CHAPTER IV

FINANCIAL AND MORAL CHAOS

Like a dropsical man calling out for water, water, our deluded

citizens are calling for more banks. (Jefferson.)

Merchants are crumbling to ruin, manufactures perishing,

agriculture stagnating and distress universal. (John Quincy

Adams.)

If we can believe our Democratic editors and public declaimers

it [Bank of the United States] is a Hydra, a Cerberus, a Gorgon,

a Vulture, a Viper. (William Harris Crawford.)

Where one prudent and honest man applies for [bankruptcy] one

hundred rogues are facilitated in their depredations. (Hezekiah

Niles.)

Merchants and traders are harassed by twenty different systems

of laws, prolific in endless frauds, perjuries and evasions.

(Harrison Gray Otis.)

The months of February and March, 1819, are memorable in American

history, for during those months John Marshall delivered three of his

greatest opinions. All of these opinions have had a determinative effect

upon the political and industrial evolution of the people; and one of

them[437] has so decisively influenced the growth of the Nation that, by

many, it is considered as only second in importance to the Constitution

itself. At no period and in no land, in so brief a space of time, has

any other jurist or statesman ever bestowed upon his country three

documents of equal importance. Like the other fundamental state papers

which, in the form of judicial opinions, Marshall gave out from the

Supreme Bench, those of 1819 were compelled by grave and dangerous

conditions, National in extent.

It was a melancholy prospect over which Marshall's broad vision ranged,

when from his rustic bench under his trees at Richmond, during the

spring and autumn of 1818, he surveyed the situation in which the

American people found themselves. It was there, or in the quiet of the

Blue Ridge Mountains where he spent the summer months, that he formed

the outlines of those charts which he was soon to present to the country

for its guidance; and it was there that at least one of them was put on

paper.

The interpretation of John Marshall as the constructing architect of

American Nationalism is not satisfactorily accomplished by a mere

statement of his Nationalist opinions and of the immediate legal

questions which they answered. Indeed, such a narrative, by itself, does

not greatly aid to an understanding of Marshall's immense and enduring

achievements. Not in the narrow technical points involved, some of them

diminutive and all uninviting in their formality; not in the dreary

records of the law cases decided, is to be found the measure of his

monumental service to the Republic or the meaning of what he did. The

state of things which imperatively demanded the exercise of his creative

genius and the firm pressure of his steadying hand must be understood in

order to grasp the significance of his labors.

When the Supreme Court met in February, 1819, almost the whole country

was in grievous turmoil; for nearly three years conditions had been

growing rapidly worse and were now desperate. Poverty, bankruptcy,

chicanery, crime were widespread and increasing. Thrift, prudence,

honesty, and order had seemingly been driven from the hearts and minds

of most of the people; while speculation, craft, and unscrupulous

devices were prevalent throughout all but one portion of the land. Only

New England had largely escaped the universal curse that appeared to

have fallen upon the United States; and even that section was not

untouched by the economic and social plague that had raged and was

becoming more deadly in every other quarter.

While it is true that a genuine democratizing evolution was in progress,

this fact does not explain the situation that had grown up throughout

the country. Neither does the circumstance that the development of land

and resources was going forward in haphazard fashion, at the hands of a

new population hard pressed for money and facilities for work and

communication, reveal the cause of the appalling state of affairs. It

must frankly be said of the conditions, to us now unbelievable, that

they were due partly to the ignorance, credulity, and greed of the

people; partly to the spirit of extravagance; partly to the criminal

avarice of the financially ambitious; partly to popular dread of any

great centralized moneyed institution, however sound; partly to that

pest of all democracies, the uninformed and incessant demagogue whipping

up and then pandering to the passions of the multitude; partly to that

scarcely less dangerous creature in a Republic, the fanatical

doctrinaire, proclaiming the perfection of government by word-logic and

insisting that human nature shall be confined in the strait-jacket of

verbal theory. From this general welter of moral and economic

debauchery, Localism had once more arisen and was eagerly reasserting

its domination.

The immediate cause of the country's plight was an utter chaos in

banking. Seldom has such a financial motley ever covered with variegated

rags the backs of a people. The confusion was incredible; but not for a

moment did the millions who suffered, blame themselves for their tragic

predicament. Now praising banks as unfailing fountains of money, now

denouncing banks as the sources of poisoned waters, clamoring for

whatever promised even momentary relief, striking at whatever seemingly

denied it, the people laid upon anything and anybody but themselves and

their improvidence, the responsibility for their distress.

Hamilton's financial plans[438] had proved to be as successful as they

were brilliant. The Bank of the United States, managed, on the whole,

with prudence, skill, and honesty,[439] had fulfilled the expectations

of its founders. It had helped to maintain the National credit by loans

in anticipation of revenue; it had served admirably, and without

compensation, as an agent for collecting, safeguarding, and transporting

the funds of the Government; and, more important than all else, it had

kept the currency, whether its own notes or those of private banks, on a

sound specie basis. It had, indeed, "acted as the general guardian of

commercial credit" and, as such, had faithfully and wisely performed its

duties.[440]

But the success of the Bank had not overcome the original antagonism to

a great central moneyed institution. Following the lead of Jefferson,

who had insisted that the project was unconstitutional,[441] Madison, in

the first Congress, had opposed the bill to incorporate the first Bank

of the United States. Congress had no power, he said, to create

corporations.[442] After twelve years of able management, and in spite

of the good it had accomplished, Jefferson still considered it,

potentially, a monster that might overthrow the Republic. "This

institution," he wrote in the third year of his Presidency, "is one of

the most deadly hostility existing, against the principles & form of our

Constitution.... An institution like this, penetrating by it's branches

every part of the Union, acting by command & in phalanx, may, in a

critical moment, upset the government.... What an obstruction could not

this bank of the U.S., with all it's branch banks, be in time of

war?"[443]

The fact that most of the stock of the Bank had been bought up by

Englishmen added to the unpopularity of the institution.[444] Another

source of hostility was the jealousy of State banks, much of the

complaint about "unconstitutionality" and "foreign ownership" coming

from the agents and friends of these local concerns. The State banks

wished for themselves the profits made by the National Bank and its

branches, and they chafed under the wise regulation of their note

issues, which the existence of the National system compelled.

For several years these State banks had been growing in number and

activity.[445] When, in 1808, the directors of the Bank of the United

States asked for a renewal of its charter, which would expire in 1811,

and when the same request was made of Congress in 1809, opposition

poured into the Capital from every section of the country. The great

Bank was a British institution, it was said; its profits were too great;

it was a creature of Federalism, brought forth in violation of the

Constitution. Its directors, officers, and American stockholders were

Federalists; and this fact was the next most powerful motive for the

overthrow of the first Bank of the United States.[446]

Petitions to Congress denounced it and demanded its extinction. One from

Pittsburgh declared "that your memorialists are 'the People of the

United States,'" and asserted that the Bank "held in bondage thousands

of our citizens," kept the Government "in duress," and subsidized the

press, thus "thronging" the Capital with lobbyists who in general were

the "head-waters of corruption."[447] The Legislatures of many States

"instructed" their Senators and "earnestly requested" their

Representatives in Congress to oppose a new charter for the expiring

National institution. Such resolutions came from Pennsylvania, from

Virginia, from Massachusetts.[448]

The State banks were the principal contrivers of all this

agitation.[449] For instance, the Bank of Virginia, organized in 1804,

had acquired great power and, but for the branch of the National concern

at Richmond, would have had almost the banking monopoly of that State.

Especially did the Virginia Bank desire to become the depository of

National funds[450]--a thing that could not be accomplished so long as

the Bank of the United States was in existence.[451] Dr. John

Brockenbrough, the relative, friend, and political associate of Spencer

Roane and Thomas Ritchie, was the president of this State institution,

which was a most important part of the Republican machine in Virginia.

Considering the absolute control held by this political organization

over the Legislature, it seems probable that the State bank secured the

resolution condemnatory of the Bank of the United States.

Certainly the General Assembly would not have taken any action not

approved by Brockenbrough, Roane, and Ritchie. Ritchie's _Enquirer_

boasted that it "was the first to denounce the renewal of the bank

charter."[452] In the Senate, William H. Crawford boldly charged that

the instructions of the State Legislatures were "induced by motives of

avarice";[453] and Senator Giles was plainly embarrassed in his attempt

to deny the indictment.[454]

Nearly all the newspapers were controlled by the State banks;[455] they,

of course, denounced the National Bank in the familiar terms of

democratic controversy and assailed the character of every public man

who spoke in behalf of so vile and dangerous an institution.[456] It was

also an ideal object of assault for local politicians who bombarded the

Bank with their usual vituperation. All this moved Senator Crawford, in

his great speech for the rechartering of the Bank, to a scathing

arraignment of such methods.[457]

In spite of conclusive arguments in favor of the Bank of the United

States on the merits of the question, the bill to recharter that

institution was defeated in the House by a single vote,[458] and in the

Senate by the casting vote of the Vice-President, the aged George

Clinton.[459] Thus, on the very threshold of the War of 1812, the

Government was deprived of this all but indispensable fiscal agent;

immense quantities of specie, representing foreign bank holdings, were

withdrawn from the country; and the State banks were given a free hand

which they soon used with unrestrained license.

These local institutions, which, from the moment the failure of the

rechartering of the National Bank seemed probable, had rapidly increased

in number, now began to spring up everywhere.[460] From the first these

concerns had issued bills for the loan of which they charged interest.

Thus banking was made doubly profitable. Even those banks, whose note

issues were properly safeguarded, achieved immense profits. Banking

became a mania.

