USA > Connecticut > Connecticut in transition: 1775-1818 > Part 9
Note: The text from this book was generated using artificial intelligence so there may be some errors. The full pages can be found on Archive.org (link on the Part 1 page).
Part 1 | Part 2 | Part 3 | Part 4 | Part 5 | Part 6 | Part 7 | Part 8 | Part 9 | Part 10 | Part 11 | Part 12 | Part 13 | Part 14 | Part 15 | Part 16 | Part 17 | Part 18 | Part 19 | Part 20 | Part 21 | Part 22 | Part 23 | Part 24 | Part 25 | Part 26 | Part 27 | Part 28 | Part 29 | Part 30 | Part 31 | Part 32
This is quite enough to make clear that an influential moneyed class was evolving, with its stronghold in the banking interests of the com- munity and in the Federal-Congregational party. Yet neither the party nor the sect was the all-controlling element, for an Episcopalian or Re- publican who came into political power was given place on a bank's directorate. The essential Federalist-Congregational character of the "bank crowd" was well evidenced by the opposition to the incorpora- tion of the Episcopal Bank as a rival of the Hartford Bank, which, like the Hartford Courant, breathed an orthodoxy of the olden day. In spite of all opposition the Phoenix Bank was established; and an enter- ing wedge was driven in between the banking business and the Standing Order.
The connection between the state and the banks was made closer by an act of 1803, which provided for the investment of state funds in the New Haven, Hartford, and Middletown banks. On subscribing $5,000 or more, the state was given the privilege of naming a director. In 1803 $42,525 was so invested and by 1816, $146,800. In 1815 the treasurer was authorized to buy United States stock and invest the sur- plus in the stock of any state bank. Thereupon the state became a stock-
23 Courant, Sept. 13, 1814.
71
BANKS AND THE INCREASE OF CAPITAL
holder in the Eagle and Phoenix banks. In 1817 a surplus of $250,000 was invested in the five banks.24 This must be borne in mind, for the association of the administration and the money interests gave the office-holding party a powerful lever.
The later banking acts gave certain decided advantages to the ec- clesiastical societies. The trustees of school funds, ecclesiastical funds and charitable institutions within the state were given privileges equal to those accorded the state; such privileges involved the right to buy stock at par value, to withdraw on six months' notice and to name a director if owning a certain amount of stock. This stock could not be transferred and was also of an issue above the bank's maximum capital- ization. In addition, such organizations could buy common, transferable stock. The ecclesiastical funds, aside from the Bishop's Fund, were those of Congregational societies, for the dissenting societies had little money to invest. Like the schools, the educational funds were controlled by the Congregational order. Remembering that incorporation acts were based on petition and sanctioned with modifications rather than drafted by the Assembly, one may ask: Why should banking promoters grant so much in the way of privileges to the standing church? Friends might explain it on grounds of philanthropy; more impartial critics as a means of obtaining the valuable asset of its political influence.
The years after the second war were marked by intense financial distress. Specie was being hoarded or exported to pay for foreign goods. There was a return to barter, if one may judge from newspaper adver- tisements. Money, it was said, was becoming a circulating medium in name only. Some blamed the banks for the financial panic, saying that banks were synonymous with bankruptcy. New York banks were fail- ing or refusing to loan or discount, thereby aggravating the banking difficulties of Connecticut. Of the four banks in the vicinity of New Haven, the Derby Bank had dissolved with little regard for its clients; a second practically halted business; a third diminished its loans by one- half; and the fourth greatly reduced its discounts. In all, a million dol- lars was thought to have been withdrawn from circulation, because of either fear or speculation.25 Farmers and mechanics found themselves in sore straits and all business was at a standstill.
