The Bank Controversy of the New Republic: Contingency and Authority in Early U.S. Public Debate
Preface (Written to a Recession-Weary Culture) 8
Chapter 1: The Currency of Authority and the Value of a Bank 14
Chapter 2: Arcana Imperii: Secrecy and Betrayal in a "Democratical" State 50 Chapter 3: Establishing Credit: Hamilton's Authority, Yeoman’s Tyranny 100
Chapter 4: Melodrama as Republican Currency 147
Chapter 5: Panic: The Anxiety of Irreversible Change 184
Chapter 6: Jackson’s Rhetorical Presidency 225
Chapter 7: Communicating after the Bank 260
PREFACE (Written to a Recession-Weary Culture) The Bank debates became apropos with the emergence of a subprime mortgage crisis in 2007, only months after I had settled on this topic. As with the panicked years of the Bank debates, especially 1819 and 1837, government mismanagement and other factors led to major economic crisis. Just as nearly two centuries before, nationalization, debts, and the corrupting forces of greed and consumption became frequent topics of daily debate. The Bank debates introduced the nation to these issues. Thomas Jefferson and James Madison vehemently opposed the direction of Alexander Hamilton's system of finance, which provided for the Bank of United States. Created in 1791, the Bank put public money in private hands, allowing investors to gain interest on shares of the nation's debt. This "funded debt," as it was known, gave the government the ability to wage war and launch internal improvement programs based on the tax burden of future generations. The idea, like the war, was revolutionary, grounding society in imagined growth and progress, rather than gold and silver already held. 1 Such a system relied on a firm belief in the national, communal capacity for growth. With Enlightenment belief in rationality, the wealth of a nation could be exponentially increased through reason, measurement, and an exact theory of exchange. Not many U.S. citizens shared Hamilton’s exact faith, though. Economic boom and bust cycles renewed assaults on Hamilton’s project for the next half century.
1 J.G.A. Pocock, Virtue, Commerce, and History: Essays on Political Thought and History, Chiefly in the Eighteenth Century (Cambridge: Cambridge University Press, 1985), 98.
The Bank experienced a tumultuous history as an institution amidst the controversy and became a symbol for many of the anxieties of emerging modernity. Opponents of the Bank viewed the institution as a monstrosity and an affront to republican principles. They claimed that the government showed preference to merchants and capitalists at the expense of farmers and laborers. The Bank increased speculation and lined the pockets of shareholding representatives, corrupting the nation and taking away public virtue. When the charter for the Bank was to expire in 1811, bankers threatened that the nation would fall if the Bank collapsed. Opponents saw this as a sign that bankers were already corrupting and controlling government. A nation ruled by its banks had no claim to freedom for its citizens; their campaign against the Bank succeeded. For advocates of the Bank, also imagining the world through the lens of republicanism, the institution was a symbol of economic vitality and national authority. In consolidating debts, the Bank made it possible for individual republican citizens to live freely, without debt to foreign nations. The Bank stimulated active trade and investments from overseas. The national institution limited speculation among state banks, ensuring investors against unnecessary risk. In all these ways, the Bank was the stability that republican government needed to confront modern finance and war. Bank supporters’ way of thinking and talking about the economy slowly became dominant. The ostensible results of the debate are mixed at best. Through expiration of the twenty- year charter in 1811, and the beginning of a new charter in 1816 and its expiration in 1836, the Bank remained a focal point of U.S. politics. Even in highly successful economic circumstances, the debate continued regarding republican values, constitutionality, and economic justice.
Andrew Jackson terminated the institution by vetoing its renewal in 1832, and after winning reelection, he removed deposits in 1833 and 1834. For decades afterward, leaders struggled to find a popular solution to the nation's economic management, but the much-abused Bank could not be resuscitated. Popular opinion has sided against the Bank, despite its effectiveness. As with modern recessions, the debaters centered the controversy on finding blame and examining government’s role in the economy. Debaters argued over war debts, the ethics of growth, the meaning and significance of public dissent, trade deficits, and class interests. Because these debates wrestled with issues of economic justice, individuals who held a stake in the nation’s financial future participated regularly. With growth of the market and improvements in technology, a growing percentage of white men participated. Through the medium of a free, partisan press, citizens voiced criticism of government. The fifty-two year time span of the Bank debates—discontinuous, cyclical, and haphazard as it was—helped to bring about revolutionary changes to the scope and style of debate. Many more citizens participated in much more rowdy ways. The early twenty-first-century financial crisis reveals our reliance on the transformation of these times. Citizens in the old debate turned away from republican letters, secrecy, and apathetic deference. Increasingly, as the market distorted equality, they made demands on government, as equal citizens, for a system that distributed wealth more fairly and in ways consistent with national principles. Their antagonisms, in pamphlets, broadsides, public letters, and cartoons, created a source of constant power to balance the national political structure and reconstitute “the people” as a legitimate voice in the press. The balancing of strong rhetorical dissent against government became routine through such debate.
