The Panic of 1819

II DIRECT RELIEF
OF DEBTORS

The plight of the numerous debtors during the panic was particularly arresting, and it inspired many heatedly debated proposals for their relief. One important group of debtors hit by the crisis were those who had purchased public land on credit from the federal government. Congress had established a liberal credit system for public lands in 1800. Purchasers were permitted to pay one-fourth of the total within forty days after the purchase date and the remainder in three annual installments. If the full payment were not completed within five years after the purchase date, the land would be forfeited.1 In 1804, the minimum unit of land that could be purchased was reduced from 320 to 160 acres, thus further spurring public land purchases and debts. A growing backlog of indebtedness developed, as Congress repeatedly postponed the date of forfeiture for failure to complete payment.2 The particularly strong boom in western land sales in the postwar period and the secular trend of extensive sales of public domain in the nation’s expansion westward resulted in a heavy burden of debt owed to the federal government. By 1819, the debt on public lands totaled $23 million.3 With the panic making the debt problem urgent, Congress continued to pass postponement laws, delaying forfeiture for a year—in 1818, 1819, and 1820—but these measures could, at best, temporarily postpone the problem.

What to do about this debt to the federal government was clearly a federal problem. President James Monroe, who is generally considered to have been completely indifferent to the panic and to any remedial measures by government, put the public land debt question before Congress in his annual message of November 1820.4 He brought to the fore one of the leading arguments used by all advocates of debtors’ relief: namely, that the debtors had incurred their debt when prices were very high and now had to repay at a time when prices were very low and the purchasing power of the dollar unusually high. Monroe did not elaborate on this argument. He simply stated the fact and suggested that it might be advisable “to extend to the purchasers of these lands, in consideration of the unfavorable change, which has occurred since the sale, a reasonable indulgence.”

Two days after the President’s message, Senator Richard M. Johnson of Kentucky presented a resolution to permit debtors to relinquish a prorated part of the land which they had purchased, in proportion to their failure to pay, while obtaining title to the remainder of the land outright. Thus, a purchaser who was one-quarter in arrears could relinquish one-quarter of his land to the government and acquire clear title to the rest.5 It quickly became evident that this measure was the major concern of the movement for relief of the public land debtors. Shortly afterward, similar resolutions were presented by Senators John W. Walker of Alabama, James Noble of Indiana, and Jesse B. Thomas of Illinois.6 The Walker Resolution provided for complete forgiveness of any interest due on the outstanding debt—a move to cancel the existing 6 percent interest charged on installments due. Important support for the bill came in the annual report to the Senate, on December 5, 1820, by Secretary of the Treasury William H. Crawford.7 Crawford repeated President Monroe’s argument that much of the public land had been bought at very high prices during a boom period. Crawford was at pains to separate such debt relief from legislative interference with private contracts. But it was certainly legitimate, he asserted, for the government, as a creditor, to relax its own demands. Crawford proposed to allow proportional relinquishment of the unpaid portion of land, a 25–37½ percent forgiveness of the total debt, and permission for the borrower to pay sums due in ten equal annual installments without interest.

The resolutions were referred to the Senate Committee on Public Lands and were the signal for a deluge of petitions on behalf of the measure from all of the western states, where the public land debtors were concentrated.8 Several western state legislatures—Alabama, Missouri, and Kentucky—sent resolutions asking for passage of the measure. The resolutions mentioned not only the decline of prices but also other aspects of the depression: The Kentucky legislature cited the unexpected depression of earnings, profits, property values, wages, and the depreciation of local currencies as helping to impose a burden on the debtors, and thus increasing the need for relief. The Alabama legislature cited the “great diminution of the circulating medium.” The authors of the various resolutions did not engage in sustained reasoning to bolster their views.

The relief bill was reported to the Senate by Chairman Thomas of the Public Lands Committee on December 28. It followed the Crawford proposals closely. The major provision was the permission to relinquish the unpaid proportion of the land and attain clear title to the remainder for all those who had purchased public land before July 1, 1820. The bill also discharged the interest in arrears on the outstanding debt and added two further provisions: (1) the remainder of the debt could now be paid in eight annual installments, without interest charges, and payment of the full debt was extended for those who did not wish to take advantage of the relinquishment provision; (2) the grant of a special discount of 37½ percent for debtors who would pay promptly.

Senator Thomas, in his opening speech for the bill, warned that unless the relief were granted, all public land sold on credit would be forfeited to the government.9 He emphasized that the “capacity of the community to purchase” was now greatly diminished, compared to the capacity at the time the land was obtained. At the time when most of the debt was contracted the “price of produce of every description was more than 100% higher than at present.” Shortly after the bulk of the purchases, prices of produce fell to less than half their previous height. The burden on the debtors was aggravated by the fact that the banks, in their expansion during the boom, had liberally furnished money to the purchasers of public lands, inducing them to bid up the prices of the land to great heights. During the crisis, bank facilities were withdrawn, and banks were becoming bankrupt, their notes no longer receivable. The resulting destitution of the debtors, concluded Thomas, required governmental relief.

The major controversy over the bill was the question of which groups of debtors merited the relief. As reported by the committee, relief provisions would be restricted to those who had originally purchased the land from the government. They did not apply to those who had bought the public land with its outstanding indebtedness from the previous purchasers rather than from the government directly. Illinois Senator Ninian Edwards immediately called for the extension of the relief clauses to all public land holders.10 Edwards insisted that the greatest sufferers were those latecomers who had bought the land at a very high price from the original purchasers; in many cases, the original purchasers had sold the land at a great profit to the newcomers, and yet only the original purchasers could benefit from the bill.

In his argument for the relief bill as a whole, Edwards went into great detail to excuse the actions of the debtors. The debtors, like the rest of the country, had been infatuated by the short-lived, “artificial and fictitious prosperity.” They thought that the prosperity would be permanent. Lured by the cheap money of the banks, people were tempted to engage in a “multitude of the wildest projects and most visionary speculations,” as in the case of the Mississippi and South Sea bubbles of previous centuries. Edwards sternly reminded the Senate that the government itself had encouraged public land purchases by making some of its bonds and other claims upon it receivable in payment for the lands.11 He also pointed to the distress prevailing among the debtors citing: the bank failures; the great contraction of the money supply; the loss of property values; unemployment; and general despair, as well as the fall in prices, all highlighting the need for governmental relief. Senator Thomas was apparently convinced by his colleague, and moved to extend the application of the relief bill to all holders of public land. The amendment was adopted by the Senate.12

The Thomas and Edwards arguments for relief legislation were repeated by Senator Johnson of Kentucky, who added specifically, in excuse for the debtors, that their distress was not caused by their “own imprudence” but by unforeseen changes in the economy, in prices, the money supply, and the state of the markets.13

Senator John Henry Eaton of Tennessee wanted a further restriction on the scope of the relief.14 He moved an amendment to restrict relief to the actual settlers only, thus withholding relief from the mere “speculators” in the public lands. No one rose to defend his amendment, which was subjected to a storm of criticism from western Senators and from one New Englander.15 Leading the attack was Walker of Alabama. He saw no reason why the government should discriminate among the purchases since they were sold to the highest bidders in good faith, and saw no reason why there should be a particular premium on settlement. His other major argument was that the government itself had fostered speculation on public lands. The Eaton Amendment was quickly rejected, but another amendment by Eaton drew more support and split the western delegation.16 This was a provision to grant special relief to the actual settlers by forgiving them an additional 25 percent of their unpaid debt. The amendment, however, was finally rejected.

Aside from the passage of an amendment, offered by Senator Nicholas Van Dyke of Delaware, placing a maximum limit on the size of the purchase to which the relief would be applied, the bill passed through the Senate with little opposition. It passed by a vote of thirty-six to five, and none of the five opponents spoke against the principle of the bill.17

Meanwhile, Representative John Crowell of Alabama had taken the lead of the pro-relief forces in the House of Representatives by submitting a similar bill to the House Public Lands Committee soon after the President’s address.18 When the House received the Senate bill, the committee reported it out very quickly without amendments. The House debate was distinguished by the one reported speech in Congress opposing the principle of the entire bill.19 Interestingly, this statement came not from some ultra eastern congressman far removed from the scene of the public land holders and their problems but from Representative Robert Allen of mid-Tennessee, a state that had been one of the centers of pro-relief agitation. Allen declared himself opposed completely to the whole principle of legislative interference with debt contracts. “If the people learn that debts can be paid with petitions and fair stories, you will soon have your table crowded,” Allen charged. The next step would be debtors demanding refunds of their previous payments. Indeed, where was the line to be drawn? Furthermore, such legislation constituted special privilege for public land debtors. To the argument that the debtors had not got the money for payment Allen calmly retorted that, in that case, the government would get the land back, and would therefore not be the loser.

In addition to these general arguments against government interference with contract, Allen hit hard at the speculation issue, which had been prominent in the Senate debates. He declared that no group could be less deserving of relief than the bulk of the public land purchasers. Allen, indeed, used the same set of facts that had been employed by Thomas and Edwards to denounce rather than excuse the debtors. He declared that the debtors had formed companies, had borrowed heavily from the banks in order to buy public land, and thereby these speculators had bid the land away from the actual settlers. The speculators had gone into debt never intending to pay the price anyway, but only to sell them for a higher price to others. Allen was sure that the actual settlers were a thrifty lot who did not run into debt. In a later speech, Allen retorted that the advocates of the bill, in pleading for the wretched and the poor, did not realize that the really poor never bought land.

There was far more active opposition to the relief bill in the House than in the Senate, and it was a minority of western representatives that took the lead in the opposition. Besides Allen, Representatives William McCoy from wealthy, rural Fauquier County, Virginia, and Benjamin Hardin of rural Nelson County, Kentucky, worked hard to defeat or limit the bill, but without success.20 Kentucky Representative George Robertson from rural Garrard County, tried to amend the bill to exclude speculators from its benefits and confine the bill to actual settlers, but the amendment lost by a small majority. Robertson was a leading lawyer who later became Chief Justice of the Kentucky Court of Appeals. The only victory for the anti-relief forces was the defeat of an attempt to make the reduction in debt unconditional instead of as a bonus for prompt payment.21

The only reply by the relief forces was that of Thomas Metcalf, from commercial Lexington, Kentucky, who declared that relief was called for particularly since the government’s own policies had “beguiled” these debtors into error.22

The bill finally passed the House on February 28 by a vote of 97 to 40.23 Following is a geographic breakdown of the roll-call vote in the House (bearing in mind that the negative was only the hard core of the greater opposition which had made itself felt in the voting on amendments):

Voting on Relief for Public Land Debtors

	For		Against
New England
Maine	3		—
Vermont	2		1
New Hampshire	—		5
Massachusetts	6		3
Connecticut	2		4
Rhode Island	—		1
	—		—
Total	13		14
Middle Atlantic
New York	17		4
New Jersey	3		1
Pennsylvania	13		3
Delaware	—		—
Maryland	5		2
	—		—
Total	24		12
South
Virginia	14		6
North Carolina	2		4
South Carolina	3		2
Georgia	5		—
	—		—
Total	38		10
West
Tennessee	4		3
Other western States
(Ohio, Illinois, Indiana, Kentucky, Louisiana, Alabama)	18		—
	—		—
Total	22		3

The relief bill was thus supported by all sections of the country except New England—evenly split on the issue. The hard-core opposition sentiment was pretty widely scattered geographically, with the exception of the West, although proportionally greatest in New England. The opposition was fairly strong in the South, but not in the important large Middle Atlantic States of New York and Pennsylvania. The West, with the exception of Tennessee, was overwhelmingly for the measure, with even such skeptical Kentuckians as Hardin and Robertson joining in voting for final passage.

Since various proposals for debtors’ relief legislation in the states caused indignant opposition in such places as New York City, one might be wondering why the New York representatives agreed to the measure. Perhaps one reason was that much of the public lands were held by eastern speculators. Another reason was that, after all, this particular debt was owed to the federal government itself, so that relief laws or changes in the contract by the government were directly the government’s concern as one of the parties to the contract. There was not here a question of interference in private debt contracts. Hence the disposition, in Congress and out, was to let the relief advocates have their way in this case without much opposition.

Even Hezekiah Niles, influential editor of Niles’ Weekly Register, who had no use for debtors’ relief legislation, reluctantly approved of this bill, although he was critical of the public land speculators and apprehensive that the debtors would relinquish the poorest land to the government.24

And so the public land debtors gained their desired relief measure with little opposition. Large numbers of debtors took advantage of the relief relinquishment provision; half of the public land debt in Alabama—which in turn constituted half of the nation’s total—was paid up within a year. Yet most of those who relinquished the land continued to cultivate it and treat it as their own.25

The major arguments for land debt relief—the plight of the debtors, the distressed conditions, lower prices—could be used on behalf of other, more far-reaching, measures for debtors’ relief, private as well as governmental. They were so used, both for direct relief measures designed to aid the debtor directly and for monetary proposals aimed partly or sometimes wholly at debtors’ relief. Against these proposals, the opposition was far more vocal and vigorous.

The immediate and pressing problem for debtors was the legal judgments accumulating against them for payment of their debts. Consequently, they turned to the state legislatures, which had jurisdiction over such contracts, to try to modify the provisions for payment. The proposed laws either postponed legal executions of property or prohibited sales of debtors’ property below a certain minimum price. The moratoria were known as “stay laws” or “replevin laws,” which postponed execution of property when the debtor signed a pledge to make the payment at a certain date in the future. Minimum appraisal laws provided that no property could be sold for execution below a certain minimum price, the appraised value being generally set by a board of the debtors’ neighbors. Such laws had been an intermittent feature of American government since early colonial Virginia.26

The eastern states were heavily embroiled in controversy over debtors’ and monetary legislation. Delaware, for example, was hard hit by the depression, and its relatively commercial New Castle County, in the north, had a particularly heavy incidence of suits for debt payments. As the Delaware legislative session opened at the beginning of 1819, New Castle County was a hub of agitation for debtors’ relief legislation. Its Representatives Henry Whitely and Isaac Hendrickson submitted petitions from over 450 citizens asking for some sort of relief to debtors of banks. Finally, the Delaware House created a committee headed by Representative Henry Brinckle to consider the issues raised by these petitions, as well as banking proposals which will be considered below.27 The committee took only a week to issue its report.28 It noted that among the major relief legislation proposed were some acts that would prohibit execution of judgments completely, and some that would compel creditors to take such property at a minimum appraised valuation. The Brinckle Committee rejected all such proposals on grounds of unconstitutionality and because suspension of execution would endanger the position of creditors and impair the good faith of contracts.

As was the case in most states where relief proposals were debated, the report provoked a storm. Two members of the five-man committee, headed by New Castle’s Representative John T. Cochran, moved rejection of the paragraph condemning relief laws. The motion was defeated by a vote of sixteen to four.29 The dispute, therefore, cannot be simply described as a geographical split within the state, since the majority of each county voted down the amendment.

The large eastern state of New Jersey gave serious consideration to stay laws on executions. A Committee of Inquiry was appointed by the New Jersey General Assembly, 1820 session, to consider a stay law, which would have postponed executions if the creditor refused to accept the debtors’ property at or above a minimum appraised value. A report strongly in the negative was delivered by Representative Joseph Hopkinson, and this served to send the bill down to a two-and-a-half-to-one defeat in the House.30

The arguments of the Hopkinson Report were a well-considered statement, typical of the opposition to debtors’ relief legislation, as well as to proposals to increase the money supply. The report began with assurances that the committee was deeply sensitive to the prevailing financial embarrassments, and that they had given due weight to the numerous petitions for relief legislation. While the proposed legislation, however, would perhaps alleviate the condition of the debtors temporarily, it would, in the long run, make their distress worse. The contention that relief legislation would eventually intensify the depression was a central argument for the opposition in all the states. The Hopkinson Committee used a familiar medical analogy noting that “palliatives which may suspend the pain for a season, but do not remove the disease, are not restoratives of health; it is worse than useless to lessen the present pressure by means which will finally plunge us deeper in distress.” They added that it was their duty to be truthful with the people and not delude them with promises that could not be kept—even at the expense of their “immediate displeasure”—an indication perhaps that the proposal was popular in New Jersey. The report remarked that suffering men were disposed to complain about their lot and look for rapid remedies rather than admit that the only cure was slow and gradual. As a result they would flee to patent-medicine panaceas, which would only make their condition worse.

Specifically, how would the proposed stay of execution law deepen rather than remedy the distress of the people? First, a stay law would not extinguish the debt, which would still remain outstanding. Second, the real reason for the depression was the lack of “mutual confidence.” Only such confidence could lead to a revival of credit and activity. But it was clear, declared the Hopkinson Committee, that the distress would greatly increase if a potential creditor were prohibited by law from recovering his loan from a delinquent debtor. A stay law would eliminate rather than restore credit, confidence, and business activity.

Unsuccessful attempts to pass a minimum appraisal law and a stay law also took place in conservative New York State. Ultra-conservative Massachusetts considered but did not pass a stay law. The proposed New York minimum appraisal law, in 1819, provided that in all cases of judgments on houses and lands, the court officer shall appoint three disinterested men—one a representative of the creditor, one of the debtor and one picked by the court officer—to appraise the real estate at its “just and true value, in money.” The creditor, in order to obtain payment, would be obliged to accept the property at such value. This bill was defeated by a three-to-one margin.31 A proposal for a stay law was also offered and rejected by a two-to-one margin. A bill was later passed, however, relaxing the processes against insolvent debtors.32

Maryland, on the other hand, passed a stay law by a near two-to-one majority. It also passed a law in 1819–20 exempting household articles worth up to $50 from sales at execution—a considerable aid to harassed debtors.33 There was much agitation for a special session of the Maryland legislature to enact a stay law. Citizens of rural Somerset County in southeastern Maryland, for example, called for a special session, citing the high proportion of enterprising citizens in serious debt.34 The agitation drew the criticism of the alert, conservative New York Daily Advertiser, Federalist organ for merchants.35 It pointed out that the distress of farmers and those trading with them, stemmed from the low prices of agricultural produce, and no legislative tempering with debt contracts could raise these prices in foreign markets. Furthermore, “the shock which business of every description . . . receives from [these] measures . . . is more than a counterbalance to any monetary relief.” It went on to criticize the debtors for speculations and extravagance.

That the West had no monopoly on debtors’ relief agitation is attested by the furious fight over stay laws in the Vermont legislature. In the fall of 1818, the Vermont House defeated numerous attempts to postpone consideration of the bill, and finally passed it by a three-vote margin.36 The Senate failed to pass the bill in that session, and this precipitated another battle in the 1820 session. Repeated motions to postpone were rejected by two-to-one majorities, and the bill was passed by a similar margin, after limiting amendments to force the debtor to swear to inability to pay and to limit the bill to debtors with families had overwhelmingly failed.37 The Senate still persisted in its failure to pass the bill, however, and so the House finally surrendered in the next session, by a three-to-one majority.38 The legislature finally passed a law staying all executions for debt in the spring of 1822, after the crisis had ended. But that summer, the new law met the fate of many similar state laws, and was declared unconstitutional by the Circuit Court.39

In Rhode Island a unique situation faced the debtors. Since the establishment of Rhode Island’s first chartered bank in 1791, a unique “bank process” privilege had been granted to banks of the state. When obligations to a bank fell due, the bank officers had only to give legal notice to the debtor. The courts were then forced to enter judgment against the defendant immediately and issue executions without the customary legal trial—although the debtor was permitted a trial if he denied the legality of the debt. All other debtors, including banks themselves, were entitled to the usual judicial proceedings. One of Rhode Island’s first acts on the onset of the panic late in 1818 was to repeal the summary bank process laws.40

One of the most interesting of the controversies over the debtor’s relief legislation occurred in Virginia—a stronghold of economic conservatism. Virginia’s leading statesmen were noteworthy for their opposition to fiduciary banking, expansion of paper money, and government interference with the economy.41 Yet, the Virginia General Assembly engaged in a spirited debate over a proposed minimum appraisal law. This law would prevent any sale of property under execution unless the property sold for at least three-fourths of its “value,” as appraised by a governmentally appointed commission.42 The chief advocate of the bill was Representative Thomas Miller, from rural Powhatan County. Miller concentrated on the plight of the large number of debtors.43 In Virginia, he explained, most business was transacted on credit. The farmers, in borrowing to work on their crops, had done so when tobacco sold at $12 a pound, and wheat at $2 a bushel. Naturally they had anticipated that this prosperity would continue. Then, when they had to repay their debts, they were confronted with tobacco at $5 and wheat at $1. The value of the resources that they could use to pay debts had been reduced by more than half, yet the price of imported articles, such as woolens, sugar, and coffee had remained unchanged. This situation was general throughout the state.

Miller emphasized that the debtors could not be blamed for their plight. The change was a sudden one and was not due simply to their “extravagance.” The expansion of banks and bank credit had raised the prices of property and produce, and induced the people to go into debt. Then, swiftly, the banks stopped expanding and contracted their loans and notes; the result was contraction of money and prices, and a great burden of debt. The responsibility for the debtors’ plight was therefore that of the banks, and not of the debtors themselves. Miller laid blame on the state banks and the Bank of the United States; the latter for serving as an expansionist force from its inception, then initiating the contraction, thereby causing a multiple contraction by the state banks. Since extravagance was not the cause of the crisis, mere calls for “industry and economy” would not effect a rapid cure; and the legislature, which had assured the people that its chartered banks were good for the community, owed it to them to throw them a plank in the present sea of distress.

Miller’s argument is particularly interesting in harmonizing the general anti-bank sentiment in Virginia with an argument for debtors’ relief. The advocates of debtors’ relief laws generally favored monetary expansion plans as remedies for the crisis. In many states the two were tied together, so that creditors were penalized with stay laws if they should refuse the new paper money, which would be loaned to debtors, to enable them to repay their debts. Yet, in this case, in a state of generally anti-paper money opinion, the leading advocates of debtors’ relief linked together anti-bank ideas with pleas for a minimum appraisal law.

The same argument was advanced by another leading supporter, Representative William Cabell Rives of Nelson County.44 He denounced the banks and called the relief law essential to the salvation of the people. In lurid terms he denounced the shylock creditors, who were bent on extracting their pound of flesh from the hearts of the people.45

The most comprehensive attack on the relief proposal came from Representative William Selden, of Henrico County, a middle-sized farming county adjacent to Powhatan and similar in the composition of its population.46 He recognized that the value of money had changed, but asserted that it was not subject to regulation by the government. The value of money depended on the quantity of circulating medium and the quantity of goods; “money itself is an article of traffic” like any other. “Human legislation on this subject is worse than vain.”

Selden proceeded to attack the idea of special privilege legislation for any class of citizens, such as farmers or debtors. The fact that debtors might be in the majority does not make such legislation just. Such class legislation would confiscate the property of the creditor and ruin the merchants who gave credit to their customers. Selden stressed the importance of personal responsibility for contracts and actions; the debtor should “pay the consequence of his own folly of imprudence.” In short, freedom of contract must be maintained; “Leave men alone to make their own contracts, and leave contracts alone when they are made.”47

Representative Robert T. Thompson, of wealthy Fairfax County, added another argument against the law. Objecting to the appraisement provision, he declared that property had only one value: the “price which it could command” at a fair public sale, and that its value could not be determined by any commission. Furthermore, Thompson wondered why there was no pressure for acceleration of debt payment during boom periods. He concluded by urging that the legislature let the “cure . . . go on,” this cure being the elimination of the common habits of extravagance and luxury.

The outcome of the debate was rejection of the minimum appraisal bill by a vote of 113 to 74.48 The relief forces, however, tried again with two proposed stay laws in the 1820–21 session. These were rejected by a narrow margin.49

The conservative attitude toward the financial difficulties was reflected in the message to the Virginia legislature of Governor James P. Preston.50 The embarrassments were caused by general imprudence, extravagance, love of ease, and an inordinate desire to grow rich quickly. Preston declared that the remedy for the crisis was a return to the old habits of industry and economy.51

North Carolina, plagued by a rapid fall in prices and land values, and beset by bankruptcies and failures, also saw a controversy over a stay law. Governor John Branch, in his message to the legislature in the 1820 session, proposed a stay and a minimum appraisal law to appraise the debtor’s property at its “intrinsic value.” There was too much opposition, however, for the bill to pass. Branch did succeed in passing a stay law for debtors who had purchased former Cherokee Indian land from the state.52

The pivotal state of Pennsylvania, which gave a great deal of thought to proposals for remedying the depression, considered stay laws and minimum appraisal laws. A minimum appraisal law was first suggested by two Representatives from widely separated rural areas, John Noble and James Reeder.53 They urged a law forcing creditors to accept the real estate of debtors at a value set by an official. If they refused, execution of the judgment against the debtor was to be stayed for three years. Their major argument was that, while debtors generally had enough paper currency to have discharged the debt, the widespread depreciation of paper had placed a danger of forced sales on a great portion of Pennsylvania farmers and rural citizens.

The legislature never considered this bill seriously, despite the fact that Governor William Findlay urged its passage.54 Attempts to pass such legislation were killed by the reports of several special committees on the economic distress in the next sessions of the legislature. One report was submitted by the fiery Representative William Duane, editor of the daily Philadelphia Aurora—the old stronghold of arch-Republicanism.55 Duane, as chairman of the Special Committee on the General State of the Domestic Economy, declared that widespread distress prevailed among creditors, farmers, and mechanics throughout the state. In county after county, citizens testified to daily sacrifices of property and defaults on debts. Granting that a minimum appraisal law would afford some relief to specific debtors, such a law would be economically unsound, as well as an unjust special privilege for the debtor. Duane, like Hopkinson in New Jersey, declared that one of the greatest obstacles to a return of prosperity was the “absence of credit or confidence,” and nothing could better delay a revival of confidence than such a measure.56 The famous Raguet Report, in the 1821 session, also rejected such debtors’ legislation, but, without engaging in analysis of the proposal, stated simply that it was impracticable and dishonorable.57

Despite this recommendation, Pennsylvania passed a minimum appraisal law in March, 1821, providing that bankrupt property must be sold for two-thirds of its assessed valuation, else the debt would be stayed for one year.58 Further, the legislature, without controversy, modified the provisions of the execution laws in order to alleviate some of the burdens of the insolvent debtors. Specifically, a defendant could prevent sale of his landed property, if the property was considered to be unprofitable.59

One of the most acute and original critiques of stay and minimum appraisal legislation was the product of “A Pennsylvanian” writing in the conservative—formerly Federalist—Philadelphia Union.60 “A Pennsylvanian” noted that these laws were being advocated in many petitions to the legislature. Aside from their impairment of contract, such laws would, rather than relieve the distress, have a “most pernicious effect.” For the distress was caused by two factors, a lack of money and a lack of confidence. Such laws would not increase the amount of money in circulation, and therefore would not relieve the first cause. On the other hand, they would destroy the little confidence that now remained; they would induce the withdrawal of large amounts of capital now employed and mitigating the distress. The withdrawn capital would

be either invested in the public funds or perhaps [be driven] to other states, where a higher rate of interest already holds out a sufficient temptation, and the people are too wise to destroy public confidence by laws impeding the recovery of debt.

“A Pennsylvanian” pointed to United States and City of Philadelphia 6 percent bonds being currently at 3 percent above par—indicating a great deal of idle capital waiting for return of public confidence before being applied to the relief of commerce and manufacturing. Thus, in the process of criticizing debtors’ relief legislation, the “Pennsylvanian” was led beyond a general reference to the importance of “confidence” to an unusually extensive analysis of the problems of investment, idle capital, and the rate of interest.

In the heavily indebted agricultural states of the West, there was greater agitation for debtors’ relief legislation. These states passed more such legislation than the eastern states, but generally only after an intense and continuing controversy. Although the relief sentiment was greater in the West, there were strong groups of advocates and opponents in each state.

Although Ohio was hit very heavily by the crisis, debtors’ relief proposals did not make too much of an impact or generate great controversy. Ohio had had a minimum appraisement law since its inception as a state in 1803. The law set a minimum price at forced sale at two-thirds an official appraisal of the debtor’s property—the appraisement to be performed by a board of the debtor’s neighbors. If the auction sale brought less, the property would be retained by the insolvent debtor.61 The laws were effective in shielding the debtor, although there were complaints that often the officials’ appraisals were at a very low value, hardly higher than the market value itself.62 In other cases, where appraisals were set at a high value, there were complaints in the press that creditors were being victimized. The Cleveland Herald cited one case of a creditor obliged by the law to accept miscellaneous articles of personal property (such as watches, dogs, barrels) at an inflated value or be forced to wait at least six months to collect. The Herald called for repeal of the appraisement law.63 In sum, the plight of the debtors in Ohio was urgent, but their attention was concentrated on measures other than direct intervention in debt contracts.64

Thinly populated and overwhelmingly rural, Indiana was also heavily in debt and hard-hit by the economic crisis. As soon as the crisis struck, Indiana moved swiftly to pass debtors’ relief legislation. The main argument was that such laws benefited debtor and creditor alike, since the creditors could only be harmed by the ruin of their debtors, a ruin inevitable should the rapid debt-collection system remain in effect.65 In 1819, the Indiana legislature passed two relief laws; one increased the amount of personal property exempted from execution sales; the other stayed executions for one year unless the creditor agreed to accept at par the new paper money of the State Bank of Indiana, or to accept at par money of the other chartered banks in the state.66 The measures passed in the Senate with only one dissenter.67 On January 18, 1820, Indiana passed a minimum appraisal law providing for sales at a value of two-thirds of appraisal value and a one-year stay for creditors refusing these terms. The opposition to the Indiana relief laws centered on the banking proposals and the State Bank paper, rather than on the stay provision itself.

