Cyclopædia of Political Science, Political Economy, and the Political History of the United States

Edited by: Lalor, John J.
(?-1899)
BIO
Display paragraphs in this book containing:
Editor/Trans.
First Pub. Date
1881
Publisher/Edition
New York: Maynard, Merrill, and Co.
Pub. Date
1899
Comments
Includes articles by Frédéric Bastiat, Gustave de Molinari, Henry George, J. B. Say, Francis A. Walker, and more.
Start PREVIOUS
369 of 1105
NEXT End

DEPOSITS

I.366.1

DEPOSITS, Removal of. In the course of his struggle with the bank of the United States (see BANK CONTROVERSIES, III.; JACKSON, ANDREW), president Jackson, in his message of Dec. 4, 1832, asked for an investigation into the truth of rumors which, if true, affected the safety of the government deposits in the bank. By section 16 of the act of April 10, 1816, creating the bank, the funds of the federal government were to be deposited in the bank or its branches, "unless the secretary of the treasury shall at any time otherwise order and direct; in which case the secretary of the treasury shall immediately lay before congress, if in session, and if not, immediately after the commencement of the next session, the reason of such order or direction." As the charter was accepted by the bank with this proviso, it would seem that the secretary of the treasury had been accepted by both the contracting parties as a sort of arbiter to decide upon the possible future question of a removal of the deposits from the bank; and the only punishment for a misuse of the discretion by the secretary would seem to be impeachment and removal, a punishment which the bank's friends in congress could not inflict in 1833 for want of a two-thirds majority in the senate. The question, then, lay, not in the right to remove the deposits, but in its necessity; and this necessity the president's mind found in his belief that the bank was using the public funds for a large expansion of its discount business, under the irresponsible direction of a committee appointed by the president, Nicholas Biddle, from which the government directors were excluded; that a large share of these discounts were in favor of members of congress or of their friends; and that, unless the deposits were soon removed, the bank would thus, in this or the next congress, secure to its support a majority sufficient to impeach and remove not only the secretary, but the president himself, if necessary. In the president's opinion the warfare between himself and the bank had been the fundamental question of the presidential election just ended, and his re-election was to him a certain proof that the people sustained him and condemned the bank. For these reasons he had made the suggestion above given in his message, and soon after seems to have decided to force the secretary of the treasury, McLane (see ADMINISTRATION, XIII.), either to remove the deposits or resign.

I.366.2

—March 2, 1833, by the strong majority of 109 to 46, the house, which is always regarded as the special overseer of the treasury and its secretary, resolved that the deposits might be safely continued in the bank. On the following day congress adjourned, and the president was left master of the field until the following December. In January, 1833, he had received from Wm. J. Duane an acceptance of the office of secretary of the treasury. June 1, Duane entered on the duties of his office, McLane having taken the state department, from which Livingston had retired to accept a foreign mission. During his first day of office the new secretary was unofficially informed that the president had decided to remove the federal deposits from the bank To this Duane objected, and from his own statement his objection seems to have been made, first, to the impossible project, fathered by the president, of making deposits in future in state banks (see INDEPENDENT TREASURY), and, second, to the hasty method of removal without waiting for congress to meet in December. He seems to have been no friend to the bank, and not anxious to have deposits made there, if congress would relieve him of responsibility. To all his objections the president persistently replied by offering to "assume the responsibility" himself, and he seems to have been unable to understand Duane's feeling that he was sworn to exercise his own discretion, and not to shift his responsibility to the shoulders of the president Late in July Duane incautiously promised that, if satisfactory state banks could be found in which to make the deposits, he would "either concur with the president or retire." At cabinet meetings, Sept. 10 and 17, the president argued vehemently in favor of the removal, and, Sept. 18, he announced to the cabinet that the removal was resolved upon for Oct. 1, and that he assumed the entire responsibility for it. Under these circumstances Duane seems to have become satisfied that a resignation, for the purpose of making room for a secretary who would fulfill the president's wishes, would not be a fulfillment of the duty with which he stood charged by congress. He therefore asked the president peremptorily "to favor him with a written declaration of desire that he should leave office," and the president, after long expostulation with the secretary, for whom he had great liking, did so, Sept. 23. The same day, Roger B. Taney, the attorney general, was made secretary, and three days afterward he gave the necessary orders. There was in reality no removal. The order directed government collecting officers to deposit their moneys in certain state banks, named in the order. The deposits already made in the bank were left there to be drawn upon, and 15 months afterward nearly $4,000,000 were still there on deposit.

