William Gouge,
A Short History
CHAPTER X.
Of Banking from 1816-17 to 1817-18.
During the year ending December 31st, 1816, the revenue of the United States' Government amounted to the enormous sum of forty-seven millions of dollars, or to two millions more than the total of the national debt on the first of January, 1812. The appearance of increasing riches, and the general rise of prices produced by the free use of paper money, had caused a consumption of foreign commodities, the effect of which was felt by Government in the great increase of its revenue.
But, with all this income, our fiscal affairs were not free from embarrassment. "The public treasury exhibited a phenomenon in finance. Many millions of surplus revenue, with as many different values as there were offices of collection, constantly accumulating at those ports of entry where it was least valuable, and applicable only where it was collected, while the great mass of public debt and expenditures was at those places where the public moneys were least available: even the quarterly interest on the public debt, due where the currency was most valuable, could not be discharged but by the evidence of a new debt, in the form of seven per cent. treasury notes. Thus creating an invidious distinction as well between the debtors as the creditors of the public, in many cases exceeding twenty per cent. on the amount of their respective claims. The market value of the currency paid to the Government, was made to fluctuate according to the arbitrary decisions of Banks, and intrigues of brokers.
"In this situation, the State Banks which had been employed as depositories of the public money, withheld the indispensable facilities of exchange, for the payment of the public creditors, and finally refused to pay the balances due by them, but in the ordinary course of public expenditure; at their respective places of location claiming, under various groundless pretexts, the indulgence of Government, while the immense sums received by them on account of the United States in the paper of the Banks which did not participate in the public deposits, enabled them to control those Banks and protract their efforts to resume specie payments."49
Such was the state of affairs, that, though there was a balance of twenty-two millions in the treasury, the Government was compelled to borrow five hundred thousand dollars from the United States Bank, in anticipation of its regular operations, to pay the interest due on the public debt at Boston on the first of January, 1817.
The Bank of the United States opened its doors at Philadelphia on the 1st of January, 1817. Its capital then consisted of one million four hundred thousand dollars in specie, and fourteen millions in public stocks. About this time a second instalment in specie, of the amount of two millions eight hundred thousand dollars, was due: "but it is clear," says A Friendly Monitor, "that the Bank having commenced operations, and put its paper in circulation, could not enforce the payment of the specie part of the second and third instalments of the capital in new acquisitions of specie. They would be paid either in the notes of the Bank, or in the specie which they would draw out of the Bank, or with checks drawn on the credit of the discounts, or not at all: for if the Bank had ceased to furnish facilities in the vain expectation of coercing payment, no dividend could have accrued * * * * The directors therefore acted wisely in discounting the notes of the stockholders payable in specie sixty days after date."
From the documents laid before Congress in 1819, it appears that the directors did not wait till the second instalment was due: but passed a resolution in December, before any notes of the Bank were in circulation, authorizing discounts on a pledge of stock. Such "facilities" enabled the stock holders either to comply with, or to evade, the requisitions of the law, as the reader is disposed to interpret its terms. A large part of the second instalment was not paid till months after it was due, and instead of two millions eight hundred thousand dollars, only three hundred and twenty-four thousand can, according to the report of a committee of Congress, be fairly presumed to have been paid in coin.
A third instalment, of two millions eight hundred thousand in coin, and of seven millions in Government stock, was due after the 1st of July. But the committee of Congress say that, "of the two million eight hundred thousand dollars which was to have been paid at the third instalment, it is believed that a very trifling amount was paid in coin, and as little of the funded debt, but that nearly the whole were paid by the proceeds of notes discounted on stock."50
To be brief, the capital of the United States Bank, when all paid in, consisted of about two millions in specie, instead of seven millions, and of about twenty-one millions in funded debt, instead of twenty-eight millions, and of about twelve millions in the stock notes of the original stockholders. Mr. Mann had predicted that the stock would be completed in this way, and it being the way in which Bank stock is usually completed, the result ought to occasion no Surprise.
The manner in which the discounts on pledges of stock of the Bank were conducted, was very beneficial to some of the original shareholders.