The recent crisis points out how important the market is to U.S. identity and solidarity. Economic uncertainty provides a central driving force for vigorous public discourse about the nature of government and the fundamental exchange relations in society. This project recognizes such centrality of economic discourse, creating a new historical narrative for this development. In doing so, it expands the project begun by Habermas's Structural Transformation of the Public Sphere, Michael Warner's Letters of the Republic, and Michael Schudson's The Good Citizen. 2
In each work, a historical account of a rising public sphere creates a way of thinking through the relationships of private economy to popular speech and dissent. Each book discusses the relationship of communication technologies, specific texts, and socio-political conditions to the legitimacy of such arguments in public. Limited to just one debate, this study grants an opportunity to be even more attuned to the public letters and texts that drove that process, as speech transformed from deference to widespread popular dissent. Moreover, this analysis can foreground a shift from the republican tradition (an ancient political style based in freedom from domination, concern for civic virtue as the means to shared government, and the attempt for a widely shared vision of the common good) to the liberal tradition (a modern political style based in protection of rights that enable personal economic stability, concern for individual wealth as a means to shared government, and the voicing of dissent). 3 As will be shown, this is not a cut-and-dried binary, but setting up these categories
2 Jürgen Habermas, Structural Transformation of the Public Sphere, trans. Thomas Burger (Cambridge, MA: MIT Press, 1991); Michael Warner, Letters of the Republic: Publication and the Public Sphere in Eighteenth-Century America (Cambridge, MA: Harvard University Press, 1990); Michael Schudson, The Good Citizen: A History of American Civic Life (Cambridge, MA: Harvard University Press, 1998).
3 Style cannot be separated from substance, from a rhetorical perspective. Style is more than “mere display,” but consists of a performed repertoire of forms, tropes, and arguments that cohere in historical networks of authority. Robert Hariman presents a similar definition in Political Style: The Artistry of Power (Chicago: University of
helps to highlight the major shifts that took place in discourse. Further, such negotiation of traditions helps to highlight the dramatic difference between our contemporary vocabulary for economic rationalization and the highly ethical and value-laden discourse of the founding generation. In the midst of a long recession today, we see that political economy is a key site for the formation and deformation of the public debate, since wealth and finance preeminently impact the conditions of participation and exclusion from democratic life. As the economy took unpredictable turns, political maneuvering successively created and destroyed a major financial institution, and specific speakers like Andrew Jackson seized authority through dynamic rhetorical interventions. With such seizures, the means and norms of public discourse dramatically transformed. With the hindsight of two hundred years, we see that U.S. citizens dissented against economic injustice and corporate corruption. Much of the outcome was sheer political spectacle and economic policy that makes the modern reader cringe. However, this historical analysis also recovers and foregrounds citizens’ voices that made government more responsive to economic needs, so that “the common welfare” might protect citizens abused by the market. Markets "live in the lips of men and women," to use Deirdre McCloskey's expression, and the ability to make
Chicago Press, 1995), 187. This notion of style also corresponds to the term “tradition” used by John Murphy and James Jasinski to examine normative repertoires that guide rhetorical performance. Jasinski discusses “performative traditions,” while Murphy theorizes “rhetorical traditions.” John M. Murphy, “Inventing Authority: Bill Clinton, Martin Luther King, Jr, and the Orchestration of Rhetorical Traditions,” Quarterly Journal of Speech 81, no. 3 (February 1997): 71-89; James Jasinski, “Instrumentalism, Contextualism, and Interpretation in Rhetorical Criticism,” in Rhetorical Hermeneutics, edited by William Keith and Alan Gross (Albany: State University of New York Press, 1997), 195-224. All of this work shares affinities with a tradition of scholarship known as “historical contextualism,” which attends to the language and patterns of thought in historical controversy. See especially the study of republicanism in J. G. A. Pocock, The Machiavellian Moment: Florentine Political Thought and the Atlantic Republican Tradition (Princeton, NJ: Princeton University Press, 2003).
that linguistic structure of promises work for the entire public is a duty shared by all. 4 The debaters, at times uncivil and threatening to national solidarity, bolstered dissent as a positive force for democracy. Despite the callousness and carelessness of our own “panicked” era, we can only hope that the recent crisis brings about similar gains for equality, transparency, and civic participation, now on a global scale.
