Common Sense, Part II: Plain Reasoning

As I mentioned, the fundamental rhetorical basis of Thomas Paine’s Common Sense is its reliance on plainly observable facts and reasoning that asks no more of its readers than to exercise their inherent sense of logic – their (drum roll please) common sense – to judge the quality of its arguments. The reason for this is because Paine intended his pamphlet for a popular audience. Unlike Thomas Jefferson, who in the 1770s and 1780s tended to write for people as well-versed in the classics and Enlightenment philosophy as himself, Paine chose not to depend on his readers being particularly well-read, well-educated, or even literate. To do so would have limited the number of those capable of understanding the ideas he wanted to communicate, and perhaps better than the Founders themselves Paine understood that for the American Revolution to succeed it would need to be a popular movement.

      

Thus the arguments Paine deployed throughout Common Sense approached the prospect of independence from Great Britain (at the time of publication in January, 1776 still a topic of debate) less from an abstract philosophical perspective – concerned with natural rights, natural law, sovereignty and custom – than one characterized by pragmatism and expediency. Rather than argue that separation was necessarily a fundamental or objective good, something Paine seemed to more or less take for granted, his assertions instead focussed on the practical economic and political benefits of independence and the relative ease with which it could be achieved. Whereas Jefferson or Adams rationalised disobedience and armed resistance to British authority as flowing out of the “right of revolt” described by English political theorist John Locke – whereby rulers who did not uphold their end of the unspoken social contract could legitimately be overthrown and replaced – Paine claimed that revolution and independence were permissible, even desirable, for no more reason than the end result meant a better life for the average American. He approached this overarching conclusion from many different directions and deployed many different tools along the way, from the facts and figures of British naval construction to basic English and colonial American history. Whatever the avenue of approach, however, Paine’s tone managed to avoid outright condescension. Rather than speak down to his audience he phrased his arguments in terms that placed a premium on clarity, practicality, and simplicity, and made use of references (Biblical, historical and contemporary) that were eminently accessible to the average colonial citizen.

Composed of an introduction and four parts, Common Sense begins by contemplating the origins of “Government in general” while making certain specific comments about the unwritten English Constitution. Before delving into these general remarks, however, Paine’s introduction opened, tellingly, by exhorting readers to understand that though many of the ideas about to be discussed at length were both radical and unfamiliar, tradition was not necessarily a guarantee of goodness or rightness. “A long habit of not thinking a thing wrong,” Paine wrote, “gives it a superficial appearance of being right, and raises at first a formidable outcry in defence of custom […] Time makes more converts than reason.” This admission/admonition by Paine seems to demonstrate awareness on his part of the task before him in attempting to push against centuries of accepted wisdom with little more than the force of reason at the same time that it rather neatly encapsulates one of his overall aims.

By January, 1776, when the first edition of Common Sense was published in Pennsylvania, the British (and earlier English) colonization of North America had been ongoing for over 150 years. Though in that time the relationship between the colonies themselves and the Crown had not always been particularly harmonious the 18^th century had witnessed a steady period of stable relations and a general acceptance of the bond between the colonial governments and post-Glorious-Revolution Britain. Admittedly the events of the 1760s and 1770s had weakened the integrity of this abiding status quo, between the imposition of unprecedented taxes on basic commodities and the harsh response to resulting attempts at resistance, but Paine’s task was still far from easy. The Revolutionary War, which began in April, 1775 with the Battles of Lexington and Concord, remained confined to Massachusetts and Lower Canada (Quebec) until June, 1776 with the British invasion of New York. The majority of Americans at the time of Paine’s writing were thus accustomed to British rule, and to monarchy in general, and had yet to be touched by the nascent Revolution in a meaningful, personal way. Common Sense therefore needed to dissect the basic assumptions of its readers, about how governments should function and how important their connection to Britain really was, at the same time it made its case for separation and independence.

To that end, the sixth paragraph of the first section of Common Sense contains as straightforward an explanation of the theoretical origin of government as is likely to be found in any prominent example of 18^th-century philosophy. Neither taking the knowledge of his readers for granted not doubting their ability to grasp a complex idea if put to them in the right way, Paine set out very early on in his most influential political tract to establish a baseline understanding of what the purpose of government was supposed to be. Specifically, he described government as arising first out of the need felt by all people for personal security. Collective security, whereby people depend on each other for mutual protection, followed as a potential solution, which begat formal structure, delegated administration, representative government, and some form of democracy. At the core of this explanation, as Paine phrased it, was an emphasis on the spontaneous nature of government. It arose not as the consequence of the leadership of a king, as monarchy would seem to imply, but was generated, nurtured and directed by the people whose lives and livelihoods it was to serve. As Paine explained it, because representative government and frequent elections, “will establish a common interest with every part of the community, they will mutually and naturally support each other, and on this (not on the unmeaning name of king) depends the strength of government, and the happiness of the governed.”   

 This chronicle of the basic evolution of human civilization, though simply phrased, is not all that different from similar explanations put forward by philosophers like John Locke in their own political treatises. The theory that a “social contract” of some sort existed at the core of all forms of government was a favorite of the European Enlightenment and had been repeated and refined by any number of contemporary thinkers. Where Paine differed, in addition to the simplicity and concision of his language, was in his additional assertion that the validity of the social contract theory of the origin of government lay precisely in its lack of complexity. “I draw my idea of the form of government from a principle in nature, which no art can overturn,” Paine stated, “that the more simple a thing is, the less liable it is to be disordered, and the easier repaired when disordered.” Doubtless this was a powerful sentiment to the generation of colonial Americans who had suffered under the burden of several rounds of controversial taxation and been forced to endure contending arguments for and against natural rights, regulation versus revenue, and the unparalleled sovereignty of Parliament. Government, Paine insisted, should not be so complex as to elude the understanding of those it was supposed to serve. Rather it should be simple enough to avoid inefficiency or breakdown and easy to diagnose and repair in the event of the latter. The manner in which the colonies were governed as appendages of the British Empire in the 1770s was decidedly far from simple.

Though the various colonies enjoyed different forms of government themselves, and different relationships to the Crown, all of them were self-acknowledged subjects of the British Monarch and his/her heirs. Each colony had a legislature of its own that was elected via some form of suffrage involving property ownership and each had a Governor who was either elected by a subset of the colonial population or appointed by the Crown (or in the case of Pennsylvania, New Jersey and Maryland by its Lord Proprietor). Technically speaking none of the colonies fell under the authority of the British Parliament. While George III was acknowledged by its citizens to be the monarch of the colony of Virginia, Virginia was not formally a part of the Kingdom of Great Britain. Accordingly the assembled MPs and Lords in Westminster had no legal right to make law for the colonies. To that end, the administration of Britain’s various North American colonies was overseen after the 1690s by the Board of Trade, a committee of the Privy Council. As the Privy Council was a body of advisors to the Crown and not an arm of Parliament this arrangement would appear to have preserved the separation between the governments of the colonies and the government of Britain. Where things became complicated was with the fact that the head of the Board of Trade was often also the Secretary of State for the Colonies, a cabinet-level position within the British government. Accordingly, colonial affairs were treated in Britain as the responsibility of the government of the day, and Parliament frequently passed laws intent on regulating colonial trade in keeping with the overall administration of the British Empire. This became particularly controversial in the 1760s when the government of Prime Minister George Grenville attempted to levy a tax on stamped paper issued in the Thirteen Colonies; because the line between the power of the British Government and the power of the Crown had become blurred it was unclear who possessed legitimate authority over the colonial governments. This uncertainty led to public disagreement, vociferous debate, active resistance, harsh repression, and ultimately armed revolution.

