"Indeed, I am more than ever convinced of the dangers to which the free and unbiased exercise of political opinion--the only sure foundation and safeguard of republican government--would be exposed by any further increase of the already overgrown influence of corporate authorities." - Martin Van Buren - 1837
Those are the words of President Martin Van Buren in 1837 warning of the dangers to "free and unbiased exercise of political opinion". In 1837, Van Buren was referring to the private state banks where the US Treasury was being held. Corporate authorities and private interest groups in Van Buren's opinion, were stirring up political controversies and stifling political opposition to stop Congress from approving Van Buren’s proposal to remove the treasury from the state banks. These were harsh words, but I could only imagine what Van Buren would say today as global multi-billion corporations and industry groups interfere with fiscal policy and our own government prosecutes individuals for political opposition.
In 1837, President Van Buren was adamant on changing a policy that his predecessor and mentor Andrew Jackson had established. Four years earlier, President Andrew Jackson removed all federal funds from the Second Bank of the U.S. and redistributed them to private state banks which were commonly referred to as “pet banks.” As these banks grew, they loosened up restrictions on lending and allowed investors to purchase federal lands with paper-based currency. This encouraged rampant speculation in land and commodities, forcing Andrew Jackson to order that federal officials only accept species payments backed by gold and silver for the purchase of federal lands. In response, many investors panicked and caused a run on the banks who were running out of gold and silver, leading to the Panic of 1837. This may be an over-simplification of the events, but suffice it to say, with the panic came lots of political controversy. The Whigs blamed the Democratic Party, and their fiscal policies including the refusal to recharter the Bank of the United States, while Van Buren and some Democrats blamed the panic on actions taken by the state banks. Whigs wanted to return to the central bank, many Democrats wanted to keep the state bank system, but President Martin Van Buren was ready to march down his own path.
Like his predecessor, Martin Van Buren opposed the creation of a new Bank of the United States but unlike Jackson he also opposed placing of Government funds in state banks. Instead, Van Buren proposed the creation of an Independent Treasury System and the discontinuation of using state banks. It was a very controversial stance causing revolt, not only among his opponents in the Whig party, but also with many fellow Democrats. Nevertheless, President Van Buren could find no reason to change his mind. And by no means, was he going to let the corporate authorities running the state banks shut down the "the free and unbiased exercise of political opinion". He made it very clear that reasonable men could differ on policy, but to let "influence of individual or local interests" shut down discussion would destroy our republican form of government.
Here is an excerpt from President Martin Van Buren's first State of the Union Address where he shared more detail so his plan for an Independent treasury. He reminded Congress that he was not being hostile to the banks, but also made it clear that corporations and private individuals should have no influence on the fiscal policies of the federal government. In his plan the general government would be responsible for "the collection, safe-keeping, and transfer of the public money" independent of any individuals or corporations, while constitutionally appointed agents would be granted the authority to withdraw moneys from the private institutions as needed. According to Van Buren, this would remove the improper influence of industry from the treasury, give more stability to the treasury and protect the banks from government and political intrusion.
"I have found no reason to change my own opinion as to the expediency of adopting the system proposed, being perfectly satisfied that there will be neither stability nor safety either in the fiscal affairs of the Government or in the pecuniary transactions of individuals and corporations so long as a connection exists between them which, like the past, offers such strong inducements to make them the subjects of political agitation. Indeed, I am more than ever convinced of the dangers to which the free and unbiased exercise of political opinion--the only sure foundation and safeguard of republican government--would be exposed by any further increase of the already overgrown influence of corporate authorities. I can not, therefore, consistently with my views of duty, advise a renewal of a connection which circumstances have dissolved.
