INFORMATION TO USERS
This dissertation was produced from a microfilm copy of the original document.
While the most advanced technological means to photograph and reproduce this
document have been used, the quality is heavily dependent upon the quality of
the original submitted.
The following explanation of techniques is provided to help you understand
markings or patterns which may appear on this reproduction.
1.
The sign or "target" for pages apparently lacking from the document
photographed is "Missing Page(s)". If it was possible to obtain the
missing page(s) or section, they are spliced into the film along with
adjacent pages. This may have necessitated cutting thru an image and
duplicating adjacent pages to insure you complete continuity.
2.
When an image on the film is obliterated with a large round black
mark, it is an indication that the photographer suspected that the
copy
may have moved during exposure and thus cause a blurred
image. You will find a good image of the page in the adjacent frame.
3.
When a map, drawing or chart, etc., was part of the material being
p hotographed
the
photographer
followed
a definite
method
in
"sectioning" the material. It is customary to begin photoing at the
upper left hand corner of a large sheet and to continue photoing from
left to
right in equal sections with a small overlap. If necessary,
sectioning is continued again — beginning below the first row and
continuing on until complete.
4.
The majority of users indicate that the textual content is of greatest
value,
however, a somewhat higher quality reproduction could be
made from
dissertation.
"photographs" if essential to the understanding o f the
Silver
prints
of
"photographs"
may
be
ordered
at
additional charge by writing the Order Department, giving the catalog
number, title, author and specific pages you wish reproduced.
University Microfilms
300 North Z e e b Road
Ann Arbor, M ichigan 48106
A X ero x Education C om pany
73-1925
AIELLO, John Douglas, 1941OHIO'S WAR UPON THE BANK OF THE UNITED STATES:
1817-1824.
The Ohio State University, Ph.D., 1972
History, modem
University Microfilms, A XEROX Company, Ann Arbor, Michigan
Copyright by
John Douglas Aiello
1972
THIS DISSERTATION HAS BEEN MICROFILMED EXACTLY AS RECEIVED.
OHIO'S WAR UPON THE BANK OF THE UNITED STATES;
1817-1824
DISSERATION
Presented in Partial Fulfillment of the Requirements for
the Degree Doctor of Philosophy in the Graduate
School of The Ohio State University
By
John Douglas Aiello, B.A., A.M.
* * * * *
The Ohio State University
1972
Approved by
Ad^ilsèr
Department^Jf History
PL E A S E NOTE:
So m e pa ge s ma y have
i n d i s t i n c t print.
F i l m e d as received.
University Microfilms, A Xerox Education Company
PREFACE
The philosophy of states' sovereignty has been a conten­
tious issue throughout the history of the United States.
Poli­
ticians and commentators of the present talk of the concentration
of too much power in Washington.
return of power to the states.
There is still a call for the
The flag of states' rights is
still waved and given allegiance.
The first century history of the United States witnessed a
number of clashes over the doctrine of states' sovereignty.
The
tactic of nullification was developed to implement the weaponry
in the hands of the states.
The Alien and Sedition Acts gave
birth to the Kentucky and Virginia Resolutions, authored by Thomas
Jefferson and James Madison.
The Tariff of Abominations caused
John C. Calhoun to develop further the doctrine of nullification,
and South Carolina to defy the national government and nullify
the tariff within her borders.
The advocacy of states' rights
led ultimately to the bloody war between North and South.
These
are pre-eminent examples of the clash between national and state
authority.
One clash, however, which is often overlooked by
historians or has been explained minimally is the episode of
Ohio waging war upon the second Bank of the United States.
In attempting to elucidate the clash between Ohio and
the national Bank, I have had the invaluable guidance of. my ad­
viser, Professor Bradley Chapin.
His suggestions have made this a
ii
better paper than it ordinarily would have been.
To the others who have helped me, I would like to express
my gratitude.
To the staffs of the Ohio Historioal Center
Library, the Ross County Historioal Library, the Ohio State
Library, the The Ohio State University Library who aided me in
my research, I thank all of you.
I would also like to express
my great appreciation to Mrs. Rosemary Parker who labored so hard
and so well in typing this dissertation, and to Paul Treece and
Jim Tootle who helped me meet the deadlines.
And, finally, I am particularly indebted to my wife,
Patricia Aiello, and my daughter, Julie, for the encouragement
and strength to carry this work through to its completion.
Hi
VITA
March 23, 1941 . . . . . . B o m - Utica New York
1954 ..............
. . . B.A., Loyola University, Chicago,
Illinois
1965-6 ..................
1966
Graduate assistant. Department of
History, John Carroll University,
University Heights, Ohio
............ M. A . , John Carroll University, Uni­
versity Heights, Ohio
1966-7 ..................
-,
Instructor, Department of History,
John Carroll University, University
Heights, Ohio
1967-8 ..................
Doctoral Work, Department of History,
The Ohio State University, Columbus,
Ohio
1968-9 ..................
Teaching Associate, Department of
History, The Ohio State University,
Columbus, Ohio
1969-71.
........ NDEA IV Fellowship, The Ohio State
University, Columbus, Ohio
FIELDS OF STUDY
Major Field:
Chapin.
U.S.:
Early National Period.
Colonial and Revolutionary Period.
and Bradley Chapin.
Middle Period, U.S.A.
Professor Bradley
Professors Paul Bowers
Professor Merton Dillon.
Tudor and Stuart England.
Professor Clayton Roberts.
IV
TABLE OF CONTENTS
PREFACE ..................................................
V I T A ....................................................
Page
ii
iv
Chapter
I.
THE BANK OF THE UNITED STATES IN O H I O ............
1
Ohio and Her Regulation of State Banks
The Bank of the United States Established
Branches in Ohio
II.
UNPOPULARITY OF THE UNITED STATES B A N K ..........
12
Early Displeasure at the Bank
Cheves Saves the Bank of the United States
Depression in Ohio
III.
OHIO TAXES THE B A N K ..................... '.........
35
First Moves against the Bank
Congressional and State Opposition to the Bank
IV.
THE BANK BEFORE THE SUPREME C O U R T .................
54
The Deveaux and. McCulloch Cases
Reaction to the McCulloch Decision
V.
OHIO TAXES THE B A N K ...............................
70
The Tax Is Levied
Newspaper Reaction to the Ohio Tax
VI.
THE CASE CONTESTED IN CIRCUIT C O U R T ...............
Preliminary Skirmishing
Resolutions against the Bank
Ohio Legislature Enters the Battle
Defeat in the Circuit Court
82
VII.
THE OHIO CASE BEFORE THE SUPREME C O U R T ..........
105
Interpretation of the Eleventh Amendment
The Case Deoided
The End of the Fight
E P I L O G U E ................................................
124
BIBLIOGRAPHY...........................................
127
CHAPTER I
THE BANK OF THE UNITED STATES IN OHIO
Ohio and Her Regulation of State Banks
The termination of the war of 1812 by the Treaty of Ghent
signalled a return to the normal growth of the West.
Emigrants,
restricted by the exigencies and fears of war, were now free to
proceed Westward.
A steady stream flowed West and supplied a
large accretion to the Ohio population.^
Ohio was fantastic.
The population growth in
Numbering only 45,365 inhabitants in 1800, the
population increased 408.7 percent ten years later to 230,760.
1820 the State claimed 581,434 residents.
whelmingly rural in this period;
By
The population was over­
98.3 percent of the total were
farmers in 1820.^
Speculation restrained or unbridled, was the
order of the day.
Every type of improvement was advanced.
3
The circulating medium of the state was augmented by an increase in
the number of banks.
There were but four state banks operating in
Salmon P. Chase, "A Preliminary Sketch of the History of
Ohio," in The Statutes of Ohio and of the Northwestern Territory
Adopted or Enacted from 1788 to 1833 Inclusive (Cincinnati:
Published by Coney and Fairbanks, 1833), Vol. I, p. 42. Here­
after cited as Chase, Statutes of Ohio.
p
Ted V/. Brown, Secretary of State (Compiler), The State of
Ohio: Number of Inhabitants Urban and Rural Population .
.,as
certified in the Eighteenth Federal Census (Columbus, Ohio:
The F.J. Heer Printing Co., 1961), p. 22.
^Chase, Statutes of Ohio. Vol. I, p. 42.
2
1811 with a total capital of $895,000.
The niomber tripled to
twelve in 1815; the capital increased to $1,434,719.
Nine addi­
tional banks were created in the succeeding year bringing the
total in 1816 to twenty-one banks with $2,061,927 in capital.
In
1820 the number dipped slightly to twenty banks, and the capital
declined to $1,797,463.^
The diminution in banks and capital is
understandable in the light of the practices of the second Bank
of the United States, chartered in 1816, and the Panic of 1819
and the resultant depression.
Ohio's war upon the second Bank of the United States was no
isolated act.^
The entire credit structure of Ohio was endangered
by an increasing number of unauthorized, unchartered banks that
operated under the creed that banks could issue their notes without
any necessity of redeeming them in specie.®
A first step to regu­
late banks was taken by the Ohio Legislature on February 2, 1815.
Passing "An act to raise revenue from banks and to prohibit the
unauthorized issuing and circulating bank paper,"
the legislature
levied a 4 percent annual tax payable to the State Auditor.
The
Albert Gallatin, "Considerations on the Currency and
Banking System of the United States," in The Writings of Albert
Gallatin, edited by Henry Adams (New York: Antiquarian Press
Ltd., 1960), Volume III, pp. 358-359. Hereafter cited as
Gallatin, "Considerations on the Currency."
^William Graham Sumner, A History of Banking in the
United States, Volume I of series A History of Banking in All the
Leading Nations, compiled by Thirteen Authors (New York: Journal
of Commerce and Commercial Bulletin, 1896), Volume I, p. 91.
Hereafter cited as Sumner, History of Banking in the United States.
^William T. Utter, The Frontier State: 1803-1825, Volume
II of The History of the State of Ohio, ed. Carl Wittke, (Columbus,
Ohio: Ohio State Archaeological and Historical Sociey, 1942,
Volume II, p. 274. Hereafter cited as Utter, The Frontier State.
3
law pertained to both chartered and unchartered banks.
Governor Thomas Worthington expressed a growing apprhension over the role of banks in state affairs in a message to the
Ohio Senate in December 1815.
He commented that as long as banks
aided in producing salutary effects in and for the state, they
were beneficial; but, if they added to the fever of excessive
speculation and debilitated the morals of society, they would
produce deleterious effects.
It then became the duty of the
legislature to devise, and pass laws to protect its constitutents.®
The state was vexed over the problem of depreciated paper.
Besides this she had to contend against agencies, chartered by
other states, whose depreciated bank notes were so low that they
were driving Ohio notes out of circulation.^
As a result the
legislature passed "An act to prohibit the issuing and circula­
ting of unauthorized bank paper" on January 27, 1816.
The act
levied a $1,000 fine on persons acting as agents for banks char­
tered by laws of other states.
Also the use of Ohio law courts
and its processes was denied such b a n k s . S u c h early tactics
used on her own banks and agencies of other states provided Ohio
with practice and a foundation for opposition to the Bank of the
'Chase, Statutes of Ohio. Volume II, pp. 868-869.
Q
Ohio, General Assembly, Senate, Journal of the Senate of
the State of Ohio, 14th General Assembly, 1st Session, December
20, 1815, p. 73. Hereafter cited as Ohio, Senate Journal.
^Ernest L. Bogart, "Taxation of the Second U. S. Bank by
Ohio," in The American Historical Review, XVII (1915), 313.
Hereafter cited as Bogart, "Taxation of Second U. S. Bank."
^^Chase, Statutes of Ohio, Volume II, pp. 904-905.
4
United States.
In later years Ohio employed identical means in
legislating against the Bank.
The Bank of the United States Established
The charter of the first Bank of the United States expired
in 1811 and was not renewed.
On January 4, 1814, however, the
notion of a new bank was instilled with life when a petition from
150 New York City residents, asking the incorporation of a
national bank, was presented in the House of Representatives.^^
The question of a new.bank was debated in Congress throughout the
year, and ultimately a bill incorporating a Bank of the United
States passed on January 20, 1815.
The bill was vetoed ten days
later by President James Madison on the grounds that "the pro­
posed bank does not appear to be calculated to answer the purposes
of reviving the public credit, of providing a national medium of
circulation, and of aiding the treasury by facilitating the
indispensable anticipations of revenue, and by affording the
public more durable
l o a n s .
"^2
The birth of the second Bank of the
United States was aborted only temporarily, however, as
Congress immediately resumed discussion on the Bank.
In 1815 Treasury Secretary Alexander Dallas re­
commended the creation of a national bank for the reasons that it
^^M. St. Clair Clarke and D. A. Hall (eds.). Legislative
and Documentary History of the Bank of the United States : Inclu­
ding the Original Bank of North America (Washington; Printed by
Gales and Seaton, 1832), p. 472. Hereafter cited as Clarke and
Hall, Legislative and Documentary History of the Bank of the
United States.
^^Ibid., p. 594.
5
was necessary to restore both specie payments and the national
currency.
The local banks were unable to provide a uniform
national ourrency.
Their issues depreciated, and their
value often fluctuated daily and from one place to another.
The choices before Congress were either to force the state banks
to pay their debts in specie or to establish a national bank to
clear up the monetary difficulties.
The national bank issue was debated throughout 1815.
On
March 4, 1815, the bill to incorporate the Bank of the United
States passed in the House by a small margin - 80 to 7 1 . Less
than one month later the Senate, by a vote of 22 to 12, passed the
incorporation act with amendments and returned the bill to the
House for ooncurrence.
After some half-hearted attempts to
change the Senate amendments, the House finally relented and pasts<-;.
the bill.
On April 10, 1816, President Madison signed into law
the bill entitled, "An act to incorporate the subscribers to the
^^Gallatin, "Considerations on the Currency," Volume III,
p . 289.
^'^Ibid., p. 288.
^^United States, Congress, House, Annals of the Congress of
the United States (Washington: Printed and Published by Gales and
Seaton, 1855), 14th Congress, 1st Session, March 14, 1816, p. 1219.
Hereafter cited as Annals of Congress.
^^Ibid., Senate, 14th Congress, 1st Session, April 3, 1816,
p. 281.
IV
Clarke and Hall, Legislative and Documentary History of
the Bank of the United States, p. 713.
6
Bank of the United States."
Ohio's two senators split on the bill.
Jeremiah Morrow voted for the bill; Benjamin Ruggles voted against
the measure.
18
Her five Representatives voted, three for the
proposal and two against.
The Bank of the United States, located in Philadelphia,
was chartered for twenty years with a capital of $35 millions.
The United States would subscribe to and pay for one-fifth of the
Bank's capital; the remainder would be subscribed to by private
individuals.
The Bank'was to have twenty-five directors.
Five
would be appointed by the President of the United States; twenty
were to be elected at the Philadelphia banking house by qualified
stockholders.
The number of votes a stockholder could cast varied
according to the n'umber of shares he possessed; but, thirty votes
were the maximum that any one stockholder could cast.
The Bank's
President would emerge from among the Board of Directors, as the
Board would elect one of its own number.
Public monies of the
United States were to be deposited either in the parent bank at
Philadelphia or in branch b a n k s . S e c t i o n 7 of the incorporation
charter gave the Bank of the United States the right to "sue and
be sued, plead and be impleaded, answer and be answered, defend and
be defended, in all State courts, having competent jurisdiction,
and in any circuit court of the United States. .
18
Annals of Congress. Senate, p. 281.
^^Ibid., House, p. 1219.
20
Clarke and Hall, Legislative and Document airy History of
the Bank of the United States, pp. 801-811, and passim.
^^Ibid., pp. 803-804.
7
Branches in Ohio
In light of Ohio's assault on the national Bank, it is
interesting to view the ayidity with which cities in the state
courted the Philadelphia Bank in order to obtain branch banks at
their sites.
A group of residents of the former state capital of
Ohio, Chillicothe, petitioned for a branch
b a n k .
22
The Chilli-
cothe petitioners presented a number of reasons why a branch bank
should be located there, namely:
because of the central position
of the town; because of its commerce; and, finally, because Chilli­
cothe was a thoroughfare for the Western
c o u n t r y .
23
Besides
these reasons, the Chillicothean boosters mentioned that of the
number of shares that were subscribed to in Ohio, Chillicothe ac­
counted for over two-thirds.
At present residents of Chillicothe
owned 2,070 shares, while Cincinnati, her chief rival for a
branch, could boast of subscribing to only 1,400
s h a r e s .
^4
Chillicothe's desires for a branch were aided by the active
solicitations of Governor Thomas Worthington.
Worthington was a
friend of the first President of the Bank, William Jones.
The
Governor steadfastly supported the aspirations of Chillicothe,
which was near his Adena home, in a number of letters to Jones.
His claims were often identical to those which appeared in the above
mentioned petition.
In late November 1816 Worthington wrote to the
^^Chase, Statutes of Ohio, Volume II, p. 953. The State
Capital moved to Columbus on the 2nd Tuesday of October, 1816.
Chillicothe, Town Meeting, 1816, Petition for the
Establishment of the United States Bank in the Town of Chillicothe,
1816, pp. 4-8, and passim.
^^Ibid., p. 7.
8
Bank President ; ". . . . w e think having subscribed more than twice
the amt. of Cincinnati, that you ought to have given a little more
time to hear from us, especially as I assert . . . that this place
will make a branch much more profitable for the stockholders and
infinitely more useful to the S t a t e . B u t
Worthington's
campaigning was confined not only to letter writing.
A group of
Philadelphia and personally present the qualifications of the town.
Coincidentally the Governor's wife had been ill, and her doctor
recommended travel.
Worthington realized that he could possibly
obtain a branch bank for his town and aid in his wife's recovery.
Taking his wife and youngest child with him, he departed for the
East.
If Chillicothe was happy about Worthington's solicitations,
other Ohio towns were livid.
The Western Spy, a Cincinnati
newspaper, was extremely critical of the Governor's role.
Calling
him an "Envoy Extraordinary and Minister Plenipotentiary from the
citizens of that place to the will be[sic"! directors, " the
paper queried whether the Governor received an $8,000 outfit as
was the custom with other foreign ministers. 27
Cincinnati,
^^Letter from Thomas Worthington to William Jones,
Chillicothe, November 22, 1816, Thomas Worthington Papers, February
23, 1795 - November 15, 1826, Manuscript, In Ohio State Library,
Columbus,Ohio. Hereafter cited as Worthington Papers.
^^Alfred Byron Sears, Thomas Worthington; Father of Ohio
Statehood (Columbus: The Ohio State University Press, 1958),
p. 201. Hereafter cited as Sears, Thomas Worthington.
^'^The Western Spy, October 18, 1816.
9
not Chillicothe, was the ideal location for a branch bank because
of its importance and commercial advantages.
sense would realize that.^®
Anyone with good
Worthington was further attacked
for electioneering for his home surroundings and deserting his
gubernatorial duties.29
Worthington was not universally assailed, however.
The
Chillicothe papers, naturally enough, rose to the defense of
the beleagured chief executive.
It was pointed out that the
Cincinnati newspapers were hypocritical in chiding Worthington's
mission while they conveniently glossed over the fact that at the
same time a Cincinnati delegation was descending on Philadelphia
for the identical r e a s o n . W h a t papers won the battle of words
is debatable.
The crux of the argument was that some Ohio towns
were rushing to Philadelphia to persuade the Board of Directors
to locate a branch in their locale.
Whatever town Worthington
would opt for, the other towns would be jealous.
In this
instance he chose to work for his home surroundings and, as a
result, his motives and actions were questioned.
Chillicothe's exertions seemingly were futile as the
directors of the national Bank announced that a branch would be
established at Cincinnati.
Nevertheless, Jones offered a
^®Ibid.
29
Ibid., November 15, 1816.
OQ
Scioto Gazette and Fredonian Chronicle, November 28, 1816.
^^The Western Spy, December 6, 1816.
10
concession to Worthington.
He notified the Ohio Governor that he
would suggest that there be located in Ohio one branch, but with two
offices - one at Cincinnati and the other at Chillicothe.
There
would be thirteen directors, and the directors and_the capital of
the branch would be divided between the two towns in proportion to
their population and resources.
were not to be denied, however.
3?
The aspirations of Chillicothe
Another petition was devised;
another trip to Philadelphia was arranged.
to petition the Bank for a branch.
A committee was chosen
The chairman of the committee
was Edward Tiffin, a former governor of Ohio.
Chillicothe was finally successful, and Governor Worthington
was so notified by Jones that, "Colonel Bond will have informed
you of the determination of our Board of Directors to establish
an Office of Discount and Deposit at Chillicothe . . .
Ohio now had two Offices of Discount and Deposit within
her boundaries.
The Cincinnati branch opened its doors for busi­
ness in March 1817 ; the Chillicothe branch commenced operation in
November 1817, and William Creighton, Jr. was elected President of
the branch.
35
The directors of the Chillicothe branch decided to
Jones to Worthington, Philadelphia, November 7, 1816,
Worthington Papers.
^^Citizens of Chillicothe, Memorial to President and
Directors of the Bank of the United States from Citizens of
Chillicothe. 1817, p. 3.
Jones to Worthington, Philadelphia, September 21,
1817, Worthington Papers.
35
Minutes of the Board of Directors of the Bank of the
United States at Chillicothe, Ohio 1817-1825, November 10, 1817,
Manuscript, In the Ross County Historical Society Library, Chilli­
cothe, Ohio. Hereafter cited as Minutes of the Board of Directors•
11
rent half of the house of John Carlisle (also a Board Member),
and to locate the branch office at the c o m e r of Paint and Second
S t r e e t . T h e Boards of Directors of both branches contained some
of the most prominent Ohioans of the day.
The Cincinnati branch
consisted of Daniel Drake, Martin Baum, John H. Piatt, Jacob
Bume t , and William Henry Harrison.
37
The Board of Directors in
Chillicothe was no less illustrious, listing such prestigious names
as William Creighton Jr., Edward Tiffin, William Key Bond, and
Duncan McArthur.
state leaders.
The men named to the boards were clearly
Tiffin was an ex-governor; McArthur was the Speaker
of the Ohio House and a future governor; Creighton was a United
States Representative who voted for passage of the Bank bill;
Harrison was a member of the Ohio Legislature and a future
President of the United States.
both boards and a director.
Worthington became a member of
The two Offices of Discount and Deposit
thus began of a solid foundation in 1817.
^^Ibid., November 13, 1817.
3'7
Utter, The Frontier State, Volume II, p. 278.
38
Minutes of the Board of Directors.
CHAPTER II
UNPOPULARITY OF THE UNITED STATES BANK
Early Displeasure at the Bank
It was not long before Ohio sentiment turned against the
national Bank.
Whether the reasons for this were justifiable or
imaginative made scant difference, for in the estimation of many
the Bank embodied wickedness.
Senator Thomas Hart Benton's
latter day overstatement about the monstrosity of the Bank would
have touched a familiar chord for Ohioans in 1818-1819, and after.
Benton orated;
. . .all the flourishing cities of the West are mortgaged
to this moneyed power. They may be devoured by it at any
moment. They are in the jaws of a monster1 A lump of
butter in the mouth of a dog! one gulp, one swallow, and
all is gone !^
A number of accusations levelled against the bank were
unjustifiable.
In attempting to move the country to a firmer
financial footing by creating a sound currency and by requiring the
states to resume specie payments, the Philadelphia institution
inadvertently wrought deleterious effects, not only upon state
bankers but upon merchants and farmers as well.
No matter what
United States, Congress, Register of Debates in Congress,
Comprising the Leading Debates and Incidents of the First Session
of the Twenty-Second Congress (Washington: Printed and Published
by Gales and Seaton, 1832), Volume Vlll, Part 1, June 1, 1832,
p. 1003. The statement was made by Senator Benton, in Andrew
Jackson's first administration, during the battle over the rechartering of the second Bank of the United States.
