Part 7 (2/2)

In our country and in all industrial communities it is to the former comparatively small cla.s.s that chiefly and characteristically belong ”good times” and ”bad times,” panics and crises and depressions. It is this cla.s.s which in newspapers and financial reviews becomes ”the country.” It chiefly supports the more influential of the clergy, the lawyers, the editors, and others of the professional cla.s.ses. It deals with the new uses and the acc.u.mulations of wealth; it almost monopolizes public attention; it is chiefly and conspicuously identified with industrial and commercial changes and progress. But if great depressions were as nearly universal as the rhetoric of economists and historians would literally signify, our ancestors fifty years ago must have experienced a devastation such as Alaric is said to have brought to the fields of Lombardy. But this was not so. The processes of general production went on; the land was tilled; the farmer's work of the year brought about the same amount of comfort; the ordinary mechanic was not much worse off. If some keen observer from another planet had in 1835 and again later in 1837 looked into the dining-rooms and kitchens and parlors of America, had seen its citizens with their families going to church of a Sunday morning, or watched the tea-parties of their wives, or if he had looked over the fields and into the shops, there would have seemed to him but slight difference between the two years in the occupations, the industry, or the comfort of the people. But if he had stopped looking and begun to listen, he would in 1837 at once have perceived a tremendous change. The great ma.s.ses of producing men would have been mute, as they usually are. But the capitalists, the traders, the manufacturers, all whose skill, courage, imagination, and adventure made them the leaders of progress, and whose voices were the only loud, clear, intelligible voices, until there arose the modern organizations of laboring men,--all those who in 1835 were flushed and glorious with a royal money-getting,--he would now have heard crying in frenzy and desperation. It is not meant to disparage the importance of this smaller but louder body of men, or to underrate the disaster which they suffered. In proportion to their numbers, they were vastly the most important part of the community. If they were prostrated, there must not only suffer the body of clerks, operatives, and laborers immediately engaged in their enterprises, and who may for economical purposes be ranked with them; but later on, the ma.s.ses of the community must to a real extent feel the interruption of progress which has overtaken that section of the community to which are committed the characteristic operations of material progress; and whether through the fault or the misfortune of that section, the injury is alike serious. A wise ruler, in touching the finances of his country, will forget none of this. He will look through all the agitation of bankers and traders and manufacturers, the well-voiced leaders of the richer cla.s.ses of men, to the far vaster processes of industry carried on by men who are silent, and whose silent industry will go on whatever devices of currency or banking may be adopted. This wisdom Van Buren now showed in an exalted degree.

The disaster which in 1837 overtook so large and so important a part of the community was, in its ultimate nature, not difficult to comprehend.

There had not been one equal and universal increase in nominal values.

Such an increase would not have produced the crisis. But while the great ma.s.s of the national industry went on in channels and with methods and rates substantially undisturbed, there took place an enormous and speculative advance of prices in the cities where were carried on the operations of important traders and the promoters of enterprises, and in the very new country where these enterprises found their material. When a new ca.n.a.l or road was built, or a new line of river steamers launched and an unsettled country made accessible, several things inevitably happened in the temper produced by the jubilant observation of the past.

There was not only drawn from the ordinary industry of the country the wealth necessary to build the ca.n.a.l or road or steamers; but the country thus rendered accessible seemed suddenly to gain a value measured by the best results of former settlements, however exceptional, and by the most sanguine hopes for the future. The owners of the prairies and woods and river bottoms became suddenly rich, as a miner in Idaho becomes rich when he strikes a true fissure vein. The owners of the ca.n.a.l or road or line of steamers found their real investment at once multiplied in dollars by the value of the country whose trade they were to enjoy; for, new as that value was, it seemed a.s.sured. Like investments were made in banks, and in every implement of direct or indirect use in the conduct of industries which seemed to belong as a necessity to the new value of the land. The numerous sales of lands and of stocks in roads or ca.n.a.ls or banks at rapidly advancing prices did not alter the nature, although they vastly augmented the effect, of what was happening. The so-called ”business cla.s.ses” throughout the country, related as they quickly became, under the great impetus of the national hopefulness and vanity, to the new lands, to the new cities and towns and farms, and to the means of reaching them and of providing them with the necessities and comforts of civilization, found their wealth rapidly and largely increasing. Then naturally enough followed the spending of money in personal luxury. This meant the withdrawal of labor in the older part of the country from productive work, for which the country was fitted, to work which, whether suitable or not, was unproductive. The unproductive labor was paid, as the employers supposed, from the new value lately created at the West. So capital, that is, acc.u.mulated labor, was first spent in improvements in the new country, and then, and probably in a far greater amount, spent in more costly food, clothes, equipage, and other luxuries in the older country. The successive sales at advancing prices simply increased the sense of new wealth, and augmented more and more this destructive consumption of the products of labor, or the destructive diversion of labor from productive to unproductive activity at the East by the well-to-do cla.s.ses.