4 Deirdre N. McCloskey, If You're So Smart: The Narrative of Economic Expertise (University of Chicago Press, 1990), 108; see also Deirdre N. McCloskey, The Rhetoric of Economics (Madison: University of Wisconsin Press, 2nd ed., 1998).
CHAPTER ONE: The Currency of Authority & The Value of a Bank For more than fifty years, the Bank of the United States served as a contested condensation of both corruption and aggressive national stability. 1 Often the Bank worked magnificently to stabilize the market, pay off foreign debt, and unify the national economy. To opponents, though, the Bank allowed for standing armies and continuous warfare, for urban greed and instability, and for wealthy private interests controlling public assets. In short, it was everything that James Madison and other Virginian republicans feared most about their small, free, and virtuous republic; to supporters, it was the centerpiece of a sound economic structure planned by Hamilton. Consensus between these emotionally charged viewpoints—these incipient ideologies—seemed distant. Such emotions had been fueled by the passions of the Revolution. The United States had been freed from the arbitrary "pleasures" of the British system of finance and war, said Madison, and the Constitution, ratified in 1787 and 1788, could be the guardian of a new republican faith. 2
Virginians especially hoped that the United States would not mirror the hierarchy and privilege witnessed across the Atlantic. The principles of the Revolution—of virtuous simplicity, of relative equality, and of freedom from domination—had erased some vestiges of British authority during the years of war. The Bank reminded the opponents, more than any other political or economic institution, that the nation-state was the offspring of a corrupt system.
1 On the contemporary uses and debates of linguist Edward Sapir’s notion of the condensation symbol, see David S. Kaufer and Kathleen M. Carley, “Condensation Symbols: Their Variety and Rhetorical Function in Political Discourse,” Philosophy and Rhetoric 26, no. 3 (1993): 201-226.
2 Stanley Elkins and Eric McKitrick, The Age of Federalism (New York: Oxford University Press, 1993), 68.
Supporters, republicans with a realist mentality, saw the Bank as inevitable. If soundly managed, the Bank could be the institutional support for a new nation of liberty. After all, such a Bank was supported in the weightiest treatises on political economy, revealing that the Bank was not merely the “arbitrary pleasure” of merchants but the rational centerpiece of modern political economy. With such institutions, nations could control the speculation and panic of an otherwise cruel, boom-and-bust economy. At the same time that the Bank held such an important place as a nexus of debate, it also worked on a more “constitutive” level. In the process of arguing about the Bank, debaters shared visions of the nation’s scope and character. As a recent leading advocate of a constitutive theory of language, James Boyd White suggested: In separating from Great Britain and setting up their own government, Americans claimed the freedom and the power to remake their world. That claim was of course not absolute, and a constant question at the time was how much of the old to change, how much to save. Nevertheless, what was proposed, and perhaps achieved, in America was nothing less than the self-conscious reconstitution of language and community to achieve new possibilities for life. 3
Following White's lead, this dissertation sees the Bank debate itself as constitutive of national identity. In those formative years, debaters crafted institutional structures and increased circulation in their expressions. With the paradoxical character of democracy, “We the People” emerged as a locus of national authority and as constituted authority’s greatest threat. Resistance to national power structures reached an early apotheosis in dissent against Hamilton’s Bank.
3 James Boyd White, When Words Lose Their Meaning: Constitutions and Reconstitutions of Language, Character, and Community (Chicago: University of Chicag Press, 1985), 231.
Although many other controversies occurred intermittently through the early national years, such as those concerning internal improvements, foreign relations, and tariffs, this debate is particularly interesting because of the lasting and heated dissent. The brainchild of Hamilton, based on British precedents, the Bank was created in 1791 as the institutional apparatus for all federal economic affairs. Over the next five decades, it took center stage in answering big questions about the nature of government and its relationship to private citizens. Every stratum of society targeted the institution with its dissents, on state, regional, federal, and class-based levels. In the 1830s, Andrew Jackson and his supporters destroyed the Bank as a corrupt enterprise, but then struggled to find viable alternatives. Every public person of the era (limited to white males) needed an opinion on the Bank, and differences of opinion on the issue served as a basis for the major U.S. political parties, until the Republicans formed their party on the issue of slavery in the mid-1850s. Perhaps most interesting and characteristic of this sort of debate, the goal of the controversy was never clear. Political beliefs about the Bank fluctuated, as even uncompromising leaders like John C. Calhoun flipped sides to try to maintain principle. Given the economic changes and the multiple ways a bank might be institutionalized, hundreds of alternate plans existed. Moreover, depending on one’s perspective, the Bank might be more about the nation’s character than its economy. Such debate, at the nexus of morality and economy, was risky business. Aristotle famously noted that the domain of rhetoric was amongst contingent matters (eikos). He defines these as matters that can be, but not necessarily will be, other than they are. 4
4 Ar. Rhet., 1357.23-27. Also Dilip Gaonkar, "Contingency and Probability," in Encyclopedia of Rhetoric, edited by Thomas O. Sloane (New York: Oxford University Press, 2001), 151-66.