Small wonder was it that banks and their directors were subjected
24 Statutes, pp. 70, 77, 96; Walradt, Financial History, pp. 33-34; Woodward, Hartford Bank, pp. 81-82.
25 Six Numbers on Banking, pp. 4 ff.
72
CONNECTICUT IN TRANSITION: 1775-1818
to bitter attack.26 Even an occasional Federalist writer deprecated the growth of a moneyed class as the most unfeeling and oppressive of all aristocracies.27 Only lawyers and bankers grew rich, it was argued, while the poor were made poorer. Banks were accused of making money plentiful or scarce as best suited their purpose. The money lender or "note-shaver" was described as preying on society in distress and enrich- ing himself by buying at a heavy discount farms, manufacturing plants, and merchandise. By their manoeuvers, first flooding the market with paper then contracting the currency, they were thought to work their purpose. In the past men of wealth had ready money to loan and, if a man hoarded, it made little difference. Now, it was added, the man of wealth has his money invested in bank stock or on deposit. To get a loan, the borrower must solicit the "rigidly surly, vehemently authoritative, and fretfully great" bank director.28 If one bank hoards, all refuse to dis- count. Pains were taken to impress on readers that bank charters were often dishonestly obtained; that directors were frequently borrowers from their own banks to the extent of from $15,000 to $50,000; that the Eagle Bank had forced its stock down to 90 in order to buy it in; and that there had been corrupt bank failures.29 Banks were not original creators of wealth, but only creatures of business and commerce. Hence they were not to be rated too highly, nor were their lawyer-directors to be regarded as essentially men of honor. Banks were especially attacked for buying up the Second National Bank stock, a speculation pure and simple, for bank stock paid more than the customary six per cent. Money was, it was felt, drawn from local circulation, while the people were silenced by the bankers' pretense of patriotic motives. The criti- cism was not surprising, with United States bonds rising, and bank shares increasing in value, and bankers apparently suffering less than the business community at large.30
This depression was turned by local Republicans into a political asset. In 1816 they condemned the governor's neutral speech as not
26 Ibid., Mercury, June 18, 1816; Feb. 11, 17, 1817.
27 Courant, Aug. 12, 1817. The editor was inclined to view the depression as due to drinking, the failure to honor honest labor, a speculating mania, a departure from the old habit of living within income, and the weakening of the evangelical virtues. Series of articles, Mar. 4, 1817, ff.
28 Six Numbers on Banking, p. 15.
29 Ibid., pp. 5-8, 15-17.
30 New Haven Hist. Soc., Papers, III, 201 ff.
73
BANKS AND THE INCREASE OF CAPITAL
what the people anticipated with a six months' winter facing them,31 and they attacked the purchase by state banks of National Bank stock. Their charges lost weight when, in the fall of 1818, Governor Wolcott was able to point toward coming prosperity ushered in by the more substantial national banking system. Politically the depression benefited the Republicans.
Closely associated with the banks both in point of time and in the personnel of their governing boards were the insurance companies. San- ford and Wadsworth opened an insurance office in Hartford in 1794.32 A firm known as the Hartford and New Haven Insurance Company, with a life of three years, started to insure on ships and merchandise the following year. John Caldwell, John Morgan, Wadsworth, Shipman, and Sanford were its leaders. In 1795 the Mutual Assurance Company of Norwich was founded. Two years later the New Haven Marine In- surance Company was incorporated with a capital of $50,000. The Nor- wich Marine Insurance Company was chartered in May, 1803, with a capital of $50,000 and the privilege of increasing to $100,000. In 1803 John Caldwell, Jonathan Brace and Ephraim Root founded the Middle- town Marine Insurance Company with $60,000 capital, to be increased to a maximum of $150,000. At the same time the Middletown Marine Insurance Company was established with a capital of from $60,000 to $100,000. In 1805 the Union Insurance Company of New London was given a charter with a capitalization of from $100,000 to $150,000. These were followed by the fire insurance companies, the Hartford Company being chartered in 1810 with a capital of $150,000, with the $250,000 limit. Among its directors were men like Nathaniel Terry, Nathaniel Patten, Thomas K. Brace, Henry Hudson and Daniel Wads- worth. The New Haven Company followed in 1813, with a capital of $200,000. Isaac Tomlinson, Titus Street and John Nicoll were among its trustees. Ebenezer and Jonathan Huntington, Elijah Hubbard, Joseph Alsop, and John R. Watkinson also procured a charter in this session
31 Mercury, Oct. 22, 1816.
32 This sketch of Hartford insurance companies down to the establishment of the Aetna in 1819 is based on the following: Statutes, pp. 407, 410, 416, 419; Public Laws, pp. 25, 113, 131; Pease and Niles, Gazetteer, p. 30; Caulkins, Norwich, p. 331; Field, Statistical Account, p. 41; George L. Clark, History of Connecticut, PP. 392 ff .; Forrest Morgan, Connecticut as a Colony and State, IV, 215 ff .; Fred- erick A. Betts, "Development of Connecticut Insurance," Conn. Mag., VII, 4 ff .; Woodward, Hartford Bank, pp. 90 ff .; and Woodward, Insurance in Connecticut.
74
CONNECTICUT IN TRANSITION: 1775-1818
for the Middletown Company with a capital of from $150,000 to $300,000.
This array of names and figures is appalling. It is, however, the only way to impress the reader with the vast change in Connecticut's finan- cial life in this brief period and with the growth of a rather limited capitalist class. It is not too much to say that the banking, marine and fire insurance companies were controlled by the same men. Nor is it a bold generalization to add that the status quo eminently satisfied this group.