12
13
policies were pursued, some feelings and pocketbooks would suffer.
Opponents of the Bank multiplied with the passage of time.
They
accused it of a plethora of offenses which increased the process of
its vinification from 1815 onward.
The reasons why the Bank of
the United States was detested and opposed in Ohio can be narrowed
to four;
because of the officers of the Bank and the policies
which were pursued; because of the fear that the Bank would be
able to establish some type of financial hegemony over the states;
because of mismanagement by the Bank's surrogates in Ohio; and,
finally because of the financial woes plaguing Ohio.
President James Madison named five of the federal Bank's
directors from the ranks of his Republican party.
They were
William Jones, Pierce Butler and Stephen Girard, of Philadelphia,
John Jacob Astor, of New York, and James A. Buchanan, of Baltimore.
The Bank's stockholders, showing remarkably less partisanship than
Madison, chose ten Federalists and ten Republicans as members of the
Board.
President Madison and Treasury Secretary Dallas successfully
maneuvered for the election of a Republican Bank president.
Jones was elected.^
William
Jones' credentials for the high administrative
post were far from impeccable.
Formerly a bankrupt merchant,
he had seen previous government service as an inefficient Secretary
of the Navy and as an inept acting Secretary of the Treasury
Ralph C. H. Catterall, The Second Bank of the United
States (Chicago; The University of Chicago Press, 1903, p. 22.
Hereafter cited as Catterall, Second Bank of the United States.
14
for James Madison. 3
The choice was an exceedingly poor one
because it was under Jones' direction that the Bank pursued an
erratic course which caused it much trouble.
The initial problem confronted by the federal Bank under
Jones was to compel the state banks to resume specie payments.
Secretary Dallas, in March 1815, proposed methods to the state
banks whereby they could redeem, but his schemes were thwarted by
the banks' refusal.
Governmental optimism increased with the
passage of the bill incorporating the Bank of the United States.
Congressional passage of a joint resolution calling for the payment
to the United States, after February 20, 1817, in gold, silver,
treasury notes, notes of the national Bank, or notes of banks
payable and paid on demand in specie further buttressed the hopes of
the government.
A more confident Dallas thus proposed that
beginning in October 1816 all state banks resume specie payments
on notes under the $5 denomination.
Once again he was rebuffed as
the banks announced that they would begin redemption after July 1,
1817.
Secretary of the Treasury William Crawford accepted Dallas'
position and decided to submit the undertaking to the federal
4
Bank.
The unwillingness of the state banks to resume specie
payments was primarily because they were unable to do so.
As a
3
Bray Hammond, Banks and Politics in America; From
the Revolution to the Civil War (Princeton, New Jersey;
Princeton University Press, 1957), p. 251. Hereafter cited as
Hammond, Banks and Politics in America.
‘^Catterall, Second Bank of the United States, pp. 23-24.
15
result the entreaties of the national Bank were dismissed.
The
Bank of the United States, meanwhile, had to wend a middle course
between the government's desire for specie payments and the
inability of the banks to resume payment.^
The policy was
pursued, however, and ultimately the banks concurred in the
resumption of specie payments by February 20, 1817.
Eastern
banking institutions assented first, and the interior banks fol­
lowed their lead.
The initial success of the Bank was more
superficial than substantive, nevertheless.
Resumption of specie
payments was not universal; bank notes were still discounted with
variations from place to place.
Finally, the real force behind
the partial success was not William Jones but rather Secretary
Crawford who guided Jones and the whole resumption process.®
The modicum of success subjected the Bank to as much
obloquy as praise.
the Bank.
Ohio's initial reaction was complimentary to
The first to suffer from the presence of the branches in
Ohio were the wildcat banks.
The presence of the offspring of the
federal Bank necessitated the resumption of specie payments on
notes held against the Ohio banks.
were able to comply with the demand.
At first the chartered banks
The wildcat banks,
sustaining principally upon their notes, with little if any
specie backing, suffered and many went bankrupt.
Chartered banks
^Davis R. Dewey, The Second United States Bank (Washington :
Government Printing Office, 1910), p. 190. Hereafter cited as
Dewey, The Second United States Bank.
®Hammond, Banks and Politics in America, pp. 248-249.
16
desired the ruin of the wildcats and thus welcomed the policy of
the Philadelphia institution.
But, because the chartered banks
often were guilty of overinflating their currency and accepting much
dubious paper, especially through the land offices, they soon
suffered as well.
The United States Bank pressed the Ohio banks
for the redemption of the great amounts of paper in their possession.
The banks could not comply, and a general collapse ensued.
As the
initial popularity of the Bank waned, opposition within Ohio
increased.
The first months of 1818 were popularly known as "the
golden age of the western country."
They were so designated because
the abundance of paper money circulating in the west was reputedly
as plentiful as silver was in Jerusalem in the days of King Solomon.
Once the Bank curtailed its operations, however, money was very
scarce.®
The anti-Bank movement in Ohio generated momentum with
the increasing scarcity of money in the state.^
Thus an ever-
increasing complaint found in Ohio during this period was over
the lack of or scarcity of money.
As early as 1817 comments were made regarding the lack of
n
Sears, Thomas Worthington, p. 201
®William M. Gouge, A Short History of Paper-Money and
Banking in the United States (New York: Published by B. & S.
Collins, 1835), p. 37.
9
William Henry Smith, "Charles Hammond and His Relations to
Henry Clay and John Quincy Adams or Constitutional Limitations
and the Contest for Freedom of Speech and the Press," An Address
Delivered before the Chicago Historical Society, May 20, 1884
(Published for the Chicago Historical Society, 1885), pp. 15-16.
Hereafter cited as Smith, "Charles Hammond and His Relations to
Clay and Adams."
17
money in the West.
John Crafts Wright, lawyer and Ohio Rep­
resentative to the United States Congress, wrote to his friend and
colleague, Charles Hammond, former newspaperman, lawyer, Ohio court
reporter, and member of the Ohio Legislature.
Wright claimed that
on returning to the West he was shocked at the scarcity of money.
The paper circulating throughout the territory was "vile and
worthless trash."
The currency was so valueless that scarcely
any business could be
t r a n s a c t e d .
The process continued as Ohio newspapers chronicled the
draining of specie from her borders.
A typical article appeared
in a Lancaster, Ohio newspaper entitled "Two Wagon Loads of
Specie."
It reported that two wagons carrying hard money recently
had passed through the town on its journey to the Philadelphia
Bank.
As a result Ohio banks had to disoontinue specie payments.
Popular thinking was that within a brief period the state would
be devoid completely of specie.
of the Mammoth Bank."
"Such are the blessed effects
It was estimated that between $120,000
and $140,000 had been taken from the state.12
In March 1819 the steam boat Perseverance embarked frcm
l^Letter from John Crafts Wright to Charles Hammond.
Steubenville, July 24, 1817, Charles Hammond Papers, Manuscript,
In Ohio Historical Center Library, Columbus, Ohio. Hereafter
cited as Hammond Papers.
^^The Ohio Eagle, cited in The Liberty Hall and Cincinnati
Gazette, November 24, 1818.
^^ezekiah Niles (ed.), Niles' Weekly Register. Containing
Political. Historical. Geographical, Scientifical, Statistical,
Economical, and Biographical Documents, Essays, and Facts;
Together with Notices of the Arts and Manufactures, and a Record
of the Events of the Times (Baltimore; Printed by William Ogden
Niles) Volume IV, No. 15, June 5, 1819, p. 256. Hereafter
cited as Niles' Weekly Register.
18
Cincinnati with about $400,000 of specie in her
h o l d .
13
Not
only were Ohioans angered because huge sums were transported from
their borders but because they could see little or nothing brought
into the state by the Mammoth.
The federal government received
a share of the blame and complaints for allowing the Bank of the
United States to operate in Ohio.
Ohioans argued that their
banking institutions had rendered invaluable and uncomplaining
service to the government during the late war with England, and
their reward now was to be "oppressed and plundered."14
Niles'
Weekly Register estimated that within the span of one year the
Bank had relieved Ohio of at least $800,000 in specie.1^
Besides the visual evidence of the loss of specie, the
state discerned that the Bank's operations contributed to western
inflation.
Large amounts of bank notes and loans were issued from
the western offices of Discount and Deposit late in 1817 and
through 1818.
Through the issuance of notes westerners were able
to pay their eastern creditors.
Beoause the branoh notes were
redeemable at any branch or at the parent institution, the large
western issues resulted in the flow of capital from the parent
bank and eastern offices to the western branches.
By 1819 nearly
$5,500,000 of oapital was distributed to the western offices
while the amount of the branches north and east of Philadelphia
^^The Liberty Hall and Cincinnati Gazette, cited in The
Chillicothe Supporter. March 3, 1819.
^W e s t e r n Herald and Steubenville Gazette, March 20, 1819.
^^Niles' Weekly Register, Volume IV, No. 18, June 26,
1819, p. 298.
19
totalled less than $1,000,000.
The Philadelphia Bank allowed
her surrogates in the west to overextend their notes which, in
turn, encouraged the state banks to overtrade and to inflate their
currency.
This brought on another problem.
Large balances accrued
against the state banks, and for awhile, the Mammoth was content to
leave them untouched.
Because they were not called on to settle
the balances against them, the state banks believed themselves at
liberty to inflate further their issues and to expand their
discounts.
When the liberal policy of the Bank was reversed in
July 1818, and the state banks were called upon to redeem their
paper, disaster struck.
Helpless banks harried their equally
1 rj
helpless debtors to little avail.
Bankruptcy was the price for
many Ohioans.
The complaint was lodged that before the national Bank
was introduced into Ohio the local institutions had rendered
satisfactory service.
The public had confidence in them; they
believed in their solvency.
The intrusion of the new institution
wrought ill effects on the state and her banks.
The Mammoth
arbitrarily refused notes of some solvent banks while accepting
notes from others less fiscally responsible.
Notes which were
accepted accumulated in the vaults of the branch banks until
specie was demanded.
The net result was that the circulating
Charles C. Huntington, "A History of Banking and
Currency in Ohio before the Civil War," in Ohio Archaeological
and Historical Society Pulications, XXIV (1915), 288-290,
and passim. Hereafter cited as Huntington, "History of Banking
in Ohio."
17
Utter, The Frontier State, Volume II, p. 264.
20
medium of the state was composed almost entirely of notes from
non-specie paying banks.1®
The confidence of the inhabitants of
the Western territory in their banks was shaken.
mistrust replaced it.
Widespread
The Bank was blamed for all this.
The plight of the fiscal institutions of the state did
not proceed unnoticed.
Ohio legislators were greatly concerned.
An Ohio legislative committee proclaimed that the state had an
abiding interest in her banks because:
They supply a safe and solid currency for all the purposes
of domestic commerce. They extend and cherish individual
credit, and if properly conducted, they supply an annual
revenue of very considerable amount, which must ultimately
lay a foundation for relieving the citizens of a part of
the present taxes upon the absolute necessaries of life.19
The importance of state banks properly managed and operated cannot
be minimized, but the legislators had to know that their banks
were not universally immaculate as the early regulation of them
indicated.
The United States Bank was an omnipresent force,
however, and the legislators argued that their own institutions
and Ohio could not prosper as long as the national Bank functioned
within Ohio's
l i m i t s .
20
Under these circumstances there was
little reason to dilute their cause by mentioning the past trans­
gressions of the banks which antedated the federal Bank.
The Offices of Discount and Deposit were encouraged
to discount heavily during the early period of William Jones'
administration.
Loans were sought and given on security that was
1O
The Ohio Watchman, December 9, 1819.
19
The Chillicothe Supporter, January 27, 1819,
^°Ibid.
21
generally real estate.
Huge quantities of southern and western
real estate ultimately fell into the Mammoth's g r a s p . T h e Panic
of 1819 and ensuing depression was a prime reason for the failure to
pay debts, resulting in the loss of land.
The reputation of banks,
in general, and the Bank of the United States, in particular,
suffered gravely as hard times descended upon the country.
national Bank liquidated its debts in 1818-1619.
The
A great deal
of Ohio land was taken in from debtors unable to pay back their
loans.
Much land and.property in the Cincinnati area fell into
the Bank's hands.
rapid growth.
Its value increased because of Cincinnati's
The acquisition of the real estate and its rapidly
increasing value infuriated its former owners.
Bank acquisitions
in Kentucky arid Ohio alone totalled nearly 50,000 acres.
Further,
the Philadelphia corporation secured a large part of the rapidly
growing Cincinnati.
Op
The Bank thus presented an image of pros­
pering upon the sufferings of its prior customers.
In such a
period and under such conditions it was little wonder that the
fiscal institution be described bitterly as the Mammoth.
William Jones resigned his position as President in
January 1819, and Langdon Cheves was elected.
Cheves' accession
signalled the advent of more fiscally responsible operations for the
institution.
The new leadership recognized that the Bank under
Jones had damaged its standing by extending itself too far.
21
Dewey, The Second United States Bank, p . 242.
22
United States, Congress, Senate Document #98, 22nd
Congress, 1st Session, pp. 22-27
A
22
policy of contraotion was pursued and in January 1820, the
circulation of the Bank stood at $3,600,000, a sizeable reduction
from the $8,300,000 circulating in 1818.
friction.
The new policy created
The west complained that the policy of oontraction
made money even more scarce in their locale.
Z3 Although Cheves'
policy was technically correct, it was not widely popular.
He had
to tighten up the organization after the loose operations of
his predecessor.
He was successful but the measures taken
increased the Bank's unpopularity in Ohio.
Another practice of the Bank which rankled its enemies,
although they never contested it on that ground, was its usurious
practices ;
It is a fact, highly honorable to the persecuted debtors
of that institution, that the statute of usury was not plead,
in a single instance; though it was a fact, easy of proof,
that in least half of the cases, the defendants did not
receive from the bank more than sixty, or at most seventy
per cent of the amount for which they gave their notes.
Yet another reason for opposition to the Bank of the
United States may be described as philosophical.
The Bank
appeared to be well qualified to act as a potential empire builder.
It was looked upon as a foreign institution which invaded Ohio
soil.
Some described it as a great hidden enemy.
Charles Hammond wrote that he was strongly convinced that
23
24
Dewey, The Second United States Bank, p. 227.
Jacob Burnet, Notes on the Early Settlement of the
North-Western Territory (Cincinnati: Derby, Bradley & Co.,
Publishers, 1847), p. 410.
23
the United States Bank "is about to be a most potent, empire,
for oontrolling all the pecuniary concerns of the country."
he
stated that ;
I regard it as a most melancholy circumstance that this
places all our best interests at the mercy of stockjobbers
and Brokers, mostly foreign agents, without morals or
social feelings of any kind whatever which can induce
them to assimilate with us in the great concerns which
they may, and I am fearful, will c o n t r o l . 25
The Ohio legislative committee report on the Bank, alluded
to earlier, wondered if the Bank despoiled public liberty.
The
committee claimed that the Mammoth usurped powers that the national
government refused to accept.
Because this monied aristocracy, was
assuming such powers, the committee did not doubt that the sovereign
power's authority was being usurped.
The fact that the Philadelphia Bank had branches in the
states hardly helped its image.
Ohio opponents looked askance at
the favored position of the "foreign institution" and the Monster.
The Bank possessed great privileges, paid no taxes, and often as­
sumed the role of the knowledgeable master correcting a recalcitrant
c h i l d . T h i s outlook on the Bank might have bothered its enemies
even before its practices seemed to work ill effects on the
state; but the two factors working concommitantly made new foes
for the institution.
It made no difference whether resentment
against the "foreign institution" preceded the Bank's practices
P5
24, 1817.
Charles Hammond to Thomas Worthington, Belmont, March
Hammond Papers.
^^The Chillicothe Supporter, January 27, 1819.
27 Sumner, History of Banking in the United States, Volume I
p. 109.
24
which hurt Ohioans.
What mattered was that resentment of the
corporation developed to such an extent that open warfare was
waged against it.
A further explanation for the hatred of the second Bank
of the United States rests with the Offices of Discount and De­
posit.
Great abuses were perpetrated by the branches before
Cheves assumed the presidency.
In 1818 the loss of the Philadel­
phia Bank on a capital of $16,500,000 was $328,000; the loss of
the Baltimore branch was $1,662,000 out of a capital of only
$1; 500,000 - or, in other words, more money than the branch had ;
the Norfolk branch lost $229,000 on a oapital of $500,000.
This
was typical of what transpired throughout the rest of the branches.
The figures demonstrated that the worst mismanagement took place
in the branches rather than in Philadelphia.^®
One of Cheves'
major undertakings upon assuming office was to correct the abuses
of the branch offices.
The names of Ohioans involved as members of the Boards of
Directors were mentioned earlier.
leaders.
These men were influential
In light of the charge of mismanagement of the branches,
it is interesting to note the assessment of the Chillicothe Board
that former Governor Worthington presented to Langdon Cheves.
President Cheves sought information from Worthington about the
Chillicothe Board.
Worthington named the eleven directors and
rated them in this order:
OQ
(1) William Creighton; (2) Edward
United States, Congress, Reports of Committees of the
House of Representatives at the First Session of the Twenty Second
Congress (Washington: Printed by Duff Green, 1831), Volume IV,
Document #460, p. 16.
25
Tiffin; (3) J.P.R, Bassard; (4) Walter Dun; (5) William McFarland;
(6) Duncan McArthur; (7) Cadwalader Wallace; (8) John McCoy; (9)
John Carlisle; (10) John McLandburgh; and, (11) William Key Bond.
Worthington provided a frank and sometimes caustic, assessment
as to the qualities and character of each man.
Mr. Creighton,
whom he rated first, he described as a "gentlemen of talents
. . . but does not possess that frankness which would create for
him esteem and respect."
As he approached the middle of the
pack, he described William McFarland as "a man of strict integrity
little information and too selfish."
Duncan McArthur, former
Speaker of the Ohio House and a future governor, fared even worse.
He was "equally and more selfish 6 obstinate and overbearing."
Worthington's scorn was reserved for his last choices, however.
McLandburgh was "narrow and contracted" and often succumbed to the
temptations of intoxication.
unpopular.
Bond, an attorney, was extremely
Worthington believed that two of the eleven should
be relieved immediately of their posts, and then further revised
his list to include a few others who should be replaced immediately.
29
The former governor's assessment was only of the Chillicothe
branch, and thus no general statement about all branch banks can
be made.
Worthington's attitude cannot be dismissed as a grudge
against the Bank, however.
He was, if anyone was, a prime mover in
placing a branch at Chillicothe.
He boasted an evident friendship
^^Letter from Thomas Worthington to Langdon Cheves,
Chillicothe, September 17, 1819, Thomas Worthington Letters to
Langdon Cheves, 1819, Manuscript, Typescript copies in Ross County
Historical Society Library, Chillicothe, Ohio. Hereafter cited
as Worthington Letters to Cheves.
25
with William Jones.
30
And Cheves thought well enough of Worthington
to ask his opinion of the Chillicothe Board.
An incident of great fraud in the branch office at Baltimore
was unearthed in 1819.
James A. Buchanan and William McCulloch were
the President and Cashier respectively of the Baltimore office.
stupendous fraud was perpetrated under them.
A
Buchanan, McCulloch,
and confederates discounted or appropriated nearly $3,000,000
without the knowledge of either the Baltimore Board or the
parent bank.
31
in bank funds.
James McCulloch lent himself more than $500,000
Buchanan and others took part in the dealings.
Speculation soon gave way to fraud, and Cheves had to confront
the problem soon after he became President.
was in disarray as a result of the scandal.
replaced and Buchanan resigned his post.
away further at the Banlc's reputation.
33
32
The Baltimore office
McCulloch was quickly
The ëcandal chipped
Those opposed to the
institution found new evidence to hurl against the Bank; for
30
A number of letters in Worthington's correspondence
indicates that he and Jones were on very good terms.
31
Langdon Cheves, Langdon Cheves' Exposition, in Report on
the Condition of the Bank of the United States, by the Committee
of Inspection and Investigation (Philadelphia: Printed by
William Fry, 1822), pp. 17-18. Hereafter cited as Cheves,
Report on Condition of the Bank.
32
United States Congress, American State Papers, Folio
Finance « Selected and edited under the authority of Congress, by
Asbury Dickins, Secretary of the Senate, and James C. Allen,
Clerk of the house of Representatives,
(Washington-: Published by
Gales and Seaton, 1858), Volume III, pp. 372-378, and passim.
Hereafter cited as American State Papers, Folio Finance.
33
Cheves, Report on the Condition of the Bank, Philadelphia,
Langdon Cheves to William Crawford, May 27, 1819, pp. 73-74.
27
others the transactions at Baltimore raised grave doubts.
The unpopularity of the Bank was a real fact.
However,
the financial corporation numbered many defenders who attempted
to rebut the charges against it.
which tried to reform them.
34
Local banks hated the instrument
The Bank's defenders quite properly
argued that hard times and depression, which the Bank had not
caused, were the reasons behind the attacks.
The Philadelphia
giant was a vulnerable target for the sufferers and malcontents.
It was blamed for events over which it had no control.
It was
utilized as a scapegoat for the pecuniary woes of the period, and
this, it was claimed, was unreasonable.
The Bank's defenders
maintained that :
The crisis which we have reached, would have arrived if
the Bank of the United States had never been in existence.
The host of individuals who have been nursed and sustained
by credit, would have fallen ere this . . . and in that fall
would have poured forth their clamors against the state
institutions who first led them within their fatal magic
circle; but the Bank of the United States started into
existence opportunely to relieve those establishments of
a large share of obloquy.
In other words if the Bank of the United States did not exist
to shoulder the blame, the state banks would have had to weather
the wrath of its accusers.
Cheves Saves the Bank of the United States
The accession of Langdon Cheves to the post of President
of the federal Bank meant a great improvement in its operation.
Cheves was an attorney from South Carolina.
34
35
A former Republican
Bogart, "Taxation of Second U. S. Bank," p. 317.
The Southern Patriot (Charleston), cited in The American,
September 29, 1819
28
member of the United States House of Representatives, he had
risen to the position of the Speaker of the House.
Cheves was
offered the office of Secretary of the Treasury in 1814 but
refused it.
The presidency of the Bank was accepted reluctantly
by the South Carolinian as he might have been appointed to the
Supreme Court by President James Monroe.
He was an able
administrator, the complete antithesis of his predecessor.
Soon after Cheves became President and assesed the
position of the Bank, he wrote to Secreta;cy Crawford that "the
situation of the Bank of the United States, at this moment . . .
is critical; and it is more so, because the state institutions
are equally or more embarrassed."^"^
not stymie him for long.
The critical situation did
The problems and errors of the Bank
were so manifest that they were easily discerned.
medies were applied readily.
Suitable re­
Cheves wrote that "the southern and.
western Offices were immediately directed not to issue their notes,
and the Bank ceased to purchase and collect exchange on the south
and west."38
The Board of Directors met on April 9, 1819.
A com­
mittee was appointed to study the Bank's problems and make recom­
mendations.
Six measures were proposed by the committee;
1. To continue the curtailments previously ordered.
2. To forbid the Offices to the south and west to issue
their notes when the exchanges were against them. 3.
To collect the balances due by local Banks to the Offices'.
4. To claim of the Government the time necessary to
^^Hammpnd, Banks and Politics in America, p. 262.
^^Cheves, Report on the Condition of the Bank,
Philadelphia, Cheves to Crawford, March 20, 1819, p. 40.
Cheves' Exposition, in Report on the Condition of
the Bank, p. 20.
29
transfer funds from the Offices where money was collected to
those where it disbursed . . . . 5. To pay debentures in
the same money in which the duties, on which the debentures
were secured, had been paid. 5, To obtain a loan in Europe
for a sum not exceeding $2,500,000 dollars, for a period
not exceeding three years.
Cheves' ability was demonstrated early.
He perceived that much
of the cause of the Bank's financial embarrassment could be traced
to the transactions of the southern and western branches.