On the eve of the panic the new wealth, whose seeming possession apparently justified this destructive consumption or diversion to luxury of physical value, was primarily represented by t.i.tles to lands, stocks in land, ca.n.a.l, turnpike, railroad, transportation, or banking companies, and the notes issued by banks or traders or speculators. The value of these stocks and notes depended upon the fruitfulness of the lands or ca.n.a.ls or roads or steamboat lines. Prices of many commodities had, indeed, been enhanced by speculation beyond all proper relation to other commodities, measured by the ultimate standard of the quant.i.ty and quality of labor. But important as was this element, it was subordinate to the apparent creation of wealth at the West.

Before the panic broke, it began to appear that mere surveys of wild tracts into lots made neither towns nor cities; that ca.n.a.ls and roads and steamboats did not hew down trees or drain mora.s.ses or open the glebe. The basis of the operations of capitalists and promoters and venturers in new fields, if those operations were to have real success, must lie in the ma.s.ses of strong and skillful arms of men of labor. The operations were fruitless until there came a population well sinewed and gladly ready for arduous toil. In 1836 and 1837 the operators found that there was no longer a population to give enduring life to their new operations. They had far outstripped all the immediate or even the nearly promised movements of settlers. Men, however hardy, preferred to work within an easier reach of the physical and social advantages of settlements already made, until they could see the superior fruitfulness of labor further on. The new cities and towns and farms and the means of reaching them would be mere paper a.s.sets until an army of settlers was ready to enter in and make them sources of actual physical wealth. But the army stopped far short of the new Edens and metropolises. There was no creation among them of the actual wealth, the return of physical labor, to make good and real the popular semblances of wealth, upon the faith of which in the older part of the country had arisen new methods of business and habits of living. The withdrawal of actual wealth from the multifarious treasuries of capital and industry, to meet the expense of the improvements at the West and the increased luxury at the East, had reached a point where the pressure caused by the deficiency of physical wealth was too great for the hopefulness or credulity of those who had been surrendering that wealth upon the promises of successful and opulent settlements at the West. Nor was all this confined to ventures in the new States. Almost every Eastern city had a suburb where with slight differences all the phenomena of speculation were as real and obvious as in Illinois or Mississippi.

Jackson's specie circular toppled over the house of cards, which at best could have stood but little longer. In place of bank-notes, which symbolized the expectations and hopes of the owners of new towns and improvements, the United States after July, 1836, required from all but actual settlers gold and silver for lands. An insignificant part of the sales had been lately made to settlers. They were chiefly made to speculators. The public lands, which sold invariably at $1.25 an acre, were enormously magnified in nominal value the instant the speculators owned them. Paper money was freely issued upon these estimates of value, to be again paid to the government for more lands at $1.25. But now gold and silver must be found; and nothing but actual labor could find gold and silver. A further stream of true wealth was summoned from the East, already denuded, as it was, of all the surplus it had ready to be invested upon mere expectation. Enormous rates were now paid for real money. But of the real money necessary to make good the paper bubble promises of the speculators not one-tenth part really existed. Banks could neither make their debtors pay in gold and silver, nor pay their own notes in gold and silver. So they suspended.

The great and long concealed devastation of physical wealth and of the acc.u.mulation of legitimate labor, by premature improvements and costly personal living, became now quickly apparent. Fancied wealth sank out of sight. Paper symbols of new cities and towns, ca.n.a.ls and roads, were not only without value, but they were now plainly seen to be so. Rich men became poor men. The prices of articles in which there had been speculation sank in the reaction far below their true value. The industrious and the prudent, who had given their labor and their real wealth for paper promises issued upon the credit of seemingly a.s.sured fortunes, suffered at once with men whose fortunes had never been anything better than the delusions of their hope and imagination.

