Note - These brave words are not on the net nor are they
in any history textbooks. Calhoun gave clear warning of the danger of a
central bank of the United States in the days before the veto by President
From a speech by John C. Calhoun against the foreign-owned central bank called "The Bank of the United States" during the early 1830's -- the so-called Jackson era. See that the Federal Reserve bank of today is nothing new. See that Calhoun, the intellectual heir of Jefferson, understood the problem completely -- the problem as it stood then, and the problem as it stands now. --Dick Eastman
First, Mr. President, I object to the renewal of the charter of the Bank of the United States because I look upon the bank as an instution too great and powerful to be toleratred in a government of free and equal laws. It's power is that of the purse, a power more important that than of the sword and this power it possess in a degree and an extent that will enable this bank to draw to itself too much of the political power of this union and too much of the individual property of the citizens of these states.
The money power of the bank is both direct and indirect.
The direct power of the bank is now prodigous and in the event of a renewal of the charter becomes most speedily becomes boundless and uncontrollable. The bank is now authorized to own land, effects inclusive to the amount of $55,000,000 and to issue notes to the amount of $35 million dollars more. That makes 90 million dollars; and in addition to this vast sum there is an opening for an unlimited increase, for there is a dispensation in the charter to issue as many more notes as Congress by law may permit. This opens the door to boundless emissions. For what can be more unbounded than the will and pleasure of successive Congresses?
The indirect power of the bank cannot be shown in figures, but it can be shown to be immense.
In the first place it has the keepings of the public moneys now amounting to $26 million per anum, the post office department included and the gratuitious use of the undrawn balances, large enough to constitute in themselves the capital of a great state bank.
In the second place its promissory notes are receivable by law in the purchases of all property owned by the United States and in payment of all debts due them -- and this may increase its power to the amount of an annual revenue by creating a demand for its notes to that amount. [Under the gold system the paper money of the country was the written promisory notes to pay in gold upon demand at a bank. The bank of the United States however received special favor for its notes which Calhoun here decries. Banks were usually local or regional and state chartered -- the Bank of the United States, centered in Philadelphia was free to operate in all states and to seek monopoly power as here described. -- DE]
In the third place it wears the name of the United States and has federal government for a partner, and this name and this partnership identifies the credit of the bank with credit of the union.
In the fourth place it is armed with authority to disparage and discredit the notes of other banks by excluding them from all payments to the United States and this added to all its other powers, direct and indirect, makes this institution the uncontrollable monarch of the money system of the union.
To whom is all this power granted? To a company of private individuals, many of them fireigners, and the mass of them residing in a remote and narrow corner of the union unconnected by any sympathy with the fertile regions of the great valley in which the natural power of this union, the power of numbers, will be found to reside long before the renewed term of a second charter would expire.
By who is all this power to be exercised? By a directory of seven, it may be; governed by a majority of four, it may be -- and none of these elected by the people or responsible to them.
Where is it to be exercised? In a single city, distant a thousand miles from some of the states; receiving the produce of none of them except one -- no interest in the welfare of any of them, except one -- no commerce with the people -- with branches in every state and every branch subject to the secret and absolute orders of the supreme central head, thus constituting a system of centralism hostile to the federal principle of the union, encroaching upon the wealth and power of the states, and organized upon the principle to give the highest effect to the greatest power.
The mass of power thus concentrated, thus ramified and thus directed must necessarily become under a prolonged existence the absolute monopolist of American money, the sole manufacturer of paper currency and the sole authority, for authority it will be to which the federal government, the state governments, the great cities, corporate bodies, merchants, traders and every private citizen must of necessity apply for every loan which their exigencies may demand.
Second, I object to the continuance of this bank because its tendencies are dangerous and pernicious to the people.
What are the tendencies of a great moneyed power connected with the government and controlling its fiscal operations. Are they not dangerous to every interest, public and private, political as well as pecuniary? I say they are and briefly enumerate the heads of each mischief:
1) such a bank tends to subjugate the government;
2) it tends to collusions between the government and the bank in terms of their loans;
3) it tends to create public debt by facilitating public loans and substitution unlimited supplies of paper for unlimited supplies of coin;
4) it tends to beget and prolong unnecessary wars by furnishing the means of carrying them on without recurrence to the people;
5) it tends to aggrevate the inequality of fortunes and to make the rich richer and the poor poorer, to multiply nabobs and paupers and to deepen and widen the gulf which separates Dives from Lazerus; and
6) It tends to make and to break fortunes by the flux and re-flux of paper, profuse issues and sudden contractions perform this operation which can be repeated like planetary and pestilential visitations in every cycle of so many years -- and every periodical return transferring millions from the actual possessors of property to the Neptunes who preside over the flux and re-lux of paper.
Third, I object to the renewal of the charter on account of the exclusive privileges and anti-republican monopoly which it gives to the stockholders.
