After the excitement of peace was past, as the summer drew toward a close, economical interests dwarfed the old political distinctions and gave a new character to parties. A flood of wealth poured into the Union at a steady rate of six or seven million dollars a month, and the distribution of so large a sum could not fail to show interesting results. The returns soon proved that the larger portion belonged to the Southern States. Cotton, at a valuation of twenty cents a pound, brought seventeen and a half millions to the planters; tobacco brought eight and a quarter millions; rice produced nearly two million eight hundred thousand dollars. Of fifty millions received from abroad in payment for domestic produce within seven or eight months after the peace, the slave States probably took nearly two thirds, though the white population of the States south of the Potomac was less than half the white population of the Union. The stimulus thus given to the slave system was violent, and was most plainly shown in the cotton States, where at least twenty million dollars were distributed in the year 1815 among a white population hardly exceeding half a million in all, while the larger portion fell to the share of a few slave-owners.[110]
Had the Northern States shared equally in the effects of this stimulus, the situation would have remained relatively as before; but the prosperity of the North was only moderate. The chief export of the Northern States was wheat and Indian corn. Even of these staples, Maryland and Virginia furnished a share; yet the total value of the wheat and corn exported from the Union was but eight million three hundred and fifty thousand dollars, while that of tobacco alone was eight and a quarter millions. While flour sold at nine or ten dollars a barrel, and Napoleon’s armies were vying with the Russians and Austrians in creating an artificial demand, the Middle States made a fair profit from their crops, although much less than was made by the tobacco and cotton planters; but New England produced little for export, and there the peace brought only ruin.
Ordinarily shipping was the source of New England’s profits. For twenty-five years the wars in Europe had given to New England shipping advantages which ceased with the return of peace. At first the change of condition was not felt, for every ship was promptly employed; but the reappearance of foreign vessels in American harbors showed that competition must soon begin, and that the old rates of profit were at an end.
Had this been all, Massachusetts could have borne it; but the shipping on the whole suffered least among New England interests. The new manufactures, in which large amounts of capital had been invested, were ruined by the peace. If the United States poured domestic produce valued at fifty million dollars into the markets of Great Britain, Great Britain and her dependencies poured in return not less than forty million dollars’ worth of imports into the United States, and inundated the Union with manufactured goods which were sold at any sacrifice to relieve the British markets. Although the imported manufactures paid duties of twenty-five per cent or more, they were sold at rates that made American competition impossible.
The cotton manufacturers of Rhode Island, in a memorial to Congress, dated October 20, 1815, declared that their one hundred and forty manufactories, operating one hundred and thirty thousand spindles, could no longer be worked with profit, and were threatened with speedy destruction.[111] New England could foresee with some degree of certainty the ultimate loss of the great amount of capital invested in these undertakings; but whether such fears for the future were just or not, the loss of present profits was not a matter of speculation, but of instant and evident notoriety. Before the close of the year 1815 little profit was left to the new industries. The cotton manufacture, chiefly a New England interest, was supposed to employ a capital of forty million dollars, and to expend about fifteen millions a year in wages.[112] The woollen manufacture, largely in Connecticut, was believed to employ a capital of twelve million dollars.[113] Most of the large factories for these staples were altogether stopped.
From every quarter the peace brought distress upon New England. During the war most of the richer prizes had been sent to New England ports, and the sale of their cargoes brought money and buyers into the country; but this monopoly ceased at the same moment with the monopoly of manufactures. The lumber trade was almost the last surviving interest of considerable value, but in November Parliament imposed duties on American lumber which nearly destroyed the New England trade. The fisheries alone seemed to remain as a permanent resource.
