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BANKS AND

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Originally appearing in Volume V27, Page 701 of the 1911 Encyclopedia Britannica.
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See also:

BANKS AND BANKING: See also:United States; and See also:JACKSON, See also:ANDREW.) 171. All the See also:political conflicts of Jackson's terms of See also:office were See also:close and See also:bitter. Loose in his ideas before 1829, Jackson showed a steady tendency to adopt the strictest construction of the See also:powers of the Federal See also:government, except in such See also:official perquisites as the offices. He See also:grew into strong opposition to all traces of the " See also:American See also:system," and vetoed opposition bills for See also:internal improvements unsparingly; and to the his feeling of dislike to all forms of See also:protection is as "Amerkan evident, though he took more care not to make it System." too public. There are many reasons for believing that his See also:drift was the See also:work of a strong school of leaders—Martin See also:Van Buren, See also:Thomas H. See also:Benton, See also:Edward See also:Livingston, See also:Roger B. See also:Taney, See also:Levi See also:Woodbury, See also:Lewis See also:Cass, W. L. See also:Marcy and others—who See also:developed the policy of the party, and controlled it until the See also:great changes of parties about 185o took their See also:power from them. At all events, some persistent See also:influence made the Democratic party of 1830–185o the most consistent and successful party which had thus far appeared in the United States. 172. See also:Calhoun (q.v.) and Jackson were of the same stock—Scottish-Irish—much alike in See also:appearance and charac- teristicsr the former representing the trained and edu- Jaccksonaand kson.

cated See also:

logic of the -See also:race, the latter its instincts and passions. Jackson was led to break off his friendly relations with The See also:Land System. The Whig Party. Calhoun in 183o, and he had been led to do so more easily because of the appearance of the See also:doctrine of See also:nullification (q.v.), which was generally attributed, correctly enough, to the authorship of Calhoun. Asserting, as the Republican party of 1798 had done, the See also:sovereign powers of each See also:state, Calhoun held that, as a means of avoiding See also:secession and violent struggle upon every occasion of the passage of an See also:act of See also:Congress which should seem unconstitutional to any state, the state might properly suspend or " nullify " the operation of the See also:law within its See also:jurisdiction, in See also:order to protect its citizens against oppression. The passage of the See also:Tariff Act of 1832, which organized and systematized the protective system, forced the Calhoun party into See also:action. ,A state See also:convention in See also:South Carolina (q.v.) on the 24th of See also:November 1832 declared the Tariff Act null, and made ready to enforce the See also:declaration. 173. But the See also:time was past when the power of a single state could withdraw it from the See also:Union. The See also:president issued a See also:proclamation, warning the See also:people of South Carolina against any See also:attempt to carry out the See also:ordinance of nullification; he ordered a See also:naval force to take See also:possession of See also:Charleston See also:harbour to collect the duties under the act; he called upon Congress for additional executive powers, and Congress passed what nullifiers called the " bloody See also:bill," putting the land and naval forces at the disposal of the president for the collection of duties against " unlawful combinations "; and he is said to have announced, privately and profanely, his intention of making Calhoun the first victim of any open conflict. Affairs looked so threatening that an unofficial See also:meeting of " leading nullifiers " agreed to suspend the operation of the ordinance until Congress should adjourn; whence it derived the right to suspend has never been stated. 174.

The president had already asked Congress to reduce the duties; and many Democratic members of Congress, who had yielded to the popular clamour for protection, were very glad to use " the crisis " as an excuse for now voting against it. A See also:

