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   Chapter 9 THE CRISIS OF 1819 AND ITS RESULTS (1819-1820)

Rise of the New West, 1819-1829 By Frederick Jackson Turner Characters: 21592

Updated: 2017-11-29 00:03


In 1820 the United States had a population of about nine and one- half millions; in 1830, nearly thirteen millions. It was spread out from east to west like a page in the history of society. On the Atlantic seaboard were the centers of American civilization that had grown up in colonial days in close touch with Europe. From this region of commerce and manufacture, the nation, on its march towards the west, changed through successive types of industrial life until in the Rocky Mountains the frontier fur-trader mingled with the Indians. The successive stages of social evolution which at first were exhibited in narrow belts on the Atlantic coast had now spread nearly across the continent. [Footnote: Turner, "Significance of the Frontier," in Am. Hist. Assoc., Report 1893, pp. 200, 206, 208.]

Not only was the country vast in extent, it was rapidly growing. In the decade the nation increased its population by over three million and a quarter inhabitants, an addition which nearly equaled the whole population of any one of the three great sections, the middle states, the south, and the west. As traveler after traveler passed over the routes of his predecessor in this period, reporting the life by the wayside and in the towns, we can almost see American society unfolding with startling rapidity under our gaze; farms become hamlets, hamlets grow into prosperous cities; the Indian and the forests recede; new stretches of wilderness come into view in the farther west, and we see the irresistible tide of settlement flowing towards the solitudes.

Nevertheless, at the opening of our survey the nation was in the gloom of the panic of 1819. This was brought on by the speculative reaction that immediately followed the war, when the long-pent-up crops of cotton found a market at the extraordinary price of nearly thirty cents a pound, and as high as seventy-eight dollars per acre was bid for government land in the offices of the southwest. [Footnote: Annals of Cong., 16 Cong., I Sess., 446.] The policy of the government fostered reckless purchases of public land. In the critical times of the closing years of the war, the treasury agreed to accept the notes of state banks in payment for lands, on condition that these banks should resume specie payment; and then the banks, while taking only nominal steps towards resumption, loaned their paper freely to the settlers and speculators who wished to invest in the public domain.

Under the credit system already mentioned, the pioneer was tempted to exhaust his funds in making his first partial payment, and to rely upon loans from some "wild cat" bank wherewith to complete the purchase of the hundred and sixty acres, the smallest tract offered under the terms of the law; planters, relying equally on the state banks, bought great tracts of land at absurd prices; speculators, tempted by the rapid rise in land values and by the ease of securing loans, purchased large quantities in the hope of selling before it became necessary to complete their payment. On the seaboard, extravagance abounded as a reaction from the economies of war times, imported manufactures found a ready market, and the domestic factories were in distress.

While state banks greatly multiplied and expanded their circulation freely to meet the demands of borrowers, [Footnote: Stunner, Hist, of Banking, I., chaps, iv.-vi.] the United States Bank not only failed to check the movement, but even contributed to it. After a dance of speculation, the bank, in the summer of 1818, was facing ruin, and it took drastic means to save itself. Its measures compelled the state banks to redeem their notes in specie or close their doors. [Footnote: Catterall, Second Bank, chap. iii.; Dewey, Financial Hist, of the U. S., chap, vii.; Babcock, Am. Nationality (Am. Nation. XIII.), chap. xiii.]

By the spring of 1819 the country was in the throes of a panic. State-bank issues were reduced from one hundred million dollars in 1817 to forty-five millions in 1819. Few banks in the south and west were able to redeem their notes in specie before 1822; but they pressed their debtors harshly. Staple productions fell to less than half of their former price; land values declined fifty to seventy per cent.; manufacturers were in distress; laborers were out of work; merchants were ruined. [Footnote: J. Q. Adams, Memoirs, IV., 375; Jefferson, Writings, X., 257; Benton, View, I., 5; Niles' Register, XVI., 114; Hodgson, Travels, II., 128; Sumner, Hist, of Banking, I., chaps, vii., viii.] The conditions are illustrated in the case of Cincinnati. By the foreclosure of mortgages, the national bank came to own a large part of the city-hotels, coffee- houses, warehouses, stables, iron foundries, residences, and vacant lots. "All the flourishing cities of the West," cried Benton, "are mortgaged to this money power. They may be devoured by it at any moment. They are in the jaws of the monster!" Throughout the south and west the bank became familiarly known as The Monster. [Footnote: Catterall, Second Bank, 67.]

