USA > Alabama > The formative period in Alabama, 1815-1828 > Part 8
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Though the road to Huntsville was at first a mere branch of the main thoroughfare between Knoxville and Nashville, it afforded a more direct route to New Orleans and this fact was recognized by sending the mail this way after 1822. In 1820 Huntsville was made the terminus of the first stage line in Alabama. This connected with the main line between Knoxville and Nashville, and at first the service was only once a week.+ This was increased in 1823 to two trips each way every week.+ In 1825 an increase to three trips a week was made, and the line was extended to Tuscumbia.+ Stages also connected Tuscumbia with Kentucky and Ohio by the route through Zanesville, Lexington, and Nashville.+s But below Tuscumbia, the river did not permit of continuous navigation and the Natchez Trace did not permit of stages. Consequent-
42 Statutes at Large, III, 315; American State Papers, Military, IV, 627.
43 American State Papers, Miscellaneous, II, 537; Alabama Republi- can, Dec. 17, 1819, and June 9, 1820; Jackson Papers, Wm. H. Crawford to Andrew Jackson, March 8, 1816, W. Young to Jackson, March 14, 1817.
++ American State Papers, P. O. Dept., 119-120; Tuscumbian, Nov. 12, 1824.
45 Alabama Republican, May 6, 1820.
46 Ibid., Aug. 16 and Sept. 13, 1822.
17 Tuscumbian, April 11, 1825.
4* American State Papers, P. O. Dept., 241; Southern Advocate, Sept. 4, 1827.
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RIVERS AND ROADS
ly, from Tuscumbia to New Orleans the mails were still car- ried on horseback.
.
The route through the Southern capitals, instead of parallel- ing the streams as did the one through Huntsville, crossed them and hence was more subject to interruption from swol- len waters. Though it lay through more populous com- munities than did the western route, the through mail be- tween Washington and New Orleans was not carried along it until the latter part of 1827." This accounts for the later development of stage facilities on the road between Milledge- ville, Montgomery, and Mobile. The first stage route from Montgomery eastward was established in 1821. At first only one trip a week was made, but this was increased in 1823 to two trips weekly. Not until 1826 was there a regular line established between Montgomery and Milledgeville giving three trips weekly.30 It was during the next year that the through mail to New Orleans began to come this way. It was carried from Montgomery to Mobile in two-horse wagons, from Mobile to Pascagoula by sulkey, and from Pascagoula to New Orleans by steam packet.31
This is as far as the development of transportation through Alabama went during the period under review, but a great deal of futile discussion was aroused by the Congressional act of 1824 which provided for the survey of a system of in- ternal improvements. Calhoun, in his report on the subject. stated that a highway from Washington to New Orleans would be best calculated to further the interests of that section and of the country lying south of the Capitol City ; and the survey of three separate routes was planned. The first of these was to intersect the eastward-flowing rivers at their fall lines: the second was to lie between this and the Appalachian Moun- tains; and the third was to pass down the valley beyond the mountains."" The surveys were accordingly made. The routes recommended in the first two cases were already followed by lines of travel. The first one lay through the Southern capi- tals, passing on to Mobile. The second diverged from this in northern Virginia and passed through the piedmont towns of Petersburg, Salisbury, Greenville, and Athens, rejoining the
+ House Reports, No. 48, 20 Cong., 1 Sess., 176.
50 Blue, History of Montgomery, 11-12; Alabama Journal, June 23 and 30. 1826.
51 Mobile Register, Nov. 24, 1827; House Reports, No. 63, 20 Cong., 2. Sess.
52 American State Papers, Military, III, 137-138.
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THE FORMATIVE PERIOD IN ALABAMA
other route near where it entered Alabama. But the third
route differed from that already established. After passing through the valley of Virginia to Knoxville, instead of pro- ceeding to Huntsville, it followed the valley of the Tennessee to where Chattanooga now stands, then, paralleling Lookout Mountain, passed into the valley of the Cahawba. From Centreville, at the falls of the Cahawba, it turned westward and passed out of the State by way of Demopolis.5"
This route followed the course of the rivers and valleys, and, theoretically, was perhaps the best. But it had the disad- vantage of Jackson's Military Road in that it did not follow an established route of travel. The Huntsville people pro- claimed loudly that the route through their town should be surveyed, and they had their way.5+ The mail then took this course to New Orleans, and the Postmaster General favored the route. After the survey was made, no further action was ever taken. The Old South stood opposed to the policy of in- ternal improvements, and, shortly, with Jackson's aid, it was able to restrain the desires of those who would have the gen- eral Government construct a system of communication for the country.
