Democratick Editorials: Essays in Jacksonian Political Economy

By William Leggett

Ten years after Thomas Jefferson’s death in 1826, an outspoken young editor in New York City was reformulating and extending the Jeffersonian philosophy of equal rights. William Leggett, articulating his views in the columns of the New York
Evening Post,Examiner, and
Plaindealer, gained widespread recognition as the intellectual leader of the
laissez-faire wing of Jacksonian democracy…. [From the Foreword by Lawrence H. White.]

Book Cover

Translator/Editor

Lawrence H. White, ed.

First Pub. Date

1834

Publisher

Indianapolis: Liberty Fund, Inc. Liberty Press

Pub. Date

1984

Comments

Essays first published 1834-1837.

Copyright

Portions of this edited edition are under copyright. Picture of William Leggett courtesy of United States Library of Congress. Original contains the inscription: "Engraved by Sealey, from a Painting by T. S. Cummings, N A." and includes Leggett's signature below.

CONNEXION OF STATE WITH BANKING

Plaindealer, May 6, 1837. Text and extract abridged.

A paragraph from a recent number of this paper, under the head of
Political Meddling with Finance, is copied by the
Richmond Whig, and commented upon as a concession that the “experiment” of the last administration, with regard to the currency, has failed. That journal holds the following language:

“The following article from the
Plaindealer, the ablest and most honest Van Buren paper with which we are acquainted, makes the important concession that the great
‘Experiment’ of the
hero has failed….”

· · · · · ·

…This is not a Van Buren paper. The great purpose of our journal is to advance the cause of political truth. We do not adopt, as our maxim, the stale and deceptive cant of
principia non homines, which is usually the motto of those whose purposes are utterly selfish and base. We contend for men, as well as principles; but for the former as the means, and the latter as the object. For this reason, we are friendly to Mr. Van Buren, considering him as the instrument chosen by the democracy of the country to carry into effect democratic principles in the administration of the federal government. So far as he is true to that great trust, he shall assuredly have our zealous support; but we shall support him in no deviation, however slight, from the straight and obvious path of democratic duty, and should he, in any instance, stray widely from it, he will assuredly encounter our decided opposition. Of this we have already given an earnest, in our condemnation of the strange and startling avowal with which he commenced his executive career—his precedaneous exercise of the veto power.
*31 It is an unwarrantable use of political metonymy, then, to call the
Plaindealer a Van Buren journal. It is a democratic journal, and is ambitious of no higher name.

With regard to the imputed concession made by this paper, we only ask that our language should not be strained to larger uses than its obvious purport justifies. We do not consider that the
“experiment” has failed, if by that party catchword is meant the measures of the last administration in regard to the United States Bank. We approved then, and approve now, the veto of the bill to recharter that institution. We approved then, and approve now, the removal of the federal revenues from its custody. And we should consider the reinstitution of a bank, in the popular sense of that word, by the federal authority, as one of the very worst evils which could befall our country. What we disapprove now, and what we have always disapproved, is that the government should connect itself, in any way, or to any extent, with the business of banking. When it removed its money from the federal bank, it should not have deposited it with the banks which exist under state authority. It should have stood wholly aloof from such institutions. The only legitimate use which it has for its funds is, in our view, to pay its necessary expenses; and the only legitimate keeper of them in the meanwhile is itself. The treasures of the United States are raised by taxation, in specified modes, for the purpose of paying the debts and providing for the common defence and general welfare of the country. The Constitution recognizes nothing as money but gold and silver coin; and the government should therefore receive its revenues in nothing else. It recognizes, in strictness, nothing as an object to which those revenues are to be applied but the necessary expenses incurred in conducting the general political affairs of the Confederacy. The safe keeping of the money, then, is the only object to be effected, between the collection and the disbursement of it. For this purpose the government is itself fully competent. It has but to establish a place of deposit, under proper guardians, in the commercial focus of the country, and pay the various branches of public service with checks or drafts on that depositary. It has, properly, nothing to do with the exchanges of the country. They are an affair of trade, which should be left to the laws of trade. It has, properly, nothing to do with the currency, which is also an affair of trade, and perfectly within the competency of its own natural laws to govern. Let the government confine itself to its plain and obvious political duties. Let it have nothing to do with a “credit system.” Let it connect itself neither with corporations nor individuals. Let it keep its own money, taking care that it is
money, and not
promises; and let it leave it to unfettered sagacity and enterprise to devise and carry into effect whatever system of exchange and credit may be found most advantageous to the commercial interests of society.