In the next session, the Indiana legislature passed a stronger minimum appraisal law, patterned after the Ohio measure. It provided that, in the case of insolvency, the sheriff request seventy-five freeholders to estimate the value of the debtor’s property, and then the property could not be sold for less than two-thirds of this appraised value. If the property did not sell for at least this amount, the debtor was granted a year’s stay. With almost all the freeholders being debtors, the appraisals were generally set at a very high rate, discouraging almost all forced sales.68 In 1824, amid revived business activity, the anti-reliefers succeeded in repealing the appraisement law.

In Illinois, the major concentration in the state legislature was on the establishment of a new state-owned bank for issuing large amounts of paper money. The debtor’s relief legislation was originally linked with the new bank. It provided that if creditors refused to accept the new state bank paper as payment for their debts, all executions would be stayed for nine months. Furthermore, the debtor would have the right to reclaim the property (to replevy) if he made full payment within three years. Thus, Illinois enacted the equivalent of a three-year stay of execution if the creditor refused to accept the new paper at par for payment of the debt.69 Even if the creditors accepted the notes, however, the debtors could claim rights of replevy for sixty days and judgments were stayed for one month. Debt contracts explicitly made in gold and silver, and which therefore had to be repaid in kind, were stayed for a period of one to five months. As further relief for all debtors immediate judgment could only be rendered against one-third of a debt, while all real estate, except that previously mortgaged, was exempted from judgments.70

Interestingly enough, the most bitter opponent of the inconvertible bank paper plan—Representative Wickliff Kitchell, of rural Crawford County in eastern Illinois—introduced a substitute debt-relief program of his own, albeit more modest than the three-year replevy law. Kitchell proposed a flat one-year stay on all executions for pending judgments on past debts. The execution would apply if the creditor swore that the property was in danger of being lost, in which case the debtor would have the right to replevy the property for one year, and for two years for debts over $500. There would be no stay or replevy for debts contracted in the future. The substitute bill was rejected in the Illinois House by a vote of 16 to 10. However, the legislature passed an additional mandatory nine-month stay law on all pending executions.71

Extreme western Missouri, just in the process of becoming a state, was the scene of one of the most comprehensive programs of relief legislation, and also of one of the most vigorous controversies over relief. Missouri had had particularly widespread speculation in land, and incurred heavy indebtedness in the course of this speculation.72 Most of this speculation during the prosperous postwar years, in town lots as well as in farms, was predicated on a continued heavy wave of migration to the West by men with money to spend. The wave came to a halt during the depression, adding to the crisis and fall in prices, and spreading insolvency among the debtors and landholders in the state.73 One striking result during the era (and this was also true in Illinois) was the large number of ghost towns—built during the boom—now mute evidence of the highly erroneous expectations of a few years before. As was the case throughout the West, a good part of the indebtedness was committed in public lands and was owed to the federal government. We have already seen the action that the government took to relieve this problem. This relief did not solve the problem of the private land-debtors or of the merchants deeply in debt, who had anticipated heavy demand from relatively well-to-do immigrants. The press reported widespread imprisonments for debt and noted that few could afford to attend the sheriff’s sales to purchase the debtors’ property. There were many cases of forced sale of land for tax delinquency. Close to the barter of the frontier, it is not surprising that many business firms announced their willingness to take produce in payment of debts.

In the spring of 1821, public pressure erupted for relief legislation by the state, and the pro-relief forces agitated for a special session of the legislature.74 Many newspaper articles, in April and May of 1821, cited the mass of unpayable debts and urged governmental relief. The author of one such article signed himself “Nine-Tenths of the People.”75 There had been rumors of a special session since early March, and the supporting articles were responses to these rumors.

Opposition to such legislation, however, was also vocal. As early as August 16, 1820, thirteen members of the grand jury of St. Louis—the urban center of Missouri—denounced any stay or minimum appraisal law. They declared that stay laws for land debts alone (which were being proposed) would be special privilege for landholders.76 Opposition was expressed on constitutional grounds also. A citizens’ meeting in May at Boonville, Cooper County, in central Missouri, denounced any debt interference legislation as immoral and unconstitutional. The sacredness of contracts was emphasized in an article in the Missouri Gazette, in March; the author declaring that only regular bankruptcy laws were just, and that the only leniency should be by voluntary act of the creditors themselves.

Other writers stressed the pernicious economic effect of stay and other debtors’ relief laws. They declared that creditors would cease to lend their money, and that such laws would interrupt business calculation and discourage regular trade. The laws would only aggravate the crisis further.77

Despite this strong opposition, on April 24 the Governor called a special session to be convened on June 1, ostensibly only to consider imminent statehood. The conservative forces sensed that the major aim was relief, however, and became very vocal in opposing the expected storm. The Jackson Independent Patriot, from rural southeastern Missouri, and the St. Charles Missourian took the lead in expressing fears of a replevin law. This opposition was echoed by most of the other leading newspapers, such as the Missouri Intelligencer and the St. Louis Enquirer.78

The fears of the conservatives proved justified. In his message of June 4, Governor Alexander McNair cited the “Pecuniary embarrassments . . . heretofore unknown to us,” and five days later a debtors’ relief bill was introduced in the House.79 The bill, which became law in this session, provided for a two-and-one-half-year moratorium for executions on land debts only. Under the law, the debtor could at any time replevy all land sold at sheriff’s auction by a mere payment of his debt plus 10 percent interest. The theory of the legislation was that most Missourians in the state were landholders, and that therefore this form of relief was particularly needed. It was hoped that in two and one half years revived prosperity would permit the farmer-debtors to keep their land. The special session also established a state loan office to issue paper money, reduced the penalties of imprisonment for debt, and exempted various personal necessaries from forced sales at auction.

The major act of the special session was the establishment of the loan office. When the fall session convened in November, the relief forces were anxious to enlarge the system through a strong stay and minimum appraisal law. This law was desired for its own sake, as well as to assist circulation of the new notes, and to supersede the previous law that applied only to land. The proposed law became the most vehemently debated issue of the fall session. Governor McNair’s opening message was extremely cautious. He hoped for “some effective plan of relief” which would “blend with our humanity for the unfortunate debtor a due respect for the principles of the Constitution and the rights of creditors.”80 On this hotly controversial issue, the Governor was leaving the initiative strictly to the legislature. The battle was extremely close in the House, which at one time rejected the bill by a tie vote of 21 to 21, but the bill finally passed, after high pressure by the relief forces, on a vote of 23 to 18. The bill barely passed the Senate by a vote of 7 to 5 and became law.81 The voting on the stay-minimum appraisal law, as well as on the loan office bill, cut sharply across sectional lines. The constituencies, such as St. Louis, Jackson, and Boonville, were closely divided within themselves.82

Considered by the relief forces—headed by Representative Duff Green—as the climax of the relief program, this law featured a minimum appraisal provision.83 In each township, the county court was to appoint three people to appraise the worth of the debtor’s property. The creditor was forced to accept the property at least at two-thirds of the official value. On the other hand, if, at the public sale, the property sold for more than two-thirds the official appraisal, the creditor was still entitled to only two-thirds of the sale price, while the debtor could keep the remainder. If the creditor refused to accept the property under this provision, the debtor was granted a stay of two and one half years in payment.

This was a very strong minimum appraisal law, yet the relief forces were not satisfied. They were disappointed that the law did not force the creditor to accept the new loan office certificates as an alternative to the two-and-one-half-year stay. Without such a clause the law was too narrow of application. Consequently, the relief forces were able to pass a supplementary stay law, which gave the creditor the choice of accepting two-thirds of the appraised value of the property in loan-office certificates at par or suffer a two-and-one-half-year stay.84 Again, the division in the legislature was very close, 17 to 15 in the House and 6 to 4 in the Senate, and again the voting cut across sectional lines in every county.85

During the course of relief agitation in the summer and fall of 1821, the bulk of the Missouri press swung over to support the relief program. The opposition branded the relief laws as the work of selfish groups of “spendthrifts” and “big speculators” working their influence on the state legislature. The theme of the opposition, as in the case of public land debtors described previously, was that the law was being pushed by bankrupt speculators and spendthrifts, and not by the “honest” debtors, although no criterion was laid down to distinguish between these groups of debtors.86 The speculators were also accused of buying the support of the press.87 Another common opposition theme held that pressure for relief came from the wealthy debtors rather than from the mass of poor. Thus, the Missouri Republican declared that the relief legislation was intended to preserve the “wealthy debtor in his palace,” and that, in general, it benefited the dishonest man and burdened the just.88

As was the case with most debtors’ relief and monetary expansion laws passed in this period, the stay laws ran into trouble with the courts and were declared unconstitutional by the State Circuit Courts in July, 1822. The furious relief advocates called for a purge of the judiciary, and the battle over the relief issue continued to rage.89 In the fall of 1821, before the climactic stay law legislation, the elections, drawn on the relief question, had yielded victory for the relief forces. Thus, in October, 1821, Pierre Chouteau, merchant and son of an eminent family in the state, ran as a debtors’ relief candidate. He defeated Robert Walsh, running in opposition in a special election for State Senator from St. Louis. A similar victory for the relief forces was gained in Howard County, a rural district in central Missouri, adjacent to Boonville. Now, after the court decision and a turning of the tide in public opinion, the general election to the legislature on August 7, 1822 hinged directly on relief as the critical issue. The relief forces advocated constitutional amendments to smash judicial opposition to the relief laws, while the opposition advocated repeal of the entire relief structure. The elections were a victory for the anti-relief forces. The pivotal city of St. Louis returned three reliefers and three anti-reliefers in the House, and John S. Ball, an anti-reliefer, to the State Senate; and in another special Senatorial election in St. Louis, in October, 1822, an anti-reliefer triumphed.90

Sensing the political currents, Governor McNair, who had started it all the previous year, strongly recommended, in his opening message of November 4, the elimination of the chaos by repealing all of the relief laws.91 He declared that they had not proved successful in alleviating the financial distress, and that, furthermore, the crisis was ending from natural causes. In final analysis, the only true remedies were the gradual ceasing of speculation, a change from luxury to economy, avoidance of debts or extravagance, and a growth in industry and enterprise. The legislature lost no time in complying with McNair’s wishes. On November 27, a bill to repeal the stay-minimum appraisal laws was introduced and passed by a large majority.

In early 1821, Louisiana passed—with little or no controversy—a stay law suspending execution sales for two and one half years and imposing a minimum of personal property that could be retained by the debtor.92

Relatively developed, compared to the other western states, were Tennessee and Kentucky. These were the best-known centers of debtors’ relief agitation and legislation. Tennessee had experienced a pronounced boom since the war with the opening of new lands, increased production of cotton at booming prices, and a great expansion of the credit system.93 The monetary contraction and the fall in the cotton price wreaked extensive damage on the numerous debtors, particularly in the cotton-growing regions. Insolvencies and forced sales abounded.94

As in many other states, debtors turned to the state legislature for aid.95 The center of relief agitation was the predominantly cotton-growing middle Tennessee, particularly Nashville, the most populous city in the state. The acknowledged leader of the relief agitation was the wealthy, influential merchant and politician, Felix Grundy of Nashville. Grundy, formerly Chief Justice of the Kentucky Court of Appeals and a leading Representative in the Tennessee legislature, became a candidate again for his old post as State Representative in the summer of 1819, basing his campaign on a relief platform.96 The relief proposals centered on the banking system and on stay laws for debts. Many other legislative candidates also ran on a relief platform and were active in proposing plans of action. Many of the candidates gathered in the Davidson County courthouse (Nashville is in Davidson County), on July 19, to discuss the need for relief. They were supported by the influential Nashville Clarion, which urged the legislature to suspend execution of debt judgments.97 Grundy and numerous other reliefers were elected, and, soon after the legislature opened, Grundy opened the relief struggle by introducing a set of resolutions.98 The resolutions began by pointing to the distress prevailing in the state, which “requires the early and serious attention of the legislature.” The Grundy resolution did not mention a stay law, but implied it and urged that creditors be prohibited from forcing debtors to pay in specie. It advocated forcing creditors to accept the notes of state banks at par or forfeit their debt.

Following up his resolutions, Felix Grundy introduced a bill in the Tennessee House staying all executions of judgments for two years, unless creditors accepted notes of the leading banks in the state at par.99 Passage of this bill in October, 1819, by an overwhelming vote of 24 to 10 in the House and a similar majority in the Senate, constituted the first major victory for the debtors’ relief forces in Tennessee.100 Another conditional stay law passed in the 1819 session was one introduced by Representative William Williams, of Davidson County. This provided that when a bank was the creditor and refused to accept at par, in payment of a debt judgment, either its own notes or the notes of the two leading banks in Tennessee, the execution would be stayed for two years. This bill was passed overwhelmingly with very little opposition. Another aid to the debtors passed in this session was a bill by Williams tightening the usury laws, by setting maximum rates of interest on loans.101

During early 1820, relief agitation grew in strength, this time centering on proposals for a new state loan office or bank to issue inconvertible paper along with further stay provisions. The reliefers called for a special session in the spring of 1820. It is interesting to note the Nashville Clarion proudly proclaimed that several men of wealth had taken the lead in the call for an extra session. Typical of the appeals for a special relief session was the petition of citizens from Williamson County, adjacent to Davidson.102 The petition pointed to the great decline in the price of produce, to the contraction of bank credit, and to the consequent multiplying suits for debt payment. Blame was laid on the “avidity of the creditors to collect,” which seems to increase “in an inverse ratio to the ability of the debtor to pay.” Unless relief were offered quickly, warned the petition, most of the citizens would suffer insolvency and ruin. East Tennessee, the region centering on Knoxville as its leading city, was largely opposed to the relief program and to the proposed special session.103 Typical was the vigorous disapproval of the Knoxville Register.104 It declared that the people were opposed, and charged that the huge number of petitions for relief and a special session, as described in the Nashville press, had come from only three counties endorsed by “but half a dozen signatures.” The honest, the industrious, the prudent citizens needed no relief and desired no special session. The demand for relief, charged the Register, was coming from those who had made purchases without capital, and lived in luxury beyond their means. “Now that they have run their race, they wish the Legislature to pass a law that they may keep their honest creditor from recovering his debts.” A grand jury from Sumner County, adjacent to Davidson County, declared that those seeking relief were not the poor and needy but those large businesses and speculators who had extended their credit with the banks; moreover, only these wealthy debtors would benefit from relief.105 The Courier, from Murfreesboro, a town near Nashville, replied that the debtors’ distress was not owing to their own imprudence but to a “fall of foreign markets, and the domestic scarcity of a circulating medium,” resulting in a great fall in the value of property. Legislative interference, it concluded, was necessary to save the people from bankruptcy and ruin.106 The East Tennessee opposition had a different view of the consequences of stay legislation. Thus, the Knoxville East Tennessee Patriot admitted that a stay law might give temporary relief to some people, but warned that its impairment of contracts would lead to increased rather than diminished bankruptcies.107 The East Tennesseans had even made a strong but unsuccessful effort to nip the debtors’ relief campaign in the bud by sending Enoch Parsons, losing gubernatorial candidate in 1819, to Nashville to campaign against Felix Grundy’s election.108

While the opponents of debtors’ relief charged that wealthy debtors were behind the movement, the relief forces made a similar charge. The Nashville Clarion, ignoring the eastern Tennessee opposition and its own praise for the wealthy supporters of relief, bluntly charged that the only opposition to relief came from land speculators and the “monied aristocracy of Nashville” opposed to the relief of the people.109 In fact, much vigorous opposition to debtors’ relief centered in Nashville and Davidson County itself, despite the fact that the relief forces stemmed from that area. The Nashville Gazette retorted to the Clarion’s charge that in the opposition there were “men who have money—and men who have none.” The opposition to relief legislation cut across lines of wealth.110

Governor Joseph McMinn, elected in 1819, granted the wish of Grundy and the relief forces, and called a special session for June 26.111 In his opening address, McMinn pointed to the unprecedented general pressure and urged that debtors be saved from destruction.112 “The people should be made to see,” he declared,

that public agents . . . have not abandoned them in their affliction. Men’s confidence in each other’s solvency will be restored; the thirst for purchasing at sheriff’s sales will be allayed; treasures which are now hoarded up to be used in fattening on calamity will be drawn out and again circulated in the ordinary channels of useful industry.

Thus, McMinn emphasized the ending of hoarding as a prime element in recovery. The relief advocates agreed with their opponents that the restoration of confidence was important to recovery, but urged that only aid to debtors would accomplish this end.

To gain the objective of relief, Governor McMinn advocated a loan office measure to increase the supply of paper money, a stay law, and a minimum appraisal law. The major controversy in that session was the loan office bill. He recommended a stay law as a corollary to the loan office bill, providing for a stay of execution for two years, unless the creditor were willing to accept the new paper notes at par in payment for the debt. McMinn further suggested a minimum appraisal law which would compel the creditor to accept the debtors’ property at a valuation fixed by a governmentally appointed committee of arbitration.

The next day, June 27, Felix Grundy moved to refer the three proposals of the Governor to a Joint Select Committee on the Pecuniary Distress. The committee included the leading anti-relief stalwarts in the legislature, in addition to Grundy. But the McMinn-Grundy leadership counted on Representative Samuel Anderson, from Robertson County in mid-Tennessee, to cast the deciding vote in favor of the relief proposals. Instead, Anderson turned against the stay and appraisal bills and caused alarm in the relief camp by submitting the committee report on the next day, rejecting any stay or minimum appraisal law as “inexpedient and unpolitic.”113 Grundy acted swiftly, however, and a day later succeeded in “packing” the committee with four more of his supporters, with Grundy himself becoming chairman. Backed by petitions from citizens of Warren and Smith Counties (in mid-Tennessee) supporting the relief proposals, Grundy reported the stay and loan office bill to the House on July 4. He allowed the minimum appraisal bill to die in committee, rejecting it as too extreme.

In the debate on and eventual passage of the bills, most of the effort was centered on the loan office. The stay law was opposed almost singlehandedly by Representative Williams, now a staunch opponent of relief. He moved to strike out the requirement that the creditor must receive loan-office notes or suffer a two-year stay in execution. This amendment was overwhelmingly defeated by a vote of 14 to 3, despite a petition from rural Giles County of mid-Tennessee, condemning the law as “impolitic and improper.”114 Williams tried a similar motion a week later, but lost by a vote of eleven to four, and the stay provision became law along with the new state bank.115

Although the relief movement triumphed in 1819 and 1820, the climate of public opinion had changed sharply by mid-1821. The new state bank and its paper were not faring well, the nationwide depression was receding, and the Supreme Court of Tennessee handed down a decision in June declaring the stay provision unconstitutional for compelling acceptance of the new bank notes. In the gubernatorial campaign of the summer of 1821, both candidates vigorously opposed the relief program. Colonel Edward Ward and William Carroll were wealthy merchants and prominent citizens of Nashville, and both were firm friends of Andrew Jackson. It is instructive that Carroll ran his campaign as the “people’s candidate” against the wealthier Ward.

Carroll’s decisive victory in the gubernatorial race did not intimidate Governor McMinn, who, in his farewell message to the legislature, again urged a minimum appraisal law, and also suggested a replevin law, so that the debtors could win back their forfeited property.116 McMinn’s proposals were referred to Felix Grundy’s Committee on Pecuniary Embarrassments, and Grundy’s report signaled the turn of the tide for the relief movement in Tennessee.

Grundy noted that the greatest distress during the crisis had been caused by the large accumulated debt. He declared that, since 1819, three-fifths of the debt owed to easterners had been liquidated, and that this relieved the pressure on the numerous Tennesseans in debt to eastern creditors. The economy was reviving, and the situation was no longer grave. He therefore rejected an appraisal law as a violation of contract, but staunchly defended the worth of the stay law in averting debtors’ ruin.117 Later, Grundy attacked the courts for ruling against the stay laws, and was joined by the Knoxville Intelligencer and the Nashville Whig.

The anti-relief tone of the new administration was set by Governor Carroll’s opening address.118 It was mainly devoted to paper money, but he also attacked the stay and proposed appraisal and replevin laws as violations of contract.119 Carroll declared that the relief measures had brought momentary relief for some, at the expense of increasing the general distress, and had caused the ruin of thousands through sudden fluctuations of credit and extreme depreciation of currency. The debtors’ situation was still troublesome despite Grundy’s optimism, and the press continued to advertise many sheriff’s sales. The relief forces again tried to pass a stay and an appraisal law, but without success. As a matter of fact, Grundy managed to push through another minimum appraisal law in October, 1823, but the court decision effectively ended any such stay law in Tennessee. By the fall of 1822, Governor Carroll could report a virtual ending of the economic crisis in Tennessee.120

The citizens of the state of Kentucky found themselves heavily burdened with insolvent debtors and forced sheriffs’ sales for execution of suits against debtors.121 As in Tennessee, the major focus of agitation on the state level was the banking system; but agitation over stay laws was also widespread. In Kentucky, a stay law had long been embedded in the state’s legislation. As early as 1792, the state had passed a minimum appraisal law; and it had passed a stay law in 1814–15, providing a twelve-month stay should any creditor refuse to accept at par the notes of the state’s leading bank—the Bank of Kentucky—and a mandatory three-month stay even if the creditor accepted the notes.122

The campaign of the relief forces was waged largely over stay-replevin legislation, and the elections in the fall of 1819 were an overwhelming victory for the relief forces. In the bitter fights over proposed stay legislation, two new newspapers were inaugurated in the city of Frankfort: the Patriot, to support the relief program, and the Spirit of ’76, to oppose it.123 The first relief act to pass was an “emergency” stay law, staying all executions for sixty days; this was passed on December 16, 1819.124 Governor Gabriel Slaughter, opposed to relief, vetoed the law, but the legislature was able to override the veto. A very strong stay law was passed the following February 11, providing a mandatory one-year stay of execution if the creditor accepted Bank of Kentucky notes at par in payment, or a two-year stay if the creditor refused.

The crisis was intensified by the alarm felt by creditors at this law and by their growing reluctance to lend.125 The depression continued in full force during 1820, and the reliefers began to concentrate their attention on proposals for a new state bank. Postponement of payment does not after all liquidate the debt burden, and it has been estimated that over $2 million of debt was under execution in this period. A bank was expected to grant indirect but effective relief by supplying new money to debtors. Passage of such a measure was assured by the election of Governor John Adair, a leader of the relief forces. A bank was established and, further, a new stay law passed on Christmas Day, 1820. The new law extended existing provisions, but now provided a stay of two years, unless the creditor accepted either Bank of Kentucky or the new state-owned Bank of Commonwealth notes. The law gave preference to the new bank by continuing the mandatory one-year stay even if the creditor accepted Bank of Kentucky notes, while only imposing a three-month stay for acceptance of Bank of Commonwealth notes. This was succeeded by a full mandatory twelve-month stay in February, 1820. Further relief to debtors was granted by a law exempting various tools and implements from forced sale for debt payments and by special stays for executions on real estate.

Throughout 1820, the cherished goal of the relief forces was the passage of a general “property law,” which would have been the most drastic relief legislation in the nation. This would have indefinitely postponed all sales of property under execution. However, this ambitious attempt never came to a vote. In the fall of 1821, the legislature moved again to block the infuriated creditors; by December, 1821, a minimum appraisal law was passed. It prohibited the sale of property at forced sale for less than three-quarters the value set by a jury, unless the creditor agreed to receive Bank of Commonwealth or Bank of Kentucky notes in payment.126

For a few years, the debtors reaped a substantial harvest from the stay and from bank legislation. The Bank of Commonwealth notes soon depreciated to half, as compared to specie. The juries and judges of Kentucky during 1821 and 1822 adopted a “scaling system” in their verdicts on damages and executions for debt contracts. For example: if a creditor sued a debtor for payment on a debt of one hundred dollars, and the debtor had already paid fifty dollars, the magistrate or jury “assumed” that the fifty “dollars” paid consisted of specie rather than notes (which, of course, was not the case), on the grounds that there was no proof to the contrary. Then, as a one dollar specie was now worth two dollars of Commonwealth notes, the debt was judged fully canceled, and, in addition, a judgment for court costs was levied against the creditor.127

The proponents of debtors’ relief argued that the legislature was obliged to provide relief in times of distress. Indeed, they considered themselves generous for not going so far as to repudiate all private debts completely.128 The opposition assailed the measures as repudiating contracts, and asserted that the only remedies to help the debtors in the long run were thrift and industry. Stay laws were attacked as leaving the creditors’ property in the hands of speculators and as greatly hampering credit.129 The bitterness of the opposition increased as the relief system continued, and, as the economy recovered, it succeeded in turning the relief tide. As early as the 1822–23 session, the legislature reduced the stay provision from two years to one year, and by 1824 the stay laws were repealed.130 In the meanwhile, the decision of the state courts that the relief legislation was unconstitutional precipitated a vigorous and prolonged political controversy over the judiciary, the anti-reliefers finally winning by 1826.

One of the most interesting approaches to the problem of debtor’s relief was that of Amos Kendall, at this time editor of the influential Frankfort Argus of Western America, and later one of the chief theoreticians of the war against the Second Bank of the United States. Kendall, though not completely opposed to relief, was disturbed at some of the extreme stay legislation, particularly the proposed property law, which would have repudiated all debts. In a series of articles in the Argus,131 Kendall considered one of the favorite relief arguments: that debtors were unduly burdened because they had borrowed when the money unit had a lower value in purchasing power, and must now repay their debt when money had a higher value. Kendall began with a discussion of utility, developing in essence the subjective theory of value and the law of diminishing utility. He deduced that, since value depended on the desires of men, and since these desires were always changing, desires and values could not be reduced to any standard of measurement. A unit of measure was always fixed, and yet all values were continually changing. Hence, there was no such thing as a standard of value, and money could not be used for such a standard. Turning to money, Kendall traced its development from barter and indirect exchange, until the money-commodity became a general medium of exchange. This process revealed that money was simply a commodity, albeit the most useful and exchangeable one—a commodity the value of which was always changing. Therefore, money could by no means serve as a standard of value, and from this Kendall deduced that the relief argument, resting on the assumption of money as a standard of value, was untenable.132 In the following year, Kendall denounced wasteful governmental expenditures and concluded emphatically that the legislature could not relieve debts. “The people must pay their own debts at last.” They must rely on their own power and resources and not on that of the banks or legislature.133

Thus, faced with widespread debts and insolvencies, states in every region were confronted with, and wrangled over, debtors’ relief proposals. Stay laws were considered in the eastern legislatures of Delaware, New Jersey, New York, Maryland, Vermont, Massachusetts, Pennsylvania, and Virginia, as well as in the western states of Ohio, Indiana, Illinois, Missouri, Louisiana, Tennessee, and Kentucky. Minimum appraisal laws were also considered in almost all of these states. Stay laws were passed in Maryland, Vermont, Ohio, Indiana, Illinois, Missouri, Louisiana, Tennessee, and Kentucky; minimum appraisal laws were passed in far fewer states: Ohio, Indiana, Missouri, Pennsylvania, and Kentucky.

If final passage is considered, the western states were the stronghold of relief measures. However, Pennsylvania passed a combined minimum appraisal and stay law, and there were at least sizable minorities demanding stay and minimum appraisal laws in such important and conservative states as Delaware, New Jersey, New York, and Virginia. Vermont and Maryland passed stay laws, and New York modified its judgment procedure slightly to ease the strain of insolvent debtors. Rhode Island eased the burdens of debtors to banks. Neither was the western experience uniform. Ohio and Indiana, for example, passed their legislation overwhelmingly, while there was bitter controversy in Missouri, Tennessee, and Kentucky. Four of the western states passed appraisal laws, while they could not pass in Illinois and Tennessee.

Within the states there was a noticeable lack of sharp division along sectional lines in controversy over this legislation. Within urban centers and rural counties, there was sharp controversy over relief, and tides of opinion impressed themselves in turn up on all sections.

Debtors’ relief proposals were often tied to schemes for monetary expansion, which furnished one of the richest areas of controversy during the depression.

____________________

134United States, Public and General Statutes, vol. 2, pp. 73, 533.

135Ibid., vol. 3, pp. 96, 433, 515, 555. Postponement of forfeiture laws were passed in 1810, 1812, 1813, 1814, and 1815.

136U.S. Congress, Annals of Congress, 16th Congress, 2d Session, p. 15.

137Ibid. The message was presented on November 14, 1820. The relief issue had been briefly raised late in the previous session in a resolution of the Louisiana legislature, but consideration was deferred until the 1820–21 session. Ibid., 16th Congress, 1st Session, p. 467.

138Johnson was later to become a key leader in the Jacksonian movement and Jackson’s intimate agent. He became vice-president under Van Buren.

139Annals of Congress, 16th Congress, 1st Session, pp. 17, 22.

140U.S. Congress, American State Papers: Finance 4, no. 599 (December 5, 1820): 547ff.

