dit easily secured from wild-cat banks, the Western
pioneer had bought lands beyond the purchasing power of his own meager
capital; and the speculator in turn had borrowed money to secure title
to lands which he would unload upon unsuspecting settlers. State banks
had met these demands by liberal issues of notes which were imperfectly
covered by their specie reserves. It needed only a sudden demand for
liquidation to cause widespread distress.

The unwise management of the National Bank may have contributed to the
approaching disaster. The branch banks in the South and West had loaned
freely, issuing notes which were payable at any branch of the National
Bank. Capital was thus diverted from the East to sections of the country
where there was least conservatism in banking. In 1818, the directors of
the Bank became alarmed at the excessive expansion of credit, and issued
instructions which compelled the redemption of notes at the bank where
they were issued. At the same time the branch banks curtailed their
loans. This sudden reversal of policy caused a fearful pressure which
was transmitted from creditor to debtor all along the line.

Every sufferer by the panic was disposed to blame the National Bank for
his misfortunes, particularly as it was common rumor that the directors
of the Bank had speculated in its stock and had used their influence to
cripple local banks. Congress had been obliged to take cognizance of
these charges and to appoint a committee to investigate the condition of
the institution. On the report of this committee, in January, 1819, the
stock of the Bank fell from 140 to 93. The investigation revealed
nothing worse than mismanagement; but a vigorous effort was made in
Congress to revoke the charter.

The widespread hostility of the West and South toward the National Bank
was born at this time. Everywhere it was known as "the Monster." State
after State passed acts to tax the branch banks out of existence. The
decision of Chief Justice Marshall, to be sure, in the famous case of
_M'Culloch_ v. _Maryland_, declared emphatically that the States had no
constitutional power to tax the branches of an institution chartered
under the laws of the United States; nevertheless, the legislature of
Ohio deliberately levied such a tax, and when resistance was offered to
its collection, withdrew the protection of the State from the branch
banks. Feeling themselves the victims of the money power, the people in
many