Despite Hamilton's wish to stabilize the nation—its fragile status and its economic system—the Bank became the nexus for destabilizing questions of national identity and strength. The Bank attracted additional emotion and debate because it was easy to dramatize and depict visually. It focused ineffable issues in one word, “Bank,” and in one institutional apparatus, headquartered in Philadelphia. Political economists could deal with a vast amount of theory in polemical pamphlets on the one Bank. Common citizens could easily attach their hopes, fears, and spoken arguments about the incomprehensible market to such a real, material symbol, with branches in most major U.S. cities. In the later years of the debates, cartoons and pictorial representations of the columned Bank in Philadelphia circulated to materialize these sentiments. In this analysis, I foreground the development of dissent as it emerged from public letters and pamphlets circulated against the speeches and debates inside government. These are significant because the Constitution had nothing to say about extra-governmental voice or protest. 5 The first Federalist Paper talks about a "great national discussion," as one aspect of U.S. politics. 6 Yet in no way is this aspect celebrated. Instead, Hamilton, as "Publius," writes that such national discussions are full of "angry and malignant passions," with people trying to convert others by "the loudness of their declamations, and by the bitterness of their invectives." "Popularity" of a policy existed most often at the expense of the public good.
5 One of the only aspects of public communication considered in the original Constitution was that Congress should keep a "journal of proceedings" to be published "from time to time" (Article I, section 5). The Senate was closed to the public. See Thomas C. Leonard, The Power of the Press: The Birth of American Political Reporting (New York: Oxford University Press, 1986), 64.
6 Alexander Hamilton, James Madison, and John Jay, The Federalist: With Letters of Brutus (Cambridge Texts in the History of Political Thought), (New York: Cambridge University Press, 2003), no. 1.
Such sentiments were common among republican founders, especially when a public issue dealt with economic interests. Most founders saw the duty of the government as a "disinterested and dispassionate umpire." In a few rare instances, such as Federalist 10, founders did set theoretical foundations for more. 7 Factions, Madison suggested in the public letter, were inevitable and tied to the new liberty that Americans enjoyed. Free speech allowed each person to speak, with opinions and passions having a "reciprocal effect" on one another. These opinions and passions were tied to differing types and amounts of property ownership, especially between creditors, debtors, merchants, landholders, and manufacturers. The government, Madison wrote, must channel and redirect rather than quell such spirit. Madison's genius is that he merges this theory of socio-economic alignment of authority, a theory that better matches the interest-group theory of government, with the old republican faith in enlightened representation. He does so by reliance on the enlarged scale for elections by which the best characters would be chosen, without need for the "vicious arts" (i.e., vote buying, demagoguery, and coercion). This enlargement, as Madison argued in Federalist 10, has another byproduct: multiplying and diffusing the motives by which people act. "Extend the sphere," says Madison, "and you take in a greater variety of parties and interests." Such an extension could limit "wicked" projects: "a rage for paper money, for an abolition of debts, for an equal division of property." Populist demands on issues of political economy could be thwarted, as politics of personality and direct economic payoff could never reach from snowy New England to Southern slave plantations.
7 For more on this interpretation, see Albert Furtwangler, The Authority of Publius: A Reading of the Federalist Papers (Ithaca: Cornell University Press, 1984).
Despite Madison's faith in the republican culture, the young nation fled from enlightened representation to extend the sphere, multiply the interests, and channel the spirit of faction directly into the system of government. Enlightened consensus might be obscured or non- existent on such a messy question as a national Bank with private stockholders, even on the diffuse national platform. As will be seen in Chapter Four, interest-based political culture, saturated with the language of realism, eroded this republican faith. Value-laden claims over the ethics of the economy were mocked and derided. Partisan alignments became tethered to economic interests. The “great national discussion,” as Hamilton called it, became a constant pressure on the nation’s strong authority. Chapter by chapter, particular case studies of the debate will reveal the transition, with the Bank forming a focal point to mark the shift. In the next chapter, the debate over the Bank of North America, the precursor for the Bank of the U.S., reveals a weak and unhealthy culture of debate. In Chapter 3, the ethos (i.e., character displayed before a public) of the founders merged with the science of political economy to form the Bank and reestablish national credibility. In Chapter 4, the erosion of the older political culture becomes evident as the first Bank of the U.S. began unhinging. Chapters 5 and 6 show the increasingly fluid and dynamic relationship of political actors with citizens and constituents, as particular interests to be satisfied and realigned in the era of Jackson and the Whigs. The last chapter tracks the outcomes of the debate and ties together diverse case studies in a theory of authority. As interests came to overwhelm the scene of politics, the Bank became an increasingly loaded symbol. By the 1840s, the end of this study, politicians discarded the institution completely as a viable alternative.