It is now plain enough that to recover from this crisis was a work of physical reparation to which must go time, industry, and frugality.

There was folly in every effort to retain and use as valuable a.s.sets the investments in companies and banks whose usefulness, if it had ever begun, was now ended. There was folly in every effort to conceal from the world by words of hopefulness the fact that the imagined values in new cities and garden lands had disappeared in a rude disenchantment as complete as that of Abou-Ha.s.san in the Thousand and One Nights, or that of Sly, the tinker, left untold in the Taming of the Shrew. Their sites were no more than wild lands, whose value must wait the march of American progress, fast enough indeed to the rest of the world, but slow as the snail to the wild pacing of the speculators. Every pretense of a politician, whether in or out of the senate chamber, that the government could by devices of financiering avoid this necessity of long physical repair, was either folly or wickedness. And of this folly or even wickedness there was no lack in the anxious spring and summer of 1837.

There had already occurred in many quarters that misery which is borne by the humbler producers of wealth not for their own consumption, but simply for exchange, whose earnings are not increased to meet the inflation of prices upon which traders and speculators are acc.u.mulating apparent fortunes and spending them as if they were real. On February 14, 1837, several thousand people met in front of the City Hall in New York under a call of men whom the ”Commercial Advertiser” described as ”Jackson Jacobins.” The call was headed: ”Bread, meat, rent, fuel!

Their prices must come down!” It invited the presence of ”all friends of humanity determined to resist monopolists and extortionists.” A very respectable meeting about high prices had been held two or three weeks before at the Broadway Tabernacle. The meeting in the City Hall Park, with a mixture of wisdom and folly, urged the prohibition of bank-notes under $100, and called for gold and silver; and then denounced landlords and dealers in provisions. The excitement of the meeting was followed by a riot, in which a great flour warehouse was gutted. The rioters were chiefly foreigners and few in number; nor were the promoters of the meeting involved in the riot. The military were called out; and Eli Hart & Co., the unfortunate flour merchants, issued a card pointing out with grim truth ”that the destruction of the article cannot have a tendency to reduce the price.”

The distribution of the treasury surplus to the States precipitated the crash. The first quarter's payment of $9,367,000 was made on January 1, 1837. There was disturbance in taking this large sum of money from the deposit banks. Loans had to be called in, and the accommodation to business men lessened for the time. There was speculative disturbance in the receipt of the moneys by the state depositories. There was apprehension for the next payment on April 1, which was accomplished with still greater disturbance, and after the crisis had begun. The calls for gold and silver, begun under the specie circular, and the disturbances caused by these distributions, were increased by financial pressure in England, whose money aids to America were but partly shown by the s.h.i.+pments of gold and silver already mentioned. The extravagance of living had been shown in foreign importations for consumption in luxury, to meet which there had gone varied promises to pay, and securities whose true value depended upon the true and not the apparent creation of wealth in America. Before the middle of March the money excitement at Manchester was great; and to the United States alone, it was then declared, attention was directed for larger remittances and for specie. The merchants of Liverpool about the same time sent a memorial to the chancellor of the exchequer saying ”that the distress of the mercantile interest is intense beyond example, and that it is rapidly extending to all ranks and conditions of the community, so as to threaten irretrievable ruin in all directions, involving the prudent with the imprudent.” The ”London Times” on April 10, 1837, said that great distress and pressure had been produced in every branch of national industry, and that the calamity had never been exceeded.

The cry was quickly reechoed from America. Commercial failures began in New York about April 1. By April 8 nearly one hundred failures had occurred in that city,--five of foreign and exchange brokers, thirty of dry-goods jobbers, sixteen of commission houses, twenty-eight of real-estate speculators, eight of stock brokers, and several others.

Three days later the failures had reached one hundred and twenty-eight.