141Memorials came from Ohio, Illinois, Indiana, Alabama, Tennessee, and Kentucky. Ibid., pp. 22, 36, 77, 99, 116, 126, 130, 131, 134, 141, 153, 212, 249, and 436.

142Speech of Thomas, January 11, 1821, U.S. Congress, Annals of Congress, 16th Congress, 2d Session, p. 156. Thomas was an aristocratic lawyer, formerly a Representative from Tennessee, and Federal Judge in Ohio. He nominated his friend William Henry Harrison for President in 1840.

143Ibid., pp. 161–78. Edwards had been Chief Judge of the Kentucky Court of Appeals and Governor of Illinois Territory.

144These were its “Mississippi stock,” made receivable in the Southwest, and in claims to its lands in the Northwest.

145On January 30, 1821. Ibid., p. 251.

146Ibid., pp. 214–22.

147Eaton was a lawyer, landowner, and land speculator, and an intimate associate of Andrew Jackson, his wife having been Jackson’s ward. He was later to be Secretary of War under Jackson.

148Ibid., pp. 180, 214–36. The New Englander was Senator Morrill of New Hampshire. Other Senators attacking the amendment were Noble of Indiana, Johnson of Kentucky, Thomas, and King and Walker of Alabama.

149Thus, arguing for the extra relief to settlers were Senators Johnson, King of Alabama, Ruggles of Ohio, while on the opposite side were Talbot of Kentucky, Edwards, and Noble.

150Ibid., p. 333. The bill passed on February 10, 1821. Senator Eaton voted for the final bill.

151Ibid., p. 441.

152Ibid., pp. 1187–89 and 1221ff.

153Ibid., pp. 1221ff., 1228ff.

154In this action, one of the leading advocates of the bill, Richard C. Anderson of Kentucky, head of the Committee on Public Lands, joined forces with the anti-reliefers to defeat the proposal by a narrow vote of 85 to 70. Henry Clay, of Kentucky, was leader of the extreme relief forces on this occasion.

155Metcalf was later to become Governor and Senator from Kentucky, and to oppose state inconvertible paper plans.

156For the text of this law, see U.S. Congress, American State Papers, vol. 3, pp. 612–16.

157Niles’ Weekly Register 15 (January 31, 1819): 423; 19 (November 25, 1820): 194.

158Abernethy, Formative Period, p. 56.

159Madeleine, Monetary and Banking Theories, pp. 27ff.; Greer, “Economic and Social Effects,” pp. 228–29.

160Although one of the supporting arguments for proposals for increased paper currency was the consequent relief of debtors, they will be considered separately, because of the many other issues that the monetary proposals presented. In many cases, stay laws were tied together with the monetary plans and were promulgated as attempts to bolster the general acceptability of the new paper, and so to benefit the debtor who could use it in payment.

161Delaware General Assembly, Journal of the House of Representatives, 1819 (January 26): 91; (February 2): 139.

162Ibid. (February 3): 150ff. Three of the dissenters, however, were from New Castle County.

163The vote was 26 to 10. For the vote, see New Jersey Legislature, Votes and Proceedings of the General Assembly, 1819–20 (June 13, 1820). For the report of the Hopkinson Committee, see ibid. (June 2, 1820): 202–05. Hopkinson had been a distinguished Federalist lawyer and Congressman from Philadelphia, and was soon to return there.

164New York Legislature, Senate Journal, 1819 (April 5): 251–52.

165Ibid., 1821 (March 13): 223.

166Matthew P. Andrews, Tercentenary History of Maryland (Chicago: S.J. Clarke Co., 1925), p. 1741; Boston New England Palladium, February 1, 1820. Maryland also abolished imprisonment for debt in 1819. The movement for abolition, however, is only tangential to our study, since it was a continuing humanitarian movement rather than an economic measure.

167Cleveland Register, July 6, 1819.

168New York Daily Advertiser, June 17, 1819; January 11, 1820.

169By a vote of 62 to 59, after repeated refusal to postpone the bill by fluctuating margins, as high as 97 to 56. Vermont General Assembly, House Journal, 1818–19 (October 10, 1818; November 6, 1818; November 10, 1818): 143ff., 167.

170The bill passed by a vote of 87 to 47. Ibid., 1819–20 (November 10, 1819): 172ff.

171The vote was 115 to 38. Ibid., 1820–21 (October 27, 1820): 101.

172Walter Hill Crockett, Vermont, the Green Mountain State (New York: The Century History Co., 1921), vol. 3, p. 181.

173Howard K. Stokes, “Public and Private Finance,” in Edward Field, ed., State of Rhode Island and Providence Plantations at the End of the Century: A History (Boston: The Mason Publishing Co., 1902), vol. 3, pp. 264–71, 291ff.; and Clarence S. Brigham, “The Period from 1820 to 1830,” in ibid., vol. 3, p. 304.

174Throughout this paper, “conservative” will be used as a term connoting such views.

175Richmond Enquirer, February 1, 1820.

176Ibid. The debate took place in the House of Delegates on January 28.

177Ibid., February 5, 1820.

178Rives was later to become one of the most prominent Virginia statesmen, a Jacksonian who favored state banking and balked at the sub-treasury scheme. Also supporting the bill was Representative Joseph Lovell of Kanawha, in West Virginia, who pointed to the “unusual embarrassment” of the times. Ibid., February 3, 1820.

179Ibid., February 1, 1820.

180The danger of setting a precedent in impairment of contract was stressed by Representative Andrew Stevenson, of the city of Richmond. Ibid.

181Ibid., February 5, 1820.

182One was rejected by a vote of 76 to 47, and the other by 95 to 84. The latter bill had previously been tentatively approved by a vote of 109 to 71. Virginia General Assembly, Journal of the House of Delegates, 1820–21 (January 19, January 25, February 17): 126, 140, 131.

183Ibid., 1819–20 (December 6, 1819): 6–9.

184See below for arguments on industry and economy as the remedies for hard times.

185North Carolina, Historical Records Survey Project, A Calendar of the Bartlett Yancey Papers (Raleigh: North Carolina Historical Society, 1940), p. 4.

186Representative Noble was from Bedford County in far Western Pennsylvania, and Representative Reeder represented Luzerne and Susquehanna Counties in the North. For their proposal, see Pennsylvania Legislature, Journal of the House, 1818–19 (December 10, 1818): 113.

187Findlay was later U.S. senator and treasurer of the U.S. Mint under Jackson.

188For the text of the report, see Pennsylvania Legislature, Journal of the House, 1819–20 (January 28, 1820): 476–88.

189Duane’s own remedies will be considered below.

190State Senator Condy Raguet, of Philadelphia, headed a committee to investigate the extent, causes, and remedies of the distress. Its report will be considered further. Its text is in Pennsylvania Legislature, Journal of the Senate, 1819–20 (January 29, 1820): 221–36, and the documentary appendix to the report is to be found in ibid. (February 14, 1820): 311–37.

191Kehl, Ill-Feeling, pp. 12–13.

192Pennsylvania Legislature, Laws of Pennsylvania, 1819–20 (March 28, 1820): 155.

193“A Pennsylvanian” in Philadelphia Union, February 11, 1820.

194Greer, “Economic and Social Effects,” p. 238.

195Charles C. Huntington, A History of Banking and Currency in Ohio Before the Civil War (Columbus: Ohio Archaeological and Historical Society, 1915), pp. 300ff.; comment of Philadelphia Union, August 27, 1821; Cleveland Herald, October 16, 1821.

196Cleveland Herald, March 20, 1821. This attitude contrasts with the tone of the press before the laws were passed when it was angry at the rapacity of the creditors. Thus, see Cleveland Register, May 25, 1819, August 10, 1819.

197On the pervasive insolvency in Ohio in this period, see William Greene, “Thoughts”; John J. Rowe, “Money and Banks in Cincinnati Before the Civil War,” Bulletin of the Historical and Philosophical Society of Ohio 6 (July 1948): 74–84; Goss, Cincinnati, pp. 139–41; Davis, “Economic Basis,” pp. 289–90.

198Jacob Piatt Dunn, Indiana and Indianans (Chicago: American Historical Society, 1919), p. 326.

199Indiana General Assembly, Laws, 3rd General Assembly, p. 68; on debtors’ relief laws in Indiana, see Waldo F. Mitchell, “Indiana’s Growth,” pp. 389–91.

200Indiana General Assembly, Journal of the Senate, 1818–19, p. 36.

201Indiana General Assembly, Laws, 4th General Assembly, pp. 113ff.; Mitchell, “Indiana’s Growth.”

202Garnett, State Banks, pp. 8–13. This law succeeded previous laws, enacted in 1813 and 1817, which had provided stays of one year for refusal of creditors to accept at par the notes of various Illinois banks. George W. Dowrie, The Development of Banking in Illinois, 1817–63 (Urbana: University of Illinois Press, 1913), p. 11; Knox, A History of Banking, p. 712.

203Dowrie, Development, p. 32; and Alexander Davidson and Bernard B. Stuve, A Complete History of Illinois (Springfield, Ill.: Rokker Co., 1881), p. 307.

204Illinois General Assembly, House Journal, 1820–21 (January 13, 1821): 157.

205See the excellent articles by Dorsey and Anderson.

206The existence of this special immigration boom helped to delay the crisis in Missouri to the end of 1819. Anderson, “Frontier Economic Problems,” Part I.

207On the controversy over debtors’ relief legislation in Missouri, see the articles by Dorsey, Anderson, and Hamilton.

208Primm states that the St. Charles Missourian, May 3, 1821, itself declared that “nine-tenths of the people were demanding economic relief.” James Neal Primm, Economic Policy in the Development of a Western State, Missouri, 1820–60 (Cambridge, Mass.: Harvard University Press, 1954), p. 3. But see Anderson, “Frontier Economic Problems,” Part I, p. 58n.

209Only two members of the grand jury refused to sign this presentment, and they reasoned that discussing such legislation was none of the grand jury’s business. See Anderson, “Frontier Economic Problems,” vol. 1.

210“A Citizen” in St. Louis Enquirer, March 3, 1821; Franklin Missouri Intelligencer, May 28, 1821.

211Primm gives the impression that overwhelming sentiment in this period favored relief legislation. While mentioning letters favoring relief legislation and a rural citizens’ meeting, however, Primm omits the opposition of the bulk of the press and of the rural citizens’ meeting at Boonville. Primm, Economic Policy, pp. 2–5.

212McNair was an influential merchant of St. Louis. Missouri General Assembly, Laws, 1st General Assembly, Special Session, 1821, pp. 32–34.

213Missouri General Assembly, Journal of the House of Representatives, 1st General Assembly, 2d Session, 1821, pp. 7–10.

214Missouri General Assembly, Laws, 1st General Assembly, 2d Session, 1821, pp. 46–52.

215Anderson, “Frontier Economic Problems,” vol. 1, p. 65.

216Green was a wealthy merchant, leading lawyer, and land speculator. He was brother-in-law of Ninian Edwards, of Illinois. Green’s son later married John C. Calhoun’s daughter, and Green became Calhoun’s chief editorial arm, as editor of the Washington United States Telegraph. Green later became President Tyler’s unofficial representative to Europe.

217Missouri General Assembly, Laws, 1st General Assembly, 2d Session, 1821, p. 74.

218Hamilton, Relief Movement.

219“Friend of Justice” in Franklin Missouri Intelligencer, September 4, 1821; W.J. Hamilton, “The Relief Movement in Missouri, 1820–22,” Missouri Historical Review 22 (October 1927), 78.

220Anderson, “Frontier Economic Problems,” p. 67.

221St. Louis Missouri Republican, October 9, 1822. The charge that wealthy debtors rather than poor ones were responsible for the relief drive was common to the opposition in many states. Anderson, “Frontier Economic Problems,” believes that this charge was correct, at least in Missouri. She states that the relief measures were largely for the benefit of the large land speculators, and that Representative Duff Green, the well-to-do relief leader, was himself heavily in debt at the time. Primm, Economic Policy, pp. 8–9, errs in asserting that the opposition to relief legislation based itself purely on a defense of wealth and on attacking the reliefers as poor and enemies of property.

222Hamilton, Relief Movement.

223On the 1821 election, see Primm, Economic Policy, pp. 10ff. Primm, by failing to mention the hotly fought 1822 election, vastly underestimates the extent of popular opposition to the relief program. He also neglects to mention that Governor McNair, in urging repeal of the relief legislation, specifically mentioned its failure to have the desired effects. Ibid., p. 15.

224Missouri General Assembly, Journal of the House of Representatives, 2d General Assembly, 1st Session, 1821, pp. 7–8.

225Richmond Enquirer, July 31, 1821; Folz, “Financial Crisis,” pp. 186ff.

226Thomas P. Abernethy, “The Early Development of Commerce and Banking in Tennessee,” Mississippi Valley Historical Review 14 (December 1927): 311–25. Claude A. Campbell, The Development of Banking in Tennessee (Nashville, Tenn.: Vanderbilt University Press, 1932); Joseph Howard Parks, “Felix Grundy and the Depression of 1819 in Tennessee,” Publications of the East Tennessee Historical Society 10 (1938): 20.

227William E. Beard, “Joseph McMinn, Tennessee’s Fourth Governor,” Tennessee Historical Quarterly 4 (June 1945): 162–63; and Philip Hamer, Tennessee, A History, 1673–1932 (New York: American Historical Society, 1933), pp. 229–40.

228Parks, Abernethy, Hamer, passim.

229Grundy later became a supporter of Andrew Jackson, a United States senator, and attorney general under Van Buren.

230Nashville Clarion, August 10, 1819. Cited in Joseph Howard Parks, Felix Grundy (Baton Rouge: Louisiana State University, 1940), p. 21. The Clarion was owned by Thomas G. Bradford, a political follower of the wealthy land speculator from rural Bedford County in mid-Tennessee, Andrew Ervin. See Charles G. Sellers, Jr., “Banking and Politics in Jackson’s Tennessee, 1817–1827,” Mississippi Valley Historical Review 41 (June 1954): 61–84.

231Parks, “Felix Grundy,” p. 22.

232For example, the Bank of the State of Tennessee and the Nashville Bank.

233Tennessee General Assembly, Journal of the House of Representatives, 1819, p. 245; Public Acts of Tennessee, 1819, p. 44. Sellers’ contention that this bill was a weakening of support for relief by Grundy does not seem convincing. Rather it appears to be the first step by the relief forces toward a comprehensive relief program. Sellers, “Banking.”

234Parks, “Felix Grundy,” pp. 25ff.

235Hamer, Tennessee, p. 233.

236West Tennessee was not a factor in public sentiment, since it was practically unpopulated.

237Issue of June 20, 1820.

238Nashville Whig, June 7, 1820. Cited in Sellers, “Banking,” p. 69.

239Nashville Whig, May 24, 1820; June 14, 1820.

240Parks, “Felix Grundy,” pp. 27ff. The Patriot declared that times were very hard in East Tennessee as well, but that this measure could not improve conditions.

241Ibid., p. 29.

242Issue of May 23, 1820.

243Nashville Gazette, June 14, 1820. Cited in Parks, “Felix Grundy,” p. 29. The Nashville Gazette, edited by George Wilson, was established by the dominant Overton faction of Tennessee politics, headed by Nashville land speculator, John Overton, reputed to be the wealthiest man in Tennessee. See Sellers, “Banking.”

244McMinn was an eminent politician of Tennessee, three times elected to the United States Senate, and three times Governor.

245Tennessee General Assembly, Journal of the House of Representatives, 1820 (June 26, 1820): 6–17.

246Ibid., June 28, 1820, p. 23.

247Tennessee General Assembly, Journal of the Senate, 2d Session, 1820 (July 7 and July 14, 1820).

248Ibid., July 21, 1820.

249Tennessee General Assembly, Journal of the House of Representatives, 1821 (September 17, 1821): 6ff.

250Ibid., October 2, 1821, pp. 114–15.

251Hamer, Tennessee, p. 238.

252This address was praised by the influential Hezekiah Niles, who denounced state relief laws—particularly those of Kentucky and Tennessee—as the work of dishonest debtors seeking special privilege. Niles’ Weekly Register 21 (November 3, 1821): 146.

253Gabriel H. Golden, “William Carroll and His Administration,” Tennessee Historical Magazine 9 (April 1925): 19.

254Thus, see Arndt M. Stickles, The Critical Court Struggle in Kentucky, 1819–29 (Bloomington: Indiana University Press, 1929), pp. 20ff. Also see General Basil W. Duke, History of the Bank of Kentucky, 1792–1895 (Louisville: A.C. Morton and Co., 1895), pp. 14–21. For a contemporary account of debt burdens in Kentucky, Philadelphia Union, July 3, 1821.

255Connelley and Coulter, History, vol. 2, pp. 608ff.; Samuel M. Wilson, History of Kentucky (Chicago: The S. J. Clarke Publishing Co., 1928), vol. 2, pp. 121–27; Sumner, History of Banking, p. 121.

256Orval W. Baylor, John Pope, Kentuckian (Cynthiana, Ky.: The Hobson Press, 1943), pp. 153–63. Pope, Secretary of State under Governor Slaughter and a director of the Bank of Kentucky, became the leading opponent of the debtors’ relief program.

257Kentucky General Assembly, Journal of the House of Representatives, 1819 (December 16, 1819): 811.

258Stickles, Critical Court Struggles, p. 23.

259Kentucky General Assembly, Journal of the House of Representatives, 1821–22 (December 19, 1821): 475.

260Kentucky General Assembly, Journal of the House of Representatives, 1819, p. 161.

261”Solon,” Liberty Saved (Louisville, Ky.: by the Author, no date), p. 8.

262Thus, Frankfort Argus, quoted in Washington (D.C.) National lntelligencer, June 9, 1819.

263Wilson, History of Kentucky, p. 133.

264Frankfort Argus, April 27, 1820 and following. See Amos Kendall, Autobiography, William Stickney, ed. (Boston: P. Smith, 1872), pp. 230–35.

265Kendall, Autobiography, p. 244.

266Frankfort Argus, July 5, 1821, in Kendall, Autobiography, p. 245.

