Ohio History Journal

STATE SOVEREIGNTY IN OHIO.

BY JEAN DICK CHEETHAM.

The doctrine of state sovereignty was the natural outgrowth

of conditions which existed in the American colonies;1 in the

Articles of Confederation the doctrine assumed definite form,

each state was to "retain its sovereignty, freedom and independ-

ence," and this was the element of weakness that undermined

the Confederation; it hindered the acceptance of the Constitu-

tion by the States and delayed their union; it was made the

battle cry in the political revolution of 1798-1800; it tainted the

political life of the Republic and was the predisposing cause of

most of the ills of our body politic for the first three-quarters

of a century of our national existence, but the civil war struck

the death blow to the doctrine.

Ohio did not escape this malign influence. The story of the

conflict between this State and the United States Bank-

between the State government and the Federal government-

is exceedingly interesting to the student of political history. In

her youth Ohio not only advocated state rights, but nullification,

and went so far as to prove her faith by her works.

Her blunder was a serious one, but nation, state or individ-

ual is the greatest that "Can win the most splendid victories by the

retrieval of mistakes."

Ohio was admitted to the Union in 1803, during the admin-

istration of President Jefferson, and for the first twenty-five years

of her statehood, the Democratic-Republican was the dominant

1 "As separate states they were all agreed that they should con-

stitute and govern themselves. The revolution under which they were

gasping for life * * * * had been kindled by the abuse of power

-the power of government. An invincible repugnance to the delega-

tion of power, had thus been generated, by the very course of events

which had rendered it necessary; and the more indispensable it became,

the more awakened was the jealousy and the more intense was the distrust

by which it was to be circumscribed."-J. Q. ADAMS, Jubilee of the Con-

stitution, p. 10.

(290)

State Sovereignty in Ohio.           291

party in both state and nation. It is not therefore surprising

that she should have become imbued with the doctrine of state

rights and tainted by that "colossal heresy" nullification.

In April, 1816, Congress passed an act incorporating the

Bank of the United States. This bill for rechartering the Bank

(which had been originally established in 1791, but whose char-

ter had expired in 1811) met with strong opposition in the

House, where it passed by a vote of eighty to seventy-one. The

fight was not so bitter in the Senate, the vote there standing

twenty-two to twelve.

In the spring of 1817 the Bank established an office of dis-

count and deposit at Cincinnati and a few months later another

was opened at Chillicothe.

When the Legislature met the following December, the

private banks and the political demagogues began a very lively

campaign against these branches. The Legislature appointed a

joint committee to consider the expediency of taxing all branches

of the United States Bank that had been, or might be established

within this State. The report of the committee was adverse to

such action. (House Journal 1818, pp. 144-147.)

The Lower House refused to concur in the report by a vote

of 37 to 22, and presented a substitute consisting of a very

lengthy preamble and brief resolutions. After considering the

rights of the Government, the privileges of the State and the

duties of the Bank, they strike the key-note of the opposition:

"That these branches must very seriously affect the opera-

tions of the state banks, admits of no question; and if we are to

transact our business upon a paper currency, it would seem to

be sound policy to preserve that currency in some measure under

our own control.

"From the banking institutions of the State, both the State

government and its citizens, derive considerable revenue. The

profit made by banking is divided among ourselves, and the

debts due to our banks, are debts due to our own citizens. But

by the introduction of these branches, we place ourselves in the

hands of strangers, and the discounts paid upon our loans, will

be in the nature of a tribute to the stock jobbers of the Atlantic

cities, and of Europe. * * *

292       Ohio Arch. and His. Society Publications.

"The discount upon Ohio paper in the Atlantic cities is in

act an advantage to the country. It induces the merchant to

invest it in produce at home and seek a market for that produce

abroad. * * * Its natural tendency is to keep money in the

country, and send out produce; thus reducing the consumption

of foreign articles within a just and proper boundary, and check-

ing the propensity to engage in the trade of importation.