Commercially distant as were the two sections of Alabama, there was necessarily some communication between them. The first route traveled from north to south seems to have been the portage between the Muscle Shoals and the head of navi- gation on the Tombigbee at Cotton Gin Port. Pioneers floating down the Tennessee took this trail in order to reach the settle- ments in the neighborhood of St. Stephens.5. Jackson, in the Creek War, cut a road from Huntsville southward through the country east of the Coosa River and on to the place where Fort Jackson was established at the confluence of the Coosa with the Tallapoosa.56 By this route travelers were enabled to reach the Federal Road in the neighborhood of Montgom- ery.
Yet there was but one passage between north and south Alabama which came to be traveled with frequency, and that
53 House Executive Documents, No. 156, 19 Cong., 1 Sess., IX; House Reports, No. 48, 20 Cong., 1 Sess .. I; American State Papers, Military, III, 109; Huntsville Democret, Sept. 7, 1827.
5+ House Executive Documents. No. 125, 20 Cong., 1 Sess., III; South- ern Advocate; Jan. 13, 1826, letter from Gabriel Moore.
55 Pickett, History of .Alabame. 466-479.
56 Streit, Marshall County, VIII.
.. ....
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RIVERS AND ROADS
was the one which led from Huntsville through Jones Valley to Tuscaloosa at the head of navigation on the Black Warri- or.57 The road through the Valley was good, and much pro- duce came down from Tennessee and reached central and southern Alabama by this way.58
57 Warden, United States, III, 39.
58 Alabama Republican, March 1. 1822.
CHAPTER IX.
THE COMMERCIAL SITUATION.
The lack of a well developed financial system in the United States rendered commercial transactions much more compli- cated in the 'twenties than similar business would be today. Instead of a currency resting upon the credit of the Govern- ment and of uniform value, there were only bank notes, the value of which depended upon the credit of the issuing banks.
The first Bank of the United States had done much to stabi- lize the condition of the currency, but this institution had gone out of operation in 1811 and the end of the War of 1812 found the country flooded with paper money which was no longer redeemed in specie by the banks which issued it. It was during this period that settlers began to find their way into the Ala- bama country in increasing numbers, and practically the only money which permeated this frontier consisted of the depreciated notes of the banks of Georgia.1
It has been explained- how the state banks were forced to resume specie payments when the second Bank of the United States went into operation in 1817, and how the immigrants to Alabama were supplied with funds by the numerous new banks which sprang up in Tennessee and Kentucky in 1818. But the financial stress of 1819 caused these institutions to close their doors and leave their notes to circulate at a depreciated value in the western country.
In 1816 the legislature of Mississippi Territory had charter- ed the Merchants' and Planters' Bank of Huntsville, and in 1818 the Tombeckbee Bank of St. Stephens and the Bank of Mobile were chartered by the Alabama Territory. The two last-named of these institutions were not seriously affected by the events in Tennessee, for there were few commercial ties between south Alabama and that State; but the interests of the Huntsville region were closely bound up with those of the region to the northward, and the Huntsville bank was necessarily influenced by the affairs of the banks of Tennes- see.
1 Riley, Conecuh County, 22-25.
" Chapter VI.