Having endorsed simplicity in government as among the best ways to ensure transparency and stability, neither of which the colonies enjoyed under the administration of the Crown, Paine further pointed in the tenth through the twentieth paragraphs of Common Sense to specific elements of Britain’s unwritten constitution that seemed to him calculated to create inefficiency, confusion and conflict. Said constitution, he wrote, was composed of three basic elements; led by a crowned individual, Britain was a monarchy; partially governed by hereditary landowners, it was an aristocracy; daily administered by elected representatives, it was a republic. The first two elements Paine characterized as the residue of an earlier era, kept alive more by tradition than logic, while the third was the product of more recent historical events that was uneasily fitted to its surroundings. In theory these three parts were supposed to check each-other’s power, though Paine considered such a claim to be “farcical.” The monarchy in particular he singled out for criticism, and presented a series of simple statements aimed at demonstrating the contradictions inherent in the British attempt to fuse monarchical and republican elements in a single government.

Believing that the House of Commons had the ability to act as a check on the power of the monarch presupposed two things, Paine argued. The first was that the monarch could not be trusted to act in good faith at all times on the basis of their own discretion. The logical conclusion was a general consensus that, as Paine put it, “a thirst for absolute power is the natural disease of monarchy.” The second assumption was that because the Commons was assigned the task of checking, obstructing, or otherwise supervising the monarchy, it must have been because they were, “wiser or more worthy of confidence than the crown.” Paine did not seem inclined to disagree with either of these claims. Indeed, as aspects of the so-called republican element of the British constitution I have no doubt they fully warranted his endorsement. The problem – the cause of Paine’s claim that the three-part constitution was a farce – arose from the monarch’s ability to in turn check the power of the Commons by vetoing legislation. Such an arrangement, he wrote, “supposes that the king is wiser than those whom is has already supposed to be wiser than him. A mere absurdity!”

         What makes this series of logical assertions, and the resulting contradiction, worth noting is the way Paine avoided abstractions and references to Roman or Greek antiquity or the theories of other political philosophers who had written on the same topic. Rather, he laid out a series of simple statements that depended less on his readers’ knowledge of the basic relationship between the British monarchy and House of Commons than on their ability to recognize a contradiction when it was put to them. Indeed, the less his readers could be considered knowledgeable about the intricacies of British constitutional conventions the more effective Paine’s arguments. Common Sense was not intended to be a nuanced critique, but a call to arms; the desired response was not an intellectually rigorous debate, but action. With this in mind it becomes clear the degree to which Paine was taking part in a rhetorical exercise; the statements he made and the facts he doled out were arranged in such a way at to lead his readers to the conclusion he desired. He was, to put it bluntly, engaged in a degree of manipulation. This cannot be disputed; nor can the fact that the same could be said of any contemporary writer of pamphlets or treatises whose intended audience was public. Where Paine set himself apart was in his avenue of approach – his reliance on plain over abstract reasoning.

Common Sense, Part I: Context

Having, over the last several months, delved about as far into the 19^th century as I think I’ll permit myself I’d like to engage in a slight return to form, turn back the clock and return once more to the 1770s and the glory and madness that was Revolutionary era. It was, I confess, fascinating to think about, and really dig into, how the perception and implementation in the United States of a concept like corporations changed and evolved over a period of almost fifty years. Nevertheless, I came to miss the sense of abundant and boundless possibility that seemed to infuse so much of what went on during the American Founding. Jefferson and Madison, Adams and Hamilton; these were men of intelligence, conviction, and purpose who leapt headlong into the unknown because they believed in the inviolability of man’s rights and his ability to govern himself. It was an amazing time, and they make for amazing subjects, perhaps because I still find it difficult to conceive of the task they took on and the challenges it presented. In that spirit I’d like to turn now to one of the most influential documents of the Revolutionary era, and undoubtedly the lengthiest single document I've undertaken to examine, Thomas Paine’s 1776 pamphlet entitled Common Sense.

“But Simon,” I hear you saying, “Thomas Paine wasn't a Founding Father. Hell, he wasn't even American!” Distressing though it is that I now appear to be hearing voices, a point has indeed just been made. Paine is not among the worthies usually granted the label “Founding Father.” He was not a politician, a soldier, or really much of a diplomat. And he was, yes, born in Britain; his arrival in what would become the United States did not occur until his 37^th year. I don’t dispute any of this. What I assert, rather, is that Common Sense is just too damned interesting to pass up discussing.

Unlike Jefferson’s A Summary View of the Rights of British North America, John Adams’ Thoughts on Government, the essays contained in the Federalist Papers or indeed the Declaration of Independence, all of which were written in an elevated, at-times philosophical style, Common Sense was structured along very different lines and intended for an altogether different audience. Rather than attempt to communicate with the colonial elite, utilizing language and references that were rooted in an understanding of the Enlightenment and ancient Greek and Roman literature, Paine’s pamphlet was more or less aimed at the mass of “common people” that made up the bulk of the Thirteen Colonies’ population. Widely uneducated, at times even wholly illiterate, they would have found Adams’ references to English poetry or Jefferson’s invocation of Lockean social contract theory both mystifying and wholly unconvincing. Accordingly, Paine wrote Common Sense in a style that was clearly and concisely phrased, contained few if any Latin or Greek references, and was rooted more in Protestant conceptions of morality than abstract European political philosophy.

Indeed, Paine’s rhetorical use of Scriptural references and his invocation of concepts like God, Satan, sin and evil further set his Common Sense apart from the abstract, philosophical, and Enlightenment-influenced arguments put forward by many of the Founders. Where Thomas Jefferson, Alexander Hamilton or John Jay might make use of the term “Providence” when discussing some form of Supreme Being in keeping with the Enlightenment’s emphasis on reason and scepticism, Paine wrote plainly of God and the Lord. Where John Adams or James Madison might quote Roman scholars like Cicero or Tacitus, Paine drew validation for his arguments from the Old Testament, the history of the Israelites and the story of Original Sin. Paine’s emphasis in Common Sense wasn't on the “natural rights” or “natural laws” that so many among the Founding Generation pointed to in their criticisms of British rule, but rather on the basic principle of morality that generations of Americans – be they Anglicans, Congregationalists, or Protestants of any stripe – had been taught as children and absorbed day in and day out as congregants in the countless churches that dotted the colonies from Georgia to Massachusetts. Paine’s intended audience was the common American, and so his approach took full advantage of their shared Biblical vocabulary.    

   

In addition to its accessibility and pious language, Common Sense was also substantially more radical than most of the pro-revolutionary literature that was being produced in the colonies on the eve of independence. Whatever his sentiments proved to be in time, Jefferson’s approach in crafting his account of the historical relationship between the colonies and the Crown (A Summary View) or providing a reasoned argument for the former’s political independence (the Declaration) tended towards the diplomatic. No lover of monarchy, he still avoided condemning the institution outright and instead placed blame on the government of Lord North (Prime Minister from 1770-1782) and to a lesser extent George III himself for the “imperial crisis” that had come to a head in the 1770s. Other commentators, like Pennsylvania’s John Dickenson, adopted a similar approach and portrayed their grievances as stemming from a disharmony between the Crown and colonies. Paine, for reasons that will be discussed in a later post, seemed constrained by no such desire for delicacy. His Common Sense contains one full section, twenty-four paragraphs in length, devoted solely to decrying monarchy as a concept and displaying the logical absurdities inherent in its existence, calling upon Scripture and simple reasoning as validation. Unremarkable as this may seem at first blush – the American Revolution being, after all, republican in nature – it’s worth remembering that a significant percentage of the colonial population in the mid-1770s, perhaps even the majority, were either dyed-in-the-wool Loyalists or unsure between the Crown and the colonies whom to support. The Founders had no desire to shock people into perhaps siding with Britain and thus advanced with discretion in their efforts to explain and justify a separation from their common Mother-country. Not so with Paine, who seemed intent on shattering any illusions the American people held about the nature of monarchy and at times did so with almost gleeful abandon.

