“Extracts from the Private Diary of a Certain Bank Director,” Part I
“Cashier in trouble,—circulation above a million—gold and silver coin in vaults of too small an amount to be mentioned except to particular friends.”
As a high school student studying AP American history, I became fascinated by the idea that Jacksonian Americans got so worked up over the subject of national banking. Sure, I was mildly interested in such things, but practically no one else was. How, then, did such a mundane and arcane subject so seize the minds, imaginations, passions, and fears of two or three generations of 19th-century Americans? For their part, Jacksonians, too, found the subject at least mildly interesting and often electrifying. To Jacksonian Democrats, the Bank of the United States often represented the worst of all modern evils, the most perilous of threats to American freedom and republican destiny. It was a species of Old World monopoly (run in part by and for foreign investors) shoehorned into the American constitutional, republican order, spawning aristocratic bubble-lords and -ladies all over the country. To Jacksonian Whigs (pardon the odd expression), the bank was a perfectly logical, time-honored method of modern statecraft. In fact, many believed it was the crowning touch on a history of conservative monetary and fiscal policies; a constraint on the issue-happy state banks and the flagship engine of internal improvement.
Despite the Whigs’ long-term ideological staying power, the Democrats dominated both the cultural and political battles of the Jacksonian era. Jackson and Van Buren were successful in their bank war, converted the Treasury into an independent holder of government funds, and they managed to reunite their party through bitter divides at the state and local levels during it all. Invigorated by a decade of political successes and inspired by what appeared a rising tide of thoroughly democratic and republican American culture, intellectuals like John L. O’Sullivan and his Democratic Review published lively satires of their Whig enemies and cashed in on the cultural appeal of the banking subject. The following is the first portion of one such wry commentary on the daily lives of America’s new “Mushroom Aristocracy” of high finance.
“Extracts from the Private Diary of a Certain Bank Director,” US Magazine & Democratic Review, 2 No. 8 (July 1838)
Monday. Had just finished my breakfast, when Mr. John Jones called at my dwelling, to beg I would use my influence with our board, to prevent a note of his from being thrown out. Mr. Jones pleaded very hard—said his credit would be ruined if this note were not discounted. He proved to me very satisfactorily that he owns twice as much as he owes, and is only pressed for a little ready money. Assured Mr. Jones that I would do all in my power to serve him. When the board met, and Mr. Jones’s note came under consideration, I mentioned that I had great respect for the offerer, who was one of my most particular friends, and one for whom I would go all lengths that I could, with propriety, to serve. But, as a member of a directory to which the little property of orphans and widows was intrusted, I felt it my duty to state that I had undoubted information that my friend’s credit was at this moment in a very ticklish condition. Did not doubt, however, but he would ultimately pay every body, and have something handsome left…Mr. Snatchpenny, chairman of the discount committee, said that, as I was a particular friend of Mr. Jones’s, I would probably be willing to guarantee the bank from loss. Astonished at such a proposition, and frankly told Snatchpenny as much. Friendship is one thing—business another. Sorry to say that, notwithstanding all my endeavors, the board threw out Jones’s note. However, we had no sooner adjourned, than I went to the first teller, and took up the amount on a memorandum check of my own.
As I passed out of the bank door, found Jones waiting on the steps in great anxiety. Told him of my bad luck in as circumspect terms as possible; but the poor fellow was near sinking to the earth. Did all I could to comfort him, but he refused to be comforted. He spoke of his wife and children, and of the loss of all his earnings and savings, the result of many years of toil and trouble. Could not bear to see him so distressed, and therefore told him that, though exceedingly pressed for money myself, I would speak in his behalf to a friend of mine…Referred him accordingly to Mr. Sharpsucker, my private broker, taking care to have first an interview with Sharpsucker to be sure that my benevolent intentions should not be frustrated.
In the afternoon met Jones, and found him very grateful. Was sorry to learn from him, however, that Sharpsucker had himself to borrow the money, and therefore could not let him have it at less than three per cent a month. But this, as Jones himself says, is a trifle in the present condition of his affairs.
I have done a good day’s work. I have done my duty to the bank, to myself and family, and to my friend.