He moved
swiftly to prevent them from issuing their notes "when the ex­
changes were against them."
Hie other measures provided further
relief for the corporation.
Cheves announced that within the
period of seventy days the institution had been resurrected from
a perilous situation to a position of relative safety and power.40
Langdon Cheves believed that the machinery of the Bank was
too cumbersome.
There were too many branches for the organization
to be governed effectively.
Those in charge of the local branches
were influenced frequently by local interests and sentiments.
As a result Cheves hoped to reduce the number of Offices of
Discount and Deposit.
In the meantime, however, the parent bank moved to correct
the poor distribution of capital.
The western and southern branches
were relieved of much of their funds, which, in turn, were trans­
ferred to northern offices.
39
The branches were forced to remit
Ibid., pp. 20-21.
‘^Ibid.
^^Cheves; Report on the Condition of the Bank, Bank of the
United States, Cheves to Crawford, May 27, 1819, p. 73.
30
in specie or bills of exchange on Europe or on the north.
By
October 1819 the bad distribution of capital was corrected.
Not only were the branches dealt with strictly, but
the state banks felt the regulatory hand of the Bank also.
It
was insisted that the state institutions immediately reduce the
balances held against them by the Bank.
The banks were to settle
those balances at fixed intervals and constantly redeem their
notes in s p e c i e . I n this manner the Bank recovered part of
the debt owed to it by the west.
By August 1822 it had received
$961,653 out of a debt due of $6,351,120.
Cheves believed this
to be a notable achievement.*^
Cheves' position caused a great deal of conflict with
the state banks.
With the currency in a poor state, suspension
of specie payments prevalent, and the country undergoing a de­
pression, the south and west suffered most.
The currency of those
sections was reduced further by the frequent presentation of notes
to the state banks for specie.
currency were extremely scarce.
The result was that loans and
The Bank was blamed.
Depression in Ohio
The greatest opposition to the Bank occurred in Ohio.
The
question must be posed and answered why Ohio opposition became so
^^Catterall, Second Bank of the United States, p. 73.
^*^Richmond Bncruirer, May 28, 1819.
*^^heves, Cheves' Exposition, in Report on the
Condition of the Bank, pp. 26-27.
*^^Catterall, Second Bank of the United States, pp. 83-84.
31
fierce that it led to nullification of federal laws in the state
regarding the Bank.
A partial answer as to why Ohio was such fertile ground
for a conflict with the Mammoth can be discerned in the economic
woes of the state.
The culmination of the War of 1812 left the
western territory free for settlement.
As emigration quickened,
the population of the west increased rapidly.
The swift growth
of the west, however, left her with an inadequate currency supply.
The desire for money proliferated banks which were of varying
degrees of soundness.
The dearth of specie combined with a lack of confidence
in Ohio bank paper produced a distressing effect on prices in the
state.
The worst period coincided in time with the operations of
the branches in Ohio.
Wheat sold in Chillicothe for $1.50 a
bushel in November 1816, and inhabitants of the town were counselled
to hold off the sale of their produce as the price would surely
rise.^'^
By October 1816, however, the price of wheat in the
town had plummeted to 75 cents per b u s h e l . I n
1824 Thomas
Worthington observed that the price of wheat had varied for the
last few years from 25 to 50 cents.
The average price of wheat
for the last five or six years had not exceeded 37^ cents.
Corn which sold in Cincinnati in December 1818 for 37g
"^^Huntington, "History'- of Banking in Ohio," p. 271.
47
Scioto Gazette and Predonian Chronicle, November 28,
1816.
^^The Chillicothe Supporter, October 21, 1818.
49
Ibid., September 16, 1824.
32
cents per bushe1^0 sold for 10 cents a bushel in May 1821.51
Wheat, in the same place, brought $1.00 a bushel in December 1818.
Superfine flour sold for
$6.00 to $6.50 per barrel.
apples a barrel was from
$2.00 to $3.00.
The cost of
Eggs sold for 18 cents
a d o z e n . B y December 1821, however, an offer was made of 31^cents per bushel for good marketable wheat if it was "immediately
delivered at the Cincinnati steam
m i l l .
"53
By the end of 1821
flour sold in the city for $2.50 a barrel, apples for $1.00 a
barrel, and eggs for 8 cents a
d o z e n .
$1.00 a bushel on January 1, 1817.
had declined to 62^ cents a bushel.
bushel of wheat in April
54
jn Dayton wheat was
By October 1819 the price
The Dayton price for a
1822 had fallen
to 30
c e n t s .
55
Ohio was afflicted with hard times which were reported
in the newspapers of the day.
The Western Herald and Steuben­
ville Gazette printed a letter from the Public Advertiser from a
Cincinnati resident to an acquaintance in Kentucky.
demonstrated the economic distress in Cincinnati.
The letter
The writer said:
^^The Western Spy, December 12, 1818.
^^United States Gazette and True American, May 22, 1821.
The Western Spy, December 12, 1818.
^^Liberty Hall and Cincinnati Gazette, July 28, 1821.
Niles' Weekly Register, Volume IX, No. 24, February
9, 1822, p. 381.
^^History of Montgomery County, Ohio, p. 343, cited in
Huntington, "History of Banking in Ohio," p. 298.
33
I am sorry I can give you no good tidings of this once
flourishing place. The distress is beyond all conception
. ...
Marshals' and Sheriffs' sales are daily. To give
you an idea of the situation of this town . . . I will give
you a statement of some property sold this day by the
Marshal, and which I have seen myself - A handsome gig and
very valuable horse, sold for four dollars; an elegant side­
board for three dollars; a fine Brussel's carpet and two
Scotch carpets for three dollars; three beds and bedding
for three dollars; a good dining table at 25 cents, and a
long list of other valuable articles. . . .
The author of the letter claimed that with the modest amount of
money he possessed, he could attend the daily sales and make him­
self a fortune.
However, he could not reconcile such conduct to
his conscience.
He refused to profit at the expense of his
neighbors.
Further evidence of the financial problems of
Ohioans generally, and Cincinnatians particularly, can be gleaned
from the hundreds of sheriffs' sales that appeared in Cincinnati
newspapers in 1821 in order to settle judgments or for delinquent
taxes.
Some claimed that Ohio was "in a state of pauperism" and
that the task of all her citizens was to uplift her from that
position.^®
One of the saddest and yet most eloquent expositions
of the plight of farmers was penned by "A Farmer of Ross."
Desiring to make some remarks to his readers about the times, he
noticed that whenever people now met they had little to converse
^^Western Herald and Steubenville Gazette, August 19,
1820.
57
Liberty Hall and Cincinnati Gazette, August 18, 1821,
^^From the Muskingum Messenger, cited in Cleaveland
Herald, May 22, 1821.
34
about except the hard times.
He continued;
Well, it is true, the times are hard enough. Two or three
years ago we could get a dollar a bushel for our wheat, and
for our pork and beef, four or five dollars the hundred. Then,
our farms were worth something . . . .
Now, we can get
little or nothing for our wheat, our pork and our cattle.
And as for our farms, we could hardly give them away . . . .
But one of the greatest evils that has befallen us Farmers,
is, the money of a host of swindling institutions through­
out the state, that has been shoved on to us by the mer­
chants, Contractors for the General Government, and almost
all the officers and agents who have money to pay out for
the Government.
The General Government . . . have nothing to do with the de­
preciated paper that has been among us, but pay into the hands
of their agents and contractors specie, or that that is as
good. Yet these contractors and agents have sold the good
money for a great premium, as it is called, and with the
bad money, they have purchased up our flour, pork, and whis­
key. This bad money, we . . . have received
of
them andthe
merchants who have bought our produce, at par. But when we
go to settle up our "outstanding balance," or purchase an
article at their stores, our money is worth little or
nothing. They can take it only at 25, 30, or 40 per cent
discount . . . .
If we tell them they ask too high a price
for their goods, the answer is "the money in the country is
bad ; we are obliged to charge high". . .
The money that the Farmer of Ross mentioned to be at a discount of
25, 30, or 40 percent depreciated even more by 1821.
Ohio money
reportedly was running at a 53 percent discount in the Atlantic
states.
It was not until 1824 that Ohio's bad times began to
abate and be replaced by more prosperous times.
Prices took an
upturn, and the financial condition of Ohioans improved accor­
dingly.
It was during the period from 1818 to 1824 in which
economic conditions were bad that the greatest activity against
the Bank ensued in Ohio.
^^The Supporter, July 5, 1820.
^*^United States Gazette and True American. May 22, 1821.
CHAPTER III
OHIO TAXES THE BANK
First Moves Against the Bank
A branch of the United States Bank was located in
Cincinnati in January 1817, and one in Chillicothe in October of
the same year.
The Ohio Legislature took notice of the branches
when it convened in December 1817, at which time it took its first
steps against the national Bank.
A joint committee was established
to inquire into the expediency of taxing any of the Bank's branches
which might be located in Ohio.
report on December 27, 1817.
The committee submitted its
Claiming that so many important
principles and questions were involved, it maintained that it
could not discharge satisfactorily the duty assigned it by the
legislature.
Reasons for and against the right of taxation were
bared by the committee, however.
In support of the principle of
taxation, the committee claimed that the downfall of the state
financial institutions could result if the branches were tax
exempt.
It was argued also that if you "dry up this important
souroe of your revenue, you must supply it by a tax on the faithful
laborious husbandmen, whilst the greatest proportion of the funds,
thus prevented from reaching your treasury, is carried beyond the
35
36
State, to increase the wealth of strangers and foreigners."^
The committee, nevertheless, perceived that the incorporation act
amounted to a contract between the United States and the stock­
holders of the Bank.
The Ohio Constitution, meanwhile, stated
that "no ex post facto .1aw, nor any law impairing the validity
of contracts shall ever be made."
The committee reasoned that the
law incorporating the Bank was constitutional.
If the states had
given Congress the right to create a Bank, it was irrational for
them not to allow the Bank to function.
Finally, because Ohio was
a relatively young state, the committee argued that she should not
assume the lead in contravening acts of the federal government.
2
After having studied the argument for and against levying a tax
on the branch banks, the committee decided that the preponderance
of the evidence was for not taxing them.
The matter was far from settled.
its assent from the report.
The Ohio House withheld
On January 19, 1818, the House first
resolved by a vote of 48 to 12 that it was constitutional and
legal to tax the funds of the Bank's subscribers in Ohio.
Second
and third resolutions were combined into one which proclaimed the
expediency of immediately levying a tax.
a much closer margin - 33 to 27.
The resolution passed by
3
^Ohio General Assembly, House, Journal of the House of
Representatives of the State of Ohio, 16th General Assembly,
1st Session, December 27, 1817, p. 146. Hereafter cited as
Ohio, House Journal.
^Ibid., pp. 146-147.
% b i d .. p. 307.
37
A substitute report was submitted in place of the month
old joint committee report.
The new report, after discussing the
privileges and duties of the Bank, and the privileges of the states,
presented its objections to the Bank.
Stating that it was a rule
of political economy that a state in need of capital should never
tax money, nonetheless, it did not follow that the state should
give privileges to foreigners which were denied its own citizens.
Furthermore, there was no guarantee that the branches would bring
any special advantages to Ohio.
It rather appeared that the oper­
ations of the state institutions would be hampered by their
presence.^
After further charges were made against the Mammoth,
it was resolved that a tax could now be levied against it.
A
three man committee, composed of Charles Hammond of Belmont
County, Gustavus Swan of Franklin County, and James Shields of
Butler County, was designated to prepare and present a tax bill.^
On the following day Charles Hammond reported a bill which
assessed a 4 percent annual tax on the sum of dividends made in
Ohio.
If the Bank defaulted in its payment, a $3,000 assessment
would be levied on each Office of Discount and Deposit.
A committee
of the whole House considered the bill on the evening of January 23.
Speaker of the House, Duncan McArthur, left his chair and assumed
a place on the floor for the debate.
McArthur deliver a long,
bitter oration against the proposed tax, attacking Hammond and
the supporters of the bill as "enemies of the peace of the country
and the sovereignty of the U. States."
The Speaker warned of the
^Ibid., pp. 308-315, and passim.
^Ibid., p. 315.
38
bitter consequences Ohio would suffer if she dared to attack the
financial institution.
The western country would lose all her
specie; funds for internal improvements would be denied her by the
general government.
McArthur was quoted as asking, "if there was
any man who Dared raise his hand against the Bank and the United
States, and encounter these oonsequences?"®
The Speaker later
denied ever having made the quote.
McArthur's impassioned defense of the Giant was only part
of the tactics utilized by the Bank and its supporters to send
the proposed bill to its grave.
The proximity of the Chillicothe
office to Columbus aided the Bank's cause.
Its supporters carried
on a strenuous lobbying campaign to defeat the bill.
McArthur took
a leave of absence and visited his home in Chillicothe.
the branch directors visited the capital.
A few of
A handbill containing
six columns in opposition to the tax was circulated and placed
upon the table of each of the legislators.
The President of the
Cincinnati office made a trek to Columbus at this time.^
Although
there is no direct evidence to be found concerning what the board
members said or why McArthur went to Chillicothe, the presumption
that they wanted the bill defeated can be made confidently.
McArthur's invective in the Bank's cause was not entirely
successful.
Jesse Martin, representative from Jefferson County,
rose to notify his fellow members that he had changed his mind
^Belmont Journal, signed Investigator, cited in The
Supporter, September 2, 1818.
'^Ibid.
39
regarding the taxation of the corporation.
He had opposed taxation
initially, but the picture of the Bank painted by the Speaker was
too painful to accept.
A banking corporation possessed no right to
limit a state from exercising its constitutional powers.
vote to tax the branches.
Hammond was offended.
He would
Comparing
McArthur's oration to that of an army commander reprimanding his
troops for dereliction of duty, Hammond said, "If the members were
to be dragooned out of their opinions, it was no fault of his."
He remarked that McArthur had raised no new arguments.
8
Hammond
moved that the bill be engrossed and read a third time on January
24.
William Vance of Ross County proposed that the whole matter be
postponed until the first Monday of December 1818.
posal was defeated narrowly - 29 to 27.^
Vance's pro­
The victory for the foes
of the Mammoth was only temporary.
As the bill was called up for a third reading on January 24,
Eli Baldwin of Trumbull County, who was present the preceding day
but had not voted on the matter, moved to postpone the consideration
of the bill until the second Monday of December 1818.
Baldwin then
made what was critically appraised as "a mouthing kind of speech"
about proceeding too swiftly on such an important matter.
Hammond
retorted that he was angry that gentlemen were not strong enough to
maintain their convictions."^
The day was lost as the question
®Ibid.
^Ohio, House Journal, 15th General Assembly, 1st Session,
January 23, 1818, p. 359.
^^Belmont Journal, cited in The Supporter, September 2,
1818.
40
to postpone won by a 31 to 28 margin.Ü
The pro-Bank foroes
won over only one vote from the anti-Bank group, Edward
Scofield.
However, the pro-Bank group added to its number a
few men like Baldwin who had not voted on the preceding day.
Hammond's group lost one man to the opposition, added one to its
ranks, and another who was present did not vote.
The failure to tax the Bank did not cause a great com­
motion, however.
A writer using the pseudonym "Graochus"
believed it bad policy to tax the Bank.
He argued that if
Congress possessed the constitutional power to charter the Bank,
Ohio had no right to tax it.
He insinuated that the legislators
were driven by an ulterior motive, that a number of them were
stockholders or directors of state banks.
As a result they de­
sired to eradicate the power of the national Bank in
O h i o .
12
James Wilson, editor of the Western Herald and Steuben­
ville Gazette and grandfather of Woodrow Wilson, took a moderate
tone after efforts to tax the Bank were defeated.
The newspaper
said that the attempt to levy a tax upon the Bank was a
llOhio, House Journal, January 24, 1818, pp. 360-351.
^^The Supporter, February 25, 1818. The charge that Ohio
politicians had bank connections was common and contained some
substance. Gustavus Swan, Franklin County representative, was
at one time, president of the Franklin Bank of Columbus. Ethan
Allen Brown, Ohio's next governor, was director of the Bank of
Cincinnati in 1810. He held stock in the Miami Exporting
Company in 1817. Many prominent Ohioans of the day had bank
connections. See John Still, "The Life of Ethan Allen Brown,"
(Unpublished Ph.D. dissertation. Department of History, The
Ohio State University), pp. 52 and 67.
41
doubtful measure.
The Philadelphia institution commenced
operations with good intentions, and its Ohio branches had barely
started.
Certainly it was proper to allow the federal Bank the
1^
opportunity to make good.-^'^
The newspaper's present moderation
was the antithesis of the strident tones it would use in a few
months.
The issue remained relatively quiet until aggravated in
the summer of 1818.
New fires of opposition were kindled when,
on July 20, 1818, the Philadelphia institution demanded, that the
balances against the Cincinnati banks be collected at the rate of
20 percent a m o n t h . T h e president and directors of the
Cincinnati branch gauged the demand and asked the parent bank to
reconsider.
The branch officers notified their superiors of the
astonishment excited by the request.
The new policy, they
asserted, would cause distress, perhaps ruin, for the community.
They pleaded with the Philadelphia Directors "to pause and re­
flect upon the measure which they have adopted as fraught
15
with consequences unforeseen and indescribable.""
The Cincinnati
banks swiftly protested, but William Jones rejected their requests
to proceed slowly.
Instead of offering them relief, the president
and directors of the United States Bank instructed the cashier of
^^ e s t e r n Herald and Steubenville Gazette, September 9,
1818.
14
Catterall, Second Bank of the United States, pp. 62-63
^^American State Papers, Folio Finance, IV, pp. 859-861.
42
the Cincinnati branch not to receive the notes of the Cincinnati
banks.
He should receive only "the lawful currency of the United
States, or the notes of the said office, unless in payments due
to the United States, for which he will receive any of the bills
of this bank or its offices.
The Cincinnati banks were in trouble.
run was made on them for specie.
A precipitous
They initially paid it out
but quickly resolved to suspend specie payments.
17
Not only
did the banks feel the disastrous effect of the Bank's edict but
those who transacted business with the banks and branches were
effected as well.
18
Many described the policy of the Philadelphia
Bank as the "immediate cause of Ohio's financial disaster."
19
The residents of Cincinnati were ill-equipped to forestall
the demands of the Bank.
They held a meeting in the turbulent
days in order to obtain a resolution supporting the suspension of
speoie payments.
What resulted was the appointment of a committee
to investigate the causes of the suspension.
It evidently was
hoped that a stream of public indignation be launched against the
Bank, but the meeting proved ineffectual.
PC)
l^ibid.. pp. 851-862.
^^The Western Spy, November 7, 1818.
^^Liberty Hall and Cincinnati Gazette, November 10, 1818.
^^Utter, The Frontier State. II, p. 299.
20
American State Papers, Folio Finance, IV, Extracts of
letters from Cashier of Cincinnati branch, to Cashier of Bank of
the U.S., November 7 and 8, 1818, p. 864.
43
Newspapers provided the most effective opposition.
The
Liberty Hall and Cincinnati Gazette, commenting on the recent
developments, claimed that the Bank required the immediate
payment of specie from the Cincinnati banks because they were not
humble enough before the "Presence of their High Mightiness."
It
was contended that the remonstrance made by the banks in which
they proposed to pay off the balances against them was too haughty
for the Bank to
hyperbole.
The newspaper's charge contained too much
b e a r . ^ l
Rather it was the mismanagement of the Bank under
Jones that was the fault.
As a result the state institutions
overextended themselves, while the Bank of the United States
allowed them to do so.
The request for payment asked too much,
too soon.
Great opposition was aroused which augured ill for
the Bank.
The Ohio Legislature would meet in December 1818 with
the above events before it.
Supporters of the Bank were among the first to suffer
for the position they had assumed.
election of 1818
I t
was reported that the
revolved around the question of the Bank.
And,
in every instance where the Bank was an issue, those who sup­
ported it lost.
tax levy against
Duncan McArthur, so instrumental in delaying a
the Bank in thelast legislature, was
d e f e a t e d .
Former Governor Worthington ran for the Senate in 1818 and was
defeated by Colonel William A. Trimble.
Worthington's popularity
had waned somewhat, partially because of his role in bringing the
21
31,
Liberty Hall and Cincinnati Gazette, November 10, 1818,
^^Niles' Weekly Register, Volume III, No. 10, November
1818, p. 149.
r Sicl
44
Mammoth into Ohio, and because he was both a stockholder end
d i r e c t o r . M e n who opposed the Bank were elected.
Ethan Allen
Brown, an anti-Bank candidate who Ironically had studied law in the
offices of Alexander Hamilton, was elected to succeed Thomas
Worthington.
A week after the Ohio General Assembly convened in
December 1818, a five man committee was named to inquire fully into
the status and management of the branches of the United States
Bank in Ohio, and of the condition of the state banks.
The
committee was to submit all information to the House "together
with their opinion of the measures that it would be expedient
to adopt, both with respect to taxing the Capital of the United
States Bank, and for regulating the proceedings of the state
b a n k s . C h a r l e s Hammond, Valentine Keffer, James S. Swearin­
gen, Isaac Miner, and Daniel Smith, all of whom voted to set up the
committee, were named to it.
Governor Brown's address was delivered to the General
Assembly on December 16, 1818, one day after the naming of the
committee.
He expressed his opposition to the Bank in objections
that had been often made before.
The two branches had been
located in Ohio without Ohio's permission; and the state had
no control over the actions of the officers.
Brown viewed the
Congressional power which granted the charter of incorporation
^^Sears, Thomas Worthington, p. 208.
^“^Ohio, House Journal, 17th General Assembly, 1st
Session, December 15, 1818, pp. 86-87.
45
to be debatable.
However, so long as the question was doubtful,
he recommended that the state acquiesce in the action of Congress.
The new governor, nevertheless, discerned no reason why the
branches should be tax-exempt.
To allow the Offices of Discount
and Deposit to be free from taxation would be unfair to the state
banks which had to pay.
A principal question was whether the
state had the power to tax an organization chartered by Congress.
Brown indicated that the state had the p o w e r . H i s inclinations
obviously were opposed to those of his predecessor.
Moreover
the executive and legislative branches demonstrated an increased
belligerence to the Bank.
The committee on banks submitted its findings to the House
on January 18, 1819.
The same charges that appeared in the
Governor's address appeared in the report alongside numerous
other faults of the Bank.
The agents of the branches were
accused of being more interested in their employers than in
Ohio and her banks.
Tlie committee descried the fact that the
state banks were reduced to little more than broker shops.
The report concluded with the committee recommending that an
attorney general be appointed to enforce the law against un­
authorized banking and to inquire into the conditions of banks
that refused to report.
A recommendation was made to enact a
25
Ohio, Senate Journal, 17th General Assembly, 1st
Session, December 16, 1819, pp. 97-98.
^^Ohio, General Assembly, 17th Assembly, Report of the
Committee on the Subject of Levying a Tax on the Capital of the
U.S. Bank, Employed in Ohio (Columbus: David Smith, printer,
1818), pp. 10-11.
46
law levying an annual tax of $50,000 on each branch of the
Bank which determined to remain in Ohio and transact business.
And finally.
Your committee also recommend that provision be made by
law for simplifying legal proceedings in all cases where
banks are a party, and securing the holders of bank notes
against impositions by prohibiting all brokerage in bank
paper especially on the part of debtors to and stock­
holders in banks ; and unless directed by the house, your
committee will proceed, so soon as they can be prepared,
to report bills conformable to the suggestions here m a d e . 27
The committee hoped to utilize the threat of taxation to drive the
branches from Ohio.
If the threat did not work sufficiently, the
actual levying of the $50,000 annual tax would take place.
Congressional and State Opposition to the Bank
It would be misleading to concentrate solely on Ohio's
disenchantment with the Bank of the United States.
Parallel
sentiments developed elsewhere simultaneously, both in Congress
and in other states.