• 1W.R. Scott found that early business crises in England—in the sixteenth and seventeenth centuries—were attributable to specific acts of government rather than to the complex economic causes that marked modern depressions. W.R. Scott, The Constitutions and Finance of English, Scottish, and Irish Joint-Stock Companies to 1720 (Cambridge, Mass.: Cambridge University Press, 1912), pp. 465–67.
• 2Very little work has been done on the Panic of 1819, either on its events or on contemporary opinion and policies. Samuel Rezneck’s pioneering article dealt largely with Niles’ Register and the protectionist controversy. William E. Folz’s unpublished dissertation was devoted mainly to a description of the events of the pre-Panic period, especially in the West. Thomas H. Greer’s useful article dealing with the Old Northwest overemphasized the traditional sectional and class version of debtors’ relief controversies, in which the West was considered to be almost exclusively in favor of debtors’ relief and the East opposed. Samuel Rezneck, “The Depression of 1819–1822: A Social History,” American Historical Review 49 (October 1933): 28–47; William E. Folz, “The Financial Crisis of 1819–A Study in Post-War Economic Readjustment” (unpublished Ph.D. dissertation, University of Illinois, 1935); Thomas H. Greer, “Economic and Social Effects of the Depression of 1819 in the Old Northwest,” Indiana Magazine of History 49 (September 1948): 227–43.
• 3The banks were largely note-issue institutions. The big-city banks were already using deposits, but there is little or no information about them.
• 4U.S. Congress, American State Papers: Finance 3, no. 559, January 26, 1819 (Washington, D.C.: Gales and Seaton, 1834), p. 398.
• 5U.S. Department of Commerce, Historical Statistics, p. 245.
• 6Clive Day, “The Early Development of the American Cotton Manufacture,” Quarterly Journal of Economics 39 (May 1925): 452.
• 7U.S. Congress, “Digest of Manufactures, Supplement,” American State Papers: Finance 4, no. 691 (Washington, D.C., 1834), p. 397ff. Also George Heberton Evans, Jr., Business Incorporations in the United States, 1800–1943 (New York: National Bureau of Economic Research, 1948), pp. 12–21.
• 8Allan G. Gruchy, Supervision and Control of Virginia State Banks (New York: D. Appleton-Century and Co., 1937), pp. 14–18, 48–56; Davis R. Dewey, State Banking Before the Civil War (Washington, D.C.: U.S. Government Printing Office, 1910).
• 9U.S. Comptroller of the Currency, Annual Report, 1876 (Washington, D.C.: U.S. Government Printing Office, 1876), p. xxxixff.; Albert Gallatin, Considerations on the Currency and Banking Systems of the United States (Philadelphia: Carey and Lea, 1831); and Boston, New England Palladium, July 27, 1819.
• 10Gallatin, Considerations on the Currency, p. 281; William M. Gouge, A Short History of Paper Money and Banking (New York: B. and S. Collins, 1835), pp. 61, 405ff.; U.S. Treasury Department, Reports of the Secretary of the Treasury of the United States (Washington, D.C., Blair and Rives, 1837), vol. 2, pp. 481–525.
• 11See also Dewey, State Banking, pp. 63–68; John Jay Knox, History of Banking in the United States (New York: B. Rhodes and Co., 1900), p. 445; for an account of small denomination paper, see J.T. Scharf and T. Westcott, History of Philadelphia, 1669–1884 (Philadelphia: L.H. Everts and Co., 1884), vol. 1, p. 581; for an account of West Virginia bank expansion, see Charles H. Ambler, Thomas Ritchie, A Study in Virginia Politics (Richmond, Va.: Bell Book and Stationery Co., 1913), pp. 66–67.
• 12Walter Buckingham Smith and Arthur H. Cole, Fluctuations in American Business, 1790–1860 (Cambridge, Mass.: Harvard University Press, 1935), pp. 146, 185; Anne Bezanson et al., Wholesale Prices in Philadelphia, 1784–1861 (Philadelphia: University of Pennsylvania Press, 1936), vol. 2, pp. 352–55, 409; Arthur H. Cole, Wholesale Commodity Prices in the United States, 1700–1861 (Cambridge, Mass.: Harvard University Press, 1938), vol. 1, p. 161.
• 13These are Treasury estimates for fiscal years ending September 30. U.S. Treasury Department, Bureau of Statistics, Monthly Summary of Imports and Exports for the Fiscal Year 1896 (Washington, D.C.: U.S. Government Printing Office, 1896), pp. 622–23. Official data on United States imports are not available before 1821.
• 14Timothy Pitkin, Statistical View of the Commerce of the United States of America, 3rd ed. (New Haven, Conn.: Durrie and Peck, 1835), p. 294; and Worthy P. Sterns, “The Beginning of American Financial Independence,” Journal of Political Economy 6 (1897–98): 191.
• 15Smith and Cole, Fluctuations, p. 147; Bezanson, Wholesale Prices, vol. 1, p. 353.
• 16Ray B. Westerfield, “Early History of American Auctions—A Chapter in Commercial History,” Connecticut Academy of Arts and Sciences, Transactions 13 (May 1920): 164–70; “Observer,” Review of Trade and Commerce of New York, 1815-to-Present (New York, 1820); J. Leander Bishop, A History of American Manufactures, 1608–1866 (Philadelphia: E. Young and Co., 1864), vol. 2, pp. 256ff.; New York Legislature, Assembly Documents, No. 10 (Albany, 1843), pp. 130ff.; Victor S. Clark, History of Manufactures in the United States, 1607–1860 (Washington, D.C.: Carnegie Institute, 1916), vol. 2, pp. 241ff.; Arthur H. Cole, The American Wool Manufacture (Cambridge, Mass.: Harvard University Press, 1926), vol. 1, pp. 156ff., 217; Horace Secrist, “The Anti-Auction Movement and the New York Workingmen’s Party of 1829,” Wisconsin Academy of Sciences, Arts, and Letters, Transactions 17, Part 1 (1914): 166.
• 17Bezanson, Wholesale Prices, vol. 1, p. 355.
• 18For an account of the difficulties of the cotton and woolen industry after the war, see Caroline F. Ware, The Early New England Cotton Manufacture (Boston: Houghton Mifflin Co., 1931), pp. 66, 126ff.; Bishop, A History, pp. 211ff., 236; “Reports of House Committee on Commerce and Manufactures,” U.S. Congress, American State Papers: Finance, vol. 3, pp. 32–35, 82ff., 103, 461; Cole, American Wool Manufacture, pp. 85, 144, 152ff.; Report of House Committee on Domestic Manufactures,” Pennsylvania Legislature, Journal of the House, 1818–20 (January 28, 1820): 413; and J.T. Scharf, History of Delaware (Philadelphia: L.J. Richards and Co., 1888), vol. 2, pp. 304ff.
• 19Day, Early Development, p. 452; Norman S. Buck, Development and Organization of Anglo-American Trade, 1800–1850 (New Haven, Conn.: Yale University Press, 1925), pp. 134–47. See also Evans, Business Incorporations, pp. 12–30; Ware, Early New England, pp. 56ff.
• 20Trade restrictions, however, had already reduced re-exports to $16 million by 1811, the immediate prewar year. Pitkin, Statistical View of Commerce, p. 35; U.S. Treasury, Monthly Summary; and Emory R. Johnson, et al., History of Domestic and Foreign Commerce of the United States (Washington, D.C.: Carnegie Institute, 1915), vol. 2, pp. 31ff. On exports from the principal cities, see Robert G. Albion, The Rise of the New York Port (New York: C. Scribner’s Sons, 1939), p. 390.
• 21Pitkin, Statistical View of Commerce, pp. 95–144.
• 22Cole, Wholesale Commodity Prices, p. 161; Pitkin, Statistical View of Commerce, pp. 108–15.
• 23William M. Gouge, Journal of Banking (Philadelphia: J. Van Court, 1842), pp. 346, 355.
• 24New note issue series by banks reached a heavy peak in 1815 and 1816 in New York and Pennsylvania. D.C. Wismer, Pennsylvania Descriptive List of Obsolete State Bank Notes, 1782–1866 (Fredericksburg, Md.: J.W. Stovell Printing Co., 1933); and idem, New York Descriptive List of Obsolete Paper Money (Fredericksburg, Md.: J.W. Stovell Printing Co., 1931).
• 25U.S. Congress, American State Papers: Finance 4, no. 705 (March 22, 1824): 759.
• 26Dewey, State Banking, pp. 6–21.
• 27For data, see Walter Buckingham Smith, Economic Aspects of the Second Bank of the United States (Cambridge, Mass.: Harvard University Press, 1953), p. 49. Also U.S. Comptroller of the Currency, Annual Report, 1876, p. 261; R.C.H. Catterall, The Second Bank of the United States (Chicago: University of Chicago Press, 1903), p. 501. Other assets of the Bank were $9.5 million in government bonds, $2.7 million due from state banks. Capital totaled $35 million.
• 28Folz, “Financial Crisis,” p. 164; Smith, Economic Aspects, pp. 105, 112; U.S. Congress, American State Papers: Finance 4, no. 705 (March 22, 1824): 523.
• 29A contemporary estimated the number of banks in 1818 at 500. “Philotheus,” Baltimore Federal Republican, July 9, 1819. Also Gouge, Journal, pp. 223–26; New York Legislature, Senate Journal, 1819 (January 26, 1819): 66–70.
• 30N.S.B. Gras, The Massachusetts First National Bank of Boston, 1784–1934 (Cambridge, Mass.: Harvard University Press, 1937), pp. 710–11.
• 31Knox, History of Banking, pp. 485–86.
• 32Gouge, Short History, pp. 166ff.
• 33Purchasers were only required to pay one-fourth of the total within forty days of purchase, and the penalty of forfeiture for failure to complete payment in five years was repeatedly postponed by Congress. U.S. Congress, The Public and General Statutes Passed by the Congress of the United States of America (Boston: Wells and Lilly, 1827), vols. 2 and 3, passim.
• 34See the data compiled from the records of the General Land Office, in Smith and Cole, Fluctuations, p. 185; and in Arthur H. Cole, “Cyclical and Seasonal Variations in the Sale of Public Lands, 1816–60,” Review of Economic Statistics 9 (January 1927): 42ff. Also Thomas P. Abernethy, The Formative Period in Alabama, 1815–28 (Montgomery, Ala.: Brown Printing Co., 1922), p. 50ff.; C.F. Emerick, The Credit System and the Public Domain (Vanderbilt, Tenn.: Southern History Society Publication No. 3, 1898); U.S. Congress, American State Papers: Finance 3, p. 10; and 4, pp. 859–61.
• 35On a building boom in New York City, see the comment by an influential merchant of the day, John Pintard, Letters to His Daughter, vol. 1: 1816–20 (New York: New York Historical Society, 1940), November 16, 1818, p. 154. Also New York Gazette, February 4, 1818. On a rental and property value boom in other states, U.S. Congress, Annals of Congress of the United States, 17th Congress, 1st Session (1821–22), March 12, 1822, pp. 1281–97; Washington (D.C.) National Intelligencer (July 24, 1819); Thomas Cushing, ed., History of Allegheny County, Pennsylvania (Chicago: A. Warner and Co., 1889), p. 547; William E. Connelley and E.M. Coulter, History of Kentucky (Chicago: American Historical Society, 1922), vol. 2, p. 593; Waldo F. Mitchell, “Indiana’s Growth, 1812–20,” Indiana Magazine of History 10 (December 1914): 385; Hattie M. Anderson, “Frontier Economic Problems in Missouri, 1815–28,” Missouri Historical Review 34 (October 1939): 48ff.; Dorothy B. Dorsey, “The Panic of 1819 in Missouri,” Missouri Historical Review 29 (January 1935): 79–80; Report of J.H. Brown at 1st Annual Meeting of Kentucky Bar Association, in William Graham Sumner, History of Banking in the United States (New York: Henry Holt and Co., 1896), p. 89; Charles H. Garnett, State Banks of Issue in Illinois (Urbana University of Illinois, 1898), p. 7; Pennsylvania Legislature, Journal of the Senate, 1819–21 (February 14, 1820): 311–37. On the rise in the price of slaves during the boom, John L. Conger, “South Carolina and Early Tariffs,” Mississippi Valley Historical Review 5 (March 1919): 415–25.
• 36U.S. Department of Commerce, Historical Statistics, pp. 169, 219–20.
• 37Taylor, Transportation Revolution, pp. 23, 336.
• 38Thomas S. Berry, Western Prices Before 1861 (Cambridge, Mass.: Harvard University Press, 1943), pp. 32, 45ff. On the heavy increase in costs of transporting convicts, see Pennsylvania Legislature, Journal of the Senate, 1820–21 (April 3, 1821): 816.
• 39U.S. Congress, House, Annual Report of the Commissioner of Navigation, 1901, 57th Congress, 1st Session, House Document No. 14, p. 585.
• 40Joseph E. Hedges, Commercial Banking and the Stock Market Before 1863 (Baltimore: Johns Hopkins University Press, 1938).
• 41U.S. Treasury, Monthly Summary; Cincinnati, Cincinnati Directory, 1819 (Cincinnati, Ohio, 1819), p. 52.
• 42Pitkin, Statistical View of Commerce, pp. 95–144; Smith, Economic Aspects, p. 280.
• 43Cole, Wholesale Commodity Prices, p. 161; Bezanson, Wholesale Prices, vol. 2, pp. 67–70. Also Smith, Economic Aspects, pp. 72–75; George Rogers Taylor, “Wholesale Commodity Prices at Charleston, South Carolina, 1796–1861,” Journal of Economic and Business History 4 (August 1932): 856–70.
• 44Taylor, Transportation Revolution, pp. 200–202.
• 45The order of magnitude of these earnings was approximately $3 million. See Pitkin, Statistical View of Commerce, p. 166.
• 46On the general attitude of hostility by the public as well as the banks toward attempts to redeem notes in specie, see Crawford, Report; Dewey, State Banking, pp. 73–79ff., 107ff.; Niles’ Weekly Register 13 (August 2, 1817): 357; 9 (February 7, 1817): 32; 14 (June 20, 1818): 281, 285; 14 (May 30, 1818): 225; New York Legislature, “Report on Committee on Currency,” Journal of the Assembly (February 24, 1818): 307–11; Knox, A History of Banking, p. 576. On an agreement by the banks of Philadelphia not to redeem balances against each other without delay, see Harry E. Miller, Banking Theories in the United States Before 1860 (Cambridge, Mass.: Harvard University Press, 1927), p. 215.
• 47Condy Raguet to David Ricardo, April 18, 1821, in David Ricardo, Minor Papers on the Currency Question, 1809–23, Jacob Hollander, ed. (Baltimore: The Johns Hopkins Press, 1932), pp. 199–201.
• 48On the silver premium, see Raguet Report, in Ricardo, Minor Papers, pp. 223–31; Smith, Economic Aspects, pp. 106, 123–24, 283, 286; James Flint, Letters from America, vol. 9, Early Western Travels, 1748–1846, Reuben G. Thwaites, ed. (Cleveland, Ohio: A.H. Clark Co., 1904–07), p. 136.
• 49Smith, Economic Aspects, p. 49.
• 50Ibid., pp. 40, 119, 286. Also see Catterall, Second Bank, p. 503.
• 51Gallatin, Considerations, pp. 45–51; Delaware General Assembly, Journal of the House of Representatives, 1819 (January 28): 104–06; New Hampshire Gazette, August 19, 1817; John J. Walsh, Early Banks in the District of Columbia, 1792–1818 (Washington, D.C.: Catholic University of America Press, 1940), pp. 49, 80, 82, 123ff., 168. Massachusetts banks, in contrast, were able to expand their note issues slightly from 1818–21; Gras, Massachusetts First National Bank, pp. 44–49. Also see Wismer, New York Descriptive List and Pennsylvania Descriptive List, passim.
• 52Folz, “Financial Crisis,” pp. 170–86; and Louis R. Harlan, “Public Career of William Berkeley Lewis,” Tennessee Historical Quarterly 7 (March 1948): 13; Sister M. Grace Madeleine, Monetary and Banking Theories of Jacksonian Democracy (Philadelphia: The Dolphin Press, 1943), p. 14.
• 53On business failures and debt judgments, Niles’ Weekly Register 16 (May 8, June 7, 1819): 179–80, 258–62; Richmond Enquirer, April 23, May 25, June 4, September 3, 1819; Philadelphia Poulson’s American Daily Advertiser, June 19, July 29, August 5, 1822. On the difficulties of domestic manufactures in the depression, Bishop, A History, vol. 2, 248–53, 256–63; Ware, Early New England, pp. 67–68; Cole, Wholesale Prices, vol. 1, pp. 147ff.; and Theodore G. Gronert, “Trade in the Blue-Grass Region, 1810–1820,” Mississippi Valley Historical Review 5 (1918): 313–23. On the failure of lead mines in the crisis, Ruby J. Swartzlow, “The Early History of Lead Mining in Missouri,” Missouri Historical Review 29 (January 1935): 114.
• 54Cole, Wholesale Prices, p. 161; Smith and Cole, Economic Fluctuations, p. 146; and Berry, Western Prices, pp. 71–74, 81–83; Arthur H. Cole, Wholesale Commodity Prices in the United States, 1700–1861 (Cambridge, Mass.: Harvard University Press, 1938), Supplement, pp. 182–91; Thomas S. Berry, “Wholesale Commodity Prices in the Ohio VaIley, 1816–60,” Review of Economic Statistics 17 (August 1935): 92; Taylor, “Wholesale Commodity Prices at Charleston;” Walter Buckingham Smith, “Wholesale Commodity Prices in the United States, 1795–1824,” Review of Economic Statistics 9 (October 1927): 181–83; Swartzlow, “Early History,” p. 201; Frederick W. Moore, “Fluctuations in Agricultural Prices and Wages in the South,” The South in the Building of the Nation (Richmond, Va.: Southern Historical Publishing Society, 1909), vol. 5, pp. 426–34. For the fall in the price of and return on slaves, Francis Corbin to James Madison, October 10, 1819, Massachusetts Historical Society, Proceedings 43 (January 1910): 261; Smith, Economic Aspects, pp. 78–79, 280. On the fall in rental and property values, see Clark, History, pp. 378–86; Richmond Enquirer, August 5, 1820; Connelley and Coulter, History, p. 599; Malcolm R. Eiselen, The Rise of Pennsylvania Protectionism (Philadelphia, 1932), pp. 44ff.
• 55Historical Statistics, pp. 245–48; Pitkin, Statistical View of Commerce, pp. 95–144; and James W. Livingood, The Philadelphia-Baltimore Trade Rivalry, 1780–1860 (Harrisburg: Pennsylvania Historical Commission, 1947), pp. 18–20, 89, 142.
• 56Historical Statistics, p. 248; Pitkin, Statistical View of Commerce, pp. 180–82.
• 57Historical Statistics, pp. 239–40, 245.
• 58Cole, Wholesale Prices, pp. 148, 165; Smith and Cole, Economic Fluctuations, p. 147; Bezanson, Wholesale Prices, p. 353.
• 59Smith and Cole, Economic Fluctuations, p. 185.
• 60One indication of the general decline in business activity was the considerable decline in total letters carried by the U.S. Post Office, a decline the more remarkable for interrupting a period of rapid secular growth, and despite continuing increase in the number of post offices and miles of post roads. Letters carried declined from a peak of 9.6 million in 1819 to 8.5 million in 1821. Wesley E. Rich, The History of the United States Post Office to the Year 1829 (Cambridge, Mass.: Harvard University Press, 1924), p. 183.
• 61Smith, Economic Aspects, p. 124.
• 62On whiskey as a medium of exchange in the crisis, see Alfred E. Lee, History of the City of Columbus (New York: Numsell and Co., 1892), vol. 1, pp. 368–69; on grain as a principal medium, see Greer, “Economic and Social Effects,” p. 232. On barter, see Charles F. Goss, Cincinnati, the Queen City, 1788–1912 (Chicago: S.J. Clarke Co., 1912), vol. 1, opp. 140ff.; Dorsey, “The Panic of 1819,” p. 85; J. Ray Cable, The Bank of the State of Missouri (New York: Columbia University Press, 1923), p. 24; James A. Kehl, Ill-Feeling in the Era of Good Feeling (Pittsburgh: University of Pittsburgh Press, 1956), p. 188.
• 63William Greene, “Thoughts on the Present Situation and Prospect of the Western Country, April 21, 1820,” in “A New Englander’s Impressions of Cincinnati in 1820—Letters by William Greene,” Rosamund R. Wulsin, ed., Bulletin of the Historical and Philosophical Society of Ohio 7 (April 1949): 116–22. Also Annals of Cleveland, 1818–20 (Cleveland: WPA in Ohio, 1938), vol. 1, pp. 398, 479, 539, 543, 569, 590, 629, 649; New York American, August 28, 1819; Harold E. Davis, “Economic Basis of Ohio Politics, 1820–40,” Ohio Archaeological and Historical Quarterly 67 (October 1938): 290, 309; Logan Esarey, History of Indiana (Indianapolis: B.F. Bowen and Co., 1918), vol. 1, pp. 280ff.
• 64See the above sources on manufactures, including Ware, Early New England, pp. 65–72; Bishop, History, vol. 2, p. 253; Cole, American Wool Manufacture, vol. 1, pp. 147ff.; U.S. Congress, American State Papers: Finance, vol. 4, pp. 28ff., 290ff., 357ff.
• 65Massachusetts Department of Labor, “Historical Review of Wages and Prices, 1782–1860,” Sixteenth Annual Report (Boston, 1885), vol. 3, pp. 317–28. Also see the index of wage rates based on these estimates, in Rufus S. Tucker, “Gold and the General Price Level,” Review of Economic Statistics 16 (February 1934): 24; idem, “Real Wages Under Laissez-Faire” Barron’s 13 (October 23, 1933): 7.
• 66William A. Sullivan, The Industrial Worker in Pennsylvania, 1800–1840 (Harrisburg: Pennsylvania Historical and Museum Commission, 1955), pp. 68, 72.
• 67See the report of a Committee of Citizens of Philadelphia, headed by Condy Raguet, in Niles’ Weekly Register 17 (October 23, 1819): 116; also U.S. Congress, American State Papers: Finance 3, p. 641; Matthew Carey, Essays in Political Economy (Philadelphia: Carey and Lea, 1822): 319–20; Niles’ Weekly Register 16 (August 7, 1819): 385 and 21 (September 1, 1821): 1; Flint, Letters, pp. 236, 248; Rezneck, “The Depression,” pp. 29–32; Minutes of the Common Council of the City of New York 9 (December 10, 1819), 663.
• 68A report of the Female Hospitable Society of Philadelphia blamed the increase in pauperism during 1819–20 on unemployment there. Benjamin J. Klebaner, Public Poor Relief in America, 1790–1860 (New York: Columbia University, microfilmed, 1952), pp. 9, 20.
• 69See the message of Governor Joseph Hiester to the Pennsylvania Legislature, December 5, 1821, in Pennsylvania, Pennsylvania Archives, George E. Reed, ed., Fourth series 5 (Harrisburg, 1900): 281.
• 70Smith, Economic Effects, pp. 271–72.
• 71See the aforementioned sources on prices.
• 72On the revival of manufacturing activity, see Niles’ Weekly Register 20 (March 17, 1821): 34–35; Ware, Early New England, p. 88; Philadelphia Union, September 4, 1821; Bishop, History, pp. 270, 294, 297; Gronert, “Trade,” p. 323; Folz, “Financial Crisis,” pp. 234–35. On revival of trade, see Hattie M. Anderson, “Frontier Economic Problems in Missouri, Part II,” Missouri Historical Review 34 (January 1940): 189.
• 73Wesley C. Mitchell, Business Cycles, vol. 1: The Problem and Its Setting (New York: National Bureau of Economic Research, 1927), p. 75.
• 74Ibid., pp. 76–79.
• 75Historical Statistics, p. 63.
• 76Arthur F. Burns and Wesley C. Mitchell, Measuring Business Cycles (New York: National Bureau of Economic Research, 1946), pp. 97n, 408n, 503–05.
• 77George K. Holmes, Cotton Crop of the United States, 1790–1911 (Washington, D.C.: U.S. Department of Agriculture, Bureau of Statistics, 1912), Circular 32, p. 6; idem, Rice Crop of the United States, 1712–1911 (Washington, D.C.: U.S. Department of Agriculture, Bureau of Statistics, 1912), Circular 34, pp. 7–8; Smith, Economic Aspects, pp. 24, 306.
• 78The urban commerce engaged in handling farm products was bolstered by the high physical production.
• 79Although the flow of manufactured imports after the war dealt a heavy blow to household manufactures, particularly in New England and the eastern urban areas, household woolen manufactures in the West and even upstate New York continued to flourish and expand undisturbed. Cole, American Wool Manufacture, vol. 1, pp. 182ff.
• 80Mitchell, Business Cycles, p. 78.
• 81Kathleen Bruce, Virginia Iron Manufacture in the Slave Era (New York: The Century Co., 1931), p. 127.
• 82Burns and Mitchell, Measuring Business Cycles, pp. 78–79.
• 83We shall see, however, that when a problem such as the land debt arose, which Monroe considered within the province of the federal government, the President was quick to take action.
• 84James D. Richardson, ed., A Compilation of the Messages and Papers of the Presidents (New York: Bureau of National Literature, 1897), pp. 608–16.
• 85Ibid., pp. 623–31. Monroe, however, vaguely hinted to Congress that domestic manufactures should in some way be supported.
• 86Ibid., pp. 642–49.
• 87Ibid., pp. 655–63.
• 88Detroit Gazette, December 17, 1819. For other attempts to minimize the depression, see the New York Daily Advertiser, June 14, 1819, June 25, 1819; Philadelphia Union, June 2, 1819; New York Gazette, December 9, 1818; Washington (D.C.) Gazette, reprinted in Raleigh Star, June 25, 1819.
• 89Some of the proponents of laissez-faire were in favor of measures to restrict bank credit expansion. While these measures hardly preserved the status quo, they were not considered programs of government intervention, but rather policies to prevent bank inflation—itself considered an interference with market processes.
• 90[Willard Phillips] “Seybert’s Statistical Annals,” North American Review 9 (September 1819): 207–39.
• 91New York Daily Advertiser, March 6, 1819, August 21, 1819, June 10, 1819, May 20, 1819, June 17, 1819. The only exception the Advertiser was willing to make was sumptuary laws, to enforce frugality and limit extravagance, but it saw no chance of a free people adopting such legislation.
• 92New York Evening Post, June 15, 1819. For other expressions of laissez-faire views, see New York Gazette, December 9, 1818; Richmond Correspondent, in the Boston New England Palladium, May 28, 1819; the charge of Judge Ross to the grand jury, Montgomery County, Pennsylvania, Niles’ Weekly Register 18 (July 1, 1820); Peter Force, National Calendar, 1820 (Washington, 1820), pp. 214ff.; Churchill C. Cambreleng (Signed “One of the People”), An Examination of the New Tariff (New York: Gould and Banks, 1821), pp. 19–21.
• 93Washington (D.C.) National Intelligencer, May 5, 1820.
• 94See New York National Advocate, October 2, 16, November 7, 24, 1818; February 5, June 5, 18, 30, July 9, 16, 22, 31, August 6, September 3, October 2, 1819.
• 95Philadelphia Union, August 10, 13, 1819.
• 96See New York Daily Advertiser, June 15, 1819. For other expressions of the industry and economy theme, see address of Governor Franklin, North Carolina General Assembly, Journal of the House, 1821 (November 22): 7–12; Address of the Society of Tammany to Its Absent Members (New York, 1819); “Homespun,” in New York Commercial Advertiser, October 15, 1819; Jackson Memorial, Niles’ Weekly Register 19 (September 2, 1820): 9; address of Governor James P. Preston, Virginia General Assembly, Journal of the House of Delegates, 1819–20 (December 6, 1819): 6–9; charge of Judge Ross to grand jury, Niles’ Weekly Register 18 (July 1, 1820): 321; “Senex;” in New York Columbian, February 11, 1819; Baltimore Federal Republican, May 22, 1819; “Experience,” in Richmond Enquirer, October 1, 1819; Detroit Gazette, January 29, 1819; New York American, October 13, 1819.
• 97New York Daily Advertiser, August 21, 1819; New York American, July 1, 1820. Also see the New York National Advocate, June 8, 1819; “Z.,” in Philadelphia Union, February 17, 1819; and Pintard, Letters, p. 197.
• 98Annapolis Maryland Gazette, June 3, 1819.
• 99Extracts from the Minutes of the General Assembly of the Presbyterian Church of the United States of America, 1819 (Philadelphia, 1819), pp. 171–72. The Convention opened on May 20 in Philadelphia, and consisted mainly of delegates from the Middle Atlantic states, particularly upstate New York.
• 100U.S. Congress, American State Papers: Finance 3, no. 589 (April 14, 1820): 522–25. Actions to cut government salaries were put into effect by the Common Council of New York City, by a two-to-one majority of the Virginia House, and suggested by the House Finance Committee of the New Jersey legislature, and by Governor Joseph Hiester of Pennsylvania. Conservative papers urged retrenchment in national spending and the national debt, and Thomas Jefferson wrote letters to his friends denouncing the Federal deficit. Virginia General Assembly, Journal of the House of Delegates, 1821 (January 23): 131ff.; ibid. (December 11, 1820, January 11, 1821), pp. 30ff., 110ff.; New Jersey Legislature, Votes and Proceedings of the General Assembly, 1820 (November 1), p. 18; Pennsylvania Legislature, Journal of the House, 1820 (December 19), p. 246; Minutes of the Common Council of the City of New York (February 28, 1820), p. 756; New York Daily Advertiser, January 1, 1820; New York American, July 29, 1820; Thomas Jefferson to Thomas Ritchie, December 25, 1820 and Jefferson to Judge Spencer Roane, March 9, 1821, in Thomas Jefferson, Writings, T.E. Bergh, ed. (Washington, D.C.: Thomas Jefferson Memorial Association of the United States, 1904), vol. 15, pp. 295, 325.
• 101Parks, “Felix Grundy,” pp. 25ff.
• 102Hamer, Tennessee, p. 233.
• 103West Tennessee was not a factor in public sentiment, since it was practically unpopulated.
• 104Issue of June 20, 1820.
• 105Nashville Whig, June 7, 1820. Cited in Sellers, “Banking,” p. 69.
• 106Nashville Whig, May 24, 1820; June 14, 1820.
• 107Parks, “Felix Grundy,” pp. 27ff. The Patriot declared that times were very hard in East Tennessee as well, but that this measure could not improve conditions.
• 108Ibid., p. 29.
• 109Issue of May 23, 1820.
• 110Nashville Gazette, June 14, 1820. Cited in Parks, “Felix Grundy,” p. 29. The Nashville Gazette, edited by George Wilson, was established by the dominant Overton faction of Tennessee politics, headed by Nashville land speculator, John Overton, reputed to be the wealthiest man in Tennessee. See Sellers, “Banking.”
• 111McMinn was an eminent politician of Tennessee, three times elected to the United States Senate, and three times Governor.
• 112Tennessee General Assembly, Journal of the House of Representatives, 1820 (June 26, 1820): 6–17.
• 113Ibid., June 28, 1820, p. 23.
• 114Tennessee General Assembly, Journal of the Senate, 2d Session, 1820 (July 7 and July 14, 1820).
• 115Ibid., July 21, 1820.
• 116Tennessee General Assembly, Journal of the House of Representatives, 1821 (September 17, 1821): 6ff.
• 117Ibid., October 2, 1821, pp. 114–15.
• 118Hamer, Tennessee, p. 238.
• 119This address was praised by the influential Hezekiah Niles, who denounced state relief laws—particularly those of Kentucky and Tennessee—as the work of dishonest debtors seeking special privilege. Niles’ Weekly Register 21 (November 3, 1821): 146.
• 120Gabriel H. Golden, “William Carroll and His Administration,” Tennessee Historical Magazine 9 (April 1925): 19.
• 121Thus, see Arndt M. Stickles, The Critical Court Struggle in Kentucky, 1819–29 (Bloomington: Indiana University Press, 1929), pp. 20ff. Also see General Basil W. Duke, History of the Bank of Kentucky, 1792–1895 (Louisville: A.C. Morton and Co., 1895), pp. 14–21. For a contemporary account of debt burdens in Kentucky, Philadelphia Union, July 3, 1821.
• 122Connelley and Coulter, History, vol. 2, pp. 608ff.; Samuel M. Wilson, History of Kentucky (Chicago: The S. J. Clarke Publishing Co., 1928), vol. 2, pp. 121–27; Sumner, History of Banking, p. 121.
• 123Orval W. Baylor, John Pope, Kentuckian (Cynthiana, Ky.: The Hobson Press, 1943), pp. 153–63. Pope, Secretary of State under Governor Slaughter and a director of the Bank of Kentucky, became the leading opponent of the debtors’ relief program.
• 124Kentucky General Assembly, Journal of the House of Representatives, 1819 (December 16, 1819): 811.
• 125Stickles, Critical Court Struggles, p. 23.
• 126Kentucky General Assembly, Journal of the House of Representatives, 1821–22 (December 19, 1821): 475.
• 127Kentucky General Assembly, Journal of the House of Representatives, 1819, p. 161.
• 128”Solon,” Liberty Saved (Louisville, Ky.: by the Author, no date), p. 8.
• 129Thus, Frankfort Argus, quoted in Washington (D.C.) National lntelligencer, June 9, 1819.
• 130Wilson, History of Kentucky, p. 133.
• 131Frankfort Argus, April 27, 1820 and following. See Amos Kendall, Autobiography, William Stickney, ed. (Boston: P. Smith, 1872), pp. 230–35.
• 132Kendall, Autobiography, p. 244.
• 133Frankfort Argus, July 5, 1821, in Kendall, Autobiography, p. 245.
• 134The Panic of 1819 was America’s first great economic crisis and depression. For the first time in American history, there was a crisis of nationwide scope that could not simply and directly be attributed to specific dislocations and restrictions—such as a famine or wartime blockades. Neither could it be simply attributed to the machinations or blunders of one man or to one upsetting act of government, which could be cured by removing the offending cause. In such a way had the economic dislocations from 1808–15 been blamed on “Mr. Jefferson’s Embargo” or “Mr. Madison’s War.” In short, here was a crisis marked with strong hints of modern depressions; it appeared to come mysteriously from within the economic system itself. Without obvious reasons, processes of production and exchange went awry.
• 135The bulk of the work deals with the remedial proposals themselves, and the speculations, controversies, and policies arising from them. Arguments were especially prevalent over monetary proposals, debtors’ relief—often tied in with monetary schemes—and a protective tariff. At the start of the depression each of these problems was unsettled: the tariff question was not resolved; the monetary system was new and troublesome. But the depression greatly intensified these problems, and added new aspects, and made solutions more pressing.
• 136The monetary system of the country was not highly developed. The banks, outside of New England at least, were confined almost exclusively to the cities. Their methods tended to be lax; government control was negligible; and the fact that most banks, like other corporations of the period, had to gain their status by special legislative charter, invited speculative abuses through pressure on the legislature. The result was a lack of uniformity in dealing with banks within and between states. Until 1811, the existence of the First Bank of the United States had influenced the banks toward uniformity. The currency of the United States was on a bimetallic standard, but at the legal ratio of fifteen-to-one gold was undervalued, and the bulk of the specie in circulation was silver. Silver coins were largely foreign, particularly Spanish, augmented by coins minted in Great Britain, Portugal, and France.
• 137The monetary system of the country was not highly developed. The banks, outside of New England at least, were confined almost exclusively to the cities. Their methods tended to be lax; government control was negligible; and the fact that most banks, like other corporations of the period, had to gain their status by special legislative charter, invited speculative abuses through pressure on the legislature. The result was a lack of uniformity in dealing with banks within and between states. Until 1811, the existence of the First Bank of the United States had influenced the banks toward uniformity. The currency of the United States was on a bimetallic standard, but at the legal ratio of fifteen-to-one gold was undervalued, and the bulk of the specie in circulation was silver. Silver coins were largely foreign, particularly Spanish, augmented by coins minted in Great Britain, Portugal, and France.
• 138The War of 1812 and postwar developments forced the American economy to make many rapid and sudden adjustments. The Anglo-French Wars had long fostered the prosperity of American shipping and foreign trade. As the leading neutral we found our exports in great demand on both sides, and American ships took over trade denied to ships of belligerent nations. With the advent of the Embargo and the Non-Intercourse Acts, and then the war itself, however, our foreign trade was drastically curtailed. Foreign trade had reached a peak of $138 million in imports and $108 million in exports in 1807, and by 1814 had sunk to $13 million imports and $7 million exports. On the other hand, war conditions spurred the growth of domestic manufactures. Cotton and woolen textiles, those bellwethers of the Industrial Revolution, were the leaders in this development. These goods were formerly supplied by Great Britain, but the government now required them for war purposes. Domestic manufactures grew rapidly to fill this demand as well as to meet consumer needs no longer met by imports. Households expanded their production of textiles. Of far more lasting significance was the growth of textile factories, especially in New England, New York, and Pennsylvania. Thus, while only four new cotton factories were established during 1807, forty-three were established during 1814, and fifteen in 1815. Leading merchants, finding their capital idle in foreign trade, turned to invest in the newly profitable field of domestic manufactures. Some of these factories adopted the corporate form, hitherto largely confined to banks, insurance and bridge companies. The total number of new factories incorporated in the leading manufacturing states of Massachusetts, Connecticut, New York, New Jersey, and Maryland, averaged sixty-five a year from 1812 to 1815, compared with eight per annum before the war.
• 139The War of 1812 and postwar developments forced the American economy to make many rapid and sudden adjustments. The Anglo-French Wars had long fostered the prosperity of American shipping and foreign trade. As the leading neutral we found our exports in great demand on both sides, and American ships took over trade denied to ships of belligerent nations. With the advent of the Embargo and the Non-Intercourse Acts, and then the war itself, however, our foreign trade was drastically curtailed. Foreign trade had reached a peak of $138 million in imports and $108 million in exports in 1807, and by 1814 had sunk to $13 million imports and $7 million exports. On the other hand, war conditions spurred the growth of domestic manufactures. Cotton and woolen textiles, those bellwethers of the Industrial Revolution, were the leaders in this development. These goods were formerly supplied by Great Britain, but the government now required them for war purposes. Domestic manufactures grew rapidly to fill this demand as well as to meet consumer needs no longer met by imports. Households expanded their production of textiles. Of far more lasting significance was the growth of textile factories, especially in New England, New York, and Pennsylvania. Thus, while only four new cotton factories were established during 1807, forty-three were established during 1814, and fifteen in 1815. Leading merchants, finding their capital idle in foreign trade, turned to invest in the newly profitable field of domestic manufactures. Some of these factories adopted the corporate form, hitherto largely confined to banks, insurance and bridge companies. The total number of new factories incorporated in the leading manufacturing states of Massachusetts, Connecticut, New York, New Jersey, and Maryland, averaged sixty-five a year from 1812 to 1815, compared with eight per annum before the war.
