Prominent among the unfortunate results of the war of 1812, was the prostration of public and private credit. For a long course of years anterior to the commencement of hostilities, the policy pursued by England and France had been decidedly injurious to American commerce; and all the other great interests of the country, from their connection with and dependence upon it, were necessarily more or less affected by the same cause, and in a similar manner. When war was declared, business was generally depressed, and it did not revive again till the conclusion of the treaty of peace. The contest was emphatically one of self-defence on the part of the United States,—the very existence of the government was jeoparded,—and when she came out of the struggle, she had saved little more than her nationality and her honor.

It cannot be doubted that the opposition of the federal party to the war, and to the measures connected with its prosecution brought forward by the friends of the administration, tended very much to increase the embarrassments under which the government, and the people themselves, so long labored. But the main cause of all these difficulties was the "peace like a war," which followed the Orders in Council and the Berlin and Milan decrees, and whose disastrous consequences were witnessed more clearly and distinctly immediately after the actual declaration of war. banks soon suspended specie payments, and immense losses were sustained by the government and by private individuals, those of the former amounting, as has been estimated, to forty-six millions of dollars. Loans

The

* Report of Mr. McDuffie on the United States Bank (House of Representatives), April 13, 1830

for carrying on the war were made with great difficulty, and often at most ruinous rates. As the currency depreciated, the exchanges became deranged, and the prices of property rose and fell without any seeming regard for the laws which usually govern them. There was no financial barometer to indicate the changes that would take place. The nominal value of to-day might be increased or reduced from twentyfive to thirty per cent to-morrow, without any ostensible cause. A want of steadiness prevailed everywhere; the stagnation of business was general; commerce was completely disordered; and hopeless and irremediable bankruptcy was apprehended. The government struggled for a time against the tide, but was finally borne along to the very verge of the abyss upon which it hovered when the treaty of Ghent was signed.

What would have been the ultimate effect of the impending evils, had the war continued, it is impossi ble to say with certainty; but the country would either have rallied as one man to the support of the government, and by a display of its united, and when united, invincible, energies, terminated the contest still more gloriously; or disaffection and division would have spread further and wider, and involved everything in general ruin.

When peice was declared, the actual resources of the country were found to be far more abundant and more promising than had been anticipated, and the substantial elements of wealth and prosperity were not seriously diminished. But in order to render these available, it was evident that some plan must be de

vised for procuring relief from the present embarrassments. They formed an incubus on the body politic which it was necessary to remove before activity and vigor could return. Many of the most eminent financiers, forming their opinions upon the favorable effect produced, as was alleged, by the incorporation of a national bank in 1791, upon the disordered commerce and finances of the country at that period, desired to have a similar institution established, for the purpose of correcting the evils flowing from the war of 1812, in the same manner as those were corrected which grew out of the war of the Revolution.

Indeed, the question of renewing the charter of 1791 was agitated during the administration of Mr. Jefferson. In 1808 the stockholders of the old bank applied to Congress for a new act of incorporation, and their memorial was referred to the Secretary of the Treasury, Mr. Gallatin. That officer made his report in March, 1809, and recommended, in strong and decided terms, the reincorporation of the bank. But the Republicans were then in a large majority; Mr. Jefferson was well known to be opposed to a national bank, on constitutional grounds, while his successor, Mr. Madison, entertained similar scruples; and such being the opinions of the leaders of the party, the proposition was not favorably considered. A bill was reported at the session of 1809-10, but no final action was had upon it. The subject was revived the following year, and bills providing for the renewal of the charter were introduced into both houses of Congress. In the House of Representatives the matter was disposed of by a vote of indefinite postponement, and the Senate bill

was lost by the casting vote of the vice-president. The question was not then made a party one, although a majority of the Republican members appeared to doubt the constitutionality of the charter proposed to be renewed. Of all the members of Congress, however, belonging to both parties, on the "simple question of constitutionality, there was a decided majority in favor of it."*

All the efforts to procure a renewal of the charter of the old bank having failed, they rested undisturbed until the session of 1813-14, when a petition was presented in the House of Representatives from the city of New York, praying for the incorporation of a national bank, with a capital of thirty millions of dollars. The memorial was referred to the committee of ways and means, who reported adversely to the prayer of the petition. The subjects of banking and the currency in general had attracted the attention of Mr. Calhoun to a considerable degree, but they were yet comparatively new to him. At this time he was favorably impressed toward a national bank. The constitutional question seemed to him to have been disposed of by the legislative precedents affirming the right in the general government to charter such an institution, yet it does not appear that he was entirely decided in his mind in regard to this point, for the overruling consideration with him undoubtedly was, that a bank was absolutely necessary, in his judgment, to relieve the country from the existing embarrassments. Without it, as he and others thought, the powers expressly granted to the general government could not be exercised, and a bank

Letter of Mr. Madison to Mr. C J. Ingersoll, June 25, 1831.

was therefore to be regarded as a mere agent requisite to the proper and appropriate exercise of those powers.

The adverse report of the committee of ways and means was made in January, 1814, and on the 4th of February following, Mr. Calhoun offered a resolution instructing the committee of ways and means to inquire into the expediency of establishing a bank in the District of Columbia. The committee had reported against the petition from New York, on the ground that the constitution did not authorize the creation of corporations within the territorial limits of the states. This constitutional difficulty Mr. Calhoun desired to avoid, and for all practical purposes he thought a bank located in the district would be as useful as that which had been proposed in the petition. His resolution was agreed to without opposition, and on the 19th of February, the committee reported a bill for the establishment of a national bank in the District of Columbia, with a capital of thirty millions of dollars. The principle of this bill was approved by Mr. Calhoun, Mr. Cheves, and Mr. Grundy, and opposed by Mr. Eppes, the chairman of the committee of ways and means and the son-in-law of Mr. Jefferson, and by Mr. Seybert of Pennsylvania. Others also disapproved of the bill, for the reason that it contained no provision for the establishment of branches in the states. A motion was therefore made to engraft this feature on it, which received only thirty-six votes, whereupon no further action was had in the premises.

But the finances of the nation were in an alarming condition. The public credit was depreciating almost daily. A loan of twenty-five millions had just been