Democratick Editorials: Essays in Jacksonian Political Economy

By William Leggett

Ten years after Thomas Jefferson’s death in 1826, an outspoken young editor in New York City was reformulating and extending the Jeffersonian philosophy of equal rights. William Leggett, articulating his views in the columns of the New York
Evening Post,Examiner, and
Plaindealer, gained widespread recognition as the intellectual leader of the
laissez-faire wing of Jacksonian democracy…. [From the Foreword by Lawrence H. White.]

Book Cover

Translator/Editor

Lawrence H. White, ed.

First Pub. Date

1834

Publisher

Indianapolis: Liberty Fund, Inc. Liberty Press

Pub. Date

1984

Comments

Essays first published 1834-1837.

Copyright

Portions of this edited edition are under copyright. Picture of William Leggett courtesy of United States Library of Congress. Original contains the inscription: "Engraved by Sealey, from a Painting by T. S. Cummings, N A." and includes Leggett's signature below.

THE BANKRUPT BANKS

Plaindealer, May 13, 1837.

The newspapers, with scarcely an exception, eulogize the banks for suspending payment, and now that they have thus declared themselves bankrupt by their own unanimous act, pronounce them as good and solvent as before, and call upon them to extend their loans. Loans of what? Irredeemable promises! On what possible pretence of justice or common sense, can the banks continue their ordinary business of discount, and charge a difference of six and seven per cent between their dishonoured paper, and the valuable paper of those merchants and traders who have withstood the shock of commercial revulsion, and met all their engagements punctually and to the letter? Will any one be so preposterous as to say that the promises of the banks, which are a lie on their face, are as good as the promises of such individuals? But the banks, it is contended, are perfectly solvent, and have assets sufficient to meet all their engagements. This may be so, or it may not; but, for our own part, we have no confidence in these soulless corporations, managed in secret by a mysterious junto, and shrouded altogether from the wholesome scrutiny of the publick eye. What proof have we that the banks are solvent? Is the testimony of the bank commissioners appealed to? How many days, we would then ask, was it, before the Mechanicks Bank declared itself bankrupt, that the community were solemnly assured by a bank commissioner that that institution had abundance of specie to redeem all its obligations to its bill holders and depositors? We know little of the secrets of the prison house; but we know enough to excite deep distrust of this ready exclamation of a venal press that the banks are all perfectly solvent. We know that at least two of the broken institutions have been lending large sums of money without the knowledge of the directors, and one without the knowledge of either president or directors. How many more are in the same category? And to what extent have these unauthorized loans been made? And what is the degree of solvency of those to whom the “accommodations” were extended? Who can answer these questions?

Again, if possibly they are solvent, which is much to be doubted, are they more so, we would ask, than those individuals who are the owners of known and substantial property, and who have not yet suspended payment, but whose promises are scrupulously fulfilled? Who believes that the notes of any of the broken banks are as good as the notes of Mr. Astor? Who would not take, if it were not for the mere facility of passing again, the promise of Mr. Astor, or Mr. Lenox, or Mr. Bronson—nay, who would not take the promise of the humblest mechanick to the extent of his visible means, in preference to the invalidated and faithless promises of those great exclusively privileged bankrupt institutions in Wall street, which now stand as memorials of the egregious folly and dishonesty of special legislation?

Turn a deaf ear then, reader, we entreat you, to all these fraudulent attempts to cajole you into the belief that the banks, though broken, are as good as ever. They may be as good as ever, but they never were good. They were conceived in corruption. They were the spurious offspring of fraud and folly, and their whole career has been illustrative of their parentage. Attempt not, then, to heal the wound inflicted upon their credit by their own suicidal act. Set your face firmly against any legislative resuscitation of the exanimate brood of exclusively privileged money-changers. Now is the accepted time to overthrow forever the ignoble order of rag barons. Now is the auspicious moment when, by an energetick exercise of the popular strength, we may sunder forever the fetters of the paper money feudal system. The utter fatuity of legislative guardianship of the currency is signally illustrated by the present disruption of the links of the most strongly concatenated chain ever fastened by arbitrary power on the limbs of trade; and it is the part of wisdom to see that the broken fragments are not rivetted anew.

Let the banks rise from their ruins, if they can, by the recuperative force of what little vitality is left in them. We would neither render them assistance, nor oppose the slightest hindrance. But let us, in the meanwhile, embrace the lesson taught by their prostration, to insist that our legislative servants should immediately emancipate trade from arbitrary restrictions. If men of capital were at liberty to act, a system of free banking would arise on the ruins of monopoly which would dispense all the good that has ever been performed by the privileged institutions, and would be liable to none of their manifold abuses. The financial facilities which the community requires, in the prosecution of trade, are themselves a branch of trade, and perfectly within the influence of its natural laws. Let us then insist upon the divorcement of legislation from banking. Let us demand commercial freedom. Let us require that politicks shall confine itself to the affairs of government, and leave trade to manage its own concerns.

On the very day when the banks of this city and Brooklyn declared themselves bankrupt, stocks rose in price some fifteen or twenty per cent. This was in the confidence of a new inflation of paper money trash. But will the community consent to this? Will they tamely be imposed upon by a spurious, irresponsible, unredeemable paper currency, not worth so much as the ink wasted in recording the lying promises on its face? Will they witness a fresh series of fluctuating prices; new enterprises of mad speculation; and the prostrate fabrick of monopoly credit, now confessedly without a basis, again reared up to the clouds, to fall again, sooner or later, with more disastrous ruin?

The state of things which now exists we long since foretold; and it does not require a prophetick vision to see that worse difficulties are in reserve, unless we give freedom to trade, separating it from all the corrupt and disordering influences of legislation, and subjecting it to the salutary operation of boundless competition. Leave enterprise and rivalry alone; and the one will build up, and the other regulate, a better system of currency and exchange, than we can ever hope from the wisest legislation, to say nothing of such tampering Solons as govern our political affairs.

32.

A four-volume biographical record of the more notorious criminals confined at London’s Newgate Prison, published 1824-28.—Ed.

SEPARATION OF BANK AND STATE

33.

This law prohibited the entry of any bank not expressly chartered by the state legislature.—Ed.

“BLEST PAPER CREDIT”

34.

John Randolph of Roanoke, Representative of Virginia, 1800-1824.—Ed.

35.

“Greedy toward others, extravagant toward himself.”—Ed.

36.

The character Jeremy Diddler, in James Kenney’s farce
Raising the Wind (1803), continually contrives to borrow money.—Ed.