2. Shipping and Carrying Trade
The impetus given the shipping business by the foreign wars and the opening of the West Indies to neutrals accounted in large part for the increase in wealth after 1789. Prior to this there had been little gain in shipping or commerce because of the inability to cope with foreign competition.33 Connecticut thrived under this stimulus; the Connecticut Valley and Sound towns became the centers of a prosperous trade. Ton- nage increased; agriculture was encouraged; and money became plenti- ful, for profits were large despite seizures and admiralty decisions. Men were convinced that the state's future wealth lay bound up in shipping, the sister industry of agriculture.
Connecticut schooners carried cider, butter, cheese, spirits, tinware, clocks, plows, and wagons to the South, especially to the port of Charleston. A few ships cleared direct for Europe from New London or New Haven with cargoes of grain, though this export business was generally done through New York. Numerous small vessels plied their trade with the West Indies, bringing cargoes of grain, butter, meat, vegetables, tobacco, cattle, horses and lumber from the northern states and returning with sugar and molasses to be made into rum. Never in the commonwealth's history had there been such a lucrative trade.34 An occasional ship found its way to the East Indies in the wake of John
33 William B. Weeden, Economic and Social History of New England, II, 757, 772, 828, 833.
34 Pease and Niles, Gazetteer, p. 13; Field, Haddam, p. 9; Caulkins, Norwich, PP. 307-308; Morse, Geography, p. 156; Courant, Jan. 28, 1817; Warden, Statistical Account, II, 29; Woodward, Hartford Bank, p. 26; Woodward, Insurance, PP. 3-5.
75
SHIPPING AND CARRYING TRADE
Morgan's Empress of China which in 1785 inaugurated American trade in Chinese waters.35 New Haven before the century's end had a South Sea fleet of twenty vessels, one of which, the Neptune, had circumnavi- gated the globe in a three-year cruise and brought back a cargo of tea, silk, and chinaware which netted profits of $240,000.36
In 1800 ship-builders from the Kennebec to the Hudson were laying more keels, it was reported, than ever before in a season. New Haven's three yards had built so rapidly that by this date the town had fully eleven thousand tons of shipping. Farmers were urged to increase their acreage and plant larger crops and raise more stock. As Governor Trumbull cautioned, the peace of Amiens caused a marked decline, but, fortunately for Connecticut shipping, it proved but a time-serving truce.37
In 1807 the Derby Fishing Company was organized with a capital- ization of $200,000, held by Derby and New Haven people. This com- pany owned several good ships which engaged in the Newfoundland fisheries and in carrying to Europe and the West Indies. For a time its success was astounding, but it soon floundered under the spell of evil days.38 New Haven, on the eve of the Non-Intercourse acts, was a busy shipping center, as many as a hundred foreign-bound vessels annually leaving its wharves. Duties on imports averaged about $150,000. Its Long Wharf was lined by shipping offices, rope-walks and commercial houses. Few were its citizens not directly or indirectly dependent on commerce. New London did a business not less important.39
Non-Intercourse and Embargo dealt hard blows to Connecticut ship- ping. Republicans suffered silently and patriotically, or loyally con- doned the measures taken by the national administration. The Federal- ists, however, continually became more bitter in their opposition and vigorous in their protests. Some saw a studied attempt to ruin New England's maritime wealth, with the intention of developing Republican sections of the country; others feared that in encouraging manufacture there would arise a capitalist class. The Connecticut Courant saw no need for the "dambargo," the avowed purpose of which was the preven- tion of a foreign power's impressing "foreign subjects, deserters, and