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THE COMMERCIAL SITUATION
The West was a debtor section ; it owed for lands, for slaves, for goods. The East was creditor and had to be paid. But when the banks of Tennessee suspended specie payments, their notes were no longer available for remittance to the East. One way around the difficulty lay in purchasing Huntsville notes with the Tennessee notes, and drawing spe- cie on the former. This was done, and so great was the drain on the specie reserve of the Huntsville bank that it felt itself forced to suspend payments in 1820.3 Its notes continued to be used, but they fell below par and usually circulated on an equality with notes from Tennessee. Specie and the notes of specie-paying banks, being at a premium, ceased to pass from hand to hand, and north Alabama was left with a depreciated currency.+
The value of a bank note depended not only upon the solvency of the issuing institution, but upon the chance of presenting it for payment in specie. Thus the value of a note in a locality at some distance from the place of issue would depend upon the commercial relations between the two places. If the mer- chants who held the notes had no remittances to make to the place where they could be redeemed, they would have to bear the expense of sending them for redemption and bringing back the specie. The value of the notes would be diminished by the amount of this expense. If, for instance, it cost five per cent. to collect in this way, notes would be worth only ninety- five per cent. of their face value. But if the merchants had remittances to make, notes would be more convenient for that purpose than specie and they would command their full value. In fact, if the remittance to be made outran the supply of notes, the value of these might rise above their face value by the amount that it would cost to ship specie in their stead. For instance, if it cost three dollars to send a hundred in spe- cie, a hundred dollar note would be worth a hundred and three dollars to a merchant who had remittances to make.
This situation is brought out by the condition of affairs in Alabama. The Georgia and South Carolina notes, which formed the bulk of currency in the southern part of the State were worth about four per cent. less than specie in the Ten- nessee Valley because there was very little business between
3 American State Papers, Finance, III, 765-766.
4 Alabama Republican, Sont. 22, 1820, advertisement of P. Yeatman & Co .; Ibid., Oct. 6. 1820; also statistics collected on bank note exchange from newspapers.
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THE FORMATIVE PERIOD IN ALABAMA
that section and the country directly to the south or east of it. The notes of New Orleans banks were usually on a par with these because the cotton sent down to the City was more than sufficient to cover all remittances for goods. But, on the oth- er hand, the notes on Virginia banks and on the banks of Bal- timore, Philadelphia, and New York were always nearly equal to specie because the Tennessee Valley imported its manufactured goods through the Eastern cities and obtained its agricultural produce from the Ohio River region and from Tennessee. Eastern notes could be used to pay the East directly, or they could be employed with equal facility to pay the West, for the latter section was in debt to the former and anxious to have funds for remittance."
So difficult was communication between the two sections of the State that the trade of the southern section was entirely distinct from that of the northern. Not only did the towns along the rivers send their cotton down to Mobile, but the cen- tral hilly region also forwarded its crop by way of Tuscaloosa and Montgomery. Some of the staple was shipped directly from Mobile to European ports, but the greater part of it went to Eastern cities, principally New York." An amount almost as great, consisting largely of the best grades, which could be passed off as the Louisiana product, was sent to New Or- leans to pay for the corn, pork, flour, and whisky which came down from the Ohio River region and which were purchased by the merchants of Mobile to be sent up the Alabama and Tom- bigbee Rivers to the interior of the State .?
In the trade between Mobile and the Eastern cities, there was a balance in favor of Mobile, more cotton being shipped than was necessary to pay for the imports which were receiv- ed in return. As a result, there was a balance due the South- ern merchants which had to be paid in cash. But in the trade with New Orleans the cotton shipped was not sufficient to pay for the produce that was imported, and the Mobile mer- chants had to use their cash to pay the difference.' In other words, the money which the planters of southern Alabama re- ceived for their cotton was spent largely in payment for corn,
5 Statistics on bank note exchange in Huntsville and Tuscumbia, col- lected from newspapers.
t Mobile Register, Oct. 5. 1824. Exports for the year 1824 included 14,990 bales of cotton to New York, 13,094 to New Orleans, and 8,778 to Liverpool.
i Mobile Register, Nov. 7, 1822; Feb. 17. 1824.
Biddle Papers, John Hunter to Nicholas Biddle, Jan. 6, 1827.
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THE COMMERCIAL SITUATION
pork, flour, and whisky which were brought down the Ohio and Cumberland Rivers to New Orleans, and shipped thence to . Mobile.
The larger planters usually went down to Mobile once a year to transact their business with the merchants of the port ; but the smaller producers had to do their business with coun- try merchants who bought their goods in Mobile and trans- ported them to the interior. These merchants did a local "factorage" business, which consisted in "advancing" supplies to farmers and taking their cotton in payment when the crop was made, a balance being struck once a year. The trans- actions between the larger planters and the merchants in the principal towns were perhaps frequently on this same basis.ª This was the method whereby the cotton producer secured capital to finance his operations throughout the year. This cap- ital was obtained from the local merchants in the first in- stance, but these dealers were financed by the Eastern mer- chants for whom they purchased the staple; and in this way the East furnished capital for the production of cotton.