* * * The complaints against depreciated bank paper, and

about the difficulty of exchange, are loud and incessant, but this

is no proof that they are of the magnitude described. * * *

"It is therefore evident that the capital introduced into the

country through these branches, is directly calculated to wither

our agriculture and cramp our manufactures, and, of course,

has no claim upon our indulgence; but is most unquestionably a

proper subject of taxation." (House Journal 1818, pp.

313-315.)

This substitute report was accepted and a committee was

appointed to prepare a bill. No further action was taken, how-

ever, in regard to the matter at that session. But when the

General Assembly met in the winter of 1818-1819 the question

was again taken up and on the 8th of February, 1819, a law

was enacted taxing the United States Bank. In a preamble they

declare that "The president and directors of the Bank of the

United States have established two offices of discount and

deposit in this state, at which they transact banking business,

by loaning money and issuing bills in violation of the laws of

this state." It was therefore provided that if the Bank of the

United States continued to do business after the 1st day of

September, 1819, that it should "pay a tax of fifty thousand dol-

lars per annum upon each office of discount and deposit at which

they may commence or continue to transact banking business

within this state." (0. L. Vol. 17, pp. 190-191.)

The collection of the tax was committed to the Auditor of

State, who was to "make out his warrant under his seal of office

directed to any person whom he may appoint, in such warrant,

to execute the same, commanding him to collect the amount of

tax in said warrant specified, from the Bank of the United

States." (O. L. Vol. 17, p. 192.)

State Sovereignty in Ohio.           293

This collector was vested with extraordinary powers in col-

lecting the tax. He was authorized to enter the banking house

of the Bank of the United States and demand payment of the

amount called for in the warrant. If, after such demand was

made, payment of the tax was refused, if he was unable to find

in the banking room any money, bank notes, etc., whereon to

levy, the act declares that "it shall and may be lawful, and it is

hereby made the duty of such person, to go into each and any

other room or vault of such banking house, and every closet,

chest, box or drawer in such banking house to open and search;

and any money, bank notes, or other goods and chattels, the

property of said bank * * * therein deposited, thereon to levy,

or so much thereof as will satisfy the tax aforesaid." (0. L

Vol. 17, pp. 193.)

The Auditor, considering the act imperative, made known

to the Governor, at an early period, his determination to carry

the law into effect, and he received the concurrent opinion of the

Executive that it was his (the Auditor's) duty to proceed to the

executive thereof unless enjoined by proper authority. On the

11th of September the Auditor was served with a notice that

application would be made on the 14th of that month, "or so

soon thereafter as counsel could be heard," to the Circuit Court

of the United States at Chillicothe, "to enjoin the proceedings

under the aforesaid act, against the Bank of the United States,

in the hands of the Auditor."

On the morning of the 15th of September the Auditor was

served with a copy of a petition in chancery, filed in the Circuit

Court of the United States by the officers of the Bank, praying,

among other things, that the Auditor be enjoined from charging

the said Bank with a tax of fifty thousand dollars upon either

of the offices established in the State of Ohio, and also from

making out any warrant or appointing any person to execute

either or any of the provisions of the said act of the Legislature

against them.

The Auditor was also served with a subpoena in chancery

from the Circuit Court to appear before it in Chillicothe on the

first Monday of January to answer said petition.

294       Ohio Arch. and His. Society Publications.

Notwithstanding all this, the Auditor proceeded to charge

the Bank of the United States with a tax of one hundred thou-

sand dollars, and issued a warrant to John L. Harper for the

collection of the same. On the 17th of September demand was

made by Mr. Harper on the Cashier of the bank at Chillicothe,

and on his refusal to pay it, the bank was forcibly entered by

Mr. Harper and his assistant, and specie and bank notes to the

amount of one hundred thousand dollars were taken. Mr.

Harper started at once for Columbus, and on reaching that point

placed ninety-eight thousand dollars in the hands of the Treas-

urer (two per cent of the full amount being retained by the col-

lectors for their services) and received the receipt of the Treasurer

for that amount; this receipt was given by Mr. Harper to the

Auditor, who gave his official receipt for it and charged the

Treasurer therewith. The Treasurer consulted counsel as to

whether he ought to retain this sum within his individual con-

trol or pass it to the credit of the State on his books; he adopted

the latter course, but placed the funds in a trunk and kept it

separate from other funds. (Senate Journal 1820, pp. 39-66,

and Wheaton's Reports, 9, p. 833.)