compromise Tariff Act, scaling down all duties over 20% by one-tenth of the excess every two years until 1842, when the remaining excess over 20% should be dropped, was introduced by See also:Clay and became law. Calhoun and his followers claimed this as all that the nullification ordinance had aimed at; and the ordinance was formally repealed. But nullification had received its See also:death-See also:blow; even those See also:Southern leaders who maintained the right of secession refused to recognize the right of a state to remain in the Union while nullifying its See also:laws; and, when protection was reintroduced by the tariff of 1842, nullification was hardly thought of. 175. All the internal conditions of the United States were completely altered by the introduction of See also:railways. For twenty The years past the Americans had been pushing in every See also:Locomotive. direction which offered a See also:hope of the means of recon- ciling vast territory With enormous See also:population. See also:Stephenson's invention of the locomotive came just in time, and Jackson's two terms of office marked the outburst of See also:modern American See also:life. The See also:miles of railway were 23 in 1830, 1098 in 1835, some 2800 in 184o, and thereafter they about doubled every five years until ,86o. 176. A railway See also:map of 1840 shows a fragmentary system, designed mainly to fill the gaps See also:left by the means of communica-RaUways tion in use in 183o. One or two See also:short lines run back of 1840, into the See also:country from See also:Savannah and Charleston; another runs See also:north along the See also:coast from See also:Wilmington to See also:Baltimore; several lines connect New See also:York with See also:Washington and other points; and short lines elsewhere See also:mark the openings which needed to be filled at once—a number in New See also:England and the See also:Middle states, three in See also:Ohio and See also:Michigan, and three in See also:Louisiana.

See also:

Year after year new inventions came in to increase 4nthrache. and aid this development. The See also:anthracite See also:coal of the Middle states had been known since 1790, but no means had been devised to put the refractory See also:agent to work. It was now successfully applied to railways (1836), See also:Iron, and to the manufacture of iron (1837). Hitherto See also:wood had been the best See also:fuel for iron-making; now the states which relied on wood were driven out of competition,and See also:production was restricted to the states in which nature had placed coal alongside of iron. See also:Steam See also:navigation across the See also:Atlantic was established in 1838. The See also:telegraph OceanNavicame next, S. F. B. See also:Morse's See also:line being erected in See also:gallon. The 1844. The spread of the railway system brought Telegraph. with it, as a natural development, the rise of the American system of See also:express companies, whose first phases of individual enterprise appeared in 1839. No similar See also:period in American See also:history is so extraordinary for material development as the See also:decade 183o-184o.

At its beginning the country was an over-grown type of colonial life; at its end American life had been shifted to entirely new lines, which it has since followed. Modern American history had burst in with the explosiveness of an See also:

Arctic summer. 177. The steamboat had aided Western development, but the railway aided it far more. Cities and states grew as if the See also:oxygen of their surroundings had been suddenly Western increased. The steamboat influenced the railway, See also:settlement. and the railway gave the steamboat new powers. Vacant places in the states See also:east of the See also:Mississippi were filling up; the See also:long lines of emigrant waggons gave way to the new and better methods of transport; and new grades of land were made accessible. See also:Chicago was but a frontier fort in 1832; within a See also:half-dozen years it was a flourishing See also:town, with eight steamers connecting it with See also:Buffalo, and dawning ideas of its future development of railway connexions. The maps See also:change from decade to decade, as mapmakers hasten to insert new cities which have sprung up. Two new states,See also:Admission See also:Arkansas and Michigan, were admitted (1836 and of Arkansas 1837). The population of Ohio grew from 9oo,000 See also:Mat'd ichigan. to 1,500,000, that of Michigan from 32,000 to 212,000, and that of the country from 13,000,000 to 17,000,000, between 183o and 1840. 178.

With the change of material surroundings and possibilities came a steady amelioration of social conditions and a development of social ideals. Such features of the social past as imprisonment for See also:

debt and the cruel indiffer- conditions. ence of old methods of dealing with See also:crime began to disappear; the time was past when a state could use an abandoned See also:copper mine as its state See also:prison, as See also:Connecticut had formerly done (see See also:SIMSBURY, Connecticut). The domestic use of See also:gas and anthracite coal, the introduction of expensive aqueducts for pure See also:water, and the changing life of the people forced changes in the interior and exterior of American dwellings. Wood was still the See also:common See also:building material; imitations of See also:Greek See also:architecture still retained their See also:vogue; but the interiors were See also:models of comfort in comparison with the houses even of 181o. In the " new " regions this was not yet the See also:case, and here social restraints were still so few that society seemed to be reduced almost to its See also:primitive elements. Western steamers reeked with gambling, swindling, duelling and every variety of See also:vice. Public law was almost suspended in some regions; and organized associations of counterfeiters and See also:horse-thieves terrorized whole sections of country. But this state of affairs was altogether temporary, as well as limited in its See also:area; the older and more densely settled states had been well prepared for the change and had never lost command of the social forces, and the See also:process of settling down went on, even in the newer states, with far more rapidity than could reasonably have been expected. Those who took See also:part in the movements of population in 183o-1840 had been trained under the rigid forms of the previous American life; and these soon re-asserted themselves. The rebound was over before 1847, and the Western states were then as well prepared to receive and See also:digest the great See also:immigration which followed as the older states would have been in 1830. 179. A distinct American literature See also:dates from this period.