During the early 'twenties, when the country was just be- ing opened up, money was scarce in southern Alabama and many complaints were heard upon the subject;10 yet the notes of the local banks, as well as those of South Carolina and Georgia, furnished a sound, though limited, currency.11 So complete was the commercial separation between the two sections of the State, that each kept to its own medium of ex- change with practically no interference from the other. Aft-
? See The Cotton Factoruge System of the Southern States, by Alfred H. Stone, American Historical Review, XX. 557-565. This system came to be the usual practice, but whether it was completely developed during the 'twenties cannot be stated definitely. Merchants frequently adver- tised that they would advance on cotton turned over to them for ship- ment, but a committee of the legislature estimated in 1826 that two-thirds of the cotton shipped to Mobile was sold by the negotiation of bills of exchange, and the banks of that town did a large business in such paper. The fact that the planters received payments in these bills indicates that the local merchants were hardly more than purchasing agents for their Eastern correspondents.
Another indication of sales on a cash basis is the prevalence of auc- tions in Mobile at this time. It was customary to beat a drum as an announcement of the sale, and the noise made in this way came to be such a nuisance that complaint was made in the newspapers. But coun- try merchants doubtless made advances to the small producers in their neighborhood from the very first. See Alabama, House Journal, 1826. 80; Southern Adrocate, May 12, 1826; Mobile Register, April 21, 1823, and Jan. 17, 1824.
10 Alabama, Senate Journal, 1819, 188-190.
11 American State Papers, Finance, IV, 745.
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THE FORMATIVE PERIOD IN ALABAMA
er business conditions became more settled, the notes of South Carolina and Georgia banks ceased to pass at their face value because of the lack of trade between Mobile and those states. A currency sufficient for practical purposes was furnished by local banks, the Bank of the United States, and the New Orleans banks.12
The specie foundation upon which all these notes rested was very slight, judged by modern standards of safety. Both gold and silver were legal tender, according to law, but ac- cording to the market prices of the metals, a gold dollar was worth more than was one of silver. The result of this situation was that silver passed from hand to hand, while gold was withdrawn from circulation and a premium had to be paid to obtain it.
But even silver was scarce. There had been a profit made out of sending silver dollars to Latin-American countries and exchanging them on equal terms for the Spanish dollars, or pieces of eight reals, which were a little heavier. These for- eign coins were brought back and melted down because the silver in them was worth a little more than a dollar according to our monetary standard. Hence there was left for circula- tion in this country only the Spanish dollars which were too light to afford a profit in the bullion market, and a certain amount of fractional Spanish coin.
This situation had caused Jefferson to suspend the coinage of silver dollars in 1806 and none had been produced since.13 Spanish, Mexican, and other foreign coins made up our supply of specie, and it afforded a very light reserve against the notes which were issued by the banks, nor were there nearly enough of the smaller coins to serve the ordinary purposes of trade. A remedy was sought in the issue of "change tickets," which were merely bits of paper purporting to be worth twenty-five, fifty or seventy-five cents. They were signed by the issuer and were supposed to be redeemable for specie. but, since there was a demand for them, they were expected to remain afloat. This was a very profitable form of printing and it was indulged in by business houses and municipal au- thorities. 14 The irregularity in the issuance of such tickets made this practice a great nuisance to the community. For- geries were easy, and the country was flooded with the paper
12 Mobile Register, Oct. 29, 1823, and Aug. 30, 1828.
13 White, More and Banking, 33-34.
14 Alabama Republican, Nov. 10, 1820.
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THE COMMERCIAL SITUATION
of various uncertain houses. These considerations finally in- duced the State to take the matter up; the issuance of change tickets by private firms was forbidden and the government undertook to furnish the people with a lawful supply.15
Such was the condition of the currency in Alabama; but the man who had cotton to sell was affected not only by local con- ditions, but by national and international trade relations as well. The crop of Alabama was sold largely through Mobile and New Orleans merchants, who in turn disposed of the bulk of it, directly or indirectly, in the British market. The Amer- ican merchant collected his account by drawing a bill of ex- change on the British purchaser and disposing of this to some other American merchant who was in need of funds to remit to England.