Understanding why this was, why a man born and bred in 18^th-centry England like Thomas Paine felt compelled to argue so forcefully against monarchy, would seem to demand some understanding of where and when he came from. As it happens, however, there is little in Paine’s background that would appear to explain how he became such a radical opponent of monarchy and a fervent advocate of republicanism. Born in 1736 in Thetford, a market town in Norfolk in the East of England, Paine was the son of a Quaker father and an Anglican mother. His life between 1744 and 1768 was relatively unremarkable. During this period he, in order, attended school in his native Thetford, apprenticed to his rope-maker father, briefly went to sea as a privateer, married, went into business as a rope-maker himself, lost his wife and unborn child, gained employment as a tax official, and finally relocated to the town of Lewes, Sussex. Long a centre of anti-monarchical sentiment dating back to the 17^th century and the English Civil War, Lewes was likely the sight of Paine’s philosophical awakening due to his involvement in local politics.

Specifically, Paine served on the equivalent of the town council as well as the parish vestry, and became involved in 1772 with a campaign on behalf of his fellow tax officers to demand better pay and working conditions. The the winter of 1772-73 was accordingly spent away from his post in Lewes, distributing 4000 copies of an article he’d published entitled The Case of the Officers of Excise to members of Parliament and various other notables. For his troubles Paine was dismissed for being absent from his duties without permission in the spring of 1774 and was forced to sell most of his possessions in order to avoid being sent to debtor’s prison. The following summer he departed for London where he was introduced by a colleague to inventor and diplomat Benjamin Franklin, then in Britain as several of the American colonies’ representative to the Crown. Franklin, sensible of Paine’s recent troubles, advised emigration to Pennsylvania and provided him with a letter of recommendation to that effect. Paine subsequently left Great Britain in October, 1774 and arrived in Philadelphia at the end of the following month.

His journey to America nearly ended him due to his contracting Typhoid from his ship’s contaminated water supply and he spent his first six week in Pennsylvania recovering. He became a citizen of the colony as soon as he was well enough to take the appropriate oath, and in January, 1775 became the editor of the Pennsylvania Magazine. There is, for better or worse, little more to Paine’s story leading up to the publishing of Common Sense than that. Still, there are certain loose conclusions that can be drawn. That Paine was a man who felt his convictions very deeply would seem relatively clear. Once he arrived at politics and political advocacy in the 1770s his passion and dedication ran deep, evidenced by his efforts on behalf of such a mundane cause as fair pay for tax officers. That this campaign ultimately cost him his means of employment and most of his possessions, and nearly landed him in debtor’s prison, doubtless shaped his perception of social justice, the indifference of Parliament, and English society more broadly.

Also worth noting is that his father was a Quaker. Granted, without any deeper understanding of the nature of their relationship, or even whether Thomas was raised in any faith at all, it’s difficult to say with any conviction that Paine’s abiding anti-authoritarianism, strong moral sense, and passion for justice were the product of his father’s religion. Indeed, considering the strongly Deist position he gave voice to during his imprisonment in France in the 1790s I might go so far as to say that piety was not a characteristic he ever put much stock in. That being said, most variations of the Quaker faith embrace ideas like social justice, are strictly anti-hierarchical, disdain outward ornamentation, and place great importance on the relationship between God and the individual believer (without the “interference” of a formal priesthood). Without saying that Paine ever considered himself, at any point in his life, a Quaker, or consciously channelled Quaker theology in his political writings, it would seem to be a decent supposition that he was influenced by their beliefs on some level.

Less theoretical, I would say, is the probable influence of Paine’s social status on his perception of the American Revolution and the crisis at its heart between the rights of the colonists and the prerogatives of the Crown. Unlike Jefferson or Madison, Thomas Paine was not born into wealth and did not inherit an extensive estate upon his father’s passing. He did not attend college, like fellow immigrant Alexander Hamilton, and he possessed no training in the law, like the majority of the American Founding Fathers. The life of Benjamin Franklin, a man of limited education and prodigious talents, is perhaps most similar to Paine’s, though his success as an author and inventor elevated him to a unique level of popularity in his adopted home-colony of Pennsylvania. Paine, rather, was a member of what we might now think of as the middle class, and likely its lower cohort at that. His father was a tradesman, in whose footsteps he followed for a time, and his formal education was limited to a five year period between the ages of 8 and 13. He neither studied the classics nor read the law, and before becoming a political activist the station to which he had managed to rise was firmly lodged in the low-tier of the British bureaucracy. In short, Paine’s understanding of concepts like capital and labour, government and society were shaped by fundamentally different experiences than the majority of the commentators and pamphlet-writers whose work is often thought to define the literary component of the American Revolution.  

This is certainly not to say that Paine was less intelligent than his better-educated colleagues like Jefferson, Adams or Hamilton. His command of rhetoric and propulsive prose style speak to a sharp mind and a complex understanding of both the problems at hand and the perceptions and biases of his audience. No, Paine’s relatively humble background rather speaks to his ability to understand and tap into the basic experiences, fears and prejudices of the average American in a way that many of the Founders simply weren't capable. A stranger to the aristocratic lifestyle of the Southern planter, the bustle of the wealthy New York merchant, or the courtly forum inhabited by the successful colonial lawyer, Paine understood how hard it could be for the average person to eke out an existence within a complex and at times indifferent economic and political environment. He knew from experience how narrow the horizons of the “common people” could be, how defined their lives were by faith and family, and how impervious they could be to abstract philosophy. Consequently the perspective through which Paine attempted to communicate in Common Sense seems specifically calibrated to plug into a mindset unfamiliar with Locke, Montesquieu or the Glorious Revolution, whose perception of right and wrong was rooted almost entirely in Scripture, and who responded best to plain speaking, plain reasoning and the occasional vulgar reference. While I might go so far as to say that Paine was donning a mask with Common Sense – that his knowledge of Enlightenment philosophy was more extensive than he let on and that his relationship to orthodox Christianity was somewhat more strained than his use of Biblical references might suggest – I believe he was able to do so effectively because he had lived in the world of the common man and been raised speaking his language. Paine’s Common Sense was thus not a scholarly essay by a trained academic, as one could say of Thoughts on Government, A Summary View or any one of the Federalist Papers, but a popular appeal from an ordinary man. 

Corporations in the Early United States, Part XIII: Taking Stock, contd.

What the hell was all that supposed to mean?

I know I’ve posed this question (or some variation thereof) more than once over the course of the last year (has it been a year?), but it’s one that I’m sure anyone who is gracious enough to take the time to read my scribblings asks with not inconsiderable frequency. In this case, as I begin the 13^th in a series of posts at times only theoretically about the same topic, some degree of puzzlement would seem abundantly justified. More than once I wondered myself what it was I was driving at. Rest assured I do have a point, and one which I hope I’ll be able to clear up and expand on over the course of the next few paragraphs.

I hope.

If there was one thing I could point to, one idea that this months-long study of central banking in the early United States caused me to think of, it would probably have to be the notion of historical progress. There is, I think, a perception in mainstream Western culture that history is basically a narrative of progress. As we, the human species, move through one era after another our understanding of the world increases, becomes more complex, and allows us to explore and build and create new and better (note emphasis) ways of living, communicating, and basically existing. This plays out in the very mundane but recognisable association of things that are more recent with a quality of superiority (the newer the better, essentially). Without going into depth as to why this is (not being a psychologist, anthropologist or sociologist), I think it’s fair to say that it’s an idea the majority of people in the West hold to be true on some level, conscious or otherwise. Consequently when most people who live in what could be considered the Western World look back on their own history, rare though I feel such occasions are, they tend to view events in terms of a logical progression from bad to good or ignorance to knowledge. As comforting as this notion is, perhaps because it helps creates an understanding of ourselves as being at the pinnacle of human civilization, it is fundamentally bad history.