Provisions, wages, rents, everything, as the ”New York Herald” on that day announced, were coming down. Within a few days more the failures were too numerous to be specially noticed; and before the end of the month the rest of the country was in a like condition. The prostration in the newer cotton States was peculiarly complete. Their staple was now down to ten cents a pound; within a year it had been worth twenty. All other staples fell enormously in price.

Later in April the merchants of New York met. Instead of condemning their own folly, they resolved, in a silly fury, that the disaster was due to government interference with the business and commercial operations of the country by requiring land to be paid for in specie instead of paper, to its destruction of the Bank, and to its subst.i.tution of a metallic for a credit currency. A committee of fifty, including Thomas Denny, Henry Parish, Elisha Riggs, and many others whose names are still honored in New York, was appointed to remonstrate with the president. ”What const.i.tutional or legal justification,” it was seriously demanded, ”can Martin Van Buren offer to the people of the United States for having brought upon them all their present difficulties?” The continuance of the specie circular, they said, was more high-handed tyranny than that which had cost Charles I. his crown and his head. On May 3 the committee visited Was.h.i.+ngton and told the President that their real estate had depreciated forty millions, their stocks twenty millions, their immense amounts of merchandise in warehouses thirty per cent. They piteously said to him, ”The n.o.ble city which we represent lies prostrate in despair, its credit blighted, its industry paralyzed, and without a hope beaming through the darkness, unless”--and here we might suppose they would have added, ”unless Americans at once stop spending money which has not been earned, and repair the ruin by years of sensible industry and strict economy.” But the conclusion of the merchants was that the darkness must continue unless relief came from Was.h.i.+ngton. It was unjust, they said, to attribute the evils to excessive development of mercantile enterprise; they flowed instead from ”that unwise system which aimed at the subst.i.tution of a metallic for a paper currency.” The error of their rulers ”had produced a wider desolation than the pestilence which depopulated our streets, or the conflagration which laid them in ashes.”

In the opinion of these sapient gentlemen of business, it was the requirement that the United States, in selling Western lands to speculators, should be paid in real and not in nominal money, which had prostrated in despair the metropolis of the country. They asked for a withdrawal of the specie circular, for a suspension of government suits against importers on bonds given for duties, for an extra session of Congress to pa.s.s Clay's bill for the distribution of the land revenue among the States, and for the re-chartering of the Bank. Never did men out of their heads with fright propose more foolish attempts at relief than some of these. But the folly, as will be seen, seized statesmen of the widest experience as well as frenzied merchants. The President's answer was dignified, but ”brief and explicit.” To the insolent suggestion that Jackson's financial measures had been more destructive than fire or pestilence, he calmly reminded them that he had made fully known, before he was elected, his own approval of those measures; that knowing this the people had deliberately chosen him; and that he would still adhere to those measures. The specie circular should be neither repealed nor modified. Such indulgence in enforcing custom-house bonds would be allowed as the law permitted. The emergency did not, he thought, justify an extra session. Nicholas Biddle called on Van Buren; and many were disgusted that in the presence of this arch enemy the president remained ”profoundly silent upon the great and interesting topics of the day.”

Van Buren's resolution to face the storm without either the aid or the embarra.s.sment of the early presence of Congress he was soon compelled to abandon. Within a few days of the return of the merchants to New York, that city sent the President an appalling reply. On May 10 its banks suspended payment of their notes in coin. A few days before some banks in lesser cities of the Southwest had stopped. On the day after the New York suspension, the banks of Philadelphia, Baltimore, Albany, Hartford, New Haven, and Providence followed. On the 12th the banks of Boston and Mobile, on the 13th those of New Orleans, and on the 17th those of Charleston and Cincinnati fell in the same crash. There was now simply a general bankruptcy. Men would no longer meet their promises to pay, because no longer could new paper promises pay off old ones. No longer would men surrender physical wealth safely in their hands for the expectation of wealth to be created by the future progress of the country. But men with perfectly real physical wealth in their storehouses, which they could not themselves use, were also in practical bankruptcy because of their commercial debts most prudently incurred.

The natural exchange of their own goods for goods which they or their creditors might use was obstructed by the utter discredit of paper money, and by the almost complete disappearance of gold and silver.

Extra sessions of state legislatures were called to devise relief. The banks' suspension of specie payment in New York was within a few days legalized by the legislature of that State. On May 12 the secretary of the treasury directed government collectors themselves to keep public moneys where the deposit banks had suspended.