"The Banking Infatuation pervades all America," wrote John Adams in

1810. "Our whole system of Banks is a violation of every honest

Principle of Banks.... A Bank that issues Paper at Interest is a

Pickpocket or a Robber. But the Delusion will have its Course. You may

as well reason with a Hurricane. An Aristocracy is growing out of them,

that will be as fatal as The Feudal Barons, if unchecked in Time....

Think of the Number, the Offices, Stations, Wealth, Piety and

Reputations of the Persons in all the States, who have made Fortunes by

these Banks, and then you will see how deeply rooted the evil is. The

Number of Debtors who hope to pay their debts by this Paper united with

the Creditors who build Pallaces in our Cities, and Castles for Country

Seats, by issuing this Paper form too impregnable a Phalanx to be

attacked by any Thing less disciplined than Roman Legions."[461]

Such was the condition even before the expiration of the charter of the

first Bank. But, when the restraining and regulating influence of that

conservative and ably managed institution was removed altogether, local

banking began a course that ended in a mad carnival of roguery, to the

ruin of legitimate business and the impoverishment and bankruptcy of

hundreds of thousands of the general public.

The avarice of the State banks was immediately inflamed by the war

necessities of the National Government. Desperate for money, the

Treasury exchanged six per cent United States bonds for the notes of

State banks.[462] The Government thus lost five million dollars from

worthless bank bills.[463] These local institutions now became the sole

depositories of the Government funds which the National Bank had

formerly held.[464] Sources of gain of this kind were only extra

inducements to those who, by wit alone, would gather quick wealth to set

up more local banks. But other advantages were quite enough to appeal to

the greedy, the dishonest, and the adventurous.

Liberty to pour out bills without effective restriction as to the

amount or security; to loan such "rags" to any who could be induced to

borrow; to collect these debts by foreclosure of mortgages or threats of

imprisonment of the debtors--these were some of the seeds from which

grew the noxious financial weeds that began to suck the prosperity of

the country. When the first Bank of the United States was organized

there were only three State banks in the country. By 1800, there were

twenty-eight; by 1811, they had more than trebled,[465] and most of the

eighty-eight State institutions in existence when the first National

Bank was destroyed had been organized after it seemed probable that it

would not be granted a recharter.

So rapidly did they increase and so great were their gains that, within

little more than a year from the demise of the first Bank of the United

States, John Adams records: "The Profits of our Banks to the advantage

of the few, at the loss of the many, are such an enormous fraud and

oppression as no other Nation ever invented or endured. Who can compute

the amount of the sums taken out of the Pocketts of the Simple and

hoarded in the Purses of the cunning in the course of every year?... If

Rumour speaks the Truth Boston has and will emulate Philadelphia in her

Proportion of Bankruptcies."[466]

Yet Boston and Philadelphia banks were the soundest and most carefully

conducted of any in the whole land. If Adams spoke extravagantly of the

methods and results of the best managed financial institutions of the

country, he did not exaggerate conditions elsewhere. From Connecticut to

the Mississippi River, from Lake Erie to New Orleans, the craze for

irresponsible banking spread like a contagious fever. The people were as

much affected by the disease as were the speculators. The more "money"

they saw, the more "money" they wanted. Bank notes fell in value; specie

payments were suspended; rates of exchange were in utter confusion and

constantly changing. From day to day no man knew, with certainty, what

the "currency" in his pocket was worth. At Vincennes, Indiana, in 1818,

William Faux records: "I passed away my 20 dollar note of the rotten

bank of Harmony, Pennsylvania, for five dollars only!"[467]

The continuance of the war, of course, made this financial situation

even worse for the Government than for the people. It could not

negotiate its loans; the public dues were collected with difficulty,

loss, and delay; the Treasury was well-nigh bankrupt. "The Department of

State was so bare of money as to be unable to pay even its stationery

bill."[468] In 1814, when on the verge of financial collapse, the

Administration determined that another Bank of the United States was

absolutely necessary to the conduct of the war.[469] Scheme after scheme

was proposed, wrangled over, and defeated.

One plan for a bank[470] was beaten "after a day of the most tumultuous

proceedings I ever saw," testifies Webster.[471] Another bill

passed,[472] but was vetoed by President Madison because it could not

aid in the rehabilitation of the public credit, nor "provide a

circulating medium during the war, nor ... furnish loans, or anticipate

public revenue."[473] When the war was over, Madison timidly suggested

to Congress the advisability of establishing a National bank "that the

benefits of a uniform national currency should be restored."[474] Thus,

on April 10, 1816, two years after Congress took up the subject, a law

finally was enacted and approved providing for the chartering and

government of the second Bank of the United States.[475]

Within four years, then, of the refusal of Congress to recharter the

sound and ably managed first Bank of the United States, it was forced to

authorize another National institution, endowed with practically the

same powers possessed by the Bank which Congress itself had so recently

destroyed.[476] But the second establishment would have at least one

advantage over the first in the eyes of the predominant political

party--a majority of the officers and directors of the Bank would be

Republicans.[477]

During their four years of "financial liberty" the number of State banks

had multiplied. Those that could be enumerated in 1816 were 246.[478] In

addition to these, scores of others, most of them "pure swindles,"[479]

were pouring out their paper.[480] Even if they had been sound, not half

of them were needed.[481] Nearly all of them extended their wild

methods. "The Banks have been going on, as tho' the day of reckoning

would never come," wrote Rufus King of conditions in the spring of

1816.[482]

The people themselves encouraged these practices. The end of the war

released an immense quantity of English goods which flooded the American

market. The people, believing that devastated Europe would absorb all

American products, and beholding a vision of radiant prosperity, were

eager to buy. A passion for extravagance swept over America;[483] the

country was drained of specie by payments for exports.[484] Then came a

frenzy of speculation. "The people were wild; ... reason seemed turned

topsy turvey."[485]

The multitude of local banks intensified both these manias by every

device that guile and avarice could suggest. Every one wanted to get

rich at the expense of some one else by a mysterious process, the

nature of which was not generally understood beyond the fact that it

involved some sort of trickery. Did any man's wife and family want

expensive clothing--the local bank would loan him bills issued by

itself, but only on good security. Did any man wish to start some

unfamiliar and alluring enterprise by which to make a fortune

speedily--if he had a farm to mortgage, the funds were his. Was a big

new house desired? The money was at hand--nothing was required to get it

but the pledge of property worth many times the amount with which the

bank "accommodated" him.[486]

Indeed, the local banks urged such "investments," invited people with

property to borrow, laid traps to ensnare them. "What," asked Hezekiah

Niles, "is to be the end of such a business?--Mammoth fortunes for the

_wise_, wretched poverty for the _foolish_.... Lands, lots,

houses--stock, farming utensils and household furniture, under custody

of the sheriff--SPECULATION IN A COACH, HONESTY IN THE JAIL."[487]

Many banks sent agents among the people to hawk their bills. These were

perfectly good, the harpies would assure their victims, but they could

now be had at a heavy discount; to buy them was to make a large profit.

So the farmer, the merchant, even the laborer who had acquired a

dwelling of his own, were induced to mortgage their property or sell it

outright in exchange for bank paper that often proved to be

worthless.[488]

Frequently these local banks ensnared prosperous farmers by the use of

"cappers." Niles prints conspicuously as "A True Story"[489] the account

of a certain farmer who owned two thousand acres, well improved and with

a commodious residence and substantial farm buildings upon it. Through

his land ran a stream affording good water power. He was out of debt,

prosperous, and contented. One day he went to a town not many miles from

his plantation. There four pleasant-mannered, well-dressed men made his

acquaintance and asked him to dinner, where a few directors of the local

bank were present. The conversation was brought around to the profits to

be made in the milling business. The farmer was induced to borrow a

large sum from the local bank and build a mill, mortgaging his farm to

secure the loan. The mill was built, but seldom used because there was

no work for it to do; and, in the end, the two thousand acres, dwelling,

buildings, mill, and all, became the property of the bank

directors.[490]

This incident is illustrative of numerous similar cases throughout the

country, especially in the West and South. Niles thus describes banking

methods in general: "At first they throw out money profusely, to all

that they believe are _ultimately_ able to return it; nay, they wind

round some like serpents to tempt them to borrow--... they then affect

to draw in their notes, ... money becomes scarce, and notes of hand are

_shaved_ by them to meet bank engagements; it gets worse--the

_consummation originally_ designed draws nigh, and farm after farm, lot

after lot, house after house, are sacrificed."[491]

So terrifying became the evil that the Legislature of New York, although

one of the worst offenders in the granting of bank charters, was driven

to appoint a committee of investigation. It reported nothing more than

every honest observer had noted. Money could not be transmitted from

place to place, the committee said, because local banks had "engrossed

the whole circulation in their neighborhood," while their notes abroad

had depreciated. The operations of the bankers "immediately within their

vicinity" were ruinous: "Designing, unprincipled speculator[s] ...

impose on the credulity of the honest, industrious, unsuspecting ... by

their specious flattery and misrepresentation, obtaining from them

borrowed notes and endorsements, until the ruin is consummated, and

their farms are sold by the sheriff."[492]

Some banks committed astonishing frauds, "such as placing a partial fund

in a distant bank to redeem their paper" and then "issuing an emission

of notes signed with ink of a different shade, at the same time giving

secret orders to said bank not to pay the notes thus signed." Bank

paper, called "_facility notes_," was issued, but "payable in neither

money, country produce, or any thing else that has body or shape." Bank

directors even terrorized merchants who did not submit to their

practices. In one typical case all persons were denied discounts who

traded at a certain store, the owner of which had asked for bank bills

that would be accepted in New York City, where they had to be

remitted--this, too, when the offending merchant kept his account at the

bank.