Tuesday. In the evening there was a social little party of one or two hundred friends at my mansion. Among them there was our beloved pastor, the Rev. Dr. McThwackem, with whom I had a most interesting conversation. As the Doctor was once Professor in a University, and as he is as distinguished for his erudition as he is for his piety, I took occasion to ask him the exact meaning of the word specie, and was pleased to learn from him that the popular use of the word is entirely unauthorized by any classical authorities. The true word, the Reverend Doctor says, is species…As language deteriorated, men began to speak of species of coin, as philosophers sometimes spoke of species of things; but not knowing exactly what philosophers meant by species of things, the vulgar herd mis-applied the term, and further corrupted speech by an ellipsis “of coin,” and dropping the final s in “species.” To a man of true classical taste, the Reverend Doctor said, nothing could be more offensive than a word thus extruncated and misapplied, and in this I perfectly agree with him…
Nothing could be more lucid than the reverend gentleman’s illustrations; and his arguments were perfectly conclusive. This encouraged me to ask him the true meaning of the word bullion…The French word billon, a kind of base metal or base coin, was evidently related to it; but it was altogether too base a word to have an etymon in respectable Greek or Latin. Its root, if to be found anywhere, was, perhaps, to be found in bulla, a word of the corrupt Latin of the middle ages, which word might be rendered into English by either ball or bubble…”I never hear the word mentioned without experiencing the most painful emotions. The Popish edicts take their name of bulls from a little ball of gold attached to each, called bulla in monkish Latin. Hence the English word bullion. The bare sound makes me tremble, for it immediately causes my mind to revert to the little balls of gold attached to the Popish bulls, thence to the contents of those bulls, and thence to the horrible designs many entertain of subverting our Protestant liberties by bringing in the Pope, and it may be the Pretender also.”
Well may you tremble, my beloved pastor. The evident intention of the hard-money men is to bring us back to the condition of the dark ages.
Wednesday. I was early at bank this morning, for this is the day for preparing our annual return to the Legislature. Cashier in trouble,—circulation above a million—gold and silver coin in vaults of too small an amount to be mentioned except to particular friends. Asked cashier if he could not borrow from other banks for the day, to be paid back to-morrow. Said he had already borrowed as much as he could from every bank and broker for five miles round, and that to get what he had got, he had been obliged to promise to pay back to-day instead of to-morrow, and also to lend every pistareen he had to three several banks in succession, before three o’clock this afternoon. How very embarrassing these returns to the Legislature sometimes prove!…One of the board suggested that the notes of other banks on hand, and sums due from others banks, being as good as specie, might be put down as specie. Cashier said…[that] as a conscientious man, he should not like to swear to such an account. Mentioned to cashier my conversation of last evening with his beloved pastor and mine. The whole board loud in their praise of the Rev. Dr. McThwackem’s piety and patriotism; but cashier, though perfectly satisfied that there is a Popish plot at the bottom of the schemes of the hard-money men, a little dubious as to the true meaning of the word specie. Said, however, that if he could be convinced that specie meant much the same as specious and speciously, he could make out a very fair account, for then he could include the memorandum checks of the directors among the specie.
Sent for Webster’s large dictionary, and read to cashier…
Cashier perfectly satisfied, except as to whether species and specie were not different words; therefore read to him a part of what Webster says under the eighth head, namely,
“In modern practice this word is contracted into specie.”
Cashier convinced, and at the same time delighted. Says he shall never more have any difficulty in making up his annual returns. Memorandum checks are the real specie; for, if they are not “a special idea,” they are certainly “an appearance to the senses,—a visible or sensible representation—a representation to the mind—a show—a visible exhibition”—of something.
Mr. Snatchpenny proposed that, to make the specie in our bank a round half million, we should each take up an additional amount on memorandum checks, allowing the cashier to share equally with the directors. Nothing could be fairer, and the conscientious scruples of the cashier being entirely removed, he went immediately before a magistrate and made oath to the return, agreeably to the provisions of our charter.
Thursday. My son Jack, who has just come from college, put into my hands the Democratic Review for May. Was highly gratified with the autobiography of my most worthy friend, Ferret Snapp Newcraft, Esq. Mr. Newcraft hardly does himself justice in this brief memoir. I hope he will publish fuller reminiscences of his life and times, for the benefit of his children, and of mine. It is true, he was not quite free from faults; and I always thought that, as he himself says, “the distinction between making a great speculation and ‘taking in’ a fellow creature, was never precisely clear to his mind.”