"The directors did not confine themselves to the amount prescribed in the resolution of December 27th, that is, to the proportion of the coined part of the second instalment, but discounted to the full value of the stock which was paid for by the proceeds of the same discounts; and the discounts, the payment of the second instalment, the payment of the price to the owner, the transfer, and the pledge of the stock, were, as it is termed, simultaneous operations. All the discounts on stock after the 20th of February, 1817, were made at the value of the shares, which enabled the discounter not only to pay the whole of the instalments, including the specie part, and the funded debt part, but also to draw out of the Bank the amount which might have been paid in on his shares. * * * The effect of these discounts was, very obviously, to enable those who had made large purchases, to retain their stock without paying for it, and to derive a benefit from its probable advancement in price. Had the Bank rigidly required the payment of the instalments, the large stockholders must have sold that portion of their shares which their real means did not enable them to hold. Or, if the Bank had not exacted the instalments, and had not afforded the means of substituting credit for payment, the stock would not have advanced materially in price, and the large holders of it would have had no inducement to retain it. In either event, a more equal diffusion of shares would have been the consequence, and it would have reached the hands of solid capitalists, who would have held only what they could pay for."51
In August a resolution was adopted to grant discounts on Bank stock, at the rate of 125 for 100 paid, with an indorser for the excess.
"And in order to insure the greatest amount of such loans, and at the same time afford facilities to the prompt purchase and sale of stock," the President and Cashier were authorized, "to discount all stock notes that should be offered between discount days, to a certain amount. Stock-jobbing to an immense extent, and wagers on the price of shares, were the inevitable consequences of this system. It gave equal facilities to the bankrupt, who had not credit enough to obtain an indorser, and to the capitalist. Stock could be, and was, purchased without the advance of a cent by the purchaser, who had only to apply to the directors, or to the President and Cashier between discount days, for a loan on the shares about to be bought, and, by what is termed a simultaneous operation, he obtained the discount, and with it paid for his stock. A rise in the market would enable him to sell his shares, pocket the difference, and commence operations anew. The loans actually made were most of them unreasonable, and excessive in their amount: they were not made to the merchant and trader, but to a few persons consisting of directors, brokers, and speculators: and have been renewed and continued almost invariably at the option of the borrower.
"One of the arts obviously intended to give the Bank stock a high price in the European market, was the establishment of an agency there to pay the dividends. On the 28th of November, 1816, a resolution was passed by the casting vote of the President, and against the report of a committee who had been appointed to consider the subject, authorizing John Sergeant, Esq., to make arrangements in Europe, for the payment of the Bank dividends at the par of exchange, and at the risk and expense of the Bank. When the committee find among the eleven who voted in the affirmative, the names of some directors who have been constantly and largely engaged in the purchase and sale of stock; and that of the ten who voted in the negative, not one has been ascertained to have dealt in those transactions, they are almost irresistibly impelled to the conclusion, that the measure was adopted more with a view to enhance the price of shares, than for the permanent benefit of the institution.
"The root and source of all these instances of misconduct, was the illegal and reprehensible division of the stock. By the first fundamental article of the charter, no person, co-partnership, or body politic, shall be entitled to more than thirty votes: and yet, in violation of this provision, it was a common and general practice, well known to the judges of the election and to the directors, to divide shares into small parcels, varying from one to twenty shares to a name, held in the names of persons who had no interest in them, and to vote upon the shares thus held as the attorneys of the pretended proprietors. By some of the witnesses it is avowed that their object was to influence the election. Mr. Leiper, one of the judges of the first election, states that he did so himself. The effect was, that Baltimore, which had about one-seventh of the shares owned by individuals, gave more than one-fourth of all the votes that could be given. In that place there were 1172 shares taken in 1172 names, by George Williams, as attorney, the whole of which, it appears from his examination, he owned. At Philadelphia nearly one-third of the shares was owned, and the votes given at that place were about two-ninths of the whole authorized. The same persons who thus held the power of appointing directors, are found to have the greatest loans on stock."52
It is time now to turn our attention to other operations of the Bank. In January, a convention of delegates from the Banks of New York, Philadelphia, Baltimore, Richmond, and Norfolk, met in Philadelphia, and resolved to resume specie payments on the 20th of February, on certain conditions, one of which was, that the payment of the balances which might accumulate against these Banks, should not be demanded by the Bank of the United States, until the said Bank and branches should have discounted for individuals (other than those having duties to pay) 2,000,000 in New York, 2,000,000 in Philadelphia, 1,500,000 in Baltimore, and 500,000 in Virginia.
