rency. But the money thus borrowed from the banks was soon vested in more lands, which, again returned to the banks, afforded occasion for new loans. In this way the indebtedness of the country was constantly augmenting, by reason of which, although there was more money in circulation than had ever been before, and the excess had raised the prices of all property which depended exclusively on the home market, higher than it ever was before, yet there was also an unusual demand for money -so that the high market rate of interest in the cities was constantly attracting money from the country, to be vested in loans. Another consequence of the extensive loans made by the banks was, that there was a great increase in the expensiveness of living, and of the consumption of foreign luxuries, which brought the country in debt to other countries, and consequently caused an export of specie, by which the banks were compelled either to lessen their circulation, by calling in part of their loans, or to refuse to redeem their notes in specie. They deemed the last expedient the most advisable. The country was in that anomalous condition, of suffering at one and the same time the inconveniences of a deficient and a redundant circulation of redundancy, from the great excess of paper circulation, which was the general currency of the country; and a deficiency of metallic currency, the only money which the Government would receive, at the time when it was a creditor to an unprecedented amount.

The evils caused by the suspension of the banks induced many of the former supporters of the Administration to doubt the wisdom of its contest with the Bank; but, on the other hand, the popular admiration for General Jackson was rather increased than lessened by that event, for they looked upon it as the consequence of his

no longer being at the helm of state; and they remarked that all had gone on well, as long as he was President; but he had scarcely been out of power two months, before the whole country was thrown into a state of general confusion and distress.

In consequence of the general suspension of cash payments by the banks, at the time when the Government had done all that it could to discourage the system of paper currency, and had required all moneys due to it to be paid in gold and silver, the embarrassments of the mercantile community were very great, and were rapidly increasing. Under these difficulties, the merchants of New York applied to the President, asking forbearance to bring suit on their bonds to the custom-house.

The Secretary of the Treasury stated, in answer to this application, that the indulgence asked was beyond the power of the Executive: that where indulgence had been given, it had been only after suit was brought. He details the practical difficulties in the way of any long forbearance on the part of the Government; and he adds:

"This Department cannot close the present communication without requesting you to assure the individuals connected with the great commerce of your port, of the deep sympathy felt here on account of its embarrassments; of the willingness cherished at this time, as on former occasions, to extend to it every species of relief and indulgence in the power of the Treasury, consistent with the laws."

While the mercantile community was thus heavily

1 See Mr. Webster's speech in New York, giving a history of the war made by the Administration on the banks, and the fulfilment of the disastrous consequences which he had predicted. This speech was delivered March 15th, 1837. See LII. Niles's Register, page 150.

pressed by their obligations to pay specie to the Government, and the difficulty of procuring it, strong efforts. were made to support the former policy of the Administration; and large meetings were held in New York and Philadelphia, in which the wisdom of that policy was firmly maintained, and the banks were denounced for suspending cash payments.

On the other hand, there was a meeting of delegates from all the banks of Philadelphia, and they replied to the inquiries of the popular meeting of the fifteenth of May. In answer to the first inquiry into the cause for suspending cash payments, they allege the example of New York, that if they could not receive specie from others, they could not pay it. If the banks part with the specie, they must stop lending. The suspension was necessary to enable them to lend to those who pay wages to the industrious classes. To the second inquiry, whether, during the suspension, the banks may not pay their bills of five and ten dollars- they say it is impossible, and would do no good. If paid in specie, these notes would command the same premium as specie, and thus would not be retained in circulation. The banks looking to a resumption of specie payments, will preserve their present supply, and not reduce it for the purposes of gain.

In all the cities meetings were held by merchants and others, devising plans of proceeding to mitigate the evils arising from the suspension; and the Administration found it necessary to authorise indulgence to be given on duty bonds as well before as after suit, and permitted that indulgence to be extended till after the commencement of the ensuing session of Congress: but the collector, who had proposed to exercise yet greater forbearance, was reproved for his course by the Administration,

and instructed to alter it. In a speech made by Mr. Webster at Wheeling, in Virginia, where he happened to be at this time, he naturally dwelt on his predictions of the failure of "the experiment" made by the Administration on the currency:

"You know," he says, "the obloquy cast upon me, who opposed this experiment. You know that we have been called bank agents, bank advocates, and bank hirelings. You know that it has been a thousand times said that the experiment worked admirably, that nothing could do better, that it was the highest possible evidence of the political wisdom and sagacity of its contrivers; and none opposed it, or doubted its efficiency, but the wicked or stupid.

"Its lofty promises, its grandeur, its flashes that threw other men's sense and understanding back into the shades where are they now? Here is the 'fine of fines, and the recovery of recoveries;' its panics, its scoffs, its jeers, its jests, its gibes at all former experience, its cry of a new policy,' which was so much to delight and astonish mankind. To this conclusion has it come at last:

"But yesterday it stood against a world:

Now lies it there, and none so poor to do it reverence.'

He said that every step in our financial and banking system, since 1832, had been a false step: that if there had been over-trading and rash speculation in the public lands, the Government had encouraged them by furnishing the means by the money it accumulated in the deposit banks.

There was another popular meeting in Philadelphia, and also one in Baltimore, maintaining the policy of a specie currency, and denouncing banks, moneyed aristocracy, and other abuses.

At a very numerous public meeting in New York, on the third of July, they passed resolutions in favor of a metallic currency, against a National Bank, and extolled the conduct of Martin Van Buren in adhering to the measures of Andrew Jackson.

On the fourth of September, Congress having assembled, President Van Buren sent them his first message.

He begins with stating the cause of their being convened at this unusual time, which was, that Congress having made it the duty of the Treasury Department to discontinue the use of such banks as should fail to redeem their notes in specie, and all the banks in which the public money had been deposited having suspended specie payments in May last, the regulations of Congress concerning the public money having thus become inoperative, he had felt it his duty to give them an early opportunity of exercising their supervisory powers. He also apprehended that the receipts into the treasury would not be sufficient to defray the expenses of the GovernThese fears have been since realized, and would make some further provision by Congress necessary.

ment.

He had granted indulgence to the mercantile class indebted to the Government, in consequence of their present difficulties. The Government had also, under its obligations to pay specie, been restrained from offering its creditors the notes of any bank not paying specie. From these sources of difficulty, for which they alone could provide, their meeting was indispensable.

He adverted to the different opinions that had prevailed as to the causes of the recent revulsion, arising not merely from the nature of the subject, but also from party influences. It was natural that those who had opposed the policy of the Government should attribute