The committee describes, as illustrative of banking chicanery, the

instance of "an aged farmer," owner of a valuable farm, who, "wishing to

raise the sum of one thousand dollars, to assist his children, was told

by a director, he could get it out of the bank ... and that he would

endorse his note for him." Thus the loan was made; but, when the note

expired, the director refused to obtain a renewal except upon the

payment of one hundred dollars in addition to the discount. At the next

renewal the same condition was exacted and also "a judgment ... in favor

of said director, and the result was, his farm was soon after sold

without his knowledge by the sheriff, and purchased by the said director

for less than the judgment."[493]

Before the second Bank of the United States opened its doors for

business, the local banks began to gather the first fruits of their

labors. By the end of 1816 suits upon promissory notes, bonds, and

mortgages, given by borrowers, were begun. Three fourths of all

judgments rendered in the spring of 1818 by the Supreme Court of the

State of New York alone were "in favor of banks, against real

property."[494] Suits and judgments of this kind grew ever more

frequent.

In such fashion was the country hastened toward the period of

bankruptcy. Yet the people in general still continued to demand more

"money." The worse the curse, the greater the floods of it called for by

the body of the public. "Like a dropsical man calling out for water,

water, our deluded citizens are clamoring for more banks.... We are now

taught to believe that legerdemain tricks upon paper can produce as

solid wealth as hard labor in the earth," wrote Jefferson when the

financial madness was becoming too apparent to all thoughtful men.[495]

Practically no restrictions were placed upon these financial

freebooters,[496] while such flimsy regulations as their charters

provided were disregarded at will.[497] There was practically no

publicity as to the management and condition of even the best of these

banks;[498] most of them denied the right of any authority to inquire

into their affairs and scorned to furnish information as to their assets

or methods.[499] For years the Legislatures of many States were

controlled by these institutions; bank charters were secured by the

worst methods of legislative manipulation; lobbyists thronged the State

Capitols when the General Assemblies were in session; few, if any,

lawmaking bodies of the States were without officers, directors, or

agents of local banks among their membership.[500]

Thus bank charters were granted by wholesale and they were often little

better than permits to plunder the public. During the session of the

Virginia Legislature of 1816-17, twenty-two applications for bank

charters were made.[501] At nearly the same time twenty-one banks were

chartered in the newly admitted and thinly peopled State of Ohio.[502]

The following year forty-three new banks were authorized in

Kentucky.[503] In December, 1818, James Flint found in Kentucky, Ohio,

and Tennessee a "vast host of fabricators, and venders of base

money."[504] All sorts of "companies" went into the banking business.

Bridge companies, turnpike companies, manufacturing companies,

mercantile companies, were authorized to issue their bills, and this

flood of paper became the "money" of the people; even towns and villages

emitted "currency" in the form of municipal notes. The City of Richmond,

Virginia, in 1815, issued "small paper bills for change, to the amount

of $29,948."[505] Often bills were put in circulation of denominations

as low as six and one fourth cents.[506] Rapidly the property of the

people became encumbered to secure their indebtedness to the banks.

A careful and accurate Scotch traveler thus describes their methods: "By

lending, and otherwise emitting their engravings, they have contrived to

mortgage and buy much of the property of their neighbours, and to

appropriate to themselves the labour of less moneyed citizens....

Bankers gave in exchange for their paper, that of _other banks, equally

good with their own_.... The holder of the paper may comply in the

barter, or keep the notes ...; but he finds it too late to be delivered

from the snare. The people committed the lapsus, when they accepted of

the gew-gaws clean from the press.... The deluded multitude have been

basely duped."[507] Yet, says Flint, "every one is afraid of bursting

the bubble."[508]

As settlers penetrated the Ohio and Indiana forests and spread over the

Illinois prairies, the banks went with them and "levied their

contributions on the first stroke of the axe."[509] Kentucky was

comparatively well settled and furnished many emigrants to the newer

regions north of the Ohio River. Rough log cabins were the abodes of

nearly all of the people[510] who, for the most part, lived

roughly,[511] drank heavily,[512] were poorly educated.[513] They were,

however, hospitable, generous, and brave; but most of them preferred to

speculate rather than to work.[514] Illness was general, sound health

rare.[515] "I hate the prairies.... I would not have any of them of a

gift, if I must be compelled to live on them," avowed an English

emigrant.[516]

In short, the settlers reproduced most of the features of the same

movement in the preceding generation.[517] There was the same squalor,

suspicion, credulity, and the same combativeness,[518] the same

assertion of superiority over every other people on earth,[519] the same

impatience of control, particularly from a source so remote as the

National Government.[520] "The people speak and seem as if they were

without a government, and name it only as a bugbear," wrote William

Faux.[521]

Moreover, the inhabitants of one section knew little or nothing of what

those in another were doing. "We are as ignorant of the temper

prevailing in the Eastern States as the people of New Holland can be,"

testifies John Randolph in 1812.[522] Even a generation after Randolph

made this statement, Frederick Marryat records that "the United

States ... comprehend an immense extent of territory, with a population

running from a state of refinement down to one of positive barbarism....

The inhabitants of the cities ... know as little of what is passing in

Arkansas and Alabama as a cockney does of the manners and customs of ...

the Isle of Man."[523] Communities were still almost as segregated as

were those of a half-century earlier.[524] Marryat observes, a few years

later, that "to write upon America _as a nation_ would be absurd, for

nation ... it is not."[525] Again, he notes in his journal that "the

mass of the citizens of the United States have ... a very great dislike

to all law except ... the decision of the majority."[526]

These qualities furnished rich soil for cultivation by demagogues, and

small was the husbandry required to produce a sturdy and bellicose

sentiment of Localism. Although the bills of the Bank of the United

States were sought for,[527] the hostility to that National institution

was increased rather than diminished by the superiority of its notes

over those of the local money mills. No town was too small for a bank.

The fact that specie payments were not exacted "indicated every village

in the United States, where there was a 'church, a tavern and a

blacksmith's shop,' as a suitable site for a _bank_, and justified any

persons in establishing one who could raise enough to pay the _paper

maker_ and _engraver_."[528]

Not only did these chartered manufactories of currency multiply, but

private banks sprang up and did business without any restraint whatever.

Niles was entirely within the truth when he declared that nothing more

was necessary to start a banking business than plates, presses, and

paper.[529] Often the notes of the banks, private or incorporated,

circulated only in the region where they were issued.[530] In 1818 the

"currency" of the local banks of Cincinnati was "mere waste paper ...

out of the city."[531] The people had to take this local "money" or go

without any medium of exchange. When the notes of distant banks were to

be had, the people did not know the value of them. "Notes current in one

part, are either refused, or taken at a large discount, in another,"

wrote Flint in 1818.[532]

In the cities firms dealing with bank bills printed lists of them with

the market values, which changed from day to day.[533] Sometimes the

county courts fixed rates of exchange; for instance, the County Court of

Norfolk County, Virginia, in March, 1816, decreed that the notes of the

Bank of Virginia and the Bank of South Carolina were worth their face

value, while the bills of Baltimore and Philadelphia and the District of

Columbia were below par.[534] Merchants had to keep lists on which was

estimated the value of bank bills and to take chances on the constant

fluctuations of them.[535] "Of upwards of a hundred banks that lately

figured in Indiana, Ohio, Kentucky, and Tennessee, the money of two is

now only received in the land-office, in payment for public lands,"

testifies Flint, writing from Jeffersonville, Indiana, in March, 1820.

"Discount," he adds, "varies from thirty to one hundred per cent."[536]

By September, 1818, two thirds of the bank bills sent to Niles in

payment for the _Register_ could not "be passed for money."[537]

"Chains" of banks were formed by which one member of the conspiracy

would redeem its notes only by paying out the bills of another. Thus, if

a man presented at the counter of a certain bank the bills issued by it,

he was given in exchange those of another bank; when these were taken

to this second institution, they were exchanged for the bills of a third

bank, which redeemed them with notes of the first.[538] For instance,

Bigelow's bank at Jeffersonville, Indiana, redeemed its notes with those

of Piatt's bank at Cincinnati, Ohio; this, in turn, paid its bills with

those of a Vincennes sawmill and the sawmill exchanged its paper for

that of Bigelow's bank.[539]

The redemption of their bills by the payment of specie was refused even

by the best State banks, and this when the law positively required it.

Niles estimated in April, 1818, that, although many banks were sound and

honestly conducted, there were not "half a dozen banks in the United

States that are able to pay their debts _as they are payable_."[540]

All this John Marshall saw and experienced. In 1815, George Fisher[541]

presented to the Bank of Virginia ten of its one-hundred-dollar notes

for redemption, which was refused. After several months' delay, during

which the bank officials ignored a summons to appear in court, a

distringas[542] was secured. The President of the bank, Dr.

Brockenbrough, resisted service of the writ, and the "Sheriff then

called upon the by-standers, as a _posse comitatus_," to assist him.

Among these was the Chief Justice of the United States. Fisher had hard

work in finding a lawyer to take his case; for months no member of the

bar would act as his attorney.[543] For in Virginia as elsewhere--even

less than in many States--the local banks were the most lucrative

clients and the strongest political influence; and they controlled the

lawyers as well as the press.

