New Sectional Issues 211bank. In October 1814 Secretary of the Treasury
Alexander J. Dallas submitted a plan for a second
Bank of the United States, and after considerable
wrangling over its precise form, the institution was
authorized in April 1816.
The new Bank was much larger than its predeces-
sor, being capitalized at $35 million. However, unlike
Hamilton’s creation, it was badly managed at the
start. Its first president, William Jones, a former secre-
tary of the treasury, allowed his institution to join in
the irresponsible creation of credit. By the summer of
1818 the Bank’s eighteen branches had issued notes
in excess of ten times their specie reserves, far more
than was prudent, considering the Bank’s responsibil-
ities. When depression struck the country in 1819,
the Bank of the United States was as hard pressed as
many of the state banks. Jones resigned.
The new president, Langdon Cheves of South
Carolina, was as rigid as Jones had been permissive.
During the bad times, when easy credit was needed,
he pursued a policy of stern curtailment. The Bank
thus regained a sound position at the expense of
hardship to borrowers. “The Bank was saved,” the
contemporary economist William Gouge wrote
somewhat hyperbolically, “and the people were
ruined.” Indeed, the bank reached a low point in
public favor. Irresponsible state banks resented it, as
did the advocates of hard money.
Regional lines were less sharply drawn on the Bank
issue than on the tariff. Northern congressmen voted
against the Bank fifty-three to forty-four in 1816—many
of them because they objected to the particular pro-
posal, not because they were against any national bank.
Those from other sections favored it, fifty-eight to thirty.
The collapse occasioned by the Panic
of 1819 produced further opposition
to the institution in the West.
Land policy in the West also
caused sectional controversy. No one
wished to eliminate the system of
survey and sale, but there was con-
tinuous pressure to reduce the price
of public land and the minimum
unit offered for sale. The Land Act
of 1800 set $2 an acre as the mini-
mum price and 320 acres (a half sec-
tion) as the smallest unit. In 1804
the minimum was cut to 160 acres,
which could be had for about $80
down, roughly a quarter of what the
average artisan could earn in a year.
Since banks were pursuing an
easy-credit policy, land sales boomed.
In 1818 the government sold nearly
3.5 million acres. Thereafter, continu-
ing expansion and the rapid shrinkage
of the foreign market as European farmers resumed
production after the Napoleonic Wars led to disaster.
Prices fell, the panic struck, and western debtors were
forced to the wall by the hundreds.
Sectional attitudes toward the public lands were
fairly straightforward. The West wanted cheap land;
the North and South tended to look on the national
domain as an asset that should be converted into as
much cash as possible. Northern manufacturers feared
that cheap land in the West would drain off surplus
labor and force wages up, while southern planters were
concerned about the competition that would develop
when the virgin lands of the Southwest were put to the
plow to make cotton. The West, however, was ready to
fight to the last line of defense over land policy, while
the other regions would usually compromise on the
issue to gain support for their own vital interests.
Sectional alignments on the question of internal
improvements were similar to those on land policy,
but this issue, soon to become very important, had
not greatly agitated national affairs before 1820. As
we have seen, the only significant federal internal
improvement project undertaken before that date was
the National Road.
The most divisive sectional issue was slavery. After
the compromises affecting the “peculiar institution”
made at the Constitutional Convention, it caused
remarkably little conflict in national politics before- Although the importation of blacks rose in the
1790s, Congress abolished the African slave trade in
1808 without major incident. As the nation expanded,
free and slave states were added to the Union in equal
numbers with Ohio, Indiana, and Illinois being
balanced by Louisiana, Mississippi, and Alabama. In
The Bank of Philadelphia (1801), designed by Benjamin Latrobe, combined the Ionic columns
of an ancient Athenian temple and the circular dome of ancient Rome. By appropriating the
grandeur of antiquity, Americans were seeking to liberate themselves from modern Europe.
Sectional tensions led to many disputes over the tariff, banking, federal land policy, and
internal improvements. Overshadowing all of these was the debate over slavery.