country where involuntary labour {192} exists, but the neighbourhood
is infected. Certain kinds of labour are despised as being the work of
slaves. Shoe-blacking, and, in some instances, family manufactures, are
of this class of labours; and it is thus, that in some of the small
towns on the _north side_ of the Ohio, the mechanic and the labourer
are to be seen drawing water at the wells; their wives and daughters
not condescending to services that are looked upon to be opprobrious.
It was for the same reason, that on one occasion, some paupers in a
poor’s house at Cincinnati refused to carry water for their own use.
Elopements from Kentucky into Indiana are frequent. Since my arrival
in this very town, I have witnessed two examples. I do not now allude
to slave-keepers losing their negroes, but their white daughters, who
escape to get married. In a former letter I mentioned the watchfulness
of parents over young ladies in Kentucky, and would only add, that
there, as elsewhere, restraint does not seem to be conducive to
contentment. Those who are acquainted with the state of society in
Turkey, are perhaps the most able to give a decided opinion on this
very interesting subject.
Of upwards of a hundred banks that lately figured in Indiana, Ohio,
Kentucky, and Tennessee, the money of two is now only received in the
land-office, in payment for public lands. Many have perished, and the
remainder are struggling for existence. Still giving for their _rags_
“bills as _good as their own_;” but, except two, none pay in specie,
or bills of the United States Bank. Discount varies from thirty to one
hundred per cent.
The recent history of banking in these western States, is probably
unrivalled. Such a system of knavery could only be developed in a
country where avarice and credulity are prominent features {193} of
character. About four years ago, the passion for acquiring unearned
gains rose to a great height; banking institutions were created in
abundance. The designing amongst lawyers, doctors, tavern-keepers,
farmers, grocers, shoemakers, tailors, &c. entered into the project,
and subscribed for stock. Small moieties must actually have been
advanced to defray the expenses of engraving, and other incidents
necessary to putting their schemes in operation. To deposit much
capital was out of their power; nor was it any part of their plan.
Their main object was to extract it from the community. A common
provision in charters, stipulated, that the property of each partner
was not liable, in security, to a greater amount than the sum he had
subscribed. This exempted the banks from the natural inconveniences
that might be occasioned by the insolvencies and elopements of members.
Money was accumulated in great abundance, as they bought property; lent
on security; and became rich. But their credit was of short duration.
When it was found, that a few of them could not redeem their bills, the
faith of the people was shaken. A run on the paper shops commenced; and
a suspension of specie payments soon became general. Had the people
been at liberty to recover a composition, as in the bankrupt concerns
of Britain, the evil might have, in some measure, been remedied before
this time; but chartered privileges granted by legislators concerned
in the fraud, prevented legal recourse. Even these could not have been
sufficient protection, but for the co-operation of subsequent laws
dictated by the same interest. The state of Indiana, for example,
passed in 1818, what was called “the replevy law,” liberating the
debtor for a year from the claim of the creditor, who refuses to accept
depreciated money. This {194} law, though sufficiently injurious
to creditors, could give no stability to swindling banks. It was,
therefore, succeeded by an act during last session, prohibiting landed
property to be sold by execution, under two-thirds of the appraised
value, and that to be ascertained by five freeholders. The debtor is
by the same act allowed to set apart any portion of his property he
chooses, to discharge execution. Freeholders, it may be observed,
are a class of men naturally adverse to depreciating their own land,
by setting a low value on that of their neighbours. This disposition
is the more dangerous at present, especially when lands are falling
considerably in price, in consequence of the depreciation of the
money which lately stamped such a high value on property. In Kentucky,
a total suspension of law process for sixty days, was followed by a
“replevy law.” In the State of Ohio, enactments similar to those of
Indiana were passed. Here is a combination of laws for the protection
of knaves, who have swindled the people.[117] Those who have either
bought property on credit, or borrowed money, while _rags_ passed at a
high price, have got debts of a great amount to pay, while property can
no longer be sold at former prices. Debtors of this description have
united with bankers, in getting the infamous laws passed just noticed.
