IV. FINANCIAL AND MORAL CHAOS
Like a dropsical man calling out for water, water, our deluded citizens are calling for more banks. (Jefferson.)
Merchants are crumbling to ruin, manufactures perishing, agriculture stagnating and distress universal. (John Quincy Adams.)
If we can believe our Democratic editors and public declaimers it [Bank of the United States] is a Hydra, a Cerberus, a Gorgon, a Vulture, a Viper. (William Harris Crawford.)
Where one prudent and honest man applies for [bankruptcy] one hundred rogues are facilitated in their depredations. (Hezekiah Niles.)
Merchants and traders are harassed by twenty different systems of laws, prolific in endless frauds, perjuries and evasions. (Harrison Gray Otis.)
The months of February and March, 1819, are memorable in American history, for during those months John Marshall delivered three of his greatest opinions. All of these opinions have had a determinative effect upon the political and industrial evolution of the people; and one of them[437] has so decisively influenced the growth of the Nation that, by many, it is considered as only second in importance to the Constitution itself. At no period and in no land, in so brief a space of time, has any other jurist or statesman ever bestowed upon his country three documents of equal importance. Like the other fundamental state papers which, in the form of judicial opinions, Marshall gave out from the Supreme Bench, those of 1819 were compelled by grave and dangerous conditions, National in extent.
It was a melancholy prospect over which Marshall's broad vision ranged, when from his rustic bench under his trees at Richmond, during the spring and autumn of 1818, he surveyed the situation in which the American people found themselves. It was there, or in the quiet of the Blue Ridge Mountains where he spent the summer months, that he formed the outlines of those charts which he was soon to present to the country for its guidance; and it was there that at least one of them was put on paper.
The interpretation of John Marshall as the constructing architect of American Nationalism is not satisfactorily accomplished by a mere statement of his Nationalist opinions and of the immediate legal questions which they answered. Indeed, such a narrative, by itself, does not greatly aid to an understanding of Marshall's immense and enduring achievements. Not in the narrow technical points involved, some of them diminutive and all uninviting in their formality; not in the dreary records of the law cases decided, is to be found the measure of his monumental service to the Republic or the meaning of what he did. The state of things which imperatively demanded the exercise of his creative genius and the firm pressure of his steadying hand must be understood in order to grasp the significance of his labors.
When the Supreme Court met in February, 1819, almost the whole country was in grievous turmoil; for nearly three years conditions had been growing rapidly worse and were now desperate. Poverty, bankruptcy, chicanery, crime were widespread and increasing. Thrift, prudence, honesty, and order had seemingly been driven from the hearts and minds of most of the people; while speculation, craft, and unscrupulous devices were prevalent throughout all but one portion of the land. Only New England had largely escaped the universal curse that appeared to have fallen upon the United States; and even that section was not untouched by the economic and social plague that had raged and was becoming more deadly in every other quarter.
While it is true that a genuine democratizing evolution was in progress, this fact does not explain the situation that had grown up throughout the country. Neither does the circumstance that the development of land and resources was going forward in haphazard fashion, at the hands of a new population hard pressed for money and facilities for work and communication, reveal the cause of the appalling state of affairs. It must frankly be said of the conditions, to us now unbelievable, that they were due partly to the ignorance, credulity, and greed of the people; partly to the spirit of extravagance; partly to the criminal avarice of the financially ambitious; partly to popular dread of any great centralized moneyed institution, however sound; partly to that pest of all democracies, the uninformed and incessant demagogue whipping up and then pandering to the passions of the multitude; partly to that scarcely less dangerous creature in a Republic, the fanatical doctrinaire, proclaiming the perfection of government by word-logic and insisting that human nature shall be confined in the strait-jacket of verbal theory. From this general welter of moral and economic debauchery, Localism had once more arisen and was eagerly reasserting its domination.
The immediate cause of the country's plight was an utter chaos in banking. Seldom has such a financial motley ever covered with variegated rags the backs of a people. The confusion was incredible; but not for a moment did the millions who suffered, blame themselves for their tragic predicament. Now praising banks as unfailing fountains of money, now denouncing banks as the sources of poisoned waters, clamoring for whatever promised even momentary relief, striking at whatever seemingly denied it, the people laid upon anything and anybody but themselves and their improvidence, the responsibility for their distress.
Hamilton's financial plans[438] had proved to be as successful as they were brilliant. The Bank of the United States, managed, on the whole, with prudence, skill, and honesty,[439] had fulfilled the expectations of its founders. It had helped to maintain the National credit by loans in anticipation of revenue; it had served admirably, and without compensation, as an agent for collecting, safeguarding, and transporting the funds of the Government; and, more important than all else, it had kept the currency, whether its own notes or those of private banks, on a sound specie basis. It had, indeed, "acted as the general guardian of commercial credit" and, as such, had faithfully and wisely performed its duties.[440]
But the success of the Bank had not overcome the original antagonism to a great central moneyed institution. Following the lead of Jefferson, who had insisted that the project was unconstitutional,[441] Madison, in the first Congress, had opposed the bill to incorporate the first Bank of the United States. Congress had no power, he said, to create corporations.[442] After twelve years of able management, and in spite of the good it had accomplished, Jefferson still considered it, potentially, a monster that might overthrow the Republic. "This institution," he wrote in the third year of his Presidency, "is one of the most deadly hostility existing, against the principles & form of our Constitution.... An institution like this, penetrating by it's branches every part of the Union, acting by command & in phalanx, may, in a critical moment, upset the government.... What an obstruction could not this bank of the U.S., with all it's branch banks, be in time of war?"[443]
The fact that most of the stock of the Bank had been bought up by Englishmen added to the unpopularity of the institution.[444] Another source of hostility was the jealousy of State banks, much of the complaint about "unconstitutionality" and "foreign ownership" coming from the agents and friends of these local concerns. The State banks wished for themselves the profits made by the National Bank and its branches, and they chafed under the wise regulation of their note issues, which the existence of the National system compelled.
For several years these State banks had been growing in number and activity.[445] When, in 1808, the directors of the Bank of the United States asked for a renewal of its charter, which would expire in 1811, and when the same request was made of Congress in 1809, opposition poured into the Capital from every section of the country. The great Bank was a British institution, it was said; its profits were too great; it was a creature of Federalism, brought forth in violation of the Constitution. Its directors, officers, and American stockholders were Federalists; and this fact was the next most powerful motive for the overthrow of the first Bank of the United States.[446]
Petitions to Congress denounced it and demanded its extinction. One from Pittsburgh declared "that your memorialists are 'the People of the United States,'" and asserted that the Bank "held in bondage thousands of our citizens," kept the Government "in duress," and subsidized the press, thus "thronging" the Capital with lobbyists who in general were the "head-waters of corruption."[447] The Legislatures of many States "instructed" their Senators and "earnestly requested" their Representatives in Congress to oppose a new charter for the expiring National institution. Such resolutions came from Pennsylvania, from Virginia, from Massachusetts.[448]
The State banks were the principal contrivers of all this agitation.[449] For instance, the Bank of Virginia, organized in 1804, had acquired great power and, but for the branch of the National concern at Richmond, would have had almost the banking monopoly of that State. Especially did the Virginia Bank desire to become the depository of National funds[450]--a thing that could not be accomplished so long as the Bank of the United States was in existence.[451] Dr. John Brockenbrough, the relative, friend, and political associate of Spencer Roane and Thomas Ritchie, was the president of this State institution, which was a most important part of the Republican machine in Virginia. Considering the absolute control held by this political organization over the Legislature, it seems probable that the State bank secured the resolution condemnatory of the Bank of the United States.
Certainly the General Assembly would not have taken any action not approved by Brockenbrough, Roane, and Ritchie. Ritchie's Enquirer boasted that it "was the first to denounce the renewal of the bank charter."[452] In the Senate, William H. Crawford boldly charged that the instructions of the State Legislatures were "induced by motives of avarice";[453] and Senator Giles was plainly embarrassed in his attempt to deny the indictment.[454]
Nearly all the newspapers were controlled by the State banks;[455] they, of course, denounced the National Bank in the familiar terms of democratic controversy and assailed the character of every public man who spoke in behalf of so vile and dangerous an institution.[456] It was also an ideal object of assault for local politicians who bombarded the Bank with their usual vituperation. All this moved Senator Crawford, in his great speech for the rechartering of the Bank, to a scathing arraignment of such methods.[457]
In spite of conclusive arguments in favor of the Bank of the United States on the merits of the question, the bill to recharter that institution was defeated in the House by a single vote,[458] and in the Senate by the casting vote of the Vice-President, the aged George Clinton.[459] Thus, on the very threshold of the War of 1812, the Government was deprived of this all but indispensable fiscal agent; immense quantities of specie, representing foreign bank holdings, were withdrawn from the country; and the State banks were given a free hand which they soon used with unrestrained license.
These local institutions, which, from the moment the failure of the rechartering of the National Bank seemed probable, had rapidly increased in number, now began to spring up everywhere.[460] From the first these concerns had issued bills for the loan of which they charged interest. Thus banking was made doubly profitable. Even those banks, whose note issues were properly safeguarded, achieved immense profits. Banking became a mania.
"The Banking Infatuation pervades all America," wrote John Adams in 1810. "Our whole system of Banks is a violation of every honest Principle of Banks.... A Bank that issues Paper at Interest is a Pickpocket or a Robber. But the Delusion will have its Course. You may as well reason with a Hurricane. An Aristocracy is growing out of them, that will be as fatal as The Feudal Barons, if unchecked in Time.... Think of the Number, the Offices, Stations, Wealth, Piety and Reputations of the Persons in all the States, who have made Fortunes by these Banks, and then you will see how deeply rooted the evil is. The Number of Debtors who hope to pay their debts by this Paper united with the Creditors who build Pallaces in our Cities, and Castles for Country Seats, by issuing this Paper form too impregnable a Phalanx to be attacked by any Thing less disciplined than Roman Legions."[461]
Such was the condition even before the expiration of the charter of the first Bank. But, when the restraining and regulating influence of that conservative and ably managed institution was removed altogether, local banking began a course that ended in a mad carnival of roguery, to the ruin of legitimate business and the impoverishment and bankruptcy of hundreds of thousands of the general public.
The avarice of the State banks was immediately inflamed by the war necessities of the National Government. Desperate for money, the Treasury exchanged six per cent United States bonds for the notes of State banks.[462] The Government thus lost five million dollars from worthless bank bills.[463] These local institutions now became the sole depositories of the Government funds which the National Bank had formerly held.[464] Sources of gain of this kind were only extra inducements to those who, by wit alone, would gather quick wealth to set up more local banks. But other advantages were quite enough to appeal to the greedy, the dishonest, and the adventurous.
Liberty to pour out bills without effective restriction as to the amount or security; to loan such "rags" to any who could be induced to borrow; to collect these debts by foreclosure of mortgages or threats of imprisonment of the debtors--these were some of the seeds from which grew the noxious financial weeds that began to suck the prosperity of the country. When the first Bank of the United States was organized there were only three State banks in the country. By 1800, there were twenty-eight; by 1811, they had more than trebled,[465] and most of the eighty-eight State institutions in existence when the first National Bank was destroyed had been organized after it seemed probable that it would not be granted a recharter.
So rapidly did they increase and so great were their gains that, within little more than a year from the demise of the first Bank of the United States, John Adams records: "The Profits of our Banks to the advantage of the few, at the loss of the many, are such an enormous fraud and oppression as no other Nation ever invented or endured. Who can compute the amount of the sums taken out of the Pocketts of the Simple and hoarded in the Purses of the cunning in the course of every year?... If Rumour speaks the Truth Boston has and will emulate Philadelphia in her Proportion of Bankruptcies."[466]
Yet Boston and Philadelphia banks were the soundest and most carefully conducted of any in the whole land. If Adams spoke extravagantly of the methods and results of the best managed financial institutions of the country, he did not exaggerate conditions elsewhere. From Connecticut to the Mississippi River, from Lake Erie to New Orleans, the craze for irresponsible banking spread like a contagious fever. The people were as much affected by the disease as were the speculators. The more "money" they saw, the more "money" they wanted. Bank notes fell in value; specie payments were suspended; rates of exchange were in utter confusion and constantly changing. From day to day no man knew, with certainty, what the "currency" in his pocket was worth. At Vincennes, Indiana, in 1818, William Faux records: "I passed away my 20 dollar note of the rotten bank of Harmony, Pennsylvania, for five dollars only!"[467]
The continuance of the war, of course, made this financial situation even worse for the Government than for the people. It could not negotiate its loans; the public dues were collected with difficulty, loss, and delay; the Treasury was well-nigh bankrupt. "The Department of State was so bare of money as to be unable to pay even its stationery bill."[468] In 1814, when on the verge of financial collapse, the Administration determined that another Bank of the United States was absolutely necessary to the conduct of the war.[469] Scheme after scheme was proposed, wrangled over, and defeated.
One plan for a bank[470] was beaten "after a day of the most tumultuous proceedings I ever saw," testifies Webster.[471] Another bill passed,[472] but was vetoed by President Madison because it could not aid in the rehabilitation of the public credit, nor "provide a circulating medium during the war, nor ... furnish loans, or anticipate public revenue."[473] When the war was over, Madison timidly suggested to Congress the advisability of establishing a National bank "that the benefits of a uniform national currency should be restored."[474] Thus, on April 10, 1816, two years after Congress took up the subject, a law finally was enacted and approved providing for the chartering and government of the second Bank of the United States.[475]
Within four years, then, of the refusal of Congress to recharter the sound and ably managed first Bank of the United States, it was forced to authorize another National institution, endowed with practically the same powers possessed by the Bank which Congress itself had so recently destroyed.[476] But the second establishment would have at least one advantage over the first in the eyes of the predominant political party--a majority of the officers and directors of the Bank would be Republicans.[477]
During their four years of "financial liberty" the number of State banks had multiplied. Those that could be enumerated in 1816 were 246.[478] In addition to these, scores of others, most of them "pure swindles,"[479] were pouring out their paper.[480] Even if they had been sound, not half of them were needed.[481] Nearly all of them extended their wild methods. "The Banks have been going on, as tho' the day of reckoning would never come," wrote Rufus King of conditions in the spring of 1816.[482]
The people themselves encouraged these practices. The end of the war released an immense quantity of English goods which flooded the American market. The people, believing that devastated Europe would absorb all American products, and beholding a vision of radiant prosperity, were eager to buy. A passion for extravagance swept over America;[483] the country was drained of specie by payments for exports.[484] Then came a frenzy of speculation. "The people were wild; ... reason seemed turned topsy turvey."[485]
The multitude of local banks intensified both these manias by every device that guile and avarice could suggest. Every one wanted to get rich at the expense of some one else by a mysterious process, the nature of which was not generally understood beyond the fact that it involved some sort of trickery. Did any man's wife and family want expensive clothing--the local bank would loan him bills issued by itself, but only on good security. Did any man wish to start some unfamiliar and alluring enterprise by which to make a fortune speedily--if he had a farm to mortgage, the funds were his. Was a big new house desired? The money was at hand--nothing was required to get it but the pledge of property worth many times the amount with which the bank "accommodated" him.[486]
Indeed, the local banks urged such "investments," invited people with property to borrow, laid traps to ensnare them. "What," asked Hezekiah Niles, "is to be the end of such a business?--Mammoth fortunes for the wise, wretched poverty for the foolish.... Lands, lots, houses--stock, farming utensils and household furniture, under custody of the sheriff--SPECULATION IN A COACH, HONESTY IN THE JAIL."[487]
Many banks sent agents among the people to hawk their bills. These were perfectly good, the harpies would assure their victims, but they could now be had at a heavy discount; to buy them was to make a large profit. So the farmer, the merchant, even the laborer who had acquired a dwelling of his own, were induced to mortgage their property or sell it outright in exchange for bank paper that often proved to be worthless.[488]
Frequently these local banks ensnared prosperous farmers by the use of "cappers." Niles prints conspicuously as "A True Story"[489] the account of a certain farmer who owned two thousand acres, well improved and with a commodious residence and substantial farm buildings upon it. Through his land ran a stream affording good water power. He was out of debt, prosperous, and contented. One day he went to a town not many miles from his plantation. There four pleasant-mannered, well-dressed men made his acquaintance and asked him to dinner, where a few directors of the local bank were present. The conversation was brought around to the profits to be made in the milling business. The farmer was induced to borrow a large sum from the local bank and build a mill, mortgaging his farm to secure the loan. The mill was built, but seldom used because there was no work for it to do; and, in the end, the two thousand acres, dwelling, buildings, mill, and all, became the property of the bank directors.[490]
This incident is illustrative of numerous similar cases throughout the country, especially in the West and South. Niles thus describes banking methods in general: "At first they throw out money profusely, to all that they believe are ultimately able to return it; nay, they wind round some like serpents to tempt them to borrow--... they then affect to draw in their notes, ... money becomes scarce, and notes of hand are shaved by them to meet bank engagements; it gets worse--the consummation originally designed draws nigh, and farm after farm, lot after lot, house after house, are sacrificed."[491]
So terrifying became the evil that the Legislature of New York, although one of the worst offenders in the granting of bank charters, was driven to appoint a committee of investigation. It reported nothing more than every honest observer had noted. Money could not be transmitted from place to place, the committee said, because local banks had "engrossed the whole circulation in their neighborhood," while their notes abroad had depreciated. The operations of the bankers "immediately within their vicinity" were ruinous: "Designing, unprincipled speculator[s] ... impose on the credulity of the honest, industrious, unsuspecting ... by their specious flattery and misrepresentation, obtaining from them borrowed notes and endorsements, until the ruin is consummated, and their farms are sold by the sheriff."[492]
Some banks committed astonishing frauds, "such as placing a partial fund in a distant bank to redeem their paper" and then "issuing an emission of notes signed with ink of a different shade, at the same time giving secret orders to said bank not to pay the notes thus signed." Bank paper, called "facility notes," was issued, but "payable in neither money, country produce, or any thing else that has body or shape." Bank directors even terrorized merchants who did not submit to their practices. In one typical case all persons were denied discounts who traded at a certain store, the owner of which had asked for bank bills that would be accepted in New York City, where they had to be remitted--this, too, when the offending merchant kept his account at the bank.
The committee describes, as illustrative of banking chicanery, the instance of "an aged farmer," owner of a valuable farm, who, "wishing to raise the sum of one thousand dollars, to assist his children, was told by a director, he could get it out of the bank ... and that he would endorse his note for him." Thus the loan was made; but, when the note expired, the director refused to obtain a renewal except upon the payment of one hundred dollars in addition to the discount. At the next renewal the same condition was exacted and also "a judgment ... in favor of said director, and the result was, his farm was soon after sold without his knowledge by the sheriff, and purchased by the said director for less than the judgment."[493]
Before the second Bank of the United States opened its doors for business, the local banks began to gather the first fruits of their labors. By the end of 1816 suits upon promissory notes, bonds, and mortgages, given by borrowers, were begun. Three fourths of all judgments rendered in the spring of 1818 by the Supreme Court of the State of New York alone were "in favor of banks, against real property."[494] Suits and judgments of this kind grew ever more frequent.
In such fashion was the country hastened toward the period of bankruptcy. Yet the people in general still continued to demand more "money." The worse the curse, the greater the floods of it called for by the body of the public. "Like a dropsical man calling out for water, water, our deluded citizens are clamoring for more banks.... We are now taught to believe that legerdemain tricks upon paper can produce as solid wealth as hard labor in the earth," wrote Jefferson when the financial madness was becoming too apparent to all thoughtful men.[495]
Practically no restrictions were placed upon these financial freebooters,[496] while such flimsy regulations as their charters provided were disregarded at will.[497] There was practically no publicity as to the management and condition of even the best of these banks;[498] most of them denied the right of any authority to inquire into their affairs and scorned to furnish information as to their assets or methods.[499] For years the Legislatures of many States were controlled by these institutions; bank charters were secured by the worst methods of legislative manipulation; lobbyists thronged the State Capitols when the General Assemblies were in session; few, if any, lawmaking bodies of the States were without officers, directors, or agents of local banks among their membership.[500]
Thus bank charters were granted by wholesale and they were often little better than permits to plunder the public. During the session of the Virginia Legislature of 1816-17, twenty-two applications for bank charters were made.[501] At nearly the same time twenty-one banks were chartered in the newly admitted and thinly peopled State of Ohio.[502] The following year forty-three new banks were authorized in Kentucky.[503] In December, 1818, James Flint found in Kentucky, Ohio, and Tennessee a "vast host of fabricators, and venders of base money."[504] All sorts of "companies" went into the banking business. Bridge companies, turnpike companies, manufacturing companies, mercantile companies, were authorized to issue their bills, and this flood of paper became the "money" of the people; even towns and villages emitted "currency" in the form of municipal notes. The City of Richmond, Virginia, in 1815, issued "small paper bills for change, to the amount of $29,948."[505] Often bills were put in circulation of denominations as low as six and one fourth cents.[506] Rapidly the property of the people became encumbered to secure their indebtedness to the banks.
