James Madison Papers

To James Madison from William Crawford, 24 January 1814

From William Crawford

Washington Jany. 24th: 1814


A project of finance, addressed to you in this days Intr.1 induces me to offer a few observations upon that project & the plan already submitted.2

The project there offered adopts in part the plan formerly proposed. But it connects with it an extensive banking operation, from whose beneficent influences it calculates on providing for the national expenditures, in times of public pressure—on relieving it from the consequences of such pressure, in times of greater prosperity—and on building up a formidable naval power—without adding to the public burthens. Were I competent—it would require a more extensive investigation than can now be given to it—to shew that much of its promise is fallacious; and that much of what it promises is incompatible with the habits—the wishes & the safety of a free people.

I shall therefore forbear, at present, to enter on this discussion. Permit me briefly to mark the prominent difference of the respective propositions. The one presents to government only a temporary facility, in drawing on the resources of its citizens to meet the present emergency—to which it awakens all their attention. The other professes to hold out such facility permanently—in every situation in which the government can be placed—and without exciting the suspicions of its citizens—on the objects or aims of those who apply resources so easily & certainly attainable Adverse to the leading principle of such a project—because it aims a deadly blow at the future existence of those free & happy forms of government, under which we have enjoyed and still continue to enjoy so large a portion of human felicity. I shall enter upon none of its details—but shall proceed to offer a few explanatory observations on the plan formerly submitted to your consideration.

That plan, if adopted, had three leading objects in view by its accomplishment.

First—To meet the temporary exigencies of the government.

Secondly—To interest a large portion of the community in supporting the measures & views of its government. And

Thirdly—Instead of connecting it with, or founding it on, a corrupt & corrupting bank influence—it is intended to form a barrier against that unbounded rage for bank speculation which threatens to undermine & subvert every salutary institution of our country. For this purpose its last provision ought to have excluded all banking companies—in their associated or individual capacities—by their presidents—directors—agents or stockholders—other than those already included, from subscribing upon any terms to the proposed loan.

A large quantity of unnemployed capital probably exists, at present, in the possession of individuals scattered over the face of our country. Those who possess this capital, appear anxious to find, for it, some profitable employment. Those who are in want of it are equally sollicitous to obtain it, and turn it to their advantage. Tho’ governed by such discordant views—ways & means, to accomplish their mutual wish, have exercised the ingenuity of both. Decoys, of every description have been employed by the one, and, in too many instances greedily caught by the other. Among these, bank capital, increased & increasing, to an extent greatly beyond the demands of usefull employment, holds pre-eminent rank. Under no legal or moral restraint, the profligate swindler—will convert this ideal stock into real & substantial property—while his victim will sacrifice the means of extending, rewarding, and perpetuating his industry, for a shadow, which will elude his grasp, as “the baseless fabric of a vision”3 masks the awakened eye—and leave him a prey to hopeless penury.

In so far as banks are instituted on principles calculated to cherish, extend, & multiply the operations of honest industry, and confined within limits which promise security to those who vest their funds therein—for such laudable purposes—they merit, & ought to meet every legitimate encouragement. But when they threaten to thwart—and shackle & control every effort which refuses to subserve the indirect views of their institutors—they become swindlers—and the bane of honest & independent industry. From the latter they take the means as well as the disposition to increase & diversify its salutary operations. To the former it furnishes resources for multiplying and extending their fraudulent speculations. Nor will these cease untill they threaten to recoil on their employers—to whom they will afford the means of securing a safe & splendid retreat from villainny—where they can laugh at ease at those they have ruined. Nor do their evils cease with the calamities inflicted on individuals. They foster, & fatten on, the abuses of power. They promote accumulations—and produce deprivations incompatible with the existince because they are calculated to sap the foundations of republican institutions.

It therefore becomes the duty of every honest man, who dreads such consequences from the abuse of bank institutions, to provide, by every prudent moral precaution, for his own safety and for the salvation of his country.

To aid this laudable purpose, a plan was, some time ago, submitted to the chief magistrate of Penna. Propositions, similar, in their nature & tendency, with some of those which that plan embraced have been offered & rejected in the legislature of that state. Every effort to afford future security to its citizens has proved abortive—because they professed to limit the unguarded or unprincipled speculations of the advocates, agents, or participators in these establishments. From the refusal to provide by law for the redemption of notes in specie—it can hardly be considered as uncharitable to presume that, but for the interposition of constitutional interdiction—they would have made their paper a legal tender.4 Such abandonment of moral restraint, in a state heretofore remarkable for its good faith & sober industry, affords an awfull & instructive lesson—which imperiously demands the interposition of every wellwisher to his country to save it from impending ruin.

To point out the evils experienced or anticipated, from this wide spreading mania, would greatly exceed the bounds of a letter. The only favor sollicited, by the subscriber, is a mature consideration of the plan in all its bearings & tendencies—before it is rejected. It would certainly divert a large portion of that capital, which without some such outlet, will assuredly sink in these precarious & dangerous establishments. And altho’ it may not succeed to its whole extent—yet it is confidently believed that, with other aids, it may be so far relied on—as to relieve the government from any serious apprehensions of failure in their resources to resist aggression & support the rights of their country. For it is presumed that many thousands of individuals would prefer the security which the government can give. Its adoption would thus multiply the means of support to the government from the rival interests of individuals & those of incorporated bodies. And their mutual jealousies & clashing interests may cherish the institutions while they afford support to the government of their country. I am Sir With High respect Your fellow citizen

Wm. Crawford


1“Americanus” to JM, 10 Jan. 1814.

3Shakespeare, Tempest, 4.1.151 (Riverside description begins G. Blakemore Evans, ed., The Riverside Shakespeare (Boston, 1974). description ends ).

4On 19 Mar. 1813 Pennsylvania governor Simon Snyder vetoed a bill that would have authorized the establishment of several new banks. The veto was sustained, but during the following session the legislature passed a bill creating forty-one new banks, which Snyder also vetoed. The legislators overrode the second veto on 21 Mar. 1814, and the measure became law (Higginbotham, Keystone in the Democratic Arch, 273–75, 287–88).

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