In June, 1818, for instance, a business man in Pennsylvania had

accumulated several hundred dollars in bills of a local bank which

refused to redeem them in specie or better bills. Three justices of the

peace declined to entertain suit against the bank and no notary public

would protest the bills. In Maryland, at the same time, a man succeeded

in bringing an action against a bank for the redemption of some of its

bills; but the cashier, while admitting his own signature on the notes,

swore that he could not identify that of the bank's president, who had

absented himself.[544]

Counterfeiting was widely practiced and, for a time, almost unpunished;

a favorite device was the raising of notes, usually from five to fifty

dollars. Bills were put in circulation purporting to have been issued by

distant banks that did not exist, and never had existed. In a single

week of June, 1818, the country newspapers contained accounts of

twenty-eight cases of these and similar criminal operations.[545]

Sometimes a forger or counterfeiter was caught; at Plattsburg, New York,

one of these had twenty different kinds of fraudulent notes, "well

executed."[546] In August, 1818, Niles estimates that "the notes of at

least ONE HUNDRED banks in the United States are counterfeited."[547] By

the end of the year an organized gang of counterfeiters, forgers, and

distributors of their products covered the whole country.[548]

Counterfeits of the Marine Bank of Baltimore alone were estimated at

$1,000,000;[549] one-hundred-dollar notes of the Bank of Louisiana were

scattered far and wide.[550] Scarcely an issue of any newspaper appeared

without notices of these depredations;[551] one half of the remittances

sent Niles from the West were counterfeit.[552]

Into this chaos of speculation, fraud, and financial fiction came the

second Bank of the United States. The management of it, at the

beginning, was adventurous, erratic, corrupt; its officers and directors

countenanced the most shameful manipulation of the Bank's stock; some of

them participated in the incredible jobbery.[553] Nothing of this,

however, was known to the country at large for many months,[554] nor did

the knowledge of it, when revealed, afford the occasion for the popular

wrath that soon came to be directed against the National Bank. This

public hostility, indeed, was largely produced by measures which the

Bank took to retrieve the early business blunders of its managers.

These blunders were appalling. As soon as it opened in 1817, the Bank

began to do business on the inflated scale which the State banks had

established; by over-issue of its notes it increased the inflation,

already blown to the bursting point. Except in New England, where its

loans were moderate and well secured, it accommodated borrowers

lavishly. The branches were not required to limit their business to a

fixed capital; in many cases, the branch officers and directors,

incompetent and swayed by local interest and feeling,[555] issued notes

as recklessly as did some of the State banks. In the West particularly,

and also in the South, the loans made were enormous. The borrowers had

no expectation of paying them when due, but of renewing them from time

to time, as had been the practice under State banking.

The National branches in these regions showed a faint gleam of prudence

by refusing to accept bills of notoriously unsound local banks. This

undemocratic partiality, although timidly exercised, aroused to activity

the never-slumbering hostility of these local concerns. In the course of

business, however, bills of most State banks accumulated to an immense

amount in the vaults of the branches of the Bank of the United States.

When, in spite of the disposition of the branch officers to extend

unending and unlimited indulgence to the State banks and to borrowers

generally, the branches finally were compelled by the parent Bank to

demand payment of loans and redemption of bills of local banks held by

it; and when, in consequence, the State banks were forced to collect

debts due them, the catastrophe, so long preparing, fell upon sections

where the vices of State banking had been practiced most flagrantly.

Suits upon promissory notes, bonds and mortgages, already frequent, now

became incessant; sheriffs were never idle. In the autumn of 1818, in a

single small county[556] of Delaware, one hundred and fifty such actions

were brought by the banks. In addition to this, records the financial

chronicler of the period, "their vaults are loaded with bonds, mortgages

and other securities, held _in terrorem_ over the heads of several

hundreds more."[557] At Harrisburg, Pennsylvania, one bank brought more

than one hundred suits during May, 1818;[558] a few months later a

single issue of one country newspaper in Pennsylvania contained

advertisements of eighteen farms and mills at sheriff's sale; a village

newspaper in New York advertised sixty-three farms and lots to be sold

under the sheriff's hammer.[559] "Currency" decreased in quantity;

unemployment was amazing; scores of thousands of men begged for work;

throngs of the idle camped near cities and subsisted on charity.[560]

All this the people laid at the doors of the National Bank, while the

State banks,[561] of course, encouraged the popular animosity. Another

order of the National concern increased the anger of the people and of

the State banks against it. For more than a year the parent institution

and its branches had redeemed all notes issued by them wherever

presented. Since the notes from the West and South flowed to the North

and East[562] in payment for the manufactures and merchandise of these

sections, this universal redemption became impossible. So, on August 28,

1818, the branches were directed to refuse all notes except their

own.[563]

Thus the Bank, "like an _abandoned_ mother, ... BASTARDIZED its

offspring,"[564] said the enemies of the National Bank, among them all

State banks and most of the people. The enforcement of redemption of

State bank bills, the reduction of the volume of "currency," were the

real causes of the fury with which the Bank of the United States and its

branches was now assailed. That institution was the monster, said local

orators and editors; its branches were the tentacles of the Octopus,

heads of the Hydra.[565] "The 'branches' are execrated on all hands,"

wrote an Ohio man. "We _feel_ that to the policy pursued by them, we are

indebted for all the evils we experience for want of a circulating

medium."[566]

The popular cry was for relief. More money, not less, was needed, it was

said; and more banks that could and would loan funds with which to pay

debts. If the creditor would not accept the currency thus procured, let

laws be passed that would compel him to do so, or prevent him from

collecting what his contract called for. Thus, with such demands upon

their lips, and in the midst of a storm of lawsuits, the people entered

at last that inevitable period of bankruptcy to which for years they had

been drawing nearer and for which they were themselves largely

responsible.

Bankruptcy laws had already been enacted by some States; and if these

acts had not been drawn for the benefit of speculators in anticipation

of the possible evil day, the "insolvency" statutes certainly had been

administered for the protection of rich and dishonest men who wished to

escape their liabilities, and yet to preserve their assets. In New

York[567] the debtor was enabled to discharge all accounts by turning

over such property as he had; if he owed ten thousand dollars, and

possessed but fifty dollars, his debt was cancelled by the surrender of

that sum. For the honest and prudent man the law was just, since no

great discrepancy usually existed between his reported assets and his

liabilities. But lax administration of it afforded to the dishonest

adventurer a shield from the righteous consequences of his wrongdoing.

The "bankruptcies" of knavish men were common operations. One merchant

in an Eastern city "failed," but contrived to go on living in a house

for which he "was offered $200,000 in real money."[568] Another in

Philadelphia became "insolvent," yet had $7000 worth of wine in his

cellar at the very time he was going through "bankruptcy."[569] A

merchant tailor in the little town of York, Pennsylvania, resorted to

bankruptcy to clear himself of eighty-four thousand dollars of

debt.[570]

In their speculations adventurous men counted on the aid of these

legislative acts for the relief of debtors. "Never ... have any ... laws

been more productive of crime than the insolvent laws of Maryland,"

testifies Niles.[571] One issue of the _Federal Gazette_ contained six

columns of bankruptcy notices, and these were only about "one-third of

the persons" then "'going through our mill.'" Several "bankrupts" had

been millionaires, and continued to "_live in splendid affluence_, ...

their wives and children, or some kind relative, having been made rich

through their swindlings of the people."[572] Many "insolvents" were

bankers; and this led Niles to propose that the following law be

adopted:

"'Whereas certain persons ... _unknown_, have petitioned for the

establishment of a bank at ----:

"'Be it enacted, that ... these persons, ... shall have liberty to

become BANKRUPTS, and may legally swindle as much as they can.'"[573]

In a Senate debate in March, 1820, for a proposed new National

Bankruptcy Act,[574] Senator Harrison Gray Otis of Massachusetts

moderately stated the results of the State insolvency laws. "Merchants

and traders ... are harassed and perplexed by twenty different systems

of municipal laws, often repugnant to each other and themselves; always

defective; seldom executed in good faith; prolific in endless frauds,

perjuries, and evasions; and never productive of ... any sort of

justice, to the creditor. Nothing could be ... comparable to their

pernicious effects upon the public morals."[575] Senator Prentiss

Mellen, of the same State, described the operation of the bankruptcy

mill thus: "We frequently witness transactions, poisoned throughout with

fraud ... in which _all_ creditors are deceived and defrauded.... The

man _pretends_ to be a bankrupt; and having converted a large portion of

his property into money ... he ... closes his doors; ... goes through

the form of offering to give up all his property, (though secretly

retaining thousands,) on condition of receiving a discharge from his

creditors.... In a few months, or perhaps weeks, he recommences

business, and finds himself ... with a handsome property at

command."[576]

Senator James Burrill, Jr., of Rhode Island was equally specific and

convincing. He pictured the career of a dishonest merchant, who

transfers property to relatives, secures a discharge from the State

bankruptcy courts, and "in a few days ... resumes his career of folly,

extravagance, and rashness.... Thus the creditors are defrauded, and the

debtor, in many cases, lives in affluence and splendor."[577] Flint

records that "mutual credit and confidence are almost torn up by the

roots."[578]

It was soon to be the good fortune of John Marshall to declare such

State legislation null and void because in violation of the National

Constitution. Never did common honesty, good faith, and fair dealing

need such a stabilizing power as at the moment Marshall furnished to the

American people. In most parts of the country even insolvency laws did

not satisfy debtors; they were trying to avoid the results of their own

acts by securing the enactment of local statutes that repealed the

natural laws of human intercourse--of statutes that expressed the

momentary wish of the uncomfortable, if honest, multitude, but that

represented no less the devices of the clever and unscrupulous.

Fortunate, indeed, was it for the United States, at this critical time

in its development, that one department of the Government could not be

swayed by the passion of the hour, and thrice happy that the head of

that department was John Marshall.