A careful and accurate Scotch traveler thus describes their methods: "By lending, and otherwise emitting their engravings, they have contrived to mortgage and buy much of the property of their neighbours, and to appropriate to themselves the labour of less moneyed citizens.... Bankers gave in exchange for their paper, that of other banks, equally good with their own.... The holder of the paper may comply in the barter, or keep the notes ...; but he finds it too late to be delivered from the snare. The people committed the lapsus, when they accepted of the gew-gaws clean from the press.... The deluded multitude have been basely duped."[507] Yet, says Flint, "every one is afraid of bursting the bubble."[508]
As settlers penetrated the Ohio and Indiana forests and spread over the Illinois prairies, the banks went with them and "levied their contributions on the first stroke of the axe."[509] Kentucky was comparatively well settled and furnished many emigrants to the newer regions north of the Ohio River. Rough log cabins were the abodes of nearly all of the people[510] who, for the most part, lived roughly,[511] drank heavily,[512] were poorly educated.[513] They were, however, hospitable, generous, and brave; but most of them preferred to speculate rather than to work.[514] Illness was general, sound health rare.[515] "I hate the prairies.... I would not have any of them of a gift, if I must be compelled to live on them," avowed an English emigrant.[516]
In short, the settlers reproduced most of the features of the same movement in the preceding generation.[517] There was the same squalor, suspicion, credulity, and the same combativeness,[518] the same assertion of superiority over every other people on earth,[519] the same impatience of control, particularly from a source so remote as the National Government.[520] "The people speak and seem as if they were without a government, and name it only as a bugbear," wrote William Faux.[521]
Moreover, the inhabitants of one section knew little or nothing of what those in another were doing. "We are as ignorant of the temper prevailing in the Eastern States as the people of New Holland can be," testifies John Randolph in 1812.[522] Even a generation after Randolph made this statement, Frederick Marryat records that "the United States ... comprehend an immense extent of territory, with a population running from a state of refinement down to one of positive barbarism.... The inhabitants of the cities ... know as little of what is passing in Arkansas and Alabama as a cockney does of the manners and customs of ... the Isle of Man."[523] Communities were still almost as segregated as were those of a half-century earlier.[524] Marryat observes, a few years later, that "to write upon America as a nation would be absurd, for nation ... it is not."[525] Again, he notes in his journal that "the mass of the citizens of the United States have ... a very great dislike to all law except ... the decision of the majority."[526]
These qualities furnished rich soil for cultivation by demagogues, and small was the husbandry required to produce a sturdy and bellicose sentiment of Localism. Although the bills of the Bank of the United States were sought for,[527] the hostility to that National institution was increased rather than diminished by the superiority of its notes over those of the local money mills. No town was too small for a bank. The fact that specie payments were not exacted "indicated every village in the United States, where there was a 'church, a tavern and a blacksmith's shop,' as a suitable site for a bank, and justified any persons in establishing one who could raise enough to pay the paper maker and engraver."[528]
Not only did these chartered manufactories of currency multiply, but private banks sprang up and did business without any restraint whatever. Niles was entirely within the truth when he declared that nothing more was necessary to start a banking business than plates, presses, and paper.[529] Often the notes of the banks, private or incorporated, circulated only in the region where they were issued.[530] In 1818 the "currency" of the local banks of Cincinnati was "mere waste paper ... out of the city."[531] The people had to take this local "money" or go without any medium of exchange. When the notes of distant banks were to be had, the people did not know the value of them. "Notes current in one part, are either refused, or taken at a large discount, in another," wrote Flint in 1818.[532]
In the cities firms dealing with bank bills printed lists of them with the market values, which changed from day to day.[533] Sometimes the county courts fixed rates of exchange; for instance, the County Court of Norfolk County, Virginia, in March, 1816, decreed that the notes of the Bank of Virginia and the Bank of South Carolina were worth their face value, while the bills of Baltimore and Philadelphia and the District of Columbia were below par.[534] Merchants had to keep lists on which was estimated the value of bank bills and to take chances on the constant fluctuations of them.[535] "Of upwards of a hundred banks that lately figured in Indiana, Ohio, Kentucky, and Tennessee, the money of two is now only received in the land-office, in payment for public lands," testifies Flint, writing from Jeffersonville, Indiana, in March, 1820. "Discount," he adds, "varies from thirty to one hundred per cent."[536] By September, 1818, two thirds of the bank bills sent to Niles in payment for the Register could not "be passed for money."[537]
"Chains" of banks were formed by which one member of the conspiracy would redeem its notes only by paying out the bills of another. Thus, if a man presented at the counter of a certain bank the bills issued by it, he was given in exchange those of another bank; when these were taken to this second institution, they were exchanged for the bills of a third bank, which redeemed them with notes of the first.[538] For instance, Bigelow's bank at Jeffersonville, Indiana, redeemed its notes with those of Piatt's bank at Cincinnati, Ohio; this, in turn, paid its bills with those of a Vincennes sawmill and the sawmill exchanged its paper for that of Bigelow's bank.[539]
The redemption of their bills by the payment of specie was refused even by the best State banks, and this when the law positively required it. Niles estimated in April, 1818, that, although many banks were sound and honestly conducted, there were not "half a dozen banks in the United States that are able to pay their debts as they are payable."[540]
All this John Marshall saw and experienced. In 1815, George Fisher[541] presented to the Bank of Virginia ten of its one-hundred-dollar notes for redemption, which was refused. After several months' delay, during which the bank officials ignored a summons to appear in court, a distringas[542] was secured. The President of the bank, Dr. Brockenbrough, resisted service of the writ, and the "Sheriff then called upon the by-standers, as a posse comitatus," to assist him. Among these was the Chief Justice of the United States. Fisher had hard work in finding a lawyer to take his case; for months no member of the bar would act as his attorney.[543] For in Virginia as elsewhere--even less than in many States--the local banks were the most lucrative clients and the strongest political influence; and they controlled the lawyers as well as the press.
In June, 1818, for instance, a business man in Pennsylvania had accumulated several hundred dollars in bills of a local bank which refused to redeem them in specie or better bills. Three justices of the peace declined to entertain suit against the bank and no notary public would protest the bills. In Maryland, at the same time, a man succeeded in bringing an action against a bank for the redemption of some of its bills; but the cashier, while admitting his own signature on the notes, swore that he could not identify that of the bank's president, who had absented himself.[544]
Counterfeiting was widely practiced and, for a time, almost unpunished; a favorite device was the raising of notes, usually from five to fifty dollars. Bills were put in circulation purporting to have been issued by distant banks that did not exist, and never had existed. In a single week of June, 1818, the country newspapers contained accounts of twenty-eight cases of these and similar criminal operations.[545] Sometimes a forger or counterfeiter was caught; at Plattsburg, New York, one of these had twenty different kinds of fraudulent notes, "well executed."[546] In August, 1818, Niles estimates that "the notes of at least ONE HUNDRED banks in the United States are counterfeited."[547] By the end of the year an organized gang of counterfeiters, forgers, and distributors of their products covered the whole country.[548] Counterfeits of the Marine Bank of Baltimore alone were estimated at $1,000,000;[549] one-hundred-dollar notes of the Bank of Louisiana were scattered far and wide.[550] Scarcely an issue of any newspaper appeared without notices of these depredations;[551] one half of the remittances sent Niles from the West were counterfeit.[552]
Into this chaos of speculation, fraud, and financial fiction came the second Bank of the United States. The management of it, at the beginning, was adventurous, erratic, corrupt; its officers and directors countenanced the most shameful manipulation of the Bank's stock; some of them participated in the incredible jobbery.[553] Nothing of this, however, was known to the country at large for many months,[554] nor did the knowledge of it, when revealed, afford the occasion for the popular wrath that soon came to be directed against the National Bank. This public hostility, indeed, was largely produced by measures which the Bank took to retrieve the early business blunders of its managers.
These blunders were appalling. As soon as it opened in 1817, the Bank began to do business on the inflated scale which the State banks had established; by over-issue of its notes it increased the inflation, already blown to the bursting point. Except in New England, where its loans were moderate and well secured, it accommodated borrowers lavishly. The branches were not required to limit their business to a fixed capital; in many cases, the branch officers and directors, incompetent and swayed by local interest and feeling,[555] issued notes as recklessly as did some of the State banks. In the West particularly, and also in the South, the loans made were enormous. The borrowers had no expectation of paying them when due, but of renewing them from time to time, as had been the practice under State banking.
The National branches in these regions showed a faint gleam of prudence by refusing to accept bills of notoriously unsound local banks. This undemocratic partiality, although timidly exercised, aroused to activity the never-slumbering hostility of these local concerns. In the course of business, however, bills of most State banks accumulated to an immense amount in the vaults of the branches of the Bank of the United States. When, in spite of the disposition of the branch officers to extend unending and unlimited indulgence to the State banks and to borrowers generally, the branches finally were compelled by the parent Bank to demand payment of loans and redemption of bills of local banks held by it; and when, in consequence, the State banks were forced to collect debts due them, the catastrophe, so long preparing, fell upon sections where the vices of State banking had been practiced most flagrantly.
Suits upon promissory notes, bonds and mortgages, already frequent, now became incessant; sheriffs were never idle. In the autumn of 1818, in a single small county[556] of Delaware, one hundred and fifty such actions were brought by the banks. In addition to this, records the financial chronicler of the period, "their vaults are loaded with bonds, mortgages and other securities, held in terrorem over the heads of several hundreds more."[557] At Harrisburg, Pennsylvania, one bank brought more than one hundred suits during May, 1818;[558] a few months later a single issue of one country newspaper in Pennsylvania contained advertisements of eighteen farms and mills at sheriff's sale; a village newspaper in New York advertised sixty-three farms and lots to be sold under the sheriff's hammer.[559] "Currency" decreased in quantity; unemployment was amazing; scores of thousands of men begged for work; throngs of the idle camped near cities and subsisted on charity.[560]
All this the people laid at the doors of the National Bank, while the State banks,[561] of course, encouraged the popular animosity. Another order of the National concern increased the anger of the people and of the State banks against it. For more than a year the parent institution and its branches had redeemed all notes issued by them wherever presented. Since the notes from the West and South flowed to the North and East[562] in payment for the manufactures and merchandise of these sections, this universal redemption became impossible. So, on August 28, 1818, the branches were directed to refuse all notes except their own.[563]
Thus the Bank, "like an abandoned mother, ... BASTARDIZED its offspring,"[564] said the enemies of the National Bank, among them all State banks and most of the people. The enforcement of redemption of State bank bills, the reduction of the volume of "currency," were the real causes of the fury with which the Bank of the United States and its branches was now assailed. That institution was the monster, said local orators and editors; its branches were the tentacles of the Octopus, heads of the Hydra.[565] "The 'branches' are execrated on all hands," wrote an Ohio man. "We feel that to the policy pursued by them, we are indebted for all the evils we experience for want of a circulating medium."[566]
The popular cry was for relief. More money, not less, was needed, it was said; and more banks that could and would loan funds with which to pay debts. If the creditor would not accept the currency thus procured, let laws be passed that would compel him to do so, or prevent him from collecting what his contract called for. Thus, with such demands upon their lips, and in the midst of a storm of lawsuits, the people entered at last that inevitable period of bankruptcy to which for years they had been drawing nearer and for which they were themselves largely responsible.
Bankruptcy laws had already been enacted by some States; and if these acts had not been drawn for the benefit of speculators in anticipation of the possible evil day, the "insolvency" statutes certainly had been administered for the protection of rich and dishonest men who wished to escape their liabilities, and yet to preserve their assets. In New York[567] the debtor was enabled to discharge all accounts by turning over such property as he had; if he owed ten thousand dollars, and possessed but fifty dollars, his debt was cancelled by the surrender of that sum. For the honest and prudent man the law was just, since no great discrepancy usually existed between his reported assets and his liabilities. But lax administration of it afforded to the dishonest adventurer a shield from the righteous consequences of his wrongdoing.
The "bankruptcies" of knavish men were common operations. One merchant in an Eastern city "failed," but contrived to go on living in a house for which he "was offered $200,000 in real money."[568] Another in Philadelphia became "insolvent," yet had $7000 worth of wine in his cellar at the very time he was going through "bankruptcy."[569] A merchant tailor in the little town of York, Pennsylvania, resorted to bankruptcy to clear himself of eighty-four thousand dollars of debt.[570]
In their speculations adventurous men counted on the aid of these legislative acts for the relief of debtors. "Never ... have any ... laws been more productive of crime than the insolvent laws of Maryland," testifies Niles.[571] One issue of the Federal Gazette contained six columns of bankruptcy notices, and these were only about "one-third of the persons" then "'going through our mill.'" Several "bankrupts" had been millionaires, and continued to "live in splendid affluence, ... their wives and children, or some kind relative, having been made rich through their swindlings of the people."[572] Many "insolvents" were bankers; and this led Niles to propose that the following law be adopted:
"'Whereas certain persons ... unknown, have petitioned for the establishment of a bank at ----:
"'Be it enacted, that ... these persons, ... shall have liberty to become BANKRUPTS, and may legally swindle as much as they can.'"[573]
In a Senate debate in March, 1820, for a proposed new National Bankruptcy Act,[574] Senator Harrison Gray Otis of Massachusetts moderately stated the results of the State insolvency laws. "Merchants and traders ... are harassed and perplexed by twenty different systems of municipal laws, often repugnant to each other and themselves; always defective; seldom executed in good faith; prolific in endless frauds, perjuries, and evasions; and never productive of ... any sort of justice, to the creditor. Nothing could be ... comparable to their pernicious effects upon the public morals."[575] Senator Prentiss Mellen, of the same State, described the operation of the bankruptcy mill thus: "We frequently witness transactions, poisoned throughout with fraud ... in which all creditors are deceived and defrauded.... The man pretends to be a bankrupt; and having converted a large portion of his property into money ... he ... closes his doors; ... goes through the form of offering to give up all his property, (though secretly retaining thousands,) on condition of receiving a discharge from his creditors.... In a few months, or perhaps weeks, he recommences business, and finds himself ... with a handsome property at command."[576]
Senator James Burrill, Jr., of Rhode Island was equally specific and convincing. He pictured the career of a dishonest merchant, who transfers property to relatives, secures a discharge from the State bankruptcy courts, and "in a few days ... resumes his career of folly, extravagance, and rashness.... Thus the creditors are defrauded, and the debtor, in many cases, lives in affluence and splendor."[577] Flint records that "mutual credit and confidence are almost torn up by the roots."[578]
It was soon to be the good fortune of John Marshall to declare such State legislation null and void because in violation of the National Constitution. Never did common honesty, good faith, and fair dealing need such a stabilizing power as at the moment Marshall furnished to the American people. In most parts of the country even insolvency laws did not satisfy debtors; they were trying to avoid the results of their own acts by securing the enactment of local statutes that repealed the natural laws of human intercourse--of statutes that expressed the momentary wish of the uncomfortable, if honest, multitude, but that represented no less the devices of the clever and unscrupulous. Fortunate, indeed, was it for the United States, at this critical time in its development, that one department of the Government could not be swayed by the passion of the hour, and thrice happy that the head of that department was John Marshall.
The impression made directly on Marshall by what took place under his very eyes in Virginia was strengthened by events that occurred in Kentucky. All his brothers and sisters, except two, besides numerous cousins and relatives by marriage, lived there. Thus he was advised in an intimate and personal way of what went forward in that State.[579]
The indebtedness of Kentucky State banks, and of individual borrowers to the branches of the National Bank located in that Commonwealth, amounted to more than two and one half millions of dollars.[580] "This is the trifling sum which the people of Kentucky are called upon to pay in specie!"[581] exclaimed a Kentucky paper. The people of that State owed the local banks about $7,000,000 more, while the total indebtedness to all financial institutions within Kentucky was not far from $10,000,000.[582] The sacrifice of property for the satisfaction of mortgages grew ever more distressing. At Lexington, a house and lot, for which the owner had refused $15,000, brought but $1300 at sheriff's sale; another costing $10,000 sold under the hammer for $1500.[583] Even slaves could be sold only at a small fraction of their ordinary market price.
It was the same in other States. Within Marshall's personal observation in Virginia the people were forced to eat the fruits of their folly. "Lands in this State cannot now be sold for a year's rent," wrote Jefferson.[584] A farm near Easton, Pennsylvania, worth $12,500, mortgaged to secure a debt of $2500, was taken by the lender on foreclosure for the amount of the loan. A druggist's stock of the retail value of $10,000 was seized for rent by the landlord and sold for $400.[585] In Virginia a little later a farm of three hundred acres with improvements worth, at the lowest estimate, $1500, sold for $300; two wagon horses costing $200 were sacrificed for $40.
Mines were shut down, shops closed, taxes unpaid. "The debtor ... gives up his land, and, ruined and undone, seeks a home for himself and his family in the western wilderness."[586] John Quincy Adams records in his diary: "Staple productions ... are falling to ... less than half the prices which they have lately borne, the merchants are crumbling to ruin, the manufactures perishing, agriculture stagnating, and distress universal in every part of the country."[587]
During the summer and autumn of 1818, the popular demand for legislation that would suspend contracts, postpone the payment of debts, and stay the judgment of courts, became strident and peremptory. "Our greatest real evil is the question between debtor and creditor, into which the banks have plunged us deeper than would have been possible without them," testifies Adams. "The bank debtors are everywhere so numerous and powerful that they control the newspapers throughout the Union, and give the discussion a turn extremely erroneous, and prostrate every principle of political economy."[588]
This was especially true of Kentucky. Throughout the State great assemblages were harangued by oratorical "friends of the people." "The reign of political quackery was in its glory."[589] Why the scarcity of money when that commodity was most needed? Why the lawsuits for the collection of debts, the enforcement of bonds, the foreclosure of mortgages, instead of the renewal of loans, to which debtors had been accustomed? Financial manipulation had done it all. The money power was responsible for the misery of the people. Let that author and contriver of human suffering be suppressed.
What could be easier or more just than to enact legislation that would lift the burden of debt that was crushing the people? The State banks would not resist--were they not under the control of the people's Legislature? But they were also at the mercy of that remorseless creature of the National Government, the Bank of the United States. That malign Thing was the real cause of all the trouble.[590] Let the law by which Congress had given illegitimate life to that destroyer of the people's well-being be repealed. If that could not be done because so many of the National Legislature were corruptly interested in the Bank, the States had a sure weapon with which to destroy it--or at least to drive it out of business in every member of the Union.
That weapon was taxation. Let each Legislature, by special taxes, strangle the branches of the National Bank operating in the States. So came a popular determination to exterminate, by State action, the second Bank of the United States. National power should be brought to its knees by local authority! National agencies should be made helpless and be dispatched by State prohibition and State taxation! The arm of the National Government should be paralyzed by the blows showered on it when thrusting itself into the affairs of "sovereign" States! Already this process was well under way.
The first Constitution of Indiana, adopted soon after Congress had authorized the second Bank of the United States, prohibited any bank chartered outside the State from doing business within its borders.[591] During the very month that the National Bank opened its doors in 1817, the Legislature of Maryland passed an act taxing the Baltimore branch $15,000 annually. Seven months afterward the Legislature of Tennessee enacted a law that any bank not chartered under its authority should pay $50,000 each year for the privilege of banking in that State. A month later Georgia placed a special tax on branches of the Bank of the United States.
The Constitution of Illinois, adopted in August, 1818, forbade the establishment of any but State banks. In December of that year North Carolina taxed the branch of the National Bank in that State $5000 per annum. A few weeks later Kentucky laid an annual tax of $60,000 on each of the two branches of the Bank of the United States located at Lexington and Frankfort. Three weeks before John Marshall delivered his opinion in M'Culloch vs. Maryland, Ohio enacted a statute placing a yearly tax of $50,000 on each of the two National Bank branches then doing business in that State.[592]
Thus the extinction of the second Bank of the United States by State legislation appeared to be inevitable. The past management of it had well deserved this fate; but earnest efforts were now in operation to recover it from former blunders and to retrieve its fortunes. The period of corruption was over, and a new, able, and honest management was about to take charge. If, however, the States could destroy this National fiscal agency, it mattered not how well it might thereafter be conducted, for nothing could be more certain than that the local influence of State banks always would be great enough to induce State Legislatures to lay impossible burdens on the National Bank.