Thanks to McThwackem’s excellent instructions, I can perceive distinctions where Newcraft never could. McThwackem splits hairs with so much dexterity, that they never break off in the middle…
I do like McThwackem, I only wish he would drop the ugly prefix to his name, and become a native.
Friday. Great outcry among the merchants, because our bank and the other banks cannot grant them facilities, in consequence of the directors and a few others monopolizing the funds of public institutions for their private speculations. Of all stations in society it appears to me that that of director of a bank is the most thankless. The officers of Government are all paid for their services, and the officers of banks, presidents and cashiers excepted, are not paid. Even the small emoluments we get in an indirect way seem to be grudged to us, though these have never, in my won case at least, amounted to more than fifty thousand dollars in any one year. Yes, these little gains excite envy, and this at a time when we are doing all in our power to make dollars as plenty as black-berries…
The merchants and the rest of the community have, indeed, abundant cause of complaint, but then it is of the government, not of the banks. If the government would only cease its war on the banks, we could make money so plenty that there would be not only enough to promote our own speculations, but also to grant the merchants the facilities they require…If there were no banks, commerce would be a humdrum affair, whereas it is now almost as exciting as a game at rouge et noir, and almost as uncertain. If there were no banks every man would have to be content with his own earnings, and there would be no capital to the Corinthian column at all, nothing but a plain Doric shaft. If there were no banks there would be no means of acquiring even a competency, except by labor, agricultural, mechanical, mercantile, or professional, all slow and hard ways of becoming rich. Banking affords a quick and easy road to wealth,—if not to the whole nation at least to a part of it. By its means I have myself, besides living tolerably like a gentleman, acquired a snug little fortune of two hundred thousand dollars in the short space of ten years, and I am morally certain that if I had been obliged to work for it I never should have been worth the one-half part of that many cents.
Saturday. Entered into a combination with a number of friends to depress the price of certain articles by refusing to the holders of them all kind of facilities, and pressing on them for the prompt discharge of their obligations. As the scheme was an extensive one, requiring a number of persons to carry it on, and profound secrecy to bring it to a successful issue, it was several times in danger of miscarrying. But our power was so great, and the necessities of the merchants who held the articles were somehow so urgent, that we bought them all up pretty much at our own price. We have now only to increase our issues, and we shall be able to sell these articles at such rates as we may choose to ask. In that case my two hundred thousand dollars will become four hundred thousand. I prefer going on in this snug way to dashing out as Newcraft did. He always appeared to me to go ahead too fast.
At a special meeting of our board, held to-day, Mr. O’Squeezem made a long speech, in which he dwelt at great length on some very plain truths, such, for example, as that gold and silver in the vaults of a bank are a dead weight to a bank, and of no use to the community—that there is a continual risk of the metals being stolen—that memorandum checks are the real specie, &c. &c.; and finally wound up with a proposal to rid the bank of the gold and silver with which it was encumbered, by giving his own memorandum checks for it.
O’Squeezem is all for self. Now, if there is any one vice I do dislike, it is selfishness. I therefore opposed him most manfully; but I had not spoken more than half an hour before another director proposed that each member of the board should have an equal share of the gold and silver. In this form there was something like fairness and justice in the proposal; and I withdrew my opposition, for the moment, that the cashier might give some necessary information.
Cashier expressed his desire to do all in his power to favor the wishes of the board, but stated frankly that the adoption of the resolution in its present form would expose him to considerable inconvenience, and he doubted if all the gold and silver at present in the vaults of the banks, would be much of an object to the directors, if equally divided among them. Mr. O’Sqeezem remarked that the amount, when the annual return was made up, appeared to be considerable. Cashier said that appearances were frequently deceitful…He hoped that whatever was done, the board would leave him enough gold and silver coin to pay postages. The tyrannic requisitions of the Government under which we live made this indispensable. The remark of the cashier in regard to postages almost decided me, and a few words I had with him apart, left me no longer in doubt as to the course I should pursue. I opposed the proposition in its modified form with as much energy as I had resisted it in its original shape…
O’Squeezem sneeringly remarked that Deacon Graball ought to be at his prayers—that he was becoming a convert to the Specie Humbug—a defender of the Specie Circular, & c. These revilings affected me not. I look on all kinds of paper money except what is founded on a metallic basis as a DOWNRIGHT FRAUD on the community. Whether the basis is large or small, is not of much moment. Such is the excellent nature of paper credit, that a single dollar in metal may serve for any number of dollars in paper.