• 140The War of 1812 and postwar developments forced the American economy to make many rapid and sudden adjustments. The Anglo-French Wars had long fostered the prosperity of American shipping and foreign trade. As the leading neutral we found our exports in great demand on both sides, and American ships took over trade denied to ships of belligerent nations. With the advent of the Embargo and the Non-Intercourse Acts, and then the war itself, however, our foreign trade was drastically curtailed. Foreign trade had reached a peak of $138 million in imports and $108 million in exports in 1807, and by 1814 had sunk to $13 million imports and $7 million exports. On the other hand, war conditions spurred the growth of domestic manufactures. Cotton and woolen textiles, those bellwethers of the Industrial Revolution, were the leaders in this development. These goods were formerly supplied by Great Britain, but the government now required them for war purposes. Domestic manufactures grew rapidly to fill this demand as well as to meet consumer needs no longer met by imports. Households expanded their production of textiles. Of far more lasting significance was the growth of textile factories, especially in New England, New York, and Pennsylvania. Thus, while only four new cotton factories were established during 1807, forty-three were established during 1814, and fifteen in 1815. Leading merchants, finding their capital idle in foreign trade, turned to invest in the newly profitable field of domestic manufactures. Some of these factories adopted the corporate form, hitherto largely confined to banks, insurance and bridge companies. The total number of new factories incorporated in the leading manufacturing states of Massachusetts, Connecticut, New York, New Jersey, and Maryland, averaged sixty-five a year from 1812 to 1815, compared with eight per annum before the war.
• 141The war wrought great changes in the monetary system as well. It brought heavy pressure for federal government borrowing. New England, where the banks were more conservative, was opposed to the war and loaned only negligible amounts to the government, and the federal government came to rely on the mushrooming banks in the other states. These banks were primarily note-issuing institutions, generally run on loose principles. Little specie was paid in as capital, and it was quite common for the stockholders to pay for their bank stock with their own promissory notes, using the stock itself as the only collateral. Usually, the officers and stockholders of the banks were the most favored borrowers in their own institutions. Contributing to the expansion of the note issue was the practice of printing notes in denominations as low as six cents. With the restraint of the Bank of the United States removed, and the needs of government finance heavy, the number of new banks and the quantity of note issue multiplied rapidly. The great expansion of bank notes outside of New England contrasted with the conservative policy of the New England banks, and led to a drain of specie from other states to New England. The relative conservatism of New England banks is revealed by the fact that Massachusetts bank notes outstanding increased but slowly—from $2.4 million to $2.7 million from 1811 to 1815. Furthermore, specie in the bank vaults increased from $1.5 million to $3.5 million in the same period.
• 142The war wrought great changes in the monetary system as well. It brought heavy pressure for federal government borrowing. New England, where the banks were more conservative, was opposed to the war and loaned only negligible amounts to the government, and the federal government came to rely on the mushrooming banks in the other states. These banks were primarily note-issuing institutions, generally run on loose principles. Little specie was paid in as capital, and it was quite common for the stockholders to pay for their bank stock with their own promissory notes, using the stock itself as the only collateral. Usually, the officers and stockholders of the banks were the most favored borrowers in their own institutions. Contributing to the expansion of the note issue was the practice of printing notes in denominations as low as six cents. With the restraint of the Bank of the United States removed, and the needs of government finance heavy, the number of new banks and the quantity of note issue multiplied rapidly. The great expansion of bank notes outside of New England contrasted with the conservative policy of the New England banks, and led to a drain of specie from other states to New England. The relative conservatism of New England banks is revealed by the fact that Massachusetts bank notes outstanding increased but slowly—from $2.4 million to $2.7 million from 1811 to 1815. Furthermore, specie in the bank vaults increased from $1.5 million to $3.5 million in the same period.
• 143There was no uniform currency except specie that could be used in all areas of the country. Furthermore, the government, borrowing Middle Atlantic, Southern, and Western bank notes, had to make heavy expenditures in the New England area for imported supplies and for newly burgeoning textile goods manufactured in that region. The resulting specie drain and the continuing bank note expansion led inevitably to a suspension of specie payments outside the New England area in August 1814. The government agreed to this suspension, and the banks continued in operation—the exchange rate of each bank’s notes varying widely. The notes of the suspended banks depreciated at varying rates with respect to the New England bank notes and to specie. The suspension of the obligation to redeem greatly spurred the establishment of new banks and the expansion of bank note issues. The number of banks in the United States rose from 88 in 1811 to 208 in 1815, while bank notes outstanding rose from $2.3 million to $4.6 million in the same period. Expansion was particularly large in the Middle Atlantic states, notably Pennsylvania. The number of banks in the Middle Atlantic states increased from 25 to 111 in this period, while banks in the southern and western states increased from 16 to 34. Pennsylvania incorporated 41 banks in the month of March, 1814.
• 144There was no uniform currency except specie that could be used in all areas of the country. Furthermore, the government, borrowing Middle Atlantic, Southern, and Western bank notes, had to make heavy expenditures in the New England area for imported supplies and for newly burgeoning textile goods manufactured in that region. The resulting specie drain and the continuing bank note expansion led inevitably to a suspension of specie payments outside the New England area in August 1814. The government agreed to this suspension, and the banks continued in operation—the exchange rate of each bank’s notes varying widely. The notes of the suspended banks depreciated at varying rates with respect to the New England bank notes and to specie. The suspension of the obligation to redeem greatly spurred the establishment of new banks and the expansion of bank note issues. The number of banks in the United States rose from 88 in 1811 to 208 in 1815, while bank notes outstanding rose from $2.3 million to $4.6 million in the same period. Expansion was particularly large in the Middle Atlantic states, notably Pennsylvania. The number of banks in the Middle Atlantic states increased from 25 to 111 in this period, while banks in the southern and western states increased from 16 to 34. Pennsylvania incorporated 41 banks in the month of March, 1814.
• 145The war also saw a great rise in prices. Prices of domestic goods rose under the impact of the rapid expansion of the money supply; prices of imported goods rose further as a result of the blocking of foreign trade. Domestic commodity prices rose by about 20–30 percent; cotton, the leading export staple, doubled in price. Imported commodity prices rose by about 70 percent.
• 146The first war of the new nation, therefore, wrought many unsettling changes in the American economy. Trade was blocked from its former channels, the monetary system became disordered, expansion of money and a shortage of imported goods drove prices upward, and domestic manufactures—particularly textiles—developed under the spur of government demand and the closing of foreign supply sources. The advent of peace brought its own set of problems. After the wartime shortages, the scramble for foreign trade was pursued in earnest. Americans were eager to buy foreign goods, particularly British textiles, and the British exporters were anxious to unload their accumulated stocks. Total imports rose from $5.3 million in the last prewar year to $113 million in 1815, and to $147 million in 1816. British exports to the United States alone totaled $59 million in 1815, and $43 million in 1816. The renewal of the supply of imported goods drastically lowered the prices of imports in the United States and spurred American demand. Imported commodity prices at Philadelphia, for example, fell in one month (March, 1815) from an index of 231 to 178. Import prices continued to sag afterwards, reaching 125 by early 1817.
• 147The first war of the new nation, therefore, wrought many unsettling changes in the American economy. Trade was blocked from its former channels, the monetary system became disordered, expansion of money and a shortage of imported goods drove prices upward, and domestic manufactures—particularly textiles—developed under the spur of government demand and the closing of foreign supply sources. The advent of peace brought its own set of problems. After the wartime shortages, the scramble for foreign trade was pursued in earnest. Americans were eager to buy foreign goods, particularly British textiles, and the British exporters were anxious to unload their accumulated stocks. Total imports rose from $5.3 million in the last prewar year to $113 million in 1815, and to $147 million in 1816. British exports to the United States alone totaled $59 million in 1815, and $43 million in 1816. The renewal of the supply of imported goods drastically lowered the prices of imports in the United States and spurred American demand. Imported commodity prices at Philadelphia, for example, fell in one month (March, 1815) from an index of 231 to 178. Import prices continued to sag afterwards, reaching 125 by early 1817.
• 148The first war of the new nation, therefore, wrought many unsettling changes in the American economy. Trade was blocked from its former channels, the monetary system became disordered, expansion of money and a shortage of imported goods drove prices upward, and domestic manufactures—particularly textiles—developed under the spur of government demand and the closing of foreign supply sources. The advent of peace brought its own set of problems. After the wartime shortages, the scramble for foreign trade was pursued in earnest. Americans were eager to buy foreign goods, particularly British textiles, and the British exporters were anxious to unload their accumulated stocks. Total imports rose from $5.3 million in the last prewar year to $113 million in 1815, and to $147 million in 1816. British exports to the United States alone totaled $59 million in 1815, and $43 million in 1816. The renewal of the supply of imported goods drastically lowered the prices of imports in the United States and spurred American demand. Imported commodity prices at Philadelphia, for example, fell in one month (March, 1815) from an index of 231 to 178. Import prices continued to sag afterwards, reaching 125 by early 1817.
• 149The ability and eagerness to import was increased by the continued inflation and credit expansion of the banks, which still were not obliged to redeem in specie. Furthermore, the federal government aided imports by allowing from several months to more than a year for payment of import duties. British and other foreign exporters were willing to grant short-term credits on a large scale to American importers, and these credits played a major role in meeting the large balance of trade deficit in the postwar years. A further spur to imports, again particularly in British textiles, was the emergence of a system of selling these goods at auction sales instead of through regular import channels. British manufacturers found that auction sales through agents yielded quicker returns; the lower prices were compensated by the lower costs of operation. The auction system flourished, particularly in New York City. Total auction sales in the United States during 1818 were $30 million. In New York City they totaled $14 million, in contrast to $5 million before the war. Half of these sales consisted of European dry goods, in contrast to a sale of $1 million of American-made dry goods.
• 150The influx of imports spelled trouble for war-grown manufactures, especially textiles, which suddenly had to face the onrush of foreign competition. The manufacturers did not share in the general postwar prosperity. Bezanson’s index of prices of industrial commodities at Philadelphia (including such products as dyes, chemicals, metals, textiles, sugar, soap, glass), which had increased from 141 to 214 during the war period, fell abruptly to 177 in March, 1815, and continued to fall, reaching 127 in March, 1817. This drop indicates the difficulties confronting the fledgling manufacturers. The households which had increased textile manufacturing during the war could easily suspend their work as imports resumed, but the new factories had invested capital at stake. A few of the up-to-date factories, such as the famous cotton textile firm of Waltham, Massachusetts—a pioneer in American mass production, using the new power loom to make plain white sheeting for lower income customers—could easily withstand the competition, but most factories were hard-pressed. The decline continued for several years; new factories incorporated in five leading manufacturing states averaged nine per annum from 1817–19, in contrast to sixty-four per annum in the war years.
• 151The influx of imports spelled trouble for war-grown manufactures, especially textiles, which suddenly had to face the onrush of foreign competition. The manufacturers did not share in the general postwar prosperity. Bezanson’s index of prices of industrial commodities at Philadelphia (including such products as dyes, chemicals, metals, textiles, sugar, soap, glass), which had increased from 141 to 214 during the war period, fell abruptly to 177 in March, 1815, and continued to fall, reaching 127 in March, 1817. This drop indicates the difficulties confronting the fledgling manufacturers. The households which had increased textile manufacturing during the war could easily suspend their work as imports resumed, but the new factories had invested capital at stake. A few of the up-to-date factories, such as the famous cotton textile firm of Waltham, Massachusetts—a pioneer in American mass production, using the new power loom to make plain white sheeting for lower income customers—could easily withstand the competition, but most factories were hard-pressed. The decline continued for several years; new factories incorporated in five leading manufacturing states averaged nine per annum from 1817–19, in contrast to sixty-four per annum in the war years.
• 152The influx of imports spelled trouble for war-grown manufactures, especially textiles, which suddenly had to face the onrush of foreign competition. The manufacturers did not share in the general postwar prosperity. Bezanson’s index of prices of industrial commodities at Philadelphia (including such products as dyes, chemicals, metals, textiles, sugar, soap, glass), which had increased from 141 to 214 during the war period, fell abruptly to 177 in March, 1815, and continued to fall, reaching 127 in March, 1817. This drop indicates the difficulties confronting the fledgling manufacturers. The households which had increased textile manufacturing during the war could easily suspend their work as imports resumed, but the new factories had invested capital at stake. A few of the up-to-date factories, such as the famous cotton textile firm of Waltham, Massachusetts—a pioneer in American mass production, using the new power loom to make plain white sheeting for lower income customers—could easily withstand the competition, but most factories were hard-pressed. The decline continued for several years; new factories incorporated in five leading manufacturing states averaged nine per annum from 1817–19, in contrast to sixty-four per annum in the war years.
• 153American exports continued to expand greatly, however, although by far less than imports. Europe’s hunger for agricultural staples was stimulated by poor postwar crops abroad, and the prices and values of American staples exported, notably cotton and tobacco, increased greatly. Such leading customers as Britain and France led the surge in European demand. In spite of this, exports never reached the peak prewar totals. Re-exports of foreign goods fared badly, never attaining more than one-third of their prewar level, when neutral ships of the United States had a virtual monopoly of the European carrying trade. Domestic exports totaled $46 million in the fiscal year 1815, and $65 million in 1816, compared to a prewar peak of $49 million. Re-exports, on the other hand, totaled $7 million in 1816, and $17 million the next year, compared to the prewar peak of $60 million. The net balance of foreign trade, in sum, was a deficit of $60 million for the fiscal year of 1815, and of $65 million for the fiscal year 1816. Agricultural produce accounted for $14 million of the $19 million increase in domestic exports from 1815 to 1816. Agricultural produce exported rose from $38 million in the fiscal year 1815 to $52 million in 1816. Cotton furnished about half of the agricultural exports, and tobacco, wheat, and flour formed the bulk of the remainder. Of the exports in 1815, cotton was $17.5 million, tobacco was $8 million, and wheat and flour exports totaled $7 million. In 1816, cotton increased to $24 million, and tobacco to $13 million.
• 154American exports continued to expand greatly, however, although by far less than imports. Europe’s hunger for agricultural staples was stimulated by poor postwar crops abroad, and the prices and values of American staples exported, notably cotton and tobacco, increased greatly. Such leading customers as Britain and France led the surge in European demand. In spite of this, exports never reached the peak prewar totals. Re-exports of foreign goods fared badly, never attaining more than one-third of their prewar level, when neutral ships of the United States had a virtual monopoly of the European carrying trade. Domestic exports totaled $46 million in the fiscal year 1815, and $65 million in 1816, compared to a prewar peak of $49 million. Re-exports, on the other hand, totaled $7 million in 1816, and $17 million the next year, compared to the prewar peak of $60 million. The net balance of foreign trade, in sum, was a deficit of $60 million for the fiscal year of 1815, and of $65 million for the fiscal year 1816. Agricultural produce accounted for $14 million of the $19 million increase in domestic exports from 1815 to 1816. Agricultural produce exported rose from $38 million in the fiscal year 1815 to $52 million in 1816. Cotton furnished about half of the agricultural exports, and tobacco, wheat, and flour formed the bulk of the remainder. Of the exports in 1815, cotton was $17.5 million, tobacco was $8 million, and wheat and flour exports totaled $7 million. In 1816, cotton increased to $24 million, and tobacco to $13 million.
• 155Prices of American exports increased as a result of increased European demand and monetary expansion at home. The boom in export values was largely a price and not a physical production phenomenon. Cole’s index of export prices at Charleston rose from 93 in March 1815, to 138 in March 1817, and cotton prices rose even more in the same period. The physical quantity of cotton produced and exported, on the other hand, increased slowly in these years.
• 156The postwar monetary situation was generally considered intolerable. Banks continued to expand in number and note issue, without the obligation of redeeming in specie, and their notes continued to depreciate and fluctuate from bank to bank, and from place to place. The number of banks increased from 208 to 246 during 1815 alone, while the estimated total of bank notes in circulation increased from $46 million to $68 million. There was a great desire for nationwide uniformity in the currency, and the Treasury chafed under the necessity of receiving depreciated bank notes from its sale of public lands in the West, while it had to spend the bulk of its funds in the East in far less depreciated money. It was clear, however, that the inflated banks could not return immediately to specie convertibility without an enormous contraction of credit and deflation of the money supply. As an attempted solution, a Second Bank of the United States was authorized by Congress. It was required to redeem its notes in specie, and was expected to provide a sound and uniform currency. It began operations in January, 1817, but the state banks agreed to resume specie payments by February 20, under the proviso that the new Bank discount by that date a minimum of $2 million in New York, $2 million in Philadelphia, $1.5 million in Baltimore, and $500 thousand in Virginia—a minimum of $6 million. The banks also extracted a pledge of support in emergencies. The Bank, indeed, was not averse to a credit expansion of its own. Its main office and southern and western branches soon overfulfilled their promises. It was run as a strictly profit-making enterprise, under very liberal rules. Like many of the state banks, the Second Bank of the United States accepted its second and later installments of capital in the form of IOUs instead of specie. Eventually, such stock loans totaled $10 million, and the loans were particularly heavy to the important Philadelphia and Baltimore officers and directors of the Bank. Control over the branches of the Bank was negligible, and the southern and western branches greatly expanded their credits and note issues. The officers of the Baltimore branch, indeed, engaged in outright embezzlement. By the beginning of 1818, the Bank had loaned over $41 million. Its note issue outstanding reached $10 million, and its demand deposits $13 million, for a total money issue of $23 million, contrasted to a specie reserve of about $2.5 million.
• 157The postwar monetary situation was generally considered intolerable. Banks continued to expand in number and note issue, without the obligation of redeeming in specie, and their notes continued to depreciate and fluctuate from bank to bank, and from place to place. The number of banks increased from 208 to 246 during 1815 alone, while the estimated total of bank notes in circulation increased from $46 million to $68 million. There was a great desire for nationwide uniformity in the currency, and the Treasury chafed under the necessity of receiving depreciated bank notes from its sale of public lands in the West, while it had to spend the bulk of its funds in the East in far less depreciated money. It was clear, however, that the inflated banks could not return immediately to specie convertibility without an enormous contraction of credit and deflation of the money supply. As an attempted solution, a Second Bank of the United States was authorized by Congress. It was required to redeem its notes in specie, and was expected to provide a sound and uniform currency. It began operations in January, 1817, but the state banks agreed to resume specie payments by February 20, under the proviso that the new Bank discount by that date a minimum of $2 million in New York, $2 million in Philadelphia, $1.5 million in Baltimore, and $500 thousand in Virginia—a minimum of $6 million. The banks also extracted a pledge of support in emergencies. The Bank, indeed, was not averse to a credit expansion of its own. Its main office and southern and western branches soon overfulfilled their promises. It was run as a strictly profit-making enterprise, under very liberal rules. Like many of the state banks, the Second Bank of the United States accepted its second and later installments of capital in the form of IOUs instead of specie. Eventually, such stock loans totaled $10 million, and the loans were particularly heavy to the important Philadelphia and Baltimore officers and directors of the Bank. Control over the branches of the Bank was negligible, and the southern and western branches greatly expanded their credits and note issues. The officers of the Baltimore branch, indeed, engaged in outright embezzlement. By the beginning of 1818, the Bank had loaned over $41 million. Its note issue outstanding reached $10 million, and its demand deposits $13 million, for a total money issue of $23 million, contrasted to a specie reserve of about $2.5 million.
• 158The postwar monetary situation was generally considered intolerable. Banks continued to expand in number and note issue, without the obligation of redeeming in specie, and their notes continued to depreciate and fluctuate from bank to bank, and from place to place. The number of banks increased from 208 to 246 during 1815 alone, while the estimated total of bank notes in circulation increased from $46 million to $68 million. There was a great desire for nationwide uniformity in the currency, and the Treasury chafed under the necessity of receiving depreciated bank notes from its sale of public lands in the West, while it had to spend the bulk of its funds in the East in far less depreciated money. It was clear, however, that the inflated banks could not return immediately to specie convertibility without an enormous contraction of credit and deflation of the money supply. As an attempted solution, a Second Bank of the United States was authorized by Congress. It was required to redeem its notes in specie, and was expected to provide a sound and uniform currency. It began operations in January, 1817, but the state banks agreed to resume specie payments by February 20, under the proviso that the new Bank discount by that date a minimum of $2 million in New York, $2 million in Philadelphia, $1.5 million in Baltimore, and $500 thousand in Virginia—a minimum of $6 million. The banks also extracted a pledge of support in emergencies. The Bank, indeed, was not averse to a credit expansion of its own. Its main office and southern and western branches soon overfulfilled their promises. It was run as a strictly profit-making enterprise, under very liberal rules. Like many of the state banks, the Second Bank of the United States accepted its second and later installments of capital in the form of IOUs instead of specie. Eventually, such stock loans totaled $10 million, and the loans were particularly heavy to the important Philadelphia and Baltimore officers and directors of the Bank. Control over the branches of the Bank was negligible, and the southern and western branches greatly expanded their credits and note issues. The officers of the Baltimore branch, indeed, engaged in outright embezzlement. By the beginning of 1818, the Bank had loaned over $41 million. Its note issue outstanding reached $10 million, and its demand deposits $13 million, for a total money issue of $23 million, contrasted to a specie reserve of about $2.5 million.
• 159The postwar monetary situation was generally considered intolerable. Banks continued to expand in number and note issue, without the obligation of redeeming in specie, and their notes continued to depreciate and fluctuate from bank to bank, and from place to place. The number of banks increased from 208 to 246 during 1815 alone, while the estimated total of bank notes in circulation increased from $46 million to $68 million. There was a great desire for nationwide uniformity in the currency, and the Treasury chafed under the necessity of receiving depreciated bank notes from its sale of public lands in the West, while it had to spend the bulk of its funds in the East in far less depreciated money. It was clear, however, that the inflated banks could not return immediately to specie convertibility without an enormous contraction of credit and deflation of the money supply. As an attempted solution, a Second Bank of the United States was authorized by Congress. It was required to redeem its notes in specie, and was expected to provide a sound and uniform currency. It began operations in January, 1817, but the state banks agreed to resume specie payments by February 20, under the proviso that the new Bank discount by that date a minimum of $2 million in New York, $2 million in Philadelphia, $1.5 million in Baltimore, and $500 thousand in Virginia—a minimum of $6 million. The banks also extracted a pledge of support in emergencies. The Bank, indeed, was not averse to a credit expansion of its own. Its main office and southern and western branches soon overfulfilled their promises. It was run as a strictly profit-making enterprise, under very liberal rules. Like many of the state banks, the Second Bank of the United States accepted its second and later installments of capital in the form of IOUs instead of specie. Eventually, such stock loans totaled $10 million, and the loans were particularly heavy to the important Philadelphia and Baltimore officers and directors of the Bank. Control over the branches of the Bank was negligible, and the southern and western branches greatly expanded their credits and note issues. The officers of the Baltimore branch, indeed, engaged in outright embezzlement. By the beginning of 1818, the Bank had loaned over $41 million. Its note issue outstanding reached $10 million, and its demand deposits $13 million, for a total money issue of $23 million, contrasted to a specie reserve of about $2.5 million.
• 160The postwar monetary situation was generally considered intolerable. Banks continued to expand in number and note issue, without the obligation of redeeming in specie, and their notes continued to depreciate and fluctuate from bank to bank, and from place to place. The number of banks increased from 208 to 246 during 1815 alone, while the estimated total of bank notes in circulation increased from $46 million to $68 million. There was a great desire for nationwide uniformity in the currency, and the Treasury chafed under the necessity of receiving depreciated bank notes from its sale of public lands in the West, while it had to spend the bulk of its funds in the East in far less depreciated money. It was clear, however, that the inflated banks could not return immediately to specie convertibility without an enormous contraction of credit and deflation of the money supply. As an attempted solution, a Second Bank of the United States was authorized by Congress. It was required to redeem its notes in specie, and was expected to provide a sound and uniform currency. It began operations in January, 1817, but the state banks agreed to resume specie payments by February 20, under the proviso that the new Bank discount by that date a minimum of $2 million in New York, $2 million in Philadelphia, $1.5 million in Baltimore, and $500 thousand in Virginia—a minimum of $6 million. The banks also extracted a pledge of support in emergencies. The Bank, indeed, was not averse to a credit expansion of its own. Its main office and southern and western branches soon overfulfilled their promises. It was run as a strictly profit-making enterprise, under very liberal rules. Like many of the state banks, the Second Bank of the United States accepted its second and later installments of capital in the form of IOUs instead of specie. Eventually, such stock loans totaled $10 million, and the loans were particularly heavy to the important Philadelphia and Baltimore officers and directors of the Bank. Control over the branches of the Bank was negligible, and the southern and western branches greatly expanded their credits and note issues. The officers of the Baltimore branch, indeed, engaged in outright embezzlement. By the beginning of 1818, the Bank had loaned over $41 million. Its note issue outstanding reached $10 million, and its demand deposits $13 million, for a total money issue of $23 million, contrasted to a specie reserve of about $2.5 million.
• 161The boom therefore continued in 1818, with the Bank of the United States acting as an expansionary, rather than as a limiting, force. The expansionist attitude of the Bank was encouraged by the Treasury, which wanted the Bank to accept and use the various state bank notes in which the Treasury received its revenue, particularly its receipts from public land sales. The expansion of its note issue encouraged the state banks throughout the country, especially outside New England, to multiply and continue their credit expansion. The number of banks had increased from 246 in 1816 to 392 in 1818. Kentucky alone chartered 40 new banks in the 1817–18 session. Bank expansion was spurred by the decision of the Bank of the United States and the Treasury to treat the notes of nominally resuming banks as actually equivalent to specie. The Bank thereby accumulated balances and notes against the private banks without presenting them for redemption. Many of these notes were original Treasury balances which had been deposited with the Bank but not claimed from the state banks. In New England, on the other hand, both the private banks and the branches of the Bank of the United States pursued a conservative policy. Indeed, they were forced to contract, as the New England branches of the Bank were continually forced to payout specie on the expanded note issue of the western and southern branches, since by prevailing Bank rule, all branches were liable for the notes of all other branches. As a result, the notes of the Massachusetts banks declined from a total of $1 million in June, 1815 to $850 thousand by June, 1818.
• 162The boom therefore continued in 1818, with the Bank of the United States acting as an expansionary, rather than as a limiting, force. The expansionist attitude of the Bank was encouraged by the Treasury, which wanted the Bank to accept and use the various state bank notes in which the Treasury received its revenue, particularly its receipts from public land sales. The expansion of its note issue encouraged the state banks throughout the country, especially outside New England, to multiply and continue their credit expansion. The number of banks had increased from 246 in 1816 to 392 in 1818. Kentucky alone chartered 40 new banks in the 1817–18 session. Bank expansion was spurred by the decision of the Bank of the United States and the Treasury to treat the notes of nominally resuming banks as actually equivalent to specie. The Bank thereby accumulated balances and notes against the private banks without presenting them for redemption. Many of these notes were original Treasury balances which had been deposited with the Bank but not claimed from the state banks. In New England, on the other hand, both the private banks and the branches of the Bank of the United States pursued a conservative policy. Indeed, they were forced to contract, as the New England branches of the Bank were continually forced to payout specie on the expanded note issue of the western and southern branches, since by prevailing Bank rule, all branches were liable for the notes of all other branches. As a result, the notes of the Massachusetts banks declined from a total of $1 million in June, 1815 to $850 thousand by June, 1818.
• 163The boom therefore continued in 1818, with the Bank of the United States acting as an expansionary, rather than as a limiting, force. The expansionist attitude of the Bank was encouraged by the Treasury, which wanted the Bank to accept and use the various state bank notes in which the Treasury received its revenue, particularly its receipts from public land sales. The expansion of its note issue encouraged the state banks throughout the country, especially outside New England, to multiply and continue their credit expansion. The number of banks had increased from 246 in 1816 to 392 in 1818. Kentucky alone chartered 40 new banks in the 1817–18 session. Bank expansion was spurred by the decision of the Bank of the United States and the Treasury to treat the notes of nominally resuming banks as actually equivalent to specie. The Bank thereby accumulated balances and notes against the private banks without presenting them for redemption. Many of these notes were original Treasury balances which had been deposited with the Bank but not claimed from the state banks. In New England, on the other hand, both the private banks and the branches of the Bank of the United States pursued a conservative policy. Indeed, they were forced to contract, as the New England branches of the Bank were continually forced to payout specie on the expanded note issue of the western and southern branches, since by prevailing Bank rule, all branches were liable for the notes of all other branches. As a result, the notes of the Massachusetts banks declined from a total of $1 million in June, 1815 to $850 thousand by June, 1818.
• 164A generally uniform currency prevailed throughout the country, most bank notes circulating at par. There were exceptions, however; during 1818, for example, notes of some banks in Pennsylvania were depreciated by as much as 30 percent, and in Virginia, Kentucky, and Tennessee by as much as 12 percent.
• 165A generally uniform currency prevailed throughout the country, most bank notes circulating at par. There were exceptions, however; during 1818, for example, notes of some banks in Pennsylvania were depreciated by as much as 30 percent, and in Virginia, Kentucky, and Tennessee by as much as 12 percent.
• 166Investment in real estate, turnpikes, and farm improvement projects spurted, and prices in these fields rose. Furthermore, the federal government facilitated large-scale speculation in public lands by opening up for sale large tracts in the Southwest and Northwest, and granting liberal credit terms to purchasers. Public land sales, which had averaged $2 million to $4 million per annum in 1815 and 1816, rose to a peak of $13.6 million in 1818.
• 167Investment in real estate, turnpikes, and farm improvement projects spurted, and prices in these fields rose. Furthermore, the federal government facilitated large-scale speculation in public lands by opening up for sale large tracts in the Southwest and Northwest, and granting liberal credit terms to purchasers. Public land sales, which had averaged $2 million to $4 million per annum in 1815 and 1816, rose to a peak of $13.6 million in 1818.
• 168Speculation in urban and rural lands and real estate, using bank credit, was a common phenomenon which sharply raised property values. Furthermore, this speculation increased Treasury balances in western banks, and added to the flow of the Bank’s notes from west to east. Federal construction expenditures also helped to further the boom: they rose from $700 thousand in 1816 to over $14 million in 1818. Beginning in 1816, there was a construction boom in turnpikes, especially in New York, Maryland, and western Pennsylvania. Turnpikes were built by corporations, each of which received special charters from the states, and corporations in turnpike construction rivaled new banks in number. The share of transportation in the boom is also demonstrated by high and rising freight rates on steamboats, which were just beginning operation. Shipbuilders also shared in the boom prosperity.