The Bank of the United States acceded to this arrangement, and thus engaged to extend its credit dealings as the other Banks contracted theirs.
A favorite object was "the equalization of exchange between different parts of the Union." This was unfortunately sought to be effected, not by compelling the local Banks to redeem their extra issues, and thus bring the currency in every part of the country to a level with specie; but by issuing notes payable at all the offices, and by a system of drawing and re-drawing carried on by the mother Bank and its branches. The directors of the branches at the South and West, especially those at Baltimore, had their own speculations to promote, and issued their notes and drafts in so great quantity, as to cause no little embarrassment to the Bank at Philadelphia, and the branches to the North.
The Secretary of the Treasury increased the inducements of the Bank to multiply its discounts, by redeeming with a portion of the public deposits, eleven millions of the funded debt which formed part of the capital stock of the Bank.
The effect of these various operations was, that the discounts of the Bank, which were less than 3 millions on the 27th of February, were increased to 20 millions by the 30th of April, to 25 millions by the 29th of July, and to 33 millions by the 31st of October. At the close of the year, the amount of unsound credit dealings was, taking the country throughout, greater than it was at the beginning: for the "contraction" made by all the local Banks, did not equal the "expansion" made by the United States' Bank.
The Committee of the Senate of Pennsylvania, describe it as only a nominal resumption of specie payments that was effected in this year. "Had the United States Bank," they say, "been conducted with the discretion and wisdom which were essential to so powerful a machine, its influence might have been productive of the most happy consequences The public was aware that the currency of the State Banks was still depreciated from excess, and that nothing but a further reduction of their issues could remove its unsoundness; and yet, with this fact evident to the most limited capacity, the directors of the new Bank fancied, that if they could only persuade the city Banks to call that a sound currency which was in reality an unsound one, the evil of depreciation would be cured; and they accordingly proposed to them to enter into an arrangement to resume specie payment on the 21st of February following. The city Banks, sensible that their power over the community was so great that few individuals would have the boldness to make large demands on them for coin, and relying upon the forbearance that had hitherto been extended to them by an injured public, who had been for two years and a half paying them six per cent. per annum for their dishonored bills, consented to the arrangement, and specie payments were nominally resumed on the appointed day. We say nominally, because, in point of fact, a bona fide resumption did not take place, as is evident from the well-known circumstance, that, for a long time after that period, American as well as foreign coins would command on the spot a price in city Bank notes above their nominal value. Depreciation can as well result from the forbearance of the public to demand their rights, as from the refusal of the Banks to pay their engagements; and the arrangement alluded to, was not any real resumption of cash payments, but a mere change of one species of inconvertibility for another. No sooner, however, had the directors of the National Bank succeeded in the desirable object of rendering depreciated paper an equivalent for their own convertible notes, than, instead of reflecting, from an acquaintance with general principles and from the experience of the past, that the channels of circulation could contain only, without depreciation, but a limited amount of paper credits, and that that amount was already in these channels, they began to add to the mass already redundant, by emissions of their own notes: and in the course of a few months, added to the mass of Bank loans an amount greatly beyond the reductions which had been made. By these means the currency, although nominally convertible, was depreciated below its former low state, and was thrown back instead of being advanced on the road to restoration: and thus was rendered nugatory, all the pain and embarrassment which the public had suffered from the former curtailments of the State Banks."53
In the Southern and Western States, the operations of the United States' Bank caused the local Banks to extend their issues. The Bank, say the committee of Congress, "improvidently afforded a temptation to the western Banks particularly, to extend their circulation of notes, by insisting on its branches paying out their own notes in preference to those of the State Banks, and on their delivering drafts on the eastern cities, whenever it could be done, to prevent the remittance of their own notes. The branch notes and the drafts issued in consequence of these instructions, were swept away by the facility of remittance thus unwarily given, as well as by the ordinary balance of trade. A vacuum in the circulation was thus produced, which could be supplied only by the local notes, which were readily received by the offices of the Bank of the United States, and were retained by them as a fund upon which interest was paid by the State Banks. The committee are of opinion, that instead of conducting with the alleged rigor towards the State Banks, the Bank of the United States is liable to the more serious charge of having increased the amount of notes in circulation, by its acceptance of them in those places where it was knows they would not be redeemed in specie, and by making them, in the manner before mentioned, the only circulating medium in that part of the country. So long as the notes of each office were payable at all the others, and the office issuing was not exclusively liable for their redemption, the discounts at those places against which there was a balance of trade, became larger in proportion to their indemnity against demands. As the notes of the offices were rapidly carried off, the payment of those discounts was necessarily made in the notes of the local institutions. And thus it was one of the inevitable effects of the old system, to increase the debts of the State Banks to the offices of the United States Bank at those places."