Only two weeks before the naming of the committee to
study the Bank in Ohio, Representative John Spencer of New York
proposed a resolution in the House of Representatives that a
committee be appointed to inspect the Bank's books and to examine
its proceedings.
It should report, among other things, whether
the provisions of the Bank charter had been violated.^8
resolution passed on November 30.
The
A five man committee was
^'^Ibid. , pp. 17-18.
OQ
Annals of Congress, 15th Congress, 2nd Session, House
of Representatives, November 25, 1818, p. 317.
47
appointed and proceeded to Philadelphia.
Convening there, it
summoned the necessary persons and papers before it.^^
The results of the investigation were reported by Spencer
on January 15, 1819.
The committee's lengthy report concluded
that the federal Bank violated its charter in four instances;
first,
by purchasing $2,000,000 of public debt to substitute them for
$2,000,000 of similar debt which it had contracted to sell to
Britain, and which the Secretary of the Treasury claimed the right
of redeeming; second, by not requiring "the fulfillment of the
engagement made by the stockholders, on subscribing, to pay the
second and third installments on the stock in coin and funded
debt"; third, by paying dividends to stockholders who had not
paid their installments; and fourth, by allowing stockholders
to have too many votes in Bank elections.
30
The maximum number
of votes any one stockholder could cast was thirty, but by using
loopholes he could cast more.
There was no mention in the re­
port whether the charter of the Bank ought to be repealed.
The subject of the repeal of the Philadelphia Bank's
charter was aired in Congress three days after the report.
David
Trimble of Kentucky proposed that the United States Attorney
General act jointly with the Pennsylvania district attorney and
cause a scire facias to be issued.
The task of the Bank would be
^^Ibid., November 30, 1818, p. 335.
30
Clarke and Hall, Legislative and Documentary History of
the Bank of the United States, pp. 731-732.
48
to explain why its charter should not be forefeited.
By
a 71 to 53 vote the House decided not to consider the resolution
at the present.
House.
31
It was referred to a committee of the whole
Spencer of New York later presented a resolution, containing
a list of propositions, the last concerning a scire facias to be
issued from a United States circuit court.
The resolution was
tabled as the House agreed to devote full time to discuss the
matter.
On February 9, 1819, James Johnscn of Virginia submitted
a resolution "That the Committee on the Judiciary be instructed
to report a bill to repeal the act entitled An act to incorporate
the subscribers to the Bank of the United States . . . ."
Johnson's resolution was referred to the committee of the whole
u
House.33
A full discussion was afforded to the Bank of the United
States for the next two weeks.
The attempts to repeal the charter
finally were defeated on February 24, 1819.
The committee of the
whole disagreed with Johnson's resolution by a vote of 121 to
30.
Trimble's earlier proposal also met defeat by a vote of
116 to 39.
34:
Both resolutions were rejected, thus stifling
Congressional opposition for a long period.
Annals of Congress. 15th Congress, 2nd Session, House
of Representatives, January 19, 1819, pp. 598 and 600.
^^Ibid., February 1, 1819, pp. 923-925.
^^Ibid., February 9, 1819, pp. 1140 and 1142.
^^Ibid., February 24, 1819, pp. 1411-1413.
49
State antipathy to the Bank was much stronger in this period.
The Bank was opposed by some as early as 1816.
The Indiana
constitution of that year prohibited the inoorporation of a bank
or a banking company within its borders "for the purpose of
issuing bills of credit or bills payable to order or bearer."
35
The Illinois constitution of 1818 barred the existence of banks
or moneyed Institutions from the State except those that were
already lawfully provided for or except for a State bank and its
b r a n c h e s . T e n n e s s e e imposed a tax of $50,000 on any other
bank transaoting business in the state except for a state bank.^'^
A Georgia law entitled "An Act to raise a Tax for the support of
Government for the Political Year 1818" levied a tax of 31% cents
on every $100 of bank stock "operated upon, or employed within
this state."
38
The Maryland General Assembly enacted a law in
February 1818, levying a heavy stamp tax on all notes issued by
outside chartered banks.
upon stamped paper:
No bank notes could be issued except
there would be a stamp of 10 cents on every
35
Benjamin Parley Poore, The Federal and State
Constitutions, Colonial Charters and Other Organic Laws of the
United States. (Washington: Government Printing Office, 1878),
Volume I, Article X, Section I, p. 509. Hereafter cited as
Poore, Federal and State Constitutions.
^^Ibid., Volume I, Article VIII, Section 21, p. 447.
37
Laws of Tennessee, Scott's Edition, Volume II, pp. 389 f f ;
Laws of 1817, Chapter 132, Seotion 2, November 22, 1817, cited in
Catterall, Second Bank of the United States, p. 64.
Lucius Q. C. Lamar, A Compilation of the Laws of the
State of Georgia, Passed by the Legislature since the Year 1810
to the Year 1819, Inclusive, (August; Published by T. S. Harmon,
1821), assented to December 19, 1817, pp. 889-890.
50
five dollar note, 20 cents on every ten dollar note, 30 cents on
every fifty dollar note, all the way up to a 20 dollar stamp on
every one thousand dollar note.
A fine of $500 would be levied on
any recalcitrant president, cashier, or director who refused to
comply with the l a w . I n
December 1818 North Carolina imposed
a yearly tax of $5,000 on the Offices of Discount and Deposit.'^®
In January 1818 the Kentucky Assembly levied the heaviest sum
of all, $60,000 per annum on each branch within the state.
The law would go into effect on March 4, whereupon the Bank was
to pay a $5,000 monthly tax.
Henry Clay was "mortified" to hear
of the step his state had taken.
He sent a copy of the Kentucky
tax act to President William Jones with the comment that much
of the blame for the tax measure could be traced to the jealousy
of the state bank.
He felt that Kentucky was inconsistent in the
matter, first inviting the Bank into the state and then proceeding
^^Maryland, General Assembly, Laws Made and Passed by the
General Assembly of the State of Maryland, at a Session Begun and
Held at the City of Annapolis, on Monday the First Day of December,
Eighteen Hundred and Seventeen (Annapolis; Printed by Jonas
Green, 1818), Chapter 156, passed February 11, 1818, pp. 174175.
40
History
p. 889.
Charles Warren, The Supreme Court in United States
(Boston: Little, Brown, and Company, 1926), Vol. II,
Hereafter cited as Warren, The Supreme Court.
^^Kentucky, General Assembly, Acts Passed at the First
Session of the Twenty-Seventh General Assembly for the Commonwealth
of Kentucky, Begun and Held in the Town of Frankfort, on Monday
the Seventh Day of December 1818, and of the Commonwealth the
Twenty-Seventh (Frankfort : Printed by Kendall and Russels,
1819), Chapter 343, passed January 28, 1819, p. 637.
51
to tax it out of existence.
42
Seven out of the twenty states in the Union had taken
some sort of legislative or constitutional action against the
Bank of the
United States by the end of January 1819.
this time Ohio antagonism against the
gained momentum.
During
financial institution
The Ohio Legislature, meanwhile, had the
example of over one-third of the Union, and, thus, did not proceed
in isolation.
The Bank Committee reported a bank bill to the Ohio
House which levied a tax on the Bank.
The bill passed the
House by the overwhelming margin of 56 ayes to 3 noes.
43
The
Senate concurred, and on February 8 , 1819, the tax on the United
States Bank became law.
Entitled "An act to levy and collect a
tax from all banks and individuals, and companies and associations
of individuals, that may transact banking business in this state,
without being authorized to do so by the laws thereof," the
preamble stated ;
Whereas, the president and directors of the bank of
the United States have established two offices of discount
and deposit in this state, at which they transact business,
by loaning money and issuing bills in violation of the
laws of this state; and whereas, diverse companies and
associations of individuals within this state, unauthorized
by law, continue in like manner to do business as bankers and
42
James P. Hopkins (ed.), Papers of Henry Clay (Lexingtoni
University of Kentucky, 1963), Henry Clay to William Jones,
Washington, March 3, 1819, Volume II, p. 442. Hereafter cited
as Hopkins (ed.). Papers of Henry Clay.
^^The Supporter, February 3, 1819.
52
banks, by loaning money and issuing bills and by trading
in notes and bills; and whereas, it is just and necessary
that such unlawful banking, while continued, should be
subject to the payment of a tax for the support of
government . . .
Ohio rivalled Kentucky in harshness by exacting an annual tax
of $50,000 on each Office of Discount and Deposit.
The law
ordered the State Auditor to collect the tax which was to be
levied in September 1819 and annually thereafter.
The Auditor
could issue a warrant appointing a collector to levy the tax.
The collector was given the extraordinary power of unlimited
search.
Armed with a warrant, he could enter into the Bank's
premises and demand payment of the stipulated amount.
If the de­
mand was refused, and, he was unable to locate any money, bank
notes, or goods it became his duty "to go into each and any other
room, or vault of such banking-house, and every closet, chest,
box or drawer in such banking-house to open and search . . .
The law was termed the crow-bar law because of the instrument
used to execute it.
A journalistic justification for taxing the Bank was
offered by Niles' Weekly Register.
Believing that the incorp­
oration of the Bank was erroneous, but that the institution had
rendered some meritorious service to the country, the magazine
believed that the Bank ought to be preserved.
It had to be
restrained, however, and the most effective manner of accomplishing
this was through the acknowledged right of state taxation because
Chase, Statutes of Ohio. Volume II, Chapter 343, passed
January 28, 1819, p. 1072.
45
Ibid., pp. 1072-1073.
53
"The People Are The Only Safe Depository of Their Own Interests."
If the Bank performed well, it insured its existence.
badly, it might be driven from the state.
If it erred
Niles contended that
a denial of the states' right of taxation meant a denial of
state sovereignty.^^
This was the crux of the issue.
Eight states, or 40 percent of the Union, had taken
action against the Bank by February 1819.
lone effort.
Ohio's action was no
Whether the action was constitutional was moot ;
but it was on the verge of being decided when Ohio took her step.
'^^Niles* Weekly Register. Volume III, Number 25,
February 13, 1819, p. 464.
CHAPTER IV
THE BANK BEFORE THE SUPREME COURT
The Deveaux and McCulloch Cases
The Maryland stamp tax prompted legal action in that
state in 1818 which became the famous case of McCulloch v.
Maryland.
The state brought an action against the Baltimore
branch cashier, James W. McCulloch, for violating the state law
requiring that bank-notes be issued upon stamped paper.
The
cashier refused either to purchase the stamps from Maryland or
to pay a heavy tax.
Governor Charles Ridgley reported the
progress of the court action to the Maryland General Assembly
in December 1818.
•
The Bank determined to disobey the stamp tax,
!laer, desired to test the constitutionality of the tax
before the courts.
Both the Maryland authorities and the national
Bank, recognizing the gravity of the issue, agreed to waive all
legal delays and quickly bring the case before the United States
Supreme Court.
The case progressed rapidly through the courts.
Judgment was rendered for the state in the suit instituted before
the Baltimore county court ; the Bank appealed the judgment to
the state court of appeals in June 1818, and once again the
decision favored the state.
Supreme Court of the land.
concluded an agreement.
The case had now reached the
Meanwhile the Bank and Maryland had
If the Bank lost the case, the penalty
would not be exaoted from the institution; instead the Bank
54
55
would pay $15,000 into the Maryland treasury, as specified by
the legislative act.
The Bank agreed to pay the annual tax so
long as the statute remained in force or the Bank remained in
Maryland.
If judgment was rendered against Maryland, neither
costs would be exacted nor would the state pursue any further
steps against the financial institution.^
Although the McCulloch case is a truly important case in
constitutional law, its notoriety should not obscure the fact that
this was not the first time that the United States Bank was
involved in a Supreme Court case. , The first Bank of the United
States encountered problems with the state of Georgia a decade
earlier.
A branch office was located in Savannah in 1802.
At
first welcomed by borrowers, a reversal of sentiment prevailed
when the Bank demanded repayment.
borrowers were alienated.
legislative action.
Debtors as well as would be
Soon resentment was channeled into
An 1805 act of the Georgia General Assembly
which raised a tax to support the state government levied a tax
of 2^ percent "on the amount or capital of any bank or banks,
offices of discount and deposit within the state and the further sum
of one half percent, on the amount of bills issued from any such
bank or offices of discount and deposit . . . ."
p
^Niles' Weekly Register, Supplement to Volume XII, p. 71.
Governor Ridgley's Communication to the Maryland General
Assembly, 1818.
p
Georgia General Assembly, Acts of the General Assembly
of the State of Georgia, Passed at Louisville, in December. 1805
(Augusta: Printed by George F. Randolph, 1805), assented to
December 4, 1805, p. 20
56
An act of December 1806 placed a tax of 31% cents on every
$100 of bank capital or capital of the Offices of Discount and
Deposit.
3
The following year witnessed a repeat of the same
taxation of bank capital
Not only did Georgia establish an example for future
legislative action against the second Bank by her taxation of the
original, but the state also provided an example of action that
Ohio would imitate a decade later.
tax.
The Bank refused to pay the
State officers thereupon entered the Bank's premises at
Savannah on April 20, 1807, and secured two boxes of silver
containing $2,004.^
An action of trespass was pressed by the
Bank and ultimately reached the Supreme Court.
The opinion of
the Bank of the United States v. Deveaux et a l . was delivered by
Chief Justioe John Marshall on March 15, 1809.
The Chief Justice
claimed that two points were made in the case, namely;
(1 )
that a corporation, composed of the citizens of one state may
sue a citizen of another state, in the federal courts; and
(2) that a right to sue in those courts was conferred on this
bank by the laws which incorporated it.
the second point first.
Marshall considered
The Bank had sued in the circuit courts;
3
Acts of Georgia General Assembly . . . November and
December, 1806 (Louisville: Printed by Ambrose Day, 1806),
assented to December 8 , 1806, p. 80.
^Acts of Georgia General Assembly, Passed at Milledgeville, in November and December, 1807 (Milledgeville: Printed
by Alexander M'Millan, 1807), assented to December 10, 1807, pp.
72-73.
^William Cranch, Reports of Cases Argued and Adjudged in the
Supreme Court of the United States, in February Term, 1809 (New
York: Banks & Brothers, Law Publishers, 1882), Volume V, p. 61.
57
but the Judicial Act did not bestow the right for the Bank to
sue in that court upon the principle that the case arose under
a law of the United States.
The Bank's lawyers contended that the
incorporating act gave the Bank the right to sue in the circuit
courts.
It enabled the Bank "to sue and be sued, plead and be
impleaded, answer and be answered, defend and be defended, in
courts of record, or any other place whatsoever."
Marshall
said:
But the 9th article of the 7th section of the act
furnishes a conclusive argument against the construction
for which the plaintiffs contend. That section subjects
the president and directors, in their individual capacity,
to the suit of any person aggrieved by their putting into
circulation more notes than is permitted by law, and
expressly authorizes the bringing of that action in the
federal or State courts.
This evinces the opinion of congress, that the right
to sue in the courts of the Union, unless it be
expressed. . .
Marshall concluded that the incorporating act gave the Bank
no right to sue in the federal courts.
The second point considered was whether a corporation
may sue in the federal courts, since the jurisdiction of such
courts was limited "to controversies between citizens of diff­
erent states."
Both parties involved in the suit had to be
citizens in order to fall within this description.
The Bank had
to be considered not as a "mere faculty" but rather as "a company
of individuals, who, in transacting their joint concerns, may use
n
a legal name . . . ."
^Ibid., pp. 85-86.
'^Ibid., pp. 86-87
58
The court cited a case in British law, known as the
Mayor and Commonalty y. Wood, to settle the principle.
A
London corporation had instituted a suit against Wood in the
mayor's court.
An objection was made that a "corporation was
an intangible, incorporeal entity in which the characters of
the members involved were completely submerged."
The court
decided that it could look past the corporate name and discern
the character of the individuals.
Marshall found an ample
0
precedent therein for the Deveaux case.
He concluded:
The court feels itself authorized by the case in 12 Mod.,
on a question of jurisdiction to look to the character
of the individuals who compose the corporation, and they
think that the precedents of this court, though they were
not decisions on argument, ought not to be absolutely
disregarded.
If a corporation may sue in the courts of the Union,
the court is of opinion, that the averment in this case
is sufficient. Being authorized to sue in their corporate
name, they could make the averment, and it must apply to
the plaintiffs as individuals. . . .
The Bank lost the case and the Savannah branch paid the
Sheriff's execution.
The case, however, was so entangled in
technicalities that the constitutional issue involved was
i g n o r e d . L a t e r problems could have been alleviated if the
constitutional issue had been settled, but it was ten years beforec
that was accomplished.
Meanwhile the Bank's charter expired in
1811, and it was five years before the second Bank received a
charter.
8
Ibid., p. 90.
^Ibid., pp. 91-92.
Sumner, History of Banking in the United States, Volume I,
p. 48.
59
While the problem involved in the Deveaux case was
jurisdictional, the question in the McCulloch case was
constitutional.
The case was an action of debt by John James,
suing for himself and the state of Maryland, to recover a
$100 penalty from James McCulloch, Baltimore branch cashier,
for violation of the Maryland statute by circulating an unstamped
banknote.
The case came before the Supreme Court in the
1819 February term.
In preparation for it Chief Justice Marshall
sold the seventeen shares of bank stock he owned and never again
T O
bought any.
The arguments by six of the country's outstanding
lawyers - Attorney-General William Wirt, Daniel Webster, and
William Pinkney, for the Bank, and Luther Martin, Joseph Hopkinson,
and Walter Jones, for Maryland - consumed nine days, from Feb­
ruary 22 to March 3.
The last argument, presented by William Pinkney from
March 1 to March 3, was the most eloquent and persuasive in the
case.
Pinkney queried whether the congressional act of incor­
poration was consonant with the constitution.
He presented his
view of the constitution thus;
But the constitution acts directly on the people, by
means of powers communicated directly from the people.
No state, in its corporate capacity, ratified it; but
it was proposed for adoption to popular conventions.
It
springs from the people, precisely as the state constitution
springs from the people, and acts on them in a similar
Henry Wheaton, Reports of Cases Argued and Adjudged
in the Supreme Court of the United States. February Term 1819.
(New York: Banks & Brothers Law Publishers, 1883), Volume IV,
p. 317. Hereafter cited as 4 Wheaton.
TP
Bray Hammond, Banks and Politics in America, p. 264.
60
manner. . . .
The federal powers are just as sovereign
as those of the states. The state sovereignties are not
the authors of the constitution of the United States.
They are preceeding in point of time, to the national
sovereignty, but they are postponed to it, in point of
supremacy, by the will of the people.
Pinkney argued for an implied powers theory of government.
He claimed that unless means were denied specifically to the
general government, it had them within the ambit of its powers.
It was impossible for the constitution's writers to detail every
means, because it would have required too much detail and because
the writers could not foresee the f u t u r e . P h i l o l o g i c a l l y
analysing the terms "necessary and proper," Pinkney demonstrated
that the word "necessary" did not possess an inflexible meaning.
It could be qualified by adjectives and adverbs "such as
very indispensably, more, less, or absolutely necessary; which
last is the sense in which it is used in the 10th section of this
article of the constitutionI"
He concluded that a strict
entymological study of the word proved it was used not only in
a strict and rigorous s e n s e . H e preferred a liberal inter­
pretation which would allow the incorporation of the Bank.
Pinkney contended that the Offices of Discount and
Deposit were identical with the parent bank.
Because Congress
possessed the principal power to charter the Bank, the subordinate
power to establish branches followed.
^^4 Wheaton, pp. 377-378.
^“^Ibid., pp. 384-385.
^^Ibid.. pp. 387-388.
^^Ibid.. p. 390.
61
The last question considered by the Bank's counsel was
considered by him to be the only difficult question in the
case, and of vital importance to the Union.
Arguing that there
was no constitutional provision to exempt the national
institutions or property from state taxes, it was only by
implication that they were tax exempt.
Pinkney argued that
Congress' power to establish implied a power to continue.
The law of Maryland acted on the Bank's operations and could
destroy it.
He claimed that the Bank was as much a govern­
mental instrument for monetary purposes as the courts were for
judicial reasons.
Both sprang from the supreme power; both
could claim its protection.
17
Pinkney maintained that Congress
possessed and exercised the authority to tax the state banks.
The states might argue that they had the authority to tax the
national Bank.
However, because Congress exercised the power
of the people, when it acted it did so as the whole acting on the
whole.
When a state taxed the Bank, however, this was a part
acting on the whole.
The Bank attorney concluded that it was
inconsistent to establish a Bank if it was to be driven out of
existence by state taxation.
In such a way might the whole
machinery of the national government be stopped.
"No other
alternative remains, but for this court to Interpose its author­
ity, and save the nation from the consequences of this dangerous
attempt.
Supreme Court Justice Joseph Story effusively praised
17
Ibid., pp. 391-396 and passim.
^®Ibid., pp. 397-400, passim.
62
Pinkney's presentation.
Justice Story averred that he had never
heard an hbler speech in his whole life.
He claimed that,
It was worth a journey from Salem to hear it; his
elocution was exceedingly vehement, but his eloquence
was overwhelming. His language, his style, his figures,
his arguments were most brilliant and sparkling. He
spoke like a great statesman, and a sound constitutional
lawyer. All the cobwebs of sophistry and metaphysics
about State rights and State sovereignty he brushed away
with a might besom.
Pinkney's performance not only pleased Story but affected the
Chief Justice as well.
20
The Court, composed of five Republican justices and two
Federalists delivered a unanimous opinion in favor of the Bank.
Four members of the Court had received their appointments from
Jefferson and Madison.
21
The Chief Justice delivered the
unanimous opinion on March 7, 1819, one day after Langdon Cheves
assumed the presidency of the Bank.
Congressional power to
incorporate and-control a Bank was affirmed.
The selecting of
locations for branch banks was a proper action of the Bank.
power of the state to tax the federal Bank was denied.
The
The
19
William W. Story (ed.). Life and Letters of Joseph
Story (Boston: Charles C. Little and James Brown, 1851),
letter to Stephen Smith, March 3, 1819, Volume I, p. 325.
20
Maurice Baxter, Daniel Webster and the Supreme Court
(The University of Massachusetts Press, 1966), p. 174. Baxter
points out the striking similarities between Pinkney's arguments
and Marshall's opinion.
See footnotes 16 and 17.
^^Warren, The Supreme Court in United States History,
p. 515.
63
Maryland law imposing a tax on the Bank was declared -uncon­
stitutional and void.
The decision encompassed much more than
the Bank of the United States.
The Bank was portrayed as an
instrument of government rather than simply a financial
institution.
As a result of the case federal authority was
greatly enhanced which was of greater significance than merely
preserving the Bank.
This was understood by interested spec­
tators.
Reaction to the McCulloch Decision
While the North and East, where the Bank was less
unpopular, generally adhered to the McCulloch decision, the
South and West stridently denounced ito
The criticism levelled
at the Court was not because the Court possessed the power to
declare a Congressional act unconstitutional, but, because, in
this instance, it had refrained from doing so.
Rather, by
its decision, the Supreme Court aided and abetted the wide lati­
tude of power that gave Congress the power to establish a
national Bank.
decision.
23
Strict Jeffersonians were incensed at the
For believers in states' rights the decision signified
a great encroachment on state sovereignty.
The loudest outcries against the McCulloch decision
appeared in the newspapers.
Niles' Weekly Register published a
three part article on the case entitled "The Sovereignty of
the States."
22
Bemoaning the fact that state sovereignty had been
4 Wheaton, pp. 400-437, and passim.
^^arren. The Supreme Court in United States History,
pp. 514-515.
64
dealt a deadly blow, Niles was shocked that the wielder of the
weapon was an agency so inaccessible to public opinion - the
Supreme Court.
He was convinced that "the welfare of the Union
has received a more dangerous wound than fifty Hartford
conventions. . . ."