• 169Speculation in urban and rural lands and real estate, using bank credit, was a common phenomenon which sharply raised property values. Furthermore, this speculation increased Treasury balances in western banks, and added to the flow of the Bank’s notes from west to east. Federal construction expenditures also helped to further the boom: they rose from $700 thousand in 1816 to over $14 million in 1818. Beginning in 1816, there was a construction boom in turnpikes, especially in New York, Maryland, and western Pennsylvania. Turnpikes were built by corporations, each of which received special charters from the states, and corporations in turnpike construction rivaled new banks in number. The share of transportation in the boom is also demonstrated by high and rising freight rates on steamboats, which were just beginning operation. Shipbuilders also shared in the boom prosperity.
• 170Speculation in urban and rural lands and real estate, using bank credit, was a common phenomenon which sharply raised property values. Furthermore, this speculation increased Treasury balances in western banks, and added to the flow of the Bank’s notes from west to east. Federal construction expenditures also helped to further the boom: they rose from $700 thousand in 1816 to over $14 million in 1818. Beginning in 1816, there was a construction boom in turnpikes, especially in New York, Maryland, and western Pennsylvania. Turnpikes were built by corporations, each of which received special charters from the states, and corporations in turnpike construction rivaled new banks in number. The share of transportation in the boom is also demonstrated by high and rising freight rates on steamboats, which were just beginning operation. Shipbuilders also shared in the boom prosperity.
• 171Speculation in urban and rural lands and real estate, using bank credit, was a common phenomenon which sharply raised property values. Furthermore, this speculation increased Treasury balances in western banks, and added to the flow of the Bank’s notes from west to east. Federal construction expenditures also helped to further the boom: they rose from $700 thousand in 1816 to over $14 million in 1818. Beginning in 1816, there was a construction boom in turnpikes, especially in New York, Maryland, and western Pennsylvania. Turnpikes were built by corporations, each of which received special charters from the states, and corporations in turnpike construction rivaled new banks in number. The share of transportation in the boom is also demonstrated by high and rising freight rates on steamboats, which were just beginning operation. Shipbuilders also shared in the boom prosperity.
• 172Speculation in urban and rural lands and real estate, using bank credit, was a common phenomenon which sharply raised property values. Furthermore, this speculation increased Treasury balances in western banks, and added to the flow of the Bank’s notes from west to east. Federal construction expenditures also helped to further the boom: they rose from $700 thousand in 1816 to over $14 million in 1818. Beginning in 1816, there was a construction boom in turnpikes, especially in New York, Maryland, and western Pennsylvania. Turnpikes were built by corporations, each of which received special charters from the states, and corporations in turnpike construction rivaled new banks in number. The share of transportation in the boom is also demonstrated by high and rising freight rates on steamboats, which were just beginning operation. Shipbuilders also shared in the boom prosperity.
• 173It does not seem accidental that the boom period saw the establishment of the first formal indoor stock exchange in the country: the New York Stock Exchange opened in March, 1817. Traders had been buying and selling stocks on the curbs in Wall Street since the eighteenth century, but now they found it necessary to form a definite association and rent indoor quarters. The period also marked the beginning of investment banking: commercial banks and individual bankers bought blocks of stock and sold them in small lots on the market or sold the stocks as agents of the issuer. Prominent in this new business were former merchants in foreign trade who had accumulated capital, such as Alexander Brown and Sons, and persons with fortunes amassed elsewhere, such as Astor and Son.
• 174As a result of the monetary and credit expansion, imports continued at a high rate, exceeding the rising exports, and financed by specie outflow and by credits from foreign merchants. After the rush for imports in 1815 and 1816, import values, though remaining at a relatively high level, declined in 1817. This temporary decline from peak levels was spurred by the uncertainties surrounding the return of the banking system to specie payment in 1817, and the consequent relative slackening in monetary expansion during that period. However, imports increased sharply again in 1818 to $122 million. Imports of foreign goods into Cincinnati—the major western depot—doubled in 1817–18 over the 1815–16 totals. In contrast, prices of imported goods, determined largely by conditions outside America, remained almost constant during these years.
• 175Exports, helped by European prosperity and poor crops abroad, continued to rise in price and value. They rose to $88 million in 1817 and reached a peak of $93 million in 1818. Exports of domestic products also rose to a peak of $74 million in that year. Even reexports reached a postwar peak in 1818, although the increase over 1816 was negligible. Agricultural exports rose to $57 million in 1817 and to a peak of $63 million in 1818, advancing at a faster rate than domestic exports as a whole. Agricultural exports rose by $5 million in 1817 and $5.4 million in 1818, while aggregate domestic exports rose by $3.5 million and $5.6 million respectively. Cotton exports also reached a peak in the latter year. Prices of export staples rose even more rapidly during this period. Cole’s index of export staple prices at Charleston rose from 138 in March, 1817 to 169 in August, 1818. A similar rise occurred in Bezanson’s cotton index.
• 176Exports, helped by European prosperity and poor crops abroad, continued to rise in price and value. They rose to $88 million in 1817 and reached a peak of $93 million in 1818. Exports of domestic products also rose to a peak of $74 million in that year. Even reexports reached a postwar peak in 1818, although the increase over 1816 was negligible. Agricultural exports rose to $57 million in 1817 and to a peak of $63 million in 1818, advancing at a faster rate than domestic exports as a whole. Agricultural exports rose by $5 million in 1817 and $5.4 million in 1818, while aggregate domestic exports rose by $3.5 million and $5.6 million respectively. Cotton exports also reached a peak in the latter year. Prices of export staples rose even more rapidly during this period. Cole’s index of export staple prices at Charleston rose from 138 in March, 1817 to 169 in August, 1818. A similar rise occurred in Bezanson’s cotton index.
• 177The net result in the balance of trade was a sharp drop in the trade deficit to $11.6 million in 1817, and a later rise to $28.5 million in 1818. The large deficits of the postwar years are partly overstated, for some were offset by earnings of American shipping, which carried almost all American foreign trade—the earnings of which do not appear in the trade balance.
• 178The net result in the balance of trade was a sharp drop in the trade deficit to $11.6 million in 1817, and a later rise to $28.5 million in 1818. The large deficits of the postwar years are partly overstated, for some were offset by earnings of American shipping, which carried almost all American foreign trade—the earnings of which do not appear in the trade balance.
• 179Troubles and strains, however, began to pile up as the boom continued. The resumption of specie payments by the banks was increasingly more nominal than real. Obstacles and intimidation were the lot of those who attempted to press the banks for payment in specie. As the Philadelphia economist, merchant, and State Senator Condy Raguet wrote to Ricardo:
• 180You state in your letter that you find it difficult to comprehend, why persons who had a right to demand coin from the Banks in payment of their notes, so long forbore to exercise it. This no doubt appears paradoxical to one who resides in a country where an act of parliament was necessary to protect a bank, but the difficulty is easily solved. The whole of our population are either stockholders of banks or in debt to them. It is not the interest of the first to press the banks and the rest are afraid. This is the whole secret. An independent man, who was neither a stockholder or debtor, who would have ventured to compel the banks to do justice, would have been persecuted as an enemy of society.
• 181The consequent loss of confidence in the banks was demonstrated by the emergence of a premium for specie on the market. The discount on bank notes made it more difficult for the banks maintaining specie payment to retain specie in their vaults, since people could redeem their notes for specie, and sell it for bank notes at a discount. Specie came to be at a premium in terms of Bank of United States notes, even though the Bank was required to pay in specie. This reflected a lack of confidence in the Bank’s ability to continue specie payments. A premium on Spanish silver dollars—the major coin circulating in the United States—appeared in March, 1818, and reached 4 percent by June and 6 percent by November. The specie drain from the Bank vaults increased, adding to the heavy external drain for payment of imports. It became evident that the Bank could not long continue expanding its notes and paying out specie at such a rapid rate. Importations of specie from abroad by the Bank, totaling over $7 million and purchased at a heavy price, proved only a temporary expedient. The problem was aggravated by the pressure resulting from rapid repayment of the Federal debt. The autumn of 1818 and early 1819 were the scheduled dates for the repayment of the “Louisiana debt,” which had financed the Louisiana Purchase. Most of this debt—amounting to over $4 million—was owed abroad, and it had to be repaid in specie. The responsibility for meeting the payments fell on the Bank of the United States, the repository for the Treasury’s deposits.
• 182Faced with these threatening circumstances, the Bank of the United States was forced to call a halt to its expansion and launch a painful process of contraction. Beginning in the summer of 1818, the Bank precipitated the Panic of 1819 by a series of deflationary moves. The branches of the Bank were ordered to call on the state banks to redeem heavy balances and notes held by the Bank. The requirement that each branch redeem the notes of every other branch was rescinded, thus ending the liability of the conservative eastern branches to redeem the notes of expansionist branches. The Boston branch began this move in March, and it was made general for all the Bank’s offices by the end of August. The contractionist policy, begun hesitantly under the presidency of William Jones and continued more firmly under the direction of his successor Langdon Cheves, sharply limited and contracted the loans and note issues of the branches. As a result, total demand liabilities of the Bank, including notes, private and public deposits, declined precipitately from $22 million in the fall of 1818 to $12 million in January, 1819, and to $10 million by January, 1820. Of this amount, notes outstanding of the Bank fell from a peak of $10 million in early 1818, to $8.5 million in the fall of 1818, less than $5 million by the summer of 1819, and $3.6 million by January, 1820. Particularly striking was the decline in the Bank’s public deposits, consisting largely of bank debts accumulated from public land sales. They declined from $9 million in the autumn of 1818 to less than $3 million in January, 1819.
• 183Another result of contraction was a large rise in the Bank’s specie reserve, which had been about $2.5 million during 1818 and early 1819. As loans were recalled, and the specie drain reversed, specie flowed into the Bank and reached $3.4 million in January, 1820. Specie reserves spurted to $8 million in the spring of 1821, at a time when total demand liabilities of the Bank were less than $12 million.
• 184The contractionist policy forced the state banks, in debt to the Bank, to contract their loans and notes outstanding at a rapid pace. Total bank notes in circulation were estimated at $45 million in January, 1820, as compared to $68 million in 1816. The severe monetary contraction, lasting through 1820, led to a wave of bankruptcies throughout the country, particularly outside New England. In many cases, banks attempted to continue in operation while refusing specie payment, but their notes depreciated greatly and no longer circulated outside the vicinity of issue. The notes of most of the inland banks depreciated and fluctuated in relation to each other. New England, in contrast, was the only area little touched by bank failures or runs; the banks outside of Rhode Island remained solvent. The entire hastily built private credit structure was greatly shaken by the contraction and wave of defaults. The financial panic led, as did later panics, to a great scramble for a cash position, and an eagerness to sell stocks of goods at even sacrifice rates.
• 185The contractionist policy forced the state banks, in debt to the Bank, to contract their loans and notes outstanding at a rapid pace. Total bank notes in circulation were estimated at $45 million in January, 1820, as compared to $68 million in 1816. The severe monetary contraction, lasting through 1820, led to a wave of bankruptcies throughout the country, particularly outside New England. In many cases, banks attempted to continue in operation while refusing specie payment, but their notes depreciated greatly and no longer circulated outside the vicinity of issue. The notes of most of the inland banks depreciated and fluctuated in relation to each other. New England, in contrast, was the only area little touched by bank failures or runs; the banks outside of Rhode Island remained solvent. The entire hastily built private credit structure was greatly shaken by the contraction and wave of defaults. The financial panic led, as did later panics, to a great scramble for a cash position, and an eagerness to sell stocks of goods at even sacrifice rates.
• 186The contractionist policy forced the state banks, in debt to the Bank, to contract their loans and notes outstanding at a rapid pace. Total bank notes in circulation were estimated at $45 million in January, 1820, as compared to $68 million in 1816. The severe monetary contraction, lasting through 1820, led to a wave of bankruptcies throughout the country, particularly outside New England. In many cases, banks attempted to continue in operation while refusing specie payment, but their notes depreciated greatly and no longer circulated outside the vicinity of issue. The notes of most of the inland banks depreciated and fluctuated in relation to each other. New England, in contrast, was the only area little touched by bank failures or runs; the banks outside of Rhode Island remained solvent. The entire hastily built private credit structure was greatly shaken by the contraction and wave of defaults. The financial panic led, as did later panics, to a great scramble for a cash position, and an eagerness to sell stocks of goods at even sacrifice rates.
• 187The severe contraction of the money supply, added to an increased demand for liquidity, led to a rapid and very heavy drop in prices. Although detailed price information is available only for wholesale commodities, there is evidence that prices fell in many other fields, such as real estate values and rents. Most important for the American economy were the prices of the great export staples, and their fall was remarkably precipitate. The index of export staples fell from 169 in August 1818, and 158 in November, 1818, to 77 in June, 1819. A similar movement occurred in the price of cotton and in the Smith and Cole index of domestic commodity prices. Evidence of falling prices can be seen in freight rates and in the prices of slaves.
• 188The fall in export prices was aggravated by a fall in European demand for agricultural imports, occasioned by the abundant European crops after 1817 and the crisis and business contraction in Britain during the same period. Values of American exports declined sharply as well. Total exports fell from $93 million in 1818 to $70 million in 1819 and 1820. Re-exports did not contract, and the brunt was taken by domestic exports, which fell from $74 million to $51 million. Of this drop, $20 million was accounted for by agricultural exports ($10 million by cotton and $7 million by wheat and flour). It was a pure price decline, since the physical volume of exports continued to increase steadily during this period.
• 189Imports fell even more in value than did exports, reflecting the decline in American incomes. Total imports fell drastically from $122 million in 1818 to $87 million in 1819 and $74.5 million in 1820, thus practically ending the specie drain. Imports from Great Britain fell from $42 million in 1818 to $14 million in 1820, and cotton and woolen imports from Britain fell from over $14 million each in 1818 to about $5 million.
• 190During 1821, total exports and total imports are listed as almost identical, $54.6 million for the former and $54.5 million for the latter. Both were absolute low points, not only for the period of boom and depression but for America since 1815. Import prices also fell with the advent of economic contraction abroad. They fell only slightly, however, and were a negligible factor in the reduction of import values, as compared to the decrease in money income at home. The index of import prices at Philadelphia fell from 126 to 112 from November, 1818 to July, 1819.
• 191During 1821, total exports and total imports are listed as almost identical, $54.6 million for the former and $54.5 million for the latter. Both were absolute low points, not only for the period of boom and depression but for America since 1815. Import prices also fell with the advent of economic contraction abroad. They fell only slightly, however, and were a negligible factor in the reduction of import values, as compared to the decrease in money income at home. The index of import prices at Philadelphia fell from 126 to 112 from November, 1818 to July, 1819.
• 192The credit contraction also caused public land sales to drop sharply, falling from $13.6 million in 1818, to $1.7 million in 1820, and to $1.3 million in 1821. Added to a quickened general desire for a cash position, it also led to high interest rates and common complaint about the scarcity of loanable funds.
• 193Economic distress was suffered by all groups in the community. The great fall in prices heavily increased the burden of fixed money debts, and provided a great impetus toward debtor insolvency. The distress of the farmers, occasioned by the fall in agricultural and real estate prices, was aggravated by the mass of private and bank debts that they had contracted during the boom period. Borrowing for long-term improvements, farmers had been served by the new and greatly expanded banks of the South and West, as well as by the western branches of the Bank of the United States. Bank stockholders who had borrowed on the basis of unpaid stock found themselves forced to meet their debts. Speculators and others who had bought public lands during the boom were now confronted with heavy debt burdens. Merchants suffered from the decline in prices and demand for their produce and from heavy debts. Their debts to the British as well as to domestic creditors were often canceled by the ruthless process of bankruptcy. Niles judged that no less than $100 million of mercantile debts to Europe were eliminated by bankruptcy during the depression. So low were prices and so scarce was the monetary medium in the frontier areas that there was a considerable return to barter conditions among farmers and other local inhabitants. Various areas returned to barter or the use of such goods as grain and whiskey as media of exchange.
• 194Economic distress was suffered by all groups in the community. The great fall in prices heavily increased the burden of fixed money debts, and provided a great impetus toward debtor insolvency. The distress of the farmers, occasioned by the fall in agricultural and real estate prices, was aggravated by the mass of private and bank debts that they had contracted during the boom period. Borrowing for long-term improvements, farmers had been served by the new and greatly expanded banks of the South and West, as well as by the western branches of the Bank of the United States. Bank stockholders who had borrowed on the basis of unpaid stock found themselves forced to meet their debts. Speculators and others who had bought public lands during the boom were now confronted with heavy debt burdens. Merchants suffered from the decline in prices and demand for their produce and from heavy debts. Their debts to the British as well as to domestic creditors were often canceled by the ruthless process of bankruptcy. Niles judged that no less than $100 million of mercantile debts to Europe were eliminated by bankruptcy during the depression. So low were prices and so scarce was the monetary medium in the frontier areas that there was a considerable return to barter conditions among farmers and other local inhabitants. Various areas returned to barter or the use of such goods as grain and whiskey as media of exchange.
• 195Economic distress was suffered by all groups in the community. The great fall in prices heavily increased the burden of fixed money debts, and provided a great impetus toward debtor insolvency. The distress of the farmers, occasioned by the fall in agricultural and real estate prices, was aggravated by the mass of private and bank debts that they had contracted during the boom period. Borrowing for long-term improvements, farmers had been served by the new and greatly expanded banks of the South and West, as well as by the western branches of the Bank of the United States. Bank stockholders who had borrowed on the basis of unpaid stock found themselves forced to meet their debts. Speculators and others who had bought public lands during the boom were now confronted with heavy debt burdens. Merchants suffered from the decline in prices and demand for their produce and from heavy debts. Their debts to the British as well as to domestic creditors were often canceled by the ruthless process of bankruptcy. Niles judged that no less than $100 million of mercantile debts to Europe were eliminated by bankruptcy during the depression. So low were prices and so scarce was the monetary medium in the frontier areas that there was a considerable return to barter conditions among farmers and other local inhabitants. Various areas returned to barter or the use of such goods as grain and whiskey as media of exchange.
• 196One thing seems to be universally conceded, that the greater part of our mercantile citizens are in a state of bankruptcy—that those of them who have the largest possessions of real and personal estate . . . find it almost impossible to raise sufficient funds to supply themselves with the necessaries of life—that the citizens of every class are uniformly delinquent in discharging even the most trifling of debts.
• 197Manufacturers suffered from the general decline in prices as well as from the contraction in credit, and the panic served to intensify their generally depressed condition since the end of the war. However, the progressive factory at Waltham was able to withstand the buffetings of the depression, to continue profitable operations, and even to expand throughout the depression period.
• 198Evidence is very scanty on the behavior of wage rates during this period. In Massachusetts, the wages of agricultural workers fluctuated sharply with the boom and contraction, averaging sixty cents per day in 1811, $1.50 in 1818, and fifty-three cents in 1819. The wage rates of skilled labor, on the other hand, remained stable throughout at approximately $1 per day. In Pennsylvania, woodcutters who averaged a wage of thirty-three cents per cord in the first half of the nineteenth century were paid only ten cents per cord in 1821 and 1822. Unskilled turnpike workers paid seventy-five cents a day in early 1818 received only twelve cents a day in 1819.
• 199Evidence is very scanty on the behavior of wage rates during this period. In Massachusetts, the wages of agricultural workers fluctuated sharply with the boom and contraction, averaging sixty cents per day in 1811, $1.50 in 1818, and fifty-three cents in 1819. The wage rates of skilled labor, on the other hand, remained stable throughout at approximately $1 per day. In Pennsylvania, woodcutters who averaged a wage of thirty-three cents per cord in the first half of the nineteenth century were paid only ten cents per cord in 1821 and 1822. Unskilled turnpike workers paid seventy-five cents a day in early 1818 received only twelve cents a day in 1819.
• 200One of the most significant phenomena of the depression was the advent of a new problem casting a long shadow on future events: large-scale unemployment in the cities. Although America was still an overwhelmingly rural country, the cities—the centers of manufacture and trade—were rapidly growing, and this depression witnessed the problem of unemployment for factory workers, artisans, mechanics, and other skilled craftsmen. These workers were often independent businessmen rather than employees, but their distress was not less acute. Concentrated in the cities, their plight was thereby dramatized, and they lacked the flexibility of farmers who could resort to barter or self-sufficiency production. In the fall of 1819, in thirty out of sixty branches of manufacturing (largely handicraft) in Philadelphia, employment in these fields totaled only 2,100, compared to 9,700 employed in 1815. There was a corresponding decline in total earnings—from $3 million to less than $700 thousand during the later year. Very drastic declines in employment took place in the cotton, woolen, and iron industries. Unemployment also swelled the ranks of the paupers during the depression.
• 201One of the most significant phenomena of the depression was the advent of a new problem casting a long shadow on future events: large-scale unemployment in the cities. Although America was still an overwhelmingly rural country, the cities—the centers of manufacture and trade—were rapidly growing, and this depression witnessed the problem of unemployment for factory workers, artisans, mechanics, and other skilled craftsmen. These workers were often independent businessmen rather than employees, but their distress was not less acute. Concentrated in the cities, their plight was thereby dramatized, and they lacked the flexibility of farmers who could resort to barter or self-sufficiency production. In the fall of 1819, in thirty out of sixty branches of manufacturing (largely handicraft) in Philadelphia, employment in these fields totaled only 2,100, compared to 9,700 employed in 1815. There was a corresponding decline in total earnings—from $3 million to less than $700 thousand during the later year. Very drastic declines in employment took place in the cotton, woolen, and iron industries. Unemployment also swelled the ranks of the paupers during the depression.
• 202By 1821, the depression had begun to clear, and the economy was launched on a slow road to recovery. The painful process of debt liquidation was over, and the equally painful process of monetary contraction had subsided. The surviving banks, their notes returned to par, successfully expanded credit. The Bank of the United States, saved from imminent failure, was at last in a sound position. Its branches were again able to redeem each others’ notes, and were now more firmly under strong central control. The premium on Spanish silver dollars over Bank notes dropped in June, 1819 from 4 percent to less than 2 percent, and par was restored by April, 1820. In states such as Kentucky or Tennessee, however, there was no general return to par and redeemability for several more years. Business in Britain and continental Europe was also past the trough of depression, and American exports began to recover both in prices and in total values. Prices, in general, which had continued sluggish after the steep decline in 1819, began a slow rise. Export staples at Charleston, reaching 77 in June 1819, fell to a trough of 64 in April, 1821, then slowly rose from that point on. In the same month a trough was reached by cotton prices, domestic commodities at Philadelphia, agricultural commodities, and industrial commodities, and each rose very slowly thereafter. Import prices, however, continued to fall slightly or remain at a stable level. Credit began to be available, and new securities to be heavily subscribed, both at home and in the British market. Business and manufacturing activity began to rise again.
• 203By 1821, the depression had begun to clear, and the economy was launched on a slow road to recovery. The painful process of debt liquidation was over, and the equally painful process of monetary contraction had subsided. The surviving banks, their notes returned to par, successfully expanded credit. The Bank of the United States, saved from imminent failure, was at last in a sound position. Its branches were again able to redeem each others’ notes, and were now more firmly under strong central control. The premium on Spanish silver dollars over Bank notes dropped in June, 1819 from 4 percent to less than 2 percent, and par was restored by April, 1820. In states such as Kentucky or Tennessee, however, there was no general return to par and redeemability for several more years. Business in Britain and continental Europe was also past the trough of depression, and American exports began to recover both in prices and in total values. Prices, in general, which had continued sluggish after the steep decline in 1819, began a slow rise. Export staples at Charleston, reaching 77 in June 1819, fell to a trough of 64 in April, 1821, then slowly rose from that point on. In the same month a trough was reached by cotton prices, domestic commodities at Philadelphia, agricultural commodities, and industrial commodities, and each rose very slowly thereafter. Import prices, however, continued to fall slightly or remain at a stable level. Credit began to be available, and new securities to be heavily subscribed, both at home and in the British market. Business and manufacturing activity began to rise again.
• 204By 1821, the depression had begun to clear, and the economy was launched on a slow road to recovery. The painful process of debt liquidation was over, and the equally painful process of monetary contraction had subsided. The surviving banks, their notes returned to par, successfully expanded credit. The Bank of the United States, saved from imminent failure, was at last in a sound position. Its branches were again able to redeem each others’ notes, and were now more firmly under strong central control. The premium on Spanish silver dollars over Bank notes dropped in June, 1819 from 4 percent to less than 2 percent, and par was restored by April, 1820. In states such as Kentucky or Tennessee, however, there was no general return to par and redeemability for several more years. Business in Britain and continental Europe was also past the trough of depression, and American exports began to recover both in prices and in total values. Prices, in general, which had continued sluggish after the steep decline in 1819, began a slow rise. Export staples at Charleston, reaching 77 in June 1819, fell to a trough of 64 in April, 1821, then slowly rose from that point on. In the same month a trough was reached by cotton prices, domestic commodities at Philadelphia, agricultural commodities, and industrial commodities, and each rose very slowly thereafter. Import prices, however, continued to fall slightly or remain at a stable level. Credit began to be available, and new securities to be heavily subscribed, both at home and in the British market. Business and manufacturing activity began to rise again.
• 205By 1821, the depression had begun to clear, and the economy was launched on a slow road to recovery. The painful process of debt liquidation was over, and the equally painful process of monetary contraction had subsided. The surviving banks, their notes returned to par, successfully expanded credit. The Bank of the United States, saved from imminent failure, was at last in a sound position. Its branches were again able to redeem each others’ notes, and were now more firmly under strong central control. The premium on Spanish silver dollars over Bank notes dropped in June, 1819 from 4 percent to less than 2 percent, and par was restored by April, 1820. In states such as Kentucky or Tennessee, however, there was no general return to par and redeemability for several more years. Business in Britain and continental Europe was also past the trough of depression, and American exports began to recover both in prices and in total values. Prices, in general, which had continued sluggish after the steep decline in 1819, began a slow rise. Export staples at Charleston, reaching 77 in June 1819, fell to a trough of 64 in April, 1821, then slowly rose from that point on. In the same month a trough was reached by cotton prices, domestic commodities at Philadelphia, agricultural commodities, and industrial commodities, and each rose very slowly thereafter. Import prices, however, continued to fall slightly or remain at a stable level. Credit began to be available, and new securities to be heavily subscribed, both at home and in the British market. Business and manufacturing activity began to rise again.
• 206in the modern sense.
• 207On the one hand, the boom, the crisis of 1818–19, and the depression until 1821 present many features akin to modern business cycles as interpreted by Mitchell. Although banking had previously been undeveloped, this period saw a rapid expansion of banks and bank money—unsound as much of the expansion may have been. The period also saw much of the typical characteristics of later financial panics: expansion of bank notes; followed by a specie drain from the banks both abroad and at home; and finally a crisis with a contraction of bank notes, runs on banks, and bank failures. A corollary to the contraction of loans and bank runs was the scramble for a cash position and rapid rise in interest rates during the panic. The diversity of bank notes and bank activity from section to section was hardly a modern characteristic, but there was an approach to uniformity in expansion and contraction because of the existence of the Bank of the United States. As in modern business cycles, the entire contraction and expansion cycle was fairly short-lived, totaling five or six years, and the period of crisis itself a short one. Furthermore, the sequence of phases was boom, crisis, depression, and revival as in the business cycle.
• 208On the other hand, there were many backward features of the economy that go counter to an interpretation of the period as a modern business cycle in the Mitchellian sense or the Panic of 1819 as a modern business crisis. Despite the growth of commerce, it was still true that the overwhelming preponderance of economic activity in that period was in agriculture. It has been estimated that 72 percent of the labor force in 1820 was engaged in agriculture. Although statistics are not available, it seems from contemporary comments that urban construction increased in the boom and declined in the crisis. Physical agricultural production is not too responsive to cycles, however, and agricultural production represents overwhelmingly the greatest part of productive activity during this period. Thus, physical production of cotton, rice, wheat, and flour continued to grow during the depression period. Certainly farm employment is not a markedly cyclical phenomenon. Furthermore, many farm households were self-sufficient, and carried on only local barter trade, or entered the monetary nexus occasionally. With such a prevalence of home sufficiency and barter conditions, the economy could hardly be classified as modern, or conditions the same as a modern business cycle.
• 209On the other hand, there were many backward features of the economy that go counter to an interpretation of the period as a modern business cycle in the Mitchellian sense or the Panic of 1819 as a modern business crisis. Despite the growth of commerce, it was still true that the overwhelming preponderance of economic activity in that period was in agriculture. It has been estimated that 72 percent of the labor force in 1820 was engaged in agriculture. Although statistics are not available, it seems from contemporary comments that urban construction increased in the boom and declined in the crisis. Physical agricultural production is not too responsive to cycles, however, and agricultural production represents overwhelmingly the greatest part of productive activity during this period. Thus, physical production of cotton, rice, wheat, and flour continued to grow during the depression period. Certainly farm employment is not a markedly cyclical phenomenon. Furthermore, many farm households were self-sufficient, and carried on only local barter trade, or entered the monetary nexus occasionally. With such a prevalence of home sufficiency and barter conditions, the economy could hardly be classified as modern, or conditions the same as a modern business cycle.