The effect of these changes from prosperity to adversity was shown in the usual forms. Emigration became active. Thousands of native New Englanders transferred themselves to the valley of the Mohawk and Western New York. All the cities of the coast had suffered a check from the war; but while New York and Philadelphia began to recover their lost ground, Boston was slow to feel the impulse. The financial reason could be partly seen in the bank returns of Massachusetts. In January, 1814, the Massachusetts banks held about $7,300,000 in specie.[114] In January and February, 1815, when peace was declared, the same banks probably held still more specie, as the causes which led to the influx were not removed. In June, about three months later, they held only $3,464,000 in specie, and the drain steadily continued, until in June, 1816, the specie in their vaults was reduced to $1,260,000, while their discounts were not increased and their circulation was diminished.[115]
The state of the currency and the policy pursued by the Treasury added to the burden carried by New England. There alone the banks maintained specie payments. In the autumn of 1815, while the notes of the Boston banks were equivalent to gold, Treasury notes were at eleven per cent discount in Boston; New York bank-notes were at eleven and a half per cent discount; Philadelphia at sixteen; Baltimore at seventeen and eighteen; and United States six-percent bonds sold at eighty-six. In New England the Government exacted payments either in Treasury notes or in the notes of local banks equivalent to specie. Elsewhere it accepted the notes of local banks at a rate of depreciation much greater than that of Treasury notes. This injustice in exacting taxes was doubled by an equivalent injustice in paying debts. In New England the Treasury compelled creditors to take payment in whatever medium it had at hand, or to go unpaid. Elsewhere the Treasury paid its debts in the currency it received for its taxes.
Dallas admitted the wrong, but made no serious attempt to correct it. So complicated was the currency that the Treasury was obliged to keep four accounts with each of its ninety-four banks of deposit,—(1) in the currency of the bank itself; (2) in special deposits of other bank currency; (3) in special deposits of Treasury notes bearing interest; (4) in small Treasury notes not bearing interest. In New England, and also in the cities of New York and Philadelphia, for some months after the peace the taxes were paid in Treasury notes. So little local currency was collected at these chief centres of business that the Treasury did not attempt to discharge its warrants there in currency. As the Treasury notes gradually appreciated in value above the local bank-notes of the Middle States, tax-payers ceased to make payments in them, and paid in their local bank-notes. Little by little the accumulation of local currency in the Treasury deposits at Philadelphia and New York increased, until the Treasury was able to draw on them in payment of its warrants; but even at those points this degree of credit was not attained in 1815, and in New England the Treasury still made no payments except in Treasury notes, or the notes of distant banks at a discount still greater than that of Treasury notes. This exceptional severity toward New England was admitted by Dallas, and excused only for the reason that if he were just to New England he must be severe to the rest of the country. Every holder of a Treasury warrant would have demanded payment at the place where the local medium was of the highest value, which was Boston; and as the Treasury could not pay specie at Boston without exacting specie elsewhere, Dallas paid no attention to Constitutional scruples or legal objections, but arbitrarily excluded Boston from the number of points where warrants were paid in local currency.[116]
The people of Boston criticised, with much severity and with apparent justice, Dallas’s management of the finances, which seemed to require some explanation not furnished in his reports. By an Act approved March 3, Congress authorized a loan of $18,452,800 to absorb the outstanding Treasury notes. At that time, under the momentary reaction of peace excitement, Treasury notes were supposed to be worth about ninety-four cents in the dollar, and Dallas expected to convert them nearly dollar for dollar into six-per-cent bonds. His proposals were issued March 10, inviting bids for twelve millions, and requiring only “that the terms of the proposals should bear some relation to the actual fair price of stock in the market of Philadelphia or New York.” When the bids were received, Dallas rejected them all, because in his opinion they were below the market rates. “In point of fact,” he afterward said, “no direct offer was made to subscribe at a higher rate than eighty-nine per cent, while some of the offers were made at a rate even lower than seventy-five per cent.” Although the old six-per-cents were then selling at eighty-nine, eighty-eight, and eighty-seven in Boston and New York, Dallas held that “the real condition of the public credit” required him to insist upon ninety-five as the value of the new stock.