Indiana State University - Sycamore Yearbook (Terre Haute, IN)

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which they believe they are seconded by tlie unanimous voice of their fellow-citizens of this state. This bank was given the right to de- posit the public moneys, but it soon failed ut- terly in its business. By the end of 1819 popular sentiment had softened toward the United States Bank. The legislature which met in December of that year authorized state and county collccinr hi ac- cept notes of the banks of the I ' micd Stales or its branches, or in the notes of the chartered banks of this state or their branches, or any of the state banks and branches of other states, that pass at par within this state. ' ' This legislature also passed one of those in- genious laws for the relief of debtors. By this act, if a debtor could not meet his obliga- tions, the sheriff should provide for an inquest of five respectable freeholders, who should estimate the value of the property of the debtor whose ijrojDerty was to be sold under execution. Xo property was to be sold ' for less than two- thirds of the returned value of the inquest. ' If the property would not sell for at least two- thirds of its assessed value, then there should be a stay of execution for one year. It is ob- vious that in a community where nearly all the people were debtors, it would almost be im- possible to get five respectable freeholders who would assess the property low enough that it would find a ijurchaser even at two-thivds its (hssem-d value. This law is typical of many laws that were passed for the relief of debtoi-s during this financial crisis. Congress also came to the relief of the debtors. In fact, relief acts in some form or other had been passed by congress nearly every year since lands were put on sale in Indiana, in 1818, 1819 and 1820. relief acts were passed for the benefit of debtors. By these acts. debtors whose lands were subject to forfeiture, were given an extension of credit for one year, if the holding did not exceed 640 acres. By the last of these acts the final jjeriod of foi-- feiture was extended to March 31, 1821. Doc. 66. p. 47. I.. ND SYSTEM REVISED. Other national legislation which did more to relieve the debtor class than any other laws yet passed, was to follow — legislation which would jirevent men from getting into debt to the government. All the factors mentioned by observers, farmers and statesmen as being in- strumental in bringing the economic distress upon the west in 1818- ' 19 possibly operated. Extravagant living and excessive buying from the east; the drain of money from the west through the land offices; reckless speculation in lands and town property; bad and careless banking; the restrictions placed by the secre- tary of the treasury upon the kind of money that would be received from the land pur- chasers — all these undoubtedly operated in bringing disaster to industry in the west. But one factor stands out distinct and fundamental, and above all the other causes that were influen- tial in bringing on the depression. The credit Hy stern had been abused. Banks and individ- uals had loaned money without sufficient secur- ity, on investments that w ' ere not likely to pay dividends. The United States goernment had unduly encouraged speculation since 1800 by giving four years ' credit to purchasers of lands. As a result, the greater part of the peoj le in the west were in debt, and could not meet their obligations. Tiiey had bought be- yond their capacity to pay. By December 31, 1820. the total indebtedness at the land offices in Indiana alone was $2,214,168.63, which amounted to a per rapifa indebtedness to the government alone of $1.5 in a population of 147.178. In a country where accciilablc money was not to be had, this was virtual liaiikrii[)tcy. The past twenty years of the en dif si sfr n in the operations of the pnblii ' hind sales had shown its incomjietency. It had worked disas- trously for the jjeople for whom it was devised — for the settlers. In 1820 congress passed an act establishing a new system of land sales — a fdsh si stem. Treat, the historian of the early operations of our national land system, says of

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the proportion in wliich the debtors found it difficult to get money with which to pay their debts, there would be counnensurate oppor- tunities for speculation for those who can com- mand funds which are receivable, unless con- gress shall interfere in their behalf. If land could be paid for only at a heavy discount on the moncA ' which the farmers were compelled to accejjt at par for their produce, this discount was, the governor said, an indirect but exor- bitant tax on the farmer. He said that there were two reasons for this condition : ( 1 ) There was a mere regulation adopted to the interest of the stockholders of the national bank. He thus referred to the fact that this bank would accept only its own notes and specie. (2) The National Bank was aided in this purpose by the treasury department, which refused to ac- cept fnnii tlic tanners anything but specie and currency of the United States bank. Undoubt- edly he was expre.ssing the general view of the west at that time. The Westerners did not realize that their own bad banking and exces- .sive speculation were responsible for this de- pi-essing economic condition. RELIEF FOR THE FARMERS. The state legislature came to the aid of the debtors, and passed a law to go into effect in January, 1819. The amount of personal prop- erty exempted from sale under execution for debt was considerably enlarged by one act. A creditor was compelled to accept the paper of the state bank and its branches, and of all other chartered banks whose money was current with the merchants at the time, or, should the creditor refuse to accept it at par, the debtor should have a stay of execution for one year. In other words, those to whom money was due were compelled to take in payment money at par that might really vary a great deal from par value. Obviously, this law was partial to the debtor, entirely unfair to the creditor, and, under conditions less distressing, would have api eared to be a disgrace upon the legislature. Niles Register. Supplement. XV, P. 77 ' State Laws, 1818- ' 19, P. 142. Western Sun, June 7, 1819. This legislature also passed an act ordering that all county and state collectors of revenue should collect the bills of the state bank and of about all the state and private banks of the surrounding states, as long as such paper passed current in the state. The notes of the United States Bank were not included in the list. Such legislation soon raised opposition on the part of certain classes, for it was evident that the law passed for the relief of debtors was aimed as much for the relief of the state bank and its branches as of the debtoi-s. A meeting of citizens was called at Salem in Washington County, and resolutions were adopted condemning the banking system of the state as injurious and dangerous. These people maintained that its influence was already too prevalent in our legislative councils. By the fall of 1819 the people and editors in the west had begun quite generally to awaken from their dreams and delusions.. One west- ern editor wrote: There is one cause in the western country which has operated very pow- erfully in producing the present state of things, and which must continue to operate in the same way: I mean, speculations in the public lands. Capitalists, both real and fictitious, have en- gaged very extensively in this business. The banks have conspired with the government to promote it; the former by lending money to the speculators, and the latter by its wretched system of selling the lands on credit. Nearly all the money which is paid goes over the mountains; the government has but little use for it in the western country. This last fact occasioned a real grievance. The state bank petitioned the secretary of the United States treasury to allow the surplus moneys collected at the Vincennes land office to be deposited at Vincennes. so that they could be used. The petition continued: Your memorialists are strongly of opinion that the citizens of this state have a righf° to the use of the public moneys raised within this state, when they are not wanted by the government, an opinion in