The United States Bank brought an action for trespass

against the Auditor of State and others, in which it charged

them with carrying away one hundred thousand dollars "under

color and pretence of the law of Ohio," and secured the arrest

of the collectors who had taken the money from the bank at

Chillicothe; they also secured an order enjoining the State

Treasurer from "negotiating, delivering over, or in any manner

parting with, or disposing of the specie and identical bank notes

or coin, of which the sum of one hundred thousand dollars, or

any part thereof consisted," until the case should be finally de-

cided. (House Journal 1821, p. 66.)

At the next meeting of the General Assembly, December,

1820, the Auditor of State made a full report of all that had

occurred in connection with this case, and the report was referred

to a joint committee of the House and Senate. On December

12, 1820, this committee made a very lengthy report in which

it declared that it was "aware of the doctrine that the Federal

Courts are exclusively vested with jurisdiction to declare, in

State Sovereignty in Ohio.                 295

the last resort, the true interpretation of the constitution of the

United States. To this doctrine, in the latitude contended for,

they never can give their assent." (House Journal 1821, p. 106.)

The   committee   recommended     that the  decision  of the

Supreme Court in the case of McCulloch vs. the State of Mary-

land (Wheaton's Reports 4, p. 316), a case covering much the

same ground, be ignored, and it was called a "manufactured

case." It announced that "a combination between one-half of

the states, comprising one-third of the people only, possess the

power of disorganizing the federal government, in all its

majesty of supremacy, without a single act of violence."  (House

Journal 1821, p. 117.)

It further said "In general partial legislation is objection-

able, but this is no ordinary case; and may, therefore call for, and

warrant extraordinary measures. Since the exemptions claimed

by the bank are sustained upon the proposition that the power

that created it must have the power to preserve it, there would

seem to be a strict propriety in putting the creating power

to the exercise of this preserving power, and thus ascertaining

distinctly whether the executive and legislative departments of

the government of the Union, will recognize, sustain and enforce

the doctrine of the judicial department." (House Journal 1821,

p. 130.)

It then proceeded to recommend that the United States

Bank be placed beyond the protection of the laws of the State,

and the committee adopted a series of resolutions, among them

the following:

Resolved, By the General Assembly of the State of Ohio, That in

respect to the powers of the governments of the several states that com-

pose the American Union and the powers of the Federal Government,

this General Assembly do recognize and approve the doctrines asserted

by the Legislatures of Kentucky and Virginia in their resolutions of

November and December, 1798, and January, 1800, and do consider

that their principles have been recognized and adopted by a majority of

the American people.

Resolved further, That this General Assembly do assert, and will

maintain, by all legal and constitutional means, the right of the states to

tax the business and property of any private corporation of trade, in-

corporated by the Congress of the United States, and located to transact

its corporate business within any state.

296        Ohio Arch. and His. Society Publications.

Resolved further, That the Bank of the United States is a private

corporation of trade, the capital and business of which may be legally

taxed in any state where they may be found.

Resolved further, That this General Assembly do protest against the

doctrine, that the political rights of the separate states that compose the

American Union, and their powers as sovereign states, may be settled

and determined in the Supreme Court of the United States, so as to

conclude and bind them, in cases contrived between individuals, and

where they are, no one of them, parties direct. (House Journal 1821,

P. 131.)

The committee made its report to the General Assembly,

the resolutions were adopted, and on Jan. 29, 1821, a law was

passed withdrawing from the Bank of the United States the aid

and protection of the state laws.

This law provided "That from and after the 1st day

of September next, it shall not be lawful for any sheriff

or other keeper of a jail within this state, to receive into his cus-

tody any person arrested upon mesne process, or taken or

charged in execution at the suit of the president, directors & co.

of the Bank of the United States, or any person committed for

or upon account of any offense alleged and charged to have been

committed upon the property, rights, interests, or corporate

franchises of said Bank, when acting under a law of this State.