Most of the publications in the United States were still cheap reprints of See also:

foreign See also:works; but native productions Literature. no longer followed foreign models with servility. Between 1830 and 1840 See also:Whittier, See also:Longfellow, See also:Holmes, See also:Poe, See also:Hawthorne, See also:Emerson, See also:Bancroft and See also:Prescott joined the advance-guard of American writers—Bryant, See also:Dana, See also:Halleck, See also:Drake, Nullification. Tariff of 1833. See also:Irving and See also:Cooper; and even those writers who had already made their See also:place in literature showed the influence of new conditions by their growing tendency to look less to foreign models and methods. (See AMERICAN LITERATURE.) Popular See also:education was improved. The new states had from the first endeavoured to secure the best possible system of common See also:schools. The attempt came naturally from the political instincts of the class from which the See also:migration came; but the system which resulted was to be of incalculable service during the years to come. Their See also:absolute See also:democracy and their universal use of the See also:English common See also:language have made the common schools most School successful See also:machines for converting the raw material System. of immigration into American citizens. This supreme benefit is the basis of the system and the See also:reason for its existence and development, but its incidental See also:advantage of educating the people has been beyond calculation. It was an See also:odd symptom of the See also:general change that American See also:newspapers took a new See also:form during these ten years. The old " blanket-See also:sheet " newspaper, cumbrous to handle and slow in all its ways, met its first See also:rival in the type of newspaper which appeared first in New York See also:City, in the See also:Sun, the See also:Herald and the See also:Tribune (1833, 1835 and 1841). See also:Swift and energetic in gathering See also:news, and fearless, sometimes reckless, in stating it, they brought into American life, with very much that is evil, a great preponderance of See also:good.

1So. The See also:

chaos into which a part of American society had been thrown had a marked effect on the See also:financial institutions Land Sales. of the country, which went to pieces before it for a time. It had not been meant to make the public lands of the United States a source of See also:revenue so much as a source of development. The sales had touched their high-water mark during the speculative year 1819, when receipts from them had amounted to $3,274,000; in other years they seldom went above $2,000,000. When the railway set the stream of migration moving faster than ever, and cities began to grow like See also:mush-rooms, it was natural that See also:speculation in land should feel the effects. Sales See also:rose to $3,200,000 in 1831, to $4,000,000 Speculation.. in 1833, to $5,000,000 in 1834, to $15,000,000 in 1835, and to $25,000,000 in 1836. In 1835 the president announced to Congress that the public debt was extinguished, and that some way of dealing with the surplus should be found. Calhoun's proposal, that after the year 1836 any surplus in excess of $5,000,000 should be divided among the states as a See also:loan, was adopted, as regards the surplus (almost $37,000,000) of that year; and some $28,000,000—still carried on the books of the See also:treasury as unavailable funds—were actually distributed before the crisis of 1837 put an end to the surplus and to the policy. The states had already taken a See also:hand in the general speculation by beginning works of public improvement. Foreign, particularly English, See also:capital was abundant; and states which had been accustomed to think a dozen times over a tax of a See also:hundred thousand dollars now began to negotiate loans of millions of dollars and to appropriate the proceeds to the digging of canals and the construction of railways. Their enterprises were badly conceived and badly managed, and only added to the confusion when the See also:crash came.

If the Federal government and the states See also:

felt that they were See also:rich, the imaginations of individuals ran See also:riot. Every one wanted to buy; prices rose, and every one was growing richer on See also:paper. The assessed value of real See also:estate in New York City in 1832 was $104,000,000; in 1836 it had grown to $253,000,000. In See also:Mobile the assessed value rose from $r,000,000 to $27,000,000. Fictitious values were the See also:rule. 181. When Jackson in 1833 ordered the government revenues to be deposited elsewhere than in the See also:Bank of the United States, there was no government agent to receive them. The secretary of the treasury selected banks at various points in which the revenue should be deposited by the See also:collecting See also:officers; but these banks were organized under charters from their states, as were all banks except that of the United States. The theory of the dominant party denied the constitutional power of Congress to See also:charter a bank, and tho states had not yet learned how todeal with such institutions. Their grants of bank charters had been based on See also:ignorance, intrigue, favouritism or corruption, and the banks were utterly unregulated. The Democratic feeling was that the See also:privilege of forming banking corpora-corporations should be open to all citizens, and it Lions. soon became so.