During the period following the War of 1812, America was importing more than she was exporting and the bills of ex- change drawn by exporters were not sufficient to meet the demand of the importers who needed funds for remittance. Th result was that some of the importers had to send gold to pay their debt and this operation cost about ten per cent. It normally cost only about five per cent. to ship gold to England, but that country was on a gold basis and nothing but silver was circulating in this country. Consequently, the man who had a remittance to make in specie had to take silver at the current rate and purchase gold with it at about five per cent. advance. This premium on gold, added to the expense of shipment, accounts for the ten per cent. which it cost to send specie to London. Now the man who could buy a bill of ex- change on London to cover his debt was willing to pay-and the competition for such bills forced him to pay-a premium of about ten per cent. over its face value. 16
The Mobile merchants usually transacted their foreign bus- iness through New York firms, and received the proceeds of their foreign exchange in drafts on New York. Since, after the first few years of expansion, the cotton crop of south Ala- bama brought in more of these than could be used for remit- tances to New York, the balance had to be sent for collection in specie, and it cost about three per cent. to bring the specie from New York to Mobile. Hence New York paper passed at about three per cent. below its face value in the Alabama port, and the local merchant, not caring to stand the loss of
15 Ibid., May 18, 1821. June 29, 1821; Cahouba Press, June 8, 1822.
16Statistics on London exchange, collected from newspapers; Ala- bama Republican, Feb. 12. 1822, extract from the National Gazette.
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THE FORMATIVE PERIOD IN ALABAMA
the three per cent., made a practice of remitting to the plant- er in New York funds, leaving the latter to pay the cost of converting them into current money. 17 Yet, as a total result, ' there was a gain of about seven per cent. to the cotton pro- ducer because of the condition of trade-balance between the cotton region and the East on the one hand, and between this Country and England on the other.
It must not be understood from this discussion, however, that there was a trade balance in favor of Alabama as against the rest of the world and that specie was pouring in. While money was coming in from New York, it was all going out in other directions, and the State was accumulating no capital in cash. Like all newly opened country, Alabama was in debt.18 The settlers owed for their lands and slaves, and for consum- able goods. What they made from their crops, they invested in their establishments and there was no capital for commerci- al enterprises. This was doubtless due largely to the fact that cotton planting was the only occupation which was sure to give social prestige. Merchandising was carried on to a large extent by men from the North, and it was not regarded with great esteem by the agricultural community. The mer- chant was likely to be looked upon by the planter as a grasping inferior, while the poor man was apt to consider him an eco- nomic enemy.
Speculation, land grabbing, and graft of all kinds were the necessary accompaniments of a rush into new country where all were scrambling for a place and where the strong could use his strength to greatest advantage against the weak. The man without capital was largely at the mercy of him who had it, as is well illustrated by the situation in regard to the sale of the public lands.
The planter who bought his land and settled down to the business of raising cotton was not looked on with disfavor by any part of. the people, for his profits did not come from his neighbors. But the man who used his capital in a commercial way made his profits largely out of the community, and he often made too much. Thus the poorer men frequently looked with suspicion upon those who did business with them, which fact manifests itself forcibly in connection with the banking question.
17 Alabama, House Journal, 1826, 80; American State Papers, Finance, III, 762; statistics on domestic exchange, collected from newspapers.
15 Alabama, Senate Journal, 1821, 21, Message of Governor Pickens.
CHAPTER X.
-
THE BANK QUESTION.
The money which cotton brought into Alabama during the 'twenties went out largely through the land offices and for slaves, and the State was left without commercial capital. Funds were needed to finance the cotton crop; to promote ag- ricultural expansion ; and, especially, to furnish the basis for a sufficient circulating medium. The first of these needs was met by the New York cotton dealers, for they financed mer- chants in the South who bought the staple on their account; agricultural expansion was provided for by the planter's rein- vestment of his profits; but there seemed to be no means of securing a sufficient circulating medium except. by local banks, and this expedient was resorted to.
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