Part 17
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.
Rich country signifies fertility of soil, and not the opulence of its inhabitants.--It would be vain to search for a rich district, according to the European acceptation of the term. Almost every object bespeaks a want of capital. Fine houses are brick ones of two stories high, covered with shingles, and frequently unfinished within; and where the work is completed, it is usually in a bad style; the windows often broken; and the adjoining grounds perhaps studded with the stumps of trees, overgrown with rank weeds, or rutted by hogs. The inferior buildings, as stables, barns, (and negro huts in slave States,) are unseemly log cabins, frequently standing in front of the mansion; the whole having more the appearance of a ruin than the abodes of a people having taste for elegant improvements. Gardening is performed in the most slovenly manner imaginable; the plough {206} being in more general use than the spade. Labouring utensils are constructed without the application of the joiner’s plane. Iron is either sparingly used in their formation, or altogether dispensed with.