While the property law was pending in the Assembly of Indiana, debtors
were in full activity sending forward petitions in favour of the
impolicy, and persuading the ignorant of the propriety of the measure.
In the small town of Jeffersonville, two petitions were made. These
unnatural expedients, however, cannot long serve the purpose intended.
Land continues to fall. The debtor may, for a short time, be kept out
of jail, and the peculator from being stripped of his ill-gotten gains;
but the public is {195} receiving dearly bought instructions, and must
set a watch over future elections.
Although the relations of debtor and creditor are equal in the
amount of property involved in their transactions; and although the
obligations imposed by contracts naturally render creditors the more
powerful class in civilized society, the recent proceedings of
legislatures in this western country, would lead us to believe, that
a majority in numbers or artifice, or perhaps in both, stands on the
debtor side of the ledger. Republicans are not to be whipped like
slaves, nor openly and directly taxed to such extent as Europeans are,
but they may be deluded. Men of their own electing have practised upon
them with success, and the emoluments to be gained in this way, are
apparently the great stimulus that prompts men to intrude themselves
into State governments. No rational mind can discover profit enough
in two dollars per day; or patriotism enough in cheating their
constituents; or popularity enough in eloquence that few can hear, and
none can ever see in print, to collect talent and integrity in council.
At first sight, it would appear to be a paradox, that any individual
State can be allowed to grant charters to banks, or to frame laws that
protect pecuniary fraud, while a section of the constitution of the
United States prohibits such procedure by the following words:--“No
state shall coin money; emit bills of credit; make any thing but gold
and silver coin a tender in paying of debts; pass any ex post facto
law; or law impairing the obligation of contracts.” The western States
cannot avoid being brought to issue with the above very distinct
clauses, as every charter granted by them, is an act tolerating
the substitution of paper, instead of gold and silver; and their
replevy laws, and property {196} laws, are in reality, making paper
a legal tender. Besides, several establishments are chartered under
the appellations of State Banks; and that in Kentucky, for example,
consists partly of stock owned by the State. The conduct of Congress
is not marked by any known act of partiality towards the makers of
unconstitutional money. On the contrary, the collectors of the United
States’ revenue are not allowed to accept of depreciated bills. Their
receiving the money of inferior banks while at par, though apparently
countenancing them, has been, in effect, the best means hitherto
adopted for effecting their ruin. The receivers of revenue lodge the
money received in the United States’ Bank, whose officers almost
immediately present the money to the Banks that issued it, and demand
payment in specie, or bills of the United States’ Bank. It has been in
this way that many of the paper manufacturers were obliged to suspend
specie payments; and it was partly on account of this mode of operating
on local banks, that several State Assemblies voted an enormous tax to
be levied on the branches of the United States’ Bank situated in the
respective States.--That tax was mentioned in a former letter, with
a notice that the supreme court had given judgment in favour of the
National Bank; and the reasonings on which the decision was founded,
were published in a most luminous style. The supreme court being the
arbitrator in all questions rising out of the constitution, Congress
have the power of making the United States a party in defending against
encroachments in the prerogative of the general government. In the
present banking concern, they prudently decline interference, seeing
that experience will soon open the eyes of a people who can, at any
time, counteract the {197} abuse by excluding bankers, and their
adherents, from State legislatures. On this occasion, there can be no
necessity for forcing the interests of the people down their throats,
nor can there be any danger that this infraction of the constitution
will be perpetuated. That the present disorders in banking are not
extended over the whole of the United States is manifested by the
tables of exchange periodically published at New York. These show that
the depressions of money are chiefly confined to the western country,
where the substantial capital is small, and where, (there is reason to
believe,) a large proportion of the people are less acute.