As your average historian will tell you (as they chuckle dryly to themselves over a glass of Chardonnay at a dinner party you don’t remember why you agreed to attend), assuming that history is a chronicle of the triumph of human progress assumes that “progress” is inherently good and that good is inherently better or stronger than bad (or evil, or ignorance, or whatever you want to call it). Historians love to say things like this. Once you’ve overcome the urge to throttle the person who just shared this particular revelation with you (in this hypothetical scenario I just realized I've constructed) I invite you to entertain the notion that this theoretical historian has a point. If we think of history only in terms of the triumph of progress and the banishment of ignorance, how do we explain the loss of scientific and philosophical knowledge that followed the collapse of the Western Roman Empire? Of the witch burnings that accompanied the emergence of the European Renaissance? Or the rise of the Third Reich? Easy though it might be to respond that all of these supposed historical “errors” were eventually righted, the question of how they came about at all, presupposing that history is a narrative of progress, remains to be answered. In truth there isn’t really a satisfying answer because the basic, underlying assumption is flawed. In the simplest terms history is not a record of progress, but rather an attempt to understand why and how the events of the past occurred the way that they did. Sometimes there are trends; sometimes certain ideas seem to catch on, gain strength, or rise to prominence. What’s important to understand, however, is that the reason these ideas appear to succeed is not because they are intrinsically good, but rather for a multitude of reasons having to do with time, place, culture, economics, religion, diplomacy, warfare, and who knows what else.

But I digress.

The reason that the topic of corporations in the early United States caused me to think about the myth of historical progress is because of the way the relationship between the American government and central banking over the course of the first half-century of the nation’s life belies the existence of a simple narrative of a to b, ignorance to knowledge. The fact that not once but twice the United States government chartered a central bank, only to turn against the idea and hasten its demise demonstrates a more complicated series of forces at play than mere progress alone. Rather, what appears when taking into consideration the history of American corporations between the 1790s and 1830s is a somewhat more cyclical than linear relationship. What I mean is the acceptance or rejection of corporations during this period in the early United States seemed to ebb and flow in two distinct waves. One occurred between the 1790s and 1810s, when Federalist economic policies that favored corporations as a means to distribute the responsibility and cost of government initiatives gave way to Republican suspicion of corporate privilege and the growth of monopolies; the other between the 1810s and 1830s, when Republican acceptance of corporations as a useful, if easily abused, tool of state policy transitioned into Democratic distrust of limited corporate accountability and fear for the corrosion of America’s republican sensibilities. These two waves are connected, share many of the same figures, but combined they don’t necessarily represent a larger trend or movement towards some inevitable future wherein the superior value or idea won out. Rather, they are by-products of a larger, messier process whereby the political and cultural identity of the United States of America was created, transformed, broken apart and reconstructed over the course of the nation’s first fifty years of existence. Central banking and corporations in general were a part of this process; studying them helps us to understand some of its contours.

That being said, thinking back to the previous summer when a friend asked me what the Founding Fathers had to say about corporations I now feel able to answer. I would respond, first and foremost, that they had different things to say at different times, and that as with any topic under the sun there was really never much of a consensus among them. James Madison went from helping lead the charge, along with his friend and collaborator Jefferson, against the First Bank of the United States during the latter’s presidency (1801-1809) to promoting, after 1816, a rigorous economic program at whose centre was what would become the Second Bank of the United States. He was not alone in this, and between Jefferson, Hamilton, Madison, Washington, Adams (John and John Quincy), Gallatin, Clay and Jackson there existed a spectrum of opinion that stretched from full-throated support for central banking and corporations to intense, almost paranoiac suspicion of their undemocratic aspects. But of course the study of history is so often an attempt to identify and explain the significance of trends or patterns, and the research I’ve delved into lo these many months has turned up its fair share.

While I reiterate that opinions as to the worth of corporations varied greatly from one Founder to the next I would also grant that there seemed to exist a general consensus of opinion at any given time as to the philosophical underpinnings of corporations and how they actually functioned. Alexander Hamilton, founder of the First Bank of the United States and Federalist partisan extraordinaire, evidently viewed corporations through much the same lens as the British ministers he so admired, as vehicles that permitted private wealth to be put to use in the achievement of public ends. They were admittedly imperfect – in terms of granting privileges, even monopolies, to the few – but they at least managed with proven success to channel the avarice seemingly inherent in human nature towards constructive, socially beneficial end goals. To this Presidents Washington and Adams seemed to agree, for between them they had little to say concerning the 1^st BUS and the terms under which it operated. Jefferson, as I hope I’ve made clear, was far less sanguine.

The Sage of Monticello was quick to point out all of the ways chartered corporations broke with established legal conventions and effectively helped create a “moneyed class” of exclusive shareholders. To his thinking the negative aspects of granting incorporation to small groups of investors almost always outweighed whatever benefits the resulting corporate entities might have offered as tools of government. That being said, his utilitarian streak seemed willing to grudgingly countenance the existence of small, state-chartered banks meant to meet the financial needs of farmers, entrepreneurs, and planters like himself. So long as these institutions didn’t dominate the state governments that created them, and so long as they were allowed to proliferate and compete in such a way as to prevent the formation of a monopoly, Jefferson allowed that they had a useful purpose to serve. Caveats aside, this admission demonstrates that even radical Republican Jefferson agreed in principle with radical Federalist Hamilton that corporations, properly regulated, could usefully contribute to the general good of American society. 

The decentralized, Jeffersonian take on corporations was brought the forefront of American political culture upon Jefferson’s ascendance to the highest office in the land in 1801. Under his auspices, and with the moderating influences of cabinet secretaries Madison and Gallatin, Hamilton’s 1^st BUS was weakened and the growth of state-chartered corporations exploded. In addition to preventing the emergence of monopolies and ensuring that more Americans had access to useful services, the multiplication of corporations that accompanied Jefferson’s presidency carried additional ideological significance. By widely distributing corporate privileges, formerly intended to be exclusive state-granted largess, state legislatures in the Jeffersonian era helped republicanize the American corporation in a way that preserved the egalitarianism so many Americans regarded as the cornerstone of their revolution. Though the 1^st BUS was permitted to wither away and ultimately perish in 1811 under Jefferson successor Madison, the orthodox understanding of corporations remained largely state-focused (providing a means for governments to achieve what they could not afford in a way that was also philosophically satisfying).

The War of 1812 and its accompanying financial demands stretched the capability of the Jeffersonian state-banking network to support a major economic undertaking to the breaking point. The resultant chartering of a Second Bank of the United States in 1816, along with a handful of similar centralizing reforms, represented a fundamental shift away from the Jeffersonian program of limited government. Nevertheless, I would argue that the basic understanding of corporations held by President Madison and his supporters remained fundamentally the same as before the war. Namely, they viewed corporations as tools by which a state implemented policy. Whether those corporations held a national charter, like the 2^nd BUS, or a state charter, like the Bank of Pennsylvania, the barrier for their existence was whether or not they contributed something useful to society. If they did, then the privileges they enjoyed and the profits they generated were justifiable. This outlook was not substantially challenged by an American presidential administration until the ascendance of Andrew Jackson in the years after his first electoral victory in 1828.

Where Presidents Monroe and Adams the younger had been content to more or less leave the 2^nd BUS to its own devices (even after the disastrous Panic of 1819), Jackson made it known within his first year in office that he was not satisfied with the terms under which the Second Bank operated. To his thinking the 2^nd BUS was unconstitutional, grossly out of step with republican values, and had failed to anchor a strong national currency or facilitate economic growth. On the basis of these objections Jackson began a years-long crusade against the Bank, during which he vetoed its re-charter and time and again offered criticisms against the power it possessed, the economic influence it wielded, and the accountability it lacked. During this contest between Jackson and the Second Bank, which Jackson ultimately won, Old Hickory put forth a conception of the relationship between corporations, the American people, and their government that represented a fundamental break with the prevailing wisdom of every administration that had come before.