35 Woodward, Hartford Bank, p. 26.
36 Levermore, Government of New Haven, p. 24.
37 Ibid .; Mercury, Mar. 20, 1800; May 26, 1803.
38 New Haven Hist. Soc., Papers, III, 175 ff.
39 Ibid., I, 97 ff. III, 162 ff .; Dwight, Statistical Account, pp. 54 ff .; Starr, New London, p. 70.
76
CONNECTICUT IN TRANSITION: 1775-1818
renegades-Men who are never wanted on board American vessels; and who are taking the bread from the mouths of the native American sea- men." The Declaration of Independence, it was recalled, had com- plained of the cutting off of our trade with the rest of the world. Yet the embargo was far worse-"the little finger of Thomas Jefferson is heavier than the loins of George the Third." 40
Shipping was detained in the harbors, for even the coasting trade was stringently regulated. Whereas England blockaded France with squad- rons and France blockaded England by decrees, America's plan of em- bargoing itself was regarded as the most ludicrous as well as the most effective. New Haven alone had seventy-eight vessels embargoed in 1808.41 State exports fell from $1,625,000 in 1807 to $414,000 in 1808, rising to $769,000 in 1810. Duties in the four collection districts fell off similarly: New London, in 1807, paid into the national treasury about $203,000, in 1808, $98,000 and in 1810 only $23,000; New Haven fell from $158,000 in 1807 to $56,000 in 1809; Middletown from $85,000 in 1807 to $49,000 in 1810; and Fairfield from $21,000 in 1807 to only $2,000 in 1809.42
Naturally there was distress and widespread complaint. Farmers saw their markets cut off; merchants were in despair; sailors and shipwrights were idle; rope-walks were for sale. Grass was growing on the wharves, honest sailors were driven to clam-digging, sea-faring men were emi- grating to Canada. Canada, some feared, was being sent a half-century ahead. Yet it is doubtful if the situation was as depressing as Federalist memorialists would have the President believe.43 At any rate the New Haven Manifesto, which was sent around to the various towns, found responsive accord only in Derby, Danbury and Lyme, and a less hearty support in Meriden.44 Obviously the state could not have been on the verge of ruin.
The Embargo and Non-Intercourse acts were hardly raised when war was declared. Ships fell prey to British privateers. Carrying trade gave way to the hazardous but more profitable privateering. Peace came
40 See articles, "Farewell to the Ocean," "The Times," Courant, Apr. 27, May II, 1808; Jan. 13, May 4, 1808.
41 Levermore, Government of New Haven, p. 26; New Haven Hist. Soc., Papers, III, 167.
42 New Haven Address to the President of the Bank of U. S., pp. 12-16, 43, 44.
43 Courant, Jan. 13, Aug. 31, Dec. 28, 1808; May 9, 1810. For a less sombre, more patriotic view, see Mercury, May 26, Sept. 8, 15, 1808.
44 Infra, Chapter VI.
77
SHIPPING AND CARRYING TRADE
but brought no relief. Only the coast trader could face British competi- tion. Europe no longer depended on neutral carriers. The West-India trade was lost to America for a considerable period. No state suffered greater injury than Connecticut. New Haven's Long Wharf, which best represented the state's commercial greatness, followed the Union Wharf into a speedy decline. Marine insurance concerns failed. The Derby Fishing Company, the largest shipping concern, went bankrupt because of losses at sea by seizures, and because of the decline of busi- ness.45 These failures ushered in the hard times which were aggravated by speculative ship-building in 1815.46 Governor Smith in 1816 sorrow- fully reported that foreign ships were driving Connecticut vessels into dry-dock even when it came to carrying domestic products.47
Governor Smith blamed the convention with England, by which duties imposed on domestic and foreign tonnage were equalized. He would return to the earlier discriminating duties which so benefited American interests, arguing that the extension of the merchant marine should ever be a favorite national policy.48 He clearly represented the old interests and old capital of the state; but no number of Federalist memorials to Congress could prevent the change. A new era was usher- ing in manufactures as the chief pillar of the state's wealth.
45 Caulkins, Norwich, pp. 309, 330; Starr, New London, p. 70; Field, Haddam, p. 9; Woodward, Hartford Bank, pp. 34-35; New Haven Hist. Soc., Papers, I, 97- 99, III, 175.
46 While the tonnage statistics are unreliable, the following will show the obstinacy with which shipping men clung to their belief in the state's future on the sea. Middlesex County alone launched 7,500 tons in 1815. Figures for the state follow:
tons
1800
32,867
18II
45,000
1815
50,358
1816
1818
60,104 60,000
Field, Statistical Account, pp. 17, 128; Morse and Morse, Guide, p. 91; Morse, Geography, p. 166; Pease and Niles, Gazetteer, p. 14; Warden, Statistical Account, II, 29; Caulkins, Norwich, p. 309; New Haven Address (1816), pp. 12, 38.
47 Courant, Oct. 15, 1816.
48 Ibid., May 14, 1816.
78
CONNECTICUT IN TRANSITION: 1775-1818
3. Manufactures
The development of extensive manufacturing interests character- ized the state's economic history from 1800 to the end of our period. Manufactures were encouraged by the Non-Intercourse acts, the war and blockade, the tariff and, to a considerable extent, by national patri- otism. Yankee resourcefulness, adaptability and inventive genius assisted materially. The character of the country, affording cheap power and easy access to markets, proved advantageous. Again, the time was propitious. With commerce destroyed, capital invested in shipping turned to new ventures. There was a considerable accumulation of money which the banking system made available. Conditions were so favorable that manufactures were given a start by 1818 which foretold their future greatness.
