Thomas Jefferson Papers

From Thomas Jefferson to Albert Gallatin, 13 December 1803

To Albert Gallatin

Dec. 13. 03.

Th: Jefferson to mr Gallatin

The Attorney Genl. having considered and decided that the prescription, in the law for establishing a bank, that the officers in the subordinate offices of discount & deposit shall be appointed ‘on the same terms and in the same manner practised in the principal bank’ does not extend to them the principle of rotation established by the legislature in the body of Directors in the principal bank, it follows that the extension of that principle has been merely a voluntary & prudential act of the principal bank, from which they are free to depart. I think the extension was wise & proper1 on their part; because the legislature having deemed rotation useful in the principal bank constituted by them, there would be the same reason for it in the subordinate banks to be established by the principal. it breaks in upon the esprit de corps so apt to prevail in permanent bodies, it gives a chance for the public eye2 penetrating into the sanctuary of those proceedings & practices which the avarice of the directors may introduce for their personal emolument, & which the resentments of excluded directors, or the honesty of those newly admitted might betray to the public; and it gives an opportunity at the end of a year, or at other periods, of correcting a choice which on trial proves to have been unfortunate; an evil of which themselves complain in their distant institutions. whether however they have a power to alter this, or not, the Executive has no right to decide; & their consultation with you3 has been merely an act of complaisance, or a desire to shield so important an innovation under the cover of Executive sanction. but ought we to volunteer our sanction in such a case? ought we to disarm ourselves of any fair right of animadversion whenever that institution shall be a legitimate subject of consideration? I own I think the most proper answer would be that we do not think ourselves authorised to give an opinion on the question.

From a passage in the letter of the President, I observe an idea of establishing a branch bank of the US. in New Orleans. this institution is one, of the most deadly hostility existing, against the principles & form of our constitution. the nation is at this time so strong & united in it’s sentiments that it cannot be shaken at this moment. but suppose a series of untoward events should occur sufficient to bring into doubt the competency of a republican government to meet a crisis of great danger, or to unhinge the confidence of the people in the public functionaries, an institution like this, penetrating by it’s branches every part of the Union, acting by command & in phalanx may in a critical moment4 upset the government. I deem no government safe which is under the vassalage of any self-constituted authorities, or any other authority than that of the nation or it’s regular functionaries. what an obstruction could not this bank of the US. with all it’s branch banks, be, in time of war? it might dictate to us the peace we should accept, or withdraw it’s aids. ought we then to give further growth to an institution so powerful, so hostile? that it is so hostile we know 1. from a knolege of the principles of the persons composing the body of Directors in every bank, principal or branch and those of most of the stockholders:5 2. from their activity in opposition to the measures & principles of the government, & to the election of those friendly to them: & 3. from the sentiments of the newspapers they support. now, while we are strong,6 it is the greatest duty we owe to the safety of our constitution, to bring this powerful enemy to a perfect subordination under it’s authorities. the first measure would be to reduce them to an equal footing only with other banks as to the favors of the government. but, in order to be able to meet a general combination of the banks against us, in a critical emergency, could we not make a beginning towards an independant use of our own money, towards holding our own bank,7 in all the deposits where it is recieved, and letting the Treasurer give his draught or note, for paiment at any particular place, which in a well conducted government, ought to have as much credit as any private draught or bank note or bill; and would give us the same facilities which we derive from the banks? I pray you to turn this subject in your mind, and to give it the benefit of your knowlege of details, whereas I have only very general views of the subject. affectionate salutations.

RC (NHi: Gallatin Papers); endorsed. PrC (DLC).

The 1791 law for establishing the Bank of the United States outlined the process for organizing branches for discount and deposit. Under a principle of rotation, not more than three-fourths of the 25 directors, excluding the president, were eligible for reelection the next year (U.S. Statutes at Large description begins Richard Peters, ed., The Public Statutes at Large of the United States … 1789 to March 3, 1845, Boston, 1855-56, 8 vols. description ends , 1:191-5). The bank found it difficult to obtain qualified candidates to serve as directors at the smaller branches, even though only 13 were required for each branch. In the case of the branch at Washington, it was decided to decrease the number to nine. The directors of the Bank of the United States elected the directors of each branch annually. By 1804, the bank had decided “to abandon the principle of partial rotation in the appointment of branch directors” (James O. Wettereau, “The Branches of the First Bank of the United States,” Journal of Economic History, 2 [1942], supplement, 74-6, 78-83, 89-92; Vol. 35:132, 133-4n, 136n, 190-1; Vol. 39:531).

letter of the president: the letter from Thomas Willing, president of the Bank of the United States, to Gallatin has not been found (see also the following document). In March 1804, Congress passed an act authorizing the bank to establish branches “in any part of the territories or dependencies of the United States, in the manner, and on the terms prescribed” by the 1791 act (U.S. Statutes at Large description begins Richard Peters, ed., The Public Statutes at Large of the United States … 1789 to March 3, 1845, Boston, 1855-56, 8 vols. description ends , 2:274).

1TJ first wrote “it was a wise act” before altering the passage to read as above.

2Word interlined.

3Preceding two words interlined.

4Preceding four words interlined.

5Preceding seven words interlined.

6TJ first wrote “now that we are strong” before altering the passage to read as above.

7Here TJ canceled “and transferring.”

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