Flint's Letters from America, 1818-1820

by active 19th century James Flint

There is here much trouble with paper money. The notes current in one part, are either refused, or taken at a large discount, in another. Banks that were creditable a few days ago, have refused to redeem their paper in specie, or in notes of the United States’ Bank. In Kentucky, there are two branches of the United States’ Bank; thirteen of the Kentucky bank, and a list of fifty independent banks, some of which are not in operation. In the state of Ohio, there are thirty chartered banks, and a few others which have not obtained that pernicious distinction. In Tennessee, the number of banks, including branches, is fourteen. The total number of these establishments in the United States, could not, perhaps, be accurately stated on any given day. The enumeration, like the census of population, might be affected by births and deaths. The creation of this vast host of fabricators, and venders of base money, must form a memorable epoch in the history of the country.—These craftsmen have greatly increased the money capital of the nation; and have, in a corresponding degree, enhanced the nominal value of property and labour. By lending, and otherwise emitting, their engravings, they have contrived to mortgage and buy much of the property of their neighbours, and to appropriate to themselves the labour of less moneyed citizens. Proceeding in this manner, they cannot retain specie enough to redeem their bills, admitting the gratuitous assumption that they were once possessed of it. They {109} seem to have calculated that the whole of their paper would not return on them in one day. Small quantities, however, of it have, on various occasions, been sufficient to cause them to suspend specie payments.

So long as a credulous public entertained full confidence in the banks, bankers gave in exchange for their paper, that of other banks, equally good with their own. The same kind of exchanges are still offered now, when the people are very suspicious of the circumstances and intentions of money manufacturers; and bankers console their creditors by professing to be as solvent as their neighbouring institutions. The holder of the paper may comply in the barter, or keep the notes, such as they are; but he finds it too late to be delivered from the snare. The people committed the lapsus, when they accepted of the gew-gaws clean from the press. It is altogether surprising that the people of this country have shut their eyes against the strongest light of experience. If they had kept sufficiently in recollection the vast issues, and the ultimate depreciation of continental money during their revolutionary war, they might have effectually resisted the late influx of paper. But the farmer, the mechanic, and the labourer, have been, for a short time, pleased with what was, in name, a greater price, or a greater hire. As every necessary of life has been proportionally raised in nominal value, they do not find that their comforts or savings are substantially enlarged. They are in reality diminished to the amount of the gains that have arisen to the paper mint, and of the brokers who deal in depreciated money. The immutable maxim, that productive labour is the true source of wealth, has been lost sight of. Designing men {110} have availed themselves of that apathy, and the deluded multitude have been basely duped.

The baneful consequence of the paper system are not confined to internal derangements here, but are extended to every department of foreign intercourse. The merchants and manufacturers of other countries are enabled to sell their goods, and the produce of their labour, nominally cheaper than the Americans. Imports are increased, and a large balance of trade arises. This must be paid in specie. Foreign capitalists, who engage their funds in American speculations, must also have the dividends, or profits on their stock, paid in the precious metals. The grain raised by the American farmer is sent abroad, but the price is greatly reduced by expense and risk incurred by a voyage, also by the profits of merchants on both sides of the Atlantic. The cotton and the wool are sent to Europe under similar disadvantages, and a repetition of them in reconveying the manufactured goods to America. A few facts will set this impolicy in a strong light. Cotton, which now sells in the United States for a few cents per pound, is, in certain cases, sent to England, and returned to the wearer at nearly as many dollars. A gentleman from Mount Sterling, about thirty miles east of this place, told me that a good coat of English manufacture, costs there thirty-six dollars. Indian corn sells at twenty-five cents per bushel. The farmer, then, who wears such a coat, must pay a hundred and forty-four bushels for it,—a quantity sufficient to be bread for twelve men for a whole year. One pound of good tea costs twelve bushels,—bread for one man for a year. A chemical manufacturer, at Pittsburg, buys saltpetre imported from India, cheaper than he can procure the spontaneous product from the {111} caverns of Kentucky. Although most of the metallic and earthy substances, useful in manufacture, are abundant in America, she imports jewellery, cutlery, glass, crystal, earthen and porcelain wares. By this means the republic discourages her own artizans, and pays the taxes of foreign monarchies. Under the present money system it is in vain that nature has diffused her mineral resources over the New World. In vain will the government impose the highest restrictive duties on imported goods, while every crop of flax augments the imaginary money capital to a greater extent, and while there is the smallest residuum of specie left in the country. It would be an interesting inquiry to find the number and the names of legislators in the different states assemblies, who are interested in banking concerns. The people would then see how the power that grants chartered privileges to banks is constituted.