Such, then, was the situation that produced those opinions of Marshall on insolvency, on contract, and on a National bank, delivered during February and March of 1819; such the National conditions which confronted him during the preceding summer and autumn. He could do nothing to ameliorate these conditions, nothing to relieve the universal unhappiness, nothing to appease the popular discontent. But he could establish great National principles, which would give steadiness to American business, vitality to the National Government; and which would encourage the people to practice honesty, prudence, and thrift. And just this John Marshall did. When considering the enduring work he performed at this time, we must have in our thought the circumstances that made that work vitally necessary.
One of the earliest cases decided by the Supreme Court in 1819 involved the Bankrupt Law of New York. On November 25, 1817, Josiah Sturges[593] of Massachusetts sued Richard Crowninshield of New York in the United States Circuit Court for the District of Massachusetts to recover upon two promissory notes for the sum of $771.86 each, executed March 22, 1811, just twelve days before the passage, April 3, 1811, of the New York statute for the relief of insolvent debtors. The defendant pleaded his discharge under that act. The judges were divided in opinion on the questions whether a State can pass a bankrupt act, whether the New York law was a bankrupt act, and whether it impaired the obligations of a contract. These questions were, accordingly, certified to the Supreme Court.
The case was there argued long and exhaustively by David Daggett and Joseph Hopkinson for Sturges and by David B. Ogden and William Hunter for Crowninshield. In weight of reasoning and full citation of authority, the discussion was inferior only to those contests before the Supreme Bench which have found a place in history.
On February 17, 1819, Marshall delivered the unanimous opinion of the court.[594] Do the words of the Constitution, "Congress shall have power ... to establish ... uniform laws on the subject of bankruptcies throughout the United States" take from the States the right to pass such laws?
Before the adoption of the Constitution, begins Marshall, the States "united for some purposes, but, in most respects, sovereign," could "exercise almost every legislative power." The powers of the States under the Constitution were not defined in that instrument. "These powers proceed, not from the people of America, but from the people of the several states; and remain, after the adoption of the constitution, what they were before, except so far as they may be abridged" by the Nation's fundamental law.
While the "mere grant of a power to Congress" does not necessarily mean that the States are forbidden to exercise the same power, such concurrent power does not extend to "every possible case" not expressly prohibited by the Constitution. "The confusion resulting from such a practice would be endless." As a general principle, declares the Chief Justice, "whenever the terms in which a power is granted to Congress, or the nature of the power, required that it should be exercised exclusively by Congress, the subject is as completely taken from the state legislatures as if they had been expressly forbidden to act on it."[595]
Does this general principle apply to bankrupt laws? Assuredly it does. Congress is empowered to "establish uniform laws on the subject throughout the United States." Uniform National legislation is "incompatible with state legislation" on the same subject. Marshall draws a distinction between bankrupt and insolvency laws, although "the line of partition between them is not so distinctly marked" that it can be said, "with positive precision, what belongs exclusively to the one, and not to the other class of laws."[596]
He enters upon an examination of the nature of insolvent laws which States may enact, and bankrupt laws which Congress may enact; and finds that "there is such a connection between them as to render it difficult to say how far they may be blended together.... A bankrupt law may contain those regulations which are generally found in insolvent laws"; while "an insolvent law may contain those which are common to a bankrupt law." It is "obvious," then, that it would be a hardship to "deny to the state legislatures the power of acting on this subject, in consequence of the grant to Congress." The true rule--"certainly a convenient one"--is to "consider the power of the states as existing over such cases as the laws of the Union may not reach."[597]
But, whether this common-sense construction is adopted or not, it is undeniable that Congress may exercise a power granted to it or decline to exercise it. So, if Congress thinks that uniform bankrupt laws "ought not to be established" throughout the country, surely the State Legislatures ought not, on that account, to be prevented from passing bankrupt acts. The idea of Marshall, the statesman, was that it was better to have bankrupt laws of some kind than none at all. "It is not the mere existence of the power [in Congress], but its exercise, which is incompatible with the exercise of the same power by the states. It is not the right to establish these uniform laws, but their actual establishment, which is inconsistent with the partial acts of the states."[598]
Even should Congress pass a bankrupt law, that action does not extinguish, but only suspends, the power of the State to legislate on the same subject. When Congress repeals a National bankrupt law it merely "removes a disability" of the State created by the enactment of the National statute, and lasting only so long as that statute is in force. In short, "until the power to pass uniform laws on the subject of bankruptcies be exercised by Congress, the states are not forbidden to pass a bankrupt law, provided it contain no principle which violates the 10th section of the first article of the constitution of the United States."[599]
Having toilsomely reached this conclusion, Marshall comes to what he calls "the great question on which the cause must depend": Does the New York Bankrupt Law "impair the obligation of contracts"?[600]
What is the effect of that law? It "liberates the person of the debtor, and discharges him from all liability for any debt previously contracted, on his surrendering his property in the manner it prescribes." Here Marshall enters upon that series of expositions of the contract clause of the Constitution which, next to the Nationalism of his opinions, is, perhaps, the most conspicuous feature of his philosophy of government and human intercourse.[601] "What is the obligation of a contract? and what will impair it?"[602]
It would be hard to find words "more intelligible, or less liable to misconstruction, than those which are to be explained." With a tinge of patient impatience, the Chief Justice proceeds to define the words "contract," "impair," and "obligation," much as a weary school teacher might teach the simplest lesson to a particularly dull pupil.
"A contract is an agreement in which a party undertakes to do, or not to do, a particular thing. The law binds him to perform his undertaking, and this is, of course, the obligation of his contract. In the case at bar, the defendant has given his promissory note to pay the plaintiff a sum of money on or before a certain day. The contract binds him to pay that sum on that day; and this is its obligation. Any law which releases a part of this obligation, must, in the literal sense of the word, impair it. Much more must a law impair it which makes it totally invalid, and entirely discharges it.
"The words of the constitution, then, are express, and incapable of being misunderstood. They admit of no variety of construction, and are acknowledged to apply to that species of contract, an engagement between man and man, for the payment of money, which has been entered into by these parties."[603]
What are the arguments that such law does not violate the Constitution? One is that, since a contract "can only bind a man to pay to the full extent of his property, it is an implied condition that he may be discharged on surrendering the whole of it." This is simply not true, says Marshall. When a contract is made, the parties to it have in mind, not only existing property, but "future acquisitions. Industry, talents and integrity, constitute a fund which is as confidently trusted as property itself. Future acquisitions are, therefore, liable for contracts; and to release them from this liability impairs their obligation."[604]
Marshall brushes aside, almost brusquely, the argument that the only reason for the adoption of the contract clause by the Constitutional Convention was the paper money evil; that the States always had passed bankrupt and insolvent laws; and that if the framers of the Constitution had intended to deprive the States of this power, "insolvent laws would have been mentioned in the prohibition."
No power whatever, he repeats, is conferred on the States by the Constitution. That instrument found them "in possession" of practically all legislative power and either prohibited "its future exercise entirely," or restrained it "so far as national policy may require."
While the Constitution permits States to pass bankrupt laws "until that power shall be exercised by Congress," the fundamental law positively forbids the States to "introduce into such laws a clause which discharges the obligations the bankrupt has entered into. It is not admitted that, without this principle, an act cannot be a bankrupt law; and if it were, that admission would not change the constitution, nor exempt such acts from its prohibitions."[605]
There was, said Marshall, nothing in the argument that, if the framers of the Constitution had intended to "prohibit the States from passing insolvent laws," they would have plainly said so. "It was not necessary, nor would it have been safe" for them to have enumerated "particular subjects to which the principle they intended to establish should apply."
On this subject, as on every other dealt with in the Constitution, fundamental principles are set out. What is the one involved in this case? It is "the inviolability of contracts. This principle was to be protected in whatsoever form it might be assailed. To what purpose enumerate the particular modes of violation which should be forbidden, when it was intended to forbid all?... The plain and simple declaration, that no state shall pass any law impairing the obligation of contracts, includes insolvent laws and all other laws, so far as they infringe the principle the convention intended to hold sacred, and no farther."[606]
At this point Marshall displays the humanitarian which, in his character, was inferior only to the statesman. He was against imprisonment for debt, one of the many brutal customs still practiced. "The convention did not intend to prohibit the passage of all insolvent laws," he avows. "To punish honest insolvency by imprisonment for life, and to make this a constitutional principle, would be an excess of inhumanity which will not readily be imputed to the illustrious patriots who framed our constitution, nor to the people who adopted it.... Confinement of the debtor may be a punishment for not performing his contract, or may be allowed as a means of inducing him to perform it. But the state may refuse to inflict this punishment, or may withhold this means and leave the contract in full force. Imprisonment is no part of the contract, and simply to release the prisoner does not impair its obligation."[607]
Following his provoking custom of taking up a point with which he had already dealt, Marshall harks back to the subject of the reason for inserting the contract clause into the Constitution. He restates the argument against applying that provision to State insolvent laws--that, from the beginning, the Colonies and States had enacted such legislation; that the history of the times shows that "the mind of the convention was directed to other laws which were fraudulent in their character, which enabled the debtor to escape from his obligation, and yet hold his property, not to this, which is beneficial in its operation."
But, he continues, "the spirit of ... a constitution" is not to be determined solely by a partial view of the history of the times when it was adopted--"the spirit is to be collected chiefly from its words." And "it would be dangerous in the extreme to infer from extrinsic circumstances, that a case for which the words of an instrument expressly provide, shall be exempted from its operation." Where language is obscure, where words conflict, "construction becomes necessary." But, when language is clear, words harmonious, the plain meaning of that language and of those words is not "to be disregarded, because we believe the framers of that instrument could not intend what they say."[608]
The practice of the Colonies, and of the States before the Constitution was adopted, was a weak argument at best. For example, the Colonies and States had issued paper money, emitted bills of credit, and done other things, all of which the Constitution prohibits. "If the long exercise of the power to emit bills of credit did not restrain the convention from prohibiting its future exercise, neither can it be said that the long exercise of the power to impair the obligation of contracts, should prevent a similar prohibition." The fact that insolvent laws are not forbidden "by name" does not exclude them from the operation of the contract clause of the Constitution. It is "a principle which is to be forbidden; and this principle is described in as appropriate terms as our language affords."[609]
Perhaps paper money was the chief and impelling reason for making the contract clause a part of the National Constitution. But can the operation of that clause be confined to paper money? "No court can be justified in restricting such comprehensive words to a particular mischief to which no allusion is made." The words must be given "their full and obvious meaning."[610] Doubtless the evils of paper money directed the Convention to the subject of contracts; but it did far more than to make paper money impossible thereafter. "In the opinion of the convention, much more remained to be done. The same mischief might be effected by other means. To restore public confidence completely, it was necessary not only to prohibit the use of particular means by which it might be effected, but to prohibit the use of any means by which the same mischief might be produced. The convention appears to have intended to establish a great principle, that contracts should be inviolable. The constitution therefore declares, that no state shall pass 'any law impairing the obligation of contracts.'"[611] From all this it follows that the New York Bankruptcy Act of 1812 is unconstitutional because it impaired the obligations of a contract.
The opinion of the Chief Justice aroused great excitement.[612] It, of course, alarmed those who had been using State insolvent laws to avoid payment of their debts, while retaining much of their wealth. It also was unwelcome to the great body of honest, though imprudent, debtors who were struggling to lighten their burdens by legislation. But the more thoughtful, even among radicals, welcomed Marshall's pronouncement. Niles approved it heartily.[613]
Gradually, surely, Marshall's simple doctrine grew in favor throughout the whole country, and is to-day a vital and enduring element of American thought and character as well as of Constitutional law.
As in Fletcher vs. Peck, the principle of the inviolability of contracts was applied where a State and individuals are parties, so the same principle was now asserted in Sturges vs. Crowninshield as to State laws impairing the obligation of contracts between man and man. At the same session, in the celebrated Dartmouth College case,[614] Marshall announced that this principle also covers charters granted by States. Thus did he develop the idea of good faith and stability of engagement as a life-giving principle of the American Constitution.
FOOTNOTES:
[437] M'Culloch vs. Maryland, see infra, chap. VI.Return to passage
[438] See vol. II, 60, of this work.Return to passage
[439] Sumner: History of American Currency, 63.Return to passage
[440] See Memorial of the Bank for a recharter, April 20, 1808 (Am. State Papers, Finance, II, 301), and second Memorial, Dec. 18, 1810 (ib. 451-52). Every statement in these petitions was true. See also Dewey: Financial History of the United States, 100, 101.Return to passage
[441] See vol. II, 70-71, of this work.Return to passage
[442] Annals, 1st Cong. 2d. Sess. 1945. By far the strongest objection to a National bank, however, was that it was a monopoly inconsistent with free institutions.Return to passage
[443] Jefferson to Gallatin, Dec. 13, 1803, Works: Ford: X, 57.Return to passage
[444] "Fully two thirds of the Bank stock ... were owned in England." (Adams: U.S. V, 328.)Return to passage
[445] Dewey, 127; and Pitkin: Statistical View of the Commerce of the United States, 130-32.Return to passage
[446] Adams: U.S. V, 328-29.Return to passage
[447] Annals, 11th Cong. 3d Sess. 118-21.Return to passage
[448] Ib. 153, 201, 308; and see Pitkin, 421.Return to passage
[449] Adams: U.S. V, 327-28. "They induced one State legislature after another to instruct their senators on the subject." Pitkin, 422.Return to passage
[450] Ambler: Ritchie, 26-27, 52.Return to passage
[451] Ib. 67.Return to passage
[452] Branch Hist. Papers, June, 1903, 179.Return to passage
[453] Annals, 11th Cong. 3d Sess. 145.Return to passage
[454] "It is true, that a branch of the Bank of the United States ... is established at Norfolk; and that a branch of the Bank of Virginia is also established there. But these circumstances furnish no possible motive of avarice to the Virginia Legislature.... They have acted ... from the purest and most honorable motives." (Annals, 11th Cong. 3d Sess. 200.)Return to passage
[455] Pitkin, 421.Return to passage
[456] The "newspapers teem with the most virulent abuse." (James Flint's Letters from America, in Early Western Travels: Thwaites, IX, 87.) Even twenty years later Captain Marryat records: "The press in the United States is licentious to the highest possible degree, and defies control.... Every man in America reads his newspaper, and hardly any thing else." (Marryat: Diary in America, 2d Series, 56-59.)Return to passage
[457] "The Democratic presses ... have ... teemed with the most scurrilous abuse against every member of Congress who has dared to utter a syllable in favor of the renewal of the bank charter." Any member supporting the bank "is instantly charged with being bribed, ... with being corrupt, with having trampled upon the rights and liberties of the people, ... with being guilty of perjury."Return to passage
According to "the rantings of our Democratic editors ... and the denunciations of our public declaimers," the bank "exists under the form of every foul and hateful beast and bird, and creeping thing. It is an Hydra; it is a Cerberus; it is a Gorgon; it is a Vulture; it is a Viper....
"Shall we tamely act under the lash of this tyranny of the press?... I most solemnly protest.... To tyranny, under whatever form it may be exercised, I declare open and interminable war ... whether the tyrant is an irresponsible editor or a despotic Monarch." (Annals, 11th Cong. 3d Sess. 145.)
[458] Annals, 11th Cong. 3d Sess. 826.Return to passage
[459] Ib. 347.Return to passage
[460] Pitkin, 430.Return to passage
[461] Adams to Rush, Dec. 27, 1810, Old Family Letters, 272.Return to passage
[462] Sumner: Andrew Jackson, 229.Return to passage
[463] Dewey, 145.Return to passage
[464] Twenty-one State banks were employed as Government depositories after the destruction of the first Bank of the United States (Ib. 128.)Return to passage
[465] Dewey, 127.Return to passage
[466] Adams to Rush, July 3, 1812, Old Family Letters, 299.Return to passage
[467] William Faux's Journal, E. W. T.: Thwaites, XI, 207.Return to passage
[468] Speech of Hanson in the House, Nov. 28, 1814, Annals, 13th Cong. 3d Sess. 656.Return to passage
[469] Catterall: Second Bank of the United States, 13-17.Return to passage
[470] Calhoun's bill.Return to passage
[471] Webster to his brother, Nov. 29, 1814, Van Tyne, 55.Return to passage
[472] Webster's bill.Return to passage
[473] Annals, 13th Cong. 3d Sess. 189-91; Richardson, I, 555-57.Return to passage
[474] Richardson, I, 565-66. Four years afterwards President Monroe told his Secretary of State, John Quincy Adams, that Jefferson, Madison, and himself considered all Constitutional objections to the Bank as having been "settled by twenty years of practice and acquiescence under the first bank." (Memoirs, J. Q. A.: Adams, IV, 499, Jan. 8, 1820.)Return to passage
[475] Annals, 14th Cong. 1st Sess. 280-81.Return to passage
[476] Annals, 1st Cong. 2d and 3d Sess. 2375-82; and 14th Cong. 1st Sess. 1812-25; also Dewey, 150-51.Return to passage
[477] Catterall, 22.Return to passage
[478] Dewey, 144.Return to passage
[479] Sumner: Hist. Am. Currency, 70.Return to passage
[480] In November, 1818, Niles estimated that there were about four hundred banks in the country with eight thousand "managers and clerks," costing $2,000,000, annually. (Niles, XV, 162.)Return to passage
[481] "The present multitude of them ... is no more fitted to the condition of society, than a long-tailed coat becomes a sailor on ship-board." (Ib. XI, 130.)Return to passage
[482] King to his son, May 1, 1816, King, VI, 22.Return to passage
[483] King to Gore, May 14, 1816, Ib. 23-25.Return to passage
[484] Niles, XIV, 109.Return to passage
[485] Ib. XVI, 257.Return to passage
[486] Niles, XVI, 257.Return to passage
[487] Ib. XIV, 110.Return to passage
[488] Ib. 195-96.Return to passage
[489] "Niles' Weekly Register is ... an excellent repository of facts and documents." (Jefferson to Crawford, Feb. 11, 1815, Works: Ford, XI. 453.)Return to passage
[490] Niles, XIV, 426-28.Return to passage
[491] Niles, XIV, 2-3.Return to passage
[492] "Report of the Committee on the Currency of this [New York] State," Feb. 24, 1818, ib. 39-42; also partially reproduced in American History told by Contemporaries: Hart, III, 441-45.Return to passage
[493] "Report of Committee on the Currency," New York, supra, 184.Return to passage
[494] Niles, XIV, 108.Return to passage
[495] Jefferson to Yancey, Jan. 6, 1816, Works: Ford, XI, 494.Return to passage
[496] Dewey, 144; and Sumner: Hist. Am. Currency, 75.Return to passage
[497] Niles proposed a new bank to be called "THE RAGBANK OF THE UNIVERSE," main office at "Lottery-ville," and branches at "Hookstown," "Owl Creek," "Botany Bay," and "Twisters-burg." Directors were to be empowered also "to put offices on wheels, on ship-board, or in balloons"; stock to be "one thousand million of old shirts." (Niles, XIV, 227.)Return to passage
[498] Dewey, 144.Return to passage
[499] Ib. 153-54.Return to passage
[500] Flint's Letters, E. W. T.: Thwaites, IX, 136; and see "Report of the Committee on the Currency," New York, supra, 184.Return to passage
[501] Tyler: Tyler, I, 302; Niles, XI, 130.Return to passage
[502] Niles, XI, 128.Return to passage
[503] Ib. IV, 109; Collins: Historical Sketches of Kentucky, 88.Return to passage
These were in addition to the branches of the Bank of Kentucky and of the Bank of the United States. Including them, the number of chartered banks in that State was fifty-eight by the close of 1818. Of the towns where new banks were established during that year, Burksville had 106 inhabitants; Barboursville, 55; Hopkinsville, 131; Greenville, 75; thirteen others had fewer than 500 inhabitants. The "capital" of the banks in such places was never less than $100,000, but that at Glasgow, with 244 inhabitants, had a capital of $200,000, and several other villages were similarly favored. For full list see Niles, XIV, 109.