(1) The name, the credit, the revenues of the United States are given up to the use of this company and constitute in themselves an immense capital to bank upon. The name of the United States, like that of the king is a tower of strength and this strong tower is now the outwork to defend the citidal of a moneyed corporation. The credit of the union is incalculable and of this credit as going with the name and being in partnership with the United States the same corporation now has possession. The revenues of the union are $26 million dollars including the post office and all of this is so much capital in the hands of the bank -- because the revenue is received by it and is payable in its promosory notes.
(2) Other banks depend upon their credit for the receivability of their notes, but this favored institution has law on its side and a chartered right to compel the reception of its paper by the federal government. The immediate consequence of thsi esxtraordinary pivilege is that the United States becomes virtually bound to stand security for the bank as much as if she had signed a bound bond to that effect and must stand forward to sustain the institution in all emergencies in order to save her own revenue. This is what has already happened. Some ten years ago in the early progress of the bank and when the emense aid given it by the federal government enabled it to survive the crisis of its own overwhelming mismanagement.
3) To hold the moneys of the United States in deposit without making compensation for the use of the undrawn balances.
(4) To discredit and disparage the notes of all other banks by excluding them from the collection of the federal revenue. This results from the collection, no, not the collection but the receipt of the revenue having been committed to the bank and along with it the virtual execution of the joint resolution of the 1816 to regulate the collection of the federal revenue. The execution of that resolution was intended to be vested in the Secretary of the Treasury, a disinterested arbiter between rival banks but it may be considered as virtually devolved on the Bank of the United States and powerfully increases the capacity of the that institution to destroy or subjugate all other banks. The notes of the state banks excluded from revenue payments are discredited and disparaged and fall into the hands of brokers in all places where they are not issued and payable. They cease to insulate at all the points to which the exclusion extends. I am informed that the notes of the bank south of the Potomoc and Ohio, even those of the lower Mississippi are generally refused at the United States branch bank in St. Lewis and in consequence are expelled from circulation in Missouri and Illinois and the neighboring districts. This power to disparage the notes of all other banks is the power to injure them and added to all the other privileges of the Bank of the United States is the power to destroy them.
Policy may restrain the destroying faculties for the present, but they exist and will come foth when interest prompts and policy permits. They have been exercised and the general prostration of the southern and western banks attests the fact. They will be exercised, the charter being renewed and the remaining state banks will be be swept with the besom of destruction. Note that all will have their signs knocked down and their stores closed -- far worse than that to many of them. Subjugation in preference to destruction will fate of many. The state banks spared by the sword will be passed under the yoke, they will become subordinate parts of the great machine, their place in the scale of subordination will one degree below the rank of the legitimate branches, their businesses to perform the work which it would be too disreputable for the legitimate branches to perform. This will be the fate of the state banks which are allowed to keep up their signs and set open their doors and thus the entire moneyed power of the union will fall into the hands of one single institution whose inexhorable and invisible mandates emanating from a center would pervade the union, giving or witholding money according to its own sovereign will and absolute pleasure. To the favored state, to an individual or a class of individuals favored by the central power the golden stream of Pactolus [the river that received the "golden-touch" power when taken from King Midas -- DE] would flow direct. To all such the munificent mandates of the high directory would as the fabled god made his terresterial visit of love and desire enveloped in a shower of gold -- but to others, those not favored and those hated, the mandates of this same directory would be as the planetary plague which hangs its poison in the thick air -- death to them -- death all who minister to their wants. What a state of things! What a condition for a confederacy of states! What grounds of alarm and terrible apprehension when the confederacy of such vast extent, so many independent states, so many ...
[note: I am transcribing from a tape recording of this speech I made when the collected speeches of Calhoun was in my hands in the early 90's -- unfortunately the tape broke here and I mended it with tape losing some of the speech -- perhaps a few dozen words -- I continue where I left off --DE]
... there should be but one money tribunal before which all the rival contending elements must appear, but one single dispenser of money to which every citizen, every trader, every merchant, every manufacturer, every planter, every corporation, city, every state and the federal government itself must apply in every emergency for the most indispensible loan. And this is the face of the fact that in every contest for human rights the great moneyed institutions of the world have uniformly been found on the side of kings and nobels against the lives and liberties of the people. To hold real estate, receive rents and retain a body of tenantry -- this privilege is hostile to the nature of our republican government and inconsistent with the nature and design of a banking institution. Republics want free holders, not landlords and tenants.
No one, when this charter was granted, presumed to speak in favor of an incorporating a societry of landlords, especially foreign landlords to buy lands, build houses, rent tenements and retain tenantry. Loans of money was the object in view and the purpose of real estate is incompatible with that object. Instead of remaining bankers, the corporators may turn land speculators. Instead of having money to lend they may turn you out tenants to vote. To an application of a loan they may answer , and answer truly, that they have no money on hand and the reason may be that they laid it out in land.