49. A Friendly Monitor. Philadelphia, December, 1819. Reprinted September, 1822 Mr. Gallatin says "it is well known that this pamphlet came from an authentic source." We have been told it was written by W. Jones, the first President of the United States Bank.
50. Report to Congress, January, 1819.
51. Report to Congress, January, 1819.
52. The effect of these different proceedings was, that on the last of December, 1816, Bank of the United States stock was at 41.7-8, for 30 paid, in April at 81 for 65 paid, in May at 98, on the 20th of August at 144 for 100 paid, on the 30th of August at 156½, at which price it remained for some days, and then began to decline. Report to Congress, January 16th, 1819.
53. Report on the Public Distress, January 29th, 1820.
CHAPTER XI.
Of Banking from 1817-18 to 1818-19.
In the first part of the next year, the Bank of the United States conducted operations on the same principles that had governed it in 1817. In January and February, 1818, the amount of its discounts and exchange dealings was swelled to forty-two millions, and in March and April to upwards of forty-three millions.
During all this time the Bank had not succeeded in getting notes to the amount of ten million dollars in circulation, but this appears to have been owing not to any disinclination of the directors to issue paper in abundance, but to a physical inability on the part of the President and Cashier to sign as many notes as were wanted. To get over this difficulty, application was made to Congress to grant authority to the President and Cashiers of the Branches to sign notes. One of the objects in establishing the United States' Bank, was to substitute a uniform paper currency for that variety of notes which made it difficult for many persons to distinguish between the genuine and the counterfeit. An objection was therefore made to granting the officers of the branches power to sign notes, as the variety of signatures would increase one of the evils the Bank was intended to remedy: but a bill was passed by the Senate to authorize the appointment of a Vice President and Assistant Cashier, whose special duty it should be to sign notes for the mother Bank and all its branches. When the bill came before the House on the 18th of April, much praise was bestowed on the Bank for the excellent manner in which it had been conducted, and the propriety of taking measures to enable it to circulate more paper was warmly urged. Mr. Smith, of Maryland, said, "one great object of the Bank was to afford an adequate circulating medium, that would be uniform throughout the Union. To effect this, it is necessary to have a sufficient number of notes signed to enable the Bank to put twenty millions of dollars in circulation. The President and Cashier cannot, (having their other business to attend to,) sign more than 1500 notes each day. At that rate it would require more than four years to sign the number and kind necessary for circulation." The bill was negatived by the House, chiefly from a fear, as would appear from the debates, that it would give the United States' Bank too much power over the local Banks.
In its charter, in the preference given to its notes by the Government, and in its being made the depository of the public revenue, the United States' Bank had great power. It was thus it was enabled to make discounts in little more than a year to an amount exceeding forty-three millions, including eleven or twelve millions on pledges of stock, though the specie part of its capital was hardly two millions.
To sustain its operations, the Bank exchanged part of its funded debt for specie in Europe, and purchased a large amount of coin in the West Indies and other places. Between July, 1817, and July, 1818, upwards of seven millions of specie were imported by the Bank, at a cost of five hundred thousand dollars. But the original cause of the specie's leaving the country, viz: the excess of paper issues, still continuing to operate, the money was exported by individuals faster than it was imported by the Bank. "I myself have seen," says A Friendly Monitor, "a detailed statement of five millions dollars, exported in twelve months from the ports of Boston and Salem alone, and from this data the aggregate amount exported in twelve months from the United States, could not have been, during the same period, short of twelve million of dollars." This estimate is probably below the real amount, and the result would have been the same, if the Bank had imported seventy millions instead of seven millions. If we had mines as rich as those of Potosi, and paper should be issued in excess, we should not be able to retain in the country even that small amount of silver which is necessary to keep Bank notes convertible.