[504] Flint's Letters, E. W. T.: Thwaites, IX, 133.Return to passage
[505] Niles, XVII, 85.Return to passage
[506] John Woods's Two Years' Residence, E. W. T.: Thwaites, X, 236.Return to passage
[507] Flint's Letters, E. W. T.: Thwaites, IX, 133-34.Return to passage
[508] Ib. 136.Return to passage
[509] Niles, XIV, 162.Return to passage
[510] Woods's Two Years' Residence, E. W. T.: Thwaites, X, 274-78: and Flint's Letters, ib. IX, 69.Return to passage
In southwestern Indiana, in 1818, Faux "saw nothing ... but miserable log holes, and a mean ville of eight or ten huts or cabins, sadly neglected farms, and indolent, dirty, sickly, wild-looking inhabitants." (Faux's Journal, Nov. 1, 1818, ib. XI, 213-14.) He describes Kentucky houses as "miserable holes, having one room only," where "all cook, eat, sleep, breed, and die, males and females, all together." (Ib. 185, and see 202.)
[511] For shocking and almost unbelievable conditions of living among the settlers see Faux's Journal, E. W. T.: Thwaites, XI, 226, 231, 252-53, 268-69.Return to passage
[512] "We landed for some whiskey; for our men would do nothing without." (Woods's Two Years' Residence, ib. X, 245, 317.) "Excessive drinking seems the all-pervading, easily-besetting sin." (Faux's Journal, Nov. 3, 1818, ib. XI, 213.) This continued for many years and was as marked in the East as in the West. (See Marryat, 2d Series, 37-41.)Return to passage
There was, however, a large and ever-increasing number who hearkened to those wonderful men, the circuit-riding preachers, who did so much to build up moral and religious America. Most people belonged to some church, and at the camp meetings and revivals, multitudes received conviction.
The student should carefully read the Autobiography of Peter Cartwright, edited by W. P. Strickland. This book is an invaluable historical source and is highly interesting. See also Schermerhorn and Mills: A Correct View of that part of the United States which lies west of the Allegany Mountains, with regard to Religion and Morals. Great Revival in the West, by Catharine C. Cleveland, is a careful and trustworthy account of religious conditions before the War of 1812. It has a complete bibliography.
[513] Flint's Letters, E. W. T.: Thwaites, 153; also Schermerhorn and Mills, 17-18.Return to passage
[514] "Nature is the agriculturist here [near Princeton, Ind.]; speculation instead of cultivation, is the order of the day amongst men." (Thomas Hulme's Journal, E. W. T.: Thwaites, X, 62; see Faux's Journal, ib. XI, 227.)Return to passage
[515] Faux's Journal, ib. 216, 236, 242-43.Return to passage
[516] Ib. 214.Return to passage
[517] See vol. I, chap, VII, of this work.Return to passage
[518] Flint's Letters, E. W. T.: Thwaites, IX, 87; Woods's Two Years Residence, ib. X, 255. "I saw a man this day ... his nose bitten off close down to its root, in a fight with a nose-loving neighbour." (Faux's Journal, ib. XI, 222; and see Strickland, 24-25.)Return to passage
[519] The reports of American conditions by British travelers, although from unsympathetic pens and much exaggerated, were substantially true. Thus Europe, and especially the United Kingdom, conceived for Americans that profound contempt which was to endure for generations.Return to passage
"Such is the land of Jonathan," declared the Edinburgh Review in an analysis in 1820 (XXXIII, 78-80) of a book entitled Statistical Annals of the United States, by Adam Seybert. "He must not ... allow himself to be dazzled by that galaxy of epithets by which his orators and newspaper scribblers endeavour to persuade their supporters that they are the greatest, the most refined, the most enlightened, and the most moral people upon earth.... They have hitherto given no indications of genius, and made no approaches to the heroic, either in their morality or character....
"During the thirty or forty years of their independence, they have done absolutely nothing for the Sciences, for the Arts, for Literature, or even for statesman-like studies of Politics or Political Economy.... In the four quarters of the globe, who reads an American book? or goes to an American play? or looks at an American picture or statue? What does the world yet owe to American physicians or surgeons? What new substances have their chemists discovered? or what old ones have they analyzed? What new constellations have been discovered by the telescopes of Americans?--what have they done in the mathematics...? under which of the old tyrannical governments of Europe is every sixth man a Slave, whom his fellow-creatures may buy and sell and torture?"
[520] Nevertheless, these very settlers had qualities of sound, clean citizenship; and beneath their roughness and crudity were noble aspirations. For a sympathetic and scholarly treatment of this phase of the subject see Pease: Frontier State, I, 69.Return to passage
[521] Faux's Journal, E. W. T.: Thwaites, XI, 246.Return to passage
[522] Randolph to Quincy, Aug. 16, 1812, Quincy: Quincy, 270.Return to passage
[523] Marryat, 2d Series, 1.Return to passage
[524] See vol. I, chap, VII, of this work.Return to passage
[525] Marryat, 1st Series, 15.Return to passage
[526] Marryat, 2d Series, 176.Return to passage
[527] Woods's Two Years' Residence, E. W. T.: Thwaites, X, 325.Return to passage
[528] Niles, XIV, 2.Return to passage
[529] See McMaster, IV, 287. This continued even after the people had at last become suspicious of unlicensed banks. In 1820, at Bloomington, Ohio, a hamlet of "ten houses ... in the edge of the prairie ... a [bank] company was formed, plates engraved, and the bank notes brought to the spot." Failing to secure a charter, the adventurers sold their outfit at auction, fictitious names were signed to the notes, which were then put into fraudulent circulation. (Flint's Letters, E. W. T.: Thwaites, IX, 310.)Return to passage
[530] Ib. 130-31.Return to passage
[531] Faux's Journal, Oct. 11, 1818, E. W. T.: Thwaites, XI, 171. Faux says that even in Cincinnati itself the bank bills of that town could be exchanged at stores "only 30 or 40 per centum below par, or United States' paper."Return to passage
[532] Flint's Letters, E. W. T. Thwaites, IX, 132-36.Return to passage
[533] In Baltimore Cohens's "lottery and exchange office" issued a list of nearly seventy banks, with rates of prices on their notes. The circular gave notice that the quotations were good for one day only. (Niles, XIV, 396.) At the same time G. & R. Waite, with offices in New York, Philadelphia, and Baltimore, issued a list covering the country from Connecticut to Ohio and Kentucky. (Ib. 415.) The rates as given by this firm differed greatly from those published by Cohens.Return to passage
[534] Ib. X, 80.Return to passage
[535] Sumner: Jackson, 229.Return to passage
[536] Flint's Letters, E. W. T.: Thwaites, IX, 219.Return to passage
[537] Niles, XV, 60.Return to passage
[538] Niles, XIV, 193-96; also XV, 434.Return to passage
[539] Ib. XVII, 164.Return to passage
[540] Ib. XIV, 108.Return to passage
[541] A wealthy Richmond merchant who had married a sister of Marshall's wife. (See vol. II, 172, of this work.)Return to passage
[542] A writ directing the sheriff to seize the goods and chattels of a person to compel him to satisfy an obligation. Bouvier (Rawle's ed.) I, 590.Return to passage
[543] Richmond Enquirer, Jan. 16, 1816.Return to passage
What was the outcome of this incident does not appear. Professor Sumner says that the bank was closed for a few days, but soon opened and went on with its business. (Sumner: Hist. Am. Currency, 74-75.) Sumner fixes the date in 1817, two years after the event.
[544] Niles, XIV, 281.Return to passage
[545] Ib. 314-15.Return to passage
[546] Ib. 333; and for similar cases, see ib. 356, 396-97, 428-30. All these accounts were taken from newspapers at the places where criminals were captured.Return to passage
[547] Niles, XIV, 428.Return to passage
[548] Ib. XVI, 147-48; also, ib. 360, 373, 390.Return to passage
[549] Ib. 179.Return to passage
[550] Ib. 210.Return to passage
[551] Ib. 208.Return to passage
[552] Ib. 210.Return to passage
[553] See Catterall, 39-50.Return to passage
[554] The frauds of the directors and officers of the Bank of the United States were used, however, as the pretext for an effort to repeal its charter. On Feb. 9, 1819, James Johnson of Virginia introduced a resolution for that purpose. (Annals, 15th Cong. 2d Sess. III, 1140-42.)Return to passage
[555] See Catterall, 32.Return to passage
[556] New Castle County.Return to passage
[557] Niles, XV, 162.Return to passage
[558] Ib. 59.Return to passage
[559] Ib. 418.Return to passage
[560] Flint's Letters, E.W.T.: Thwaites, IX, 226.Return to passage
[561] They, too, asserted that institution to be the author of their woes, (Niles, XVII, 2.)Return to passage
[562] Catterall, 33-37.Return to passage
[563] Ib. 51-53; and see Niles, XV, 25.Return to passage
[564] Catterall, 33.Return to passage
[565] Monster, Hydra, Cerberus, Octopus, and names of similar import were popularly applied to the Bank of the United States. (See Crawford's speech, supra, 175.)Return to passage
[566] Niles, XV, 5.Return to passage
[567] Act of April 3, 1811, Laws of New York, 1811, 205-21.Return to passage
[568] Niles, XVI, 257.Return to passage
[569] Ib.Return to passage
[570] Ib. XVII, 147.Return to passage
[571] "I have known several to calculate upon the 'relief' from them, just as they would do on an accommodation at bank, or on the payment of debts due to them! If we succeed in such and such a thing, say they--very well; if not, we can get the benefit of the insolvent laws.... Where one prudent and honest man applies for such benefit, one hundred rogues are facilitated in their depredations." (Niles, XVII, 115.)Return to passage
[572] Ib.Return to passage
[573] Ib. XV, 283.Return to passage
[574] The bankruptcy law which Marshall had helped to draw when in Congress (see vol. II, 481-82, of this work) had been repealed in 1803. (Annals, 8th Cong. 1st Sess. 215, 625, 631. For reasons for the repeal see ib. 616-22.)Return to passage
[575] Annals, 16th Cong. 1st Sess. 505.Return to passage
[576] Ib. 513.Return to passage
[577] Ib. 517-18.Return to passage
[578] Flint's Letters, E.W.T.: Thwaites, IX, 225.Return to passage
In reviewing Sketches of America by Henry Bradshaw Fearon, an Englishman who traveled through the United States, the Quarterly Review of London scathingly denounced the frauds perpetrated by means of insolvent laws. (Quarterly Review, XXI, 165.)
[579] None of these letters to Marshall have been preserved. Indeed, only a scant half-dozen of the original great number of letters written him even by prominent men during his long life are in existence. For those of men like Story and Pickering we are indebted to copies preserved in their papers.Return to passage
Marshall, at best, was incredibly negligent of his correspondence as he was of all other ordinary details of life. Most other important men of the time kept copies of their letters; Marshall kept none; and if he preserved those written to him, nearly all of them have disappeared.
[580] Niles, XV, 385.Return to passage
[581] Ib.Return to passage
[582] Ib. XVI, 261.Return to passage
[583] Ib. XVII, 85.Return to passage
[584] Jefferson to Adams, Nov. 7, 1819, Works: Ford, XII, 145.Return to passage
[585] Niles, XVII, 85.Return to passage
[586] Niles, XVII, 185.Return to passage
[587] Memoirs, J. Q. A.: Adams, May 27, 1819, IV, 375.Return to passage
[588] Ib. 391.Return to passage
[589] Collins, 88.Return to passage
[590] "The disappointment is altogether ascribed to the Bank of the U.S." (King to Mason, Feb. 7, 1819, King, VI, 205.) King's testimony is uncommonly trustworthy. His son was an officer of the branch of Chillicothe, Ohio.Return to passage
[591] See Article X, Section 1, Constitution of Indiana, as adopted June 29, 1816.Return to passage
[592] See Catterall, 64-65, and sources there cited.Return to passage
[593] Spelled Sturgis on the manuscript records of the Supreme Court.Return to passage
[594] 4 Wheaton, 192.Return to passage
[595] 4 Wheaton, 192-93.Return to passage
[596] 4 Wheaton, 194.Return to passage
[597] Ib. 195.Return to passage
[598] 4 Wheaton, 196.Return to passage
[599] "No State shall ... emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; pass any ... ex post facto Law, or Law impairing the Obligation of Contracts."Return to passage
[600] 4 Wheaton, 196-97.Return to passage
[601] For the proceedings in the Constitutional Convention on this clause, see vol. III, chap. X, of this work.Return to passage
[602] 4 Wheaton, 197.Return to passage
[603] Ib. 197-98.Return to passage
[604] 4 Wheaton, 198.Return to passage
[605] 4 Wheaton, 199.Return to passage
[606] Ib. 200.Return to passage
[607] 4 Wheaton, 200-01.Return to passage
[608] 4 Wheaton, 202.Return to passage
[609] Ib. 203-04.Return to passage
[610] 4 Wheaton, 205.Return to passage
[611] Ib. 206.Return to passage
[612] Niles, XVI, 76.Return to passage
[613] "It will probably, make some great revolutions in property, and raise up many from penury ... and cause others to descend to the condition that becomes honest men, by compelling a payment of their debts--as every honest man ought to be compelled to do, if ever able.... It ought not to be at any one's discretion to say when, or under what convenient circumstances, he will wipe off his debts, by the benefit of an insolvent law--as some do every two or three years; or, just as often as they can get credit enough to make any thing by it." (Niles, XVI, 2.)Return to passage
[614] See infra, next chapter.Return to passage
V. THE DARTMOUTH COLLEGE CASE
Such a contract, in relation to a publick institution would be absurd and contrary to the principles of all governments. (Chief Justice William M. Richardson.)
It would seem as if the state legislatures have an invincible hostility to the sacredness of charters. (Marshall.)
Perhaps no judicial proceedings in this country ever involved more important consequences. (North American Review, 1820.)
It is the legitimate business of government to see that contracts are fulfilled, that charters are kept inviolate, and the foundations of human confidence not rudely or wantonly disturbed. (John Fiske.)
Just before Marshall delivered his opinion in Sturges vs. Crowninshield, he gave to the Nation another state paper which profoundly influenced the development of the United States. It was one of the trilogy of Constitutional expositions which make historic the February term, 1819, of the Supreme Court of the United States. This pronouncement, like that in the bankruptcy case, had to do with the stability of contract. Both were avowals that State Legislatures cannot, on any pretext, overthrow agreements, whether in the form of engagements between individuals or franchises to corporations. Both were meant to check the epidemic of repudiatory legislation which for three years had been sweeping over the land and was increasing in virulence at the time when Marshall prepared them. The Dartmouth opinion was wholly written in Virginia during the summer, autumn, or winter of 1818; and it is probable that the greater part of the opinion in Sturges vs. Crowninshield was also prepared when the Chief Justice was at home or on his vacation.
Marshall's economic and political views, formed as a young man,[615] had been strengthened by every event that had since occurred until, in his sixty-fifth year, those early ideas had become convictions so deep as to pervade his very being. The sacredness of contract, the stability of institutions, and, above all, Nationalism in government, were, to John Marshall, articles of a creed as holy as any that ever inspired a religious enthusiast.
His opinion of contract had already been expressed by him not only in the sensational case of Fletcher vs. Peck,[616] but far more rigidly two years later, 1812, in the important case of the State of New Jersey vs. Wilson.[617] In 1758, the Proprietary Government of New Jersey agreed to purchase a tract of land for a band of Delaware Indians, provided that the Indians would surrender their title to all other lands claimed by them in New Jersey. The Indians agreed and the contract was embodied in an act of the Legislature, which further provided that the lands purchased for the Indians should "not hereafter be subject to any tax, any law, usage or custom to the contrary thereof, in any wise notwithstanding."[618] The contract was then executed, the State purchasing lands for the Indians and the latter relinquishing the lands claimed by them.
After forty years the Indians, wishing to join other Delawares in New York, asked the State of New Jersey to authorize the sale of their lands. This was done by an act of the Legislature, and the lands were sold. Soon after this, another act was passed which repealed that part of the Act of 1758 exempting the lands from taxation. Accordingly the lands were assessed and payment of the tax demanded. The purchasers resisted and, the Supreme Court of New Jersey having held valid the repealing act, took the case to the Supreme Court of the United States.
In a brief opinion, in which it is worthy of particular note that the Supreme Court was unanimous, Marshall says that the Constitution protects "contracts to which a state is a party, as well as ... contracts between individuals.... The proceedings [of 1758] between the then colony ... and the Indians ... is certainly a contract clothed in forms of unusual solemnity." The exemption of the lands from taxation, "though for the benefit of the Indians, is annexed, by the terms which create it, to the land itself, not to their persons." This element of the contract was valuable to the Indians, since, "in the event of a sale, on which alone the question could become material, the value [of the lands] would be enhanced" by the exemption.
New Jersey "might have insisted on a surrender of this privilege as the sole condition on which a sale of the property should be allowed"; but this had not been done and the land was sold "with the assent of the state, with all its privileges and immunities. The purchaser succeeds, with the assent of the state, to all the rights of the Indians. He stands, with respect to this land, in their place, and claims the benefit of their contract. This contract is certainly impaired by a law which would annul this essential part of it."[619]
After his opinions in Fletcher vs. Peck and in New Jersey vs. Wilson, nobody could have expected from John Marshall any other action than the one he took in the Dartmouth College case.[620]
The origins of the Dartmouth controversy are tangled and obscure. When on December 23, 1765, a little ocean-going craft, of which a New England John Marshall[621] was skipper, set sail from Boston Harbor for England with Nathaniel Whitaker and Samson Occom on board,[622] a succession of curious events began which, two generations afterward, terminated in one of the most influential decisions ever rendered by a court. Whitaker was a preacher and a disciple of George Whitefield; Occom was a young Indian, converted to Christianity by one Eleazar Wheelock, and endowed with uncommon powers of oratory.
Wheelock had built up a wilderness school to which were admitted Indian youth, in whom he became increasingly interested. Occom was one product of his labors, and Wheelock sent him to England as a living, speaking illustration of what his school could do if given financial support. Whitaker went with the devout and talented Indian as the business agent.[623]
Their mission was to raise funds for the prosecution of this educational and missionary work on the American frontier. They succeeded in a manner almost miraculous. Over eleven thousand pounds were soon raised,[624] and this fund was placed under the control of the Trustees, at the head of whom was the Earl of Dartmouth, one of the principal donors.[625] From this circumstance the name of this nobleman was given to Wheelock's institution.
On December 13, 1769, John Wentworth, Royal Governor of the Province of New Hampshire, granted to Wheelock a charter for his school. It was, of course, in the name of the sovereign, but it is improbable that George III ever heard of it.[626] This charter sets forth the successful efforts of Wheelock, "at his own expense, on his own estate," to establish a charity school for Indian as well as white youth, in order to spread "the knowledge of the great Redeemer among their savage tribes"; the contributions to the cause; the trust, headed by Dartmouth--and all the other facts concerning Wheelock's adventure. Because of these facts the charter establishes "DARTMOUTH COLLEGE" for the education of Indians, to be governed by "one body corporate and politick, ... by the name of the TRUSTEES OF DARTMOUTH COLLEGE."
These Trustees are constituted "forever hereafter ... in deed, act, and name a body corporate and politick," and are empowered to buy, receive, and hold lands, "jurisdictions, and franchises, for themselves and their successors, in fee simple, or otherwise howsoever." In short, the Trustees are authorized to do anything and everything that they may think proper. Wheelock is made President of the College, and given power to "appoint, ... by his last will" whomever he chooses to succeed himself as President of the College.
The charter grants to the Trustees and to "their successors forever," or "the major part of any seven or more of them convened," the power to remove and choose a President of the College, and to fill any vacancy in the Board of Trustees occasioned by death, or "removal," or any other cause. All this is to be done if seven Trustees, or a majority of seven, are present at any meeting. Also this majority of seven of the twelve Trustees, if no more attend a meeting, are authorized to make all laws, rules, and regulations for the College. Other powers are granted, all of which the Trustees and their successors are "to have and to hold ... forever."[627] Under this charter, Dartmouth College was established and, for nearly half a century, governed and managed.
Eleazar Wheelock died in 1779, when sixty-eight years of age.[628] By his will he made his son John his successor as President of the College.[629] This young man, then but twenty-five years of age, was a Colonel of the Revolutionary Army.[630] He hesitated to accept the management of the institution, but the Trustees finally prevailed upon him to do so.[631] The son was as strong-willed and energetic as the father, and gave himself vigorously to the work to which he had thus been called.