Rather than view corporations as tools of government policy – a bank that could provide a stable currency or a ferry company that facilitated transportation and commerce – Jackson claimed that they constituted nothing more than a means by which the American people could exercise their right to earn a living. Banking, he specified, was a business like farming or manufacturing. If individual Americans wished to pool their resources and form a corporation in order to pursue said business it was their right to do so, just as it was the duty of government to put in place the necessary regulations in order to ensure that no harm came to society at large. This re-articulation of the meaning and purpose of the American corporation carried with it two significant implications. The first was the de-legitimization of public corporations like national banks. If it had never really been a privilege of government to create corporations as a means of accomplishing desired objectives, as Jackson asserted, then the existence of corporate entities that mixed public and private aspects were fundamentally illegitimate. Corporations, Old Hickory maintained time and again, were private entities; giving them public responsibilities and access to public resources only served to create opportunities for corruption and malfeasance. The second was a new perception of corporations and commerce within the context of the rights and responsibilities of the American people. By shifting the understanding of corporations from serving the will of government to serving the will of the people, and asserting that the pursuit of commerce was a basic right, Jackson arguably helped lay the foundation of the now seemingly unshakable bond between republicanism, democracy, and capitalism that pervades the modern United States.

This is, of course, just a theory. I have no doubt that a great deal more occurred between the late 1830s and today that contributed meaningfully to the shift in perception I herein attempted to describe. That being said, I do believe that Jackson’s express views represent a significant break in the way corporations were seen by members of the American political elite during the early years of the United States. To many I’m sure the notion that the rise of Andrew Jackson represents a fundamental shift in American political culture will illicit little more than a yawn and a metaphorical pat on the head. I mean to say that it’s well-trod territory. Still, there it is. I hope I managed to present what I’ve found in a way that was clear to my readers and left them more informed than when they arrived.

And, of course, I hope it was at least the slightest bit enjoyable. For my part, I found this experiment in longer-form, narrative-driven reflection to present an interesting challenge. Having to transition from one document to the next while preserving context and presenting potential avenues of comparison reminded me a great deal of my schools days and the reams and reams of term papers I churned out over the course of five years. That is to say, it was nostalgic and also slightly horrifying.

Such is life.

Thank you for you kind indulgence. Though I didn’t reference it directly, a perusal of Jackson’s Farewell Address would yield to the curious reader a handy summation of most of the Old General’s views on banking and paper currency.

It can be found here: http://en.wikisource.org/wiki/Andrew_Jackson%27s_Farewell_Address

Corporations in the Early United States, Part XII: Taking Stock

Over the course of the next couple of posts, which I promise will be the last in this series, I’d like to wrap up my discussion of the venerable Andrew Jackson and his seemingly retrograde perception of corporations. As well, I plan to reflect on what I hope I've been able to communicate about the way corporations have been historically perceived by some of those commonly considered to be America’s founders. To that end I’ll be reviewing Jackson’s 6^th, 7^th, and 8^th State of the Union Addresses (delivered between December, 1834 and December, 1836) and running down what were (along with his Farewell Address) Old Hickory’s final words on the Second Bank of the United States and corporate banking in general. Having effectively defeated the “Monster Bank,” by the end of 1833, Jackson was permitted over the course of the remaining years of his second term to bask in his victory at the same time he was forced to justify his actions. The results speak to his abiding suspicion of seemingly any form or banking (or indeed any kind of corporation), as well as his conflicting hard money bona fides and the political expediency of supporting state bank paper currency.

            Generally speaking, the criticisms aimed at the Second Bank and the justifications for its destruction that Jackson deployed in his State of the Union Addresses between 1834 and 1836 can be grouped into three thematic categories. The first constitutes a general support for state banking over national banking for a variety of practical and ideological reasons, not the least of which concerned long-term strategic thinking on the part of the Democratic Party. The second revolves around the essentially anti-republican character of the Second Bank of the United States, being an institution that was led by unelected shareholders and which put public money to private uses. The third theme common to Jackson’s latter Addresses to Congress is a distinct antipathy towards any form of corporation that mixed private and public attributes (such as the 2^nd BUS). Many of the concepts contained within these themes were put to use by Jackson in prior instances, in his famous Veto Message or in earlier State of the Union Addresses, for instance. Nevertheless, I would argue that they were expressed more clearly and with less equivocation in Old Hickory’s writings after 1832 than those before.     

At various points in his 6^th, 7^th, and 8^th State of the Union Address Jackson endorsed the use of state banks in place of the defeated 2^nd BUS as anchors of the American economy. State banks, he argued, were fundamentally weaker institutions than the defeated 2^nd BUS and operated within a far narrower scope. A state bank, for instance, was unlikely to attempt to influence a national election, as Nicholas Biddle had attempted in 1832 using the resources of the 2^nd BUS, because it lacked a national charter. This was significant because, as Jackson explained in his 7^th State of the Union, it meant that state banks were not themselves appendages of the federal government. While the Second Bank of the United States had become a political as well as economic force because of its connections to the Treasury Department and its direct relationships with certain members of Congress and the print media, state banks existed largely outside the federal sphere. A state bank could thus be trusted to hold federal funds because it was not beholden to federal officials for its existence – officials to whom it at times lent money. Theoretically, this eliminated potential conflicts of interest. As state banks lacked the financial resources possessed by the Second Bank, they were also far less capable of exerting pressure on the governments that created them in order to achieve a desired end. In an attempt to compel Congress into re-examining the prospect of a 2^nd BUS re-charter, Biddle instigated a credit crunch and generated an accompanying financial panic between late-1833 and mid-1834. A state bank, or even a group of state banks, simply lacked the resources or scope to pose a similar threat to the American economy.

In addition to the practical limitations under which they operated, Jackson also endorsed stated banks on ideological grounds. He claimed, for instance, in his 6^th State of the Union that federal patronage of state banks was preferable to the continued existence of the 2^nd BUS because the former had been making significant progress in both promoting the use of specie (gold and silver coinage) over paper currency as well as gradually eliminating the use of small banknotes (denominations bellow $20). These efforts would, he argued, help place the United States on a stable financial footing while still promoting a degree of economic growth. He elaborated on this concept in his 7^th State of the Union, wherein he claimed that the gradual diminishment of the “paper economy” via the state banks would, “do more to revive and perpetuate those habits of economy and simplicity which are so congenial to the character of republicans than all the legislation which has yet been attempted.” Because gold and silver were naturally in limited supply their widespread use would discourage the kind of rampant financial speculation, reckless borrowing, and the overprinting of paper currency that was one of the main causes of the Panic of 1819. Eliminating paper denominations below $20 would likewise discourage the use of bills of credit (whose value was subject to sudden fluctuations) in everyday transactions and thereby lessen the ability of banks to exert control over the American economy for their own purposes (since the value of precious metals was determined on the global market).

Jackson’s 8^th State of the Union pushed this argument further still and gave it a patriotic tinge by claiming that precious metals were the form of currency intended by the Framers. Though they had not stated as such in the text itself, he intuited from, “the whole context of the Constitution, as well as the history of the times which gave birth to it,” that metallic currency was the intended medium of exchange of the United States of America. This fact, he went on to argue, was intended to exclude more “mutable medium[s] of exchange,” such as the, “pernicious expedient of a paper currency.” Thus, between his 6^th, 7^th and 8^th State of the Union Address Jackson managed to link together a preference for hard money and the dependability of state banks with a patriotic attachment to republican government and the Constitution; a potent combination under any circumstances.

Of interest concerning these claims is the fact that the policies being promoted by state banks in the 1830s actually tended to favor paper currency over specie. While Jackson claimed that it was the state banks’ support of hard currency over bills of credit that made them a better means of encouraging economic stability than the 2^nd BUS, state banks in fact made extensive use of the government deposits he provided them to churn out reams of paper bills in the years after 1832. This overextension of credit, combined with policies put forward by the Jackson Administration aimed at encouraging the use of hard currency, was one of the major causes of the subsequent Panic of 1837. To his credit, Old Hickory did not appear to be unaware that the state banks that benefited from his endorsement were guilty of significant indiscretions themselves. In his 8^th State of the Union he acknowledged the affinity some state banks demonstrated for paper bills at the same time he argued that they were only following the example put forward by the 2^nd BUS and the proliferation of paper currency it had fostered during its existence. While this would not appear to be a particularly nuanced perspective it at least demonstrates that Jackson was aware that state banks were not immune from some of the ills he found so distasteful in a national bank. The apparent contradiction that this seems to indicate – of a president encouraging state banking and hard currency while those same institutions were churning out large quantities of paper bills – was a consequence of the divided loyalties Old Hickory was forced to court within the Democratic Party. Though a hard-money advocate himself, and hardly alone in that, there was a sizeable contingent of Democrats whose occupations (farming, operating small businesses, manufacturing, etc…) required access to ready sources of capital. This meant paper currency, and while Jackson was opposed to the concept in principle he had little choice but to offer tacit support to the continued printing of bills of credit by state banks in order to prevent the political coalition he and his allies had assembled in the 1830s from flying apart.