The impression made directly on Marshall by what took place under his

very eyes in Virginia was strengthened by events that occurred in

Kentucky. All his brothers and sisters, except two, besides numerous

cousins and relatives by marriage, lived there. Thus he was advised in

an intimate and personal way of what went forward in that State.[579]

The indebtedness of Kentucky State banks, and of individual borrowers to

the branches of the National Bank located in that Commonwealth, amounted

to more than two and one half millions of dollars.[580] "This is the

_trifling_ sum which the people of Kentucky are called upon to pay in

_specie_!"[581] exclaimed a Kentucky paper. The people of that State

owed the local banks about $7,000,000 more, while the total indebtedness

to all financial institutions within Kentucky was not far from

$10,000,000.[582] The sacrifice of property for the satisfaction of

mortgages grew ever more distressing. At Lexington, a house and lot, for

which the owner had refused $15,000, brought but $1300 at sheriff's

sale; another costing $10,000 sold under the hammer for $1500.[583] Even

slaves could be sold only at a small fraction of their ordinary market

price.

It was the same in other States. Within Marshall's personal observation

in Virginia the people were forced to eat the fruits of their folly.

"Lands in this State cannot now be sold for a year's rent," wrote

Jefferson.[584] A farm near Easton, Pennsylvania, worth $12,500,

mortgaged to secure a debt of $2500, was taken by the lender on

foreclosure for the amount of the loan. A druggist's stock of the retail

value of $10,000 was seized for rent by the landlord and sold for

$400.[585] In Virginia a little later a farm of three hundred acres with

improvements worth, at the lowest estimate, $1500, sold for $300; two

wagon horses costing $200 were sacrificed for $40.

Mines were shut down, shops closed, taxes unpaid. "The debtor ... gives

up his land, and, ruined and undone, seeks a home for himself and his

family in the western wilderness."[586] John Quincy Adams records in his

diary: "Staple productions ... are falling to ... less than half the

prices which they have lately borne, the merchants are crumbling to

ruin, the manufactures perishing, agriculture stagnating, and distress

universal in every part of the country."[587]

During the summer and autumn of 1818, the popular demand for legislation

that would suspend contracts, postpone the payment of debts, and stay

the judgment of courts, became strident and peremptory. "Our greatest

real evil is the question between debtor and creditor, into which the

banks have plunged us deeper than would have been possible without

them," testifies Adams. "The bank debtors are everywhere so numerous and

powerful that they control the newspapers throughout the Union, and give

the discussion a turn extremely erroneous, and prostrate every principle

of political economy."[588]

This was especially true of Kentucky. Throughout the State great

assemblages were harangued by oratorical "friends of the people." "The

reign of political quackery was in its glory."[589] Why the scarcity of

money when that commodity was most needed? Why the lawsuits for the

collection of debts, the enforcement of bonds, the foreclosure of

mortgages, instead of the renewal of loans, to which debtors had been

accustomed? Financial manipulation had done it all. The money power was

responsible for the misery of the people. Let that author and contriver

of human suffering be suppressed.

What could be easier or more just than to enact legislation that would

lift the burden of debt that was crushing the people? The State banks

would not resist--were they not under the control of the people's

Legislature? But they were also at the mercy of that remorseless

creature of the National Government, the Bank of the United States. That

malign Thing was the real cause of all the trouble.[590] Let the law by

which Congress had given illegitimate life to that destroyer of the

people's well-being be repealed. If that could not be done because so

many of the National Legislature were corruptly interested in the Bank,

the States had a sure weapon with which to destroy it--or at least to

drive it out of business in every member of the Union.

That weapon was taxation. Let each Legislature, by special taxes,

strangle the branches of the National Bank operating in the States. So

came a popular determination to exterminate, by State action, the

second Bank of the United States. National power should be brought to

its knees by local authority! National agencies should be made helpless

and be dispatched by State prohibition and State taxation! The arm of

the National Government should be paralyzed by the blows showered on it

when thrusting itself into the affairs of "sovereign" States! Already

this process was well under way.

The first Constitution of Indiana, adopted soon after Congress had

authorized the second Bank of the United States, prohibited any bank

chartered outside the State from doing business within its borders.[591]

During the very month that the National Bank opened its doors in 1817,

the Legislature of Maryland passed an act taxing the Baltimore branch

$15,000 annually. Seven months afterward the Legislature of Tennessee

enacted a law that any bank not chartered under its authority should pay

$50,000 each year for the privilege of banking in that State. A month

later Georgia placed a special tax on branches of the Bank of the United

States.

The Constitution of Illinois, adopted in August, 1818, forbade the

establishment of any but State banks. In December of that year North

Carolina taxed the branch of the National Bank in that State $5000 per

annum. A few weeks later Kentucky laid an annual tax of $60,000 on each

of the two branches of the Bank of the United States located at

Lexington and Frankfort. Three weeks before John Marshall delivered his

opinion in M'Culloch _vs._ Maryland, Ohio enacted a statute placing a

yearly tax of $50,000 on each of the two National Bank branches then

doing business in that State.[592]

Thus the extinction of the second Bank of the United States by State

legislation appeared to be inevitable. The past management of it had

well deserved this fate; but earnest efforts were now in operation to

recover it from former blunders and to retrieve its fortunes. The period

of corruption was over, and a new, able, and honest management was about

to take charge. If, however, the States could destroy this National

fiscal agency, it mattered not how well it might thereafter be

conducted, for nothing could be more certain than that the local

influence of State banks always would be great enough to induce State

Legislatures to lay impossible burdens on the National Bank.

Such, then, was the situation that produced those opinions of Marshall

on insolvency, on contract, and on a National bank, delivered during

February and March of 1819; such the National conditions which

confronted him during the preceding summer and autumn. He could do

nothing to ameliorate these conditions, nothing to relieve the universal

unhappiness, nothing to appease the popular discontent. But he could

establish great National principles, which would give steadiness to

American business, vitality to the National Government; and which would

encourage the people to practice honesty, prudence, and thrift. And just

this John Marshall did. When considering the enduring work he performed

at this time, we must have in our thought the circumstances that made

that work vitally necessary.

One of the earliest cases decided by the Supreme Court in 1819 involved

the Bankrupt Law of New York. On November 25, 1817, Josiah Sturges[593]

of Massachusetts sued Richard Crowninshield of New York in the United

States Circuit Court for the District of Massachusetts to recover upon

two promissory notes for the sum of $771.86 each, executed March 22,

1811, just twelve days before the passage, April 3, 1811, of the New

York statute for the relief of insolvent debtors. The defendant pleaded

his discharge under that act. The judges were divided in opinion on the

questions whether a State can pass a bankrupt act, whether the New York

law was a bankrupt act, and whether it impaired the obligations of a

contract. These questions were, accordingly, certified to the Supreme

Court.

The case was there argued long and exhaustively by David Daggett and

Joseph Hopkinson for Sturges and by David B. Ogden and William Hunter

for Crowninshield. In weight of reasoning and full citation of

authority, the discussion was inferior only to those contests before the

Supreme Bench which have found a place in history.

On February 17, 1819, Marshall delivered the unanimous opinion of the

court.[594] Do the words of the Constitution, "Congress shall have

power ... to establish ... uniform laws on the subject of bankruptcies

throughout the United States" take from the States the right to pass

such laws?

Before the adoption of the Constitution, begins Marshall, the States

"united for some purposes, but, in most respects, sovereign," could

"exercise almost every legislative power." The powers of the States

under the Constitution were not defined in that instrument. "These

powers proceed, not from the people of America, but from the people of

the several states; and remain, after the adoption of the constitution,

what they were before, except so far as they may be abridged" by the

Nation's fundamental law.

While the "mere grant of a power to Congress" does not necessarily mean

that the States are forbidden to exercise the same power, such

concurrent power does not extend to "every possible case" not expressly

prohibited by the Constitution. "The confusion resulting from such a

practice would be endless." As a general principle, declares the Chief

Justice, "whenever the terms in which a power is granted to Congress, or

the nature of the power, required that it should be exercised

exclusively by Congress, the subject is as completely taken from the

state legislatures as if they had been expressly forbidden to act on

it."[595]

[Illustration: _John Marshall_

_From the bust in the Court Room of the United States Supreme Court_]

Does this general principle apply to bankrupt laws? Assuredly it

does. Congress is empowered to "establish uniform laws on the subject

throughout the United States." Uniform National legislation is

"incompatible with state legislation" on the same subject. Marshall

draws a distinction between bankrupt and insolvency laws, although "the

line of partition between them is not so distinctly marked" that it can

be said, "with positive precision, what belongs exclusively to the one,

and not to the other class of laws."[596]

He enters upon an examination of the nature of insolvent laws which

States may enact, and bankrupt laws which Congress may enact; and finds

that "there is such a connection between them as to render it difficult

to say how far they may be blended together.... A bankrupt law may

contain those regulations which are generally found in insolvent laws";

while "an insolvent law may contain those which are common to a bankrupt

law." It is "obvious," then, that it would be a hardship to "deny to the

state legislatures the power of acting on this subject, in consequence

of the grant to Congress." The true rule--"certainly a convenient

one"--is to "consider the power of the states as existing over such

cases as the laws of the Union may not reach."[597]

But, whether this common-sense construction is adopted or not, it is

undeniable that Congress may exercise a power granted to it or decline

to exercise it. So, if Congress thinks that uniform bankrupt laws "ought

not to be established" throughout the country, surely the State

Legislatures ought not, on that account, to be prevented from passing

bankrupt acts. The idea of Marshall, the statesman, was that it was

better to have bankrupt laws of some kind than none at all. "It is not

the mere existence of the power [in Congress], but its exercise, which

is incompatible with the exercise of the same power by the states. It is

not the right to establish these uniform laws, but their actual

establishment, which is inconsistent with the partial acts of the

states."[598]

Even should Congress pass a bankrupt law, that action does not

extinguish, but only suspends, the power of the State to legislate on

the same subject. When Congress repeals a National bankrupt law it

merely "removes a disability" of the State created by the enactment of

the National statute, and lasting only so long as that statute is in

force. In short, "until the power to pass uniform laws on the subject of

bankruptcies be exercised by Congress, the states are not forbidden to

pass a bankrupt law, provided it contain no principle which violates the

10th section of the first article of the constitution of the United

States."[599]

Having toilsomely reached this conclusion, Marshall comes to what he

calls "the great question on which the cause must depend": Does the New

York Bankrupt Law "impair the obligation of contracts"?[600]

What is the effect of that law? It "liberates the person of the debtor,

and discharges him from all liability for any debt previously

contracted, on his surrendering his property in the manner it

prescribes." Here Marshall enters upon that series of expositions of

the contract clause of the Constitution which, next to the Nationalism

of his opinions, is, perhaps, the most conspicuous feature of his

philosophy of government and human intercourse.[601] "What is the

obligation of a contract? and what will impair it?"[602]

It would be hard to find words "more intelligible, or less liable to

misconstruction, than those which are to be explained." With a tinge of

patient impatience, the Chief Justice proceeds to define the words

"contract," "impair," and "obligation," much as a weary school teacher

might teach the simplest lesson to a particularly dull pupil.