Notwithstanding the importation of specie made by the Bank, the amount at any one time in its vaults did not rise to three millions – an amount which, divided among the mother Bank and eighteen branches, was quite insufficient to sustain its operations.
In July the Board of Directors found it absolutely necessary to change their policy. A sudden reduction of dis counts to the amount of two millions at the Bank in Philadelphia, two millions at Baltimore, seven hundred thousand at Richmond, and five hundred thousand in Norfolk, was then ordered to be made before the 1st of November, and it was resolved to require the payment of the balances due by the Banks of Cincinnati and of the District of Columbia.
By the 30th of October, the reduction of discounts at Philadelphia had exceeded the prescribed amount in the sum of five hundred thousand dollars. In Baltimore, Richmond, and Norfolk, the deficiency was one million seventy seven thousand five hundred. The total reduction in the four cities was nearly four million five hundred thousand: yet an additional reduction to the amount of one million, was deemed necessary in Philadelphia; and a committee of investigation was constrained to urge a steady perseverence in the curtailments of the discounts of the Bank and its offices, wherever it might be practical and useful. One of the reasons for this course of procedure, was "the premium paid at this time for specie, which is said to be ten per cent. on Spanish dollars, and a considerable though less premium for other coins."
"When, in July last," says the Committee of Congress, "the Board directed a curtailment of discounts, it fell in almost all cases on the business paper, while the immense amounts loaned on stock pledges were but little affected, excepting at the offices at Richmond and Washington, where the curtailment appears to have fallen equally on all the notes. But the discounts at these places on stock were very small, particularly when compared with Baltimore, where the loans were such, and so long continued, as to receive the animadversions of the parent Board."
A reduction of discounts to the amount of four million five hundred thousand dollars in four cities, in the short space of three months and ten days, had a very disastrous effect on the merchants, and through them, on the rest of the community. Their sufferings were increased by the order not to receive on deposit: at Philadelphia any notes except those of the mother Bank, or at any one of the branches, any notes except those of that one branch. Heretofore the mother Bank and its branches had paid and received indiscriminately, all their notes, without regard to the place of issue. By the new arrangement, paper which was received from the Bank on one day was on the next no longer available in paying debts to the Bank. In other words, the merchants were called on to pay four or five millions, and were not allowed the privilege of paying debts due to the Bank itself in the paper of the Bank.
The local Banks, when a sudden demand was made on them for balances due to the United States' Bank, had no way of meeting those demands but by pressing on their own customers. The pressure thus became general throughout the country.
The Committee of Congress say, that the demands of the United States' Bank against the local Banks, "were suffered to accumulate improperly, instead of being gradually reduced as specie was required at other offices, and in small quantities that would not have been felt. Their reduction was not insisted upon sufficiently early; and when the Bank began to call for specie, its demands were so considerable as not only to expose the local Banks, but the citizens in their vicinity, generally, to very severe pressure."
