Thomas Benton - Thirty Years' View (Vol. I of 2)

The war with Great Britain commenced in 1812 and ended in 1815. It was a short war, but a necessary and important one, and introduced several changes, and made some new points of departure in American policy, which are necessary to be understood in order to understand the subsequent working of the government, and the VIEW of that working which is proposed to be given.

1. It struggled and labored under the state of the finances and the currency, and terminated without any professed settlement of the cause for which it began. There was no national currency – no money, or its equivalent, which represented the same value in all places. The first Bank of the United States had ceased to exist in 1811. Gold, from being undervalued, had ceased to be a currency – had become an article of merchandise, and of export – and was carried to foreign countries. Silver had been banished by the general use of bank notes, had been reduced to a small quantity, insufficient for a public demand; and, besides, would have been too cumbrous for a national currency. Local banks overspread the land; and upon these the federal government, having lost the currency of the constitution, was thrown for a currency and for loans. They, unequal to the task, and having removed their own foundations by banishing specie with profuse paper issues, sunk under the double load of national and local wants, and stopped specie payments – all except those of New England, which section of the Union was unfavorable to the war. Treasury notes were then the resort of the federal government. They were issued in great quantities; and not being convertible into coin at the will of the holder, soon began to depreciate. In the second year of the war the depreciation had already become enormous, especially towards the Canada frontier, where the war raged, and where money was most wanted. An officer setting out from Washington with a supply of these notes found them sunk one-third by the time he arrived at the northern frontier – his every three dollars counting but two. After all, the treasury notes could not be used as a currency, neither legally, nor in fact: they could only be used to obtain local bank paper – itself greatly depreciated. All government securities were under par, even for depreciated bank notes. Loans were obtained with great difficulty – at large discount – almost on the lender's own terms; and still attainable only in depreciated local bank notes. In less than three years the government, paralyzed by the state of the finances, was forced to seek peace, and to make it, without securing, by any treaty stipulation, the object for which war had been declared. Impressment was the object – the main one, with the insults and the outrages connected with it – and without which there would have been no declaration of war. The treaty of peace did not mention or allude to the subject – the first time, perhaps, in modern history, in which a war was terminated by treaty without any stipulation derived from its cause. Mr. Jefferson, in 1807, rejected upon his own responsibility, without even its communication to the Senate, the treaty of that year negotiated by Messrs. Monroe and Pinkney, because it did not contain an express renunciation of the practice of impressment – because it was silent on that point. It was a treaty of great moment, settled many troublesome questions, was very desirable for what it contained; but as it was silent on the main point, it was rejected, without even a reference to the Senate. Now we were in a like condition after a war. The war was struggling for its own existence under the state of the finances, and had to be stopped without securing by treaty the object for which it was declared. The object was obtained, however, by the war itself. It showed the British government that the people of the United States would fight upon that point – that she would have war again if she impressed again: and there has been no impressment since. Near forty years without a case! when we were not as many days, oftentimes, without cases before, and of the most insulting and outrageous nature. The spirit and patriotism of the people in furnishing the supplies, volunteering for the service, and standing to the contest in the general wreck of the finances and the currency, without regard to their own losses – and the heroic courage of the army and navy, and of the militia and volunteers, made the war successful and glorious in spite of empty treasuries; and extorted from a proud empire that security in point of fact which diplomacy could not obtain as a treaty stipulation. And it was well. Since, and now, and henceforth, we hold exemption from impressment as we hold our independence – by right, and by might – and now want the treaty acknowledgment of no nation on either point. But the glorious termination of the war did not cure the evil of a ruined currency and defective finances, nor render less impressive the financial lesson which it taught. A return to the currency of the constitution – to the hard-money government which our fathers gave us – no connection with banks – no bank paper for federal uses – the establishment of an independent treasury for the federal government; this was the financial lesson which the war taught. The new generation into whose hands the working of the government fell during the Thirty Years, eventually availed themselves of that lesson: – with what effect, the state of the country since, unprecedentedly prosperous; the state of the currency, never deranged; of the federal treasury, never polluted with "unavailable funds," and constantly crammed to repletion with solid gold; the issue of the Mexican war, carried on triumphantly without a national bank, and with the public securities constantly above par – sufficiently proclaim. No other tongue but these results is necessary to show the value of that financial lesson, taught us by the war of 1812.

2. The establishment of the second national bank grew out of this war. The failure of the local banks was enough to prove the necessity of a national currency, and the re-establishment of a national bank was the accepted remedy. No one seemed to think of the currency of the constitution – especially of that gold currency upon which the business of the world had been carried on from the beginning of the world, and by empires whose expenses for a week were equal to those of the United States for a year, and which the framers of the constitution had so carefully secured and guarded for their country. A national bank was the only remedy thought of. Its constitutionality was believed by some to have been vindicated by the events of the war. Its expediency was generally admitted. The whole argument turned upon the word "necessary," as used in the grant of implied powers at the end of the enumeration of powers expressly granted to Congress; and this necessity was affirmed and denied on each side at the time of the establishment of the first national bank, with a firmness and steadiness which showed that these fathers of the constitution knew that the whole field of argument lay there. Washington's queries to his cabinet went to that point; the close reasoning of Hamilton and Jefferson turned upon it. And it is worthy of note, in order to show how much war has to do with the working of government, and the trying of its powers, that the strongest illustration used by General Hamilton, and the one, perhaps, which turned the question in Washington's mind, was the state of the Indian war in the Northwest, then just become a charge upon the new federal government, and beginning to assume the serious character which it afterward attained. To carry on war at that time, with such Indians as were then, supported by the British traders, themselves countenanced by their government, at such a distance in the wilderness, and by the young federal government, was a severe trial upon the finances of the federal treasury, as well as upon the courage and discipline of the troops; and General Hamilton, the head of the treasury, argued that with the aid of a national bank, the war would be better and more successfully conducted: and, therefore, that it was " necessary ," and might be established as a means of executing a granted power, to wit, the power of making war. That war terminated well; and the bank having been established in the mean time, got the credit of having furnished its "sinews." The war of 1812 languished under the state of the finances and the currency, no national bank existing; and this want seemed to all to be the cause of its difficulties, and to show the necessity for a bank. The second national bank was then established – many of its old, most able, and conscientious opponents giving in to it, Mr. Madison at their head. Thus the question of a national bank again grew up – grew up out of the events of the war – and was decided against the strict construction of the constitution – to the weakening of a principle which was fundamental in the working of the government, and to the damage of the party which stood upon the doctrine of a strict construction of the constitution. But in the course of the "Thirty Years" of which it is proposed to take a "View," some of the younger generation became impressed with the belief that the constitutional currency had not had a fair trial in that war of 1812! that, in fact, it had had no trial at all! that it was not even in the field! not even present at the time when it was supposed to have failed! and that it was entitled to a trial before it was condemned. That trial has been obtained. The second national bank was left to expire upon its own limitation. The gold currency and the independent treasury were established. The Mexican war tried them. They triumphed. And thus a national bank was shown to be "unnecessary," and therefore unconstitutional. And thus a great question of constitutional construction, and of party division, three times decided by the events of war, and twice against the constitution and the strict constructionists, was decided the last time in their favor; and is entitled to stand, being the last, and the only one in which the constitutional currency had a trial.