"A contract is an agreement in which a party undertakes to do, or not to

do, a particular thing. The law binds him to perform his undertaking,

and this is, of course, the obligation of his contract. In the case at

bar, the defendant has given his promissory note to pay the plaintiff a

sum of money on or before a certain day. The contract binds him to pay

that sum on that day; and this is its obligation. Any law which releases

a part of this obligation, must, in the literal sense of the word,

impair it. Much more must a law impair it which makes it totally

invalid, and entirely discharges it.

"The words of the constitution, then, are express, and incapable of

being misunderstood. They admit of no variety of construction, and are

acknowledged to apply to that species of contract, an engagement between

man and man, for the payment of money, which has been entered into by

these parties."[603]

What are the arguments that such law does not violate the Constitution?

One is that, since a contract "can only bind a man to pay to the full

extent of his property, it is an implied condition that he may be

discharged on surrendering the whole of it." This is simply not true,

says Marshall. When a contract is made, the parties to it have in mind,

not only existing property, but "future acquisitions. Industry, talents

and integrity, constitute a fund which is as confidently trusted as

property itself. Future acquisitions are, therefore, liable for

contracts; and to release them from this liability impairs their

obligation."[604]

Marshall brushes aside, almost brusquely, the argument that the only

reason for the adoption of the contract clause by the Constitutional

Convention was the paper money evil; that the States always had passed

bankrupt and insolvent laws; and that if the framers of the Constitution

had intended to deprive the States of this power, "insolvent laws would

have been mentioned in the prohibition."

No power whatever, he repeats, is conferred on the States by the

Constitution. That instrument found them "in possession" of practically

all legislative power and either prohibited "its future exercise

entirely," or restrained it "so far as national policy may require."

While the Constitution permits States to pass bankrupt laws "until that

power shall be exercised by Congress," the fundamental law positively

forbids the States to "introduce into such laws a clause which

discharges the obligations the bankrupt has entered into. It is not

admitted that, without this principle, an act cannot be a bankrupt law;

and if it were, that admission would not change the constitution, nor

exempt such acts from its prohibitions."[605]

There was, said Marshall, nothing in the argument that, if the framers

of the Constitution had intended to "prohibit the States from passing

insolvent laws," they would have plainly said so. "It was not necessary,

nor would it have been safe" for them to have enumerated "particular

subjects to which the principle they intended to establish should

apply."

On this subject, as on every other dealt with in the Constitution,

fundamental principles are set out. What is the one involved in this

case? It is "the inviolability of contracts. This principle was to be

protected in whatsoever form it might be assailed. To what purpose

enumerate the particular modes of violation which should be forbidden,

when it was intended to forbid all?... The plain and simple declaration,

that no state shall pass any law impairing the obligation of contracts,

includes insolvent laws and all other laws, so far as they infringe the

principle the convention intended to hold sacred, and no farther."[606]

At this point Marshall displays the humanitarian which, in his

character, was inferior only to the statesman. He was against

imprisonment for debt, one of the many brutal customs still practiced.

"The convention did not intend to prohibit the passage of all insolvent

laws," he avows. "To punish honest insolvency by imprisonment for life,

and to make this a constitutional principle, would be an excess of

inhumanity which will not readily be imputed to the illustrious patriots

who framed our constitution, nor to the people who adopted it....

Confinement of the debtor may be a punishment for not performing his

contract, or may be allowed as a means of inducing him to perform it.

But the state may refuse to inflict this punishment, or may withhold

this means and leave the contract in full force. Imprisonment is no part

of the contract, and simply to release the prisoner does not impair its

obligation."[607]

Following his provoking custom of taking up a point with which he had

already dealt, Marshall harks back to the subject of the reason for

inserting the contract clause into the Constitution. He restates the

argument against applying that provision to State insolvent laws--that,

from the beginning, the Colonies and States had enacted such

legislation; that the history of the times shows that "the mind of the

convention was directed to other laws which were fraudulent in their

character, which enabled the debtor to escape from his obligation, and

yet hold his property, not to this, which is beneficial in its

operation."

But, he continues, "the spirit of ... a constitution" is not to be

determined solely by a partial view of the history of the times when it

was adopted--"the spirit is to be collected chiefly from its words." And

"it would be dangerous in the extreme to infer from extrinsic

circumstances, that a case for which the words of an instrument

expressly provide, shall be exempted from its operation." Where language

is obscure, where words conflict, "construction becomes necessary." But,

when language is clear, words harmonious, the plain meaning of that

language and of those words is not "to be disregarded, because we

believe the framers of that instrument could not intend what they

say."[608]

The practice of the Colonies, and of the States before the Constitution

was adopted, was a weak argument at best. For example, the Colonies and

States had issued paper money, emitted bills of credit, and done other

things, all of which the Constitution prohibits. "If the long exercise

of the power to emit bills of credit did not restrain the convention

from prohibiting its future exercise, neither can it be said that the

long exercise of the power to impair the obligation of contracts, should

prevent a similar prohibition." The fact that insolvent laws are not

forbidden "by name" does not exclude them from the operation of the

contract clause of the Constitution. It is "a principle which is to be

forbidden; and this principle is described in as appropriate terms as

our language affords."[609]

Perhaps paper money was the chief and impelling reason for making the

contract clause a part of the National Constitution. But can the

operation of that clause be confined to paper money? "No court can be

justified in restricting such comprehensive words to a particular

mischief to which no allusion is made." The words must be given "their

full and obvious meaning."[610] Doubtless the evils of paper money

directed the Convention to the subject of contracts; but it did far more

than to make paper money impossible thereafter. "In the opinion of the

convention, much more remained to be done. The same mischief might be

effected by other means. To restore public confidence completely, it was

necessary not only to prohibit the use of particular means by which it

might be effected, but to prohibit the use of any means by which the

same mischief might be produced. The convention appears to have intended

to establish a great principle, that contracts should be inviolable. The

constitution therefore declares, that no state shall pass 'any law

impairing the obligation of contracts.'"[611] From all this it follows

that the New York Bankruptcy Act of 1812 is unconstitutional because it

impaired the obligations of a contract.

The opinion of the Chief Justice aroused great excitement.[612] It, of

course, alarmed those who had been using State insolvent laws to avoid

payment of their debts, while retaining much of their wealth. It also

was unwelcome to the great body of honest, though imprudent, debtors who

were struggling to lighten their burdens by legislation. But the more

thoughtful, even among radicals, welcomed Marshall's pronouncement.

Niles approved it heartily.[613]

Gradually, surely, Marshall's simple doctrine grew in favor throughout

the whole country, and is to-day a vital and enduring element of

American thought and character as well as of Constitutional law.

As in Fletcher _vs._ Peck, the principle of the inviolability of

contracts was applied where a State and individuals are parties, so the

same principle was now asserted in Sturges _vs._ Crowninshield as to

State laws impairing the obligation of contracts between man and man. At

the same session, in the celebrated Dartmouth College case,[614]

Marshall announced that this principle also covers charters granted by

States. Thus did he develop the idea of good faith and stability of

engagement as a life-giving principle of the American Constitution.

FOOTNOTES:

[437] M'Culloch _vs._ Maryland, see _infra_, chap. VI.

[438] See vol. II, 60, of this work.

[439] Sumner: _History of American Currency_, 63.

[440] See Memorial of the Bank for a recharter, April 20, 1808 (_Am.

State Papers, Finance_, II, 301), and second Memorial, Dec. 18, 1810

(_ib._ 451-52). Every statement in these petitions was true. See also

Dewey: _Financial History of the United States_, 100, 101.

[441] See vol. II, 70-71, of this work.

[442] _Annals_, 1st Cong. 2d. Sess. 1945. By far the strongest objection

to a National bank, however, was that it was a monopoly inconsistent

with free institutions.

[443] Jefferson to Gallatin, Dec. 13, 1803, _Works_: Ford: X, 57.

[444] "Fully two thirds of the Bank stock ... were owned in England."

(Adams: _U.S._ V, 328.)

[445] Dewey, 127; and Pitkin: _Statistical View of the Commerce of the

United States_, 130-32.

[446] Adams: _U.S._ V, 328-29.

[447] _Annals_, 11th Cong. 3d Sess. 118-21.

[448] _Ib._ 153, 201, 308; and see Pitkin, 421.

[449] Adams: _U.S._ V, 327-28. "They induced one State legislature after

another to instruct their senators on the subject." Pitkin, 422.

[450] Ambler: _Ritchie_, 26-27, 52.

[451] _Ib._ 67.