I.366.3

—Of the economic recklessness of the removal of the deposits, without the substitution of any efficient custodian for them, the panic of 1837 is a fair proof. (See INDEPENDENT TREASURY.) Of the strict legality of the removal there is less doubt than of the legality of the president's action. He was not, apart from congress, a party to the contract between the bank and the government; and yet, availing himself of the fact that one of his cabinet had been appointed arbiter between the parties, he had used his power of removal to gain by indirection a control over the contract which he had not directly. But there is this to be said, and it applies to every phase of the struggle between the president and the bank: there was not room in the United States government for both Andrew Jackson and the bank of the United States. Instead of following the simple and natural plan afterward adopted (see INDEPENDENT TREASURY), by which the whole fiscal business of the federal government was intrusted to the treasury, congress had undertaken taken to graft a private corporation upon the treasury. The larger the fiscal business of the government grew, the more powerful and dangerous grew this extra-governmental excrescence. The very even balance of the war between the president and the bank is of itself strong evidence of the power which the bank was able to exert in politics so early in our history as 1831-2. Had it continued to enjoy the use of the increasing revenues of the federal government it would have become more and more dangerous, either as the tool or as the master of a popular government, and the succeeding administrations would have found it more and more difficult to shake off its weight. Jackson showed more political wisdom than is usually credited to him in forcing the struggle so early. When the struggle was once begun, it became a struggle for existence, in which both parties were certain to strain every point of law in the charter and elsewhere. In such a conflict it is matter for thankfulness that the most exceptionable action on either side was a violation, not of the letter, but of the spirit and intent of the law of 1816.

I.366.4

—Dec, 4, 1833, secretary Taney, as required by law, gave congress his reasons for the removal of the deposits. Duane, who saw no reason for their removal, would have been unable to perform this office, even if the president's assumption of responsibility had been allowed by him, and this inability was the main cause of his obstinate refusal. Taney believed firmly that right and reason were conjoined in support of the removal, and he therefore argued the case, not as the mere mouth-piece of the president, but with perfect good faith. Debate upon the removal occupied the whole time of congress, Dec. 2, 1833-June 30, 1834. Petitions in great number were offered, most of them for the restoration of the deposits, but, beyond debate, the friends of the bank could do nothing. The president was impregnable against remonstrance or petition; the necessary majority to remove the president could not possibly be secured; and, after a three months' almost constant debate, the only result was a vote of censure by the senate. (See CENSURES, I.) The nomination of Taney was deferred by the president until June 23, and was then promptly rejected by the senate. It was, therefore, a personal satisfaction to the president that, when Martin Van Buren, whose nomination as minister to England had been rejected by the senate in 1832, was inaugurated as president in 1837, the oath was administered by chief justice Taney, whose nomination as secretary of the treasury had been rejected by the senate in 1834. (See BANK CONTROVERSIES III.; DEMOCRATIC-REPUBLICAN PARTY, IV.; WHIG PARTY, II.)

I.366.5

—See II. F. Baker's Banking in the United States; Gilbart's Banking in America; Goddard's Bank of the United States; Gallatin's Considerations on the Currency; Hildreth's Banks and Banking; Clarke and Hall's History of the Bank of the United States; Moulton's Constitutional Guide; Gouge's Short History of Money and Banking in the United States; 2 von Holst's United States, 52; 1 Benton's Thirty Years' View, 373; 3 Parton's Life of Jackson, 498; 3 Webster's Works, 506, and 4: 3; 2 Colton's Life and Times of Clay; 2 Clay's Speeches; 2 Statesman's Manual; Tyler's Life of Taney; 2 Story's Life of Story; 11, 12 Benton's Debates of Congress. Duane's Address to the People, with his own and Jackson's letters, is in 2 Colton, 86; his Narrative is in 3 Parton, 509; the act of April 10, 1816, is in 3 Stat. at Large, 274.

ALEXANDER JOHNSTON.

Start PREVIOUS
369 of 1105
NEXT End

Return to top