The Bank is now the greatest moneyed power in the union. In the event of the renewal of its charter it soon be the sole one -- sole dispenser of money. It will soon be the chief owner of property. To unlimited means of acquisitiion would b e united perpetuity of tenure -- for a corporation never dies and is free from the operation of the laws which govern the descent and distribution of the real estate in the hands of individuals.
Monopolies and perpetual succession are the bane of republics. Our ancestors took care to provide against them by abolishing entails [British law for keeping passage of a landed estate to a particular line of heirs --DE] and primogeniture [required inheritance of an estate by the first son -- DE] Even the glebes [cultivatable lands owned by a parish --DE] of the church, lean and few as they were in most of the states, fell under the republican principles of limited tenures. All the states abolished the anti-republican tenures, but Congress re-establishes them! -- and in a mammer more dangerous and offensive than before the revolution. They are now given not generally, but to few -- not to natives only, but to foreigners also. For foreigners are large owners of this bank! And thus the principles of the revolution sink before the privileges of an incorporated company.
[another break in the tape -- DE]
-- to deal in pawns, merchandise and bills of exchange, thus the bank is an incorporated company of pawn brokers and merchants as well as an incorporation of landlords and land speculators -- and this derogatory privilege like the others is copied from the old Bank of England charter of 1694. Bills of exchange [an IOU used in foreign exchange -- like a post-dated check --DE] are also subjected to the traffic of this bank. It is a traffic unconnected with the trade of banking, dangerous for the great bank to hold and now operating most injuriously in south and west. It is the process which drains these quarters of the union of their gold and silver and stiffles the growth of a fair commerce in the products of the country. The merchants to make remittances buy bills of exchange from the branch banks instead of buying produce from the farmers, the bills are paid for in gold and silver and eventually the gold and silver sent tot he mother bank or to the branches in the eastern cities either to meet these bills or to replenish their coffers to furnish vast loans to favored states or individuals. The bills sell cheap, say a fraction of the one percent. They are therefore a good remittance to the merchant. To the bank the operation is doubly good-- for even the half of one percent on bills of exchange is a great profit to the institution that monopolizes that business. While the collection and delivery of the branches of all the hard money in the country is a still more considerable advantage. Under this system the best of the western banks -- I do not speak of the those which had no foundations and sank under the weight of neighborhood opinion -- but those which deserved favor and confidence -- sank ten years ago. Under this system the entire west is now undedrgoing a silent general invisivle drain of its hard money and if not quickly arrested these states will soon be, so far as the precious metals are concerned, no more than the empty skins of an imolated victim.
(7) To establish branches in the different states, without their consent and in defiance of their resistance, no one can deny the degrading and injurious tendeny of this privilege. It derogates from the sovereignty of a state, tramples her laws, injures her revenue and commerce, lays open her government to the attacks of centralism and impairs the property of her citizens and fastens a vampire on the her bosom of to suck up her gold and silver.
(a) it derogates from her sovereignty because the central instiution may impose its intrusive branches upon the state without her consent and in defiance of her resistance. The state of Alabama but four years ago by a resolve of her legislature remonstrated against the intrusion of a branch upon her. She protested against the favor. Was the will of the state respected? On the contrary! Was a branch not instantaneously forced upon her as if by the suddenness of the action to make a striking and conspicuous display of the omnipotence of the bank and the nullity of the state.
(b) It tramples upon her laws, because according to the decision of the Supreme Court the bank and all its branches are wholly independent of state legislation -- and it tramples on them again, because it authorizes foreigners to hold lands and tenements in every state -- contrary to laws of many of them. And because it applies of the mortmain tenure ["dead hand" -- ownership of land by a perpetual corporation --DE] which is condemned by all the republican states in the union.
(c) It injures her revenue, because the bank stock under the decision of the Supreme Court is not liable to taxation. And thus foreigners and non-resident Americans who monopolize the money of the state, who hold its best lands and town lots, who mettle in its elections and suck out its gold and sivler and perform no military duty are exempted from paying taxes in proportion to their wealth for the subject of the state whose laws they trample upon and whose benefits they usurp.
(d) It subjects the state to the dangerous manoeuvers and intrigues of centralism by means of tenants, debters, bank officers and bank money which the central directory retain in the state and may embody and direct against it in its elections and its legislative and judicial proceedings;
(e) It tends to impair the property of the citizens and, in some instances, that of the states by destroying the state banks in which they have invested their money;
(f) It is injurious to the commerce of the states -- I speak of the western states -- by substituting a trade in bills fo exchange for trade in the products of the country;
(g) It fastens a vampire on the bosom of the state to suck away its gold and silver and to cooperate with the course of trade of federal legislation and of exchange in draining the south and west of all their hard money. The southern states with their $30 million of annual exports in cotton, rice and tobacco and the western states in their $12 million of provisions in tobacco exported from New Orleans and terh $5 million consummed in the south and on the lower Mississippi, that is to say with three fifths of the marketable productions of the union are not able to sustain 30 specie-paying [gold-and-silver-coin-paying -- DE] banks. While the minority of the states, north of the Potomoc, without any of the great staples for export have about 400 of such banks. These states without rice, without cotton, without tobacco, without sugar and with the less flour and provisions to export are saturated with gold and silver while the western states with all the real sources of wealth are in a state of the utmost destitution.