The error committed in the Western States, is not in consequence of any
defect exclusively inherent in the democratic system of government; as
the fraud is neither matured nor confirmed in the older States, and
as England suffers under an evil of the same kind, and apparently in
a more dangerous form. Her restriction act of 1797, is not understood
to be opposed by any recognized constitutional principle. It emanated
from the highest authority in the land. It is not yet repealed, and
twenty-four bank-directors still have it in their power to regulate the
_money_ value of all the property in the empire.[118]
Amidst all the pecuniary inconveniences of this country, the personal
liberty of men is not in danger of being assailed by the hand of
constituted authority. May the time soon come, when the people shall
have understanding enough to take care of their property.
FOOTNOTES:
[117] This practically stopped execution sales, as the freeholders
appraised property so high that no bidder would offer two-thirds of the
appraised value. Flint regards the replevin laws as a protection to
knaves; as a matter of fact, they were a protection to the majority of
the people of the Western States, who had bought their lands on credit,
and in the depreciated state of paper money found themselves helpless
to pay, and their land about to be sold at a great sacrifice. See
McMaster, _History of the United States_, iv, pp. 506-510.--ED.
[118] Essay on the Justice and Expediency of Reducing the Interest of
the National Debt. By Mr. J. R. McCulloch. Edinburgh, 1816.--FLINT.
{198} LETTER XVII
Depreciated Paper Money--Stagnation in Trade--Produce cheap--Labourers
and Mechanics in want of Employment--The Poor and Poor’s
Rates--Appropriations for the Expenses of the State of Indiana, for
the year 1820--Objects and Rates of Taxation--County Taxes--A rude
style of Improvement--The progress of New Settlements--Lands about to
be Forfeited to the Government for non-payment of the price.
_Jeffersonville, (Indiana,) May 4, 1820._
The accounts given in my last letter of the depredations committed by
bankers, will make you suppose that affairs are much deranged here.
Bankruptcy is now a sin prohibited by law. In the Eastern States, and
in Europe, our condition must be viewed as universal insolvency. Who,
it may be asked, would give credit to a people whose laws tolerate the
violation of contracts? Mutual credit and confidence are almost torn up
by the roots. It is said that in China, knaves are openly commended in
courts of law for the adroitness of their management. In the interior
of the United States, law has removed the necessity of being either
acute or honest.
The money in circulation is puzzling to traders, and more particularly
to strangers; for besides the multiplicity of banks, and the diversity
in supposed value, fluctuations are so frequent, and so great, that
no man who holds it in his possession can be safe {199} for a day.
The merchant, when asked the price of an article, instead of making
a direct answer, usually puts the question, “What sort of money
have you got?” Supposing that a number of bills are shown, and one
or more are accepted of, it is not till then, that the price of the
goods is declared; and an additional price is uniformly laid on,
to compensate for the supposed defect in the quality of the money.
Trade is stagnated--produce cheap--and merchants find it difficult
to lay in assortments of foreign manufactures. I have lately heard,
that if a lady purchases a dress in the city of Cincinnati, she has
to call at almost all the shops in town, before she can procure
trimmings of the suitable colours. It is only about three years ago,
that an English traveller[119] asserted, that in Cincinnati “_English
goods abound in as great profusion as in Cheapside_.”--Merchants in
Cincinnati, as elsewhere, have got into debt, by buying property, or
by building houses, but are now secure in the possession. Such people,
notwithstanding complain of the badness of the times, finding that the
trade of buying without paying cannot be continued. Those who have not
already secured an independence for life, may soon be willing to have
trade and fair dealing as formerly. Property laws deprive creditors of
the debts now due to them; but they cannot force them to give credit as
they were wont to do.
Agriculture languishes--farmers cannot find profit in hiring labourers.
The increase of produce in the United States is greater than any
increase of consumpt that may be pointed out elsewhere. To increase
the quantity of provisions, then, without enlarging the numbers of
those who eat them, will be only diminishing the price farther. {200}
Land in these circumstances can be of no value to the capitalist who
would employ his funds in farming. The spare capital of farmers is here
chiefly laid out in the purchase of lands.
