"I can not bring myself to depict the humiliation to which this Government and people might be sooner or later reduced if the means for defending their rights are to be made dependent upon those who may have the most powerful of motives to impair them."
- Martin Van Buren 1839
In his 1839 State of the Union address, Martin Van Buren warned that entrusting public money to banks could endanger the independence of the United States. American banks depended upon one another, with institutions in smaller communities looking to the great commercial centers of Philadelphia and New York. But the chain did not end there. It reached across the Atlantic to London, where American merchants, banks, and states obtained credit. If the government placed its revenue in banks dependent on that credit, Van Buren warned it risked becoming dependent itself.
In the 1837 cartoon I used in my opening image, Uncle Sam Sick with La Grippe, Nicholas Biddle arrives with “Post Notes” and “Bonds,” announcing that he has sent to “Dr. John Bull” for assistance. Although the cartoon presents British help as a remedy, it illustrates the financial dependence that Van Buren warned could endanger the government if public money were entrusted to banks.
Samuel Jaudon, The Pennsylvania Bank and London Credit
A report published in Savannah’s Weekly Georgian on November 9, 1839, provides a concrete example of this dependency. Samuel Jaudon, the London agent of the Pennsylvania Bank of the United States, needed funds to meet the bank’s post-notes or “promises to pay on a future date” that were coming due in London. When Hope & Co. of Amsterdam refused to provide the advances he had expected, Jaudon turned to the Bank of England for assistance. According to the Georgian report, the Bank of England granted assistance backed by guarantees from major commercial houses. But rather than provide additional banknotes, it supplied three-percent consols or British government securities. Such an arrangement avoided increasing the Bank of England’s note circulation. This report and other contemporary reports describe the American bank’s dependence on foreign backing. British financiers demanded safeguards for their support, while the writer in London’s Morning Post resented the American bank’s encroachment on British banking and commerce. In other words, the Pennsylvania bank needed help from institutions whose priorities could conflict with its own (“Bank of the United States”; “London, Saturday”; “From The Morning Post”). The financing helped Jaudon meet immediate obligations, but it did not prevent the Pennsylvania bank from suspending specie payments in October 1839.
Van Buren's Warning
In his annual address that year, Van Buren described this very type of vulnerability. A bank could possess American assets yet depend upon foreign institutions for the funds needed to honor its promises. Van Buren’s concern was over what could happen if a bank in that position held money belonging to the United States Treasury. Foreign financing decisions could then affect the government’s access to its own revenue. Its ability to pay expenses, carry out policy, or defend the country could become entangled with interests beyond American control. The following excerpt traces that chain from American banks to London and then asks Congress to consider its consequences for national independence. Van Buren did not reject mutually beneficial commerce with Britain and stated that creating more banks, whether state or national, would not remove the dependence built into the credit system, and the government should not expose its funds to it.
“But this chain of dependence does not stop here. It does not terminate at Philadelphia or New York. It reaches across the ocean and ends in London, the center of the credit system. The same laws of trade which give to the banks in our principal cities power over the whole banking system of the United States subject the former, in their turn, to the money power in Great Britain. It is not denied that the suspension of the New York banks in 1837, which was followed in quick succession throughout the Union, was produced by an application of that power, and it is now alleged, in extenuation of the present condition of so large a portion of our banks, that their embarrassments have arisen from the same cause.
From this influence they can not now entirely escape, for it has its origin in the credit currencies of the two countries; it is strengthened by the current of trade and exchange which centers in London, and is rendered almost irresistible by the large debts contracted there by our merchants, our banks, and our States. It is thus that an introduction of a new bank into the most distant of our villages places the business of that village within the influence of the money power in England; it is thus that every new debt which we contract in that country seriously affects our own currency and extends over the pursuits of our citizens its powerful influence. We can not escape from this by making new banks, great or small, State or national. The same chains which bind those now existing to the center of this system of paper credit must equally fetter every similar institution we create. It is only by the extent to which this system has been pushed of late that we have been made fully aware of its irresistible tendency to subject our own banks and currency to a vast controlling power in a foreign land, and it adds a new argument to those which illustrate their precarious situation. Endangered in the first place by their own mismanagement and again by the conduct of every institution which connects them with the center of trade in our own country, they are yet subjected beyond all this to the effect of whatever measures policy, necessity, or caprice may induce those who control the credits of England to resort to. I mean not to comment upon these measures, present or past, and much less to discourage the prosecution of fair commercial dealing between the two countries, based on reciprocal benefits; but it having now been made manifest that the power of inflicting these and similar injuries is by the resistless law of a credit currency and credit trade equally capable of extending their consequences through all the ramifications of our banking system, and by that means indirectly obtaining, particularly when our banks are used as depositories of the public moneys, a dangerous political influence in the United States, I have deemed it my duty to bring the subject to your notice and ask for it your serious consideration.