The first objection which will probably suggest itself to these views is, that they contemplate the keeping of a vast fund of the precious metals hoarded up from use, which might be profitably employed as the basis of commercial credit. But it is not necessary that the fund should be vast, and, on the contrary, it is admitted by politicians both of the democratic and aristocratic sects, the former on general political principle, and the latter from aversion to the dominant party, or distrust of its integrity, that the revenue should be adjusted to the scale of expenditure. The keeping of the surplus safely locked up in the shape of money, would afford an additional motive to both parties to increase their efforts to reduce the revenue to the minimum amount. Again, as to this money being susceptible of being usefully employed as a basis of credit. Credit to whom? The government does not need it; for it has no business to transact on credit. The people collectively do not need it; for it is as much a part of the substantial wealth of the country under the lock and key of the federal treasury, as it would be under that of any bank or individual. And no bank or individual needs it; for the credit of every bank and of every person is sufficiently extended when it covers the basis of their own real wealth. If extended beyond this, on the basis of a loan or deposit from the government, it is obvious such bank or individual would be deriving an advantage by jeoparding the money of the government; that is, of the people; that is, the rights of the many would be endangered for the benefit of the few.

Another objection to our theory may be urged, that if the government gathered its revenue for safe keeping at any one point, its checks on that fund, in some quarters where payments would be necessary would be below par, and the receiver of them would thus be defrauded of a portion of his dues. This would not be so, in fact, in any part of our country, if the commercial focus of the Confederacy were selected as the place for the federal depositary. Should it happen, however, in relation to any branch of the public service, say, for example, some military outpost, the government would but be under the necessity of transporting the requisite amount of funds to such outposts; and the cost of doing so would be as much the legitimate expense to be defrayed out of the general fund, as any other expense incurred in the conducting of our political affairs. The same remark will hold good of the cost of conveying the revenues from the various points where collected, to the place of general deposit.

These are, in brief, our views as to the duty of the federal government, in regard to the collection and disbursement of its revenues. The great object which we desire to see accomplished, and to the accomplishment of which, we think, the course of things is obviously tending, is the utter and complete divorcement of politics from the business of banking. We desire to see banking divorced not only from federal legislation, but from state legislation. Nothing but evil, either in this country or others, has arisen from their union. The regulation of the currency, and the regulation of credit, are both affairs of trade. Men want no laws on the subject, except for the punishment of frauds. They want no laws except such as are necessary for the protection of their equal rights. If the government deposites its money with a corporation, a voluntary association, or an individual, it does so either on the condition of some return being rendered, or none. If none, an advantage, which is the property of the whole people, is given to one or a few, in manifest violation of the people’s equal rights. If it receives a return, that return is either an equivalent or not. But no corporation, association, or individual would render an exact equivalent, since only the profit of the trust would present a motive for assuming it. If the return is not an equivalent, it is still manifest that one or a few are benefited at the expense of the many.

We are no enemy to banking. It is a highly useful branch of trade. It is capable of accomplishing many important results, the advantages of which, without legislative control or impediment, would naturally diffuse themselves over the whole surface of society. Banking is an important wheel in the great machine of commerce; and commerce, not confining the word to merchants, who are mere intermediaries and factors, but using it to express the stupendous aggregate of that vast reciprocal intercourse which embraces alike the products of agriculture and art, science and literature—commerce is the efficient instrument of civilization and promoter of all that improves and elevates mankind. We cannot therefore be an enemy of any essential part in so beneficent a whole. Our hostility is not directed against banking, but against that legislative intermeddling, by which it is withdrawn from the harmonious operation of its own laws, and subjected to laws imposed by ignorance, selfishness, ambition and rapacity.

