CHAPTER 4.

Schools and Banks.

1841-1845.

The State of Alabama was organized at Huntsville and the framers of the Constitution were duly impressed with the problem of finance presented to them. The great amount of productive capital coming under the new government was inadequately supplied with a currency. It was apparent that the known workable mines of the precious metals of the world were almost exhausted. The bulk of commerce had no egress save through the port of Mobile, by sailing vessels. Exchange, to the necessary extent, was impossible. Under this emergency, a provision was incorporated in the organic law, allowing the Legislature to create a bank of the State, to be located at the capital and from time to time to establish branch banks. The banks, the navigable streams, leading to a single metropolis, Mobile, offering one mile of navigable water front to every twenty-five miles square of farming lands, the salubrious climate and fruitful soil, in co-operation, produced an unparalleled general prosperity, smooth as the music of troubadour's song.

The original and most valuable resources dedicated to public education in Alabama became early and, innocently, involved in the public necessity-the State banking system. When this system had degenerated into a public evil its radical reform or summary removal became a condition precedent to the restoration of the public education fund to its

legitimate purposes. But the richer class, to which the banking system had afforded greatest relicf, were least dependent upon the public education fund. Hence, when Mr. Yancey, upon entering his first canvass for the Legislature, pledged himself to the people in extraordinary efforts to release the fund, he also declared: "I know the prejudice with which one who enlists in this cause must contend." A public school system was not established in the State until fifteen years later. Therefore the cause of which he was one of the earliest friends was indebted to him only for wise counsels in its early struggles. The rights of the schools began to be pressed, as the Indians retired and non-slaveholding whites filled the vacated land. As early as the fall of 1840, while Benjamin Fitzpatrick yet pursued his canvass as Presidential elector, the Wetumpka Argus, knowing him to be free from all bank entanglements, as officer or borrower, lead all newspapers in a call upon its party to meet in convention at Tuskaloosa, early in the December, for the purpose of nominating that gentleman for Governor. The disinterested nature of this counsel became apparent when it was known that the relative and earliest and most steadfast friend of the editor, in the State, Major Jesse Beene, a party man of eminent services and the highest personal merit, was a candidate for the nomination. The editor confessed, feelingly, the sacrifice of his personal predilection to his sense of public duty in recommending Fitzpatrick over Beene. Successful, both in the call for the convention and in the acceptance by that body of his recommendation of a nominee, Yancey, both as editor and orator, kept alive the leading local issue, bank reform. In the midst of the campaign, of 1841, involving Fitzpatrick's election to the office of Governor, and his own to the Lower House of the Legislature, he was called upon by a public meeting, convened for the purpose, to define his position on this question. In reply he published an elaborate letter. The opinions expressed become noteworthy here because they formulated the entire principle, in the abstract, upon which, five years later, bank reform was set in motion and the school fund thus far released. He had never studied finance, he said, much less the science of banking, with a special object in view. In this exigency the essential object was, not to carry on banking by

*

the State but to prepare to withdraw the State from banking. "I am not in favor (he wrote) of entirely abolishing the existing Bank System at once; for to do so would leave us without a circulating medium of any kind, or at least with one not at all adequate to the wants of the community or the necessities of trade; or it would impose upon us the hasty adoption of some other system, ill digested in its details and probably as defective and as dangerous as the present one. It would also cause a most sudden and ruinous depreciation of the bills of these institutions a state of things upon which the broker and speculator might thrive, but which would entail ruin upon the poor who held the bills. I am, therefore, in favor of so changing and altering the present system as to produce no sudden or violent convulsion in the currency of the State, already greatly deranged; and to make it (the currency) the means of paying off the State stock as it falls due; thus saving us from the necessity of a direct and oppressive tax to sustain our honor and our credit and, at the same time, to give us time to prepare such a plan of banking as the light of experience shall suggest to be good. Should I be elected, I shall listen to all propositions with candor and a fixed determination to select that one which will best subserve the interests and the honor of the people of Alabama."