Moreover, it was not until after the crash that New York began the system of compelling such deposits as would really secure circulation, which was long afterward further developed into the See also:

present See also:national bank system. In most of the states banks could be freely organized with or without tangible capital, and their notes could be sent to the See also:West for the See also:purchase of government lands, which needed to be held but a See also:month or two to gain a handsome profit. (See BANKS AND BANKING: United States.) " See also:Wild-See also:cat banks " sprang up all over the country; and the " pet banks," as those chosen for the See also:deposit of government revenues were called, went into speculation as eagerly as the banks which hardly pretended to have capital. 182. The Democratic theory denied the power of Congress to make anything but See also:gold or See also:silver See also:coin legal See also:tender. There have been " paper-See also:money heresies " in the party; but there was none such among the new school of The "specie Gincu/ar." Democratic leaders which came in in 1829; they were " hard-money men." In See also:July 1836 Jackson's secretary of the treasury ordered land agents to take nothing in See also:payment for lands except gold or silver. In the following See also:spring the full effects of the order became evident; they See also:fell on the See also:administration of Van Buren,. Jackson's successor.' Van Buren had been Jackson's secretary of state, the representative See also:man of the new Democratic school, and, in the See also:opinion of the opposition, the evil See also:genius of the Jackson administration; and it seemed to the Whigs poetic See also:justice that he should See also:bear the See also:weight of his predecessor's errors. The " specie circular " turned the See also:tide of paper back to the East, and when it was presented for payment most of the banks suspended specie payment with hardly a struggle. There was no longer a thought of buying; every one wanted to sell; and prices ran down with a rapidity even more startling than that with which they had risen. Failures, to an extent and on a See also:scale unprecedented in the United States, made up the " panic of 1837." Many of the 1837 of states had left their bonds in the hands of their agents, and, on the failure of the latter, found that the bonds had been hypothecated or disposed of, so that the states got no return from them except a debt which was to them enormous. Saddled suddenly with such a See also:burden, and unable even to pay See also:interest, some of the states Rtioneudia.

- " repudiated " their obligations; and repudiation was made successful by the fact that a state could not be sued by its creditors except by its own consent. Even the Federal government felt the See also:

strain, for its revenues were locked up in suspended banks. A little more than a year after Congress had authorized the See also:distribution of its surplus revenues among the states Van Buren was forced to See also:call it into See also:special session to provide some See also:relief for the government itself. 183. Van Buren held manfully to the strictest construction of the powers of the Federal government. He insisted that the panic would best right itself without government sun-interference, and, after a four years' struggle, he treasury succeeded in making the " sub-treasury See also:scheme " Scheme. law (184o). It cut off all connexion of the government with banks, putting collecting and disbursing officers under bonds to hold money safely and to See also:transfer it under orders from the treasury, and restricting payments to or by the United States to gold and silver coin. Its passage had been preceded by another commercial crisis (1839), more limited in its See also:field, but more discouraging to the people. It is true that Jackson, in dealing with the finances, had " simply smashed things," leaving his successor to repair See also:damages; but it is far from certain that this was not the best way available at the time. The wisest scheme of . financial reform would have had small See also:chance In the See also:election of 1836 Van Buren received 17o electoral votes, W. H. See also:Harrison (Whig) 73, See also:Hugh L.

See also:

White 26, See also:Daniel See also:Webster 14 and W. P. Mangum 11. News-papers. of success with the land-jobbers in Congress, and Van Buren's firmness found the way out of the chaos. 184. Van Buren's firmness was unpopular, and the Whig party now adopted methods which were popular if somewhat Election demagogical. It nominated See also:William H. Harrison of 1840. in 184o; it contrasted his homely frontier virtues with Van Buren's " ostentatious indifference to the misfortunes of the people " and with the supposed luxury of his life in the White See also:House; and, after the first of the modern " See also:campaigns " of See also:mass meetings and processions, Harrison was elected, receiving 234 electoral votes and Van Buren only 6o. He died on the 4th of See also:April 1841, only a month after his inauguration, and the vice-president, See also:John See also:Tyler, became president. Tyler was of the extreme Calhoun school, which had shown some disposition to See also:grant to Van Buren a support which it had refused to Jackson; and the Whigs had nominated Tyler to retain his See also:faction with them. Now he was the nominal See also:leader of the party, while his politics were opposite to theirs, and the real leader of the party, Clay, was ready to force a See also:quarrel upon him.