[452] _Branch Hist. Papers_, June, 1903, 179.

[453] _Annals_, 11th Cong. 3d Sess. 145.

[454] "It is true, that a branch of the Bank of the United States ... is

established at Norfolk; and that a branch of the Bank of Virginia is

also established there. But these circumstances furnish no possible

motive of avarice to the Virginia Legislature.... They have acted ...

from the purest and most honorable motives." (_Annals_, 11th Cong. 3d

Sess. 200.)

[455] Pitkin, 421.

[456] The "newspapers teem with the most virulent abuse." (James Flint's

Letters from America, in _Early Western Travels_: Thwaites, IX, 87.)

Even twenty years later Captain Marryat records: "The press in the

United States is licentious to the highest possible degree, and defies

control.... Every man in America reads his newspaper, and hardly any

thing else." (Marryat: _Diary in America_, 2d Series, 56-59.)

[457] "The Democratic presses ... have ... teemed with the most

scurrilous abuse against every member of Congress who has dared to utter

a syllable in favor of the renewal of the bank charter." Any member

supporting the bank "is instantly charged with being bribed, ... with

being corrupt, with having trampled upon the rights and liberties of the

people, ... with being guilty of perjury."

According to "the rantings of our Democratic editors ... and the

denunciations of our public declaimers," the bank "exists under the form

of every foul and hateful beast and bird, and creeping thing. It is an

_Hydra_; it is a _Cerberus_; it is a _Gorgon_; it is a _Vulture_; it is

a _Viper_....

"Shall we tamely act under the lash of this tyranny of the press?... I

most solemnly protest.... To tyranny, under whatever form it may be

exercised, I declare open and interminable war ... whether the tyrant is

an irresponsible editor or a despotic Monarch." (_Annals_, 11th Cong. 3d

Sess. 145.)

[458] _Annals_, 11th Cong. 3d Sess. 826.

[459] _Ib._ 347.

[460] Pitkin, 430.

[461] Adams to Rush, Dec. 27, 1810, _Old Family Letters_, 272.

[462] Sumner: _Andrew Jackson_, 229.

[463] Dewey, 145.

[464] Twenty-one State banks were employed as Government depositories

after the destruction of the first Bank of the United States (_Ib._

128.)

[465] Dewey, 127.

[466] Adams to Rush, July 3, 1812, _Old Family Letters_, 299.

[467] William Faux's Journal, _E. W. T._: Thwaites, XI, 207.

[468] Speech of Hanson in the House, Nov. 28, 1814, _Annals_, 13th Cong.

3d Sess. 656.

[469] Catterall: _Second Bank of the United States_, 13-17.

[470] Calhoun's bill.

[471] Webster to his brother, Nov. 29, 1814, Van Tyne, 55.

[472] Webster's bill.

[473] _Annals_, 13th Cong. 3d Sess. 189-91; Richardson, I, 555-57.

[474] Richardson, I, 565-66. Four years afterwards President Monroe told

his Secretary of State, John Quincy Adams, that Jefferson, Madison, and

himself considered all Constitutional objections to the Bank as having

been "settled by twenty years of practice and acquiescence under the

first bank." (_Memoirs, J. Q. A.: Adams_, IV, 499, Jan. 8, 1820.)

[475] _Annals_, 14th Cong. 1st Sess. 280-81.

[476] _Annals_, 1st Cong. 2d and 3d Sess. 2375-82; and 14th Cong. 1st

Sess. 1812-25; also Dewey, 150-51.

[477] Catterall, 22.

[478] Dewey, 144.

[479] Sumner: _Hist. Am. Currency_, 70.

[480] In November, 1818, Niles estimated that there were about four

hundred banks in the country with eight thousand "managers and clerks,"

costing $2,000,000, annually. (Niles, XV, 162.)

[481] "The present multitude of them ... is no more fitted to the

condition of society, than a long-tailed coat becomes a sailor on

ship-board." (_Ib._ XI, 130.)

[482] King to his son, May 1, 1816, King, VI, 22.

[483] King to Gore, May 14, 1816, _Ib._ 23-25.

[484] Niles, XIV, 109.

[485] _Ib._ XVI, 257.

[486] Niles, XVI, 257.

[487] _Ib._ XIV, 110.

[488] _Ib._ 195-96.

[489] "Niles' _Weekly Register_ is ... an excellent repository of facts

and documents." (Jefferson to Crawford, Feb. 11, 1815, _Works_: Ford,

XI. 453.)

[490] Niles, XIV, 426-28.

[491] Niles, XIV, 2-3.

[492] "Report of the Committee on the Currency of this [New York]

State," Feb. 24, 1818, _ib._ 39-42; also partially reproduced in

_American History told by Contemporaries_: Hart, III, 441-45.

[493] "Report of Committee on the Currency," New York, _supra_, 184.

[494] Niles, XIV, 108.

[495] Jefferson to Yancey, Jan. 6, 1816, _Works_: Ford, XI, 494.

[496] Dewey, 144; and Sumner: _Hist. Am. Currency_, 75.

[497] Niles proposed a new bank to be called "THE RAGBANK OF THE

UNIVERSE," main office at "_Lottery-ville_," and branches at

"_Hookstown_," "_Owl Creek_," "_Botany Bay_," and "_Twisters-burg_."

Directors were to be empowered also "to put offices on wheels, on

ship-board, or in balloons"; stock to be "one thousand million of old

shirts." (Niles, XIV, 227.)

[498] Dewey, 144.

[499] _Ib._ 153-54.

[500] Flint's Letters, _E. W. T._: Thwaites, IX, 136; and see "Report of

the Committee on the Currency," New York, _supra_, 184.

[501] Tyler: _Tyler_, I, 302; Niles, XI, 130.

[502] Niles, XI, 128.

[503] _Ib._ IV, 109; Collins: _Historical Sketches of Kentucky_, 88.

These were in addition to the branches of the Bank of Kentucky and of

the Bank of the United States. Including them, the number of chartered

banks in that State was fifty-eight by the close of 1818. Of the towns

where new banks were established during that year, Burksville had 106

inhabitants; Barboursville, 55; Hopkinsville, 131; Greenville, 75;

thirteen others had fewer than 500 inhabitants. The "capital" of the

banks in such places was never less than $100,000, but that at Glasgow,

with 244 inhabitants, had a capital of $200,000, and several other

villages were similarly favored. For full list see Niles, XIV, 109.

[504] Flint's Letters, _E. W. T._: Thwaites, IX, 133.

[505] Niles, XVII, 85.

[506] John Woods's Two Years' Residence, _E. W. T._: Thwaites, X, 236.

[507] Flint's Letters, _E. W. T._: Thwaites, IX, 133-34.

[508] _Ib._ 136.

[509] Niles, XIV, 162.

[510] Woods's Two Years' Residence, _E. W. T._: Thwaites, X, 274-78: and

Flint's Letters, _ib._ IX, 69.

In southwestern Indiana, in 1818, Faux "saw nothing ... but miserable

log holes, and a mean ville of eight or ten huts or cabins, sadly

neglected farms, and indolent, dirty, sickly, wild-looking inhabitants."

(Faux's Journal, Nov. 1, 1818, _ib._ XI, 213-14.) He describes Kentucky

houses as "miserable holes, having one room only," where "all cook, eat,

sleep, breed, and die, males and females, all together." (_Ib._ 185, and

see 202.)

[511] For shocking and almost unbelievable conditions of living among

the settlers see Faux's Journal, _E. W. T._: Thwaites, XI, 226, 231,

252-53, 268-69.

[512] "We landed for some whiskey; for our men would do nothing

without." (Woods's Two Years' Residence, _ib._ X, 245, 317.) "Excessive

drinking seems the all-pervading, easily-besetting sin." (Faux's

Journal, Nov. 3, 1818, _ib._ XI, 213.) This continued for many years and

was as marked in the East as in the West. (See Marryat, 2d Series,

37-41.)

There was, however, a large and ever-increasing number who hearkened to

those wonderful men, the circuit-riding preachers, who did so much to

build up moral and religious America. Most people belonged to some

church, and at the camp meetings and revivals, multitudes received

conviction.

The student should carefully read the _Autobiography of Peter

Cartwright_, edited by W. P. Strickland. This book is an invaluable

historical source and is highly interesting. See also Schermerhorn and

Mills: _A Correct View of that part of the United States which lies west

of the Allegany Mountains, with regard to Religion and Morals._ _Great

Revival in the West_, by Catharine C. Cleveland, is a careful and

trustworthy account of religious conditions before the War of 1812. It

has a complete bibliography.

[513] Flint's Letters, _E. W. T._: Thwaites, 153; also Schermerhorn and

Mills, 17-18.

[514] "Nature is the agriculturist here [near Princeton, Ind.];

speculation instead of cultivation, is the order of the day amongst

men." (Thomas Hulme's Journal, E. W. T.: Thwaites, X, 62; see Faux's

Journal, _ib._ XI, 227.)

[515] Faux's Journal, _ib._ 216, 236, 242-43.

[516] _Ib._ 214.

[517] See vol. I, chap, VII, of this work.

[518] Flint's Letters, _E. W. T._: Thwaites, IX, 87; Woods's Two Years

Residence, _ib._ X, 255. "I saw a man this day ... his nose bitten off

close down to its root, in a fight with a nose-loving neighbour."

(Faux's Journal, _ib._ XI, 222; and see Strickland, 24-25.)

[519] The reports of American conditions by British travelers, although

from unsympathetic pens and much exaggerated, were substantially true.

Thus Europe, and especially the United Kingdom, conceived for Americans

that profound contempt which was to endure for generations.

