Изображения страниц
PDF
EPUB

Cong. Globe,

Ist Session, 1835-1836,

8.

Laughlin,

Ch. IV.

Sumner,

Hist. Am. Currency, 103-113.

National Bank as a dangerous monopoly, a conviction that banks of issue should be left to state control, and the hope that all bank money might soon be superseded by specie. He believed that suppression of bank notes below the twenty-dollar denomination would necessitate the use of gold and silver and place the currency on a sound basis. The Debasement of the Coinage.-The discovery of workBimetallism, able gold in the mountains of North Carolina and Georgia gave some reason to believe that the domestic production of this metal might supply the money needs of the country. The ratio of fifteen to one fixed upon in 1792 was an overvaluation of silver, and gold coins had been withdrawn from circulation. In 1834 the ratio was altered to sixteen (15.98) to one. The amount of pure gold in the eagle was reduced from 247.5 grains to 232 grains; the effect was to debase the coinage by 6.26 per cent. and the other supporters of the administration policy flattered themselves that they were restoring to circulation the "dollar of the fathers," the silver dollar of 371.25 grains proposed by Hamilton; but under the new ratio silver was undervalued and disappeared from circulation. Gold began to be coined at the rate of three and four million dollars a year, but not in sufficient quantities to meet the money demand. Some form of paper currency was inevitable.

Dewey, 224-231.

Benton

The Crisis of 1837.- The war against the National Bank was carried on with unflagging zeal. The President's policy was supported not only by the champions of the state banks but by the whole debtor class. When the proposition for renewal came up again in 1834, it was defeated by a large majority. The withdrawal of the national bank notes left a vacuum which the state banks were not long in making good. In the West and South banks were chartered without let or hindrance. The number increased from three hundred and twenty-nine in 1829 to seven hundred and eighty-eight in 1837, with a proportionate increase of capital. During the same interval the volume of the currency was trebled, and bank loans were extended at an even more rapid rate.

[graphic][merged small]

Speculation outstripped the available capital of the country. Land jobbers borrowed freely of the banks in the expectation of speedy returns. Transportation companies were chartered by the score and undertook schemes far beyond the needs of traffic. Imports exceeded exports for the speculative period (1830-1837), by $140,000,000. Importers ran up bills with their foreign agents or induced their creditors to take stock in American enterprises by

way of payment. Under the stimulus of advancing prices, Hammond, the cotton planters of the Gulf states extended their acre- 71, 72. age, mortgaging the growing crop for the money with which to buy slaves and put up cotton gins. The Missis sippi Valley, north and south, was heavily mortgaged to the eastern bankers, the seaboard states were under heavy obligations to English capitalists, but the largest creditor of all was the United States government. The so-called cash payment for public lands had been receivable in national bank notes, or in the notes of such state banks as could assure specie redemption. The distinction was one not easily sustained. Many of the "coon box" banks, organized since 1830, were loaning irredeemable currency to land speculators, who presented it at the government land offices in defiance of the law. The United States Treasury was soon glutted with this depreciated currency. In 1836 a resolution was brought forward in the Senate requiring that such payments be made in gold and silver, but it failed to pass. Under direction of President Jackson, the Secretary of the Treasury issued the famous. specie circular, directing that land sales must be effected in legal tender except in case of actual settlers and bona fide residents in the state where the lands lay. From such purchasers bank bills would still be received. The effect of the specie circular was to discredit the state bank notes, and private creditors began to demand payment in coin.

When, in October, 1836, financial depression overwhelmed the English business world, American obligations were called in, and the banking houses of New York and

Diary of

Philip Hone,
I, 251-259.

Collins,
Hist.

Sketches

of Ky., 95-97.

Philadelphia became seriously embarrassed. Then the English cotton factories curtailed production, and the price of cotton fell. The New Orleans banks, accustomed to loan freely on cotton securities, were the first to break down. Most of the cotton factors failed, and the Cotton Exchange was prostrated. The crisis was extended to the northern banks by a general failure of cereal crops in 1835 and again in 1837. The farmers of the Middle and Western states had nothing to sell, and were as little able as the cotton planters to meet their obligations. Unable to realize upon their loans, the credit agencies collapsed like so many balloons. On May 10, 1837, the banks of New York City suspended, dragging down in their failure many business houses. There were two hundred and fifty bankruptcies within two months. Real estate depreciated in value $40,000,000. Twenty thousand men were thrown out of employment. The outraged public grew dangerous, and the militia was called in to protect the terrified financiers. The Philadelphia banks went next. The officers declared that deposits were sufficient for the needs of their own constituents, but that they could not be expected to provide currency for the length of the Atlantic seaboard. The panic spread like an epidemic. Six hundred and eighteen banks failed in this fatal year. Everywhere outside of New England the collapse was complete. A contemporary thus describes the crisis in Kentucky:"Specie disappeared from circulation entirely, and the smaller coin was replaced by paper tickets, issued by cities, towns, and individuals, having a local currency, but worthless beyond the range of their immediate neighborhood. Bankruptcies multiplied in every direction. All public improvements were suspended; many states were unable to pay the interest of their respective debts, and Kentucky was compelled to add fifty per cent to her direct tax or forfeit her integrity. In the latter part of 1841, and in the year 1842, the tempest so long suspended burst in all force over Kentucky. The dockets of her courts groaned under the enormous load of lawsuits, and the most

« ПредыдущаяПродолжить »