The “experiment” of the last administration, so far as it was an experiment intended to separate the government from connexion with banks, and to bring about the repudiation of every thing but real money in its dealings with the citizens, has our warmest approbation. The specie circular, for the same reason, is an “experiment” which we wholly approved, and Mr. Van Buren has strengthened our good opinion of him by his firmness in adhering to that measure, against the clamour of which it has been made a prolific theme. Glad should we be, if a law, of a tenor corresponding with that order, were enacted in relation to the payments at the customs. We should be rejoiced if the federal government should set so noble an example to the monopoly-loving legislatures of the states, and teach them that the money of the Constitution is the only money which should be known to the laws. They who ascribe the present embarrassments of trade to the “experiments” of Andrew Jackson are not wholly in the wrong. Much of the present evil, we do not question, might have been avoided, had the United States Bank been quietly re-chartered, without opposition, and without curtailment of its powers. It would then have had no motive for its alternate contractions and expansions, beyond the mere desire of pecuniary gain, unless, indeed, it had chosen to play the part of “king-maker,” and dictate to the people whom they should elect to fill their chief political trusts. But not being quietly re-chartered, it undertook to coerce the administration to do what it was not disposed to do of its own free will, and hence was tried, in the first place, the efficacy of a sudden pressure, and afterwards of a sudden expansion. It was this course which gave the original impulse to the spirit of wild speculation, and led to the creation of such a large number of banking institutions by the several states. The result, probably, was not wholly unforeseen by the late President, when he refused his signature to the act renewing the charter of the United States Bank. The path of duty, however, lay plain before him; and to turn aside from it would have been as inexcusable, as would be the conduct of that judge who should pardon an atrocious criminal from the fear that, if executed, his confederates might embrace the occasion to excite a tumult, and throw the community into temporary disorder. The course of justice ought not to be stayed by such a consideration in the one case more than in the other.

If the community desire a banking institution, capable of regulating the currency and the exchanges, and possessed of all the power for good which distinguished the United States Bank, without that enormous power of evil by which it was more distinguished, let them, through the ballot-boxes, insist on the abolition of all restraints on the freedom of trade. Enterprise and competition, if they were free to act, would soon build up a better bank than it is in the power of Congress to create, putting out of sight the constitutional objection; and they would regulate its issues, ensure its solvency, and confine it within the proper field of bank operations, far more effectually than could the most cunningly devised checks and conditions which legislative wisdom ever framed. This is the great “experiment” which has yet to be tried; and it requires no spirit of prophecy to foresee that one of the great dividing questions of politics for some years to come will resolve itself into a demand, on the one hand, for a federal bank, and, on the other, for the total separation of bank and state. We have provided with great care against the union of politics and religion; but in our judgment a hierarchical mixture in our government is not more to be deprecated than an alliance between legislation and banking.
Church and State, has an evil sound; but
Bank and State grates more harshly on our ears.

25.

Leggett may have been aware of the private Bechtler mint in North Carolina, which coined several million dollars worth of Southern Appalachian gold between 1831 and 1850. Congress did not outlaw private coinage until 1864.—Ed.

26.

Bob Acres is a shallow-headed comic character in Richard Sheridan’s play
The Rivals (1775).—Ed.

THE MONEY MARKET AND NICHOLAS BIDDLE

27.

President of the Second Bank of the United States, at the date of this editorial operating under a charter from the state of Pennsylvania.—Ed.

28.

An allusion to the fable of the frogs desiring a king, to whom Jupiter sent down a log of wood.—Ed.

29.

A reference to Biddle’s offer to rediscount bills held by the New York banks.—Ed.

THE PRESSURE—THE CAUSE OF IT—AND THE REMEDY

30.

This extract, and another following it, described speculations in cotton financed by bank credits.—Ed.

CONNEXION OF STATE WITH BANKING

31.

See “Commencement of the Administration of Martin Van Buren” below, p. 221.—Ed.

THE CRISIS

Categories: William Leggett

Democratick Editorials: Essays in Jacksonian Political Economy

By William Leggett

Book Cover

Translator/Editor

First Pub. Date

Publisher

Pub. Date

Comments

Copyright

Table of Contents

CONNEXION OF STATE WITH BANKING