The discontinuance of the use of State banks for fiscal purposes ought not to be regarded as a measure of hostility toward those institutions. Banks properly established and conducted are highly useful to the business of the country, and will doubtless continue to exist in the States so long as they conform to their laws and are found to be safe and beneficial. How they should be created, what privileges they should enjoy, under what responsibilities they should act, and to what restrictions they should be subject are questions which, as I observed on a previous occasion, belong to the States to decide. Upon their rights or the exercise of them the General Government can have no motive to encroach. Its duty toward them is well performed when it refrains from legislating for their special benefit, because such legislation would violate the spirit of the Constitution and be unjust to other interests; when it takes no steps to impair their usefulness, but so manages its own affairs as to make it the interest of those institutions to strengthen and improve their condition for the security and welfare of the community at large. They have no right to insist on a connection with the Federal Government, nor on the use of the public money for their own benefit. The object of the measure under consideration is to avoid for the future a compulsory connection of this kind. It proposes to place the General Government, in regard to the essential points of the collection, safe-keeping, and transfer of the public money, in a situation which shall relieve it from all dependence on the will of irresponsible individuals or corporations; to withdraw those moneys from the uses of private trade and confide them to agents constitutionally selected and controlled by law; to abstain from improper interference with the industry of the people and withhold inducements to improvident dealings on the part of individuals; to give stability to the concerns of the Treasury; to preserve the measures of the Government from the unavoidable reproaches that flow from such a connection, and the banks themselves from the injurious effects of a supposed participation in the political conflicts of the day, from which they will otherwise find it difficult to escape.
These are my views upon this important subject, formed after careful reflection and with no desire but to arrive at what is most likely to promote the public interest. They are now, as they were before, submitted with unfeigned deference for the opinions of others. It was hardly to be hoped that changes so important on a subject so interesting could be made without producing a serious diversity of opinion; but so long as those conflicting views are kept above the influence of individual or local interests, so long as they pursue only the general good and are discussed with moderation and candor, such diversity is a benefit, not an injury. If a majority of Congress see the public welfare in a different light, and more especially if they should be satisfied that the measure proposed would not be acceptable to the people, I shall look to their wisdom to substitute such as may be more conducive to the one and more satisfactory to the other. In any event, they may confidently rely on my hearty cooperation to the fullest extent to which my views of the Constitution and my sense of duty will permit.
It is obviously important to this branch of the public service and to the business and quiet of the country that the whole subject should in some way be settled and regulated by law, and, if possible, at your present session. Besides the plans above referred to, I am not aware that any one has been suggested except that of keeping the public money in the State banks in special deposit. This plan is to some extent in accordance with the practice of the Government and with the present arrangements of the Treasury Department, which, except, perhaps, during the operation of the late deposit act, has always been allowed, even during the existence of a national bank, to make a temporary use of the State banks in particular places for the safe-keeping of portions of the revenue. This discretionary power might be continued if Congress deem it desirable, whatever general system be adopted. So long as the connection is voluntary we need, perhaps, anticipate few of those difficulties and little of that dependence on the banks which must attend every such connection when compulsory in its nature and when so arranged as to make the banks a fixed part of the machinery of government. It is undoubtedly in the power of Congress so to regulate and guard it as to prevent the public money from being applied to the use or intermingled with the affairs of individuals. Thus arranged, although it would not give to the Government that entire control over its own funds which I desire to secure to it by the plan I have proposed, it would, it must be admitted, in a great degree accomplish one of the objects which has recommended that plan to my judgment--the separation of the fiscal concerns of the Government from those of individuals or corporations.With these observations I recommend the whole matter to your dispassionate reflection, confidently hoping that some conclusion may be reached by your deliberations which on the one hand shall give safety and stability to the fiscal operations of the Government, and be consistent, on the other, with the genius of our institutions and with the interests and wishes of the great mass of our constituents."
References
“First Annual Message.” First Annual Message | The American Presidency Project, 5 Dec. 1837, www.presidency.ucsb.edu/documents/first-annual-message-4
Martin Van Buren - The independent treasury, https://www.presidentprofiles.com/Washington-Johnson/Martin-Van-Buren-The-independent-treasury.html
MARTIN VAN BUREN: DOMESTIC AFFAIRS, https://millercenter.org/president/vanburen/domestic-affairs
The “Monster” of Chestnut Street, https://www.minneapolisfed.org/article/2008/the-monster-of-chestnut-street
1800-1849: A History of America's Banks and The ABA. https://www.aba.com/about-us/our-story/aba-history/1800-1849
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