The first school in which the English language was taught in Alabama was kept by a New Englander, John Pierce, at "the boat yard" on the Tensaw river, in the early years of the first decade of the nineteenth century. The first public appropriation for schools in Alabama was made by the Legislature of the Mississippi Territory, in 1814. One thousand dollars was divided between Washington Academy, at St. Stephens, on the lower Tom Bigbee, and Green Academy, at Huntsville, in the other extremity of the settlements. Green Academy prospered, until burned by the United States army of invasion fifty years later. A provision of the fundamental law of Alabama, adopted in 1819, preparatory to the application of the State for admission to the Union, took the most advanced view of the sacred duty of the State toward public education. The public school system of the United States, at least of all the States not included in the original thirteen,

was founded upon a plan of endowment, adopted by the "old Congress," in 1785, by which the section numbered sixteen, in every township surveyed, in territory belonging to the Union, should be sold or leased and the proceeds constitute a permanent fund for the maintenance of public schools in that township. Ohio, Illinois, Indiana and Alabama were the first four States admitted with the benefit of land grants by the United States for purposes of education. In addition to the sixteenth section grant for public schools, the government gave the State of Alabama seventy-two sections, or 46,080 acres to be designated by the Secretary of the Treasury for the sole purpose of establishing and maintaining "a seminary of learning." In this last named grant originated the University of Alabama. The first Governor of the State, William W. Bibb, urged the Legislature to provide for the application of the government grants. As to the University lands, trustees were appointed and the lands vested in them. The question arose, how to dispose of the funds arising from the sale or lease of the University lands. There was small opportunity to invest in stocks in Alabama, where property consisted in land and slaves almost exclusively. A bank of the State was established and by order of the Legislature the University fund, arising from the University lands, was invested in the stock of the State held in the bank. The bank was allowed to absorb the money paid into the Treasury from the sales of the sixteenth sections. From 1836 to 1844 the State bank and its branches paid the entire State taxes. The banks naturally opposed any diversion of the Treasury receipts from their control, and, therefore, the banks were unfriendly to the separation of school monies from the general receipts of the Treasury. The banks, being creations of the Legislature, soon learned to corrupt the Legislature, the better to perpetuate their own power. The Legislature elected the Presidents and Directors of the banks the parent bank at Tuskaloosa, the branches at Decatur, Huntsville, Montgomery and Mobile. A report was prepared by the Legislature, at its sessions of 1840-41, showing that forty-five Whig members of that body, and Whig Directors and Presidents owed the banks of the State $572,596; and that forty-three Democrats, members of the Legislature and officers of the banks, owed

those institutions $149,312. The largest Whig debtor, T. McC. Prince, owed $120,436; the next largest, C. C. Langdon, editor of the Mobile Advertiser, the leading Whig journal of the State, owed $89,311. The largest debtor among the Democrats was the President of the Senate, Nathaniel Terry, who owed $46,049. Besides debts on their individual accounts, many of the members of the Legislature, of both parties, were deeply involved as sureties on the promissory notes of their constituents, held by the banks; some to the extent of $100,000 and over, each.

It is easy to trace the influence emanating from Wetumpka, as a political centre, favorable to bank reform. It is certain that bank reform in Alabama was made a political issue, first in the territory of which Wetumpka was the commercial and social centre. The Argus, being the only bank reform newspaper published at that town, exerted a determining influence over public opinion. At the sessions of the Legislature of 1840-41, the Representative of Coosa, William W. Morris, introduced resolutions so startling to the House in direct charges against the conduct of the banks and their relations to the Legislature, that the resolutions were indefinitely postponed. This was the first decisive step toward reform, for Morris' resolutions had made a deep impression. The Argus reproduced them and argued with untiring zeal from their standpoint. At another day, in the same session, the Governor sent to the Legislature majority and minority reports of a Commission of three citizens appointed, before the assembling of that body, by himself, to examine the books of the branch bank at Montgomery. Howell Rose, a large planter in the vicinity of Wetumpka, a member of the committee, prepared the minority report. Mr. Rose's report differed from that of his associates in the fullness of the exposure of bank corruption and legislative collusion presented by it. June 21, 1841, a meeting of the citizens of Autauga and Coosa counties, regardless of party affiliations, met at Wetumpka to consider measures of relief from "a spirit of speculation and fraud abroad in the land which is destined, unless speedily arrested, to destroy the banks and bankrupt the people."

July 3, a large meeting of citizens assembled at Vernon, Antauga county, to inquire into bank frauds. A list of