Is an argument required beyond the exposition of these facts to show the impropriety of using our banking institutions as depositories of the public money? Can we venture not only to encounter the risk of their individual and mutual mismanagement, but at the same time to place our foreign and domestic policy entirely under the control of a foreign moneyed interest? To do so is to impair the independence of our Government, as the present credit system has already impaired the independence of our banks; it is to submit all its important operations, whether of peace or war, to be controlled or thwarted, at first by our own banks and then by a power abroad greater than themselves. I can not bring myself to depict the humiliation to which this Government and people might be sooner or later reduced if the means for defending their rights are to be made dependent upon those who may have the most powerful of motives to impair them.”
Van Buren’s warning still resonates today. Foreign investment and credit can bring prosperity, but they also bind American institutions to interests and decisions beyond the nation’s control. Modern concerns about China’s investments in American businesses and its holdings of federal debt raise a familiar question: when does a beneficial financial relationship become a dangerous dependence? The arrangements have changed since 1839, but the underlying concern remains. A nation’s political independence can be compromised when its ability to act depends upon financial support from abroad.
References
Van Buren, Martin. “Third Annual Message.” 2 Dec. 1839. The American Presidency Project, University of California, Santa Barbara, https://www.presidency.ucsb.edu/documents/third-annual-message-4. Accessed 12 Oct. 2026.
“Bank of the United States.” The Weekly Georgian, 9 Nov. 1839, p. 4. Georgia Historic Newspapers, Digital Library of Georgia, https://gahistoricnewspapers.galileo.usg.edu/lccn/sn85040618/1839-11-09/ed-1/seq-4/. Accessed 12 Oct. 2026.
Benton, Thomas Hart. Thirty Years’ View; or, A History of the Working of the American Government for Thirty Years, from 1820 to 1850. Vol. 2, D. Appleton and Company, 1856. Chapter 87. Yamaguchy, https://www.heritech.com/yamaguchy/library/benton/benton_365.html. Accessed 12 Oct. 2026.
“From the Morning Post, 20th ult.” Standard of Union, 22 Oct. 1839, p. 3. Reprinted from The Morning Post, 20 Sept. 1839. Georgia Historic Newspapers, Digital Library of Georgia, https://gahistoricnewspapers.galileo.usg.edu/lccn/sn87090009/1839-10-22/ed-1/seq-3/. Accessed 12 Oct. 2026.
“London, Saturday, Sep. 28, half past 12.” The Weekly Georgian, 9 Nov. 1839, p. 4. Georgia Historic Newspapers, Digital Library of Georgia, https://gahistoricnewspapers.galileo.usg.edu/lccn/sn85040618/1839-11-09/ed-1/seq-4/. Accessed 12 Oct. 2026.
Sumner, William Graham. A History of Banking in the United States. Journal of Commerce and Commercial Bulletin, 1896. Chapter 14. Wikisource, https://en.wikisource.org/wiki/A_History_of_Banking_in_the_United_States/Chapter_14. Accessed 12 Oct. 2026.
United States, Department of the Treasury. “Table 5: Major Foreign Holders of Treasury Securities.” Treasury International Capital, https://ticdata.treasury.gov/resource-center/data-chart-center/tic/Documents/slt_table5.html. Accessed 12 Oct. 2026.
Editorial note: The excerpt’s transcription errors “foreign lad” and the doubled period after “situation” have been corrected.
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