Within four years troubles began to gather about the College. They came from sources as strange as human nature itself, and mingled at last into a compound of animosities, prejudices, ambitions, jealousies, as curious as any aggregation of passions ever arranged by the most extravagant novelist. It is possible here to mention but briefly only a few of the circumstances by which the famous Dartmouth quarrel may be traced. A woman, one Rachel Murch, complained to the church at Hanover, where Dartmouth College was situated, that a brother of the congregation, one Samuel Haze, had said of her, among other things, that her "character was ... as black as Hell."[632] This incident grew into a sectarian warfare that, by the most illogical and human processes, eventuated in arraigning the Congregationalists, or "established" Church, on one side and all other denominations on the other.[633]
Into this religious quarrel the economic issue entered, as it always does. The property of ministers of the "standing order," or "State religion," was exempt from taxation while that of other preachers was not.[634] Another source of discord arose out of the question as to whether the College Professor of Theology should preach in the village church. Coincident with this grave problem were subsidiary ones concerning the attendance of students at village worship and the benches they were to occupy. The fates threw still another ingredient of trouble into the cauldron. This was the election in 1793, as one of the Trustees, of Nathaniel Niles, whom Jefferson, with characteristic exuberance of expression, once declared to be "the ablest man I ever knew."[635]
Although a lawyer by profession, Niles had taken a course in theology when a student, his instructor being a Dr. Joseph Bellamy. Both the elder Wheelock and Bellamy had graduated from Yale and had indulged in some bitter sectarian quarrels, Bellamy as a Congregationalist and Wheelock as a Presbyterian. From tutor and parent, Niles and the younger Wheelock inherited this religious antagonism. Moreover, they were as antipathetic by nature as they were bold, uncompromising, and dominant. Niles eventually acquired superior influence over his fellow Trustees, and thereafter no friend of President Wheelock was elected to the Board.[636]
An implacable feud arose. Wheelock asked the Legislature to appoint a committee to investigate the conduct of the College. This further angered the Trustees. By this time the warfare in the one college in the State had aroused the interest of the people of New Hampshire and, indeed, of all New England, and they were beginning to take sides. This process was hastened by a furious battle of pamphlets which broke out in 1815. This logomachy of vituperation was opened by President Wheelock who wrote an unsigned attack upon the Trustees.[637] Another pamphlet followed immediately in support of that of Wheelock.[638]
The Trustees quickly answered by means of two pamphlets.[639] The Wheelock faction instantly replied.[640] With the animosity and diligence of political, religious, and personal enemies, the adherents of the hostile factions circulated these pamphlets among the people, who became greatly excited. On August 26, 1815, the Trustees removed Wheelock from the office of President,[641] and thereby increased the public agitation. Two days after Wheelock's removal, the Trustees elected as his successor the Reverend Francis Brown of Yarmouth, Maine.[642]
During these years of increasing dissension, political parties were gradually drawn into the controversy; at the climax of it, the Federalists found themselves supporting the cause of the Trustees and the Republicans that of Wheelock. In a general, and yet quite definite, way the issue shaped itself into the maintenance of chartered rights and the established religious order, as against reform in college management and equality of religious sects. Into this issue was woven a contest over the State Judiciary. The Judiciary laws of New Hampshire were confused and inadequate and the courts had fallen in dignity. During the Republican control of the State, Republicans had been appointed to all judicial positions.[643] When, in 1813, the Federalists recovered supremacy, they, in turn, enacted a statute, the effect of which was the ousting of the Republican judges and the appointment of Federalists in their stead.[644] The Republicans made loud and savage outcry against this Federalist "outrage."
Upon questions so absurdly incongruous a political campaign raged throughout New Hampshire during the autumn and winter of 1815. In March, 1816, the Republicans elected William Plumer Governor,[645] and a Republican majority was sent to the Legislature.[646] Bills for the reform of the Judiciary[647] and the management of Dartmouth College[648] were introduced. That relating to Dartmouth changed the name of the College to "Dartmouth University," increased the number of Trustees from twelve to twenty-one, provided for a Board of twenty-five Overseers with a veto power over acts of the Trustees, and directed the President of the "University" to report annually to the Governor of the State upon the management and conditions of the institution. The Governor and Council of State were empowered to appoint the Overseers; to fill up the existing Board of Trustees to the number of twenty-one; and authorized to inspect the "University" and report to the Legislature concerning it at least once in every five years.[649] In effect the act annulled the charter and brought the College under the control of the Legislature.
The bitterness occasioned by the passage of this legislation was intense. Seventy-five members of the House entered upon the Journal their formal and emphatic protest.[650] The old Trustees adopted elaborate resolutions, declining to accept the provisions of the law and assigning many reasons for their action. Among their criticisms of the act, the fact that it violated the contract clause of the National Constitution was mentioned almost incidentally. In summing up their argument, the Trustees declared that "if the act ... has its intended operation and effect, every literary institution in the State will hereafter hold its rights, privileges and property, not according to the settled established principles of law, but according to the arbitrary will and pleasure of every successive Legislature."[651]
In later resolutions the old Trustees declined to accept the provisions of the law, "but do hereby expressly refuse to act under the same."[652] The Governor and Council promptly appointed Trustees and Overseers of the new University; among the latter was Joseph Story. The old Trustees were defiant and continued to run the College. When the winter session of the Legislature met, Governor Plumer sharply denounced their action;[653] and two laws were passed for the enforcement of the College Acts, the second of which provided that any person assuming to act as trustee or officer of the College, except as provided by law, should be fined $500 for each offense.[654]
The Trustees of the University "removed" the old Trustees of the College and the President, and the professors who adhered to them.[655] Each side took its case to the people.[656] The new régime ousted the old faculty from the College buildings and the faculty of the University were installed in them. Wheelock was elected President of the State institution.[657] The College faculty procured quarters in Rowley Hall near by, and there continued their work, the students mostly adhering to them.[658]
The College Trustees took great pains to get the opinion of the best lawyers throughout New Hampshire,[659] as well as the advice of their immediate counsel, Jeremiah Mason, Jeremiah Smith, and Daniel Webster, the three ablest members of the New England bar, all three of them accomplished politicians.[660]
William H. Woodward, who for years had been Secretary and Treasurer of the College, had in his possession the records, account books, and seal. As one of the Wheelock faction he declined to recognize the College Trustees and acted with the Board of the University. The College Trustees removed him from his official position on the College Board;[661] and on February 8, 1817, brought suit against him in the Court of Common Pleas of Grafton County for the recovery of the original charter, the books of record and account, and the common seal--all of the value of $50,000. By the consent of the parties the case was taken directly before the Superior Court of Appeals, and was argued upon an agreed state of facts returned by the jury in the form of a special verdict.[662]
There were two arguments in the Court of Appeals, the first during May and the second during September, 1817. The court consisted of William M. Richardson, Chief Justice, and Samuel Bell and Levi Woodbury, Associate Justices, all Republicans appointed by Governor Plumer.
Mason, Smith, and Webster made uncommonly able and learned arguments. The University was represented by George Sullivan and Ichabod Bartlett, who, while good lawyers, were no match for the legal triumvirate that appeared for the College.[663] The principle upon which Marshall finally overthrew the New Hampshire law was given a minor place[664] in the plans as well as in the arguments of Webster, Mason, and Smith.
The Superior Court of Appeals decided against the College. The opinion, delivered by Chief Justice Richardson, is able and persuasive. "A corporation, all of whose franchises are exercised for publick purposes, is a publick corporation"--a gift to such a corporation "is in reality a gift to the publick."[665] The corporation of Dartmouth College is therefore public. "Who has any private interest either in the objects or the property of this institution?" If all its "property ... were destroyed, the loss would be exclusively publick." The Trustees, as individuals, would lose nothing. "The office of trustee of Dartmouth College is, in fact, a publick trust, as much so as the office of governor, or of judge of this court."[666]
No provision in the State or National Constitution prevents the control of the College by the Legislature. The Constitutional provisions cited by counsel for the College[667] "were, most manifestly, intended to protect private rights only."[668] No court has ever yet decided that such a charter as that of Dartmouth College is in violation of the contract clause of the National Constitution, which "was obviously intended to protect private rights of property, and embraces all contracts relating to private property." This clause "was not intended to limit the power of the states" over their officers or "their own civil institutions";[669] otherwise divorce laws would be void. So would acts repealing or modifying laws under which the judges, sheriffs, and other officers were appointed.
Even if the royal charter is a contract, it does not, cannot forever, prevent the Legislature from modifying it for the general good (as, for instance, by increasing the number of trustees) "however strongly the publick interest might require" this to be done. "Such a contract, in relation to a publick institution, would ... be absurd and repugnant to the principles of all government. The king had no power to make such a contract," and neither has the Legislature. If the act of June 27 had provided that "the twenty-one trustees should forever have the exclusive controul of this institution, and that no future legislature should add to their number," it would be as invalid as an act that the "number of judges of this court should never be augmented."[670]
It is against "sound policy," Richardson affirmed, to place the great institutions of learning "within the absolute controul of a few individuals, and out of the controul of the sovereign power.... It is a matter of too great moment, too intimately connected with the publick welfare and prosperity, to be thus entrusted in the hands of a few."[671] So the New Hampshire court adjudged that the College Acts were valid and binding upon the old Trustees "without acceptance thereof, or assent thereto by them." And the court specifically declared that such legislation was "not repugnant to the constitution of the United States."[672]
Immediately the case was taken to the Supreme Court by writ of error, which assigned the violation of the National Constitution by the College Acts as the ground of appeal.[673] On March 10, 1818, Webster opened the argument before a full bench.[674] Only a few auditors were present, and these were lawyers[675] who were in Washington to argue other cases.[676] Stirred as New Hampshire and the New England States were by the College controversy, the remainder of the country appears to have taken no interest in it. Indeed, west and south of the Hudson, the people seem to have known nothing of the quarrel. The Capital was either ignorant or indifferent. Moreover, Webster had not, as yet, made that great reputation, in Washington, as a lawyer as well as an orator which, later, became his peculiar crown of glory. At any rate, the public was not drawn to the court-room on that occasion.[677]
The argument was one of the shortest ever made in a notable case before the Supreme Court during the twenty-eight years of its existence up to this time. Not three full days were consumed by counsel on both sides--a space of time frequently occupied by a single speaker in hearings of important causes.[678]
In talents, bearing, and preparation the attorneys for the College were as much superior to those for the University as, in the Chase impeachment trial, the counsel for the defense were stronger than the House managers.[679] Indeed, the similarity of the arguments in the Chase trial and in the Dartmouth case, in respect to the strength and preparation of opposing counsel, is notable; and in both cases the victory came to the side having the abler and better-prepared advocates. With Webster for the College was Joseph Hopkinson of Philadelphia, who had so distinguished himself in the Chase trial exactly thirteen years earlier. Hopkinson was now in his forty-ninth year, the unrivaled leader of the Philadelphia bar and one of the most accomplished of American lawyers.[680]
It would seem incredible that sensible men could have selected such counsel to argue serious questions before any court as those who represented the University in this vitally important controversy. The obvious explanation is that the State officials and the University Trustees were so certain of winning that they did not consider the employment of powerful and expensive attorneys to be necessary.[681] In fact, the belief was general that the contest was practically over and that the appeal of the College to the Supreme Court was the pursuit of a feeble and forlorn hope.
Even after his powerful and impressive argument in the Supreme Court, Webster declared that he had never allowed himself "to indulge any great hopes of success."[682] It was not unnatural, then, that the State and the University should neglect to employ adequate counsel.
John Holmes, a Representative in Congress from that part of Massachusetts which afterward became the State of Maine, appeared for the University. He was notoriously unfitted to argue a legal question of any weight in any court. He was a busy, agile, talkative politician of the roustabout, hail-fellow-well-met variety, "a power-on-the-stump" orator, gifted with cheap wit and tawdry eloquence.[683]
Associated with Holmes was William Wirt, recently appointed Attorney-General. At that particular time Wirt was all but crushed by overwork, and without either leisure or strength to master the case and prepare an argument.[684] Never in Wirt's life did he appear in any case so poorly equipped as he was in the Dartmouth controversy.[685]
Webster's address was a combination of the arguments made by Mason and Smith in the New Hampshire court. Although the only question before the Supreme Court was whether the College Acts violated the contract clause of the Constitution, Webster gave comparatively scant attention to it; or, perhaps it might be said that most of his argument was devoted to laying the foundation for his brief reasoning on the main question. In laying this foundation, Webster cleverly brought before the court his version of the history of the College, the situation in New Hampshire, the plight of institutions like Dartmouth, if the College Acts were permitted to stand.
The facts were, said Webster, that Wheelock had founded a private charity; that, to perpetuate this, the charter created a corporation by the name of "The Trustees of Dartmouth College," with the powers, privileges, immunities, and limitations set forth in the charter. That instrument provided for no public funds, but only for the perpetuation and convenient management of the private charity. For nearly half a century the College "thus created had existed, uninterruptedly, and usefully." Then its happy and prosperous career was broken by the rude and despoiling hands of the Legislature of the State which the College had so blessed by the education of New Hampshire youth.
What has the Legislature done to the College? It has created a new corporation and transferred to it "all the property, rights, powers, liberties and privileges of the old corporation." The spirit and the letter of the charter were wholly changed by the College Acts.[686] Moreover, the old Trustees "are to be punished" for not accepting these revolutionary laws. A single fact reveals the confiscatory nature of these statutes: Under the charter the president, professors, and tutors of the College had a right to their places and salaries, "subject to the twelve trustees alone"; the College Acts change all this and make the faculty "accountable to new masters."
If the Legislature can make such alterations, it can abolish the charter "rights and privileges altogether." In short, if this legislation is sustained, the old Trustees "have no rights, liberties, franchises, property or privileges, which the legislature may not revoke, annul, alienate or transfer to others whenever it sees fit." Such acts are against "common right" as well as violations of the State and National Constitutions.[687]
Although, says Webster, nothing is before the court but the single question of the violation of the National Constitution, he will compare the New Hampshire laws with "fundamental principles" in order that the court may see "their true nature and character." Regardless of written constitutions, "these acts are not the exercise of a power properly legislative." They take away "vested rights"; but this involves a "forfeiture ... to ... declare which is the proper province of the judiciary."[688] Dartmouth College is not a civil but "an eleemosynary corporation," a "private charity"; and, as such, not subject to the control of public authorities.[689] Does Dartmouth College stand alone in this respect? No! Practically all American institutions of learning have been "established ... by incorporating governours, or trustees.... All such corporations are ... in the strictest legal sense a private charity." Even Harvard has not "any surer title than Dartmouth College. It may, to-day, have more friends; but to-morrow it may have more enemies. Its legal rights are the same. So also of Yale College; and indeed of all others."[690]
From the time of Magna Charta the privilege of being a member of such eleemosynary corporations "has been the object of legal protection." To contend that this privilege may be "taken away," because the Trustees derive no "pecuniary benefit" from it, is "an extremely narrow view." As well say that if the charter had provided that each Trustee should be given a "commission on the disbursement of the funds," his status and the nature of the corporation would have been changed from public to private. Are the rights of the Trustees any the less sacred "because they have undertaken to administer it [the trust] gratuitously?... As if the law regarded no rights but the rights of money, and of visible tangible property!"[691]
The doctrine that all property "of which the use may be beneficial to the publick, belongs therefore to the publick," is without principle or precedent. In this very matter of Dartmouth College, Wheelock might well have "conveyed his property to trustees, for precisely such uses as are described in this charter"--yet nobody would contend that any Legislature could overthrow such a private act. "Who ever appointed a legislature to administer his charity? Or who ever heard, before, that a gift to a college, or hospital, or an asylum, was, in reality, nothing but a gift to the state?"[692]
Vermont has given lands to the College; was this a gift to New Hampshire? "What hinders Vermont ... from resuming her grants," upon the ground that she, equally with New Hampshire, is "the representative of the publick?" In 1794, Vermont had "granted to the respective towns in that state, certain glebe lands lying within those towns for the sole use and support of religious worship." Five years later, the Legislature of that State repealed this grant; "but this court declared[693] that the act of 1794, 'so far as it granted the glebes to the towns, could not afterwards be repealed by the legislature, so as to divest the rights of the towns under the grant.'"[694]
So with the Trustees of Dartmouth College. The property entrusted to them was "private property"; and the right to "administer the funds, and ... govern the college was a franchise and privilege, solemnly granted to them," which no Legislature can annul. "The use being publick in no way diminishes their legal estate in the property, or their title to the franchise." Since "the acts in question violate property, ... take away privileges, immunities, and franchises, ... deny to the trustees the protection of the law," and "are retrospective in their operation," they are, in all respects, "against the constitution of New Hampshire."[695]
It will be perceived by now that Webster relied chiefly on abstract justice. His main point was that, if chartered rights could be interfered with at all, such action was inherently beyond the power of the Legislature, and belonged exclusively to the Judiciary. In this Webster was rigidly following Smith and Mason, neither of whom depended on the violation of the contract clause of the National Constitution any more than did Webster.
Well did Webster know that the Supreme Court of the United States could not consider the violation of a State constitution by a State law. He merely indulged in a device of argument to bring before Marshall and the Associate Justices those "fundamental principles," old as Magna Charta, and embalmed in the State Constitution, which protect private property from confiscation.[696] Toward the close of his argument, Webster discusses the infraction of the National Constitution by the New Hampshire College Acts, a violation the charge of which alone gave the Supreme Court jurisdiction over the case.
What, asks Webster, is the meaning of the words, "no state shall pass any ... law impairing the obligation of contracts"? Madison, in the Federalist, clearly states that such laws "'are contrary to the first principles of the social compact, and to every principle of sound legislation.'" But this is not enough. "Our own experience," continues Madison, "has taught us ... that additional fences" should be erected against spoliations of "personal security and private rights." This was the reason for inserting the contract clause in the National Constitution--a provision much desired by the "sober people of America," who had grown "weary of the fluctuating policy" of the State Governments and beheld with anger "that sudden changes, and legislative interferences in cases affecting personal rights, become jobs in the hands of enterprising and influential speculators." These, said Webster, were the words of James Madison in Number 44 of the Federalist.
High as such authority is, one still more exalted and final has spoken, and upon the precise point now in controversy. That authority is the Supreme Court itself. In Fletcher vs. Peck[697] this very tribunal declared specifically that "a grant is a contract, within the meaning of this provision; and that a grant by a state is also a contract, as much as the grant of an individual."[698] This court went even further when, in New Jersey vs. Wilson,[699] it decided that "a grant by a state before the revolution is as much to be protected as a grant since."[700] The principle announced in these decisions was not new, even in America. Even before Fletcher vs. Peck and New Jersey vs. Wilson, this court denied[701] that a Legislature "can repeal statutes creating private corporations, or confirming to them property already acquired under the faith of previous laws, and by such repeal can vest the property of such corporations exclusively in the state, or dispose of the same to such purposes as they please, without the consent or default of the corporators ...; and we think ourselves standing upon the principles of natural justice, upon the fundamental laws of every free government, upon the spirit and letter of the constitution of the United States, and upon the decisions of the most respectable judicial tribunals, in resisting such a doctrine."[702]
From the beginning of our Government until this very hour, continues Webster, such has been the uniform language of this honorable court. The principle that a Legislature cannot "repeal statutes creating private corporations" must be considered as settled. It follows, then, that if a Legislature cannot repeal such laws entirely, it cannot repeal them in part--cannot "impair them, or essentially alter them without the consent of the corporators."[703] In the case last cited[704] the property granted was land; but the Dartmouth charter "is embraced within the very terms of that decision," since "a grant of corporate powers and privileges is as much a contract as a grant of land."[705]
Even the State court concedes that if Dartmouth College is a private corporation, "its rights stand on the same ground as those of an individual"; and that tribunal rests its judgment against the College on the sole ground that it is a public corporation.[706]
Dartmouth College is not the only institution affected by this invasion of chartered rights. "Every college, and all the literary institutions of the country" are imperiled. All of them exist because of "the inviolability of their charters." Shall their fate depend upon "the rise and fall of popular parties, and the fluctuations of political opinions"? If so, "colleges and halls will ... become a theatre for the contention of politicks. Party and faction will be cherished in the places consecrated to piety and learning."
"We had hoped, earnestly hoped," exclaimed Webster, "that the State court would protect Dartmouth College. That hope has failed. It is here, that those rights are now to be maintained, or they are prostrated forever." He closed with a long Latin quotation, not a word of which Marshall understood, but which, delivered in Webster's sonorous tones and with Webster's histrionic power, must have been prodigiously impressive.[707]
Undoubtedly it was at this point that the incomparable actor, lawyer, and orator added to his prepared peroration that dramatic passage which has found a permanent place in the literature of emotional eloquence. Although given to the world a quarter of a century after Webster's speech was delivered, and transmitted through two men of vivid and creative imaginations, there certainly is some foundation for the story. Rufus Choate in his "Eulogy of Webster," delivered at Dartmouth College in 1853, told, for the first time, of the incident as narrated to him by Professor Chauncey A. Goodrich, who heard Webster's argument. When Webster had apparently finished, says Goodrich, he "stood for some moments silent before the Court, while every eye was fixed intently upon him." At length, addressing the Chief Justice, Webster delivered that famous peroration ending: "'Sir, you may destroy this little Institution; it is weak; it is in your hands! I know it is one of the lesser lights in the literary horizon of our country. You may put it out. But if you do so, you must carry through your work! You must extinguish, one after another, all those great lights of science which, for more than a century, have thrown their radiance over our land!