The situation of the community was very alarming. Mr. Niles, in his Register of October 3d, intimates that "a grand scheme was maturing 'for keeping the paper-mill a going.' The first part of the scheme is to prepare the members of Congress to vote as directed at the ensuing session of Congress. Of what is designed to be done, when a sufficient number of members are secured, we are almost wholly in the dark at present: but we believe one of the things proposed is, the substitution of a paper currency as a LEGAL TENDER, instead of coin, which is frequently hinted at in certain newspapers, as if to feel the public pulse." In his Register, of November 7th, he says,
"We have several times darkly hinted at a great intrigue which was going on to relieve the Banking system, generally, and especially to subserve the grand views of the Bank of the United States. I am just now informed of what this intrigue is: but private honor will not permit me to mention it, at present. The object is, by bits of paper to prevent the Banks from being compelled to pay their debts. This is the long and the short of the whole affair. Aye, and the pretence is most specious, the appearance most seducing: but the instantaneous effect will be to banish money, and bring about those happy times when lordly Banks issued notes for six and a quarter cents, and a copper coin was a rarity. To effect this arrangement, many of the local Banks will co-operate – to seal their own ruin; for the bits of paper above alluded to, will immediately centre in the Bank of the United States. Perhaps, as the people are alarmed on this subject, the project may not be pressed; though we have reason to believe that much exertion has been made to convince certain members of Congress of the propriety of it: and we were astonished to learn that a distinguished gentlemen, of whom, indeed, we expected a different conduct, had boldly predicted the triumph of the United States' Bank over the local institutions. Upon my conscience, I would rather agree to have a hereditary President and a Senate for life, than that this thing should happen. In the latter case, our President and Senators might be influenced to good actions by a sense of individual shame, or a love of true glory, and the choice of representatives would be left free to us: but in the other, an unknown and irresistible aristocracy would be raised up, secret as the 'council of ten' and remorseless as the 'holy inquisition.' Give me to live under any despotism but that which springs from the command of money: for it is the most base and unprincipled of all.
"But Congress will not, cannot, dare not, pass the law, proposed to pamper speculation They may prohibit the exportation of coin, if they please; still they cannot substitute a paper medium for it, and compel me to take it in payment of debts justly due me. And this it is which is fondly designed to be attempted – for the benefit of the rag-barons."
It is certain that letters were received at Washington from Philadelphia, in the early part of December, urging an emission of treasury notes; and that, on the 7th of December, a meeting was held in Philadelphia, Mr. Matthew Carey in the chair, by which a committee was appointed to draft a memorial to Congress to prohibit the exportation of specie. Some of the members appointed on the committee declined acting, and no memorial appears to have been prepared; but a member of the Senate actually brought before that body a resolution to prohibit the ex portion of the precious metals ! What despotic Spain could never accomplish, was attempted in free America.
Towards the close of this year, public opinion became so adverse to the Banks as to call forth strong denunciations of them from some of the high officers of State. De Witt Clinton, the Governor of New York, in his Message to the Legislature, reprobated the system in strong terms. "The embarrassments," he said, "arising from the disordered state of our currency, have increased instead of diminishing, since I had the honor to address the Legislature on the subject. And unless efficient preventives are adopted, and suitable remedies applied, the evil will be in a state of progressive augmentation. A proposition to invest Banks with a power of coining money, would have no advocates, and yet it might not be so pernicious as the authority already granted of emitting Bank notes. Having uniformly opposed the multiplication of Banks, I now only express opinions formed for many years, after mature deliberation, and which are every day sanctioned by the progress of time and the voice of experience."
Governor Worthington, of Ohio, said, "The disordered state of the currency will claim your attention. The good people of the State look to you, gentlemen, for such remedy as may be within your power. The obstacles you have to encounter in effecting an object of so much importance cannot be disguised: indeed, I fear it may be found impracticable, under existing circumstances, to answer public expectation."
Gabriel Slaughter,* the Governor of Kentucky, was very emphatic in his denunciation of the system:
"I am in deed, ready to confess before my countrymen, that my sentiments, or perhaps prejudices, ever have been, and still are, strongly against the Banking system. Time and experience, instead of conquering these prejudices, have tended to confirm them. I have ever viewed these moneyed corporations with jealousy. I consider the corporate powers and privileges conferred on them, as so much taken from the power of the people, and a contrivance to rear up in the country a moneyed aristocracy. Money is power, in whatever hands it is placed: but it is less dangerous when divided among individuals, than when combined and organized in the form of Banks. In vain did the American people, during their struggles for liberty and independence, destroy the landed aristocracy, then existing under the law authorizing estates to be entailed, if a moneyed aristocracy is to be substituted. Instead of having our National and State Legislatures filled with men representing the feelings and interests of the great agricultural class of the community, I fear we shall see these Banking aristocracies greatly preponderate on the legislative floor. I must ever be opposed to any system of policy, which, independent of its pernicious and corrupting influence in other respects, tends to diminish, if not destroy, the weight and influence of the farming interest, upon whose virtue and independence the duration of our free institutions so essentially depends.