• 210On the other hand, there were many backward features of the economy that go counter to an interpretation of the period as a modern business cycle in the Mitchellian sense or the Panic of 1819 as a modern business crisis. Despite the growth of commerce, it was still true that the overwhelming preponderance of economic activity in that period was in agriculture. It has been estimated that 72 percent of the labor force in 1820 was engaged in agriculture. Although statistics are not available, it seems from contemporary comments that urban construction increased in the boom and declined in the crisis. Physical agricultural production is not too responsive to cycles, however, and agricultural production represents overwhelmingly the greatest part of productive activity during this period. Thus, physical production of cotton, rice, wheat, and flour continued to grow during the depression period. Certainly farm employment is not a markedly cyclical phenomenon. Furthermore, many farm households were self-sufficient, and carried on only local barter trade, or entered the monetary nexus occasionally. With such a prevalence of home sufficiency and barter conditions, the economy could hardly be classified as modern, or conditions the same as a modern business cycle.
• 211On the other hand, there were many backward features of the economy that go counter to an interpretation of the period as a modern business cycle in the Mitchellian sense or the Panic of 1819 as a modern business crisis. Despite the growth of commerce, it was still true that the overwhelming preponderance of economic activity in that period was in agriculture. It has been estimated that 72 percent of the labor force in 1820 was engaged in agriculture. Although statistics are not available, it seems from contemporary comments that urban construction increased in the boom and declined in the crisis. Physical agricultural production is not too responsive to cycles, however, and agricultural production represents overwhelmingly the greatest part of productive activity during this period. Thus, physical production of cotton, rice, wheat, and flour continued to grow during the depression period. Certainly farm employment is not a markedly cyclical phenomenon. Furthermore, many farm households were self-sufficient, and carried on only local barter trade, or entered the monetary nexus occasionally. With such a prevalence of home sufficiency and barter conditions, the economy could hardly be classified as modern, or conditions the same as a modern business cycle.
• 212One of the most vital points of difference between the economy of that period and of the modern day is the role of manufacturing. Not only was it small-scale, and even then largely (approximately two-thirds) in self-sufficient households, but the conditions of the fledgling factories differed from the rest of the economy. The factories were depressed while the rest of the community was booming, due to the postwar import of manufactured goods; their depression was continued and intensified during the panic. A crisis occurring in the midst of a depressed period—as happened to much of manufacturing in 1819—is more a feature of early pre-cyclical crisis as described by Mitchell. Furthermore, in manufacturing fields other than textiles, there were not even glimmerings of large-scale factory production. The other leading branches of manufacture, such as pot and pearl ashes, iron, soap, whiskey, candles, leather, lumber products, flour, paper, were the product of household and small-scale neighborhood manufactures. An exception was the larger flour mills, which expanded rapidly during 1815–16 to supply the booming European market. The great preponderance of flour mills, however, continued to be small, local affairs using local streams for power.
• 213One of the most vital points of difference between the economy of that period and of the modern day is the role of manufacturing. Not only was it small-scale, and even then largely (approximately two-thirds) in self-sufficient households, but the conditions of the fledgling factories differed from the rest of the economy. The factories were depressed while the rest of the community was booming, due to the postwar import of manufactured goods; their depression was continued and intensified during the panic. A crisis occurring in the midst of a depressed period—as happened to much of manufacturing in 1819—is more a feature of early pre-cyclical crisis as described by Mitchell. Furthermore, in manufacturing fields other than textiles, there were not even glimmerings of large-scale factory production. The other leading branches of manufacture, such as pot and pearl ashes, iron, soap, whiskey, candles, leather, lumber products, flour, paper, were the product of household and small-scale neighborhood manufactures. An exception was the larger flour mills, which expanded rapidly during 1815–16 to supply the booming European market. The great preponderance of flour mills, however, continued to be small, local affairs using local streams for power.
• 214One of the most vital points of difference between the economy of that period and of the modern day is the role of manufacturing. Not only was it small-scale, and even then largely (approximately two-thirds) in self-sufficient households, but the conditions of the fledgling factories differed from the rest of the economy. The factories were depressed while the rest of the community was booming, due to the postwar import of manufactured goods; their depression was continued and intensified during the panic. A crisis occurring in the midst of a depressed period—as happened to much of manufacturing in 1819—is more a feature of early pre-cyclical crisis as described by Mitchell. Furthermore, in manufacturing fields other than textiles, there were not even glimmerings of large-scale factory production. The other leading branches of manufacture, such as pot and pearl ashes, iron, soap, whiskey, candles, leather, lumber products, flour, paper, were the product of household and small-scale neighborhood manufactures. An exception was the larger flour mills, which expanded rapidly during 1815–16 to supply the booming European market. The great preponderance of flour mills, however, continued to be small, local affairs using local streams for power.
• 215With production and transportation in a relatively backward state, with such a large proportion of production on the farms and in self-sufficient households, and with the budding factory production facing a different course of economic conditions from the rest of society it is apparent that the National Bureau of Economic Research, within its own definitions, was correct in beginning its reference dates for American business cycles with the 1834–38 cycle and not earlier. On the other hand, as the greatest and last major crisis before 1836, the panic of 1819 holds considerable interest for the study of business cycles and for the present day. It was an economy in transition, as it were, to a state where business cycles as we know them would develop. Its new shaky, banking structure provided a surge of bank notes, while bringing in its wake many modern problems of money supply, bank soundness, and bank failure. Its new manufactures were the beginning of a great industrial development, and initiated national concern with foreign competition and the prosperity of industry. Extensive foreign trade brought the country in direct relationship to the fluctuations and developments in European economic conditions. Finally, urban unemployment, that modern specter, first became an object of concern with this panic.
• 216Faced with the new and burgeoning phenomenon of the panic, those Americans opposed to any governmental interference in the existing economic structure could take one of two courses: either simply deny that any distress existed, or face the facts of depression and argue that only individual acts could bring about a cure. The former position was the official reaction of the Monroe Administration. In his annual message of December 1818, for example, President Monroe ignored the panic completely and hailed the abundant harvest and the flourishing of commerce. In the following annual message, Monroe took brief notice of some currency derangement and depression of manufactures, but added that the evils were diminishing by being left to individual remedies. By November 1820, Monroe was actually rejoicing in the happy situation of the country; he admitted some pressure, but declared these of no importance. The best remedy for these slight pressures was simplicity and economy. In his second Inaugural Address, on March 5, 1821, Monroe admitted at last to a general depression of prices, but only as a means of explaining the great decline in the federal revenue. Despite this, he asserted that the situation of America presented a “gratifying spectacle.” A few newspapers echoed this theme. An anecdote in the Detroit Gazette inferred that unemployment was nothing to worry about, being simply a consequence of the laziness of the worker.
• 217Faced with the new and burgeoning phenomenon of the panic, those Americans opposed to any governmental interference in the existing economic structure could take one of two courses: either simply deny that any distress existed, or face the facts of depression and argue that only individual acts could bring about a cure. The former position was the official reaction of the Monroe Administration. In his annual message of December 1818, for example, President Monroe ignored the panic completely and hailed the abundant harvest and the flourishing of commerce. In the following annual message, Monroe took brief notice of some currency derangement and depression of manufactures, but added that the evils were diminishing by being left to individual remedies. By November 1820, Monroe was actually rejoicing in the happy situation of the country; he admitted some pressure, but declared these of no importance. The best remedy for these slight pressures was simplicity and economy. In his second Inaugural Address, on March 5, 1821, Monroe admitted at last to a general depression of prices, but only as a means of explaining the great decline in the federal revenue. Despite this, he asserted that the situation of America presented a “gratifying spectacle.” A few newspapers echoed this theme. An anecdote in the Detroit Gazette inferred that unemployment was nothing to worry about, being simply a consequence of the laziness of the worker.
• 218Faced with the new and burgeoning phenomenon of the panic, those Americans opposed to any governmental interference in the existing economic structure could take one of two courses: either simply deny that any distress existed, or face the facts of depression and argue that only individual acts could bring about a cure. The former position was the official reaction of the Monroe Administration. In his annual message of December 1818, for example, President Monroe ignored the panic completely and hailed the abundant harvest and the flourishing of commerce. In the following annual message, Monroe took brief notice of some currency derangement and depression of manufactures, but added that the evils were diminishing by being left to individual remedies. By November 1820, Monroe was actually rejoicing in the happy situation of the country; he admitted some pressure, but declared these of no importance. The best remedy for these slight pressures was simplicity and economy. In his second Inaugural Address, on March 5, 1821, Monroe admitted at last to a general depression of prices, but only as a means of explaining the great decline in the federal revenue. Despite this, he asserted that the situation of America presented a “gratifying spectacle.” A few newspapers echoed this theme. An anecdote in the Detroit Gazette inferred that unemployment was nothing to worry about, being simply a consequence of the laziness of the worker.
• 219Faced with the new and burgeoning phenomenon of the panic, those Americans opposed to any governmental interference in the existing economic structure could take one of two courses: either simply deny that any distress existed, or face the facts of depression and argue that only individual acts could bring about a cure. The former position was the official reaction of the Monroe Administration. In his annual message of December 1818, for example, President Monroe ignored the panic completely and hailed the abundant harvest and the flourishing of commerce. In the following annual message, Monroe took brief notice of some currency derangement and depression of manufactures, but added that the evils were diminishing by being left to individual remedies. By November 1820, Monroe was actually rejoicing in the happy situation of the country; he admitted some pressure, but declared these of no importance. The best remedy for these slight pressures was simplicity and economy. In his second Inaugural Address, on March 5, 1821, Monroe admitted at last to a general depression of prices, but only as a means of explaining the great decline in the federal revenue. Despite this, he asserted that the situation of America presented a “gratifying spectacle.” A few newspapers echoed this theme. An anecdote in the Detroit Gazette inferred that unemployment was nothing to worry about, being simply a consequence of the laziness of the worker.
• 220Faced with the new and burgeoning phenomenon of the panic, those Americans opposed to any governmental interference in the existing economic structure could take one of two courses: either simply deny that any distress existed, or face the facts of depression and argue that only individual acts could bring about a cure. The former position was the official reaction of the Monroe Administration. In his annual message of December 1818, for example, President Monroe ignored the panic completely and hailed the abundant harvest and the flourishing of commerce. In the following annual message, Monroe took brief notice of some currency derangement and depression of manufactures, but added that the evils were diminishing by being left to individual remedies. By November 1820, Monroe was actually rejoicing in the happy situation of the country; he admitted some pressure, but declared these of no importance. The best remedy for these slight pressures was simplicity and economy. In his second Inaugural Address, on March 5, 1821, Monroe admitted at last to a general depression of prices, but only as a means of explaining the great decline in the federal revenue. Despite this, he asserted that the situation of America presented a “gratifying spectacle.” A few newspapers echoed this theme. An anecdote in the Detroit Gazette inferred that unemployment was nothing to worry about, being simply a consequence of the laziness of the worker.
• 221Faced with the new and burgeoning phenomenon of the panic, those Americans opposed to any governmental interference in the existing economic structure could take one of two courses: either simply deny that any distress existed, or face the facts of depression and argue that only individual acts could bring about a cure. The former position was the official reaction of the Monroe Administration. In his annual message of December 1818, for example, President Monroe ignored the panic completely and hailed the abundant harvest and the flourishing of commerce. In the following annual message, Monroe took brief notice of some currency derangement and depression of manufactures, but added that the evils were diminishing by being left to individual remedies. By November 1820, Monroe was actually rejoicing in the happy situation of the country; he admitted some pressure, but declared these of no importance. The best remedy for these slight pressures was simplicity and economy. In his second Inaugural Address, on March 5, 1821, Monroe admitted at last to a general depression of prices, but only as a means of explaining the great decline in the federal revenue. Despite this, he asserted that the situation of America presented a “gratifying spectacle.” A few newspapers echoed this theme. An anecdote in the Detroit Gazette inferred that unemployment was nothing to worry about, being simply a consequence of the laziness of the worker.
• 222Of those who recognized the severity of the depression, there were scattered expressions of laissez-faire doctrine in opposition to all proposals of government intervention. We shall see below that the laissez-faire advocates developed their views and elaborated their arguments in the process of opposing specific proposals of government intervention: largely debtors’ relief, monetary inflation, and a protective tariff. Of general expressions of laissez-faire, not specifically related to proposals for intervention, one cogent exposition was that of Willard Phillips, young New England lawyer and leading Federalist. Phillips declared it outside the province of the legislature or of political economists to concern themselves with the state of trade or its profitability. For this “is a question which the merchants alone are acquainted with, and capable of deciding; and as the public interest coincides directly with theirs, there is no danger of its being neglected.” The New York Daily Advertiser set forth the laissez-faire position at some length. It stressed repeatedly that the depression must be allowed to cure itself. How could Congress remedy matters? It could not stop the people from exporting specie; it could not teach the people the necessary virtues of frugality and economy; it could not give credit to worthless banks or stop overtrading at home. The remedy must be slow and gradual, and stem from individuals, not governments. Any governmental interference would provide a shock to business enterprise. As the New York Evening Post succinctly expressed it: “Time and the laws of trade will restore things to an equilibrium, if legislatures do not rashly interfere to the natural course of events.” Of the expressions of laissez-faire sentiment in Congress, one of the most prominent was that of Representative Johnson of Virginia in the course of his attack against a proposed protective tariff. His theme was “let the people manage their own affairs . . . the people of this country understand their own interests and will pursue them to advantage.”
• 223Of those who recognized the severity of the depression, there were scattered expressions of laissez-faire doctrine in opposition to all proposals of government intervention. We shall see below that the laissez-faire advocates developed their views and elaborated their arguments in the process of opposing specific proposals of government intervention: largely debtors’ relief, monetary inflation, and a protective tariff. Of general expressions of laissez-faire, not specifically related to proposals for intervention, one cogent exposition was that of Willard Phillips, young New England lawyer and leading Federalist. Phillips declared it outside the province of the legislature or of political economists to concern themselves with the state of trade or its profitability. For this “is a question which the merchants alone are acquainted with, and capable of deciding; and as the public interest coincides directly with theirs, there is no danger of its being neglected.” The New York Daily Advertiser set forth the laissez-faire position at some length. It stressed repeatedly that the depression must be allowed to cure itself. How could Congress remedy matters? It could not stop the people from exporting specie; it could not teach the people the necessary virtues of frugality and economy; it could not give credit to worthless banks or stop overtrading at home. The remedy must be slow and gradual, and stem from individuals, not governments. Any governmental interference would provide a shock to business enterprise. As the New York Evening Post succinctly expressed it: “Time and the laws of trade will restore things to an equilibrium, if legislatures do not rashly interfere to the natural course of events.” Of the expressions of laissez-faire sentiment in Congress, one of the most prominent was that of Representative Johnson of Virginia in the course of his attack against a proposed protective tariff. His theme was “let the people manage their own affairs . . . the people of this country understand their own interests and will pursue them to advantage.”
• 224Of those who recognized the severity of the depression, there were scattered expressions of laissez-faire doctrine in opposition to all proposals of government intervention. We shall see below that the laissez-faire advocates developed their views and elaborated their arguments in the process of opposing specific proposals of government intervention: largely debtors’ relief, monetary inflation, and a protective tariff. Of general expressions of laissez-faire, not specifically related to proposals for intervention, one cogent exposition was that of Willard Phillips, young New England lawyer and leading Federalist. Phillips declared it outside the province of the legislature or of political economists to concern themselves with the state of trade or its profitability. For this “is a question which the merchants alone are acquainted with, and capable of deciding; and as the public interest coincides directly with theirs, there is no danger of its being neglected.” The New York Daily Advertiser set forth the laissez-faire position at some length. It stressed repeatedly that the depression must be allowed to cure itself. How could Congress remedy matters? It could not stop the people from exporting specie; it could not teach the people the necessary virtues of frugality and economy; it could not give credit to worthless banks or stop overtrading at home. The remedy must be slow and gradual, and stem from individuals, not governments. Any governmental interference would provide a shock to business enterprise. As the New York Evening Post succinctly expressed it: “Time and the laws of trade will restore things to an equilibrium, if legislatures do not rashly interfere to the natural course of events.” Of the expressions of laissez-faire sentiment in Congress, one of the most prominent was that of Representative Johnson of Virginia in the course of his attack against a proposed protective tariff. His theme was “let the people manage their own affairs . . . the people of this country understand their own interests and will pursue them to advantage.”
• 225Of those who recognized the severity of the depression, there were scattered expressions of laissez-faire doctrine in opposition to all proposals of government intervention. We shall see below that the laissez-faire advocates developed their views and elaborated their arguments in the process of opposing specific proposals of government intervention: largely debtors’ relief, monetary inflation, and a protective tariff. Of general expressions of laissez-faire, not specifically related to proposals for intervention, one cogent exposition was that of Willard Phillips, young New England lawyer and leading Federalist. Phillips declared it outside the province of the legislature or of political economists to concern themselves with the state of trade or its profitability. For this “is a question which the merchants alone are acquainted with, and capable of deciding; and as the public interest coincides directly with theirs, there is no danger of its being neglected.” The New York Daily Advertiser set forth the laissez-faire position at some length. It stressed repeatedly that the depression must be allowed to cure itself. How could Congress remedy matters? It could not stop the people from exporting specie; it could not teach the people the necessary virtues of frugality and economy; it could not give credit to worthless banks or stop overtrading at home. The remedy must be slow and gradual, and stem from individuals, not governments. Any governmental interference would provide a shock to business enterprise. As the New York Evening Post succinctly expressed it: “Time and the laws of trade will restore things to an equilibrium, if legislatures do not rashly interfere to the natural course of events.” Of the expressions of laissez-faire sentiment in Congress, one of the most prominent was that of Representative Johnson of Virginia in the course of his attack against a proposed protective tariff. His theme was “let the people manage their own affairs . . . the people of this country understand their own interests and will pursue them to advantage.”
• 226Of those who recognized the severity of the depression, there were scattered expressions of laissez-faire doctrine in opposition to all proposals of government intervention. We shall see below that the laissez-faire advocates developed their views and elaborated their arguments in the process of opposing specific proposals of government intervention: largely debtors’ relief, monetary inflation, and a protective tariff. Of general expressions of laissez-faire, not specifically related to proposals for intervention, one cogent exposition was that of Willard Phillips, young New England lawyer and leading Federalist. Phillips declared it outside the province of the legislature or of political economists to concern themselves with the state of trade or its profitability. For this “is a question which the merchants alone are acquainted with, and capable of deciding; and as the public interest coincides directly with theirs, there is no danger of its being neglected.” The New York Daily Advertiser set forth the laissez-faire position at some length. It stressed repeatedly that the depression must be allowed to cure itself. How could Congress remedy matters? It could not stop the people from exporting specie; it could not teach the people the necessary virtues of frugality and economy; it could not give credit to worthless banks or stop overtrading at home. The remedy must be slow and gradual, and stem from individuals, not governments. Any governmental interference would provide a shock to business enterprise. As the New York Evening Post succinctly expressed it: “Time and the laws of trade will restore things to an equilibrium, if legislatures do not rashly interfere to the natural course of events.” Of the expressions of laissez-faire sentiment in Congress, one of the most prominent was that of Representative Johnson of Virginia in the course of his attack against a proposed protective tariff. His theme was “let the people manage their own affairs . . . the people of this country understand their own interests and will pursue them to advantage.”
• 227The most extensive treatment of the economy and industry theme was a lengthy series of articles by Mordecai Manuel Noah, a leader in Tammany Hall and publisher of Tammany’s New York National Advocate. Noah’s theme was that the depression could only be remedied by individual economies in expenditure. He saw the cause of the depression in the indolence and lack of industry among the people and especially in the influence of the debilitating luxuries of high fashion. Noah had a Veblenian conception of the influence of the conspicuous consumption of the rich in encouraging extravagance by the poor. He advocated a return to family manufacture of clothing and an end to high fashion. In imitation of Noah, who had signed himself “Howard” in writing these articles, the editor of the Philadelphia Union, signing himself “Howard the Younger,” pointed out that it was the extravagant spenders who now complain of the “scarcity of money.” A quasi-humorous circular—printed in the Philadelphia American Daily Advertiser—called for a nationwide society to induce ladies to economize. It was signed by the “spirit” of many Revolutionary War heroes.
• 228The most extensive treatment of the economy and industry theme was a lengthy series of articles by Mordecai Manuel Noah, a leader in Tammany Hall and publisher of Tammany’s New York National Advocate. Noah’s theme was that the depression could only be remedied by individual economies in expenditure. He saw the cause of the depression in the indolence and lack of industry among the people and especially in the influence of the debilitating luxuries of high fashion. Noah had a Veblenian conception of the influence of the conspicuous consumption of the rich in encouraging extravagance by the poor. He advocated a return to family manufacture of clothing and an end to high fashion. In imitation of Noah, who had signed himself “Howard” in writing these articles, the editor of the Philadelphia Union, signing himself “Howard the Younger,” pointed out that it was the extravagant spenders who now complain of the “scarcity of money.” A quasi-humorous circular—printed in the Philadelphia American Daily Advertiser—called for a nationwide society to induce ladies to economize. It was signed by the “spirit” of many Revolutionary War heroes.
• 229The most extensive treatment of the economy and industry theme was a lengthy series of articles by Mordecai Manuel Noah, a leader in Tammany Hall and publisher of Tammany’s New York National Advocate. Noah’s theme was that the depression could only be remedied by individual economies in expenditure. He saw the cause of the depression in the indolence and lack of industry among the people and especially in the influence of the debilitating luxuries of high fashion. Noah had a Veblenian conception of the influence of the conspicuous consumption of the rich in encouraging extravagance by the poor. He advocated a return to family manufacture of clothing and an end to high fashion. In imitation of Noah, who had signed himself “Howard” in writing these articles, the editor of the Philadelphia Union, signing himself “Howard the Younger,” pointed out that it was the extravagant spenders who now complain of the “scarcity of money.” A quasi-humorous circular—printed in the Philadelphia American Daily Advertiser—called for a nationwide society to induce ladies to economize. It was signed by the “spirit” of many Revolutionary War heroes.
• 230Some writers went further to say that the depression was really having a good effect on the nation, since it forced people to go back to the highly moral ways of yesteryear—specifically to industry and economy. Thus, the New York Daily Advertiser saw much good from the depression; people had become much more economical and had established such channels for saving as savings banks and manufacturing associations. The New York American was even more emphatic, asserting that waste and indulgence had now been replaced by sober calculation, and prudence and morality had been regenerated.
• 231Similar to the theme that individual moral resurgence through industry and economy would relieve the depression was the belief that renewed theological faith could provide the only sufficient cure. The theological view, however, had no economic rationale. Typical was the (Annapolis) Maryland Gazette, which declared that the only remedy for the depression was to turn from wicked ways to religious devotion. A similar position was taken by the General Assembly of the Presbyterian Church, which found the only effectual remedy in a resurgence of religion and its corollary moral virtues.
• 232Similar to the theme that individual moral resurgence through industry and economy would relieve the depression was the belief that renewed theological faith could provide the only sufficient cure. The theological view, however, had no economic rationale. Typical was the (Annapolis) Maryland Gazette, which declared that the only remedy for the depression was to turn from wicked ways to religious devotion. A similar position was taken by the General Assembly of the Presbyterian Church, which found the only effectual remedy in a resurgence of religion and its corollary moral virtues.
• 233If individuals are to economize, then governments should also. Drives for legislative retrenchment were generally based upon the decline of prices since the onset of the depression. Since the preceding boom and price rise had been used as justification for increasing governmental salaries, many lawmakers urged that these salaries now be cut proportionately in turn. The government, in short, was regarded as having an obligation to retrench along with its citizens.
• 234Following up his resolutions, Felix Grundy introduced a bill in the Tennessee House staying all executions of judgments for two years, unless creditors accepted notes of the leading banks in the state at par. Passage of this bill in October, 1819, by an overwhelming vote of 24 to 10 in the House and a similar majority in the Senate, constituted the first major victory for the debtors’ relief forces in Tennessee. Another conditional stay law passed in the 1819 session was one introduced by Representative William Williams, of Davidson County. This provided that when a bank was the creditor and refused to accept at par, in payment of a debt judgment, either its own notes or the notes of the two leading banks in Tennessee, the execution would be stayed for two years. This bill was passed overwhelmingly with very little opposition. Another aid to the debtors passed in this session was a bill by Williams tightening the usury laws, by setting maximum rates of interest on loans.
• 235During early 1820, relief agitation grew in strength, this time centering on proposals for a new state loan office or bank to issue inconvertible paper along with further stay provisions. The reliefers called for a special session in the spring of 1820. It is interesting to note the Nashville Clarion proudly proclaimed that several men of wealth had taken the lead in the call for an extra session. Typical of the appeals for a special relief session was the petition of citizens from Williamson County, adjacent to Davidson. The petition pointed to the great decline in the price of produce, to the contraction of bank credit, and to the consequent multiplying suits for debt payment. Blame was laid on the “avidity of the creditors to collect,” which seems to increase “in an inverse ratio to the ability of the debtor to pay.” Unless relief were offered quickly, warned the petition, most of the citizens would suffer insolvency and ruin. East Tennessee, the region centering on Knoxville as its leading city, was largely opposed to the relief program and to the proposed special session. Typical was the vigorous disapproval of the Knoxville Register. It declared that the people were opposed, and charged that the huge number of petitions for relief and a special session, as described in the Nashville press, had come from only three counties endorsed by “but half a dozen signatures.” The honest, the industrious, the prudent citizens needed no relief and desired no special session. The demand for relief, charged the Register, was coming from those who had made purchases without capital, and lived in luxury beyond their means. “Now that they have run their race, they wish the Legislature to pass a law that they may keep their honest creditor from recovering his debts.” A grand jury from Sumner County, adjacent to Davidson County, declared that those seeking relief were not the poor and needy but those large businesses and speculators who had extended their credit with the banks; moreover, only these wealthy debtors would benefit from relief. The Courier, from Murfreesboro, a town near Nashville, replied that the debtors’ distress was not owing to their own imprudence but to a “fall of foreign markets, and the domestic scarcity of a circulating medium,” resulting in a great fall in the value of property. Legislative interference, it concluded, was necessary to save the people from bankruptcy and ruin. The East Tennessee opposition had a different view of the consequences of stay legislation. Thus, the Knoxville East Tennessee Patriot admitted that a stay law might give temporary relief to some people, but warned that its impairment of contracts would lead to increased rather than diminished bankruptcies. The East Tennesseans had even made a strong but unsuccessful effort to nip the debtors’ relief campaign in the bud by sending Enoch Parsons, losing gubernatorial candidate in 1819, to Nashville to campaign against Felix Grundy’s election.
• 236During early 1820, relief agitation grew in strength, this time centering on proposals for a new state loan office or bank to issue inconvertible paper along with further stay provisions. The reliefers called for a special session in the spring of 1820. It is interesting to note the Nashville Clarion proudly proclaimed that several men of wealth had taken the lead in the call for an extra session. Typical of the appeals for a special relief session was the petition of citizens from Williamson County, adjacent to Davidson. The petition pointed to the great decline in the price of produce, to the contraction of bank credit, and to the consequent multiplying suits for debt payment. Blame was laid on the “avidity of the creditors to collect,” which seems to increase “in an inverse ratio to the ability of the debtor to pay.” Unless relief were offered quickly, warned the petition, most of the citizens would suffer insolvency and ruin. East Tennessee, the region centering on Knoxville as its leading city, was largely opposed to the relief program and to the proposed special session. Typical was the vigorous disapproval of the Knoxville Register. It declared that the people were opposed, and charged that the huge number of petitions for relief and a special session, as described in the Nashville press, had come from only three counties endorsed by “but half a dozen signatures.” The honest, the industrious, the prudent citizens needed no relief and desired no special session. The demand for relief, charged the Register, was coming from those who had made purchases without capital, and lived in luxury beyond their means. “Now that they have run their race, they wish the Legislature to pass a law that they may keep their honest creditor from recovering his debts.” A grand jury from Sumner County, adjacent to Davidson County, declared that those seeking relief were not the poor and needy but those large businesses and speculators who had extended their credit with the banks; moreover, only these wealthy debtors would benefit from relief. The Courier, from Murfreesboro, a town near Nashville, replied that the debtors’ distress was not owing to their own imprudence but to a “fall of foreign markets, and the domestic scarcity of a circulating medium,” resulting in a great fall in the value of property. Legislative interference, it concluded, was necessary to save the people from bankruptcy and ruin. The East Tennessee opposition had a different view of the consequences of stay legislation. Thus, the Knoxville East Tennessee Patriot admitted that a stay law might give temporary relief to some people, but warned that its impairment of contracts would lead to increased rather than diminished bankruptcies. The East Tennesseans had even made a strong but unsuccessful effort to nip the debtors’ relief campaign in the bud by sending Enoch Parsons, losing gubernatorial candidate in 1819, to Nashville to campaign against Felix Grundy’s election.