"'It is, Sir, as I have said, a small College. And yet, there are those who love it----'"[708]
Then, testifies Goodrich, Webster broke down with emotion, his lips quivered, his cheeks trembled, his eyes filled with tears, his voice choked. In a "few broken words of tenderness" he spoke of his love for Dartmouth in such fashion that the listeners were impressed with "the recollections of father, mother, brother, and all the trials and privations through which he had made his way into life."[709]
Goodrich describes the scene in the court-room, "during these two or three minutes," thus: "Chief Justice Marshall, with his tall and gaunt figure bent over as if to catch the slightest whisper, the deep furrows of his cheek expanded with emotion, and eyes suffused with tears; Mr. Justice Washington at his side,--with his small and emaciated frame, and countenance more like marble than I ever saw on any other human being,--leaning forward with an eager, troubled look; and the remainder of the Court, at the two extremities, pressing, as it were, toward a single point, while the audience below were wrapping themselves round in closer folds beneath the bench to catch each look, and every movement of the speaker's face." Recovering "his composure, and fixing his keen eye on the Chief Justice," Webster, "in that deep tone with which he sometimes thrilled the heart of an audience," exclaimed:
"'Sir, I know not how others may feel,' (glancing at the opponents of the College before him,) 'but, for myself, when I see my Alma Mater surrounded, like Cæsar in the senate-house, by those who are reiterating stab upon stab, I would not, for this right hand, have her turn to me, and say, Et tu quoque, mi fili!'"[710]
Exclusive of his emotional finish, Webster's whole address was made up from the arguments of Jeremiah Mason and Jeremiah Smith in the State court.[711] This fact Webster privately admitted, although he never publicly gave his associates the credit.[712]
When Farrar's "Report," containing Mason's argument, was published, Story wrote Mason that he was "exceedingly pleased" with it. "I always had a desire that the question should be put upon the broad basis you have stated; and it was a matter of regret that we were so stinted in jurisdiction in the Supreme Court, that half the argument could not be met and enforced. You need not fear a comparison of your argument with any in our annals."[713] Thus Story makes plain, what is apparent on the face of his own and Marshall's opinion, that he considered the master question involved to be that the College Acts were violative of fundamental principles of government. Could the Supreme Court have passed upon the case without regard to the Constitution, there can be no doubt that the decision would have been against the validity of the New Hampshire laws upon the ground on which Mason, Smith, and Webster chiefly relied.
Webster, as we have seen, had little faith in winning on the contract clause and was nervously anxious that the controversy should be presented to the Supreme Court by means of a case which would give that tribunal greater latitude than was afforded by the "stinted jurisdiction" of which Story complained. Indeed, Story openly expressed impatience that the court was restricted to a consideration of the contract clause. Upon his return to Massachusetts after the argument, Story as much as told Webster that another suit should be brought which could be taken to the Supreme Court, and which would permit the court to deal with all the questions raised by the New Hampshire College Acts. Webster's report of this conversation is vital to an understanding of the views of the Chief Justice, as well as of those of Story, since the latter undoubtedly stated Marshall's views as well as his own. "I saw Judge Story as I came along," Webster reported to Mason. "He is evidently expecting a case which shall present all the questions. It is not of great consequence whether the actions or action, go up at this term, except that it would give it an earlier standing on the docket next winter.
"The question which we must raise in one of these actions, is, 'whether, by the general principles of our governments, the State Legislatures be not restrained from divesting vested rights?' This, of course, independent of the constitutional provision respecting contracts. On this question [the maintenance of vested rights by "general principles"] I have great confidence in a decision on the right side. This is the proposition with which you began your argument at Exeter, and which I endeavored to state from your minutes at Washington.... On general principles, I am very confident the court at Washington would be with us."[714]
Holmes followed Webster. "The God-like Daniel" could not have wished for a more striking contrast to himself. In figure, bearing, voice, eye, intellect, and personality, the Maine Congressman, politician, and stump-speaker, was the antithesis of Webster. For three hours Holmes declaimed "the merest stuff that was ever uttered in a county court."[715] His "argument" was a diffuse and florid repetition of the opinion of Chief Justice Richardson, and was one of those empty and long-winded speeches which Marshall particularly disliked.
Wirt did his best to repair the damage done by Holmes; but he was so indifferently prepared,[716] and so physically exhausted, that, breaking down in the midst of his address, he asked the court to adjourn that he might finish next day;[717] and this the bored and weary Justices were only too willing to do. Wirt added nothing to the reasoning and facts of Richardson's opinion which was in the hands of Marshall and his associates.
The argument was closed by Joseph Hopkinson; and here again Fate acted as stage manager for Dartmouth, since the author of "Hail Columbia"[718] was as handsome and impressive a man as Webster, though of an exactly opposite type. His face was that of the lifelong student, thoughtful and refined. His voice, though light, had a golden tone. His manner was quiet, yet distinguished.
Joseph Hopkinson showed breeding in every look, movement, word, and intonation.[719] He had a beautiful and highly trained mind, equipped with immense and accurate knowledge systematically arranged.[720] It is unfortunate that space does not permit even a brief précis of Hopkinson's admirable argument.[721] He quite justified Webster's assurance to Brown that "Mr. Hopkinson ... will do all that man can do."[722]
At eleven o'clock of March 13, 1818, the morning after the argument was concluded, Marshall announced that some judges were of "different opinions, and that some judges had not formed opinions; consequently, the cause must be continued."[723] On the following day the court adjourned.
Marshall, Washington, and Story[724] were for the College, Duval and Todd were against it, and Livingston and Johnson had not made up their minds.[725] During the year that intervened before the court again met in February, 1819, hope sprang up in the hearts of Dartmouth's friends, and they became incessantly active in every legitimate way. Webster's argument was printed and placed in the hands of all influential lawyers in New England.
Chancellor James Kent of New York was looked upon by the bench and bar of the whole country as the most learned of American jurists and, next to Marshall, the ablest.[726] The views of no other judge were so sought after by his fellow occupants of the bench. Charles Marsh of New Hampshire, one of the Trustees of the College and a warm friend of Kent, sent him Webster's argument. While on a vacation in Vermont Kent had read the opinion of Chief Justice Richardson and, "on a hasty perusal of it," was at first inclined to think the College Acts valid, because he was "led by the opinion to assume the fact that Dartmouth College was a public establishment for purposes of a general nature."[727] Webster's argument changed Kent's views.
During the summer of 1818, Justice Johnson, of the National Supreme Court, was in Albany, where Kent lived, and conferred with the Chancellor about the Dartmouth case. Kent told Johnson that he thought the New Hampshire College Acts to be against natural right and in violation of the contract clause of the National Constitution.[728] It seems fairly certain also that Livingston asked for the Chancellor's opinion, and was influenced by it.
Webster sent Story, with whom he was on terms of cordial intimacy, "five copies of our argument." Evidently Webster now knew that Story was unalterably for the College, for he adds these otherwise startling sentences: "If you send one of them to each of such of the judges as you think proper, you will of course do it in the manner least likely to lead to a feeling that any indecorum has been committed by the plaintiffs."[729]
In some way, probably from the fact that Story was an intimate friend of Plumer, a rumor had spread, before the case was argued, that he was against the College Trustees. Doubtless this impression was strengthened by the fact that Governor Plumer had appointed Story one of the Board of Overseers of the new University. No shrewder politician than Plumer ever was produced by New England. But Story declined the appointment.[730] He had been compromised, however, in the eyes of both sides. The friends of the College were discouraged, angered, frightened.[731] In great apprehension, Charles Marsh, one of the College Trustees, wrote Hopkinson of Story's appointment as Overseer of the University and of the rumor in circulation. Hopkinson answered heatedly that he would object to Story's sitting in the case if the reports could be confirmed.[732]
Although the efforts of the College to get its case before Kent were praiseworthy rather than reprehensible, and although no smallest item of testimony had been adduced by eager searchers for something unethical, nevertheless out of the circumstances just related has been woven, from the materials of eager imaginations, a network of suspicion involving the integrity of the Supreme Court in the Dartmouth decision.[733]
Meanwhile the news had spread of the humiliating failure before the Supreme Court of the flamboyant Holmes and the tired and exhausted Wirt as contrasted with the splendid efforts of Webster and Hopkinson. The New Hampshire officials and the University at last realized the mistake they had made in not employing able counsel, and resolved to remedy their blunder by securing the acknowledged leader of the American bar whose primacy no judge or lawyer in the country denied. They did what they should have done at the beginning--they retained William Pinkney of Maryland.
Traveling with him in the stage during the autumn of 1818, Hopkinson learned that the great lawyer had been engaged by the University. Moreover, with characteristic indiscretion, Pinkney told Hopkinson that he intended to request a reargument at the approaching session of the Supreme Court. In alarm, Hopkinson instantly wrote Webster,[734] who was dismayed by the news. Of all men the one Webster did not want to meet in forensic combat was the legal Colossus from Baltimore.[735]
Pinkney applied himself to the preparation of the case with a diligence and energy uncommon even for that most laborious and painstaking of lawyers. Apparently he had no doubt that the Supreme Court would grant his motion for a reargument. It was generally believed that some of the Justices had not made up their minds; rearguments, under such circumstances, were usually granted and sometimes required by the court; and William Pinkney was the most highly regarded by that tribunal of all practitioners before it. So, on February 1, 1819, he took the Washington stage at Baltimore, prepared at every point for the supreme effort of his brilliant career.[736]
Pinkney's purpose was, of course, well advertised by this time. By nobody was it better understood than by Marshall and, indeed, by every Justice of the Supreme Court. All of them, except Duval and Todd, had come to an agreement and consented to the opinion which Marshall had prepared since the adjournment the previous year.[737] None of them were minded to permit the case to be reopened. Most emphatically John Marshall was not.
When, at eleven o'clock, February 2, 1819, the marshal of the court announced "The Honorable, the Chief Justice and the Associate Justices of the Supreme Court of the United States," Marshall, at the head of his robed associates, walked to his place, he beheld Pinkney rise, as did all others in the room, to greet the court. Well did Marshall know that, at the first opportunity, Pinkney would ask for a reargument.
From all accounts it would appear that Pinkney was in the act of addressing the court when the Chief Justice, seemingly unaware of his presence, placidly announced that the court had come to a decision and began reading his momentous opinion.[738] After a few introductory sentences the Chief Justice came abruptly to the main point of the dispute:
"This court can be insensible neither to the magnitude nor delicacy of this question. The validity of a legislative act is to be examined; and the opinion of the highest law tribunal of a state is to be revised: an opinion which carries with it intrinsic evidence of the diligence, of the ability, and the integrity, with which it was formed. On more than one occasion this court has expressed the cautious circumspection with which it approaches the consideration of such questions; and has declared that, in no doubtful case would it pronounce a legislative act to be contrary to the constitution.
"But the American people have said, in the constitution of the United States, that 'no state shall pass any bill of attainder, ex post facto law, or law impairing the obligation of contracts.' In the same instrument they have also said, 'that the judicial power shall extend to all cases in law and equity arising under the constitution.' On the judges of this court, then, is imposed the high and solemn duty of protecting, from even legislative violation, those contracts which the constitution of our country has placed beyond legislative control; and, however irksome the task may be, this is a duty from which we dare not shrink."[739]
Then Marshall, with, for him, amazing brevity, states the essential provisions of the charter and of the State law that modified it;[740] and continues, almost curtly: "It can require no argument to prove that the circumstances of this case constitute a contract." On the faith of the charter "large contributions" to "a religious and literary institution" are conveyed to a corporation created by that charter. Indeed, in the very application it is stated that these funds will be so applied. "Surely in this transaction every ingredient of a complete and legitimate contract is to be found."[741]
This being so, is such a contract "protected" by the Constitution, and do the New Hampshire College Acts impair that contract? Marshall states clearly and fairly Chief Justice Richardson's argument that to construe the contract clause so broadly as to cover the Dartmouth charter would prevent legislative control of public offices, and even make divorce laws invalid; and that the intention of the framers of the Constitution was to confine the operation of the contract clause to the protection of property rights, as the history of the times plainly shows.[742]
All this, says Marshall, "may be admitted." The contract clause "never has been understood to embrace other contracts than those which respect property, or some object of value, and confer rights which may be asserted in a court of justice." Divorce laws are not included, of course--they merely enable a court, "not to impair a marriage contract, but to liberate one of the parties because it has been broken by the other."
The "point on which the cause essentially depends" is "the true construction" of the Dartmouth charter. If that instrument grants "political power," creates a "civil institution" as an instrument of government; "if the funds of the college be public property," or if the State Government "be alone interested in its transactions," the Legislature may do what it likes "unrestrained" by the National Constitution.[743]
If, on the other hand, Dartmouth "be a private eleemosynary institution," empowered to receive property "for objects unconnected with government," and "whose funds are bestowed by individuals on the faith of the charter; if the donors have stipulated for the future disposition and management of those funds in the manner prescribed by themselves," the case becomes more difficult.[744] Marshall then sets out compactly and clearly the facts relating to the establishment of Wheelock's school; the granting and acceptance of the charter; the nature of the College funds which "consisted entirely of private donations." These facts unquestionably show, he avows, that Dartmouth College is "an eleemosynary, and, as far as respects its funds, a private corporation."[745]
Does the fact that the purpose of the College is the education of youth make it a public corporation? It is true that the Government may found and control an institution of learning. "But is Dartmouth College such an institution? Is education altogether in the hands of government?" Are all teachers public officers? Do gifts for the advancement of learning "necessarily become public property, so far that the will of the legislature, not the will of the donor, becomes the law of donation?"[746]
Certainly Eleazar Wheelock, teaching and supporting Indians "at his own expense, and on the voluntary contributions of the charitable," was not a public officer. The Legislature could not control his money and that given by others, merely because Wheelock was using it in an educational charity. Whence, then, comes "the idea that Dartmouth College has become a public institution?... Not from the source" or application of its funds. "Is it from the act of incorporation?"[747]
Such is the process by which Marshall reaches his famous definition of the word "corporation": "A corporation is an artificial being, invisible, intangible, and existing only in contemplation of law.... It possesses only those properties which the charter of its creation confers upon it.... Among the most important are immortality, and ... individuality.... By these means, a perpetual succession of individuals are capable of acting for the promotion of the particular object, like one immortal being.... But ... it is no more a state instrument than a natural person exercising the same powers would be."[748]
This, says Marshall, is obviously true of all private corporations. "The objects for which a corporation is created are universally such as the government wishes to promote." Why should a private charity, incorporated for the purpose of education, be excluded from the rules that apply to other corporations? An individual who volunteers to teach is not a public officer because of his personal devotion to education; how, then, is it that a corporation formed for precisely the same service "should become a part of the civil government of the country?" Because the Government has authorized the corporation "to take and to hold property in a particular form, and for particular purposes, has the Government a consequent right substantially to change that form, or to vary the purposes to which the property is to be applied?" Such an idea is without precedent. Can it be supported by reason?[749]
Any corporation for any purpose is created only because it is "deemed beneficial to the country; and this benefit constitutes the consideration, and, in most cases, the sole consideration for the grant." This is as true of incorporated charities as of any other form of incorporation. Of consequence, the Government cannot, subsequently, assume a power over such a corporation which is "in direct contradiction to its [the corporate charter's] express stipulations." So the mere fact "that a charter of incorporation has been granted" does not justify a Legislature in changing "the character of the institution," or in transferring "to the Government any new power over it."
"The character of civil institutions does not grow out of their incorporation, but out of the manner in which they are formed, and the objects for which they are created. The right to change them is not founded on their being incorporated, but on their being the instruments of government, created for its purposes. The same institutions, created for the same objects, though not incorporated, would be public institutions, and, of course, be controllable by the legislature. The incorporating act neither gives nor prevents this control. Neither, in reason, can the incorporating act change the character of a private eleemosynary institution."[750]
For whose benefit was the property of Dartmouth College given to that institution? For the people at large, as counsel insist? Read the charter. Does it give the State "any exclusive right to the property of the college, any exclusive interest in the labors of the professors?" Does it not rather "merely indicate a willingness that New Hampshire should enjoy those advantages which result to all from the establishment of a seminary of learning in the neighborhood? On this point we think it impossible to entertain a serious doubt." For the charter shows that, while the spread of education and religion was the object of the founders of the College, the "particular interests" of the State "never entered into the minds of the donors, never constituted a motive for their donation."[751]
It is plain, therefore, that every element of the problem shows "that Dartmouth College is an eleemosynary institution, incorporated for the purpose of perpetuating ... the bounty of the donors, to the specified objects of that bounty"; that the Trustees are legally authorized to perpetuate themselves and that they are "not public officers"; that, in fine, Dartmouth College is a "seminary of education, incorporated for the preservation of its property, and the perpetual application of that property to the objects of its creation."[752]
There remains a question most doubtful of "all that have been discussed." Neither those who have given money or land to the College, nor students who have profited by those benefactions, "complain of the alteration made in its charter, or think themselves injured by it. The trustees alone complain, and the trustees have no beneficial interest to be protected." Can the charter "be such a contract as the constitution intended to withdraw from the power of state legislation?"[753]
Wheelock and the other philanthropists who had endowed the College, both before and after the charter was granted, made their gifts "for something ... of inestimable value--... the perpetual application of the fund to its object, in the mode prescribed by themselves.... The corporation ... stands in their place, and distributes their bounty, as they would themselves have distributed it, had they been immortal." Also the rights of the students "collectively" are "to be exercised ... by the corporation."[754]
The British Parliament is omnipotent. Yet had it annulled the charter, even immediately after it had been granted and conveyances made to the corporation upon the faith of that charter, "so that the living donors would have witnessed the disappointment of their hopes, the perfidy of the transaction would have been universally acknowledged." Nevertheless, Parliament would have had the power to perpetrate such an outrage. "Then, as now, the donors would have had no interest in the property; ... the students ... no rights to be violated; ... the trustees ... no private, individual, beneficial interest in the property confided to their protection." But, despite the legal power of Parliament to destroy it, "the contract would at that time have been deemed sacred by all."
"What has since occurred to strip it of its inviolability? Circumstances have not changed it. In reason, in justice, and in law, it is now what it was in 1769." The donors and Trustees, on the one hand, and the Crown on the other, were the original parties to the arrangement stated in the charter, which was "plainly a contract" between those parties. To the "rights and obligations" of the Crown under that contract, "New Hampshire succeeds."[755] Can such a contract be impaired by a State Legislature?
"It is a contract made on a valuable consideration.
"It is a contract for the security and disposition of property.
"It is a contract, on the faith of which real and personal estate has been conveyed to the corporation.
"It is then a contract within the letter of the constitution, and within its spirit also, unless" the nature of the trust creates "a particular exception, taking this case out of the prohibition contained in the constitution."
It is doubtless true that the "preservation of rights of this description was not particularly in the view of the framers of the constitution when the clause under consideration was introduced into that instrument," and that legislative interferences with contractual obligations "of more frequent recurrence, to which the temptation was stronger, and of which the mischief was more extensive, constituted the great motive for imposing this restriction on the state legislatures.
"But although a particular and a rare case may not ... induce a rule, yet it must be governed by the rule, when established, unless some plain and strong reason for excluding it can be given. It is not enough to say that this particular case was not in the mind of the convention when the article was framed, nor of the American people when it was adopted. It is necessary to go farther, and to say that, had this particular case been suggested, the language [of the contract clause] would have been so varied as to exclude it, or it would have been made a special exception."[756]
Can the courts now make such an exception? "On what safe and intelligible ground can this exception stand?" Nothing in the language of the Constitution; no "sentiment delivered by its contemporaneous expounders ... justify us in making it."
Does "the nature and reason of the case itself ... sustain a construction of the constitution, not warranted by its words?" The contract clause was made a part of the Nation's fundamental law "to give stability to contracts." That clause in its "plain import" comprehends Dartmouth's charter. Does public policy demand a construction which will exclude it? The fate of all similar corporations is involved. "The law of this case is the law of all."[757] Is it so necessary that Legislatures shall "new-model" such charters "that the ordinary rules of construction must be disregarded in order to leave them exposed to legislative alteration?"