Even in the days of its laxity the national bank was obnoxious in many quarters of the country. By the state constitution of 1816 Indiana attempted to prevent the establishment within its limits of any bank not chartered by the state; and Illinois incorporated a similar provision in her constitution of 1818. Between 1817 and 1819 Maryland, Tennessee, Georgia, North Carolina, Kentucky, and Ohio all passed acts taxing the United States Bank. [Footnote: Ibid., 64, 65.] Ohio, defying the decision of the supreme court in The case of McCulloch vs. Maryland, which asserted the constitutionality of the bank and denied to the states the right to tax it, forcibly collected the tax and practically outlawed the bank. [Footnote: See chap. xv., below.]

From the beginning of our history the frontier had been a debtor region, always favorable to an expansion of the currency and to laws to relieve the debtor class. It was but the continuation of an old practice when the western legislature in this time of stringency attempted measures of relief for their citizens. Kentucky's "litter" of forty banks chartered in the session of 1818-1819 had been forced to the wall by the measures of the national bank. After the panic, Kentucky repealed the charters of these banks and incorporated the Bank of the Commonwealth of Kentucky, an institution without stockholders and under officers elected by the legislature and paid by the state. Its notes were assigned to the counties in proportion to the taxable property, to be loaned on mortgage securities to those who needed them "for the purpose of paying his, her, or their just debts," or to purchase products for exportation. The only real capital of the bank was a legislative appropriation of seven thousand dollars to buy the material and plates for printing notes. In short, the treasury of the state was used as a kind of land bank of the sort favored in the colonial days for the relief of the debtors.[Footnote: Cf. Greene, Provincial America Am. Nation, VI., chap. xvii.] The legislature then passed a replevin law giving the debtor a delay of two years to satisfy an execution, in case the creditor refused to accept notes of the Bank of the Commonwealth of Kentucky as payment; otherwise the debtor received an extension of but one year. By another law, land could not be sold under execution to pay a debt unless it brought three-fourths of its value as appraised by a board of neighbors, usually themselves debtors and interested in supporting values.

In 1823 the court of appeals of Kentucky declared the replevin and stay laws unconstitutional. In retaliation the legislature, in December, 1824, repealed the law establishing the court of appeals, and a new court was created favorable to the "relief system." This act the old court also declared unconstitutional, and a contest followed between the "old court" and the "new court" parties, which lasted until 1826, when the "old court," "anti-relief" party was victorious. In the mean time, similar relief measures had been passed in Tennessee, Illinois, Missouri, and other western states.[Footnote: Summer, Hist. of Banking, I., chap. x.; ibid., 122, 146, 157, 161; Durrett, Centenary of Louisville; McMaster, United states, V., 160.]

The distress brought about by the panic of 1819, the popular antagonism to the banks in general, and especially to the Bank of the United States, as "engines of aristocracy," oppressive to the common people, and the general discontent with the established order, had, as we have seen, produced a movement comparable to the populist agitation of our own time.

Upon the general government the first effect of this period of distress was a general reduction of the revenue. Imports fell from about $121,000,000 in 1818 to $87,000,000 in 1819. Customs receipts, Which in 1816 were over $36,000,000, were but $13,000,000 in 1821. Receipts for public lands, which amounted to $3,274,000 in 1819, were but $1,635,000 in 1820. In December, 1819, Crawford, the secretary of the treasury, was obliged to announce a deficit which required either a reduction in expenditures or an increase in revenue. Congress provided for two loans, one of $3,000,000 in 1820, and another of $5,000,000 in 1821. A policy of retrenchment was vigorously instituted, leveled chiefly at the department of war. Internal improvement schemes which had been urged in Congress in 1818 were now temporarily put to rest. With the year 1822, however, conditions brightened, and the treasury began a long term of prosperity. [Footnote: Dewey, Financial Hist. of the U. S., 168.]

One of the most important results of the crisis was the complete reorganization of the system of disposal of the public lands. The public domain was more than a source of revenue to the general government; it was one of the most profoundly influential factors in shaping American social conditions. The settler who entered the wilderness with but a small capital, or who became a squatter on the public lands without legal title, was impatient with the policy which made revenue the primary consideration of the government. Benton expressed this view in 1826, [Footnote: Register of Debates, 19 Cong., I Sess., I., 727.] when he said: "I speak to statesmen, and not to compting clerks; to Senators, and not to Quaestors of provinces; to an assembly of legislators, and not to a keeper of the King's forests. I speak to Senators who know this to be a Republic, not a Monarchy; who know that the public lands belong to the People and not to the Federal Government." The effect of the credit system had been, as we have seen, to stimulate speculation and to plunge the settlers deeply in debt to the general government.