The quarrel took place; the Whig See also:

majority in Congress was not large enough to pass any See also:measures over Tyler's See also:veto; and the first two years of his administration were passed in barren conflict with his party. The " sub-treasury " law was repealed (1841); the tariff of 1842 introduced a modified protection; and there the Whigs were forced to stop. Their dissensions made Democratic success comparatively easy, and Tyler had the support of a Democratic House behind him during the last two years of his See also:term. 185. The success of the Democratic machinery, and the reflex of its temporary check in 184o, with the influences brought to bear on it by the returning Calhoun faction, were such as to take the See also:control of the party out of the hands of the leaders who had formed it. They had had high regard fol. political principle, even though they were willing to use doubtful methods for its See also:propagation; these methods had now brought out new men, who looked mainly to success, and to close connexion with the controlling political See also:element of the South as the easiest means of attaining success. When the Democratic convention of 1844 met it was expected to renominate Van Buren. A majority of the delegates had been sent there for that purpose, but many of them would have been glad to be prevented from doing so. They allowed a See also:resolution to be passed making a two-thirds See also:vote necessary for nomination; Van Buren was unable to command so many votes; and, when his name was withdrawn, See also:James K. See also:Polk was nominated. The Whigs nominated Clay. 186.

The beginning of the abolitionist See also:

movement in the United States, the See also:establishment of the Liberator (1831), Abolition/stand of the American See also:Anti-See also:Slavery Society (1833), movement. and the subsequent divisions in it, are dealt with elsewhere (see See also:GARRISON, WILLIAM See also:LLOYD). Up to that time " abolition " had meant See also:gradual abolition; it was a wish rather than a purpose. Garrison called for immediate abolition. The basis of the American system was in the reserved rights of the states, and slavery rested on their will, which was not likely to be changed. But the cry was kept up. The See also:mission of the Abolitionists was to force the people to think of the question; and, in spite of riots, assaults and persecution of every See also:kind, they fulfilled it manfully. In truth, slavery was more and more out of See also:harmony with the new economic conditions which were taking See also:complete control of the North and West, but had hardly been felt in the South. Thus the two sections, North and South, were more and more disposed to take opposite views of everything in which slavery was involved, and it had a See also:faculty of involving itself in almost everything. The status of slavery in the Territories had been settled in 182o; that of slavery in the states had been settled by the Constitution; but even in See also:minor questions the intrusive element had to be reckoned with. The Abolitionists sent their documents through the mails, and the South wished the Federal government to interfere and stop the practice. The Abolitionists persisted in petitioning Congress for the passage of various measures which Congress regarded as utterly unconstitutional; and the disposition of Congress to denyor regulate the right of See also:petition in such matters (see See also:ADAMS, JOHN See also:QUINCY) excited the indignation of See also:Northern men who had no sympathy with abolition. But the first occasion on which the views of the two sections came into See also:flat contrast was on the question of the See also:annexation of See also:Texas.

187. The United States had had a vague claim to Texas until 1819, when the claim was surrendered to See also:

Spain in part See also:compensation for See also:Florida. On the revolt of See also:Mexico Texas became a part of that See also:republic. It was colonized by Texas. Americans, mainly southerners and slave-holders, seceded from Mexico in 1835, and defeated the Mexican armies and established its See also:independence in the following year. Southern politicians desired its annexation to the United States for many reasons. Its people were kindred to them; its See also:soil would widen the area of slavery; and its territory, it was hoped, could be divided into several states, to reinforce the Southern See also:column in the See also:Senate. People in the North were either indifferent or hostile to the proposal; Van Buren had declared against it, and his action was a reason for his defeat in the Democratic convention. On the other hand, there were indications that the See also:joint occupation of the See also:Oregon country could not Oregon. last much longer. American immigration into it had begun, while the See also:Hudson's See also:Bay See also:Company, the See also:British See also:tenant of the soil, was the natural enemy of immigration. To carry the sentiment of both sections, the two points were coupled; and the Democratic convention declared for the reannexation of Texas and the reoccupation of Oregon. 188.