"That * * * it shall not be lawful for any judge, justice of

the peace, or other judicial officer appointed under the authority

of this State, to receive any acknowledgment or proof of the ac-

knowledgment of any deed of conveyance of any kind whatever,

to which the president, directors & co. of the Bank of the

United States are or may be a party, or which may be taken

or made for their use; and no recorder shall receive into his

office, or record any deed of conveyance of any description what-

soever, in which the said president, directors & co. of the Bank

of the United States are or may be a party, or which may be

made for their use, after the said first day of September next.

"It shall not be lawful for any notary public appointed under

the authority of this state, to make a protest or give a notice

thereof, of any promissory note, or bill of exchange, made pay-

able to the president, directors & co. of the Bank of the United

State Sovereignty in Ohio.           297

States, endorsed to them, or made payable at any office of dis-

count and deposit established by them in this state.

"That if any sheriff, or jailor, shall violate the provisions

of the first section of this act, he shall forfeit and pay the sum

of $200 for every such offense, to be recovered of him in an

action of debt, by the party so received in custody. And if any

judge, justice of the peace, or recorder shall do or perform any

act prohibited by this act, every such judge, justice of the peace

or recorder, shall be deemed guilty of a misdemeanor in office,

and upon conviction thereof, upon indictment shall be fined any

sum not exceeding $500 at the discretion of the Court; and if

any notary public shall make a protest, or give notice thereof,

of any promissory note or bill of exchange made payable to or

endorsed to the Bank of the United States, or made payable at any

office of discount and deposit by them established in this State,

every such notary public shall be considered guilty of a misde-

meanor in office, for which he shall be prosecuted by indictment

and upon conviction thereof, he shall be removed from office

and such shall be the judgment of the Court." (O. L. Vol. 19,

pp. 10-110.)

Be it said to the honor of a few members of the Nineteenth

General Assembly that this outrageous measure was not allowed

to pass the Lower House without a vigorous protest, which was

signed by Messrs. Vance, Cooley, Harris, Sloane, Parish and

Gault.

Their statement of the case was strong and clear, and some

of the points they made deserve to be noted.

"The bill * * * contains provisions in themselves so ex-

traordinary and alarming, and is part of a system so manifestly

repugnant to individual justice and the acknowledged principles

upon which the Union of the States is founded-the under-

signed cannot suffer it to pass without a public manifestation of

their dissent. So decisive and overwhelming a majority as that

by which this measure passed both branches of the Legislature,

might, on ordinary occasions, well induce opposition to pause,

and to doubt whether they had not taken an incorrect and im-

proper view of the subject. But this, in the language of the

select committee, 'is no ordinary case.' And the undersigned,

298      Ohio Arch. and His. Society Publications.

after having given to it all the consideration its importance

demands, are so clearly satisfied of the correctness of the course

they have taken, they deem it a sacred duty which they owe to

themselves, their constituents and the people of the state at

large, to record their decided disapprobation of the measures

which have been adopted, and the reasons upon which that dis-

approbation is founded. * * *

"No fondness for state rights-no pride of individual

opinion-should ever induce them (the people) to endanger the

safety of our political union, or pass laws to legalize the com-

mission of crime. A foreigner, an alien enemy, is entitled to

protection from our laws, in his person and in his property.

Should it be proposed to pass a law by which it would be lawful

for any individual to rob a foreigner found within our State,

or to commit a larceny upon his property, every individual would

be shocked at its gross enormity; and yet it is deliberately pro-

posed to authorize the commission of any violation of the rights

of the corporation of the bank of the United States (robbery,

larceny and forgery not excepted); a corporation composed of

citizens of our own State and country; established under the con-

stitution and laws of the Union, by the representatives of the

people themselves; a corporation peaceably pursuing their bus-

iness in our state, and arrogating to themselves no exemption

but what the constituted authorities of the nation have recog-

nized. * * *

"That the constitution of the United States, and the laws

made in pursuance thereof, are the supreme law of the land;

that they are paramount to the constitution or laws of any par-

ticular state, need not be now urged. This principle is the very

keystone upon which the fabric of our political union rests.

