Page:A History of Banking in the United States.djvu/131



CHAPTER VIII.

HE crisis and reaction began in the West in the summer of 1818. The immediate agent was the Bank of the United States. We have noticed above, the orders which were sent to the western branches from Philadelphia, the effect of which was to transfer the capital from the East to the West. It may perhaps be just to say that but for the Bank of the United States the West would never have been drawn into the inflation. The great Bank, however, as we have seen, was in great distress in 1818, and was obliged to curtail its operations in order to save itself. On account of its responsibilities to the Treasury, it was necessarily the agent of the correction of the mistakes which had been made in the West. As an equalizer of the currency, as an agent for the transfer of the public funds, and as the agent to discipline the State banks, it was certain to become extremely unpopular. It appeared to all the local banks and debtors as a "monster." It hardly appears, however, that the first outburst of hostility against it was on account of any contraction, or disciplinary action which it exercised; but rather due to a jealousy of it as a foreign institution, present in some of the States, perhaps against their will; possessed of privileges; paying no taxes, and holding the attitude of a school-master. In Kentucky an act was passed, February 3, 1818, to tax each branch of the Bank $5,000 per annum, commutable at 50 cents on each $100 of capital in each branch, or 25 cents on each $100 of loans and discounts, as they might stand on the 10th of March in each year. This act was considered entirely reasonable in amount and method.

The popular temper in those days went through oscillations of mania for banks and rage against banks. Within a year or two, two Legislatures would be elected which might represent the extremes of these two feelings. Governor Slaughter opened the session of the Kentucky Legislature of 1818-19