The Whigs and Biddle were blaming the depression which they themselves engineered upon Jackson and van Buren. In the midst of the Panic of 1937 van Burean would not cave in to Biddle and Henry Clay. With Calhoun’s support he proposed a corrective, not a recharter of the BUS, but a complete divorce between government and banking. With only six banks in the country still redeeming their banknotes in specie (in gold) they banks by law could only deposit its money in those six, van Buren established the “Sub-Treasury” system as an emergency measure and sought its legalization and official establishment. This was the divorce between the government and the money power — and Rothschild gold — which Calhoun believed essential in beating the crisis and getting the nation moving with ample purchasing power.
In response to this Sub Treasury proposal Nicolas Biddle ordered Daniel Webster and Henry Clay to filibuster against the Sub-treasury system, even though the system had been working for months in its status as an emergency measure. Webster and Clay insisted that the Jeffersonians were seeking to destroy Northern financial interests. Biddle spoke for publication: “This insane Sub-treasury scheme is urged forward to break down all the great interests of the country.”
At this time, Jeffersonian democrat Thomas Hart Benton wrote in support of Calhoun that the accumulation of monopoly control of money in the North “had enabled that section to make the South tributary .. for a small part of the fruits of their own labor.” And Andrew Jackson from retirement wrote his criticism of “the combined money power of the aristocracy,” saying Mr. Calhoun “got right” and that he would “not through the least shade over him. To err is human, to fogive, divine.”
When Calhoun took up the fight for the Sub-treasury bill, Daniel Webster wrote to Nicolas Biddle:
“Calhoun is moving heaven and earth, etc., to obtain Southern votes for the measure. He labors to convince his Southern nighbors that its success will relieve them from their economic dependenc eon the North. His plausible endless persuasion … and the power and patgronage of the Executive have accomplished more than I thought possible.”
No one was more infuriated at Calhoun’s saving the Jeffersonian day than Henry Clay. Here was van Buren, his victorious rival for the presidency, the man who should be finished by the deflationary depression of the Panic of 1937, with Clay’s proposal for rechartering the central bank with, apparently no obstacle, here comes Calhoun to the aid of van Buren against the Whig’s Hamiltonian onslaught.
In desperation, Biddle, Clay and Webster sought to defeat the Sub-Treasury Bill with an amendment that would have created a system similar to the Federal Reserve System introduced by the Hamiltonians in 1913. The plan was to allow fifteen banks — naturally they would end up being led by Nicolas Biddle’s bank, which alone could have their banknotes legal tender for paying taxes and settling government contracts. Calhoun say what the system would become — what the Federal Reserve System, seventy years later, was from the start, a central bank with all of the power of BUS1 and BUS2.
Here is my reading of John C. Calhoun’s reply to Clay’s attempt to impose a Hamiltonian Substitution of a Federal-Reserve-like structure to the original van Buren/Calhoun the Sub-Treasury Bill. I hope, that with this background, you will better understand Calhoun’s defense of the people against the Money Power that would attempt to impose such a system.
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