Destroy this, and we are no longer one government or one peo-

ple. When, therefore, the constitutional powers conferred by

the people upon the general government conflict with those

assumed by the states, when they become absolutely inconsistent,

and cannot exist together, those of the latter must yield. Any

other supposition would be at war with the letter and spirit of

the constitution; with the first principles upon which the union

of the state is founded. * * *

State Sovereignty in Ohio.           299

"If the states themselves are to be the sole expositors in

the sense contended for, of the nature of the powers conferred

upon the general government, and those retained to the states,

they would probably receive as many different constructions,

as there are members of the American family, as the in-

terest, the feelings or the prejudices of each might dictate.

And instead of the energy, the strength, and the harmony con-

templated by the Union of the States, our government would

become a perfect 'hydra.' It could afford neither safety nor

protection; but must either fall to pieces of its own weight or

be destroyed by the discrepancy of the materials of which it is

composed. * * *

"Soon after the close of the war, the charter of the old bank

having been suffered to expire, the multiplicity of local banks

in every section of the country, the frauds of some, and the

improvidence and mismanagement of others, had introduced the

utmost derangement into our circulating medium. A kind of

village aristocracy was erected in almost every town. The

fiscal operations of the government were embarrassed, and dis-

satisfaction, distrust and complaint prevailed. The paper that

was current in one place for the purposes of business, would not

answer in another; and general disorder, confusion and loss re-

sulted as well to the government as to individuals. The estab-

lishment of a uniform currency, the correction of the abuses of

the system  of banking, and the establishment of a National

Bank, was generally desired. That institution was created. A

branch in this state was solicited and came among us. Then it

was that hostility to the institution first began to be manifest.

* * * The local institutions could no longer inundate the

country with a currency that would not answer the purposes of

money, and hence the outcry against an institution which

seemed to show to the world the rottenness of the local banks.

* * * In those states where there has not been an excess

of banking; where the public have not been imposed upon by

paper representing nothing but the frauds or the follies of those

who issued it, no complaints have been ever heard of the oper-

ations of the Bank of the United States or its branches. * * *

"A controversy in which the state, unless she is dis-

300       Ohio Arch. and His. Society Publications.

posed to inflict a vital wound upon the Union of the States,

must and will, sooner or later, abandon the grounds she has

assumed, and which, the longer it is protracted, must eventuate

in a deeper loss of interest and of character. Nor can we be-

lieve, when the whole proceeding is calmly viewed and thor-

oughly understood by the people, that they can ever sanction

the measures which their representatives have adopted."

(House Journal 1821, pp. 386-393.)

The case of the United States Bank vs. Ralph Osborn and

others, was taken up by the United States Circuit Court at its

September term, 1821, and on the 5th of September a decree

was entered against Osborn for the sum of one hundred thou-

sand dollars and interest on nineteen thousand eight hundred

and thirty dollars (the specie collected), and it was ordered to be

paid to the bank on or before the 6th of September. The order

of the Court not being complied with, an attachment was

awarded against the Treasurer (he having been made a party to

the suit and the money being in his possession), he was taken

into custody by the marshal of the district, and during his con-

finement, "a writ of sequestration was awarded, and ninety-

eight thousand dollars, part of the money collected from the

bank," was taken from the treasury, brought into the Court

and delivered to the plaintiffs. An appeal to the Supreme

Court was then arranged for by the defendants, for the two

thousand dollars with the interest and costs, and when this was

done the Treasurer was released from custody. (Senate Journal

1822, pp. 54-55.)

On March 19, 1824, the decree of the Circuit Court was

affirmed by the Supreme Court "as to the sums of $98,000 and

$2,000, but was reversed as to interest due on the coin, on the

ground that while the parties were restrained by the Court from

using it, they ought not to be charged with interest; and Chief

Justice Marshall declared that "The act of the State of Ohio

* * * is repugnant to the law of the United States, made

in pursuance of the constitution, and, therefore, void." (Whea-

ton's Reports, 9, pp. 871, 868.)

