Los Angeles herald., 1909-11-26
The American Congress
IV-The Fight ON the Bank
: Bv Frederic j Haskin

Iz;s7zkssSSl HE first great struggle between
E~AAI the congress and a president
III kS6N of the United States was upon
~ N the question of rechartering
IL the second Bank of the Unit
zszsu ed States, Henry Clay leading
the forces of the bank and
congress against Andrew Jackson only
to suffer complete and total defeat.
Since the victory of Jackson and the
destruction of the congressional leader
ship as it then existed, the American
people have accustomed themselves to
look to the White House for reforms,
and to hold the White House response
BILE for errors in government. Under
the constitution this might have be-
come a purely parliamentary govern
ment, but the domination of Jackson
forever changed the current of Ameri-
can politics and vested leadership and
responsibility in the president.
Andrew Jackson may not have been
the greatest of the presidents, but his
power and his policies were more en-
during than those of any other Ameri-
can chief magistrate. Washington in
impartial dignity attempted to prevent
partisan politics. He had not been out
of office six months until his notions of
the proper conduct of the government
were flouted. His dictum against the
third term and his warnings against
entangling alliances with foreign ma
tions has endured, but his system of
domestic politics perished before he
died The bullet which killed Lincoln
killed his policies, and his successor,
Andrew Johnson. is even now by many
held in contumely for the offense of
having attempted to continue Linooln's
work along lines Lincoln so plainly
marked out.
But Jacksons policies have not died:
They are the essence of the rule ana
practice of American politics today.
Senator Aldrieh, proposing central
bank. admits that what he has to fight
is not opposition to the bank on its
merits, but the ghost of Old Hickory.
The doctrine declaring that ito the
victors belong the spoils" is the ac-
cepted creed of every party, and the
federal office holders today constitute
the most powerful political machine IN
existence. Jackson not only designated
his successor, Van Buren,, but in his old
age nominated and elected James X.
Polk James Parton, the admiring but
not sympathetic biographer Of Jackson,
saws of him: mot only had he no such
word as fall but no belief, not the
slightest, that he could fail in anything
seriously undertaken by him. And he
never did"
The congress refused in 1911 to re-
charter the First Bank Of the United
states, an institution of which Ham
ilton was the father During the sec
ond war with England President Madi-
son and his secretary of the treasury,
George NJ. Dallas of Pennsylvania, at
tempted 70 secure a charter for new
bank Congress refused during the
war. but when peace was restored
hank was chartered and organized on
N.A OnTl W
ments had been suspended in 1914 and
the financial condition of the country
was lamentable. The state banks had
proved wholly incapable of sustaining
the burden of business, and had even
more signally failed to live up to the
responsibility of financing the federal
government. The bill chartering the
second bank was signed by President
Madison on April TO- 1915, and the bank
opened for business in Philadelphia on
January II. 1917. Instead of address
ing itself to the task OF relieving the
country of its burden of bankruptcy,
the president and officers of the bank
plunged into a carnival of speculation
and high finance which would make
modern Wall street blush for shame.
The charter was limited to twenty
years and would expire by limitation
in 1886. The bank had a capital of
s35, 900, 900, one-fifth of which was to be
subscribed by the United States. The
four-fifths was TO be taken by indivi-
duals or corporations their subscrip-
tions TO be payable one-fourth in coin
and three-fourths in the funded debt
of the United States. This provision
was designed to strengthen the credit
of the government by creating a use
for its certificates OF debt, just as the
present national banking system keeps
up the price of government bonds far
beyond their investment value. The
bank was to be governed by twenty
five directors, five of whom we're to be
appointed by the president of the
United States. The government funds
were to be deposited in the bank, un-
less the secretary OF the treasury
should otherwise direct--a fateful pro-
viso. The banks notes were to be re-
ceivable in all payments to the United
States. For this charter the bank
paid the government a bonus OF ST.
100000
William Jones was the first president.
The stock Of the bank was disposed of
to favorites, and the requirements OF
coin payments were not adhered to.
Prospective purchasers of stock were
loaned money upon the security Of the
stock to be purchased, and from this
loan they got money enough to buy the
stock, 1t was not necessary to have
cent to deal in the bank stock or to
acquire large holdings of 1t. The bank
permitted a note to be paid by the note
of the next purchaser. If the stock
rose in value, as 1t did, a man sold his
stock, for which he had paid nothing,
at an advanced price the new buyer
paid for it with note, and the first
purchaser paid his note with the new
note and pocketed the difference in
price In addition to this sharp prac-
- l.-..l- Hharal i'm lis