One of the See also:

cardinal methods of the political Abolitionists was to nominate candidates of their own against a doubtful friend, even though this secured the election of an open enemy. Clay's efforts to guard his condemna- P8 erty tion of the Texas annexation project were just enough to push the See also:Liberty party (q.v.), the political Abolitionists, into voting for candidates of their own in New York; on a close vote their loss was enough to throw the electoral votes of that state to Polk, and its votes decided the result. Ejection Polk was elected (November 1844) ;1 and Texas of 1844. was annexed to the United States in the following Admission spring. At the next meeting of Congress (1845) of Texas. Texas was admitted as a state. 189. West of Texas the northern prolongation of Mexico ran right athwart the westward movement of American population; and, though the movement had not yet reached the barrier, the Polk administration desired further acquisitions from Mexico. The western boundary of Texas was undefined; a See also:strip of territory claimed by Texas was settled exclusively by Mexicans; but the Polk administration directed General Zachary See also:Taylor, the American See also:commander in Texas, to See also:cross the Nueces See also:river and seize the disputed territory. Collisions with Mexican troops followed; they were beaten in the battles of Palo See also:Alto and Resaca de la See also:Palma, and were chased across the Rio Grande. Taylor followed and took the city of See also:Monterey. 190. On the news of the first bloodshed Congress declared See also:war against Mexico, over the opposition of the Whigs.

A land and naval force took possession of See also:

California, and a land expedition occupied New Mexico, so that the war with Mexko. authority of Mexico over all the soil north of her present boundaries was abruptly terminated (1846). At the opening of 1847 Taylor fought the last See also:battle in northern Mexico (Buena Vista), defeating the Mexicans, and General See also:Winfield See also:Scott, with a new See also:army, landed at See also:Vera Cruz for a See also:march upon the city of Mexico. Scott's march was marked by one successful battle after another, usually against heavy odds; and in See also:September he took the capital city and held it until See also:peace was made (1848) by the treaty of Guadalupe See also:Hidalgo. Among the peace. terms of peace was the cession of the present See also:Cali- fornia, See also:Utah, See also:Arizona and New Mexico, the See also:consideration being a payment of $15,000,000 by the United States and the See also:assumption of some $3,000,000 of debts due by Mexico to American citizens. With a subsequent rectification of frontier (1853) by the See also:Gadsden Treaty (see GADSDEN, JAMES), this cession 1 Polk received 170 electoral votes and Clay 105. Tariff of 1842. added some 5oo,00o sq. m. w the area of the United States; Texas itself made up a large additional area. The settlement of the north-east and north-west boundaries (see See also:MAINE and OREGON) by the Webster-See also:Ashburton and See also:Buchanan-Pakenham See also:treaties(1842, 1846) with the Texas and Mexican cessions, gave the United States the complete territorial form retained until the annexation of See also:Alaska in 1867. 191. In the new territory slavery had been forbidden under Mexican law; and its annexation brought up the question of Slavery in its status under American law. He who remembers the New the See also:historical fact that slavery had never been more Territory• than a See also:custom, ultimately recognized and protected by state law, will not have much difficulty in deciding about the propriety of forcing such a custom by law upon any part of a territory.

But, if slavery was to be excluded from the new territory, the states which should ultimately be formed out of it would enter as See also:

free states, and the influence of the South in the Senate would be decreased. For the first time the South appears as a distinct imperium in imperio in the territorial difficulties which began in 1848. 192. The first appearance of these difficulties brought out in the Democratic party a See also:solution which was so closely in line ".Squatter with the prejudices of the party, and apparently so Sove- likely to meet all the wishes of the South, that it reignty." bade See also:fair to carry the party through the crisis without the loss of its Southern vote. This was " squatter See also:sovereignty," the notion that it would be best for Congress to leave the people of each Territory to See also:settle the question of the existence of slavery for themselves. The broader and democratic ground for the party would have been that which it at first seemed likely to take—the " See also:Wilmot Proviso," a See also:condition Wilmot proposed to be added to the act authorizing acquisi- Provlso.

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