The General Assembly of Ohio at its next session passed a

resolution (January 24, 1825) authorizing the Auditor of State to

State Sovereignty in Ohio.                 301

draw on the Treasurer of State in favor of the "Cashier of the

Branch Bank of the United States at Chillicothe for the amount

of the judgment rendered in favor of said Bank vs. Ralph

Osborn and others," and that he credit "Samuel Sullivan, late

treasurer of Ohio, with the sum of ninety-eight thousand dollars,

being part of the sum levied and collected from the Bank of the

United States, which sum was taken by writ of sequestration

from the said treasurer."   (0. L. Vol. 23, p. 106.)

Thus ended the conflict, after a period of six years, between

Ohio and the Federal Government, the former, by its final action

in the matter in 1825, accepting the doctrine "that the Federal

Courts are exclusively vested with jurisdiction to declare, in the

last resort, the true interpretation of the Constitution of the

United States."

Ohio recovered rapidly from this temporary insanity, for in

1833, when South Carolina passed the ordinance of nullification,

the Ohio Legislature passed the following resolutions in relation

to the action of her sister state:

Resolved, That the doctrine that the state has the power to nullify

a law of the general government, is revolutionary in its character and is

in its nature calculated to overthrow the great Temple of American

Liberty; such a course cannot absolve that allegiance which the people

of this Union owe to the supremacy of the laws. (0. L. Vol. 31, p. 275.)

Resolved, by the General Assembly of the State of Ohio, That this

Legislature do cordially approve of the exposition of the principles of

the constitution of the United States, touching the pernicious doctrines

of nullification and secession, set forth in the proclamation of the Pres-

ident of the United States, of the 10th of December last, and in his late

message to Congress, and that this Legislature do also feel the strongest

assurance that the principles contained in that exposition will be firmly

sustained by the people of Ohio. (O. L. Vol. 31, p. 271.)

Ohio was not alone in her opposition to the United States

Bank. On the 3d of February, 1818, Kentucky passed a law

taxing the Bank of the United States, a branch of which had

been established in Lexington. This law provided that a tax

of five thousand dollars should be levied and collected annually

on each office of discount and deposit located in that state.

Upon the failure of the officers of the Bank to pay the amount

specified, they were required "to pay to the commonwealth of

Kentucky the sum of ten thousand dollars, to be recovered by

302       Ohio Arch. and His. Society Publications.

action of debt in the general court of the State." (Kentucky

Laws, 1818, pp. 527, 528.)

On January 28th, 1819, this Legislature passed an act

imposing a tax of sixty thousand dollars per annum, or five

thousand dollars per month, on the Bank of the United States.

The sergeant of the Court of Appeals was to collect this tax in

case the money was not paid "or distrain the money, goods,

&c." He was authorized "to break and enter any outer door or

inside door of such banking house or office of discount or deposit,

or any vault, drawer, chest or box in which money, goods, chat-

tels, rights, credits, etc.," could be found and he was directed to

sell these goods, chattels, etc., for ready money, or so much of

them as should be necessary to discharge this tax. (K. L. 1819,

pp. 637-638.)

The officers of the Bank refused to pay the tax and suit was

brought against them in the General Court of the State, but the

case was decided in favor of the Bank. It was then taken to the

Court of Appeals and the ruling of the lower court was sustained.

(Cincinnati Gazette and Liberty Hall, Dec. 21, 1819.)

The Maryland Legislature passed an act in 1818 imposing a

stamp duty on the circulating notes of the United States Bank

or branches thereof located in that State. The Bank refused to

pay the tax and suit was brought against McCulloch, the cashier,

to collect it. Judgment was recovered against him in the Balti-

more County Court; he carried it to the Court of Appeals, which

affirmed the judgment of the lower court. From the Court of

Appeals it was taken to the Supreme Court of the United States

and the decision of the lower courts was reversed, Chief Justice

Marshall declaring that the law taxing the Bank of the United

States was unconstitutional and void. (Wheaton's Reports, 4, p.

437.)

The states named herein are probably the only ones that

asserted the doctrine of state rights in connection with the United

States Bank, but not many of the older states "can boast that

they have never done priest's service at the altar of state sover-

eignty."

3 Von Hoist, Constitutional History of the U. S. Vol. I, p. 490.