24
The second article stressed the fear that the principles
established in the case were more dangerous for the country than
anything that the United States ever had to fear from foreign
invasion.
While the Register claimed that England's threat to
"depose" President Madison was frivolous, the judicial decision
was alarming.
It posed a threat to state sovereignty; it allowed
monopolies; and it would "make the productive many subservient
to the unproductive few."
25
The Register considered the Bank
and its Offices of Discount and Deposit a monopoly, and thought
the states were able to tax monopolies within their boundaries.
The constitution did not prohibit this.^^
The most cogent argumentation against the decision
appeared in the third article of the Register.
The Supreme
Court opinion clothed the federal government with too much power,
the power to grant monopolies in "all cases whatsoever."
These
^%files' Weekly Register, New Series No. 3, Volume IV,
March 3, 1819, pp. 41 and 43.
Ibid., New Series No. 6 , Volume IV, April 3, 1819
p. 103.
^^Ibid., The 10th article of the amendments to the
constitution says, "The powers not delegated to the United
States by the constitution, nor prohibited by it to the States
are reserved to the States respectively, or to the people."
65
monopolies were then exempt from the operations of the state.
The decision was alarming especially because "it squints at
Consolidation."
27
Utilizing a historical argument to prove its
contentions, the magazine argued that the constitution was
ratified because the states believed that they would be free from
monopolies and would reserve the powers not delegated specifically
to the national government.
New York, for example, declared
"That Congress Do not Grant Monopolies, or Erect Any Company With
Exclusive Advantages of Commerce."
Maryland resolved, "That
Congress shall exercise no power but what is expressly dele­
gated by this constitution."
Niles also quoted Alexander Hamilton,
author of number 33 of the Federalist to demonstrate that the
states were empowered to levy a tax except on imports or exports.
The prevention or abrogation of such a law would be a usurpation
OQ
of a power not granted by the constitution.
The Register
was in the vanguard of the opposition to the McCulloch decision.
Newspaper criticism in Ohio was as vitriolic as could
be found anywhere.
A leader in violent criticism to the opinion
was James Wilson's Western Herald and Steubenville Gazette.
Wilson's editorial comment on the decision was entitled "The
United States Bank, Every Thing I"
He wrote that a usurpation
had been committed as a result of the Supreme Court opinion.
matter
the iniquities
No
of the Mammoth were, the Court made
positive that the country and the west would be still afflicted by
27
Ibid., New Series No. 9, Volume IV, April 24, 1819,
p . 145.
^®Ibid.
66
it.
Wilson concluded that if the United States Bank was per­
mitted to perpetuate its operations - taxing states without
their consent, plaoing branches in states without their
permission, and remaining tax exempt - the states should not
amend the constitution but rather should return to their
territorial status.
29
A more moderate stance was assumed by the Liberty Hall
and Cincinnati Gazette.
Although the decision was a surprise,
the newspaper maintained that it had no quarrel with the jud­
iciary, the proper tribunal to define the constitution.
Marshall's
reasoning was conclusive 5 but the newspaper advocated consti­
tutional changes lest too much power be concentrated in the
hands of the federal government.
30
Within a short time, however,
the paper reported the great dissatisfaction regarding the
decision and stated, "we should not be surprised if the court
should be called upon to revise it by the perseverance of some
of the states in asserting their claims to the right of
taxation.
A letter of Walter Dun, a director of the Chillicothe
Office of Discount and Deposit to Charles Hammond appeared in
print.
Dun inquired what was to be done with the bank law and
bank report of the last session.
Hammond evidently had not
seen the text of the decision yet but replied that no arguments
in support of the principle of the decision had been propounded
29
Western Herald and Steubenville Gazette, March 20, 1819.
30
Liberty Hall and Cincinnati Gazette, April 2, 1819.
^^Ibid., April 13, 1819.
67
yet which were worthy of refutation.
If the Court's opinion
lacked compelling rationality, Hammond hoped that Ohioans would
compel the judges to review their opinions.
Hammond then ex­
pressed a sentiment that would be a constant refrain of the
opponents of the Court opinion.
The western states would accept
a decision when they were able to present their side in the
m a t t e r .
32
Hammond believed that the McCulloch case was a pre­
arranged affair that smacked too much of collusion.
Under such
circumstances acquiescence was abhorrent to him.
Hammond's wish to witness the western states present
their case against the Bank was not an idle one.
Rumors cir­
culated that Governor Brown might convene the General Assembly
into a special summer session to plan strategy to counter the
McCulloch decision.
The Western Herald and Steubenville Gazette
found the idea appealing.
It wanted the state to assume the lead­
ership in organizing other similarly inspired states to fight
against consolidation and to conserve states' rights.
Ohio's
leadership was advocated because she had suffered much from
the Mammoth's hands, yet her patriotism was
u n i m p e a c h a b l e .
33
Governor Brown, writing to Hammond, observed that the
western states would disapprove of the Supreme Court's opinion.
Tennessee, Indiana, Kentucky, Maryland, and Pennsylvania in varying
degrees were alienated from the Giant ; Virginia and Georgia were
leaning towards the opposition.
So many powerful voices raised
^^The Belmont Journal, cited in The Supporter, March 31,
1819.
OO
Western Herald and Steubenville Gazette. May 1, 1819.
68
against the Bank, and the opinion supporting it would force
Congress to listen and "to attempt something restrictive of
the constructive power, and real influence of the Bank over the
Treasury and the public.
Not all newspapers adhered to the above criticism,
however.
The Southern Patriot defended the McCulloch decision.
Arguing for a broad rather than a restricted interpretation of
the constitution, the newspaper stated that for the country to
operate effectively and efficiently Congress needed a latitude
of action.
Its direction could not be delineated and prescribed
in any written constitution.
The paper contended that the
public had been alarmed unduly and stirred up needlessly over
the decision by the journalistic medium.
These Cassandras
prophesied the subjugation of the state governments to the
national government.
There was no basis for this.
The Western
Spy and Cincinnati General Advertiser printed the opinion of the
Court and claimed that the wisdom and virtue from which the
opinion was handed down would settle the question definitively.^®
The newspaper had misread completely the temper of its readers.
There was little unanimity of opinion upon the McCulloch
decision.
34
Many could be found fervidly for while others were
Letter
Cincinnati, May
Manuscript.
In
Hereafter cited
from Ethan Allen Brown to Charles Hammond,
29, 1819, Official Papers, 1818-1822, ■
Ohio Historical Center Library, Columbus, Ohio.
as Brown Papers.
The Southern Patriot, cited in the Daily National
Intelligencer. April 22, 1819.
^^Western Spy and Cincinnati General Advertiser.
^^West
April 3, 1819
69
bitterly opposed to the decision.
Without the McCulloch decision
the Bank would have had little future in the west.
37
There was
controversy over the decision, but it appeared to be the natural
outgrowth of argumentation surrounding a great issue.
However,
the controversy demonstrated that neither the Bank nor the
principles enunciated by the Supreme Court were acceptable
yet.
least.
Ohio was the staunchest example of vocal opposition at
Whether that opposition would take more effective means
remained to be tested since the law taxing the Bank was still on
the books.
07
Catterall, Second Bank of the United States, p. 65.
The author states, "It was only the decisions of the Supreme
'Court in the cases of McCulloch vs. Maryland and Osborn vs. the
Bank of the United States which saved the bank. Had it lost
either of these cases, there can be no doubt that it would soon
have been taxed out of existence in all of the southern and western
states."
CHAPTER V
OHIO TAXES THE BANK
The Tax Is Levied
The McCulloch decision did little to allay the anti­
pathy of Ohioans towards the Bank, especially at a time when
prices were low, specie was scarce and foreclosures brought real
estate into the hands of the Bank.
The discovery of fraud in
the Baltimore branch confirmed suspicions that the Bank was
mismanaged and that the Supreme Court decision was rendered to
shore it up.
Concommitant with these practical matters were the
constitutional objections of Ohio leaders like Charles Hammond,
John Wright, and Governor Brown.
They were in a position to
challenge the Bank and the decision if they desired.
The Supreme Court decision caused the Ohio opponents of
the bank some consternation.
The men intimately involved in the
warfare on the Mammoth desired to clarify their position.
Charles Hammond corresponded with the governor and posed a series
of questions on strategy.
The most important inquiry was
whether the tax still would be collected or would the court's
decision be followed.
The chief executive replied that because
there were no circumstances in which the tax was a threat to public
safety, he would not suspend the tax.
Asked whether he intended
to convene the legislature into special session. Brown answered
that he had nothing definite to place befcre it.
70
The governor
71
did not want to call the legislature until something positive
had been accomplished.
To do so at that time might mean only
impotent or half-hearted accomplishments which would blunt
Ohio's opposition.
It was better to lose the fight before the
Supreme Court than to falter because of unpreparedness.
Brown
suggested a method for placing Ohio's position before the
Supreme Court.
Try to collect the tax, and if the circuit court
enjoin the collection, Ohio attorneys would go to court to
quash the injunction.^
anti-Bank route.
The governor was committed still to an
The tax would still be assessed.
The tax was to be collected on September 17, 1819.
As
the day approached it was clear that the state was serious
about collecting.
The institution tardily moved to forestall
the action of the state.
On September 11 the state auditor,
Ralph O s b o m , was served with a notice by the Bank's attorneys
that application would be made on September 14 or soon afterward
to the United States circuit court at Chillicothe to enjoin the
proceedings of the February 8 , 1819 act which levied the tax.
September 15 Osborn was served with a copy of a petition in
chancery.
Filed in the circuit court, the petition prayed that
the auditor be enjoined from levying the tax on the branch
offices established in Ohio.
Osborn also received a subpoena
in chancery to appear before the court on January 1 to answer
^Brown to Hammond, Cincinnati, May 29, 1819, Brown
Papers.
On
72
the petition.^
The intrepid auditor was not stymied for long.
Doubting
that he could be enjoined and observing the further transactions
of the Bank in violation of the Ohio legislative act, he
commissioned John L. Harper to collect the tax.
3
O s b o m took
the precaution to submit all the papers served on him to Jeremiah
McLene, the secretary of state.
McLene submitted the documents
to the counsellors for the state and secured their written opinions
before O s b o m proceeded any further.
The opinion of the lawyers
was that there did not appear to be a court order allowing an
4
injunction in the papers served on O s b o m .
The state was not
barred from collecting the tax.
The details of the exciting confrontation between fed­
eral and state authority can be pieced together.
John Harper
accompanied by two companions, James McCollister and Thomas Orr,
drew up a wagon before the Chillicothe branch and entered the
Bank "in a ruffian like manner, jumped over the counter and took
possession of the vault."
It was 12:30, Friday, September 17.
The state officers confronted William Creighton, president,
Abraham Claypoole, cashier, and J. Walker, teller.
Claypoole
attempted to remove the trespassers but was stopped by Harper
O
Ralph O s b o m , Communication from the Auditor of Ohio,
Accompanied with Documents to Both Houses of the Legislature, at
the Commencement of the First Session of the Eighteenth General
Assembly. December 8 . 1819 (Columbus: Printed at the office of
the Columbus Gazette, by P.H. Olmstead, State Printer, 1819),
pp. 3-4. Hereafter, cited as O s b o m , Communication from the Auditor.
^Ibid., pp. 4-5.
^Ibid., pp. 14-15.
73
who inquired whether he was ready to pay the state tax.
Claypoole
refused, tried to regain possession of the vault, and failed.
Creighton demanded to know by what authority they were there.
Harper revealed his warrant from the state auditor.
officials tried another tack.
The branch
They reminded their opponents
of the McCulloch decision and of the circuit court injunction.
Harper, unshaken, either by Creighton's arguments or by Claypoole's
feeble efforts - the cashier tried again unsuccessfully to gain
possession of the vault - removed bank notes and specie totalling
$120,422, of which $7,930 was a special Treasury deposit.^
The collected tax was then delivered to the bank of
Chillicothe that same day, after banking hours, and was deposited
there for the night.
On September 18 the amount was redelivered
to Harper and his cohorts who, protected by a guard, set out for
Columbus and the state treasury with their precious cargo.®
Eight miles outside of Chillicothe, Harper was served with an
injunction to return the money.
He was undeterred.
bus, meanwhile, Osborn also received an injunction.
In Colum­
If the money
was returned, the cashier promised that it would be received.
Osborn decided that the matter was now out of his hands because
the money was destined for the state treasury.
7
When the money
reached Columbus it was handed over to the state treasurer, Hiram
Mirick Currey who deposited it in the Franklin bank of Columbus.
^Minutes of the Board of Directors, September 17, 1819.
^ O s b o m , Communication from the Auditor, pp. 14-15.
7
Belmont Journal, cited in The Ohio Watchman, October 14,
October 14, 1819.
74
Harper received $2,000 for collecting the tax.
covered that too much money had been collected.
It was dis­
The overplus
of $20,000 was returned to the Chillicothe branch.®
The news of what was called "a most atrocious outrage"
was dispatched immediately to Secretary of Treasury William
Crawford and to Langdon Cheves.
After the shocking details
were recounted to Crawford, the Chillicothe cashier concluded
that, "this flagrant spoiliation of our funds has necessarily
suspended all banking operations, (save the renewal of notes,) and
of oourse to discontinue the payment of the numerous pensioners
from distant parts of the S t a t e . C h e v e s was promised that the
branch would employ every possible method to punish the
offenders.
Langdon Cheves understandably was livid at the course
of events.
Terming wnat transpired in Ohio an outrage, he
claimed that "it can be rarely paralled under a Government of
laws, and, if sanctioned by the higher authorities of the state,
strikes at the vitals of the constitution,"^^
Former Governor
Thomas Worthington was astonished, but attempted to minimize
the deed by having the money restored and by offering to put up
$400,000 of property as security.
His offer was refused.
O
Zanesville Express, cited in The Ohio Watchman.
October 14, 1819.
^American State Papers. Folio Finance IV, Claypoole to
Crawford, Chillicothe, September 17, 1819, p. 903.
^^Ibid., Claypoole to Cheves, Chillicothe, September 17,
1819, p. 905.
^^Ibid., Bank of United States, Cheves to Crawford,
September 30, 1819, p. 905.
75
Worthington claimed that he viewed "this transaction in the most
odious light and from my very soul detest it. . .
ashamed and hurt that it had happened in Ohio.
He was
12
Newspaper Reaction to the Ohio Tax
The step that the state of Ohio took warranted a great
play in the nation's press for the next four months.
on the action were passionate.
Comments
A Washington publication, The
National Register, claimed that Ohio had no justification for
her action.
The tax against the national Bank originated from a
desire to preserve the obnoxious state financial institutions.
The populace was warned that if the check upon state banking was
gone then the community would be visited by great afflictions.
13
Aside from such mundane considerations, however, there was t’
.v. .
matter of Ohio's attack upon an agency of the federal govern­
ment.
The paper inquired about what rights Ohio possessed prior
to the federal constitution.
The response was that she had none.
Her very existence stemmed from a congressional act.
Thus the
state should not be trying to shake and shatter federal authority.
As for the banner of states' rights being unfurled in Ohio's
defense, the paper countered that "under the outcry about state
rights, the most singular absurdities have been maintained."
A
prediction was made that the people of Ohio would not support
12
Worthington to Cheves, Chillicothe, September 17, 1819,
Worthington Letters to Cheves.
^^The National Register, Number 14, Volume VIII,
October 2, 1819, p. 220.
76
the actions of the state regarding the Bank.
In that sense
the paper was completely inaccurate.
Future issues of The National Register were equally
critical.
Ohio should have consulted with the other states before
she undertook such a rash move.
If Ohio was so constitutionally
minded, why indeed did the state not utilize the constitution to
her benefit.
"Declaratory amendments, conveying the sense of
all the people of the United States on the subject, would have
answered every honest purpose.
The consequences of the action, if effectively carried
out, were discussed.
An eastern newspaper commented that if
Ohio was successful in the action she took, and established a
precedent to resist whenever a state thought itself threatened
by a congressional act or by a decision of the federal courts,
the national government was then constructed upon quicksand.
The results of the forcible taxation of the federal Bank were
defined more fully in the Augusta Chronicle.
It argued that the
national government must possess national authority or else
"its institution is a mere nullity."
If a state persisted in her
opposition to the national government, the United States would
be confronted with some shocking choices:
either the military
would have to be mobilized to support the general government or
a single state could lead to the prostration of the laws of the
national authority.
This was a question that necessitated an
^"^Ibid. , pp. 220-221.
^^Ibid., Number 16, Volume VIII, October 16, 1819, p. 241.
^^The American. October 20, 1819.
77
immediate response.
17
Another Georgia newspaper feared the
direction in which activities like Ohio's "rebellious conduct"
tended.
Rather than fearing the state governments being swallowed
by the federal, the publication averred the opposite to be more
likely.
18
This was neither the first nor the last journal that
referred to Ohio's act as rebellion or treason.
The Southern Patriot, printed in Langdon Cheves' home­
town of Charleston, chided Ohio's sensibility for states' rights.
The paper queried whether it was states' rights or the heavy
sums of money which Ohioans owed to the Bank which compelled the
state to take drastic measures.
To have blunted suspicions
Ohioans should have paid the branch the debts due it, and then
moved against it.^^
One of the few Ohio newspapers which was critical of the
state was the Cincinnati Inquisitor.
It believed that discreet
men in Ohio were against the action.
In the past Ohio had con­
ducted herself with distinction as a member of the Union.
Her
present stand, however, would be viewed by her sister states
"as a stain upon our bright escutcheon."
20
In later issues the
Ohio paper bemoaned the sorry spectacle that this conflict afforded
17
Augusta Chronicle, cited in the National Intelligencer.
November 6, 1819.
Georgian, cited in the National Intelligencer.
November 6, 1819.
19
The Southern Patriot, cited in The American. October 30,
1819.
Cincinnati Inquisitor. September 23, 1819.
78
the European despots.
The monarchs of Europe could conclude that
our republic was weak, incapable of governing itself, and destined
to last for only a short time.
21
Among other things the\state was accused of bringing up
the same matter that was decided in the McCulloch case,
of
treasonous conduct, and of actions that could lead to the des­
truction of the Union.
condemned Ohio.
23
The eastern newspapers almost entirely
The southern press generally withheld support.
24
The western papers were generally more sympathetic to Ohio's cause.
Only two Ohio newspapers condemned the state.
25
The remaining Ohio
papers overwhelmingly supported her.
Ohio's defenders were as eloquent or as banal as her
detractors.
The first surprise that confronted the state was
the apparent wavering of a staunch opponent of the Bank and
proponent of the taxing power of the states - Niles' Weekly
Register.
Ohio, the paper declared, erred.
It was not her pre­
rogative forcefully to oppose laws as settled by the constitutional
^^Ibid.. October 19, 1819.
^^The Southern Patriot, cited in the Cincinnati Inquisitor.
December 7, 1819.
23
Niles' Weekly Register. Number 5, Volume 5, October 2,
1819, cited in Warren, The Supreme Court, p. 530.
24.
barren. The Supreme Court, p. 531.
25
Niles' Weekly Register, Number 8, Volume 5, January 1,
1820, p. 295. An Ohio correspondent writing to the magazine
stated; "In fact, no paper in the state has said anything in
condemnation but the Cincinnati Inquisitor, and the Muskingum
Messenger. The first has little influence, and the second is
supposed to be actuated by personal pique toward an individual,
distinguished for his active agency in support of the officers
of the state."
79
authorities of the nation.^®
Niles' defection was short-lived, for
within a week the paper returned to the flock.
Ohio's act was
prompted by the oppressive operations of the branches within her
boundaries.
27
Niles concluded that the McCulloch decision had
been rendered, but the subject of the Bank of the United States
was being agitated again.
The editor reasoned that it was tenable
to bring the case before the high court once more, to shed new
light on the matter, and possibly to effect a different decision.
Publishing a letter from an Ohioan, the letter's author claimed
that if the case were decided against the state, Ohio would submit
Op
peacefully.
This sentiment should not be glossed over.
The
somewhat violent action of the state was perpetrated to force a
legal, constitutional issue.
Those involved constantly maintained
that they would submit gracefully if the issue was lost.
Not all publications eschewed the term "rebels."
A
letter from a man calling himself "Brutus," addressed to Langdon
Cheves, appeared in a Philadelphia paper.
The author reminded the
Bank president that rebels was a term dear to American hearts.
This was a nation of rebels.
were rebels.
Washington, Jefferson, and Franklin
And this nation of rebels would not prostrate it­
self now before an "odious engine of kingly corruption
^^Ibid..
Number 5, Volume 5, October 2, 1819, p. 15.
^'^Ibid.,
Number 6, Volume 5, October 19, 1819, p. 85.
^^Ibid.,
132, and passim.
Number 9, Volume 5, October 30, 1819, pp. 129-
pQ
^^The
The Aurora.
Au
Brutus to Langdon Cheves, cited in The
Ohio Eagle. December 12, 1819.
80
The notion that Ohio had committed a monstrous outrage
and defied the laws of the United States was brushed aside by a
Kentucky journal.
The auditor simply performed his duty; if the
Bank had served a proper injunction upon him the matter would have
been resolved.
The institution did not, however, and the state
officers proceeded lawfully.
30
The prestigious Richmond Encruirer
rose in defense of the beleagured western state.
the blame solely for Ohio, it queried.
lators who incorporated the bank?
Why reserve
Why not blame the legis­
Why not reproach the Supreme
Court for undermining the principles of the constitution?
The
newspaper was irate at reports that the Bank was established to
make the federal government stronger.
31
Ohio newspapers, almost unanimous in their approval of the
state, varied in temperament and tone from the moderation of the
Cleaveland Herald to the bellicosity of the Western Herald and
Steubenville Gazette.
The Cleaveland Herald claimed that the
state was battling against the encroachments of the Bank.
The state
legislators hardly imagined that they were perpetrating an act of
treason.
32
Another journal argued that the financial institution
was created unconstitutionally and proceeded in the case in the same.,
manner.
It said:
30
Kentucky Reporter, cited in Liberty Hall and Cincinnati
Gazette, October 18, 1819.
31Richmond Encruirer, cited in Cleaveland Herald.
November 9, 1819.
^^Cleaveland Herald, November 2, 1819.
81
An individual would be deemed to act very aggressive,
who would sue for his remedy in a court of law and court
of equity at the same time who would sue or imprison one,
or more at law, and at the same time, for the same claim,
bring suit against others in equity. All this has been done.
But as the bank does not receive its existence from per­
mission of the constitution the course of its conduct is not
at all affected by it.
Ohio's ablest advocate was James Wilson's Western Herald.
Not
dismayed by criticism he claimed that the Bank knew of the Ohio
tax law; it remained here; it was taxed.
and its money would be returned.
Let it leave the state
If the branch remained, the
state would collect again in subsequent years.
“
Whether he read
the Cincinnati Inquisitor or not, Wilson would have disagreed
with the conclusion that Ohio's action had besmirched her honor.
Rather, he claimed, that in the conflict Ohio was a symbol "to
QC
the friends of freedom and the constitution."
James Wilson
desired that the state fight the matter as strenuously as possible.
The questionable strategy of the state taxation having
been put into effect, the matter now entered into a quieter but
more important phase.
Once again the courts were confronted with
the issue of the Bank of the United States.
Ohioans who protested
against a colluded McCulloch case could not utilize that excuse
again.
^^Ohio Monitor, cited in the Hamilton Gazette & Miami
Register, Deoember 14, 1819.
^^ e s t e r n Herald and Steubenville Gazette, October 16, 1819.
^^Ibid., November 6, 1819.
CHAPTER VI
THE CASE CONTESTED IN CIRCUIT COURT
Preliminary Skirmishing
The Ohio case was contested in three areas with differing
degrees of effectiveness:
in the newspapers, in the state
legislature, and in the courts.
Those involved in the conflict
on the side of Ohio constantly sought support from other states
in order to buttress their position.