Labourers and mechanics are in want of employment. I think that I have
seen upwards of 1500 men in quest of work within eleven months past,
and many of these declared, that they had no money. Newspapers and
private letters agree in stating, that wages are so low as eighteen
and three-fourth cents (about ten-pence) per day, with board, at
Philadelphia, and some other places. Great numbers of strangers lately
camped in the open field near Baltimore, depending on the contributions
of the charitable for subsistence. You have no doubt heard of emigrants
returning to Europe without finding the prospect of a livelihood in
America. Some who have come out to this part of the country do not
succeed well. Labourers’ wages are at present a dollar and an eighth
part per day. Board costs them two three-fourths or three dollars per
week, and washing three-fourths of a dollar for a dozen of pieces. On
these terms, it is plain that they cannot live two days by the labour
of one, with the other deductions which are to be taken from their
wages. Clothing, for example, will cost about three times its price
in Britain: and the poor labourer is almost certain of being paid in
depreciated money; perhaps from thirty to fifty per cent, under par. I
have seen several men turned out of boarding houses, where their money
would not be taken. They had no other resource left but to lodge in the
woods, without any covering except their clothes. They set fire to a
decayed log, spread some boards alongside of it for a bed, laid a block
of timber across for a pillow, and pursued their labour by day as {201}
usual. A still greater misfortune than being paid with bad money is
to be guarded against, namely, that of not being paid at all. Public
improvements are frequently executed by subscription, and subscribers
do not in every case consider themselves dishonoured by non-payment
of the sum they engage for. I could point out an interesting work,
where a tenth part of the amount on the subscription book cannot now
be realized. The treasurer of a company so circumstanced, has only to
tell undertakers or labourers, that he cannot pay them. I have heard of
a treasurer who applied the funds entrusted to him to his own use, and
who refused to give any satisfaction for his conduct. It is understood
that persons who are agents for others, frequently exchange the money
put into their hands for worse bills, and reserve the premium obtained
for themselves. Employers are also in the habit of deceiving their
workmen, by telling them that it is not convenient to pay wages in
money, and that they run accounts with the storekeeper, the tailor, and
the shoemaker, and that from them they may have all the necessaries
they want very cheap. The workman who consents to this mode of payment,
procures orders from the employer, on one or more of these citizens,
and is charged a higher price for the goods than the employer actually
pays for them. This is called _paying in trade_.
You have often heard that extreme poverty does not exist in the United
States. For some time after my arrival in the country supposed to be
exempt from abject misery, I never heard the term poor, (a word, by
the by, not often used,) without imagining that it applied to a class
in moderate circumstances, who had it not in their power to live in
{202} fine houses, indulge in foreign luxuries, and wear expensive
clothing; and on seeing a person whose external appearance would have
denoted a beggar in Britain, I concluded that the unfortunate must
have been improvident or dissipated, or perhaps possessed of both of
these qualities. My conjectures may have on two or three occasions been
just, as people of a depressed appearance are very rarely to be seen,
but I now see the propriety of divesting myself of such a hasty and
ungenerous opinion. Last winter a Cincinnati newspaper advertised a
place where old clothes were received for the poor, and another where
cast shoes were collected for children who could not, for want of
them, attend Sunday schools. The charitable measure of supplying the
poor with public meals, has lately been resorted to at Baltimore; but
there is reason to believe, that most of the people who are relieved
in this way, are Europeans recently come into America. In the western
country, poor rates are raised in the form of a county tax. They are,
however, so moderate as to be scarcely felt. Contracts for boarding
the permanently poor are advertised, and let to the lowest bidder, who
has a right to employ the pauper in any light work suited to the age
or ability of the object of charity. They are said to be well treated.
This sort of public exposure must create a repugnance against becoming
a pauper. In the Eastern States, work houses are established. It is to
be wished that those who follow this plan will not lose sight of the
example of England. The operations of bankers, and the recent decline
in trade, have been effective causes of poverty; and it seems probable
that the introduction of manufacturing industry, and a reduction of
base paper, would soon give effectual relief.