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Host important piece tile .-ougTess of the iIh ' ])i-iiR-iples of the 17s. ). Bv it. credit this act. that it •• va of hind legishition confederation hi id ( American land ysi was abolished, and the minimum price was re- duced from $2.00 to $1.2.j per acre. The mini- mimi tract was reduced from 160 acres to 80 acres, as had been done for certain sections in each township in 1817. ' RECIPEKATION. The west could not expect to return to its normal condition at once. As David Brown, the new president of the bank at Vincennes, wrote to the secretary of the treasury, April . . 1821, It must be a gradual work, and a steady perseverance will accomplish it. ' ° The new land system helped in this, for it required that prospective land jjurchasers bring their money with them. The General Land Office helloed. too, by arranging to deposit the surjDlus money from the sale of puljlic lands in various state and private banks throughout the west, so that it might enlarge the amount of much needed sound money Tiie mania fur M-lling tnwii lots sulisided. and men gave ii|i their dreams of immediate weahli. for more -oher considera- tion- . The west va- Ix ' giuning to recover from its awful delirium. One hundred years ago Indiana was engaged in a five year period of frontier hostilities. which lasted till the middle of 1814 on the eastern border, and till the end of 1815 on the Wabash. During this period the continual migration consolidated the territory in the older regions, and the increased migration in 1814 and 1815 enabled the territory to liecome a state in 1816. As hostilities began to cease, a period of excessive speculation and reckless banking began to affect the economic situation. The e causes were stimulated in IslC wlicji In- diana heranii ' a state, and the middle Wal.ash began to till up with settler... The climax to these operation,, came in the form of the Hnan- rial depression of 1819. No new territory liad lieeii -eciired for settlement from 180! to IMS. I ' ut in till ' latter year about all the land as far north as the Wabash was secured from the Indians. For some years the people had been looking () er the Indian boundary line with some liad already squatted on Indian territory. With Ihis purrhas.. of IMS. the li.Miudary was taken away, and the while- h; gaii to moxc to- ward the interior. In 1820 Indianapolis was located,™ and five years later the legi lalure lirst met at the new capital. A new common- wealth was growing up where only a few years before there was nothing but wilderness. Just at the beginning of the growth in the Xorthwest, Philip Phreneau, in 1784. j)eiuied these stanzas, fi ' om his poem. Peopling the Western Country. ' They were in-o}5hetic of what was to be. ••T,. western w.H.ds and lonely ])lain.s. I ' alamon from the crowd departs AMiere Nature ' s -wildest genius reigns. To tame the soil and plant the arts — AVhat wondei ' s there shall Freedom show. AVhat nnghty states successive growl What charming scenes attract the eye On wild Ohio ' s savage .stream I =:= ::: From these fair plain-, these rural seats. So long concealed, so lately known. Tiie unsocial Indian far retreats. To make .some otlier -linie his own. AA ' heiv other stivanis, less [jh ' asing. flow. . nd darker forests round him a ' l ' ow. s Treat. National Land System. ' State Paoers, Cong. 17. Sess. 1. Doc. 66, ' Ibid, Doc. 66. ssThwaites. Early Western Travels, IX. P ' See Tipton ' s Jnurnal. on locating the c Mag. of Hist.. I. P. 9-1.5. and P. 74-79. Tlie sources used lia e been listed in tiie foot note. ' No historian lias yet written a first-rate history of In diana since 1816.