Theoretical Justification: Networks of Authority and Dissent This study emerges from the related fields of rhetorical criticism, public address, and argumentation. Each is concerned with the artistic performance of public communication as situated, addressed discourse. The archetypal study looks at a discrete text and examines how it functions in context. Thus, one might examine Jackson’s Bank “Veto Message” as it would have addressed the newspaper-reading audiences of the time. While this type of critique can best reveal the particular way in which language persuades, such studies have also been widened to explain cultural processes, genres, rituals, and social norms. In doing so, the objects of study have also widened into more massive social structures. James Jasinksi, for example, highlights national controversy as the paradigmatic scene of rhetorical action and thus of critical intervention. 8 This level of focus is especially necessary to understand contingent social practices such as the performance of prudence. Focusing on extended controversy also allows for critical analysis of social transformation. Such a focus seems warranted by the general presupposition of rhetorical studies, a scholarly vocabulary that is concerned with changes in belief and fluctuation of norms rather than the revelation of timeless truths. Focusing on the broader plane of controversy can reveal shifts in genre norms, emotional and performative repertoires, and even background knowledges of the time. In other words, a pluralism of objects, from the single text to major rhetorical traditions, can be most productive for the broad field of critical inquiry, especially to develop a scholarly vocabulary for discourses of stability and change.
8 James Jasinski, “The Forms and Limits of Prudence in Henry Clay's (1850) Defense of the Compromise Measures,” Quarterly Journal of Speech 81, no. 4 (November 1995): 454 - 478. See especially page 471.
This work thus proceeds by reverberating the concept of authority off of particular texts to reveal insights into changing culture. The underlying theoretical notion is that public culture always relies on networks of authority for meaning to be coherent, for argumentative salience to exist, and for texts to function stylistically. That is, communication makes no sense unless we understand who said what when to which ends or purposes. Every act of audience reception and text creation is thus understood as a judgment of authority: which persons, forms, symbols, and institutions have the legitimate symbolic power to make a person act voluntarily. Each of these texts, producers, and receivers can be seen as “nodes” of authority, in a network of assent, dissent, or obligation. Rhetoric thus functions as the managing discourse of authority, embodied through symbols, forms, and institutions. From such a perspective, the task for the critic would be less about meaning-production and interpretation and more about authorization: the required social power to be a producer or consumer of texts that circulate within a given public. A critic would still need to analyze the objects of focus as a discursive tool, but a greater emphasis might fall on possible judgments and reconstitutions of authority rather than on the meaning-creation in the moment. Given the critical programs of scholars such as John Murphy and James Jasinski, who focus on the analytics of authority, judgment, and prudence as performed traditions, it would seem this system of analysis is already under way. 9 Moreover, the sociological ground has been made
9 James Jasinski, "A Constitutive Framework for Rhetorical Historiography: Toward an Understanding of the Discursive (Re)constitution of 'Constitution' in The Federalist Papers," in Doing Rhetorical History: Concepts and Cases, edited by Kathleen J. Turner (Tuscaloosa: University of Alabama Press, 1998), 72-94.
more fertile by the work of Pierre Bourdieu, whose theory of discourse forms the basis of an analysis of authorization and distinction in society. 10
In the Bank debate, actors—both national leaders and ordinary citizens—performed arguments to negotiate exactly how authority was to be distributed. Using the elite form of the public letter and the science of political economy, they often limited the possible readership of the debate. Then, through innovation on the forms and styles of the republican tradition, political speakers and newspaper editors created a larger realm of citizen involvement. Although generally goaded by self-interest, to capture political or economic capital, writers and their audiences widened the possible boundaries of circulation and participation. 11 Democratic idioms, especially those geared toward rebellious frontier mentalities, challenged deference. Analyzing textual and visual performances, I will track the Bank debate as it opened possibilities for participation out of historical political traditions. Before proceeding, it will help the reader to understand the historical and intellectual history of the term authority as understood for the purposes of this study.