, that here was a large capital, belonging, in a great measure, to foreigners; that to send it back to Europe would check our prosperity, particularly that of their own state; but that, if they would grant the necessary privileges for a new bank, he should probably be authorised to pay them several millions of dollars as a bonus, to aid their public institutions and works, in return. That state agreed to do so. He then represented to the stockholders of the national bank, who were preparing to receive back their money, what I think he believed, that, although he had now no connection with the government, he could use their capital as profitably as before. He desired

them, in a circular letter, to decide whether they would take shares in the new bank, and to authorize some one to act for each of them. They generally decided that they would do so; and almost all of them gave their power of acting to him, a circumstance that proved particularly unfortunate in the end. Such as preferred to have their money, obtained it readily, and more, by selling their shares to others.

He seemed now to be completely successful. He had been led to think that he divided the favours of the nation with its President, General Jackson, in a grand warfare; and he thought himself the conqueror. He was intoxicated with a supposed omnipotence in banking. Perhaps, as some people believe, he hoped to make himself President of the United States. If he was too wise to indulge in such a dream, I know that some of his friends were foolish enough to think of that elevation for him.

The new institution received the name of the "Bank of the United States," as if it had been a renewal of that which had just been closed. Now, as you know, the United States are considered as belonging to "the people;" and all the world adopt the name, if they like. Every city, where there are ships, has a "United States" insurance office. If an unusually large tavern is built, it is called the "United States" hotel; and if you step into an omnibus, it is very likely that you find it is called the "United States." Really, the United States, as a nation, had no more to do with this bank than they have to do with an omnibus coach. This fact was well understood at the time, or ought to have been, by the stockholders; but was probably soon forgotten. The bank is now supposed, by great numbers in Europe, I believe, to have been a national establishment; and is spoken of as such by some who know that it was not, but wish it to be believed so, that they may strengthen the case against us as a nation.

You will ask, perhaps, why some of our own people did not come forward to explain all this? A large part of the nation were loud in doing so. All those opposed to any national bank were forward in denouncing this attempt at a substitute. Those who were in favour of a national bank and hoped that this might answer the purpose, thought that enough was said

from the other side; and many of them were willing to put their own money at risk in it, particularly those who were nearest to the scene of action, in Philadelphia, and who are now among the greatest sufferers.

There was one important fact that did not receive sufficient attention at the time. Similar plans, though not on so large a scale, had been formed in other states. Our people are apt to go on in a rush for new objects; and such was the eagerness to take up the business left by the institution which was then closing its affairs, that the capital of new state banks, created for the purpose, was three or four times greater than that of the national one had been. When Mr. Biddle, therefore, attempted, in imitation of the latter, to establish branches in other states, by purchasing some smaller bank in each, he found competitors every where; and his intentions were defeated. He then began to feel the want of those exclusive privileges, throughout the Union, which the United States Bank had previously enjoyed, and which a single state could not give; and he was induced, partly by this cause, perhaps, to employ a great deal of money in a kind of loans, for which banks were never designed,-long loans to states, and to incorporated companies.

The capital of the national bank and its branches was thirty-five millions of dollars. The whole number of others that had been created, in the different states, for ten years before its close, was twenty-two, with a capital of eight millions. Within two years after its close, two hundred and sixty-eight banks were created, under the authority of the different state governments, with capital amounting to a great deal more than one hundred millions. Many of the latter became unsound, and their failure contributed to a depression in the value of property, that proved, in the sequel, ruinous to the credit of some of the states.

Mr. Biddle went on in his own way. Instead of lending the money to commercial men, on their engagements, made for a short time, he lent it in immense sums to aid doubtful projects in various states; making his power felt, as if to prepare political influence. I believe that he did not mean to do mischief, but he overrated his own sagacity and ability. When any of the directors were disposed to interfere, they

felt that he was clothed with power from the distant stockholders, and could control everything. Some independent men resigned, or were displaced. Concurrent circumstances, which it would be tedious to explain, proved unfavourable; and, after a short career, this new bank, merely a creature of one of the states, was found to be insolvent. The mischief is done, and without remedy. Nobody but the stockholders at a distance, who had implicit confidence in Mr. Biddle, could interfere with him to prevent it. In my belief, the power could only come from abroad; and it seems clear that if the stockholders in Europe had occasionally sent sensible men to look after their affairs, and to see how things were managed, the greater part of the loss would have been prevented. They could not vote in choosing directors; but the exclusion, which extended no farther, was nearly nominal. By distributing among agents here a small portion of their shares, which they could have afforded to give away, if necessary, they might have made a change at any time. If a man here had owned one half the stock of the bank, he could have had but thirty votes; and a few shares in the hands of thirty men would have given the same number. The influence of their power, then, on either side, was probably as effective as if there had been no exclusion at all.

As the change from the national bank to that of the state was, in some degree, a matter of form only, you will ask, perhaps, as others have done, what evidence I have that the misapplication of the funds, which is admitted in the latter case, had not been practised long before? I answer, the very best that could be desired; and the statement of it will serve still farther to explain to you the distinction between the national bank and that which failed; showing the safeguards that surrounded the one, and the want of them which proved fatal to the other. I assisted, myself, with the other directors of the several branches among which the capital of the national bank was divided, to guard the funds. The greater part of the thirty-five millions was distributed among the several cities of the Union, to a branch in each, leaving only a small remainder in Philadelphia under the immediate control of the president, Mr. Biddle, and the directors, there, of the mother bank, as it was called. We had, for instance,