By 1820 the

se payments for the public lands were over twenty-two million dollars in arrears. Relief measures passed by Congress from time to time had extended the period of payment and made other concessions. Now the government had to face the problem of reconstructing its land laws or of continuing the old credit system and relentlessly expelling the delinquent purchasers from their hard-won homes on the public domain. Although the legal title remained in the government, the latter alternative was so obviously dangerous and inexpedient that Congress passed two new acts. The first [Footnote: U. S. Statutes at Large, III., 566.] (April 24, 1820) reduced the price of land from two dollars to one dollar and twenty-five cents per acre, abolished the system of credit, and provided that lands might be purchased in multiples of eighty acres. Thus the settler with one hundred dollars could secure full title to a farm. This was followed by a relief act (March 2, 1821), recommended by Secretary Crawford, [Footnote: Am. State Papers., Finance, III., 551, 718; U. S. Statutes at Large, III., 566.] allowing previous purchasers to relinquish their claims to land for which they had not paid, and apply payments already made to full purchase of a portion of the land to be retained by the buyer, all overdue interest to be remitted. [Footnote: Ibid., III., 612.] It is significant that this system was not unlike the relief system which had been so popular in the west.

This adjustment of the land question by no means closed the agitation. A few years later Benton repeatedly urged Congress to graduate the price of public lands according to their real value, and to donate to actual settlers lands which remained unsold after they had been offered at fifty cents an acre. [Footnote: Speech in the Senate, May 16, 1826, Meigs, Benton, 163-170.] The argument rested chiefly on the large number of men unable to secure a farm even under the cheaper price of 1820; the great quantity of public land which remained unsold after it had been offered; the advantage to the revenues from filling the vacant lands with a productive population; and the injustice to the western states, which found themselves unable to obtain revenue by taxing unsold public lands and which were limited in their power of eminent domain and jurisdiction as compared with the eastern states, which owned their public lands. In this agitation lay the germs of the later homestead system, as well as of the propositions to relinquish the federal public lands to the states within which they lay.

With manufacturers in distress, thousands of operatives out of employment, and the crops of parts of the middle states and the west falling in price to a point where it hardly paid to produce them, an appeal to Congress to raise the duties established by the tariff of 1816 [Footnote: Babcock, Am. Nationality (Am. Nation, XIII.). chap. xiv.] was inevitable. Hence, in the spring of 1820 a new tariff bill was presented by Baldwin, of Pennsylvania, the member from Pittsburgh. He came from a city which felt the full effects of the distress of the manufacturers, especially those of iron and glass, and which was one of the important centers of the great grain- raising area of the middle states and the Ohio Valley.

Baldwin believed that the time had arrived when, "all the great interests of the country being equally prostrate, and one general scene of distress pervading all its parts," there should be a common effort to improve conditions by a new tariff, intended not for the sake of restoring the depleted treasury, but distinctly for protection. Its advocates proposed to meet the failure of the system of revenue, not by encouraging importations, but by internal taxes and excises on the manufactured goods protected by the impost. Additional revenue would be secured by higher duties on sugar, molasses, coffee, and salt. The bill increased ad valorem duties by an amount varying from twenty-five to sixty-six per cent, additional. For woolen and cotton manufactures the rate of additional duty was about one-third; on hemp, an important product in Kentucky, about two-thirds. Duty on forged iron bars was increased from seventy-five cents to one dollar and twenty-five cents per hundred-weight. On many other articles the increase of duty amounted to from twenty to one hundred per cent.

Naturally the home-market argument played an important part in the debates. It was relied upon especially by Henry Clay in his closing speech, [Footnote: Annals of Cong., 16 Cong., I Sess., II., 3034.] in which he argued that the rapidity of growth of the United States as compared with Europe made the ratio of the increase of her capacity of consumption to that of our capacity of production as one to four. Already he thought Europe was showing a want of capacity to consume our surplus; in his opinion, cotton, tobacco, and bread- stuffs had already reached the maximum of foreign demand. From this he argued that home manufactures should be encouraged to consume the surplus, and that some portion of American industry should be diverted from agriculture to manufacturing.