(8) Exemption of the stockholders from individual liability on failure of the bank.
(9) To have the United States for a partner. Disadvantageous to this partner must be the United States in a moneyed point of view. There is a far more grave and serious aspect under which to view it. It is the political aspect resulting from the union of the bank and the government. This union has been tried in England and has been found there to be just as disastrous a conjunction as the union between church and state. It is a conjunction of the lender and the borrower -- and holy writ has told us which of these catagories will be the master of the other. But suppose they agree to drop rivalry and unite their resources -- suppose they combine and make a push for political power! How greatr is the mischief which they may not accomplish?
(10) To have foreigners for partners. This Mr. President will be a strange story to be told in the west. The downright and upright people of that unsophisticated region believe that words mean what they signify and that the "Bank of the United States" is the Bank of the United States. How great must be their astonishment to learn that this belief is a false conception and that this bank -- its whole name to the contrary notwithstanding -- is just as much the bank of foreigners as it is of the federal government. It is no purpose to say that the foreign stock holders cannot be voters or directors. The answer to this suggestion is this: The foreigners have the money. They pay down the cash and want no accomodations. They are lenders not borrowers and in a great moneyed institution such stock holders must have the greatest influence. The name of this bank is a deception upon the public. It is not the bank of the federal government as its name would import -- nor of the states which comprise this union -- but cheifly of private individuals, foreign as well as natives, denizens [ residents --DE] and naturalized subjects. They own $28 million of the stock, the federal government but $7 million -- and these $7 million are precisely balanced by the stock of the aliens. The federal government and the aliens are equal, owning one fifth each. And there would be as much truth in calling it the English bank as in calling it the Bank of the United States.
Now mark a few of the privileges which this charter gives to these foreigners:
To be landholders in definace of the state laws which forbid foreigners to hold land;
To be landlords by incorporation and to hold American citizens for tenants;
To hold lands in mortmain;
To be pawnbrokers and merchants by incorporation;
To pay the revenue of the United States in their own notes;
In short to do everything which I have endeavored to point out in the long run an hideous list of exclusive privileges granted to this bank.
If I have shown it to be dangerous for the United States to be in partnership with its own citizens, how much stronger against a partnership with foreigners? What a prospect for loans when at war with a foreign power and the subjects of that power large owners of the bank here from which a loan from it (or from banks liable to destroyed by it) we can obtain money to carry on the war. What a state of things, if in the division of political parties, one of these parties and the foreigners coalescing should have the exclusive control of all the money in union -- and in addition ot the money should have the bodies of debtors, tenants, and bank officers stationed in all the states with a supreme and irresponsible system of centralism to direct the whole. Dangers from such contingenies are too great and obvious to be insisted upon.
(11) Exemption from due course of law for violations of its charter. This is a privilege which affects the administration of justice and stands without exampled in the annals of republican legislation.
(12) To have all these unjust privileges secured to the corporators as a monopoly by a pledge of of the public faith to charter no other bank. This is the most hiddeous feature of the whole mask of deformity. If these banks are beneficial institutions, why not several, one at least, and each independent of the other, to each great section of the union? If malignant, why create one? The restriction constitutes the monopoly and renders more invidious what was sufficiently hateful in itself.
[that's all I have -- I would appreciate if some scholar with access to a university library that has Caloun's speeches -- would locate this one -- and half a dozen others on this topic and make them available on some website on the internet. Today, if you google Calhoun you will find some of his last speeches only and all of these are the subject of slavery -- but slavery was not the subject he fought over most of his life -- and if the truth be known his views of slaves and slavery were probably not much different from those of Lincoln. Calhoun must once again be honored as our greatest Senator -- the man who did more than any other to save the republic from the great money power -- to often unsuccessfully -- both before and after the veto of the renewal of the BUS charter by Jackson. Study what Calhoun says here -- I made a tape of it and listen to it with earphones at night when I can't sleep and when I drive in the car -- except that lately my car's player is eating tapes. Let your homeschooler study this speech -- perhaps her or she will be the great statesman this country needs. Calhoun has written to books on the constitution -- Disquisition on Government being one of them -- I would hope that the next president would promote modifications to our system of government -- a restoration of the republic, making it better that ever -- basing his reforms on this great work. -- Dick Eastman