The importance attached by the American people to corporate charters like that of Dartmouth College is proved by "the interest which this case has excited." If the framers of the Constitution respected science and literature so highly as to give the National Government exclusive power to protect inventors and writers by patents and copyrights, were those statesman "so regardless of contracts made for the advancement of literature as to intend to exclude them from provisions made for the security of ordinary contracts between man and man?"[758]
No man ever did or will found a college, "believing at the time that an act of incorporation constitutes no security for the institution; believing that it is immediately to be deemed a public institution, whose funds are to be governed and applied, not by the will of the donor, but by the will of the legislature. All such gifts are made in the pleasing, perhaps delusive hope, that the charity will flow forever in the channel which the givers have marked out for it."
Since every man finds evidence of this truth "in his own bosom," can it be imagined that "the framers of our constitution were strangers" to the same universal sentiment? Although "feeling the necessity ... of giving permanence and security to contracts," because of the "fluctuating" course and "repeated interferences" of Legislatures which resulted in the "most perplexing and injurious embarrassments," did the framers of the Constitution nevertheless deem it "necessary to leave these contracts subject to those interferences?" Strong, indeed, must be the motives for making such exceptions.[759]
Finally, Marshall declares that the "opinion of the court, after mature deliberation, is, that this is a contract, the obligation of which cannot be impaired without violating the Constitution of the United States."[760]
Do the New Hampshire College Acts impair the obligations of Dartmouth's charter? That instrument gave the Trustees "the whole power of governing the college"; stipulated that the corporation "should continue forever"; and "that the number of trustees should forever consist of twelve, and no more." This contract was made by the Crown, a power which could have made "no violent alteration in its essential terms, without impairing its obligation."
The powers and duties of the Crown were, by the Revolution, "devolved on the people of New Hampshire." It follows that, since the Crown could not change the charter of Dartmouth without impairing the contract, neither can New Hampshire. "All contracts, and rights, respecting property, remained unchanged by the revolution."[761]
As to whether the New Hampshire College Acts radically alter the charter of Dartmouth College, "two opinions cannot be entertained." The State takes over the government of the institution. "The will of the state is substituted for the will of the donors, in every essential operation of the college.... The charter of 1769 exists no longer"--the College has been converted into "a machine entirely subservient to the will of government," instead of the "will of its founders."[762] Therefore, the New Hampshire College laws "are repugnant to the constitution of the United States."[763]
On account of the death of Woodward, who had been Secretary and Treasurer of the University, and formerly held the same offices in the College against whom the College Trustees had brought suit, Webster moved for judgment nunc pro tunc; and judgment was immediately entered accordingly.
Not for an instant could Webster restrain the expression of his joy. Before leaving the court-room he wrote his brother: "All is safe.... The opinion was delivered by the Chief Justice. It was very able and very elaborate; it goes the whole length, and leaves not an inch of ground for the University to stand on."[764] He informed President Brown that "all is safe and certain.... I feel a load removed from my shoulders much heavier than they have been accustomed to bear."[765] To Mason, Webster describes Marshall's manner: "The Chief Justice's opinion was in his own peculiar way. He reasoned along from step to step; and, not referring to the cases [cited], adopted the principles of them, and worked the whole into a close, connected, and very able argument."[766]
At the same time Hopkinson wrote Brown in a vein equally exuberant: "Our triumph ... has been complete. Five judges, only six attending, concur not only in a decision in our favor, but in placing it upon principles broad and deep, and which secure corporations of this description from legislative despotism and party violence for the future.... I would have an inscription over the door of your building, 'Founded by Eleazar Wheelock, Refounded by Daniel Webster.'"[767] The high-tempered Pinkney was vocally indignant. "He talked ... and blustered" ungenerously, wrote Webster, "because ... the party was in a fever and he must do something for his fees. As he could not talk in court, he therefore talked out of court."[768]
As we have seen, Marshall had prepared his opinion under his trees at Richmond and in the mountains during the vacation of 1818; and he had barely time to read it to his associates before the opening of court at the session when it was delivered. But he afterward submitted the manuscript to Story, who made certain changes, although enthusiastically praising it. "I am much obliged," writes Marshall, "by the alterations you have made in the Dartmouth College case & am highly gratified by what you say respecting it."[769]
Story also delivered an opinion upholding the charter[770]--one of his ablest papers. It fairly bristles with citations of precedents and historical examples. The whole philosophy of corporations is expounded with clearness, power, and learning. Apparently Justice Livingston liked Story's opinion even more than that of Marshall. Story had sent it to Livingston, who, when returning the manuscript, wrote: It "has afforded me more pleasure than can easily be expressed. It was exactly what I had expected from you, and hope it will be adopted without alteration."[771]
At the time of the Dartmouth decision little attention was paid to it outside of New Hampshire and Massachusetts.[772] The people, and even the bar, were too much occupied with bank troubles, insolvency, and the swiftly approaching slavery question, to bother about a small New Hampshire college. The profound effect of Marshall's opinion was first noted in the North American Review a year after the Chief Justice delivered it. "Perhaps no judicial proceedings in this country ever involved more important consequences, ... than the case of Dartmouth College."[773]
Important, indeed, were the "consequences" of the Dartmouth decision. Everywhere corporations were springing up in response to the necessity for larger and more constant business units and because of the convenience and profit of such organizations. Marshall's opinion was a tremendous stimulant to this natural economic tendency. It reassured investors in corporate securities and gave confidence and steadiness to the business world. It is undeniable and undenied that America could not have been developed so rapidly and solidly without the power which the law as announced by Marshall gave to industrial organization.
One result of his opinion was, for the period, of even higher value than the encouragement it gave to private enterprise and the steadiness it brought to business generally; it aligned on the side of Nationalism all powerful economic forces operating through corporate organization. A generation passed before railway development began in America; but Marshall lived to see the first stage of the evolution of that mighty element in American commercial, industrial, and social life; and all of that force, except the part of it which was directly connected with and under the immediate influence of the slave power, was aggressively and most effectively Nationalist.
That this came to be the fact was due to Marshall's Dartmouth opinion more than to any other single cause. The same was true of other industrial corporate organizations. John Fiske does not greatly exaggerate in his assertion that the law as to corporate franchises declared by Marshall, in subjecting to the National Constitution every charter granted by a State "went farther, perhaps, than any other in our history toward limiting State sovereignty and extending the Federal jurisdiction."[774]
Sir Henry Sumner Maine has some ground for his rather dogmatic statement that the principle of Marshall's opinion "is the basis of credit of many of the great American Railway Incorporations," and "has ... secured full play to the economical forces by which the achievement of cultivating the soil of the North American Continent has been performed." Marshall's statesmanship is, asserts Maine, "the bulwark of American individualism against democratic impatience and Socialistic fantasy."[775] Such views of the Dartmouth decision are remarkably similar to those which Story himself expressed soon after it was rendered. Writing to Chancellor Kent Story says: "Unless I am very much mistaken the principles on which that decision rests will be found to apply with an extensive reach to all the great concerns of the people, and will check any undue encroachments upon civil rights, which the passions or the popular doctrines of the day may stimulate our State Legislatures to adopt."[776]
The court's decision, however, made corporate franchises infinitely more valuable and strengthened the motives for procuring them, even by corruption. In this wise tremendous frauds have been perpetrated upon negligent, careless, and indifferent publics; and "enormous and threatening powers," selfish and non-public in their purposes and methods, have been created.[777] But Marshall's opinion put the public on its guard. Almost immediately the States enacted laws reserving to the Legislature the right to alter or repeal corporate charters; and the constitutions of several States now include this limitation on corporate franchises. Yet these reservations did not, as a practical matter, nullify or overthrow Marshall's philosophy of the sacredness of contracts.
Within the last half-century the tendency has been strongly away from the doctrine of the Dartmouth decision, and this tendency has steadily become more powerful. The necessity of modifying and even abrogating legislative grants, more freely than is secured by the reservation to do so contained in State constitutions and corporate charters, has further restricted the Dartmouth decision. It is this necessity that has produced the rapid development of "that well-known but undefined power called the police power,"[778] under which laws may be passed and executed, in disregard of what Marshall would have called contracts, provided such laws are necessary for the protection or preservation of life, health, property, morals, or order. The modern doctrine is that "the Legislature cannot, by any contract, divest itself of the power to provide for these objects.... They are to be attained and provided for by such appropriate means as the legislative discretion may devise. That discretion can no more be bargained away than the power itself."[779]
Aside from the stability which this pronouncement of the Chief Justice gave to commercial transactions in general, and the confidence it inspired throughout the business world, the largest permanent benefit of it to the American people was to teach them that faith once plighted, whether in private contracts or public grants, must not and cannot be broken by State legislation; that, by the fundamental law which they themselves established for their own government, they as political entities are forbidden to break their contracts by enacting statutes, just as, by the very spirit of the law, private persons are forbidden to break their contracts. If it be said that their representatives may betray the people, the plain answer is that the people must learn to elect honest agents.
For exactly a century Marshall's Dartmouth opinion has been assailed and the Supreme Court itself has often found ways to avoid its conclusions. But the theory of the Chief Justice has shown amazing vitality. Sixty years after Marshall delivered it, Chief Justice Waite declared that the principles it announced are so "imbedded in the jurisprudence of the United States as to make them to all intents and purposes a part of the Constitution itself."[780] Thirty-one years after Marshall died, Justice Davis avowed that "a departure from it [Marshall's doctrine] now would involve dangers to society that cannot be foreseen, would shock the sense of justice of the country, unhinge its business interests, and weaken, if not destroy, that respect which has always been felt for the judicial department of the Government."[781] As late as 1895, Justice Brown asserted that it has "become firmly established as a canon of American jurisprudence."[782]
It was a principle which Marshall introduced into American Constitutional law, and, fortunately for the country, that principle still stands; but to-day the courts, when construing a law said to impair the obligation of contracts, most properly require that it be established that the unmistakable purpose of the Legislature is to make an actual contract for a sufficient consideration.[783]
It is highly probable that in the present state of the country's development, the Supreme Court would not decide that the contract clause so broadly protects corporate franchises as Marshall held a century ago. In considering the Dartmouth decision, however, the state of things existing when it was rendered must be taken into account. It is certain that Marshall was right in his interpretation of corporation law as it existed in 1819; right in the practical result of his opinion in that particular case; and, above all, right in the purpose and effect of that opinion on the condition and tendency of the country at the perilous time it was delivered.
FOOTNOTES:
[615] See vol. I, 147, 231, of this work.Return to passage
[616] See vol. III, chap. X, of this work.Return to passage
[617] 7 Cranch, 164.Return to passage
[618] Ib. 165.Return to passage
[619] 7 Cranch, 166-67.Return to passage
[620] This was true also of the entire court, since all the Justices concurred in Marshall's opinions in both cases as far as the legislative violations of the contract clause were concerned.Return to passage
[621] He was not at all related to the Chief Justice. See vol. I, footnote to 15-16, of this work.Return to passage
[622] Chase: History of Dartmouth College and the Town of Hanover, New Hampshire, I, 49.Return to passage
[623] Chase, 45-48.Return to passage
[624] Ib. 59.Return to passage
[625] Ib. 54-55.Return to passage
[626] Dartmouth and the English Trustees opposed incorporation and the Bishops of the Church of England violently resisted Wheelock's whole project. (Ib. 90.)Return to passage
[627] Farrar: Report of the Case of the Trustees of Dartmouth College against William H. Woodward, 11, 16; also see Charter of Dartmouth College, Chase, 639-49. (Although the official copy of the charter appears in Chase's history, the author cites Farrar in the report of the case; the charter also is cited from his book.)Return to passage
[628] Chase, 556.Return to passage
[629] See Wheelock's will, ib. 562.Return to passage
[630] Young Wheelock was very active in the Revolution. He was a member of the New Hampshire Assembly in 1775, a Captain in the army in 1776, a Major the following year, and then Lieutenant-Colonel, serving on the staff of General Horatio Gates until called from military service by the death of his father in 1779. (See Smith: History of Dartmouth College, 76.)Return to passage
[631] Chase, 564.Return to passage
[632] Rachel Murch "To y^e Session of y^e Church of Christ in Hanover," April 26, 1783, Shirley: Dartmouth College Causes and the Supreme Court of the Untied States, 67.Return to passage
[633] Shirley, 66-70.Return to passage
[634] Ib. 70-75. Only three of the scores of Congregationalist ministers in New Hampshire were Republicans. (Ib. 70.)Return to passage
[635] Ib. 82.Return to passage
[636] Shirley, 81, 84-85.Return to passage
[637] Sketches of the History of Dartmouth College and Moors' Charity School.Return to passage
[638] A Candid, Analytical Review of the Sketches of the History of Dartmouth College.Return to passage
[639] Vindication of the Official Conduct of the Trustees, etc., and A True and Concise Narrative of the Origin and Progress of the Church Difficulties, by Benoni Dewey, James Wheelock, and Benjamin J. Gilbert.Return to passage
[640] Answer to the "Vindication," etc., by Josiah Dunham.Return to passage
[641] Lord: History of Dartmouth College, 73-77.Return to passage
[642] Lord, 78.Return to passage
[643] In 1811 the salary of Chief Justices of the Court of Common Pleas for four of the counties was fixed at $200 a year; and that of the other Justices of those courts at $180. "The Chief Justice of said court in Grafton County, $180, and the other Justices in that court $160." (Act of June 21, Laws of New Hampshire, 1811, 33.)Return to passage
[644] Acts of June 24 and Nov. 5, Laws of New Hampshire, 1813, 6-19; Barstow: History of New Hampshire, 363-64; Morison: Life of Jeremiah Smith, 265-67. This law was, however, most excellent. It established a Supreme Court and systematized the entire judicial system.Return to passage
[645] This was the second time Plumer had been elected Governor. He was first chosen to that office in 1812. Plumer had abandoned the failing and unpatriotic cause of Federalism in 1808 (Plumer, 365), and had since become an ardent follower of Jefferson.Return to passage
[646] The number of votes cast at this election was the largest ever polled in the history of the State up to that time. (Ib. 432.)Return to passage
[647] See Act of June 27, Laws of New Hampshire, 1816, 45-48. This repealed the Federalist Judiciary Acts of 1813 and revived laws repealed by those acts. (See Barstow, 383, and Plumer, 437-38.)Return to passage
The burning question of equality of religious taxation was not taken up by this Legislature. The bill was introduced in the State Senate by the Reverend Daniel Young, a Methodist preacher, but it received only three votes. Apparently the reform energy of the Republicans was, for that session, exhausted by the Judiciary and College Acts. The "Toleration Act" was not passed until three years later. (McClintock: History of New Hampshire, 507-29; also Barstow, 422.) This law is omitted from the published acts, although it is indexed.
[648] In his Message to the Legislature recommending reform laws for Dartmouth College, Governor Plumer denounced the provision of the charter relating to the Trustees as "hostile to the spirit and genius of a free government." (Barstow, 396.) This message Plumer sent to Jefferson, who replied that the idea "that institutions, established for the use of the nation, cannot be touched nor modified, even to make them answer their end ... is most absurd.... Yet our lawyers and priests generally inculcate this doctrine; and suppose that preceding generations ... had a right to impose laws on us, unalterable by ourselves; ... in fine, that the earth belongs to the dead, and not to the living." (Jefferson to Plumer, July 21, 1816, Plumer, 440-41.)Return to passage
[649] Act of June 27, Laws of New Hampshire, 1816, 48-51; and see Lord, 687-90.Return to passage
The temper of the Republicans is illustrated by a joint resolution adopted June 29, 1816, denouncing the increase of salaries of Senators and Representatives in Congress, which "presents the most inviting inducements to avarice and ambition," "will introduce a monopolizing power," and "contaminate our elections." (Act of June 27, Laws of New Hampshire, 1816, 65-66.)
