The Panic of 1819 (14 page)
Authors: Murray N. Rothbard
70
Dowrie,
Development
, p. 32; and Alexander Davidson and Bernard B. Stuve,
A Complete History of Illinois
(Springfield, Ill.: Rokker Co., 1881), p. 307.
71
Illinois General Assembly,
House Journal, 1820–21
(January 13, 1821): 157.
72
See the excellent articles by Dorsey and Anderson.
73
The existence of this special immigration boom helped to delay the crisis in Missouri to the end of 1819. Anderson, “Frontier Economic Problems,” Part I.
74
On the controversy over debtors’ relief legislation in Missouri, see the articles by Dorsey, Anderson, and Hamilton.
75
Primm 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.
76
Only 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.
77
“A Citizen” in St. Louis
Enquirer
, March 3, 1821; Franklin
Missouri Intelligencer
, May 28, 1821.
78
Primm 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.
79
McNair was an influential merchant of St. Louis. Missouri General Assembly,
Laws
, 1st General Assembly, Special Session, 1821, pp. 32–34.
80
Missouri General Assembly,
Journal of the House of Representatives
, 1st General Assembly, 2d Session, 1821, pp. 7–10.
81
Missouri General Assembly,
Laws
, 1st General Assembly, 2d Session, 1821, pp. 46–52.
82
Anderson, “Frontier Economic Problems,” vol. 1, p. 65.
83
Green 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.
84
Missouri General Assembly,
Laws
, 1st General Assembly, 2d Session, 1821, p. 74.
85
Hamilton,
Relief Movement
.
86
“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.
87
Anderson, “Frontier Economic Problems,” p. 67.
88
St. 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.
89
Hamilton,
Relief Movement
.
90
On 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.
91
Missouri General Assembly,
Journal of the House of Representatives
, 2d General Assembly, 1st Session, 1821, pp. 7–8.
92
Richmond
Enquirer
, July 31, 1821; Folz, “Financial Crisis,” pp. 186ff.
93
Thomas 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.
94
William 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.
95
Parks, Abernethy, Hamer,
passim
.
96
Grundy later became a supporter of Andrew Jackson, a United States senator, and attorney general under Van Buren.
97
Nashville
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.
98
Parks, “Felix Grundy,” p. 22.
99
For example, the Bank of the State of Tennessee and the Nashville Bank.
100
Tennessee 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.”
101
Parks, “Felix Grundy,” pp. 25ff.
102
Hamer,
Tennessee
, p. 233.
103
West Tennessee was not a factor in public sentiment, since it was practically unpopulated.
104
Issue of June 20, 1820.
105
Nashville
Whig
, June 7, 1820. Cited in Sellers, “Banking,” p. 69.
106
Nashville
Whig
, May 24, 1820; June 14, 1820.
107
Parks, “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.
108
Ibid., p. 29.
109
Issue of May 23, 1820.
110
Nashville
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.”
111
McMinn was an eminent politician of Tennessee, three times elected to the United States Senate, and three times Governor.
112
Tennessee General Assembly,
Journal of the House of Representatives, 1820
(June 26, 1820): 6–17.
113
Ibid., June 28, 1820, p. 23.
114
Tennessee General Assembly,
Journal of the Senate
, 2d Session, 1820 (July 7 and July 14, 1820).
115
Ibid., July 21, 1820.
116
Tennessee General Assembly,
Journal of the House of Representatives, 1821
(September 17, 1821): 6ff.
117
Ibid., October 2, 1821, pp. 114–15.
118
Hamer,
Tennessee
, p. 238.
119
This 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.
120
Gabriel H. Golden, “William Carroll and His Administration,”
Tennessee Historical Magazine
9 (April 1925): 19.
121
Thus, 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.
122
Connelley 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.
123
Orval 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.
124
Kentucky General Assembly,
Journal of the House of Representatives, 1819
(December 16, 1819): 811.
125
Stickles,
Critical Court Struggles
, p. 23.
126
Kentucky General Assembly,
Journal of the House of Representatives, 1821–22
(December 19, 1821): 475.
127
Kentucky General Assembly,
Journal of the House of Representatives, 1819
, p. 161.
128
”Solon,”
Liberty Saved
(Louisville, Ky.: by the Author, no date), p. 8.
129
Thus, Frankfort
Argus
, quoted in Washington (D.C.)
National lntelligencer
, June 9, 1819.
130
Wilson,
History of Kentucky
, p. 133.
131
Frankfort
Argus
, April 27, 1820 and following. See Amos Kendall,
Autobiography
, William Stickney, ed. (Boston: P. Smith, 1872), pp. 230–35.
132
Kendall,
Autobiography
, p. 244.
133
Frankfort
Argus
, July 5, 1821, in Kendall,
Autobiography
, p. 245.
S
TATE
P
ROPOSALS AND
A
CTIONS
FOR
M
ONETARY
E
XPANSION
Much of the response of the American people to the depression centered on monetary problems. One major group of proposals advocated that governmental measures—federal or state—combat the monetary scarcity. Since the banks were chartered by the states, the supply of money was largely a state problem, and the bulk of the discussion was waged at the state level.
The new state of Alabama, which entered the Union in 1819, had been a particular beneficiary of the postwar boom, with its great rise in cotton prices and its influx of immigrants. Alabama was the major center of speculation in public land purchases. Of the $22 million of public land debt outstanding in 1820 half was located in Alabama. Speculation in public lands was financed by the banks and spurred by the high price of cotton. Credit in Alabama was financed by three banks chartered in 1816 and 1818. It was also financed by new banks in Tennessee and Kentucky, the debtors migrating from these states to Alabama in the boom years.
1
The opinion was common in Alabama that banks were great engines for developing the country’s resources, particularly the potential cotton lands of the area. Banks were expected to create money and increase capital.
2
Alabama was divided into two separate trading areas, with little connection between them. Northern Alabama was connected with the Tennessee Valley and used Tennessee bank notes; its farmers sold in local markets or floated produce to New Orleans. Southern Alabama sent its cotton to Mobile and used Georgia and South Carolina bank notes. The chief bank in northern Alabama, the Merchants’ and Planters’ Bank of Huntsville, was greatly affected by the suspensions of specie payment of the Tennessee banks during the crisis of 1819 and was forced to suspend specie payments in 1820. The notes of the Huntsville Bank depreciated rapidly with respect to specie although they continued to circulate at par with Tennessee bank notes. Specie and par bank notes began to pass from circulation into hoards. Northern Alabama suffered from a depreciating currency. Southern Alabama, on the other hand, possessed two sound banks, but they were very small and were of little importance. This area used the notes of solvent banks in South Carolina and especially Georgia. Both regions abounded in complaints of a “scarcity of money.”