"While this system exists in other States, Kentucky can do little to rescue the country from the evil and anti-republican tendencies of these moneyed corporations. Let us therefore invite a co-operation in some plan, co-extensive with the Union, to redeem this young and rising Republic from the mischief and dangers of this paper system, before it is too late. If permitted to progress and inter weave itself with all the interests and concerns of society, it may, in a more advanced and dense state of our population, explode in a convulsion of the Government. The disease, it is true, has taken deep root, but the American Republic is young, and by a vigorous and determined effort, may, in a few years, exterminate it. Some time may be necessary to enable these institutions to wind up. To effect so desirable an object, I would recommend to the Legislature, to propose an amendment to the Federal Constitution, providing, that, after a certain period, no incorporated Bank should exist in the United States, or, if this should be thought going too far, and Banks in any shape, or to any extent, are useful and necessary, let the Banking powers be limited, and the system so regulated and restricted, as to secure the community against the wide spread ruin and mischief with which we are threatened."
These views appear to have been adopted by some members of the Legislature, for on the 4th of January, 1819, Mr. Bledsoe submitted the following resolutions:–
1. Resolved, by the General Assembly of the Commonwealth of Kentucky, that the establishment of a moneyed monopoly is hostile to republican liberty.
2. Resolved, That Banks are such a monopoly, and do not depend for their profits upon the correct employment of the products of industry.
3. Resolved, That as the products of the labor of a nation are the only genuine sources of national wealth, any corporation or institution which tends to substitute speculation instead of the proper and valuable fruits of this labor, must be pernicious, and ought to be abolished.
4. Resolved, That any corporation not promotive of, or essential to, public good, ought not to exist.
5. Resolved, That all Banks wherein individuals are interested, are moneyed monopolies, tending to make profit to those who do not labor, out of the means of those who do: not tending to increase the means of industry, but to profit of those means unjustly: tending to tax the many for the benefit of the few: tending to create a privileged order, unuseful and pernicious to society: tending to destroy liberty, and create a power unfriendly to human happiness: tending inevitably to an unfeeling moneyed aristocracy, more to be deprecated than monarchy itself: tending to the destruction of the best hopes of man here and hereafter.
6. Resolved, That it becomes the duty of the General Government, and of every individual State composing it, (gradually if necessary, but ultimately and certainly,) to abolish all Banks and moneyed monopolies, and if a paper medium is necessary, to substitute the impartial and disinterested medium of the credit of the nation or of the States.
We know not if these resolutions were adopted.
GABRIEL SLAUGHTER
Born: December 12, 1767
Died: September 19, 1830
Birth State: Virginia
Party: Jeffersonian Republican
Family: Married three times--Sarah Slaughter, Sarah Hord, Elizabeth Rodes; five children
Religion: Baptist
Periods in Office: From October 14, 1816 to September 6, 1820.
Military Service: National Guard
War Served: Revolutionary War
was born in Culpeper County, Virginia. As a young child, he moved with his family to Kentucky, where he was educated in the rural schools. Worked as a farmer until 1795, when he secured an appointment as the Mercer County justice of the peace. His military career began in 1803, as lieutenant colonel of the 5th Regiment, 8th Brigade of the Kentucky Militia. He was recognized for his valiant service in the Battle of New Orleans. Entered politics in 1797, serving as a member of the Kentucky House of Representatives, a position he held until 1800. He also served as a member of the Kentucky State Senate from 1801 to 1808, and was the lieutenant governor of Kentucky from 1808 to 1812, a position to which he was re-elected in 1816. On October 14, 1816, Governor George Madison passed away, and Slaughter, who was lieutenant-governor at the time, assumed the duties of the governorship. However, the legality of this action was questioned, due to the fact that Madison was the first governor to die in office. The legislature did not support the calling of a special election, and the decision for the lieutenant governor to fill the unexpired gubernatorial term prevailed. During Slaughter's tenure, the development of internal improvements was endorsed, and educational advancements were advocated for. Also, during Slaughter's term, the Panic of 1819 and the controversial removal of Charles S. Todd as secretary of state were both dealt with. Three years after leaving office, Slaughter was reelected to the Kentucky House of Representatives. He was buried at the family graveyard in Mercer County, Kentucky.