l building which the richest
of communities could ill have borne. Railroads were beginning to create
markets for Eastern farmers. The Westerners, therefore, sunk millions of
their hard earnings in railways which paralleled their canals or
projected into wildernesses. Between 1830 and 1840 these ventures of the
West, from Michigan to Louisiana, absorbed hundreds of millions of
capital. Illinois borrowed $14,000,000 when her total annual income was
hardly more than $250,000; Mississippi borrowed $12,000,000 on a yearly
income a little less than that of Illinois. The States had mortgaged
their futures for decades to come. This was especially true of Western
communities; but Eastern States like Pennsylvania, Virginia, and South
Carolina were also in debt for similar amounts. Everybody thought the
resources of the United States were inexhaustible; and everybody seemed
willing to tax future generations beyond all precedent in order to
develop these resources.

The depositing of the federal funds in state banks by Jackson had
greatly stimulated speculation. Public interest in banks, already great,
increased enormously. Forty new banks were created in Pennsylvania in a
single year. State banks increased their capital and extended their
operations. In two years the bank notes in circulation increased from
$95,000,000 to $140,000,000; loans and discounts rose from $324,000,000
to $457,000,000. The National Bank, which had curtailed business in
order to embarrass the country and particularly President Jackson,
quickly changed its tactics, and, sailing under a charter from the State
of Pennsylvania, kept pace with its five hundred rivals. To be sure the
Federal Constitution forbade the States to issue bills of credit. But
the States incorporated banking companies which issued the forbidden
notes by the million, and the Supreme Court of the United States, now
that Marshall was dead and the personnel of its membership had undergone
a change, declared the practice lawful.

States indorsed or participated in the proceedings of the banks, the
banks loaned to other corporations or to private individuals on such
security as land, slaves, improvements already made, or the personal
credit of men otherwise deeply in debt. The flood of money was thus,
before 1837, invested in lands and houses or railroads and canals which
could neither pay dividends nor return the principal for several years.
It seemed that when the Federal Government paid t