Although the convulsion which agitates bankers in the western country, is but of recent date, their money is in various instances thirty per cent. under par in the eastern states. Tavern keepers, grocers, and others, receive the money of the banks nearest to them, although they know that these banks will not pay specie for them. They see that, without the rags now in circulation, they could have very little money. Every one is afraid of bursting the bubble. How the country is to be delivered from this dilemma, bankers have not yet shewn. They are still strongly inclined to continue the traffic; but they cannot be expected to support organized establishments of directors, presidents, cashiers, clerks, offices, and empty coffers, without committing farther spoliations on the people. When the sick system dies, the public will see the full amount of the penance they have to suffer {112} for their credulity. A smaller, but a more substantial capital, will be resorted to, one better calculated to “place the manufacturer beside the farmer.”

December 5. To-day a shower of rain fell, and was followed by snow. The part that lies unmelted is about an inch thick.

Among the succession of people at the tavern, many are polite and obliging in their behaviour. Some are interesting in their conversation, and some talk of horses and horse-racing. The latter kind of discourse is mixed with swearing.

Lexington is still considered the capital of fashion in Kentucky. There are here many genteel families, a few of which keep coaches. The town, on a whole, exhibits a well-dressed population. The menials are nearly all slaves. Free blacks detest every thing that they think resembling their former condition. White people are still more averse to live as hired people in families. Females, however idle, and however great their difficulties may be, remain with their parents, till removed by that great change that all hope for. In many cases, it is said that their repugnance to support themselves, by the earnings of hired labour, induces them here, as in other places, to lead a life of profligacy and ruin.

December 9. For several days past the temperature has remained steadily a few degrees below the freezing point. This morning the snow disappeared, and through the day, the heat seemed to be much greater than ever I felt at this season of the year.

12. The Atheneum, or reading-room, is much frequented. It is well furnished with newspapers, and with the most distinguished periodical publications; scientific journals, army and navy lists of {113} Britain; Rees’ Cyclopædia, and some other books. Attached to the institution is a small collection of objects in Natural History; and some articles of the dress, arms, and tools of the Indian people. I cannot omit mentioning some particulars:—A bowl of unglazed earthen ware found along with a mummy in a cave in Tennessee. In shape it resembles a modern cast iron pot; and is a specimen of manufacture superior to that executed in some of the coarser works of the kind amongst civilized people: an Indian register from the west of the Mississippi, which is cut on a small piece of white marble. The subject of it is a record of their wars. Those of long duration, or of great extent, are represented by larger holes bored in the stone. Seven great, and fourteen inferior wars, are indicated. When the nation migrates, or when the tablet is filled with spots, they enter the register on a black stone, and part with the white one. The tribe has now five black stones in keeping. The solidity and wax colour of the specimen rank it equal with the famous Parian marble.

To-day I saw a young man buy a dirk. The number of these weapons exhibited in the jewellers’ shops show that a great sale of them must be expected. The dirk has a pointed blade, four or five inches long, with a small handle. It is worn within the vest, by which it is completely concealed. The advocates for private arms openly declare that they are for defence, but the dissipated, the passionate, and the freebooter, urge a similar pretext for carrying the stilleto. Quarrels must be conducted in a dangerous form; and murder must be made a prelude to robbery, amongst a people who use concealed arms. Spain exemplifies this truth—and it is from her colonists probably that the southern and western Americans have learned this practice.