{203} It is not from the number of benevolent institutions, nor
from the low condition of some families, nor from the insolvency of
individuals, that I draw the conclusion that poverty prevails to
a greater extent than I at first imagined. The appropriations for
defraying the expenses of the State, together with the ways and means,
and the deficiencies in payments, are highly illustrative. I shall
transcribe two documents.
_An act_ for making appropriations for the year one thousand
eight hundred and twenty.
Approved January 22, 1820.
SEC. I. _Be it enacted by the General Assembly of the State of
Indiana_, That the following sums be, and they are hereby appropriated
for the following purposes; to wit, for defraying the expenses of
the present General Assembly, including pay to the members thereof,
secretaries, clerks, door-keepers, sergeants at arms, stationary, ink,
ink-stands, fuel, printing, binding, and distributing the laws and
journals, making marginal notes and indices to the same, together with
all other just and necessary expenses, the sum of eight thousand five
hundred dollars.
_Dollars_
For the executive department, 2200
For the judiciary department, 4900
For the interest on the public debt, 3000
For defraying the contingent expenses of the government,
for the year 1820, 800
For the military department, including the salary of the
adjutant-general, 400
For defraying the premiums on wolf scalps unsatisfied, 500
For defraying warrants not yet presented in the judiciary
department, 875
-----
12675
-----
To make up the deficiency between the above expenses and the sum
appropriated, a separate act authorizes the governor to borrow four
thousand {204} dollars on the credit of the State. The following
extract from an act, shows the sources of revenue.
_Be it enacted by the General Assembly of the State of Indiana._ That
there shall be levied a tax for State purposes, on the following
objects of taxation, and after the following rates, to wit, For every
hundred acres of first rate land subject to taxation, the sum of
one dollar. On every hundred acres of second rate land, the sum of
eighty-seven and a half cents. On every hundred acres of third rate
land, the sum of sixty-two and a half cents; and in that proportion
for a greater or less quantity. And on all Bank Stock actually paid in
at the rate, twenty-five cents for every hundred dollars.
The expenses of the government of the State for last year was
11,701-90¹⁄₂/100 dollars. Receipts of bad money prevented payment
of the interest of the debt. On the 4th day of December, 1819, there
were arrears of taxes due for the years 1817 and 1818, amounting to
4991³⁴⁄₁₀₀ dollars.
It is worthy of notice, that among the objects of taxation quoted, that
on bank stock is by the act limited to “_stock actually paid in_.” A
most decided proof of the preponderance of the banking interest, in
exempting the villanous associations from an equal share of taxation;
and, at the same time, countenancing an evasion of the security pledged
by bankers to the people. The receipts of bad money, noticed in last
paragraph, disclose a wickedness or a weakness on the part of the
Assembly which is altogether contemptible.
The following are the rates of taxes to be paid for county purposes:
For every horse, mule, or ass, _not exceeding_ 37¹⁄₂ cents. For every
horse kept for covering; once the rate at which he stands for the
season. Every tavern, not less than ten, nor more than twenty-five
dollars. For every ferry, not less than five, nor more than twenty
dollars. {205} Town lots in proportion to their value, (exclusive of
improvements thereon,) not exceeding fifty cents on every hundred
dollars. A tax of fifty cents to the clerks of the several circuit
courts, at the issuing of each writ of _capias ad respondendum_. A tax
of fifty cents on each certificate of magistracy, with the county seal
attached thereto. A tax on every pleasure carriage with two wheels, of
one dollar. A tax on every pleasure carriage with four wheels, of one
dollar and twenty-five cents. A tax on every silver watch, twenty-five
cents. And a tax on each gold watch, of fifty cents.
Town taxes for defraying the expense of digging wells, forming streets,
&c. are regulated by a committee of the inhabitants. The objects of
taxation in a town in this State were published last year. Among these,
a very moderate impost on bachelors and male dogs was mentioned.