After the exaction of the tax, the United States Bank
turned once again to the courts, this time for redress.
An action
for trespass was pressed against Ralph Osborn and others.
In
mid-October two of the collectors, John L. Harper and Thomas
Orr, were incarcerated with bail set at $240,000.^
A circuit
court order was issued on November 22, 1819, by Judge Charles
Willing Byrd which prohibited the removal, meddling with, or
disposal of the tax money.
This was strengthened by a similar
order on the following day issued by Chief Justice Marshall,
enjoining Osbom, Currey, Harper, Kerr (president of the Franklin
bank of Columbus), and Neil (cashier of the bank) from disposing of
the money until the adjournment of the seventh circuit court.
^Hammond to Wright, Belmont, October 27, 1819.
o
Hammond
Papers.
O
Osbom, Communication from the Auditor, pp. 26 and 28-29.
82
83
Harper and Orr's application for a writ of habeas corpus
in the court of common pleas was denied by Judge John Thompson
which ignited a battle of words in the Ohio press.
Thompson's
opinion on the request was published and generally criticized by
all except the few Ohio newspapers favorable to the Bank.
The
Cincinnati Inquisitor regarded it as "the light of truth, flowing
from a pure fountain," but this was disputed.
Another Cincinnati
journal thought the decision an important one because it involved
the question of how far the state judiciary could proceed to protect
the liberty of a citizen against the encroachments of the national
authority.
however.^
Judge Thompson's opinion was devoid of merits,
The Western Herald and Steubenville Gazette complained
that the opinion brought great discredit upon the judicial talents
of the state.
If Thompson ever applied for a federal judgeship,
his opinion would give the government ample proof of his logical
and reasoning powers.
The newspaper believed that the judge's
nonsensical opinion would exclude him from any federal appoint­
ment even though it favored the federal government.
Not all the Bank's allies were pleased with the rigidity
and aggressiveness that it had so far exhibited in the case.
Reasoning that Cheves would prefer to settle the matter as quickly
and quietly as possible, Thomas Worthington approached the Chilli­
cothe branch president, William Creighton, with a proposal.
He
asked for the release of Harper and Orr and promised that he would
^The Literary Cadet, December 6, 1819.
‘Western Herald and Steubenville Gazette, December 4, 1819.
84
be responsible for their court appearance.
By pursuing a
conciliatory course, Worthington hoped that the Ohio legislature
would act correspondingly and thus effect a compromise.
Creighton
ruminated over the proposal for a day and then refused the exgovem o r on the grounds that he would be acting contrary to
instiructions.
affair.
Worthington's loyalties were sorely tested by the
He respected the constituted authorities of the nation,
but he could not "forget that Ohio is a sovreign fsic~], inde­
pendent state whose reputation is to me . . . most dear . . . .
The former governor could not comprehend the Bank's rigidity at
this point.
Both parties had more to gain if accomodations were
made.
Henry Clay, supporter of the Bank and destined to become
its attorney, expressed sentiments akin to Worthington's.
Al­
though he deplored the conduct of Ohio, he questioned a policy of
coercion towards the state.
He did not want the national govern­
ment to act unless it clearly was supported by the constitution.
If Ohio did not disown the conduct of her officers, all other
states would condemn her.®
Clay also preached caution.
Neither he
nor Worthington was anxious to witness a further clash between
state and federal authorities.
Before the convening of the Ohio legislature in December,
^Worthington to Cheves, Chillicothe, November 22, 1819.
Worthington Letters to Cheves.
®Hopkins (ed.). Papers of Henry Clay, Clay to Cheves,
November 14, 1819, II, p. 721.
85
Charles Hammond offered a number of suggestions to Governor
Brown.
Hammond believed that the governor should not mention
the events surrounding the Bank in his address to the legislature.
The rationale behind this strange suggestion was because the
Bank attempted "to assume a ground higher than that of ordinary
individuals."
By mentioning what transpired in his message,
Brown would be lending credence to the Mammoth's pretensions.
Rather he should look on the affair as an ordinary tax matter,
unworthy of notice.*^
Hammond's advice notwithstanding, Governor Brown's December
7 message recognized the importance of the Bank question.
The
case, he said, was worth no more public notice in a chief execu­
tive 's message than that of any other public defaulter except for
the involvement of constitutional questions.
The Supreme Court
had rendered a decision in the McCulloch case, but the governor
expressed confidence that the Court would re-examine the question.
Brown admitted that he envisioned two alternatives for the legis­
lature:
either it acceded to the Bank or let the controversy be
decided by the courts.
He advised the latter and promised that
"if the courts sustain jurisdiction in this instance, which on
grounds of their former decisions, has been much doubted, the
judgment or decree will receive due regard from the state."
Hammond to Brown, Zanesville, November 16, 1819.
Hammond Papers.
86
He concluded the message by stating,
The United States' Bank ask no favors - solicit no
compromises.
In their opposition they rely upon strict
law; to that they have resorted for redress ; and it must
be presumed that, if entitled, the law will afford them a
remedy. If they fail, the conclusion is forcible, that
the exclusive privilege, for which they contend is unfounded;
and that they are not distinguishable, by any such mark,
from ordinary defaulters of the public revenue.®
The governor's mentioning of the controversy signified no split
with Hammond.
In fact Brown was inclined to similar sentiments.
However, he comprehended the importance of all the issues involved
and knew that Ohioans desired to hear his views.
A few days after
his speech, Ralph O s b o m submitted the pertinent documents on all
that had transpired to the legislature.
While the legislature was convened. The Frankfort Argus
reported the case of Commonwealth v. James Morison et al. before
the court of appeals.
The officers of the Lexington branch were
on trial for penalties for not paying the tax levied against the
branch bank by the 1817 Kentucky act.
The three judge court
unanimously concluded that the tax could be levied because the
bank was unconstitutional; however, two of the judges claimed that
they were bound by the McCulloch case, and they reaffirmed that
decision.
The paper concluded that Kentucky was no longer
sovereign.^
Ohio anti-Bank foes were unwilling to concede their
0
Ethan A. Brown, Message from the Governor of the State of
Ohio, to Both Houses of the Legislature, at the Commencement of
the First Session of the eighteenth General Assembly, December 7,
1819 (Columbus: Printed at the Office of the Columbus Gazette,
by P.H. Olmstead, State Printer, 1819,), pp.7-8.
9
1819.
The Frankfort Argus, cited in The Western Spy, December 10,
87
approaching case, however.
The principal attorneys for the state were Charles Hammond
and John Crafts Wright.
of the day.
Hammond was one of the preeminent Ohioans
Lawyer, state legislator, Ohio supreme court reporter,
and newspaperman, he was a fierce opponent of the Bank of the
United States.
His life embodied some curious enigmas which, at
times, were difficult to explain.
In earlier years he had expressed
Federalist views of the federal judiciary which were transformed
when he supported Ohio's position before the federal c o u r t s . A
staunch Federalist who could not forgive the defection of others,
he paradoxically led the opposition to the Bank of the United
States in O h i o . H e
led the opposition masterfully in the press,
in the courts, and in the legislature in which he served.
He did
so by speeoh, brief, and p a m p h l e t . H e was on friendly terms with
such notables as Daniel Webster and Henry Clay.
John Quinoy Adams
often consulted him on constitutional questions.13
Although a
Federalist, nevertheless he was a firm believer and defender of
^^Hammond to Wright, May 6, 1821, cited in Francis Phelps
Weisenburger, "A Life of Charles Hammond: The First Great Journa­
list of the Old Northwest," Ohio Archaeological and Historical
Quarterly. XLII (October, 1934), 345.
^^Utter, The Frontier State. Volume II, p. 297.
^^Emilius O. Randall and Daniel J. Ryan, History of Ohio
(New York: The Century History Company, 1912), Volume II, pp.
324-325.
^^Letter from Stephen S. L'Hommedieu to Rosewell Marsh,
Cincinnati, Ohio, November 24, 1862, Letter (photocopy). In Ohio
State Historical Center Library, Columbus, Ohio. L'Hommedieu was
Hammond's son-in-law. Hereafter cited as L 'Hommedieu's Letter.
88
states' rightsi
In Washington at the time of the Cohens v. Vir­
ginia case, he wrote a series of articles under the pseudonym
"Hampden" in which he ardently defended states' r i g h t s . H a m ­
mond, with his friend John Crafts Wright, United States, Repre­
sentative , would argue Ohio's cause in court.
On January 5, 1820, an application was made in the circuit
court for an attachment against Osborn and Harper for contempt
because they disobeyed the injunction of the previous September.
Arguments between the Bank's counsellors and those of the state
officers ensued for the next few days.
Wright contended that the
conduct and proceedings of the officers were justified.
a series of points for the court to consider;
He raised
that the court
proceedings were really against the state of Ohio, over which the
court had no jurisdiction; that the papers were served on O s b o m
by a person with no legal authority, and were thus irregular and
constituted no legal injunction; that if O s b o m disobeyed the in­
junction, he was not in contempt because he had no intention to
commit contempt; and that Harper was not included in the injunction,
he was a public officer independent of the auditor's control.
court observed the importance of the case.
constitutional issues were involved.
The
Grave legal and
The case was taken under
advisement and the court adjoumed until the September term.^^
Harper and Orr did not languish in jail until September,
Charles Hammond, Review of the Opinion of the Supreme
Court of the United States, in the Case of Cohens vs. Virginia
(Steubenville, Ohio: Printed by James Wilson, 1821).
^^Niles' Weekly Register, Volume V, Number 26, February
26, 1820, p. 450.
89
however,
Initially they were jailed in Chillicothe but were
transferred later to Lancaster, presumably because the Chillicothe
jail was insecure.
Bank foes alleged that the transfer of the
prisoners to a more distant locale - Lancaster was thirty four
miles away from Chillicothe - was designed to separate Orr from
his wife and children, and both men from the consolations of their
f r i e n d s . D u r i n g the January session of the circuit court, it
was shown that the two men had been arrested by a deputy marshal
who was not legally constituted such.
His commission as baliff
was granted through a few words written oh the back of an old
letter.
After their incarceration the marshal arrived and acted
as though he arrested the two.
The court decided that the arrest
was illegal, because the marshal could not delegate a special
bailiff.
The state lawyers agreed they would not prosecute the
marshal and his deputy.
17
After almost three months in jail.
Harper and Orr were released
Resolutions Against the Bank
Ohio anti-Bank advocates were heartened by steps taken
“against it elsewhere.
Prior to the opening of the court case,
news was received that Pennsylvania and Georgia were close to
levying a tax on the institution, the McCulloch decision notwith-
^^Ibid., from an Ohio Correspondent, Volume V, Number
18, January 1, 1820, p. 294.
^'^Ohio Monitor, cited in E. Bates (ed.). The Philanthro­
pist. A weekly journal containing Essays, on Moral and Religious
Subjects. Domestic Economy, Agriculture, and the Mechanic Arts;
together with a Brief Notice of the Times (Mountpleasant:
Printed and Published by the Editor) Volume III, No. 14,
January 29, 1820, p. 217.
90
TO
standing. °
The Virginia Assembly resolved that Congress had no
authority to grant a charter of incorporation to the Bank of the
United States.
What appeared to be the most effective move against the
Bank was a series of resolutions by the Pennsylvania legislature
which proposed a constitutional amendment that stated:
Congress shall make no law to erect or incorporate any
bank or other moneyed f sic~] institution, except within
the District of Columbia; and every bank or other moneyed
rsic! institution which shall be established by the
authority of Congress, shall, together with its branches
and offices of discount and deposits f sicl. be confined to
the District of Columbia.
The proposed amendment and resolutions were sent to each of the
Pennsylvania representatives and senators in congress who were
requested to exert all efforts to have the amendment added to the
constitution.
State governors received copies and were asked to
submit them to their legislatures and appeal to them for help in
procuring the adoption of the amendment.
Senator Walter Lowrie
of Pennsylvania offered the proceedings of the Pennsylvania
legislature in Congress on January 5, 1820.
PO
The Pennsylvania
resolutions had been passed as early as March 1819.
It was only
now, however, that they were gaining wide circulation.
On January 31, 1820, Henry Baldwin, United States rep­
resentative from Pennsylvania, proposed a constitutional amendment
in the identical words of the Pennsylvania proposal.
Congress
^^The Cleaveland Herald, January 4, 1820.
^^Literary Cadet, and Cheap City Advertiser. June 20, 1820.
AnnaIs of Congress, Senate, 16th Congress, 1st Session,
January 5, 1820, p. 70.
91
was to enact no law which incorporated a bank except in the
District of Columbia.
The resolution having been read twice, it
was referred to the committee of the whole on the state of the
Union.
The proposed amendment made little impact on either
Congress or the state legislatures.
the United States Congress.
It was never concurred in by
It received only miniscule state
support in the next few years.
After a stormy joint committee
session in the Ohio legislature the Pennsylvania resolution was
adopted.
22
Ohio's resolutions, agreeing to the amendment, were
communicated to the United States Senate on February 16 by Ohio
Senator William Trimble.
23
The Pennsylvania amendment was enervated through a lack cf
support.
While states such as Ohio, Tennessee, and Indiana
concurred with their sister state, the majority withheld their
support.
By the end of 1823 the states of New Jersey, Connec­
ticut, Vermont, New Hampshire, South Carolina, Georgia, Massa­
chusetts, and New York had made known that they would not subscribe to the Pennsylvania amendment.
to respond to the call.
24
Other states neglected
The lack of response in constitutionally
^^Ibid., House of Representatives, January 31, 1820, p. 1022.
^^Columbus Monitor. December 30, 1819, cited in Niles'
Weekly Register, January 29, 1820, p. 355.
^^Annals of Congress, Senate, 16th Congress, 1st Session,
February 16, 1820, p . 417.
Resolutions of the state legislatures mentioned above may be
found either in the state papers of Governor Brown, from 1820 until
he resigned office to become United States Senator, or in the Ohio
Senate Journal, from 1820 until the end of 1823.
92
battling the Bank evidently disappointed those involved in the
Ohio case.
Newspaper support outside the state was welcomed,
but Ohio was more desirous of having as many of her sister
states array themselves alongside her as possible.
Lack of
support enervated her position, morally and psychologically.
Ohio Legislature Enters the Battle
In March 1820 the Bank retained Henry Clay as a legal
, counsel in the case.
Clay notified Langdon Cheves of the
impending announcement that he would practice in the Ohio federal
court.
The Speaker of the House believed that his announcement
was artful strategy.
The fact that he would practice in Ohio
would "appear less invidious to the Bar and to the public of that
State."
The assignment meant that Clay would have to resign
his Speakership and kept him from his congressional seat for two
months.
While the Bank exulted over the enlistment of the eminent
Kentuckian in the case, the Ohio lawyers were not similarly
impressed.
John Wright inquired of Hammond what his thoughts
were on the news that Clay would be their opponent.
Wright
observed that he did not think that Clay would be able to demon­
strate his skills "upon this term."
concluded that it was too bad.
Tongue-in-cheek he
"The mountain will labour, and
will not bring forth even a mouse . . . ."26
^^Hopkins (ed.). Papers of Henry Clay, Washington, Clay
to Cheves, March 15, 1820, II, pp. 794-795.
^^Wright to Hammond, Steubenville, June 27, 1820.
2®Wrig:
Hammond Papers
93
The September term of the circuit court did not yield a
final decision.
Samuel Sullivan, successor as state treasurer to
Hiram Currey, was made a defendant in the case.
An action of
trespass was commenced against Osbom, Harper, Orr, McCollister,
Wright, and Hammond, charging them with "taking and carrying away
the same sum of money in the proceedings in chancery specified,
under color and pretense of the law of Ohio.
two injunctions favorable to the bank.
on
The court granted
The state treasurer was
prevented from spending the tax collected from the bank; the
auditor was enjoined from collecting the tax in the future, at
least until the case was decided.
28
The case still not settled, there ensued a phase of in­
tense activity against the Bank in the Ohio legislature.
Anterior
to this the branch office at Cincinnati was closed in October 1820,
ostensibly because Cheves believed that the bank had too many
branches.
29
Governor Brown was re-elected overwhelmingly; Charles
Hammond was elected to the legislature as a representative from
Belmont County.
The Ohio legislature convened on December 4.
State auditor O s b o m reported the further court proceedings
of the Bank against the state officers.
After his report Charles
Hammond moved that the auditor's communication and respective
27
Ohio, House Journal, 19th General Assembly, 1st Session,
December 12, 1820, p. 99.
Tuscarawas Chronicle, cited in Cleaveland Herald.
September 26, 1820.
29
American State Papers, Folio Finance, IV, Langdon
Cheves to William Crawford, October 21, 1820, p. 944.
94
documents be submitted to a joint committee of eight, four from
the house and a similar number from the senate, to examine the
report and documents, and to report on them.
The house agreed to
30
Hammond's resolution.
On December 12 the joint committee submitted a lengtj. .
report in which historical argument, precedent, and reasoning were
employed to justify the efficacy of Ohio's position.
The elaborate
report, largely the work of Hammond, was described by friends as
compelling and by foes as specious.
It claimed that by the
eleventh amendment the separate states were not subject to the
federal courts' jurisdiction in matters involving their sovereign
state power and authority.
"No state can be concluded, by the
opinions of these tribunals."
The committee firmly believed that
the McCulloch case was contrived, and the states need not be bound
by the principles established by it.
saved the Bank.
The McCulloch decision had
But the committee cited the Marbury and Yazoo
cases as instances in which Supreme Court decisions were effec­
tively ignored;
Citing these precedents the report argued that
Ohio should not be condemned because of her refusal to succumb to
30
Ohio, House Journal, 19th General Assembly, 1st Session,
December 5, 1820, pp. 46-47.
31
Ohio, General Assembly, Report of the Joint Committee
of Both Houses of the General Assembly of Ohio, on the Communi­
cation of the Auditor of State upon the Subject of the Proceedings
of the Bank of the United States, against the Officers of State,
in the United States' Circuit Court (Concord: Printed by Hill
and Moore, 1821), p. 27. Hereafter cited as General Assembly,
Report on the Communication of the Auditor.
95
the Court's promulgations.^2
It was maintained that if congressional intent was to
prevent the Bank from being taxed, this would have been explicit
in its charter.
The investiture of the corporation with vague
and latent privileges was particularly odicus and dangerous to
the committee.23
In recommending what should be done about the Bank in
Ohio, two strategies were proposed.
A compromise was proposed
which offered to return the assessed tax to the Bank if, in turn,
the law suits were discontinued and the branches were removed from
Ohio.
The second strategy was the startling proposal that laws be
enacted prohibiting the Bank from using Ohio jails, courts, or
notaries public.
Maintaining their propositions to be peaceful
and constitutional, the committee was drawing the executive and
legislative branches of the federal government into the case.
By withdrawing the Bank from the protection of the state laws or
from using state facilities, the Bank's protection was left
solely to the federal government.24
Ibid.. p. 30. The report stated : "If the United States
stand justified, in withholding a commission, when the court ad­
judged it to be the party's right; if the United States might,
without reprehension, retain possession of the Yazoo lands, after
the supreme court decided that they were the property of the
purchasers from Georgia, surely that state of Ohio ought not to be
condemned because she did not abandon her solemn legislative acts,
as a dead letter, upon the promulgation of an opinion of that
tribunal."
^^Ibid.. pp. 44-45.
^^Ibid.. pp. 62-63.
96
The report concluded with the committee proposing
resolutions for adoption by the legislature.
The•Virginia and
Kentucky resolutions were recognized and approved.
The suit in the
federal court was protested against as violating the eleventh
amendment because state officers were sued for performing state
duties.
The state's right to tax the Bank as a private trade
corporation was maintained.
The Supreme Court was criticized ; the
rights and powers of sovereign states were not tobe settled and
concluded in that Court. The governor was
called upon to trans­
mit the report and resolutions to the other state legislatures and
to seek their opinion.
dent and to Congress.
Copies were also to be sent to the Presi­
Finally, the Ohio legislature was called on to
prepare bills consonant with the above report.
35
The whole report
and individual resolutions were considered by the House on December
28, 1820.
Henry Clay was present in the gallery.
report was agreed to by a vote of 57 to 8 .
of purpose in the Ohio House was noteworthy.
The
The whole
near unanimity
Despite the radical
sentiments of some of the resolutions, the maximum number of
votes that opponents could muster was a mere eight out of sixtyfive.
The Senate voted to agree with the resolutions by a similar
lopsided manner on December 30.
37
Governor Brown dispatched copies of the report to the
35
Ibid., pp. 63-64.
^^Ohio, House Journal, 19th General Assembly, 1st Session,
December 28, 1820, pp. 192-195, and passim.
37
Ohio, Senate Journal, 19th General Assembly, 1st Session,
December 30, 1820, pp. 173-177, and passim.
97
QO
ex-presidents Thomas Jefferson and James Madison.
and DeWitt Clinton also received copies.
John Jay
Inquiring whether
Jefferson would censure or agree to the report, Brown was
delighted to find the ex-president sympathetic to the Ohio stand.
Supporting the report, but unwilling to be quoted, Jefferson's
distress at the federal judiciary was plainly evident.
He com­
plained that "the judiciary is the dangerous corps of sappers and
miners because they are in place for life and beyond responsi­
bility, impeachment being found in practice a mere scarecrow."
The ex-president believed that the Ohio report had rendered the
judiciary's doctrines so questionable that it should reconsider
its conclusions against the states.
39
If Madison replied to
Brown's communication, his letter has been lost.
answered the governor.
John Jay
He regretted controversies between federal
and state authorities and hoped that the trouble between Ohio
and the national government would soon be settled.
He wished that
boundaries of federal and state power be learned and defined.
40
Governor DeWitt Clinton of New York, long a favorite of Ohioans,
answered in words similar to Jefferson's.
He saw the Ohio report
as an able document illuminating "the encroachments of the Supreme
Court."
Clinton advocated measures to be taken against that
^®Ethan Allen Brown to Thomas Jefferson, Ethan Allen
Brown to James Madison, January 28, 1621. Brown Papers.
39
Ibid., Thomas Jefferson to Ethan Allen Brown, Monticello, February 21, 1821.
^ Ibid., John Jay to Ethan Allen Brown, Bedford, New York,
April 30, 1821.
98
body to stem whatever evils would flow from its doctrines.
The New York governor did not mention specific measures, but
presumably he counted the Ohio report in that group.
Although
Ohio gained some powerful moral support here, her sister states
never rallied to her side.
Some Virginia papers supported her;
Kentucky bestowed her approval.
But the remaining states either
disapproved or ignored the Ohio report.
In the month of January, Charles Hammond approached Henry
Clay with an offer to use his influence to have $95,000 to $98,000
of the tax money returned to the bank.
Clay, somewhat leery, was
willing to accept the offer on condition that none of the Bank's
rights would be surrendered.
4:3
The deal never transpired.
On January 29, 1821, legislative action against the bank
in Ohio reached its highest point.
A law was passed, entitled
"An act to withdraw from the bank of the United States the
protection and aid of the laws of this state, in certain cases."
The law would go into effect if the Bank continued operations in
Ohio after September 1821.
The legislature was pursuing the
strategy enunciated in the joint committee report.
This extra­
ordinary law denied the use of the state's law processes to the
Bank.
Judges and justices of the peace were prohibited from
41
Letter from Ethan Allen Brown to DeWitt Clinton, April 21,
1821, Correspondence, August 22, 1806 - September 11, 1836, of
Ethan Allen Brown, Governor of Ohio, 1818-1822, Manuscript
(Microfilmed), In Ohio Historical Center Library, Columbus, Ohio.
42
Warren, The Supreme Court. I, pp. 530-532.
4-3
Hopkins (ed.). Papers of Henry Clay. Clay to Cheves,
January 22, 1821, III, p. 13.
99
acknowledging or receiving proof of any deed or mortgage to which
the Bank was a party.