In addition to opposing the existence of the Second Bank of the United States because the institution was too powerful, too influential, and too effectively encouraged the use of paper bills over hard currency, Jackson also argued in his 7^th State of the Union that the 2^nd BUS represented a fundamental threat to the republican form of government. Specifically he stated that the Bank was, “one of the fruits of a system at war with the genius of all our institutions,” whose, “Lavish public disbursements and corporations with exclusive privileges would be its substitutes for the original and as yet sound checks and balances of the Constitution.” In this case it’s worth noting that Jackson identified corporations in general, not just national banks or private banks or state banks, as the tools of a supposedly destructive political principle. In particular it was the “public disbursements,” and, “exclusive privileges” that Jackson believed represented the threat; the ability of chartered entities like banks to wield large sums of money and make use of certain opportunities not afforded to the average American. In this sense state banks, though Jackson lavished his fair share of praise upon them, were in the same category as the 2^nd BUS. A bank chartered by the state of Delaware was a corporation that was both public and private, had shareholders, could deploy large sums of money, and enjoyed rights not possessed by any individual citizen. Preferable though such an institution might have been to a national bank in Jackson’s mind, the definition deployed in his 7^th State of the Union would seem to indicate a lingering antipathy. Indeed, on some level Jackson might have considered any and all banks as representing a distinct threat to the American government as it existed under the Constitution.

Or perhaps it was more specific than that. Jackson’s 6^th State of the Union Address, delivered to Congress in December, 1834, indicated that though he wasn’t particularly enamoured of corporations in general he considered public (or mixed public/private) corporations as being particularly objectionable. It was his estimation that by giving government a stake in the financial well-being of a profit-making enterprise, such as the Second Bank of the United States, a public corporation served only to generate opportunities for corruption and abuse. Legislators whose responsibility it was to scrutinize and hold to account the practices of a national bank would find few practical impediments to delivering favorable reports in exchange for generous personal loans. Meanwhile the government deposits in possession of said bank could be turned to purposes ultimately harmful to the public good because, in its private aspect, a national bank was entitled to make use of its resources as it saw fit. Of these particular sins the 2^nd BUS was indeed guilty. Under Biddle’s leadership the institution had offered highly favorable loans to members of Congress and prominent editors in response to their continued public support. When the subsequent re-charter effort was underway in 1832, Biddle has also deployed Second Bank resources in an ill-fated campaign to turn the tide in the institution’s favor. Because a sizeable percentage of the capital held by the 2^nd BUS belonged to the United States government, Jackson regarded these efforts as a fundamental violation of the public trust.

He reiterated much the same in his 8^th State of the Union, delivered to Congress in December, 1836. In it, Jackson argued quite plainly that allowing public funds, which “belonged to the people,” to be deposited in private banks for the purpose of, “producing a spirit of wild speculation,” was fundamentally unjust. Though this jab was doubtless aimed at the departed Second Bank, whose charter had by then expired, it was as true of the state banks selected by Secretary Taney to receive federal deposits. In either case money collected via taxes or tariffs and intended to generate tangible benefits for the American people, like paying down the national debt or funding a national defence, was instead manipulated in order to multiply the wealth of the already wealthy. Greater regulation of the Second Bank’s credit, stronger federal oversight, or an overall reduction of its capital might have alleviated this particular ill, but none of these measures would have addressed what Jackson considered to be the fundamentally corrupt nature of the Second Bank of the United States.  As he argued in his 8^th State of the Union the shareholders of the 2^nd BUS, some of whom were members of Congress, had effectively attempted to increase the stock value (and their own wealth) by voting in favor of a re-charter. This Jackson regarded as proof enough of the corruption the institution fostered; rather than utilize private wealth to fulfill pubic functions, held as the traditional purpose of a corporation, the 2^nd BUS was making use of public funds to generate private profit.

The solution, as near as Old Hickory could figure it, was to cease the creation of corporations that mixed private wealth with public responsibility. Though it ultimately became unnecessary once its charter expired in 1836, Jackson recommended in his 6^th State of the Union that the 2^nd BUS should have been further untethered from the federal government and, “be left hereafter to its own resources and means.” This would have left the Second Bank a wholly private corporation which, though in need or some degree of government regulation, possessed its own resources and elected its own directors. Because its capital would not have any longer been backed by public funds its activities, lest they become destructive, would have been its own concern. This squared with Jackson’s previously expressed belief (from his 2^nd BUS re-charter veto message) that banking, like farming or manufacturing, stemmed from the inherent right of every American to make a living. The purpose of government, to his thinking, was not the creation of corporations that effectively amplified the wealth and privilege of the few, as he argued of the 2^nd BUS, but rather the regulation of the corporations that people created for their own personal benefit in order to ensure the overall public good.

This disdain for public corporations and their allegedly abusive combination of privilege and wealth apparently applied to Old Hickory’s outlook on state banking as well. Though, once again, Jackson spent a significant amount of his latter State of the Union Addresses identifying state banks as central to the economic salvation of the United States following the demise of the 2^nd BUS, his final address to Congress in December, 1836 contained a significant caution as well. In it, he wrote that, 

The lessons taught by the Bank of the United States can not well be lost upon the American people. They will take care never again to place so tremendous a power in irresponsible hands, and it will be fortunate if they seriously consider the consequences which are likely to result on a smaller scale from the facility with which corporate powers are granted by their State government.

It should come as no surprise that Jackson wished to take the opportunity presented by one of his final public statements as president (the election of the previous month having already decided his successor) to reinforce what had become one of the central themes of his term in office. This was, in short, that the Second Bank of the United States had been too powerful, and that said power had been placed in fundamentally, “irresponsible hands.” Less expected, to my thinking, is the caution that followed. Evidently it was Old Hickory’s estimation that the “corporate powers” granted to the various state banks then in operation – including those holding government deposits – were equally capable of being abused as those he pointed to during his successful battle with the 2^nd BUS. Necessary though it might have been in 1836 for the Democratic Party to hold together its hard and soft money wings, it speaks to the strength of Jackson’s antipathy that he still took the opportunity – indeed one of the last he would be presented with – to warn his countrymen from investing too much trust or too much power in any species of corporate entity.

            And so,

            Jackson’s 6^th State of the Union Address: http://en.wikisource.org/wiki/Andrew_Jackson%27s_Sixth_State_of_the_Union_Address

            Jackson’s 7^th State of the Union Address: http://en.wikisource.org/wiki/Andrew_Jackson%27s_Seventh_State_of_the_Union_Address

    Jackson’s 8^th State of the Union Address: http://en.wikisource.org/wiki/Andrew_Jackson%27s_Eighth_State_of_the_Union_Address

Corporations in the Early United States, Part XI: the War on the Bank, contd.

What followed the delivery of Jackson’s veto of the 2^nd BUS re-charter bill was a series of very odd and very turbulent events. Together they brought about the premature extinction of the Second Bank of the United States, set the stage for a national financial crisis on the order of 1819, and cemented the reputation of Andrew Jackson as the era’s single most indomitable and influential political figure. Indeed, where it not for Jackson’s strength of will and forceful personality I doubt very much the events that followed the defeat of re-charter would have occurred the way that they did. While American presidents that have served since Old Hickory at times skirted (or even stepped over) the edges of legality and propriety, few did it so quite as unapologetically and with such abiding self-righteousness. For that reason I find that discussing how the Bank War ended carries with it a certain quality of unreality. The way Jackson dictatorially steamrolled his opponents, violated established procedure and good sense, and came away from the experience with a reputation for being a man of the people, is quite frankly somewhat surreal. It is, I think, a testament to the man’s charisma as well as to the social and political transformations that were occurring in the United States in the 1830s, that what happened did happen.

