One Township's Yesterdays Chapter XIX  

HARD TIMES IN THE '30s

"We become wiser by adversity; prosperity destroys our appreciation of the right." ... Lucius Annaeus Seneca.

THE FOURTH DECADE of the Nineteenth Century brought hard times. Hard is a mild term to apply to that period of American history. Times were unreasonably tough. The country survived, and the first settlers of Union Township got on their way and arrived, but were scarcely settled before the worst of the storm broke. And there followed one of the most distressing periods in the entire history of the nation, in some respects even more disastrous than the panic of nearly one hundred years later, from the ravages of which we are now (we hope) convalescing.

By coincidence, or more likely by some immutable law of supply and demand, the '30s of the two centuries of our national growth found the financial structure of the country dangerously vulnerable, weak, shaky; and in both crises the "way out" was managed by quite similar expedients.

What led to the great crisis which came in 1837? Various abnormal conditions, evil practices, and schemes that "would not hold water," just such fallacies as preceded the crash of 1929. The craze for investment had gone far beyond safe limits in every branch of industry, and a mania for speculation had set in. Men borrowed at extravagant interest rates and to mortgage future earning power in proportion to their most ardent anticipations. Many a prominent enterprise was swamped in irredeemable obligations.

Financial Status.
"Impelled by buoyant confidence in its apparently inexhaustible resources," says KATHARINE COMAN, "the men of the new frontier scoffed at financial limitations." ignoring the bitter experience of inflation and collapse in the Eastern states twenty years before. Western financiers chafed at the restraints imposed by the National Bank. They proposed the overthrow of this Eastern institution, to open a free field to state banks of issue.

In Tennessee, wildcat banking had gone to unprecedented extremes. President JACKSON was from that state. He stood for a sound and uniform currency, and vetoed a bill to re-charter the National Bank. At the most inopportune time, the bimetallic system was altered ... for the worse. Workable gold was discovered in the mountains of North Carolina and Georgia, giving some reason to believe that the domestic production of this metal might supply the money needs of the country. The amount of pure gold in the eagle was reduced; the coinage was debased. Certain supporters of the administration policy flattered themselves that they were restoring to circulation the "dollar of the fathers," the silver dollar proposed by Hamilton, but under the new ratio silver was undervalued and disappeared from circulation. Not enough gold could be coined to meet the money demand. Paper currency in some form was inevitable. Banks were chartered in the West and South without let or hindrance. The volume of the currency was trebled. Bank loans were extended at an even more rapid rate. "Speculation was outstripping the available capital of the country. Land jobbers borrowed freely of the banks in expectation of speedy returns. Many of the _ coon box banks, organized since 1830, were loaning irredeemable currency to land speculators, who presented it at the government land offices in defiance of the law, and the United States Treasury was glutted with this depreciated currency. So affairs went on, from bad to worse, until the rocks of shipwreck loomed directly ahead.

Depression.
In October, 1836, while the first comers to Union Township were busy getting ready for their initial winter in this region, financial depression overwhelmed the English business world, American obligations were called in, and the banking houses of New York and Philadelphia became seriously embarrassed. The New Orleans banks were the first to break down. By a general failure of cereal crops in 1835 and again in 1837, the crisis was extended to the Northern banks. In May, 1837, the banks of New York City suspended, dragging down in their failure many business houses. Bankruptcies became common. Real estate depreciated vastly in value. A great number of men were thrown out of employment. The outraged public became dangerous, and the militia was called to protect the terrified financiers. The Philadelphia banks went next. The panic spread like an epidemic. Banks toppled and fell by the hundreds. Everywhere outside of New England the collapse was complete.

Specie disappeared from circulation entirely. Local paper currency replaced the smaller coin, but was worthless beyond the range of immediate neighborhoods. All public improvements were suspended. Many states defaulted in paying the interest of their debts.

Late in the panic, the tempest broke in full force over Kentucky. And finally the period of stress came to an end. It rang the death knell of an orgy of reckless speculation. Five years of financial depression had swept the country. The unemployed crowded the cities. All classes curtailed expenditure; the demand for goods was thus greatly reduced, Capitalists declined to loan money on any terms. In 1838, specie payment was generally resumed, but the relief was short-lived. The following year, hundreds of more banks closed their doors, and the business world was not again in working order until 1842.

It was the administration of President MARTIN VAN BUREN, a Democrat from New York State, that was marked by the panic of 1837. He had succeeded ANDREW JACKSON, a Tennessee Democrat, that year. The independent treasury was established during the Van Buren regime.

Financial Troubles.
That panic was the most disastrous that the American people have experienced up to 1929.

Every bank in the country suspended specie payments, thousands of leading merchants and manufacturers were forced to the wall, and the business of the country was utterly demoralized. Hard times came, with a vengeance. VAN BUREN faced the storm with great courage.

The wild spirit of speculation that had seized the people was the chief cause of the panic, though there were others more subtle. The wildest schemes were hatched. Prices rose. Wages were high, then ceased to be. Great manufactories were begun and never carried out. Scores of towns were laid out in the West, and many of them were never built up. The sale of public lands ran to a high figure in 1835, and banks sprang up like mushrooms. Inflation! Worthless paper money! Railroads, canals, and all manner of internal improvements were projected. Men became intoxicated with dreams of becoming rich in a night. Then the crash and the aftermath: wreckage, desolation, despair! Such was the great industrial depression known as the Panic of 1837.

The Golden Age.

After the storm came the sunshine. A new era began, a "golden age." The prosperity that followed the panic was tremendous, and lasting. During the twenty years' interval between the crisis of 1837 and that of 1857, the industrial development in this country was the most remarkable in the nation's history. The wealth of the country was quadrupled in this era. In the older and mare industrial sections of the Atlantic seaboard, the accumulation of property was greatest at the beginning of the epoch, but the agricultural communities of the Mississippi Valley made rapid gains and in the second decade doubled the amount of wealth per inhabitant.

The brunt of the storm was not borne to any great extent by those who came first to Union Township. Currency conditions and banking troubles did not worry them so much; people in the towns and more populous communities suffered more. The pioneers of Union Township were too busy establishing homes for their families to be deeply concerned in the financial strife, the money craze, and the disastrous errors of the world outside. They were in a little world by themselves. That world was as they made it. God-fearing people, they strove to make it the best that knew how. And thus they were spared the demoralizing, soul searing effects of the great panic, for which no doubt they humbly gave thanks to the Power above who guided them in their endeavors here in the wilderness.