Ohio jails were closed for its use:
anyone
who committed theft, burglary, or arson on the federal institution
would not be incarcerated.
Monetary penalties would be levied
upon any judge, sheriff, notary public, or any other person
mentioned in the act who violated the law.
was offered, however.
An alternative course
If the suits against the state officers
were dropped, and if the Bank submitted to a four percent annual
tax on dividends, or if the Bank dropped the case and withdrew
entirely from Ohio, the law would be s u s p e n d e d . T h e Ohio
legislative report which reaffirmed the Virginia and Kentucky
Resolutions was followed.
The law's effect was to nullify the
McCulloch decision and the Bank's standing, granted by congres­
sional charter, in Ohio.
A second bill enacted within a week of the first, offered
to refund $90,000 to the Bank when that institution agreed to
drop its suits against the state officers and pay a four percent
yearly tax on its dividends or a tax of $2,500.
If the insti­
tution withdrew from Ohio, its money would be r e t u r n e d . T h e
agreement of the Bank, although the bill was silent on the matter,
also meant that the organization would again enjoy the protection
of Ohio laws.
The bill to restore the money was unpalatable to Clay.
^"^Chase, Statutes of Ohio, II, Act passed January 29,
1821, pp. 1185-1185.
^^Ibid., Act passed February 2, 1821, pp. 1198-1199.
100
Conditions for the return made it impossible for the Bank to
concur.
The only remedy for the Bank was to proceed through
the courts.
Clay hopefully commented that the case would be
decided in the September term.
45
There was some opposition to the legislative acts of the
Ohio legislature.
Joseph Cooley read a dissent into the House
Journal on February 2.
The protest maintained that no states'
rights philosophy should compel men to endanger the Union.
Even
a foreigner was protected by the state's laws ; and yet a
corporation, established under the constitution and laws of the
United States, was left unprotected by Ohio laws.
The protest
maintained that congress had the constitutional right to establish
a bank.
The judiciary, not the states, were expositors of the
constitution, for;
If the states themselves are to be the sole expositors
. . . of the nature of those powers conferred upon the
general government, and those retained to the states, they
would probably receive as many different constructions,
as there are members of the American family, as the
interests, the feelings or the prejudices of each might
dictate. And, instead of the energy, the strength, and
the harmony contemplated by the union of the states, our
government would become a perfect "hydra." It could afford
neither safety or protection; but must either fall to
pieces of its own weight, or be destroyed by the discrep­
ancy of the materials of which it is composed.
After arguing that the suit did not violate the eleventh amendment,
and blaming problems on the multiplicity of state banking insti­
tutions rather than the United States Bank, the report concluded
that the law which exacted the $100,000 tax and all the subsequent
“^^Hopkins (ed.). Papers of Henry Clay, Clay to Cheves,
Washington, February 15, 1821, III, p. 41.
101
proceedings were erroneous.
The protest was signed by William
Vance, James Cooley, James Harris, Johnathan Sloane, John R.
Parrish, and William W. Gault.
position they assumed.
the next year.
47
None of the six suffered for the
James Cooley was elected to the Ohio Senate
The others were returned to the Lower House.
A Franklin County grand jury, convening in April, was
extremely critical of its legislators and the laws enacted in
January and February.
The act which outlawed the Bank, and the
proceeding relating to that subject, the grand jury was convinced,
had degraded the state's political character.
The jury contended
that all Ohioans would become disenchanted with the legislators
and litigation when they perceived how badly the state's reputation
was damaged and how much the treasury was depleted as a result of
the costs of legislation and litigation.
The high points of Ohio opposition to the Philadelphia
corporation were threefold:
the levying of the tax on the Bank;
the exaction of the tax; and the legislation outlawing the Bank.
The zenith of opposition was attained by the final action which
embraced the doctrine of nullification.
However, from this point
on the lawmakers steadily retreated from their position.
The
February 2 law was rather conciliatory in offering to return the
Bank's money, already demonstrating the legislators' retrench­
ment.
Subsequent actions and inaction demonstrated the same
principle.
'^"^Ohio, House Journal, 19th General Assembly, 1st Session,
February 2, 1821, pp. 386-393, and passim.
^^Cleaveland Herald, June 5, 1821.
102
Defeat in the Circuit Court
Almost two years after the exaction of the tax from the
Mammoth, the circuit court decided the case in the Bank's favor.
On September 5, 1821, the defendants were enjoined perpetually
from collecting the tax from the Bank, were to pay the court costs,
and were to return the $100,000 with six percent annual interest
since September 17, 1819, on the $19,830 of specie.
was to be returned before September 6.
49
The money
An agreement was filed
by the parties in the case regarding the further procedure of the
case.
If the defendants appealed the case, they would do so on
the $2,000 paid to Harper, the interests and the costs of the
suit in chancery.
State Treasurer Sullivan refused to comply with the court's
decree on the grounds that his predecessor received the money and
that he, Sullivan, could not relinquish it because neither the
auditor ordered it nor the state constitution nor laws allowed it.^^
Sullivan was jailed for contempt by the marshal of the district
and a writ of sequestration was awarded.
If the money was not
found in the state treasury, the complainants were authorized to
take the money from Sullivan's lands, real estate, goods and
chattel.
The state treasuiry was entered and the sum of $98,000
^^United States, Circuit Court, Ohio, Transcript of the Case.
1819-1821. of the Bank of the United States vs. Ralph O s b o m .
September 5, 1821. In Ohio State Historical Center Library.
5°Ibid.
^^Ibid., September 7, 1821.
103
taken and delivered to the
p l a i n t i f f s .
The irony of the money's return cannot be missed in a
scene reminiscent of the state's earlier encounter at the branch
bank.
Sullivan was removed from jail and taken to the state
treasury.
Refusing a request for the keys to the treasury, the
marshal simply removed them from Sullivan's pocket.
The money
was removed, placed in a wheel barrow, and transported "to a
tavern superbly fitted for its reception.
The next day the
money was returned to Chillicothe.
Reaction to the decision and to the entering of the state
treasury was less intemperate than might be expected.
The
Cleaveland Herald thought that states' rights proponents would be
shocked by a state treasury being entered upon a circuit court
order; but since nearly all admitted that the tax was illegally
collected, the writ granted by the court was correct and justified «
The more vocal Liberty Hall and Cincinnati Gazette com­
plained that the federal.judiciary was leading the federal
government to supremacy over all.
And, in a later issue, it
facetiously queried whether it would not be cheaper for the Ohio
legislature to be replaced by the federal circuit court and for
the executive to be replaced by the Bank.
the conduct of the state gratifying, however.
Many papers found
The case had been
^^Ibid.. September 10, 1821.
^^Ohio Monitor and Patron of Industry. September 15, 1821.
^'^Cleaveland Herald, September 18, 1821.
55
Liberty Hall and Cincinnati Gazette. September 22, 1821
and November 24, 1821.
104
in the court for almost two years and emotions had subsided.
Governor Brown related the proceedings in his annual message
to the General Assembly.
He told the lawmakers that it was now
the duty of the United States Supreme Court to decide upon the
legality and constitutionality of the circuit court decision.
If the Court reaffirmed the circuit court's decision, perhaps it
was time for the states to enact a constitutional amendment
"to prevent the clashing of jurisdictions."^®
The governor did
not refer specifically to the eleventh amendment, but he did
speak of the court decision which made a state a defendant without
its own consent.
Ohio had more than one recourse open to it.
The oase still had to go before the Supreme Court.
If an unfavor­
able verdict was rendered, there was the alternative of a
constitutional amendment.
®®Ohio, Senate Journal, 20th General Assembly, 1st Session,
December 4, 1821, pp. 9-10.
CHAPTER VII
THE OHIO CASE BEFORE THE SUPREME COURT
Interpretation of the Eleventh Amendment
States' rights proponents of Ohio's position in the case
challenged the Bank forces over the correct interpretation of
the eleventh amendment to the constitution.
The eleventh amend­
ment stated that,
"The judicial power of the United States shall not be
constructed to extend to any suit in law or equity,
commenced or prosecuted against one of the United States
by Citizens of another State, or by Citizens or subjects
of any Foreign State."
The Report on the Communication of the Auditor took great
notice of the conflicting interpretation of the eleventh amend­
ment.
Hardly an impartial party in the matter, the committee
which authored the report argued that the eleventh amendment
had been misconstrued in bringing the state before the circuit
court.
The Supreme Court originally possessed the power to hear
the oase which involved a state; however, that power had been
taken from the federal judiciary by the enactment of the above
amendment.
The committee noted that it was clearly expressed
that before ratification of the amendment, circuit courts could
not maintain jurisdiction over the states or her officers in
^Poore, Federal and State Constitutions, Part 1, p. 22.
105
106
cases "of the direct action of the state sovereignty."
Only
the Supreme Court had power to act directly upon the states.
How
enigmatic it was, then, that the eleventh amendment, expressly
enacted to prohibit the states from being taken before the
Supreme Court, would be operative "as vesting the circuit courts
with power to do that indirectly which they never had any direct
O
power to do."
The legislative committee claimed that the state was an
"intangible entity."
By moving against the officers of Ohio,
the state herself was being attacked, for it was through her
agents that the state acted.
Q
The committee's work, concurred in
by the General Assembly, was a worthy piece of states' rights
argumentation.
The lawmakers' interpretation of the eleventh amendment
was not novel.
The legislators were in the mainstream of thought
of those who took the side of Ohio in the encounter.
As early
as 1819 friendly Ohio newspapers and ideological allies argued
that the state could not be brought constitutionally into court.
One Ohio journal, the Hamilton Gazette and Miami Register, claimed
that the Bank of the United States was openly disregarding the
eleventh amendment by pursuing its case against state officers
2General Assembly, Report on the Communication of the
Auditor, pp. 6-8, and passim.
3-,
Ibid., p. 10.
107
who were carrying out a law enacted by the Ohio legislature.^
The Bank was guilty of violating the spirit, if not the letter,
of the amendment.
For proponents of state sovereignty, the specter of the
federal judiciary increasingly encroaching upon the prerogatives
of the states was too much to bear.
As a result they pressed
on with objections to the jurisdiction of the circuit court.
Charles Hammond was especially troubled by the judiciary's apparent
usurpation of power.
He complained in a letter to Governor
Brown that.
There is yet a wide extent of ground unexplored upon the
question - And the more it is discussed, the more
difficulties will present themselves in the way of the
march of the federal court to absolute supremacy . . . .
Indeed, my Dear Sir, I feel its . . . vast importance, and
cannot butmourn the apathy and misapprehension of our Sister
States, and some good men among ourselves.^
Hammond saw the necessity of the states upholding their sover­
eignty.
Obstacles had to be placed in the path of judicial branches
march to absolute power.
An Ohio newspaper carried Hammond's arguments and fears
even further with the belief that the Supreme Court was surely
progressing on a
path which would destroy the federative prin­
ciples of the United States.
From the ashes of states' rights
would arise the phoenix of a mighty consolidated empire.
For­
tunately for the countiry, the newspaper proclaimed, the state of
4
Hamilton Gazette and Miami Register, December 14, 1819.
^Hammond to Brown, Belmont, November 29, 1619.
Papers.
Hammond
108
Ohio had undertaken the defense of her sovereignty which slowed down
the pretensions of the federal court.®
A most notable foe of the federal judiciary was former
president Thomas Jefferson.
Unwilling to publish his thoughts
for public consumption, the former president was, nonetheless,
both an admirer of Ohio and of Charles Hammond.
Jefferson feared
that the seeds of dissolution of the United States government
resided in the federal judiciary whom he called an "irresponsible
body."
Imperceptibly but surely power was being usurped from the
states until the government of all be consolidated into one.
To this trend Jefferson was opposed.
The ex-president who had
tangled often and bitterly in the past with the federal judiciary,
still remained firm in his distrust and antipathy for that group.
The period of intense activity against the bank, charac­
terized by the events of 1819-1821, entered into a relatively
quiet phase.
Ironically the defenders of Ohio's state sovereignty
turned towards the Supreme Court to overturn the circuit court
verdict and to uphold the state's position.
The state actually
had gone about as far as possible in arraying herself against the
federal government.
The behavior of the men who had pushed the
case into court, although regarded as intemperate, even rebellious
by some, demonstrated no desire to effect an irreparable con­
frontation with federal authorities.
In fact as soon as Ohio
^Liberty Hall and Cincinnati Gazette. June 16, 1821.
'^Andrew A. Lipscomb (ed.). The Writings of Thomas
Jefferson (Washington, D.C.: The Thomas Jefferson Memorial
Association, 1903), Thomas Jefferson to Charles Hammond,
Monticello, August 18, 1821, Volume XV, pp. 331-332.
109
lawmakers declared the national Bank outlawed in Ohio, the
legislature receded from that position by offering the Bank a
compromise.
An irony in the case was that the principal attorneys for
each side were fairly close friends.
Charles Hammond had long
admired Henry Clay, and he was one of the Kentuckian's
presidential boosters.
However, Clay's advocacy of the Bank
caused Hammond consternation.
In writing to Clay the Ohio attorney
expressed his earnest wish someday to see a westerner as president
of the United States; but, he was less sure of advocating Clay
for that office when he saw the Kentuckian steadfastly adhere
to the doctrines put forward by the Philadelphia corporation.
Q
The former Speaker of the House attempted to assuage the doubts of
his Ohio friend.
Clay glossed over the differences between
Hammond and himself.
He claimed that a comparison of their res­
pective views assuredly would show that they were not so
divergent.
9
Whether Clay's letter immediately reassured the
Ohio lawyer is unknown; however, Hammond remained a firm friend
and admirer of his opponent.
Charles Hammond attempted to proselytize converts for the
Ohio cause through a pamphlet which was published in 1823.
Using the pamphlet as a vehicle for his views, he demonstrated
at what stage the controversy was and developed an argument to
®Hopkins (ed.). Papers of Henry Clay, Hammond to Clay,
St. Clairsville, July 1, 1822, Volume III, pp. 245-246.
^Ibid., Clay to Hammond, August 14, 1822, III, p. 276
110
uphold the Ohio position.
Hammond's argument was not new; it was
essentially the same as found in the 1821 General Assembly report.
Declaring that the circuit court decree was erroneous because of
a number of particulars, the Belmont attorney claimed that the
state, proceeded against through her agents, was actually the
defendant in the case.
Both the constitution and the judicial
act of 1789 excluded the circuit court from jurisdiction in the
matter.
The only federal judicial body invested with the nec-
essary jurisdiction was the Supreme Court.
10
Hammond referred
to section 13 of the 1789 act which gave the Supreme Court the
"exclusive jurisdiction of all controversies of a civil nature,
where a state is a party, except between a state and its citizens,
and
except also betweena state and citizens of other states or
aliens, in
which latter case it shall have original, but not
exclusive jurisdiction."^^
The principal state's attorney averred
that the Bank's charter of incorporation gave that institution
the right to sue in the circuit court, a right that Pennsylvania
.and Kentucky courts upheld.
Nevertheless he concluded that,
Neither the rules of evidence nor the law of contract are
or can be regulated by the national legislature. In the
case supposed, no question can arise except under the
law of evidence or of contract. How absurd then to say
thatthe case arises under a law of congress, when in the
whole progress of litigation no law of congress is drawn
into discussion .
^
Charles Hammond, The State of the Case and Argument for
the Appellants, in the Case of the Bank of the United States,
versus the Auditor and Treasurer of the State of Ohio, and Others,
in the Supreme Court of the United States (Cincinnati : Morgan
and Lodge, 1823), p. 45.
^^Ibid., p. 49.
^^Ibid., pp. 49-50.
Ill
The only method for handling such a case, for a state to defend
its sovereignty and rights, was to go before the supreme tribunal
of the land.
Maintaining that the Bank was neither a governmental
institution, such as the mint or post office, nor a public
institution, Mr. Hammond discussed the taxation question.
He
argued that it was demonstrable that an exemption from
taxation was not incidental to the Bank's charter.
The fact that
the original charter for the first Bank of the United States
claimed no exemption, the precedent of the Deveaux case, and
Virginia's rejection of the principle of exemption were used as
proof that exemption was debatable.
If Congress decided to
settle this moot point, it would have included a grant of exemption
in the second charter.
Congress had not done so, however.
Bank was therefore unable to claim this privilege.
The
13
Charles Hammond considered the objection that the tax
levied was much more than a tax, that it amounted to a penalty.
The whole thrust of the tax was to level a prohibition rather
than to collect revenue.
The Ohio apologist concluded that
prohibition was a proper end of taxation for all governments.
The tax, he claimed, was not designed to interfere with the
governmental functions of the Bank but only with the private
trade of that corporation.^^
The Belmont lawyer concluded his defense of the state's
position by maintaining that the constitution spoke on the topic
l^Ibid., pp. 70-71.
^"^Ibid., p. 95.
112
when the states may or may not tax.
The states could not be
restrained from using that power unless there were specific state­
ments to the contrary.
the constitution."^^
To do so was "to change the principles of
Hammond was still an adamant defender of
the correctness of the state's position.
His arguments were
consonant with a states' rights interpretation.
It is unknown whether Hammond's opus won over new suppor­
ters to the Ohio cause.
Among the readers of the pamphlet was
Chief Justice John Marshall.
Although the two men were divergent
in their philosophies of the national goveimment, nonetheless,
Marshall commended Hammond on his work.
Marshall informed the
Ohio attorney of his pleasure at reading such a cogent argument,
one that was written with great ability.
The Case Decided
Nearly four and one-half years had passed since state
officers had exacted the tax money.
Anyone who followed the case
during those years witnessed a plethora of legislative maneu­
vering, propagandizing, newspaper bickering, and court battles.
The final arbiter in the case, the Supreme Court, agreed to hear
the O s b o m case in its 1824 February term.
Charles Hammond,■
Ethan A. Brown, now a United States Senator, and John C. Wright
were attorneys for Ohio.
Henry Clay, John Sergeant, William Wirt,
and Daniel Webster argued the Bank's case.
Charles Hammond presented the opening argument for the
ISlbid.. p. 98.
^®John Marshall to Hammond, Richmond, December 28, 1823.
Hammond Papers.
113
appellantss borrowing heavily from the report presented by the
Ohio legislature and from his own pamphlet published in the
previous year.
He claimed that the circuit court decree, ordering
the return of the tax money plus interest, was erroneous.
The
main points of his objections were that the state of Ohio was
proceeded against by the circuit court which had no jurisdiction
in the matter.
And, he objected, because the court decree assumed
that "the bank of the United States is not subject to the taxing
power of the state of Ohio, and decides, that the law of Ohio,
the execution of which is enjoined, is unconstitutional."
17
As he had in the past on the former point, Hammond argued
that the bill in the case was against the state and not against
her ministerial agents.
The acts that the Bank and the bill
complained against were those of the Ohio legislature.
The
constitution and the judiciary act were clear on the point that
the inferior court could not exercise jurisdiction in the case.
This was an example of original jurisdiction which was reserved
I Q
to the Supreme Court.
The Ohio counsel asserted that the
decree was therefore erroneous:
1. Because the
2. Because the
constitution or
over the proper
proper parties are not before the court:
circuit court cannot, under either the
laws of congress, exercise jurisdiction
party: 3. Because both the constitution
TV
Henry Wheaton, Reports of Cases Argued and Adjudged
in the Supreme Court of the United States. February Term, 1824.
(New York: Banks & Brothers, Law Publishers, 1883), Volume IX,
pp. 744-745. Hereafter cited as 9 Wheaton.
^®Ibid., pp. 755-752, and passim.
114
and law vests exclusive jurisdiction of the case made
in the supreme court.
Hammond considered the most important point to be the
power of the states to tax the Bank.
The Supreme Court was
petitioned to reconsider its previous opinion in the McCulloch
case which declared that the states did not have the legitimate
power to tax the corporation.
Hammond tried to show that the
fiscal institution was a private rather than a public corporation
and, as such, did not merit a tax exempt status.
Reminiscent
of his past thoughts and words, he refuted the Bank's claim that
it was a public corporation.
Contrasting it to such agencies
of the federal government as the post office, the mint, or customs
houses, Hammond claimed that there were no real comparisons.
The business of the post office was of a public nature, whereas
that of banking was private.
The Bank's work for the government
was only incidental to its private concerns.
20
The final point made by Hammond was that the tax exempt
privilege enjoyed by the fiscal institution was not necessary
for its existence.
It was beneficial for the institution but,
in no way, was it necessary.
The Bank had existed for twenty
years without such a grant and was useful.
The privilege must,
he pleaded, be specifically inserted into the charter of
incorporation.
PI
This was not the case.
Henry Clay made a brief argument in which he assumed a
l^Ibid., p. 765.
^^Ibid., p p . 785-787, and passim.
^^Ibid.. pp. 794-795.
115
nationalist point of view.
Refraining from debating Ohio's right
to levy a tax on the grounds that the McCulloch case had already
replied to that, the Kentuckian declared that the whole point of
the Ohio law was prohibitory.
The law meant to drive an instru­
ment of the national government outside of the state.
Clay agreed with his adversary over the words of the
constitution which claimed that a state could not be sued; but
he disagreed over the interpretation.
The constitution must not
be read so that an individual could be offended "because a law
of the state happens to come under consideration."
If state
interests were at stake in the case, even more so were the sovereign
interests of the national government.
Clay argued that the
vexatious jurisdictional problem was solved by congress which had
vested the bank with the capacity to sue in circuit court.
After John Wright cited the eleventh amendment as a
defense of state sovereignty, the Court expressed a desire to
hear a reargument on the jurisdictional problems involved.
As
the lawyers prepared their briefs for a last round. Clay corres­
ponded with Nicholas Biddle, the new president of the Bank.
Clay admitted the explosive nature of the issue.
If the Court
accepted Ohio's interpretation, all the cases heretofore decided
would be called into question.
24
not exhibited to his foe, however.
Clay's apprehensiveness was
Clay wrote to Hammond and
^% b i d ., pp. 795-796.
23Ibid., p. 798.
^"^opkins (ed.). Papers of Henry Clay, Clay to Nicholas
Biddle, February 17, 1824, Volume III, p. 646.
116
predicted that Ohio would lose which would not be the cause of
any great surprise.
handily
d i s m i s s e d .
25
The rearguiaent over jurisdiction, he
The confidence he expressed to Hammond
was not the same as he had shown to Biddle.
Hammond believed that the Ohio forces had acquitted
themselves well in the encounter.
Clay had wandered somewhat
from his prepared brief to deliver extemporaneous statements
about the state’s conduct in the matter.
Hammond concluded that
his Kentucky counterpart was somewhat diffident in the
c a s e .
25
Clay, he felt, was trying to cover up fallacies in his case by
personal vituperation.
On how this would be accomplished,
however, Hammond was silent.
Hammond was somewhat despondent before the reargument,
fearing that the case was lost.
Having received Clay's letter,
the Ohio attorney reasoned that the reargument over jurisdic­
tion meant that the other points had gone against the state.
He remained convinced of his position but was pessimistic over
the o u t c o m e . H a m m o n d feared that the cause was finally over.
Reargument took place on March 11 in connection with
^^Ibid.. Clay to Hammond, February 22, 1824, III, p. 655.
^^Hammond to ?, Cincinnati, February 23, 1824.
Hammond
Papers.
^'^Ibid.. Hammond to Wright, Cincinnati, March 5, 1824.
117
another case, the Bank of the United States v. Planters * Bank of
Georgia.
Charles Hammond was absent.
The ill health of his
wife forced a return home to be at her side.
Langdon Cheves was
present to render whatever help he could to the
p l a i n t i f f s . 2 9
The reargument produced nothing that was new.
So much had
been written and said on the matter that the argumentation was
predictable.
Bank attorneys claimed that the 1816 charter granted
the Bank the power to commence suits in circuit court.
The
Deveaux case decided that the original Bank did not have the
right to sue in federal courts, but, the attorneys argued that
the high Court implied that the institution would have possessed
the right if the charter specified it.