            By now I think I've sufficiently buried the lead.

            In spite of the fact that Henry Clay and the Congressional Whigs had attempted to maneuver Jackson into confronting a potential veto of the 2^nd BUS re-charter bill, they were caught off-guard when the Old General actually followed through on his stated dislike of the Bank. To defeat the president’s veto the pro-bank forces in the Senate required a 2/3 or “supermajority” of the delegates then seated (28 of 41). They managed only 22, and Jackson’s veto was thus sustained on July 13^th, 1832. The four months that followed devolved into a rhetoric-strewn contest for the presidency as Jackson and his supporters identified the conflict between the president and the Second Bank as one between “the People” and “the Aristocracy.” In order to perpetuate this message the Democrats organized mass rallies, funded the publication of reams of pamphlets, editorials and advertisements, and deployed their accustomed assortment of popular songs and campaign memorabilia. Though based on a straightforward accounting of the Jackson Administration’s various failures and centred on the not-insubstantial accusation that the president was behaving in a tyrannical fashion, the Whig efforts lacked their opponents’ populist vigor. To make matters worse the Jacksonian press was given ample fodder to declare the Second Bank entirely corrupt when its president Nicholas Biddle mounted his own very public and very expensive campaign aimed at bringing about Jackson’s defeat. The result was a sound thrashing for the Whigs: Jackson secured 219 electoral votes to Clay’s 49. The popular vote was similarly lopsided, with 54% of voters casting for Jackson (totalling just over 700,000) compared to 36% (just shy of 500,000) for Clay. If these don’t seem like particularly large figures it’s important to recall that the United States had a population of only about 12 million in 1830.

            Not without reason, Jackson saw victory at the polls as a validation of his veto of a renewal of the Second Bank’s charter and a mandate for its dismantling prior to the expiration of its twenty-year lifespan. Thereafter discussions within the cabinet, as well as with a loose collection of Jackson’s personal advisers, yielded a series of concerns and a potential solution. Biddle, they asserted, could no longer be trusted to administer the Second Bank in a responsible manner; his behaviour during the re-charter debate and recent election, during which he attempted to use Bank resources to influence the political process, clearly demonstrated his appalling lack of impartiality. Likewise it was feared, in retaliation for Jackson’s veto, that Biddle would make use of the means at his disposal to engineer a financial crisis that could conceivably be blamed on the president’s high-handed policies. In order to avert such a crisis, punish Biddle, and protect the government funds then in the possession of the 2^nd BUS it was advised that Jackson order their removal to a series of state banks specially selected for that purpose (based on their loyalty to the administration, as it would happen). In order to facilitate this removal Jackson made a point of questioning whether the 2^nd BUS was a safe depositor of government monies in his 4^th State of the Union Address, delivered in December, 1832. Though an investigation of the Second Bank aimed at determining its continued suitability was within the power of the Treasury Secretary to undertake, the president admitted, Congress may have been better suited to the task. He further elaborated by stating that,

An inquiry into the transactions of the institution, embracing the branches as well as the principal bank, seems called for by the credit which is given throughout the country to many serious charges impeaching its character, and which if true may justly excite the apprehension that it is no longer a safe depository of the money of the people.

Notice no specific claims were made against the Bank or its officers, and nor was Biddle mentioned by name. Likely Jackson possessed no solid evidence of misdeed, and instead relied on suspicion and mistrust to colour perceptions of the 2^nd BUS. As well, take note of the way Old Hickory, having formerly demonstrated his jealously of Congressional authority by re-editing a section of his 1831 State of the Union Address that he found too deferential, in 1832 seemed eager to bow to their expertise at the expense of a member of his own cabinet. Jackson, it seemed, was attempting to insinuate controversy; he hoped to conjure it up by invoking unspoken rumour and spurring Congress to exercise its authority. Blunt as his style of leadership often was, this was Jackson at his most deft.

            Unfortunately the results of the president’s attempt at careful manipulation were decidedly mixed, and before long gave way to another of Old Hickory’s pseudo-authoritarian outbursts. The Democratic-controlled House of Representatives, as Jackson so subtly suggested, convened an investigation of the Second Bank of the United States in order to determine the continued safety of the government’s deposits. Though the committee assigned to the task was divided internally they ultimately submitted a positive report of the Second Bank’s operations (4 in favour to 3 against). James Polk, who had led the anti-bank efforts in the House during the re-charter debate, led the minority faction and objected strenuously and publicly to the continued trust of the 2^nd BUS by the federal government. Regardless, the House endorsed the committee’s findings in March, 1833, and Jackson was forced to adopt a somewhat more direct approach. Rather than await Congressional action, or even approval, the president determined to remove the government deposits from the coffers of the 2^nd BUS by executive authority alone. This strategy was made possible by the fact that the 1816 charter of the Second Bank mandated that the Treasury Secretary was authorized, with the assistance of Congress, to make all decisions regarding the disposition of the government deposits. Because, prior to the ratification of the Twentieth Amendment in 1933, Congress was out of session between May and December of the year following a general election (such as 1832), Old Hickory hoped to accomplish the removal in the absence of Congressional approval. It was his hope that by the time the House of Representatives reconvened in December, 1833 the demise of the 2^nd BUS would be already underway, and that the chamber would lack the political will to reverse the process. Alas, Jackson very quickly hit upon a rather substantial snag.

            Jackson’s Treasury Secretary Louis McLane, who had previously attempted to mediate a compromise between the president and Nicholas Biddle in order to save the 2^nd BUS from being dismantled, recoiled when he asked to participate in the planned removal. He replied to Jackson’s proposal to hasten the demise of the Bank that the same Congress whose consultation was required if the government deposits were to be tampered with had declared those same deposits perfectly safe. Jackson responded by appointing pro-bank Secretary of State Edward Livingston as Minister to France, shifting McLane into his place, and filling the resulting vacancy with the Irish-born, and notably anti-bank, William Duane. Duane took up his new position in June, 1833, and when faced with the removal plan responded, much to Jackson’s frustration, in the same manner as his predecessor. Despite the president’s claim of possessing a mandate from the American people to bring about the demise of the 2^nd BUS (thanks to his tidy re-election), Duane reiterated that Congressional consultation was required by law and refused to lend his hand to Jackson’s scheme. After several months of a protracted stalemate, and with Congress set to reconvene in December, the president declared his intention to go ahead with the removal on his own authority, dismissed Duane in September, 1833, and appointed Attorney General Taney in his place. By the start of October the removal process finally began, with Taney carefully selecting state-chartered banks and transferring funds slowly as to not suddenly and adversely gut the ability of the 2^nd BUS to regulate the American currency market. Biddle responded with a deliberate credit contraction intended to convince Congress to resume the fight for re-charter. Likely as not this only served to convince those who were still uncertain of the wisdom of Jackson’s anti-bank initiative that the 2^nd BUS was in fact being administered irresponsibly.