• 237During early 1820, relief agitation grew in strength, this time centering on proposals for a new state loan office or bank to issue inconvertible paper along with further stay provisions. The reliefers called for a special session in the spring of 1820. It is interesting to note the Nashville Clarion proudly proclaimed that several men of wealth had taken the lead in the call for an extra session. Typical of the appeals for a special relief session was the petition of citizens from Williamson County, adjacent to Davidson. The petition pointed to the great decline in the price of produce, to the contraction of bank credit, and to the consequent multiplying suits for debt payment. Blame was laid on the “avidity of the creditors to collect,” which seems to increase “in an inverse ratio to the ability of the debtor to pay.” Unless relief were offered quickly, warned the petition, most of the citizens would suffer insolvency and ruin. East Tennessee, the region centering on Knoxville as its leading city, was largely opposed to the relief program and to the proposed special session. Typical was the vigorous disapproval of the Knoxville Register. It declared that the people were opposed, and charged that the huge number of petitions for relief and a special session, as described in the Nashville press, had come from only three counties endorsed by “but half a dozen signatures.” The honest, the industrious, the prudent citizens needed no relief and desired no special session. The demand for relief, charged the Register, was coming from those who had made purchases without capital, and lived in luxury beyond their means. “Now that they have run their race, they wish the Legislature to pass a law that they may keep their honest creditor from recovering his debts.” A grand jury from Sumner County, adjacent to Davidson County, declared that those seeking relief were not the poor and needy but those large businesses and speculators who had extended their credit with the banks; moreover, only these wealthy debtors would benefit from relief. The Courier, from Murfreesboro, a town near Nashville, replied that the debtors’ distress was not owing to their own imprudence but to a “fall of foreign markets, and the domestic scarcity of a circulating medium,” resulting in a great fall in the value of property. Legislative interference, it concluded, was necessary to save the people from bankruptcy and ruin. The East Tennessee opposition had a different view of the consequences of stay legislation. Thus, the Knoxville East Tennessee Patriot admitted that a stay law might give temporary relief to some people, but warned that its impairment of contracts would lead to increased rather than diminished bankruptcies. The East Tennesseans had even made a strong but unsuccessful effort to nip the debtors’ relief campaign in the bud by sending Enoch Parsons, losing gubernatorial candidate in 1819, to Nashville to campaign against Felix Grundy’s election.
• 238During early 1820, relief agitation grew in strength, this time centering on proposals for a new state loan office or bank to issue inconvertible paper along with further stay provisions. The reliefers called for a special session in the spring of 1820. It is interesting to note the Nashville Clarion proudly proclaimed that several men of wealth had taken the lead in the call for an extra session. Typical of the appeals for a special relief session was the petition of citizens from Williamson County, adjacent to Davidson. The petition pointed to the great decline in the price of produce, to the contraction of bank credit, and to the consequent multiplying suits for debt payment. Blame was laid on the “avidity of the creditors to collect,” which seems to increase “in an inverse ratio to the ability of the debtor to pay.” Unless relief were offered quickly, warned the petition, most of the citizens would suffer insolvency and ruin. East Tennessee, the region centering on Knoxville as its leading city, was largely opposed to the relief program and to the proposed special session. Typical was the vigorous disapproval of the Knoxville Register. It declared that the people were opposed, and charged that the huge number of petitions for relief and a special session, as described in the Nashville press, had come from only three counties endorsed by “but half a dozen signatures.” The honest, the industrious, the prudent citizens needed no relief and desired no special session. The demand for relief, charged the Register, was coming from those who had made purchases without capital, and lived in luxury beyond their means. “Now that they have run their race, they wish the Legislature to pass a law that they may keep their honest creditor from recovering his debts.” A grand jury from Sumner County, adjacent to Davidson County, declared that those seeking relief were not the poor and needy but those large businesses and speculators who had extended their credit with the banks; moreover, only these wealthy debtors would benefit from relief. The Courier, from Murfreesboro, a town near Nashville, replied that the debtors’ distress was not owing to their own imprudence but to a “fall of foreign markets, and the domestic scarcity of a circulating medium,” resulting in a great fall in the value of property. Legislative interference, it concluded, was necessary to save the people from bankruptcy and ruin. The East Tennessee opposition had a different view of the consequences of stay legislation. Thus, the Knoxville East Tennessee Patriot admitted that a stay law might give temporary relief to some people, but warned that its impairment of contracts would lead to increased rather than diminished bankruptcies. The East Tennesseans had even made a strong but unsuccessful effort to nip the debtors’ relief campaign in the bud by sending Enoch Parsons, losing gubernatorial candidate in 1819, to Nashville to campaign against Felix Grundy’s election.
• 239During early 1820, relief agitation grew in strength, this time centering on proposals for a new state loan office or bank to issue inconvertible paper along with further stay provisions. The reliefers called for a special session in the spring of 1820. It is interesting to note the Nashville Clarion proudly proclaimed that several men of wealth had taken the lead in the call for an extra session. Typical of the appeals for a special relief session was the petition of citizens from Williamson County, adjacent to Davidson. The petition pointed to the great decline in the price of produce, to the contraction of bank credit, and to the consequent multiplying suits for debt payment. Blame was laid on the “avidity of the creditors to collect,” which seems to increase “in an inverse ratio to the ability of the debtor to pay.” Unless relief were offered quickly, warned the petition, most of the citizens would suffer insolvency and ruin. East Tennessee, the region centering on Knoxville as its leading city, was largely opposed to the relief program and to the proposed special session. Typical was the vigorous disapproval of the Knoxville Register. It declared that the people were opposed, and charged that the huge number of petitions for relief and a special session, as described in the Nashville press, had come from only three counties endorsed by “but half a dozen signatures.” The honest, the industrious, the prudent citizens needed no relief and desired no special session. The demand for relief, charged the Register, was coming from those who had made purchases without capital, and lived in luxury beyond their means. “Now that they have run their race, they wish the Legislature to pass a law that they may keep their honest creditor from recovering his debts.” A grand jury from Sumner County, adjacent to Davidson County, declared that those seeking relief were not the poor and needy but those large businesses and speculators who had extended their credit with the banks; moreover, only these wealthy debtors would benefit from relief. The Courier, from Murfreesboro, a town near Nashville, replied that the debtors’ distress was not owing to their own imprudence but to a “fall of foreign markets, and the domestic scarcity of a circulating medium,” resulting in a great fall in the value of property. Legislative interference, it concluded, was necessary to save the people from bankruptcy and ruin. The East Tennessee opposition had a different view of the consequences of stay legislation. Thus, the Knoxville East Tennessee Patriot admitted that a stay law might give temporary relief to some people, but warned that its impairment of contracts would lead to increased rather than diminished bankruptcies. The East Tennesseans had even made a strong but unsuccessful effort to nip the debtors’ relief campaign in the bud by sending Enoch Parsons, losing gubernatorial candidate in 1819, to Nashville to campaign against Felix Grundy’s election.
• 240During early 1820, relief agitation grew in strength, this time centering on proposals for a new state loan office or bank to issue inconvertible paper along with further stay provisions. The reliefers called for a special session in the spring of 1820. It is interesting to note the Nashville Clarion proudly proclaimed that several men of wealth had taken the lead in the call for an extra session. Typical of the appeals for a special relief session was the petition of citizens from Williamson County, adjacent to Davidson. The petition pointed to the great decline in the price of produce, to the contraction of bank credit, and to the consequent multiplying suits for debt payment. Blame was laid on the “avidity of the creditors to collect,” which seems to increase “in an inverse ratio to the ability of the debtor to pay.” Unless relief were offered quickly, warned the petition, most of the citizens would suffer insolvency and ruin. East Tennessee, the region centering on Knoxville as its leading city, was largely opposed to the relief program and to the proposed special session. Typical was the vigorous disapproval of the Knoxville Register. It declared that the people were opposed, and charged that the huge number of petitions for relief and a special session, as described in the Nashville press, had come from only three counties endorsed by “but half a dozen signatures.” The honest, the industrious, the prudent citizens needed no relief and desired no special session. The demand for relief, charged the Register, was coming from those who had made purchases without capital, and lived in luxury beyond their means. “Now that they have run their race, they wish the Legislature to pass a law that they may keep their honest creditor from recovering his debts.” A grand jury from Sumner County, adjacent to Davidson County, declared that those seeking relief were not the poor and needy but those large businesses and speculators who had extended their credit with the banks; moreover, only these wealthy debtors would benefit from relief. The Courier, from Murfreesboro, a town near Nashville, replied that the debtors’ distress was not owing to their own imprudence but to a “fall of foreign markets, and the domestic scarcity of a circulating medium,” resulting in a great fall in the value of property. Legislative interference, it concluded, was necessary to save the people from bankruptcy and ruin. The East Tennessee opposition had a different view of the consequences of stay legislation. Thus, the Knoxville East Tennessee Patriot admitted that a stay law might give temporary relief to some people, but warned that its impairment of contracts would lead to increased rather than diminished bankruptcies. The East Tennesseans had even made a strong but unsuccessful effort to nip the debtors’ relief campaign in the bud by sending Enoch Parsons, losing gubernatorial candidate in 1819, to Nashville to campaign against Felix Grundy’s election.
• 241During early 1820, relief agitation grew in strength, this time centering on proposals for a new state loan office or bank to issue inconvertible paper along with further stay provisions. The reliefers called for a special session in the spring of 1820. It is interesting to note the Nashville Clarion proudly proclaimed that several men of wealth had taken the lead in the call for an extra session. Typical of the appeals for a special relief session was the petition of citizens from Williamson County, adjacent to Davidson. The petition pointed to the great decline in the price of produce, to the contraction of bank credit, and to the consequent multiplying suits for debt payment. Blame was laid on the “avidity of the creditors to collect,” which seems to increase “in an inverse ratio to the ability of the debtor to pay.” Unless relief were offered quickly, warned the petition, most of the citizens would suffer insolvency and ruin. East Tennessee, the region centering on Knoxville as its leading city, was largely opposed to the relief program and to the proposed special session. Typical was the vigorous disapproval of the Knoxville Register. It declared that the people were opposed, and charged that the huge number of petitions for relief and a special session, as described in the Nashville press, had come from only three counties endorsed by “but half a dozen signatures.” The honest, the industrious, the prudent citizens needed no relief and desired no special session. The demand for relief, charged the Register, was coming from those who had made purchases without capital, and lived in luxury beyond their means. “Now that they have run their race, they wish the Legislature to pass a law that they may keep their honest creditor from recovering his debts.” A grand jury from Sumner County, adjacent to Davidson County, declared that those seeking relief were not the poor and needy but those large businesses and speculators who had extended their credit with the banks; moreover, only these wealthy debtors would benefit from relief. The Courier, from Murfreesboro, a town near Nashville, replied that the debtors’ distress was not owing to their own imprudence but to a “fall of foreign markets, and the domestic scarcity of a circulating medium,” resulting in a great fall in the value of property. Legislative interference, it concluded, was necessary to save the people from bankruptcy and ruin. The East Tennessee opposition had a different view of the consequences of stay legislation. Thus, the Knoxville East Tennessee Patriot admitted that a stay law might give temporary relief to some people, but warned that its impairment of contracts would lead to increased rather than diminished bankruptcies. The East Tennesseans had even made a strong but unsuccessful effort to nip the debtors’ relief campaign in the bud by sending Enoch Parsons, losing gubernatorial candidate in 1819, to Nashville to campaign against Felix Grundy’s election.
• 242While the opponents of debtors’ relief charged that wealthy debtors were behind the movement, the relief forces made a similar charge. The Nashville Clarion, ignoring the eastern Tennessee opposition and its own praise for the wealthy supporters of relief, bluntly charged that the only opposition to relief came from land speculators and the “monied aristocracy of Nashville” opposed to the relief of the people. In fact, much vigorous opposition to debtors’ relief centered in Nashville and Davidson County itself, despite the fact that the relief forces stemmed from that area. The Nashville Gazette retorted to the Clarion’s charge that in the opposition there were “men who have money—and men who have none.” The opposition to relief legislation cut across lines of wealth.
• 243While the opponents of debtors’ relief charged that wealthy debtors were behind the movement, the relief forces made a similar charge. The Nashville Clarion, ignoring the eastern Tennessee opposition and its own praise for the wealthy supporters of relief, bluntly charged that the only opposition to relief came from land speculators and the “monied aristocracy of Nashville” opposed to the relief of the people. In fact, much vigorous opposition to debtors’ relief centered in Nashville and Davidson County itself, despite the fact that the relief forces stemmed from that area. The Nashville Gazette retorted to the Clarion’s charge that in the opposition there were “men who have money—and men who have none.” The opposition to relief legislation cut across lines of wealth.
• 244Governor Joseph McMinn, elected in 1819, granted the wish of Grundy and the relief forces, and called a special session for June 26. In his opening address, McMinn pointed to the unprecedented general pressure and urged that debtors be saved from destruction. “The people should be made to see,” he declared,
• 245Governor Joseph McMinn, elected in 1819, granted the wish of Grundy and the relief forces, and called a special session for June 26. In his opening address, McMinn pointed to the unprecedented general pressure and urged that debtors be saved from destruction. “The people should be made to see,” he declared,
• 246The next day, June 27, Felix Grundy moved to refer the three proposals of the Governor to a Joint Select Committee on the Pecuniary Distress. The committee included the leading anti-relief stalwarts in the legislature, in addition to Grundy. But the McMinn-Grundy leadership counted on Representative Samuel Anderson, from Robertson County in mid-Tennessee, to cast the deciding vote in favor of the relief proposals. Instead, Anderson turned against the stay and appraisal bills and caused alarm in the relief camp by submitting the committee report on the next day, rejecting any stay or minimum appraisal law as “inexpedient and unpolitic.” Grundy acted swiftly, however, and a day later succeeded in “packing” the committee with four more of his supporters, with Grundy himself becoming chairman. Backed by petitions from citizens of Warren and Smith Counties (in mid-Tennessee) supporting the relief proposals, Grundy reported the stay and loan office bill to the House on July 4. He allowed the minimum appraisal bill to die in committee, rejecting it as too extreme.
• 247In the debate on and eventual passage of the bills, most of the effort was centered on the loan office. The stay law was opposed almost singlehandedly by Representative Williams, now a staunch opponent of relief. He moved to strike out the requirement that the creditor must receive loan-office notes or suffer a two-year stay in execution. This amendment was overwhelmingly defeated by a vote of 14 to 3, despite a petition from rural Giles County of mid-Tennessee, condemning the law as “impolitic and improper.” Williams tried a similar motion a week later, but lost by a vote of eleven to four, and the stay provision became law along with the new state bank.
• 248In the debate on and eventual passage of the bills, most of the effort was centered on the loan office. The stay law was opposed almost singlehandedly by Representative Williams, now a staunch opponent of relief. He moved to strike out the requirement that the creditor must receive loan-office notes or suffer a two-year stay in execution. This amendment was overwhelmingly defeated by a vote of 14 to 3, despite a petition from rural Giles County of mid-Tennessee, condemning the law as “impolitic and improper.” Williams tried a similar motion a week later, but lost by a vote of eleven to four, and the stay provision became law along with the new state bank.
• 249Carroll’s decisive victory in the gubernatorial race did not intimidate Governor McMinn, who, in his farewell message to the legislature, again urged a minimum appraisal law, and also suggested a replevin law, so that the debtors could win back their forfeited property. McMinn’s proposals were referred to Felix Grundy’s Committee on Pecuniary Embarrassments, and Grundy’s report signaled the turn of the tide for the relief movement in Tennessee.
• 250Grundy noted that the greatest distress during the crisis had been caused by the large accumulated debt. He declared that, since 1819, three-fifths of the debt owed to easterners had been liquidated, and that this relieved the pressure on the numerous Tennesseans in debt to eastern creditors. The economy was reviving, and the situation was no longer grave. He therefore rejected an appraisal law as a violation of contract, but staunchly defended the worth of the stay law in averting debtors’ ruin. Later, Grundy attacked the courts for ruling against the stay laws, and was joined by the Knoxville Intelligencer and the Nashville Whig.
• 251The anti-relief tone of the new administration was set by Governor Carroll’s opening address. It was mainly devoted to paper money, but he also attacked the stay and proposed appraisal and replevin laws as violations of contract. Carroll declared that the relief measures had brought momentary relief for some, at the expense of increasing the general distress, and had caused the ruin of thousands through sudden fluctuations of credit and extreme depreciation of currency. The debtors’ situation was still troublesome despite Grundy’s optimism, and the press continued to advertise many sheriff’s sales. The relief forces again tried to pass a stay and an appraisal law, but without success. As a matter of fact, Grundy managed to push through another minimum appraisal law in October, 1823, but the court decision effectively ended any such stay law in Tennessee. By the fall of 1822, Governor Carroll could report a virtual ending of the economic crisis in Tennessee.
• 252The anti-relief tone of the new administration was set by Governor Carroll’s opening address. It was mainly devoted to paper money, but he also attacked the stay and proposed appraisal and replevin laws as violations of contract. Carroll declared that the relief measures had brought momentary relief for some, at the expense of increasing the general distress, and had caused the ruin of thousands through sudden fluctuations of credit and extreme depreciation of currency. The debtors’ situation was still troublesome despite Grundy’s optimism, and the press continued to advertise many sheriff’s sales. The relief forces again tried to pass a stay and an appraisal law, but without success. As a matter of fact, Grundy managed to push through another minimum appraisal law in October, 1823, but the court decision effectively ended any such stay law in Tennessee. By the fall of 1822, Governor Carroll could report a virtual ending of the economic crisis in Tennessee.
• 253The anti-relief tone of the new administration was set by Governor Carroll’s opening address. It was mainly devoted to paper money, but he also attacked the stay and proposed appraisal and replevin laws as violations of contract. Carroll declared that the relief measures had brought momentary relief for some, at the expense of increasing the general distress, and had caused the ruin of thousands through sudden fluctuations of credit and extreme depreciation of currency. The debtors’ situation was still troublesome despite Grundy’s optimism, and the press continued to advertise many sheriff’s sales. The relief forces again tried to pass a stay and an appraisal law, but without success. As a matter of fact, Grundy managed to push through another minimum appraisal law in October, 1823, but the court decision effectively ended any such stay law in Tennessee. By the fall of 1822, Governor Carroll could report a virtual ending of the economic crisis in Tennessee.
• 254The citizens of the state of Kentucky found themselves heavily burdened with insolvent debtors and forced sheriffs’ sales for execution of suits against debtors. As in Tennessee, the major focus of agitation on the state level was the banking system; but agitation over stay laws was also widespread. In Kentucky, a stay law had long been embedded in the state’s legislation. As early as 1792, the state had passed a minimum appraisal law; and it had passed a stay law in 1814–15, providing a twelve-month stay should any creditor refuse to accept at par the notes of the state’s leading bank—the Bank of Kentucky—and a mandatory three-month stay even if the creditor accepted the notes.
• 255The citizens of the state of Kentucky found themselves heavily burdened with insolvent debtors and forced sheriffs’ sales for execution of suits against debtors. As in Tennessee, the major focus of agitation on the state level was the banking system; but agitation over stay laws was also widespread. In Kentucky, a stay law had long been embedded in the state’s legislation. As early as 1792, the state had passed a minimum appraisal law; and it had passed a stay law in 1814–15, providing a twelve-month stay should any creditor refuse to accept at par the notes of the state’s leading bank—the Bank of Kentucky—and a mandatory three-month stay even if the creditor accepted the notes.
• 256The campaign of the relief forces was waged largely over stay-replevin legislation, and the elections in the fall of 1819 were an overwhelming victory for the relief forces. In the bitter fights over proposed stay legislation, two new newspapers were inaugurated in the city of Frankfort: the Patriot, to support the relief program, and the Spirit of ’76, to oppose it. The first relief act to pass was an “emergency” stay law, staying all executions for sixty days; this was passed on December 16, 1819. Governor Gabriel Slaughter, opposed to relief, vetoed the law, but the legislature was able to override the veto. A very strong stay law was passed the following February 11, providing a mandatory one-year stay of execution if the creditor accepted Bank of Kentucky notes at par in payment, or a two-year stay if the creditor refused.
• 257The campaign of the relief forces was waged largely over stay-replevin legislation, and the elections in the fall of 1819 were an overwhelming victory for the relief forces. In the bitter fights over proposed stay legislation, two new newspapers were inaugurated in the city of Frankfort: the Patriot, to support the relief program, and the Spirit of ’76, to oppose it. The first relief act to pass was an “emergency” stay law, staying all executions for sixty days; this was passed on December 16, 1819. Governor Gabriel Slaughter, opposed to relief, vetoed the law, but the legislature was able to override the veto. A very strong stay law was passed the following February 11, providing a mandatory one-year stay of execution if the creditor accepted Bank of Kentucky notes at par in payment, or a two-year stay if the creditor refused.
• 258The crisis was intensified by the alarm felt by creditors at this law and by their growing reluctance to lend. The depression continued in full force during 1820, and the reliefers began to concentrate their attention on proposals for a new state bank. Postponement of payment does not after all liquidate the debt burden, and it has been estimated that over $2 million of debt was under execution in this period. A bank was expected to grant indirect but effective relief by supplying new money to debtors. Passage of such a measure was assured by the election of Governor John Adair, a leader of the relief forces. A bank was established and, further, a new stay law passed on Christmas Day, 1820. The new law extended existing provisions, but now provided a stay of two years, unless the creditor accepted either Bank of Kentucky or the new state-owned Bank of Commonwealth notes. The law gave preference to the new bank by continuing the mandatory one-year stay even if the creditor accepted Bank of Kentucky notes, while only imposing a three-month stay for acceptance of Bank of Commonwealth notes. This was succeeded by a full mandatory twelve-month stay in February, 1820. Further relief to debtors was granted by a law exempting various tools and implements from forced sale for debt payments and by special stays for executions on real estate.
• 259Throughout 1820, the cherished goal of the relief forces was the passage of a general “property law,” which would have been the most drastic relief legislation in the nation. This would have indefinitely postponed all sales of property under execution. However, this ambitious attempt never came to a vote. In the fall of 1821, the legislature moved again to block the infuriated creditors; by December, 1821, a minimum appraisal law was passed. It prohibited the sale of property at forced sale for less than three-quarters the value set by a jury, unless the creditor agreed to receive Bank of Commonwealth or Bank of Kentucky notes in payment.
• 260For a few years, the debtors reaped a substantial harvest from the stay and from bank legislation. The Bank of Commonwealth notes soon depreciated to half, as compared to specie. The juries and judges of Kentucky during 1821 and 1822 adopted a “scaling system” in their verdicts on damages and executions for debt contracts. For example: if a creditor sued a debtor for payment on a debt of one hundred dollars, and the debtor had already paid fifty dollars, the magistrate or jury “assumed” that the fifty “dollars” paid consisted of specie rather than notes (which, of course, was not the case), on the grounds that there was no proof to the contrary. Then, as a one dollar specie was now worth two dollars of Commonwealth notes, the debt was judged fully canceled, and, in addition, a judgment for court costs was levied against the creditor.
• 261The proponents of debtors’ relief argued that the legislature was obliged to provide relief in times of distress. Indeed, they considered themselves generous for not going so far as to repudiate all private debts completely. The opposition assailed the measures as repudiating contracts, and asserted that the only remedies to help the debtors in the long run were thrift and industry. Stay laws were attacked as leaving the creditors’ property in the hands of speculators and as greatly hampering credit. The bitterness of the opposition increased as the relief system continued, and, as the economy recovered, it succeeded in turning the relief tide. As early as the 1822–23 session, the legislature reduced the stay provision from two years to one year, and by 1824 the stay laws were repealed. In the meanwhile, the decision of the state courts that the relief legislation was unconstitutional precipitated a vigorous and prolonged political controversy over the judiciary, the anti-reliefers finally winning by 1826.
• 262The proponents of debtors’ relief argued that the legislature was obliged to provide relief in times of distress. Indeed, they considered themselves generous for not going so far as to repudiate all private debts completely. The opposition assailed the measures as repudiating contracts, and asserted that the only remedies to help the debtors in the long run were thrift and industry. Stay laws were attacked as leaving the creditors’ property in the hands of speculators and as greatly hampering credit. The bitterness of the opposition increased as the relief system continued, and, as the economy recovered, it succeeded in turning the relief tide. As early as the 1822–23 session, the legislature reduced the stay provision from two years to one year, and by 1824 the stay laws were repealed. In the meanwhile, the decision of the state courts that the relief legislation was unconstitutional precipitated a vigorous and prolonged political controversy over the judiciary, the anti-reliefers finally winning by 1826.
• 263The proponents of debtors’ relief argued that the legislature was obliged to provide relief in times of distress. Indeed, they considered themselves generous for not going so far as to repudiate all private debts completely. The opposition assailed the measures as repudiating contracts, and asserted that the only remedies to help the debtors in the long run were thrift and industry. Stay laws were attacked as leaving the creditors’ property in the hands of speculators and as greatly hampering credit. The bitterness of the opposition increased as the relief system continued, and, as the economy recovered, it succeeded in turning the relief tide. As early as the 1822–23 session, the legislature reduced the stay provision from two years to one year, and by 1824 the stay laws were repealed. In the meanwhile, the decision of the state courts that the relief legislation was unconstitutional precipitated a vigorous and prolonged political controversy over the judiciary, the anti-reliefers finally winning by 1826.
• 264One of the most interesting approaches to the problem of debtor’s relief was that of Amos Kendall, at this time editor of the influential Frankfort Argus of Western America, and later one of the chief theoreticians of the war against the Second Bank of the United States. Kendall, though not completely opposed to relief, was disturbed at some of the extreme stay legislation, particularly the proposed property law, which would have repudiated all debts. In a series of articles in the Argus, Kendall considered one of the favorite relief arguments: that debtors were unduly burdened because they had borrowed when the money unit had a lower value in purchasing power, and must now repay their debt when money had a higher value. Kendall began with a discussion of utility, developing in essence the subjective theory of value and the law of diminishing utility. He deduced that, since value depended on the desires of men, and since these desires were always changing, desires and values could not be reduced to any standard of measurement. A unit of measure was always fixed, and yet all values were continually changing. Hence, there was no such thing as a standard of value, and money could not be used for such a standard. Turning to money, Kendall traced its development from barter and indirect exchange, until the money-commodity became a general medium of exchange. This process revealed that money was simply a commodity, albeit the most useful and exchangeable one—a commodity the value of which was always changing. Therefore, money could by no means serve as a standard of value, and from this Kendall deduced that the relief argument, resting on the assumption of money as a standard of value, was untenable. In the following year, Kendall denounced wasteful governmental expenditures and concluded emphatically that the legislature could not relieve debts. “The people must pay their own debts at last.” They must rely on their own power and resources and not on that of the banks or legislature.
• 265One of the most interesting approaches to the problem of debtor’s relief was that of Amos Kendall, at this time editor of the influential Frankfort Argus of Western America, and later one of the chief theoreticians of the war against the Second Bank of the United States. Kendall, though not completely opposed to relief, was disturbed at some of the extreme stay legislation, particularly the proposed property law, which would have repudiated all debts. In a series of articles in the Argus, Kendall considered one of the favorite relief arguments: that debtors were unduly burdened because they had borrowed when the money unit had a lower value in purchasing power, and must now repay their debt when money had a higher value. Kendall began with a discussion of utility, developing in essence the subjective theory of value and the law of diminishing utility. He deduced that, since value depended on the desires of men, and since these desires were always changing, desires and values could not be reduced to any standard of measurement. A unit of measure was always fixed, and yet all values were continually changing. Hence, there was no such thing as a standard of value, and money could not be used for such a standard. Turning to money, Kendall traced its development from barter and indirect exchange, until the money-commodity became a general medium of exchange. This process revealed that money was simply a commodity, albeit the most useful and exchangeable one—a commodity the value of which was always changing. Therefore, money could by no means serve as a standard of value, and from this Kendall deduced that the relief argument, resting on the assumption of money as a standard of value, was untenable. In the following year, Kendall denounced wasteful governmental expenditures and concluded emphatically that the legislature could not relieve debts. “The people must pay their own debts at last.” They must rely on their own power and resources and not on that of the banks or legislature.
• 266One of the most interesting approaches to the problem of debtor’s relief was that of Amos Kendall, at this time editor of the influential Frankfort Argus of Western America, and later one of the chief theoreticians of the war against the Second Bank of the United States. Kendall, though not completely opposed to relief, was disturbed at some of the extreme stay legislation, particularly the proposed property law, which would have repudiated all debts. In a series of articles in the Argus, Kendall considered one of the favorite relief arguments: that debtors were unduly burdened because they had borrowed when the money unit had a lower value in purchasing power, and must now repay their debt when money had a higher value. Kendall began with a discussion of utility, developing in essence the subjective theory of value and the law of diminishing utility. He deduced that, since value depended on the desires of men, and since these desires were always changing, desires and values could not be reduced to any standard of measurement. A unit of measure was always fixed, and yet all values were continually changing. Hence, there was no such thing as a standard of value, and money could not be used for such a standard. Turning to money, Kendall traced its development from barter and indirect exchange, until the money-commodity became a general medium of exchange. This process revealed that money was simply a commodity, albeit the most useful and exchangeable one—a commodity the value of which was always changing. Therefore, money could by no means serve as a standard of value, and from this Kendall deduced that the relief argument, resting on the assumption of money as a standard of value, was untenable. In the following year, Kendall denounced wasteful governmental expenditures and concluded emphatically that the legislature could not relieve debts. “The people must pay their own debts at last.” They must rely on their own power and resources and not on that of the banks or legislature.