The Panic of 1819 (7 page)

⁶¹
Smith,
Economic Aspects
, p. 124.

⁶²
On 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.

⁶³
William 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.

⁶⁴
See 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.

⁶⁵
Massachusetts 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.

⁶⁶
William A. Sullivan,
The Industrial Worker in Pennsylvania, 1800–1840
(Harrisburg: Pennsylvania Historical and Museum Commission, 1955), pp. 68, 72.

⁶⁷
See 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.

⁶⁸
A 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.

⁶⁹
See 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.

⁷⁰
Smith,
Economic Effects
, pp. 271–72.

⁷¹
See the aforementioned sources on prices.

⁷²
On 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.

⁷³
Wesley C. Mitchell,
Business Cycles
, vol. 1:
The Problem and Its Setting
(New York: National Bureau of Economic Research, 1927), p. 75.

⁷⁴
Ibid., pp. 76–79.

⁷⁵
Historical Statistics
, p. 63.

⁷⁶
Arthur F. Burns and Wesley C. Mitchell,
Measuring Business Cycles
(New York: National Bureau of Economic Research, 1946), pp. 97n, 408n, 503–05.

⁷⁷
George 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.

⁷⁸
The urban commerce engaged in handling farm products was bolstered by the high physical production.

⁷⁹
Although 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.

⁸⁰
Mitchell,
Business Cycles
, p. 78.

⁸¹
Kathleen Bruce,
Virginia Iron Manufacture in the Slave Era
(New York: The Century Co., 1931), p. 127.

⁸²
Burns and Mitchell,
Measuring Business Cycle
s, pp. 78–79.

⁸³
We 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.

⁸⁴
James D. Richardson, ed.,
A Compilation of the Messages and Papers of the Presidents
(New York: Bureau of National Literature, 1897), pp. 608–16.

⁸⁵
Ibid., pp. 623–31. Monroe, however, vaguely hinted to Congress that domestic manufactures should in some way be supported.

⁸⁶
Ibid., pp. 642–49.

⁸⁷
Ibid., pp. 655–63.

⁸⁸
Detroit
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.

⁸⁹
Some 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.

⁹¹
New 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.

⁹²
New 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.

⁹³
Washington (D.C.)
National Intelligencer
, May 5, 1820.

⁹⁴
See 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.

⁹⁵
Philadelphia
Union
, August 10, 13, 1819.

⁹⁶
See 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.

⁹⁷
New 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.

⁹⁸
Annapolis
Maryland Gazette
, June 3, 1819.

⁹⁹
Extracts 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.

¹⁰⁰
U.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.

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.”