            Jackson’s 5^th State of the Union Address was delivered upon the reconvening of Congress in December, 1833. Therein he laid out his reasoning behind the removal of the government deposits from the 2^nd BUS and in turn why he believed it was imperative to hasten the demise of America’s national bank. Several aspects of this virtual denunciation are, I feel, particularly noteworthy. One is the usage throughout the discussion of the Second Bank of phrases like “public interest,” “public duty,” and “public money.” In light of the rhetoric commonly deployed by Jackson and his Democratic Party allies I wonder if it would not be entirely valid to translate “public” in these instances as “the people.” Thus, the president was acting in defence of “the people’s interests,” protecting “the people’s money,” and acting out of “duty to the people.” Considering Old Hickory’s penchant for attempting to circumvent or minimize the authority Congress and appeal directly to the common citizenry, this strikes me as a valid substitution. Though Jackson at least partially pursued the destruction of the Second Bank of the United States out of personal conviction (having earlier in life learned to distrust paper currency), he thus couched his public condemnations in distinctly public, or popular, terms. The Second Bank was being de-legitimized as a government institution, not because its existence violated the United States Constitution (though he believed it did) or because the financial concepts under which it operated were personally objectionable to the Chief Executive (though they were), but because it was a clear and present threat to the public interest. The manifestations of this threat included what Jackson referred to as the, “unquestionable proof that the Bank of the United States was converted into a permanent electioneering engine,” as well as the manner in which the Bank initiated a credit crunch in an attempt to force the restoration of the federal government’s deposits.

Though he had in the past, and would again in the future, Jackson appeared did not appear keen in his 5^th State of the Union to address the deficiencies of the 2^nd BUS in terms that were explicitly ideological or philosophical. It was not, Jackson seemed to be saying, that the privileges enjoyed by the shareholders of the Second Bank were distinctly anti-republican, but that in a practical, utilitarian sense the institution was generating more harm than good. Its capital, which included funds owned and deposited by the United States government and which was intended to aid in the growth and regulation of the American economy, was supposedly being put to use in order to influence the course of popular elections. The credit it was equipped to extend, intended to form the basis of a stable national paper currency, was allegedly being used as a weapon aimed at punishing the policies of the executive branch and eliciting their favourable reversal. The significance of these charges was clear and unambiguous, and though Jackson laid them before Congress in December, 1833, they seemed only partially to be his intended audience. Rather, it was “the people” to which Jackson continually addressed himself in his 1833 message. During the re-charter debate Biddle had directed a portion of the resources of the Second Bank at securing favourable editorials from pro-bank Congressmen. As Jackson characterised it, however, the people of the United States were being deprived of the ability, “to govern through representatives chosen by their unbiased suffrages,” by the, “money and power of a great corporation,” that were being, “secretly exerted to influence their judgement and control their decisions.” Per this equation the 2^nd BUS was the perpetrator, the American people were the victims, and Congress was the weapon.

Jackson continued to diminish Congress during a passage of his 5^th State of the Union in which he, rather pointedly I would say, reiterated his efforts to alert the people’s representatives to the possibility that the government deposits in possession of the 2^nd BUS were not safe. “I called the attention of Congress to the subject,” he wrote, and, “I recommended the subject to Congress as worthy of their serious investigation.” Of the report that the House of Representatives’ Ways and Means Committee delivered, which found the deposits to indeed be safe, Jackson stated, “The extent to which the examination thus recommended was gone into is spread upon your journals, and it too well known to require to be stated.” This would hardly seem like a ringing endorsement of an investigation Congress undertook at the president’s urging. Jackson made his latent disregard clearer in the paragraph that followed. After claiming that while he had the utmost respect for the opinions or suggestions rendered, “by the other departments of the Government or either of its branches,” the abuses perpetrated by the Second Bank of the United States made unilateral executive action a paramount necessity. Specifically, he wrote,

It will be seen from the brief views at this time taken of the subject by myself, as well as the more ample ones presented by the Secretary of the Treasury, that the change in the deposits which has been ordered has been deemed to be called for by considerations which are not affected by the [opinions and suggestions] referred to, and which, if correctly viewed by that Department, rendered its act a matter of imperious duty.

Essentially, Jackson believed that the danger presented by the continued existence of the Second Bank of the United States to the American people and their continued prosperity and wellbeing was so great that circumventing the authority and discretion of Congress was not only necessary, but imperative.  
    

            In addition to being amusingly brusque of Jackson, considering that in the following paragraph he implored Congress to sustain the removal, his declaration that certain considerations relating to the well-being of the American people were too important to be left to Congress alone is a highly significant one. As I mentioned in the previous post, one of the peripheral arguments Jackson deployed during his veto of the 2^nd BUS re-charter bill posited that banking, privately or by corporations, was a right every American was entitled to exercise. If governments attempted to regulate or place limits on how banks operated it was only in an attempt to ensure that the business practices of the few did not visit harm upon society as a whole. Thus, when a state government or the federal government granted a bank charter to a group of investors that grant represented both a validation of the rights of those investors as well as an acknowledgement on their part that certain limitations as to how they chose to do business were necessary to preserving the public good. Accordingly, if said investors and the corporation they together comprised exercised their government-validated authority in such a way as to bring harm to the public, it was the role – nay, the responsibility – of said government as the paramount guardian of the public good to alter or abolish the offending corporation as circumstances made necessary. This conception of corporations would seem to necessitate a strong relationship between government and the people; government both recognizes and protects the rights of the people (by allowing them to form corporations) while ensuring that the expression of said rights does not become ultimately harmful to society as a whole (by constraining how corporations operate). I will add, though he did not say as much in his veto message, that Jackson believed the president, being the only public official in the United States elected on a nationwide basis, was the ultimate arbiter of the people’s will. It thus, he felt, fell to him and him alone to determine whether the people’s rights were being respected or whether their expression had become generally harmful.

            The reason I ventured into this lengthy digression is because it strikes me that the relationship Jackson described in his veto message between government, corporations, and the people seems to be embodied in his description of why he attempted to dismantle the 2^nd BUS in his 1833 State of the Union Address. Unlike the bulk of the veto message itself, which dealt with issues like republicanism and the nature of privilege, constitutionalism, and nationalism, Jackson's 5^th State of the Union attempted to explain the removal of government deposits from the Second Bank almost entirely in terms of public utility. In his estimation the 2^nd BUS was no longer a safe depositor of government funds because it had attempted to use its resources for the purpose of hijacking the democratic process and when faced with the loss of official sanction had attempted to trigger a retaliatory financial crisis. While Jackson may have been willing to admit, in theory, that the shareholders of the 2^nd BUS had a right to form and operate a corporation (if not a monopoly), it was evidently his conviction that they had voided said right via their disregard for basic considerations of public utility. If Congress, the authority originally responsible for granting the Second Bank its charter in 1816, failed to act in order to remedy the situation Old Hickory believed it devolved upon his office to render a solution.                                    

And so he did.

The Democratic-controlled House ultimately endorsed the removal, in spite of the fact that they had earlier the same year endorsed a report declaring the deposits safe in the hands of the 2^nd BUS. They went on to further reiterate that the Bank, “ought not to be rechartered.” The Whig-controlled Senate seemed less concerned by the demise of the Bank, which had always been a means to attack the Democrats rather than a cause they truly believed in, than by Jackson’s breathtaking assumption of executive power. They roundly denounced the president as a tyrannical autocrat who cared little for the law, and Henry Clay memorably described Jackson as a “backwoods Caesar.” To that end the Senate censured the president in March, 1834, an act which carried no legal force (Clay was careful to point out) but which was intended to represent the formal opinion of a specific branch of the United States government. The text of the censure stated the Senate had, “Resolved that the President in the late Executive proceedings in relation to the public revenue, has assumed upon himself authority and power not confer’d by the Constitution and laws but in derogation of both.” Old Hickory submitted a formal protest in response which the Senate refused to publish in the journal of their proceedings. When the Democrats took control of the upper house after the election of 1836, Senator Thomas Hart Benton led a successful campaign to have the censure expunged from the record.

The Second Bank of the United States, meanwhile, rode out the remaining years of its charter term with a somewhat embittered Nicholas Biddle still at the helm. When expiration came in 1836 it was granted a new charter under the same name by the government of Pennsylvania. After languishing for a few more years it suspended specie payments in 1839 and was ultimately liquidated in 1841. Thus Jackson’s great foe was brought low and vanquished.

On that cheery note,

Jackson’s 5^th State of the Union: http://en.wikisource.org/wiki/Andrew_Jackson%27s_Fifth_State_of_the_Union_Address