Congress, meanwhile,
possessed the power to confer jurisdiction upon the circuit
courts.
The Ohio lawyers said that there was no actual difference
between the charters granted to both federal Banks.
Congress
could not invest the first institution with power to sue in
This case involved two Georgia banks; the Planters'
Bank and the Bank of the State of Georgia. President Cheves
attempted to have the two banks redeem their notes in specie in
1820. An agreement was worked out whereby the banks would redeem
their notes either weekly or monthly. Both banks ultimately
rejected the agreement and would not redeem the notes presented
by the national Bank. The Georgia Legislature entered the
controversy in 1822 by declaring that the state bank notes which
the national Bank held would not be redeemed in specie unless the
person who presented the notes swore that they were not pro­
cured for the purpose of drawing specie. See Catterall, Second
Bank of the United States, p. 84.
29
Wright to Hammond, Washington, March 8, 1824.
Papers.
^^9 Wheaton, pp. 805-806.
Hammond
118
the circuit courts and was incapable of granting that power to
its successor.
At home with his ailing wife and away from the action,
Hammond reflected upon the case.
chances for victory.
He grew more pessimistic over
Believing that the jurisdiction argument
had been fully explicated, he brooded that the reargument augured
defeat.
As is the wont of most people in a similar situation,
Hammond yearned for more time to develop a fuller and better
argument.
The Supreme Court rendered its decision on March 19, 1824.
Hammond's dire premonitions were fulfilled.
Chief Justice
Marshall delivered the Court's opinion and began by disposing of
the jurisdictional issue.
The Court rejected the appellants'
claim that the charter of incorporation did not grant the circuit
court jurisdiction.
Semantically analyzing the words which
granted the suing in circuit court, Marshall concluded that there
could be only one interpretation.
plainer by explanation."
The words could not be "made
The Bank was found against in the Deveaux
case because the power to sue, granted in the charter of the
original Bank was too b r o a d . T h e
second charter rectified that.
Marshall affirmed that the grant which gave the Bank the capa­
bility to sue was constitutional.^^
^^Ibid..
, p.
P* 812.
^ H a mmond to Wright, Cincinnati, March 15, 1824.
Papers.
^^9 Wheaton, p. 817.
^"^Ibid.. p. 828.
Hammond
119
Once the jurisdictional issue was laid aside, the Court
responded to all of Hammond's objections concerning the erroneous
nature of the circuit court decree.
decree was affirmed.
The constitutionality of the
Marshall rejected Ohio claims that the Bank
was a private corporation.
The thrust of the McCulloch decision
was that the financial institution was an instrument for carrying
out national ends.
The fact that it carried on private business
was incidental to its work for the federal government.
Marshall
asked why the Bank was created and responded that it was a
"necessary and proper" instrument for engaging in governmental
financial business.
35
The McCulloch decision was reaffirmed, and
Ohio had finally lost her long battle.
The circuit court decision
ordering interest to be paid on the money held by the state
officers was reversed, as they had been restrained from using the
money in any manner.
36
The End of the Fight
It is ironical that the case which had opened in such
turmoil was resolved and accepted with such equanimity.
Ohio
newspapers reported the decision with little editorial comment.
Apparently"the most disappointed parties were the men who had
argued so forcifully in the courtroom.
Sending home the court's
opinion, John Wright evidenced his sorrow.
He believed that a
few more similar decisions, and the populace could bid farewell
^^Ibid.. pp. 860-861.
^^Ibid.. p. 871.
120
to their state sovereignties.
the opinion.
37
Hammond remained unconvinced by
His most cogent argument that dealt with the state's
QQ
inability to be sued, he believed went unanswered.
The final
decision found Hammond unswayed in his arguments and prin­
ciples.
The Belmont attorney was lauded for his role.
John
Wright informed his friend that Daniel Webster complimented
Hammond on his arguments.
And an unidentified man, in a burst of
hyperbole, declared that he would rather have written Hammond's
argument than be president.
in effusive terms.
39
Even John Marshall praised Hammond
He called his brief "the most remarkable paper
that had been placed in our courts, since the days of Lord Mans­
field."
The Chief Justice was so impressed by the brief that he
was nearly persuaded to decide "that wrong was right in the
c a s e . M a r s h a l l also spoke highly of the "remarkable acuteness
and accuracy of mind" and the great intellectual power Hammond
d i s p l a y e d . T h e r e is little doubt that Hammond had shown himself
to be a formidable and persuasive personality even in defeat.
Ohio's defeat, although not contested, further angered
37
Wright to Hammond, Washington, March 22, 1824.
Hammond
Papers.
Ibid., Cincinnati, Hammond to Wright, Cincinnati,
April 9, 1824.
39
Ibid., Wright to Hammond, Washington, April 9, 1824.
^L'Hommedieu Letter, L'Hommedieu to Marsh, November 24,
1862.
41
Smith, "Charles Hammond and His Relations to Clay and
Adams," p. 28.
121
those who distrusted the power of the federal judiciary.
Hammond
quoted an excerpt from a letter he received from Thomas Jefferson
to Representative Wright.
The letter afforded another example of
Jefferson's antipathy towards the federal judiciary.
He stated:
The germ of disolution Fsici of our federal government is
in the constitution of the federal judiciary; an irres­
ponsible body, working like gravity by night and by day,
gaining a little to day and a little to morrow, advanoing
its noiseless step, like a thief, over the field of
jurisdiotion, until all shall be usurped from the states,
& the government of all be consolidated into one.
Although Hammond was not as pejorative in his choice of words,
there is little doubt that Jefferson's sentiment expressed
Hammond's beliefs.
With the culmination of the case, it was necessary for the
state legislature to respond to the verdict and dismantle the
apparatus of its opposition to the Bank.
Although the case was
decided in March the Ohio legislature did not convene until
December 1824.
At that time Governor Jeremiah Morrow told of the
necessity of appropriating money to pay the debts inourred by
the state officers.
A resolution was passed authorizing the
treasurer to pay out the money according to the judgment and to
credit the books of the late treasurer with $98,000 that had been
"^%iammond to Wright, September 17, 1824. Hammond Papers.
This is an excerpt from a letter that Hammond received from
Thomas Jefferson dated August 18, 1821.
122
taken from him by the writ of sequestration.^^
A last spark of defiance originated against the Bank in
the Ohio Senate in 1825.
The Cincinnati branch was to be reopened
for business which launched some irate legislators into activity.
A set of resolutions was offered in the Senate, protesting against
the reopening of the Cincinnati branch as unconstitutional because
the legislature had not given its permission.
A second resolu­
tion refused the state's consent from allowing the branch to
open within the confines of Ohio.
The resolutions were to be
forwarded to Nicholas Biddle and the cashiers of each branch.
The indefinite postponement of the resolutions was achieved,
albeit by a slender vote of 19 to 1 6 . The closeness of the
vote attested to the continued unpopularity of the Bank; but,
in face of the Osborn decision, it is difficult to imagine any
good results the passage of the resolutions could have accomp­
lished.
Fortunately cooler more prudent heads prevailed.
On January 18, 1826, the act that withdrew the protection
and aid of Ohio law from the Bank of the United States in Ohio
was r e p e a l e d . L e g i s l a t i v e resistance, although ended previously.
^^Ohio Laws, Volume 23, p. 106, cited in Jean Dick Cheetham,
"State Sovereignty in Ohio," in Ohio Archaeological and Historical
Publications, IX (1901), pp. 300-301.
44
Ohio, Senate Journal, 23rd General Assembly, 1st Session,
February 2, 1825, pp. 301-302.
^^Ohio, General Assembly, Acts of a General Nature,
Passed at the First Session of the Twenty-fourth General Assembly
of the State of Ohio, Begun and Held in the Town of Columbus,
December 6, 1825 (Columbus: Printed by George Nashee, State
Printer, 1826), Volume 24, p. 24.
123
was now technically concluded.
Ohio's assault on the Bank and
her embracing of nullification had come to an end.
EPILOGUE
The gracious acceptance of the Supreme Court decision
contrasts sharply with the rancorous conduct which precipitated
the conflict.
Many reasons may be offered why Ohioans put up
no further resistance against the Bank.
out over too long a period of time.
The issue had stretched
A four and one-half year
battle had ensued in the courts - too long a period for everyone
to maintain the high peak of interest which signified the
beginning.
In the meantime Ohio interests were turning to other
matters of great interest.
The presidential election of 1824
was approaching, and the nation and state were turning their
attention to that issue.
However, of even greater significance
and interest to Ohioans was the project of building the Erie and
Ohio Canals with the accompanying expectations of increased trade.
Furthermore, the Bank had taken steps to rectify itself.
The
inept stewardship of William Jones was replaced by the abler
Langdon Cheves and, finally, by Nicholas Biddle.
The latter
two rectified questionable practices and straightened out the
financial matters of the Bank.
The nation and the state had emerged from the depression
that struck it in the latter part of the second decade and the
first years of the third.
Gone from the Ohio newspapers were
the omnipresent laments of farmers and Ohio citizens, and the
multitudinous advertisements of sheriff's sales.
124
The finances
125
of the state were in a prosperous way by 1826.Î
The econoitiio
and political considerations combined to negate Ohio opposition
to an unfavorable verdict.
Finally, one must consider that the
men most intimately involved in the case, inspired by economic or
philosophic motives, had contested as far as they could.
the improvement of the economy one issue was erased.
With
The
philosophy of states' rights suffered by the verdict but
further combat was inconceivable.2
Men like Hammond, Wright,
and Brown fought hard and accepted defeat.
Their intent was not
to undermine the federal government.
The Ohio case has been the subject of varying interpre­
tations.
Some have been content to see the problem as a political
and constitutional issue.^
Others have tended to focus entirely
on the economic aspects of the case, concluding that warfare
upon the Bank was economically motivated.
Constitutional issues
were drawn in, however, to legitimize the actions the state
undertook.
Even historians sympathetic to Ohio's action have
embraced the latter argument.^
As compelling as the economic
argument appears to be, a modification seems in order.
The men
most wholeheartedly involved in the case were the leaders of the
state.
Their action was not isolated but done within a community
^Sumner, History of Banking in the United States. Volume I,
p. 155.
fitter. The Frontier State, Volume II, p. 312.
3
Chase, Statutes of Ohio, Volume I, p. 43.
4
Bogart, "Taxation of the Second U. S. Bank," p. 312.
^Utter, The Frontier State, Vol’jme II, p. 312.
126
of action of other states.
When those states retreated, Ohio
maintained her constitutional interpretations until she had her
day in court.
While the economic argument is difficult to rule
out, one cannot read the papers and correspondence of the man
most symbolic of Ohio resistance - Charles Hammond - to discern
that his objections were philosophically not economically inspired.
Thus, while economics plays an integral role in the affair, there
is an interplay of economic and constitutional issues rather
than a precedence of the former over the latter.
Since the Ohio case is so much the story of Charles
Hammond, a final irony is in order.
An influential newspaperman
in the 1830's, Hammond remained an ardent Clay supporter until
the former's death in 1840.
Hammond who fought so strenuously
against the Bank in the past, arrayed himself on the side of the
Bank during the Jackson administration.
He lost again.
BIBLIOGRAPHY
Public Documents
Chase, Salmon P® (ed.). The Statutes of Ohio and of the North­
western Territory. Adopted or Enacted from 1788 to 1833.
3 vols.
Cincinnati; Published by Corey & Fairbanks, 1833.
Dickins, Asbury and Allen, James C. (eds.). American State
Papers. Folio Finance. Vols. Ill and IV. Washington:
Gales and Seaton, 1858.
Georgia, General Assembly. Acts of the General Assembly of the
State of Georgia. Passed at Louisville, in December 1805.
Augusta: Printed by George F. Randolph, 1805.
Georgia, General Assembly. Acts of the General Assembly of the State
Georgia. Passed at Louisville, in November and December 1806.
Louisville : Printed by Ambrose Day, 1806.
Georgia, General Assembly. Acts of the General Assembly of the
State of Georgia. Passed at M i H e d g e ville, in November and
December 1807. Milledgeville; Printed by Alexander M'Millan,
1807.
Kentucky, General Assembly. Acts Passed at the First Session of the
Twenty-Seventh General Assembly for the Commonwealth of
Kentucky. Begun and Held in the Town of Frankfort, on Monday
the Seventh Day of December 1818, and of the Commonwealth the
Twenty-Seventh. Frankfort: Printed by Kendall and Russells,
1819.
Lamar, Lucius Q. C. A Compilation of the Laws of the State of
Georgia, Passed by the Legislature since the Year 1810 to
to the Year 1819, Inclusive . . . . to which Are Added, Such
Concurred and Approved Resolutions, as Are either of General,
Local, or Private Movement. Augusta: Published by T. S.
Hannon, 1821.
Maryland, General Assembly. Laws Made and Passed by the General
Assembly of the State of Maryland at a Session Begun and Held
at the City of Annapolis, on Monday the First Day of December,
Eighteen Hundred and Seventeen. Annapolis: Jonas Green, 1818.
Ohio, Governor. Message from the Governor of the State of Ohio, to
Both Houses of the Legislature, at the Commencement of the
First Session of the Eighteenth General Assembly, December 7,
1819. Columbus : Printed at the Office of the Columbus
Gazette, by P. H. Olmstead, State Printer, 1819.
127
128
Ohio, General Assembly. Acts of a General Nature. Passed at the
First Session of the Twenty-fourth General Assembly of the
State of Ohio. Begun and Held in the Town of Colximbus.
December 6, 1825. Vol. XXIV. Columbus: Printed by George
Nashee, State Printer, 1825.
Ohio, General Assembly, House of Representatives. Journal of the
House of Representatives of the State of Ohio. Vols. XVIXXXII. Columbus: Printed at the Office of the Columbus
Gazette, by P. H. Olmstead.
Ohio, General Assembly, Senate. Journal of the Senate of the State
of Ohio. Vols. XVI-XXIII. Columbus: Printed at the Office
of the Columbus Gazette, by P. H. Olmstead.
Ohio, General Assembly. Report of the Committee on the Subject of
Levying a Tax on the Capital of the U. S. Bank, Employed in
Ohio. 17th Assembly, 1st Session. Columbus : David Smith,
1818.
Ohio, General Assembly, Joint Select Committee on the Bank of the
United States. Report of the Joint Committee of Both Houses
of the General Assembly of Ohio, on the Communication of the
Auditor of State upon the Subject of the Proceedings of the
Bank of the United States, against the Officers of State, in
the United States' Circuit Court. Concord: Printed by Hill and
Moore. 1821.
Ohio, State Auditor. Communication from the Auditor of Ohio.
Accompanied with Documents, to Both Houses of the Legislature,
at the Commencement of the First Session of the Eighteenth
General Assembly, December 8, 1819. Columbus : Printed at
the Office of the Columbus Gazette, by P. H. Olmstead, 1819.
Poore, Benjamin Perley (ed.). The Federal and State Constitutions,
Colonial Charters and Other Organic Laws of the United States.
2 vols. Washington: Government Printing Office, 1878.
U. S. Congress. Annals of the Cong:ress of the United States.
16th Congress, 1st Session. Washington: Printed and Published
by Gales and Seaton, 1855.
U. S. Congress. Register of Debates in Congress, Comprising the
Leading Debates and Incidents of the First Session of the
Twenty-Second Congress. Vol. VIII, Part I. Washington:
Printed by Gales and Seaton, 1832.
U. S. Congress.
Senate Document #98, 22nd Congress, 1st Session.
129
Primary Sources
Manuscripts, Public Papers and Letters
Brown Letters.
(Ethan Allen Brown). Correspondence, August 22,
1806 - September 11, 1836 of Ethan Allen Brown, Governor of
Ohio, 1818-1822. Microfilmed copies in Ohio Historical
Society Library, Columbus, Ohio.
Brown Papers. Official Papers, 1818-1822. 3 boxes.
Historical Society Library, Columbus, Ohio.
In Ohio
Hammond Papers.
(Charles Hammond). Correspondence, 1801-1840.
5 boxes. In Ohio Historical Society Library, Columbus,
Ohio.
Hopkins, James P. (ed.). Papers of Henry Clay.
University of Kentucky, 1963.
3 vols.
Lexington:
L'Hommedieu's Letter.
(Stephen L'Hommedieu). Photocopy, in
Ohio Historical Society Library, Columbus, Ohio.
Lipscomb, Andrew A., et al. The Writings of Thomas Jefferson.
20 volumes. Washington, D.C.: The Thomas Jefferson Memorial
Association, 1903.
Minutes of the Board of Directors of the Bank of the United
States at Chillicothe, Ohio, 1817-1825. In the Ross County
Historical Society Library, Chillicothe, Ohio.
Story, William W. (ed. ) . Life and Letters of Joseph Story.
Boston: Charles C. Little and James Brown, 1851.
Worthington Papers.
(Thomas Worthington). Papers, February 23,
1795 - Ncvember 15, 1826. In the Ohio State Library,
Columbus> Ohio.
Worthington Letters to Langdon Cheves, 1819. Typescript ccpies,
in Ross County Historical Society Library, Chillicothe, Ohio.
U. S. Circuit Court, Ohio, Southern District. Transcript cf the
Case, 1819-1821, cf the Bank of the United States vs. Ralph
Osborn. In Ohio Historical Society Library, Columbus, Ohio.
Petitions
Chillicothe, Citizens of. Memorial to President and Directors of
the Bank
B(
of the United States from Citizens of Chillicothe_^
1817.
Chillicothe, Town Meeting, 1816. Petition for the Establishment of
a Branch of the United States Bank in the Town of Chillicothe.
1816.
130
Books
Bumet, Jacob. Notes on the Early Settlement of the NorthWestern Territory. Cincinnati; Derby, Bradley & Co., 1847.
Chase, Salmon Portland.
"A Preliminary Sketch of the History
of Ohio," in Salmon P. Chase (ed.). The Statutes of Ohio'
and of the Northwestern Territory. Adopted or Enacted from
1788 to 1833 Inclusive. Cincinnati: Published by Corey and
Fairbanks, 1833.
Cheves, Langdon. Langdon Cheves' Exposition, in Report on the
Condition of the Bank of the United States, by the Committee
of Inspection and Investigation. Philadelphia: Printed by
William Fry, 1822.
Cranch, William. S p o r t s of Cases Argued and Adjudged in the
Supreme Court of the United States, in February Term, 1809.
Vol. V. New York: Banks & Brothers, Law Publishers, 1883.
Clarke, M. St. Clair and Hall, D. A. (eds.). Legislative and
Documentary History of the Bank of the United States: Including
the Original Bank of North America. Washington: Printed by
Gales and Seaton, 1832.
Gallatin, Albert.
"Considerations on the Currency and the Banking
System of the United States," in Henry Adams (ed.). The
Writings of Albert Gallatin. Vol. Ill, New York: Anti­
quarian Press Ltd., 1960.
Gouge, William M. A Short History of Paper-Money and Banking in
the United States. New York: Published by B. & Collins,
1835.
Hammond, Charles. Review of the Opinion of the Supreme Court of
the United States, in the Case of Cohens vs. Virginia :
Originally Published in the Washington (City) Gazette:
to Which is Added. A Letter from a Gentleman. Eminent for
His Legal and Scientific Attainments. Occupying a High Station
under the Government of the State of Ohio, Containing Remarks
on the Case of Cohens vs. Virginia. Steubenville, Ohio:
Printed by James Wilson, 1821.
. The State of the Case and the Argument for the Appellants,
in the Case of the Bank of the United States, Versus the
Auditor and Treasurer of the State of Ohio, and Others, in
the Supreme Court of the United States. Cincinnati : Morgan
'. I, Lodge, 1823.
Wheaton, Henry. Reports of Cases Argued and Adjudged in the
Supreme Court of the United States, February Term 1824.
Vol. IX. New York: Banks & Brothers, Law Publishers, 1883.
131
Newspapers and Journals:
Aurora »
Period of 1816-1824
(Philadelphia).
The American.
(New York).
Bates E. (ed.). The Philanthropist. A Weekly Journal
Essays, on Moral and Religious Subjects. Domestic
Agriculture, and the Mechanic Arts; Together with
Notice of the Times. Mountpleasant: Printed and
by the Editor.
Containing
Economy.
a Brief
Published
The Chillicothe Supporter.
Cleaveland Herald.
Hamilton Gazette & Miami Register.
The Inquisitor, and Cincinnati Advertiser.
Liberty Hall and Cincinnati Gazette.
Literary Cadet.
(Cincinnati).
National Intelligencer.
National Register.
(Washington).
(Washington).
Niles, Hezekiah (ed,). Niles' Weekly Register: Containing
Political. Historical. Geographical. Scientifical. Statis­
tical. Economical, and Biographical Documents. Essays, and
Facts: Together with Notices of the Arts and Manufactures,
and a Record of the Events of the Times. Baltimore : Printed
by William Ogden Niles.
The Ohio Eagle.
(Lancaster).
Ohio Monitor and Patron of Industry.
The Ohio Watchman.
(Dayton).
Scioto Gazette and Fedonian Chronicle.
United States Gazette and True American.
(Philadelphia).
Western Herald and Steubenville Gazette.
Western Spy, and Cincinnati General Advertiser.
132
Secondary Sources
Books
Baxter, Maurice G. Daniel Webster & the Supreme Court. United
States of America: The University of Massachusetts Press,
1965.
Brown, Ted W. (Compiler), Secretary of State. The State of
Ohio: Number of Inhabitants Urban and Rural Population
. . . as Certified in the Eighteenth Federal Census.
Columbus, Ohio: the F. J. Heer Printing Co., 1961.
Catterall, Ralph C. H. The Second Bank or the United States.
Chicago: The University of Chicago Press, 1903.
Hammond, Bray. Bank and Politics in America: from the
Revolution to the Civil War. Princeton, New Jersey:
Princeton University Press, 1957.
Holdsworth, John Thom and Dewey, Davis R. The First and Second
Banks of the United States. Washington; Government Printing
Office, 1910.
Randall, Emilius 0. and Ryan, Daniel J. History of Ohio.
5 vols. New York: The Century History Company, 1912.
Sears, Alfred Byron. Thomas Worthington: Father of Ohio
Statehood. Columbus: The Ohio State University Press, 1958.
Sumner, William Graham. A History of Banking in the United States.
Vol. I of A History of Banking in All the Leading Nations.
Compiled by Thirteen Authors. New York: Journal of
Commerce and Commercial Bulletin, 1896.
Utter, William T. The Frontier State: 1803-1825. Vol. II of
The History of the State of Ohio. Edited by Carl Wittke.
Columbus, Ohio: Ohio State Archaeological and Historical
Society, 1942.
Warren, Charles. The Supreme Court in United States History.
2 vols. Boston: Little, Brown, and Company, 1926.
Articles
Bogart, Ernest L. "Taxation of the Second U. S. Bank by Ohio,"
The American Historical Review, XVII (1912) 312-331.
Cheetham, Jean Dick.
"State Sovereignty in Ohio," Ohio
Archaeological and Historical Publications. IX (1901) 290302.
133
Huntington, C. C. "A History of Banking and Currenoy in Ohio
before the Civil War," Ohio Archaeologioal and Historical
Society Publications, XXIV (1915) 235-539.
Smith, William Henry. "Charles Hammond and His Relations to
Henry Clay and John Quincy Adams or Constitutional
Limitations and the Contest for Freedom of Speech and the
Press." An Address Delivered before the Chicago Historical
Society, May 20, 1884. Published for the Chicago Histori­
cal Society, 1885.
Weisenburger, Francis Phelps. "A Life of Charles Harnmondî
First Great Journalist of the Old Northwest," Ohio
Archaeological and Historical Quarterly, XLII (1934)
340-427.
The
Unpublished Material
Still, John.
"The Life of Ethan Allen Brown." Unpublished
Ph.D. dissertation. Department of History, The Ohio State
University.