"Such is the land of Jonathan," declared the _Edinburgh Review_ in an

analysis in 1820 (XXXIII, 78-80) of a book entitled _Statistical Annals

of the United States_, by Adam Seybert. "He must not ... allow himself

to be dazzled by that galaxy of epithets by which his orators and

newspaper scribblers endeavour to persuade their supporters that they

are the greatest, the most refined, the most enlightened, and the most

moral people upon earth.... They have hitherto given no indications of

genius, and made no approaches to the heroic, either in their morality

or character....

"During the thirty or forty years of their independence, they have done

absolutely nothing for the Sciences, for the Arts, for Literature, or

even for statesman-like studies of Politics or Political Economy.... In

the four quarters of the globe, who reads an American book? or goes to

an American play? or looks at an American picture or statue? What does

the world yet owe to American physicians or surgeons? What new

substances have their chemists discovered? or what old ones have they

analyzed? What new constellations have been discovered by the telescopes

of Americans?--what have they done in the mathematics...? under which of

the old tyrannical governments of Europe is every sixth man a Slave,

whom his fellow-creatures may buy and sell and torture?"

[520] Nevertheless, these very settlers had qualities of sound, clean

citizenship; and beneath their roughness and crudity were noble

aspirations. For a sympathetic and scholarly treatment of this phase of

the subject see Pease: _Frontier State_, I, 69.

[521] Faux's Journal, _E. W. T._: Thwaites, XI, 246.

[522] Randolph to Quincy, Aug. 16, 1812, _Quincy_: Quincy, 270.

[523] Marryat, 2d Series, 1.

[524] See vol. I, chap, VII, of this work.

[525] Marryat, 1st Series, 15.

[526] Marryat, 2d Series, 176.

[527] Woods's Two Years' Residence, _E. W. T._: Thwaites, X, 325.

[528] Niles, XIV, 2.

[529] See McMaster, IV, 287. This continued even after the people had at

last become suspicious of unlicensed banks. In 1820, at Bloomington,

Ohio, a hamlet of "ten houses ... in the edge of the prairie ... a

[bank] company was formed, plates engraved, and the bank notes brought

to the spot." Failing to secure a charter, the adventurers sold their

outfit at auction, fictitious names were signed to the notes, which were

then put into fraudulent circulation. (Flint's Letters, _E. W. T._:

Thwaites, IX, 310.)

[530] _Ib._ 130-31.

[531] Faux's Journal, Oct. 11, 1818, _E. W. T_.: Thwaites, XI, 171. Faux

says that even in Cincinnati itself the bank bills of that town could be

exchanged at stores "only 30 or 40 per centum below par, or United

States' paper."

[532] Flint's Letters, _E. W. T_. Thwaites, IX, 132-36.

[533] In Baltimore Cohens's "lottery and exchange office" issued a list

of nearly seventy banks, with rates of prices on their notes. The

circular gave notice that the quotations were good for one day only.

(Niles, XIV, 396.) At the same time G. & R. Waite, with offices in New

York, Philadelphia, and Baltimore, issued a list covering the country

from Connecticut to Ohio and Kentucky. (_Ib._ 415.) The rates as given

by this firm differed greatly from those published by Cohens.

[534] _Ib._ X, 80.

[535] Sumner: _Jackson_, 229.

[536] Flint's Letters, _E. W. T._: Thwaites, IX, 219.

[537] Niles, XV, 60.

[538] Niles, XIV, 193-96; also XV, 434.

[539] _Ib._ XVII, 164.

[540] _Ib._ XIV, 108.

[541] A wealthy Richmond merchant who had married a sister of Marshall's

wife. (See vol. II, 172, of this work.)

[542] A writ directing the sheriff to seize the goods and chattels of a

person to compel him to satisfy an obligation. Bouvier (Rawle's ed.) I,

590.

[543] Richmond _Enquirer_, Jan. 16, 1816.

What was the outcome of this incident does not appear. Professor Sumner

says that the bank was closed for a few days, but soon opened and went

on with its business. (Sumner: _Hist. Am. Currency_, 74-75.) Sumner

fixes the date in 1817, two years after the event.

[544] Niles, XIV, 281.

[545] _Ib._ 314-15.

[546] _Ib._ 333; and for similar cases, see _ib._ 356, 396-97, 428-30.

All these accounts were taken from newspapers at the places where

criminals were captured.

[547] Niles, XIV, 428.

[548] _Ib._ XVI, 147-48; also, _ib._ 360, 373, 390.

[549] _Ib._ 179.

[550] _Ib._ 210.

[551] _Ib._ 208.

[552] _Ib._ 210.

[553] See Catterall, 39-50.

[554] The frauds of the directors and officers of the Bank of the United

States were used, however, as the pretext for an effort to repeal its

charter. On Feb. 9, 1819, James Johnson of Virginia introduced a

resolution for that purpose. (_Annals_, 15th Cong. 2d Sess. III,

1140-42.)

[555] See Catterall, 32.

[556] New Castle County.

[557] Niles, XV, 162.

[558] _Ib._ 59.

[559] _Ib._ 418.

[560] Flint's Letters, _E.W.T._: Thwaites, IX, 226.

[561] They, too, asserted that institution to be the author of their

woes, (Niles, XVII, 2.)

[562] Catterall, 33-37.

[563] _Ib._ 51-53; and see Niles, XV, 25.

[564] Catterall, 33.

[565] Monster, Hydra, Cerberus, Octopus, and names of similar import

were popularly applied to the Bank of the United States. (See Crawford's

speech, _supra_, 175.)

[566] Niles, XV, 5.

[567] Act of April 3, 1811, _Laws of New York_, 1811, 205-21.

[568] Niles, XVI, 257.

[569] _Ib._

[570] _Ib._ XVII, 147.

[571] "I have known several to _calculate_ upon the 'relief' from them,

just as they would do on an accommodation at bank, or on the payment of

debts due to them! If we succeed in such and such a thing, say

they--very well; if not, we can get the benefit of the insolvent

laws.... Where one prudent and honest man applies for such benefit, one

hundred rogues are facilitated in their depredations." (Niles, XVII,

115.)

[572] _Ib._

[573] _Ib._ XV, 283.

[574] The bankruptcy law which Marshall had helped to draw when in

Congress (see vol. II, 481-82, of this work) had been repealed in 1803.

(_Annals_, 8th Cong. 1st Sess. 215, 625, 631. For reasons for the repeal

see _ib._ 616-22.)

[575] _Annals_, 16th Cong. 1st Sess. 505.

[576] _Ib._ 513.

[577] _Ib._ 517-18.

[578] Flint's Letters, _E.W.T._: Thwaites, IX, 225.

In reviewing _Sketches of America_ by Henry Bradshaw Fearon, an

Englishman who traveled through the United States, the _Quarterly

Review_ of London scathingly denounced the frauds perpetrated by means

of insolvent laws. (_Quarterly Review_, XXI, 165.)

[579] None of these letters to Marshall have been preserved. Indeed,

only a scant half-dozen of the original great number of letters written

him even by prominent men during his long life are in existence. For

those of men like Story and Pickering we are indebted to copies

preserved in their papers.

Marshall, at best, was incredibly negligent of his correspondence as he

was of all other ordinary details of life. Most other important men of

the time kept copies of their letters; Marshall kept none; and if he

preserved those written to him, nearly all of them have disappeared.

[580] Niles, XV, 385.

[581] _Ib._

[582] _Ib._ XVI, 261.

[583] _Ib._ XVII, 85.

[584] Jefferson to Adams, Nov. 7, 1819, _Works_: Ford, XII, 145.

[585] Niles, XVII, 85.

[586] Niles, XVII, 185.

[587] _Memoirs, J. Q. A._: Adams, May 27, 1819, IV, 375.

[588] _Ib._ 391.

[589] Collins, 88.

[590] "The disappointment is altogether ascribed to the Bank of the

U.S." (King to Mason, Feb. 7, 1819, King, VI, 205.) King's testimony is

uncommonly trustworthy. His son was an officer of the branch of

Chillicothe, Ohio.

[591] See Article X, Section 1, Constitution of Indiana, as adopted June

29, 1816.

[592] See Catterall, 64-65, and sources there cited.

[593] Spelled _Sturgis_ on the manuscript records of the Supreme Court.

[594] 4 Wheaton, 192.

[595] 4 Wheaton, 192-93.

[596] 4 Wheaton, 194.

[597] _Ib._ 195.

[598] 4 Wheaton, 196.

[599] "No State shall ... emit Bills of Credit; make any Thing but gold

and silver Coin a Tender in Payment of Debts; pass any ... ex post facto

Law, or Law impairing the Obligation of Contracts."

[600] 4 Wheaton, 196-97.

[601] For the proceedings in the Constitutional Convention on this

clause, see vol. III, chap. X, of this work.

[602] 4 Wheaton, 197.

[603] _Ib._ 197-98.

[604] 4 Wheaton, 198.

[605] 4 Wheaton, 199.

[606] _Ib._ 200.

[607] 4 Wheaton, 200-01.

[608] 4 Wheaton, 202.

[609] _Ib._ 203-04.

[610] 4 Wheaton, 205.

[611] _Ib._ 206.

[612] Niles, XVI, 76.

[613] "It will probably, make some great revolutions in property, and

raise up many from penury ... and cause others to descend to the

condition that becomes _honest men_, by compelling a payment of their

debts--as every honest man ought to be compelled to do, if ever able....

It ought not to be at any one's discretion to say when, or under what

_convenient_ circumstances, he will _wipe off_ his debts, by the benefit

of an insolvent law--as some do every two or three years; or, just as

often as they can get credit enough to make any thing by it." (Niles,

XVI, 2.)

[614] See _infra_, next chapter.