For banks holding the public moneys sank with the others. And it was this which compelled Van Buren in one matter to yield to the storm. On May 15 he issued a proclamation for an extra session of Congress to meet on the first Monday of September. It would meet, the proclamation said, to consider ”great and weighty matters.” No scheme of relief was suggested. The locking up of public moneys in suspended banks made necessary some relief to the government itself. It was, perhaps, well enough that excited and terrified people, casting about for a remedy, should, until their wits were somewhat restored, be soothed by a.s.surance that the great council of the nation would, at any rate, discuss the situation. Moreover, it was wise to secure time, that most potent ally of the statesman. Within the three months and a half to elapse, Van Buren, like a wise ruler, thought the true nature of the calamity would become more apparent; proposals of remedies might be scrutinized; and thoughtless or superficial men might weary of their own absurd proposals, or the people might fully perceive their absurdity.

During the summer popular excitement ran very high against the administration. The Whig papers declared it to be ”the melancholy truth, the awful truth,” that the administration did nothing to relieve, but everything to distress the commercial community. Abbot Lawrence, one of the richest and most influential citizens of Boston, told a great meeting, on May 17, that there was no other people on the face of G.o.d's earth that were so abused, cheated, plundered, and trampled on by their rulers; that the government exacted impossibilities. No overt act, he said, with almost a sinister suggestion, ought to be committed until the laws of self-preservation compelled a forcible resistance; but the time might come when the crew must seize the s.h.i.+p. The friends of the administration sought, indeed, to stem the tide; and a series of skillfully devised popular gatherings was held, very probably inspired by Van Buren, who highly estimated such organized appeals to popular sentiment. In Philadelphia a great meeting denounced the bank suspensions and the issue of small notes as devices in the interest of a foreign conspiracy to throw silver coin out of circulation and export it to Europe, to raise the prices of necessaries, and recommence a course of gambling under the name of speculation and trade, in which the people must be the victims, and ”the foreign and home desperadoes” the gainers.

The meeting declared for a metallic currency. ”We hereby pledge our lives, if necessary,” they said, ”for the support of the same.” Later, on May 22, there was in the same city a large gathering at Independence Square, which solemnly called upon the administration ”manfully, fearlessly, and at all hazards to go on collecting the public revenues and paying the public dues in gold and silver.” Their forefathers, who fought for their liberties, the framers of our Const.i.tution, the patriarchs whose memory they revered, were, with a funny mixture of truth and falsehood, declared to have been hard-money men. A week later, a great meeting in Baltimore approved the specie circular, and urged its fearless execution, ”notwithstanding the senseless clamors of the British party;” for the crisis, they said, was ”a struggle of the virtuous and industrious portions of the community against bank advocates and the enemies to good morals and republicanism.” Protests were elsewhere made against forcing small notes into circulation. Paper had, however, to be used, for there was nothing else. Barter must go on, even upon the most flimsy tokens. In New York one saw, as were seen twenty-four years later, bits of paper like this: ”The bearer will be ent.i.tled to fifty cents' value in refreshments at the Auction Hotel, 123 and 125 Water Street. New York, May, 1837. Charles Redabock.” In Tallaha.s.see a committee of citizens was appointed to print bank tickets for purposes of change. In Easton the currency had a more specific basis. One of the tokens read: ”This ticket will hold good for a sheep's tongue, two crackers, and a gla.s.s of red-eye.”

When Congress a.s.sembled, the country had cried itself, if not to sleep, at least to seeming quiet. The sun had not ceased to rise and set.

Although merchants and bankers were prostrate with anxiety or even in irremediable ruin; although thousands of clerks and laborers were out of employment or earning absurdly low wages,--for near New York hundreds of laborers were rejected who applied for work at four dollars a month and board; although honest frontiersmen found themselves hopelessly isolated in a wilderness,--for the frontier had suddenly shrunk far behind them,--still the harvest had been good, the ma.s.ses of men had been at work, and economy had prevailed. The desperation was over. But there was a profound melancholy, from which a recovery was to come only too soon to be lasting.

CHAPTER IX

PRESIDENT.--SUB-TREASURY BILL

<script>