[650] Journal, House of Representatives (N.H.), June 28, 1816, 238-41.Return to passage
[651] Resolutions of the Trustees, Lord, 690-94.Return to passage
[652] Lord, 96.Return to passage
[653] "It is an important question and merits your serious consideration whether a law passed and approved by all the constituted authorities of the State shall be carried into effect, or whether a few individuals not vested with any judicial authority shall be permitted to declare your statutes dangerous and arbitrary, unconstitutional and void: whether a minority of the trustees of a literary institution formed for the education of your children shall be encouraged to inculcate the doctrine of resistance to the law and their example tolerated in disseminating principles of insubordination and rebellion against government." (Plumer's Message, Nov. 20, 1816, Lord, 103.)Return to passage
[654] Acts of Dec. 18 and 26, 1816, (Laws of New Hampshire, 1816, 74-75; see also Lord, 104.)Return to passage
[655] Lord, 111-12.Return to passage
[656] Ib. 112-15.Return to passage
[657] Ib. 115.Return to passage
[658] Lord, 121. So few students went with the University that it dared not publish a catalogue. (Ib. 129.)Return to passage
[659] Ib. 92.Return to passage
[660] One of the many stories that sprang up in after years about Webster's management of the case is that, since the College was founded for the education of Indians and none of them had attended for a long time, Webster advised President Brown to procure two or three. Brown got a number from Canada and brought them to the river beyond which were the College buildings. While the party were rowing across, the young Indians, seeing the walls and fearing that they were to be put in prison, gave war whoops, sprang into the stream, swam to shore and fled. So Webster had to go on without them. (Harvey: Reminiscences and Anecdotes of Daniel Webster, 111-12.) There is not the slightest evidence to support this absurd tale. (Letters to the author from Eugene F. Clark, Secretary of Dartmouth College, and from Professor John K. Lord, author of History of Dartmouth College.)Return to passage
[661] Lord, 99.Return to passage
[662] Farrar, 1.Return to passage
[663] These arguments are well worth perusal. (See Farrar, 28-206; also 65 N.H. Reports, 473-624.)Return to passage
[664] For instance, Mason's argument, which is very compact, consists of forty-two pages of which only four are devoted to "the contract clause" of the National Constitution and the violation of it by the New Hampshire College Act. (Farrar, 28-70; 65 N.H. 473-502.)Return to passage
[665] Farrar, 212-13; 65 N.H. 628-29.Return to passage
[666] Farrar, 214-15; 65 N.H. 630.Return to passage
[667] The contract clause.Return to passage
[668] Farrar, 216; 65 N.H. 631.Return to passage
[669] Farrar, 228-29; 65 N.H. 639.Return to passage
[670] Farrar, 231; 65 N.H. 641.Return to passage
[671] Farrar, 232; 65 N.H. 642.Return to passage
[672] Farrar, 235.Return to passage
[673] Ib.Return to passage
[674] Webster was then thirty-six years of age.Return to passage
[675] Goodrich's statement in Brown: Works of Rufus Choate: With a Memoir of his Life, I, 515.Return to passage
[676] They were Rufus Greene Amory and George Black of Boston, David B. Ogden and "a Mr. Baldwin from New York," Thomas Sergeant and Charles J. Ingersoll of Philadelphia, John Wickham, Philip Norborne, Nicholas and Benjamin Watkins Leigh of Virginia, and John McPherson Berrien of Georgia. (Webster to Sullivan, Feb. 27, 1818, Priv. Corres.: Webster, I, 273.)Return to passage
[677] Brown, I, 515. Story makes no comment on the argument of the Dartmouth case--a pretty sure sign that it attracted little attention in Washington. Contrast Story's silence as to this argument with his vivid description of that of M'Culloch vs. Maryland (infra, chap. VI). Goodrich attributes the scant attendance to the fact that the court sat "in a mean apartment of moderate size"; but that circumstance did not keep women as well as men from thronging the room when a notable case was to be heard or a celebrated lawyer was to speak. (See description of the argument of the case of the Nereid, supra, 133-34.)Return to passage
[678] For example, in M'Culloch vs. Maryland, Luther Martin spoke for three days. (Webster to Smith, Feb. 28, 1819, Van Tyne, 80; and see infra, chap, VI.)Return to passage
[679] See vol. III, chap, IV, of this work.Return to passage
[680] The College Trustees at first thought of employing Luther Martin to assist Webster in the Supreme Court (Brown to Kirkland, Nov. 15, 1817, as quoted by Warren in American Law Review, XLVI, 665). It is possible that Hopkinson was chosen instead, upon the advice of Webster, who kept himself well informed of the estimate placed by Marshall and the Associate Justices on lawyers who appeared before them. Marshall liked and admired Hopkinson, had been his personal friend for years, and often wrote him. When Peters died in 1828, Marshall secured the appointment of Hopkinson in his place. (Marshall to Hopkinson, March 16, 1827, and same to same [no date, but during 1828], Hopkinson MSS.)Return to passage
[681] It was considered to be a "needless expense" to send the original counsel, Sullivan and Bartlett, to Washington. (Lord, 140.)Return to passage
[682] Webster to McGaw, July 27, 1818, Van Tyne, 77.Return to passage
[683] Shirley, 229-32. The fact that Holmes was employed plainly shows the influence of "practical politics" on the State officials and the Trustees of the University. The Board voted December 31, 1817, "to take charge of the case." Benjamin Hale, one of the new Trustees, was commissioned to secure other counsel if Holmes did not accept. Apparently Woodward was Holmes's champion: "I have thought him extremely ready ... [a] good lawyer, inferior to D. W. only in point of oratory." (Woodward to Hall, Jan. 18, 1818, Lord, 139-40.) Hardly had Hale reached Washington than he wrote Woodward: "Were you sensible of the low ebb of Mr. Holmes' reputation here, you would ... be unwilling to trust the cause with him." (Hale to Woodward, Feb. 15, 1818, ib. 139.)Return to passage
[684] "It is late at night--the fag-end of a hard day's work. My eyes, hand and mind all tired.... I have been up till midnight, at work, every night, and still have my hands full.... I am now worn out ... extremely fatigued.... The Supreme Court is approaching. It will half kill you to hear that it will find me unprepared." (Wirt to Carr, Jan. 21, 1818, Kennedy, II, 73-74.) Wirt had just become Attorney-General. Apparently he found the office in very bad condition. The task of putting it in order burdened him. He was compelled to do much that was not "properly [his] duty." (Ib. 73.) His fee in the Dartmouth College case did not exceed $500. (Hale to Plumer, Jan. 1818, Lord, 140.)Return to passage
[685] "He seemed to treat this case as if his side could furnish nothing but declamation." (Webster to Mason, March 13, 1818, Priv. Corres.: Webster, I, 275.)Return to passage
[686] Farrar, 241; 65 N.H. 596; 4 Wheaton, 534; and see Curtis, I, 163-66.Return to passage
[687] Farrar, 242-44; 65 N.H. 597-98; 4 Wheaton, 556-57.Return to passage
[688] Farrar, 244; 65 N.H. 598-99; 4 Wheaton, 558-59.Return to passage
[689] Farrar, 248; 65 N.H. 600-01; 4 Wheaton, 563-64.Return to passage
[690] Farrar, 255-56; 65 N.H. 605-06; 4 Wheaton, 567-68.Return to passage
[691] Farrar, 258-59; 65 N.H. 607-08; 4 Wheaton, 571-72.Return to passage
[692] Farrar, 260-61; 65 N.H. 609; 4 Wheaton, 571.Return to passage
[693] In Terrett vs. Taylor, 9 Cranch, 45 et seq. Story delivered the unanimous opinion of the Supreme Court in this case. This fact was well known at the time of the passage of the College Acts; and, in view of it, there is difficulty in understanding how Story could have been expected to support the New Hampshire legislation. (See infra, 257.)Return to passage
[694] Farrar, 262; 65 N.H. 609-10; 4 Wheaton, 574-75.Return to passage
[695] Farrar, 273; 65 N.H. 617; 4 Wheaton, 588.Return to passage
[696] Farrar, 246-47; 65 N.H. 598-600; 4 Wheaton, 557-59.Return to passage
[697] See vol. III, chap, X, of this work.Return to passage
[698] Farrar, 273-74; 65 N.H. 618-19; 4 Wheaton, 591-92.Return to passage
[699] Supra, 223.Return to passage
[700] Farrar, 275; 65 N.H. 619; 4 Wheaton, 591.Return to passage
[701] In Terrett vs. Taylor, see supra, footnote to 243.Return to passage
[702] Farrar, 275; 65 N.H. 619; 4 Wheaton, 591. (Italics the author's.) It will be observed that Webster puts the emphasis upon "natural justice" and "fundamental laws" rather than upon the Constitutional point.Return to passage
[703] Farrar, 276; 65 N.H. 619-20; 4 Wheaton, 592.Return to passage
[704] Terrett vs. Taylor.Return to passage
[705] Farrar, 277; 65 N.H. 620; 4 Wheaton, 592.Return to passage
[706] Farrar, 280; 65 N.H. 622. The two paragraphs containing these statements of Webster are omitted in Wheaton's Reports.Return to passage
[707] Farrar, 282-83; 65 N.H. 624; 4 Wheaton, 599.Return to passage
[708] Brown, I, 516.Return to passage
[709] Ib. 516-17. This scene, the movement and color of which grew in dignity and vividness through the innumerable repetitions of it, caught the popular fancy. Speeches, poems, articles, were written about the incident. It became one of the chief sources from which the idolaters of Webster drew endless adulation of that great man.Return to passage
[710] See Brown, I, 517; Curtis, I, 169-71.Return to passage
Chauncey Allen Goodrich was in his twenty-eighth year when he heard Webster's argument. He was sixty-three when he gave Choate the description which the latter made famous in his "Eulogy of Webster."
[711] Compare their arguments with Webster's. See Farrar 28-70; 104-61; 238-84.Return to passage
[712] "Your notes I found to contain the whole matter. They saved me great labor; but that was not the best part of their service; they put me in the right path.... The only new aspect of the argument was produced by going into cases to prove these ideas, which indeed lie at the very bottom of your argument." (Webster to Smith, March 14, 1818, Priv. Corres.: Webster, I, 276-77; and see Webster to Mason, March 22, 1818, ib. 278.)Return to passage
A year later, after the case had been decided, when the question of publishing Farrar's Report of all the arguments and opinions in the Dartmouth College case was under consideration, Webster wrote Mason: "My own interest would be promoted by preventing the Book. I shall strut well enough in the Washington Report, & if the 'Book' should not be published, the world would not know where I borrowed my plumes--But I am still inclined to have the Book--One reason is, that you & Judge Smith may have the credit which belongs to you." (Webster to Mason, April 10, 1819, Van Tyne, 80.)
Farrar's Report was published in August, 1819. It contains the pleadings and special verdict, the arguments of counsel, opinions, and the judgments in the State and National courts, together with valuable appendices. The Farrar Report is indispensable to those who wish to understand this celebrated case from the purely legal point of view.
[713] Story to Mason, Oct. 6, 1819, Story, I, 323.Return to passage
[714] Webster to Mason, April 28, 1818, Priv. Corres.: Webster, I, 282-83. (Italics the author's.) In fact three such suits were brought early in 1818 on the ground of diverse citizenship. (Shirley, 2-3.) Any one of them would have enabled the Supreme Court to have passed on the "general principles" of contract and government. These cases, had they arrived on time, would have afforded Story his almost frantically desired opportunity to declare that legislation violative of contracts was against "natural right"--an opinion he fervently desired to give. But the wiser Marshall saw in the case, as presented to the Supreme Court on the contract guarantee of the Constitution, the occasion to declare, in effect, that these same fundamental principles are embraced in the contract clause of the written Constitution of the American Nation.Return to passage
[715] Webster to Mason, March 13, 1818, Priv. Corres.: Webster, I, 275.Return to passage
"Every body was grinning at the folly he uttered. Bell could not stand it. He seized his hat and went off." (Webster to Smith, March 14, 1818, ib. 277; and see Webster to Brown, March 11, 1818, Van Tyne, 75-76.)
Holmes "has attempted as a politician ... such a desire to be admired by everybody, that he has ceased for weeks to be regarded by anybody.... In the Dartmouth College Cause, he sunk lower at the bar than he had in the Hall of Legislature." (Daggett to Mason, March 18, 1818, Hillard: Memoir and Correspondence of Jeremiah Mason, 199.)
The contempt of the legal profession for Holmes is shown by the fact that in Farrar's Report but four and one half pages are given to his argument, while those of all other counsel for Woodward (Sullivan and Bartlett in the State court and Wirt in the Supreme Court) are published in full.
[716] "He made an apology for himself, that he had not had time to study the case, and had hardly thought of it, till it was called on." (Webster to Mason, March 13, 1818, Priv. Corres.: Webster, I, 275-76.)Return to passage
[717] "Before he concluded he became so exhausted ... that he was obliged to request the Court to indulge him until the next day." (Boston Daily Advertiser, March 23, 1818.)Return to passage
"Wirt ... argues a good cause well. In this case he said more nonsensical things than became him." (Webster to Smith, March 14, 1818, Priv. Corres.: Webster, I, 277.)
[718] Hopkinson wrote this anthem when Marshall returned from France. (See vol. II, 343, of this work.)Return to passage
[719] This description of Hopkinson is from Philadelphia according to traditions gathered by the author.Return to passage
[720] Choate says that Webster called to his aid "the ripe and beautiful culture of Hopkinson." (Brown, I, 514.)Return to passage
[721] The same was true of Hopkinson's argument for Chase. (See vol. III, chap. IV, of this work.)Return to passage
[722] Webster to Brown, March 11, 1818, Van Tyne, 75-76.Return to passage
After Hopkinson's argument Webster wrote Brown: "Mr. Hopkinson understood every part of the cause, and in his argument did it great justice." (Webster to Brown, March 13, 1818, Priv. Corres.: Webster, I, 274; and see Webster to Mason, March 13, 1818, ib. 275-76.)
"Mr. Hopkinson closed the cause for the College with great ability, and in a manner which gave perfect satisfaction and delight to all who heard him." (Boston Daily Advertiser, March 23, 1818.)
It was expected that the combined fees of Webster and Hopkinson would be $1000, "not an unreasonable compensation." (Marsh to Brown, Nov. 22, 1817, Lord, 139.) Hopkinson was paid $500. (Brown to Hopkinson, May 4, 1819, Hopkinson MSS.)
At their first meeting after the decision, the Trustees, "feeling the inadequacy" of the fees of all the lawyers for the College, asked Mason, Smith, Webster, and Hopkinson to sit for their portraits by Gilbert Stuart, the artist to be paid by the Trustees. (Shattuck to Hopkinson, Jan. 4, 1835, enclosing resolution of the Trustees, April 4, 1819, attested by Miles Olcott, secretary, Hopkinson MSS.; also, Webster to Hopkinson, May 9, 1819, ib.)
[723] Webster to Smith, March 14, 1818, Priv. Corres.: Webster, I, 577.Return to passage
[724] Many supposed that Story was undecided, perhaps opposed to the College. In fact, he was as decided as Marshall. (See infra, 257-58, 275 and footnote.)Return to passage
[725] Webster to Smith, March 14, 1818, Priv. Corres.: Webster, I, 577.Return to passage
[726] For example, William Wirt, Monroe's Attorney-General, in urging the appointment of Kent, partisan Federalist though he was, to the Supreme Bench to succeed Justice Livingston, who died March 19, 1823, wrote that "Kent holds so lofty a stand everywhere for almost matchless intellect and learning, as well as for spotless purity and high-minded honor and patriotism, that I firmly believe the nation at large would approve and applaud the appointment." (Wirt to Monroe, May 5, 1823, Kennedy, II, 153.)Return to passage
[727] Kent to Marsh, Aug. 26, 1818, Shirley, 263. Moreover, in 1804, Kent, as a member of the New York Council of Revision, had held that "charters of incorporation containing grants of personal and municipal privileges were not to be essentially affected without the consent of the parties concerned." (Record of Board, as quoted in ib. 254.)Return to passage
[728] Shirley, 253. Shirley says that Kent "agreed to draw up an opinion for Johnson in this case."Return to passage
[729] Webster to Story, Sept. 9, 1818, Priv. Corres.: Webster, I, 287.Return to passage
[730] Lord, 143.Return to passage
[731] "The folks in this region are frightened.... It is ascertained that Judge Story ... is the original framer of the law.... They suppose that on this account the cause is hopeless before the Sup. Ct. of U.S. This is, however, report." (Murdock to Brown, Dec. 27, 1817, ib. 142.)Return to passage
Murdock mentions Pickering as one of those who believed the rumors about Story. This explains much. The soured old Federalist was an incessant gossip and an indefatigable purveyor of rumors concerning any one he did not like, provided the reports were bad enough for him to repeat. He himself would, with great facility, apply the black, if the canvas were capable of receiving it; and he could not forget that Story, when a young man, had been a Republican.
[732] Hopkinson to Marsh, Dec. 31, 1817, Shirley, 274-75.Return to passage
[733] This is principally the work of John M. Shirley in his book Dartmouth College Causes and the Supreme Court of the United States. The volume is crammed with the results of extensive research, strange conglomeration of facts, suppositions, inferences, and insinuations, so inextricably mingled that it is with the utmost difficulty that the painstaking student can find his way.Return to passage
Shirley leaves the impression that Justices Johnson and Livingston were improperly worked upon because they consulted Chancellor Kent. Yet the only ground for this is that Judge Marsh sent Webster's argument to Kent, who was Marsh's intimate friend; and that the Reverend Francis Brown, President of Dartmouth, went to see Kent, reported that his opinion was favorable to the College, and that the effect of this would be good upon Johnson and Livingston.
From the mere rumor, wholly without justification, that Story was at first against the College--indeed, had drawn the College Acts (for so the rumor grew, as rumors always grow)--Shirley would have us believe, without any evidence whatever, that some improper influence was exerted over Story.
Because Webster said that there was something "left out" of the report of his argument, Shirley declares that for a whole hour Webster spoke as a Federalist partisan in order to influence Marshall. (Shirley, 237.) But such an attempt would have been resented by every Republican member of the court and, most of all, by Marshall himself. Moreover, Marshall needed no such persuasion, nor, indeed, persuasion of any kind. His former opinions showed where he stood; so did the views which he had openly and constantly avowed since he was a member of the Virginia House of Burgesses in 1783. The something "left out" of Webster's reported argument was, of course, his extemporaneous and emotional peroration described by Goodrich.
These are only a very few instances of Shirley's assumptions. Yet, because of the mass of data his book contains, and because of the impossibility of getting out of them a connected narrative without the most laborious and time-consuming examination, together with the atmosphere of wrongdoing with which Shirley manages to surround the harried reader, his volume has had a strong and erroneous effect upon general opinion.
[734] Hopkinson to Webster, Nov. 17, 1818, Priv. Corres.: Webster, I, 288-89. "I suppose he expects to do something very extraordinary in it, as he says Mr. Wirt 'was not strong enough for it, has not back enough.'" (Ib. 289.)Return to passage
[735] Both Hopkinson and Webster resolved to prevent Pinkney from making his anticipated argument. (Ib.)Return to passage
[736] Not only did Pinkney master the law of the case, but, in order to have at his command every practical detail of the controversy, he kept Cyrus Perkins, who succeeded Woodward, deceased, as Secretary of the University Trustees, under continuous examination for an entire week. Perkins knew every possible fact about the College controversy and submitted to Pinkney the whole history of the dispute and also all documents that could illuminate the subject. "Dr. Perkins had been a week at Baltimore, conferring with Mr. Pinkney." (Webster to Mason, Feb. 4, 1819, Hillard, 213; and see Shirley, 203.)Return to passage
[737] This fact was unknown to anybody but the Justices themselves. "No public or general opinion seems to be formed of the opinion of any particular judge." (Webster to Brown, Jan. 10, 1819, Priv. Corres.: Webster, I, 299.)Return to passage
[738] "On Tuesday morning, he [Pinkney] being in court, as soon as the judges had taken their seats, the Chief Justice said that in vacation the judges had formed opinions in the College case. He then immediately began reading his opinion, and, of course, nothing was said of a second argument." (Webster to Mason, Feb. 4, 1819, Hillard, 213.)Return to passage
[739] 4 Wheaton, 625.Return to passage
[740] Ib. 626-27.Return to passage
[741] 4 Wheaton, 627.Return to passage
[742] Ib. 627-28.Return to passage
[743] 4 Wheaton, 629-30.Return to passage
[744] Ib. 630.Return to passage
[745] Ib. 631-34. The statement of facts and of the questions growing out of them was by far the best work Marshall did. In these statements he is as brief, clear, and pointed as, in his arguments, he is prolix, diffuse, and repetitious.Return to passage
[746] Ib. 634.Return to passage
[747] 4 Wheaton, 635-36.Return to passage
[748] Ib. 636.Return to passage
[749] 4 Wheaton, 637.Return to passage
[750] 4 Wheaton, 638-39.Return to passage
[751] Ib. 639-40.Return to passage
[752] 4 Wheaton, 640-41.Return to passage
[753] Ib. 641.Return to passage
[754] Ib. 642-43.Return to passage
[755] 4 Wheaton, 643.Return to passage
[756] 4 Wheaton, 644.Return to passage
[757] 4 Wheaton. 645.Return to passage
[758] Ib. 646-47.Return to passage
[759] 4 Wheaton, 647-48.Return to passage
[760] Ib. 650.Return to passage
[761] Ib. 651.Return to passage
[762] 4 Wheaton, 652-53.Return to passage
[763] Ib. 654.Return to passage
[764] Webster "in court" to his brother, Feb. 2, 1819, Priv. Corres. Webster, I, 300.Return to passage
[765] Webster to Brown, Feb. 2, 1819, ib.Return to passage
[766] Webster to Mason, Feb. 4, 1819, Hillard, 213-14. Webster adds: "Some of the other judges, I am told, have drawn opinions with more reference to authorities." (Ib. 214.)Return to passage
[767] Hopkinson to Brown, Feb. 2, 1819, Priv. Corres.: Webster, I, 301.Return to passage
[768] Webster to Mason, April 13, 1819, Hillard, 223.Return to passage
[769] Marshall to Story, May 27, 1819, Proceedings, Mass. Hist. Soc. 2d Series, XIV, 324-25.Return to passage
[770] 4 Wheaton, 666-713.Return to passage
[771] Livingston to Story, Jan. 24, 1819, Story, I, 323. This important letter discredits the rumor that Story at first thought the College Acts valid.Return to passage
Story sent copies of his opinion to eminent men other than his associates on the Supreme Bench, among them William Prescott, father of the historian, a Boston lawyer highly esteemed by the leaders of the American bar. "I have read your opinion with care and great pleasure," writes Prescott. "In my judgment it is supported by the principles of our constitutions, and of all free governments, as well as by the authority of adjudged cases. As one of the public, I thank you for establishing a doctrine affecting so many valuable rights and interests, with such clearness and cogency of argument, and weight of authority as must in all probability prevent its ever being again disturbed, I see nothing I should wish altered in it. I hope it will be adopted without diminution or subtraction. You have placed the subject in some strong, and to me, new lights, although I had settled my opinion on the general question years ago." (Prescott to Story, Jan. 9, 1819, ib. 324.)
[772] For instance, the watchful Niles does not even mention it in his all-seeing and all-recording Register. Also see Warren, 377.Return to passage
[773] North American Review (1820), X, 83.Return to passage
[774] Fiske: Essays, Historical and Literary, I, 379.Return to passage
[775] Maine: Popular Government, 248.Return to passage
[776] Story to Kent, Aug. 21, 1819, Story, I, 331.Return to passage
[777] See Cooley: Constitutional Limitations (6th ed.), footnote to 335.Return to passage
[778] Butchers' Union, etc. vs. Crescent City, etc. 111 U.S. 750.Return to passage
[779] Beer Company vs. Massachusetts, 97 U.S. 25; and see Fertilizing Co. vs. Hyde Park, ib. 659.Return to passage
[780] Stone vs. Mississippi, October, 1879, 11 Otto (101 U.S.) 816.Return to passage
[781] The Binghamton Bridge, December, 1865, 3 Wallace, 73.Return to passage
[782] Pearsall vs. Great Northern Railway, 161 U.S. 660.Return to passage
[783] More has been written of Marshall's opinion in this case than of any other delivered by him except that in Marbury vs. Madison.Return to passage
For recent discussions of the subject see Russell: "Status and Tendencies of the Dartmouth College Case," Am. Law Rev. XXX, 322-56, an able, scholarly, and moderate paper; Doe: "A New View of the Dartmouth College Case," Harvard Law Review, VI, 161-81, a novel and well-reasoned article; Trickett: "The Dartmouth College Paralogism," North American Review, XL, 175-87, a vigorous radical essay; Hall: "The Dartmouth College Case," Green Bag, XX, 244-47, a short but brilliant attack upon the assailants of Marshall's opinion; Jenkins: "Should the Dartmouth College Decision be Recalled," Am. Law Rev. LI, 711-51, a bright, informed, and thorough treatment from the extremely liberal point of view. A calm, balanced, and convincing review of the effect of the Dartmouth decision on American economic and social life is that of Professor Edward S. Corwin in his Marshall and the Constitution, 167-72. When reading these comments, however, the student should, at the same time, carefully reëxamine Marshall's opinion.