Industrial independence also required this action. England had recently imposed new duties on wool and cotton, and her corn laws contributed to limit her demand for our flour. "I am, too," he said, "a friend of free trade, but it must be a free trade of perfect reciprocity. If the governing considerations were cheapness; if national independence were to weigh nothing; if honor nothing; why not subsidize foreign powers to defend us?" He met the argument of the deficiency of labor and of the danger of developing overcrowded and pauperized manufacturing centers by reasoning that machinery would enable the Americans to atone for their lack of laborers; and that while distance and attachment to the native soil would check undue migration of laborers to the west, at the same time the danger of congestion in the east would be avoided by the attraction of the cheap western lands.

Lowndes, of South Carolina, who with Calhoun had been one of the prominent supporters of the tariff in 1816, now made the principal speech in opposition: he denied the validity of the argument in favor of a home market and contended that the supply of domestic grain would in any case exceed the demand; and that, however small the export, the price of the portion sent abroad would determine that of the whole. It is important to observe that the question of constitutionality was hardly raised. The final vote in the House (April 29, 1820) stood 91 to 78. New England gave 18 votes in favor and 17 opposed; the middle region, including Delaware, gave 56 votes for and 1 vote against; the south, including Maryland and her sister states on the southern seaboard, gave 5 votes in favor and 50 opposed. The northwest gave its 8 votes in favor, and the southwest, including Kentucky, gave 4 votes in favor and 10 opposed. The vote of New England was the most divided of that of any section. From the manufacturing states of Connecticut and Rhode Island but one member, a Connecticut man, voted in opposition to the bill. The only 3 negative votes from Massachusetts proper came from the commercial region of Boston and Salem. That portion of Massachusetts soon to become the state of Maine gave 4 votes in opposition and only 2 in favor, the latter coming from the areas least interested in the carrying-trade. New Hampshire and Vermont gave their whole vote in opposition, except for one affirmative from Vermont. Kentucky's vote was 4 in favor to 3 opposed, Speaker Clay not voting.

In general, the distribution of the vote shows that the maritime interests united with the slave-holding planters, engaged in producing tobacco, cotton, and sugar, in opposition. On the other side, the manufacturing areas joined with the grain and wool raising regions of the middle and western states to support the measure. From the states of New York, New Jersey, Pennsylvania, Delaware, Ohio, Indiana, and Illinois, casting altogether 65 votes, but one man voted against the bill, and he was burned in effigy by his constituents and resigned the same year. Of the 53 votes cast by the south and southwest, outside of the border states of Maryland and Kentucky, there were but 5 affirmative votes. It is seen, therefore, that in the House of Representatives, on the tariff issue, the middle states and the Ohio Valley were combined against the south and southwest, while New England's influence was nullified by her division of interests. By a single vote, on a motion to postpone, the measure failed in the Senate; but the struggle was only deferred.

The most important aspect of the panic of 1819 was its relation to the forces of unrest and democratic change that were developing in the United States. Calhoun and John Quincy Adams, conversing in the spring of 1820 upon politics, had the gloomiest apprehensions. There had been, within two years, Calhoun said, "an immense revolution of fortunes in every part of the Union; enormous numbers of persons utterly ruined; multitudes in deep distress; and a general mass of disaffection to the Government not concentrated in any particular direction, but ready to seize upon any event and looking out anywhere for a leader." They agreed that the Missouri question and the debates on the tariff were merely incidental to this state of things, and that this vague but wide-spread discontent, caused by the disordered circumstances of individuals, had resulted in a general impression that there was something radically wrong in the administration of the government. [Footnote: Adams, Memoirs, V., 128; cf. IV., 498.] Although this impression was the result of deeper influences than those to which it was attributed by these statesmen, yet the crisis of 1819, which bore with peculiar heaviness upon the west and south, undoubtedly aggravated all the discontent of those regions. To the historian the movement is profoundly significant, for ultimately it found its leader in Andrew Jackson. More immediately it led to the demand for legislation to prevent imprisonment for debt, [Footnote: See, for example, Annals of Cong., 16 Cong., 2 Sess., 1224; McMaster, United States, IV., 532-535.] to debates over a national bankruptcy law, [Footnote: Annals of Cong., 16 Cong., 2 Sess., I., 757, 759, 792, 1203 et passim.] to the proposal of constitutional amendments leading to the diminution of the powers of the supreme court, to a reassertion of the sovereignty of the states, [Footnote: See chap. viii., below.] and to new legislation regarding the public lands and the tariff. The next few years bore clear evidence of the deep influence which this period of distress had on the politics and legislation of the country.

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