The colonial period of manufacturing lasted until the turn of the nineteenth century.49 Political independence had but little effect, though possibly more than is generally suspected. The removal of the restric- tive measures gave some stimulus. The absence of a manufacturing boom can be accounted for by the lack of capital, the impossibility of launch- ing infant factories in the face of English competition, and scarcity of labor, a situation which was in no way neutralized by the invention of labor-saving devices.
While the state continued to be essentially agricultural, there was an increasing output of domestic manufactures.50 Tench Coxe reported a surplus of "Yankee notions" for export. Every village had its sawmill and gristmill operated by men whose time was shared in farming. Un- successful attempts to raise silk had been fathered by men like Ezra Stiles. Paper mills were established in Norwich, East Hartford, West- ville and Danbury. These mills produced annually by 1787 about $9,000
49 J. Leander Bishop ended his first volume of the History of American Manu- factures from 1608 to 1860 with the year 1800.
50 Weeden, Economic History, II, 855; Bishop, American Manufactures, I, 103, 131, 200, 205, 207, 213, 250, 360, 413, 417, 516, 520, II, ch. 1, 45, 75-76; Statutes, p. 421; Woodward, Hartford Bank, p. 27; Thorpe, North Haven, p. 164; Atkins, Middlefield, pp. 21-25; Gillespie, Meriden, pp. 214 ff .; Hall, Marlborough, p. 29; Goodwin, East Hartford, pp. 155-162; Barber, New Haven, p. 58; Timlow, South- ington, pp. 119, 422; Gilman, Norwich, p. 221; Pease and Niles, Gazetteer, pp. 56- 57; Allen, Enfield, I, 492; Jennings, Bristol, pp. 47-49; Baker, Montville, pp. 621 ff .; Hughes, East Haven, pp. 115 ff .; Church, Address, pp. 46-48; Atwater, Kent, p. 81; W. H. Pynchon, "Iron Mining in Connecticut," Conn. Mag. V, 22 ff.
79
MANUFACTURES
worth of paper. There were stocking looms at Colchester, Meriden and Norwich. A type-foundry at New Haven employed several men and boys. Colonel Wadsworth, encouraged by the Assembly, built a woolen factory at Hartford which furnished Washington the domestic woolens he is reputed to have worn on the occasion of his first address to Con- gress.51 Its annual output amounted to 5,000 yards at five dollars a yard. Norwich, Westville and East Hartford had cotton mills. Clocks were made at East Windsor, Bristol, and Norwich. An Irish tinsmith estab- lished the first American tinware factory at Berlin. The iron industry, known since the earliest days of the colony, was centered in Salisbury, Enfield, and Canaan. Slitting mills, iron-rod and nail machines, and forges were set up in increasing numbers. Powder mills were not un- known; and in 1798 Eli Whitney, defrauded of the profits of his cotton- gin, had contracted with the government to manufacture firearms. Nor must the state's most thriving business be forgotten, that of distilling rum.
These concerns were all small, employing a few men who were apt to give part of their time to agricultural work. There was no class of factory labor. Rural rather than town life was stimulated. The cities, imbued only with the importance of commerce, were not affected.52 In short, it was but the first step from the domestic to the factory system.
The introduction of merino sheep inaugurated the new epoch in Connecticut manufactures as well as in the woolen industry.53 Coarse cloths for local consumption continued to be made in the homes. Card- ing machines were installed at every crossroads to card the housewife's wool on shares or for seven or eight cents a pound. Domestic manufac- ture of woolens increased as it was encouraged by the conditions which gave rise to the woolen factories, these conditions being the scarcity and high price of woolens.
The Non-Intercourse acts and the Embargo prevented the importa- tion of fine English cloths. Prices of woolens rose at the very time Amer- ica was in the high pitch of the merino mania. Full-blooded sheep were becoming numerous; old flocks were improved and increased. Early attempts by merino enthusiasts to weave cloth of English quality were regarded as highly successful. Labor was unusually plentiful owing to
51 Bishop, American Manufactures, I, 418; Chester W. Wright, Wool-Growing and the Tariff, p. 12.
52 Swift, System of the Laws, II, 155.
53 Letter from Robert Livingston to a Southerner, Mercury, Aug. 15, 1811.
80
CONNECTICUT IN TRANSITION: 1775-1818
the depression in shipping and agriculture. Money was freer, with the opportunities for investment in shipping and agriculture lessened. Such were the conditions which gave rise to the Connecticut woolen industry.
By 1810 the woolen industry was fairly well established.54 The Re- publican party called for its support on the patriotic grounds that American manhood should be freed from the necessity of wearing a "foreign livery." The oncoming war clinched the point. All imports were embargoed, this time by the enemy country. Prices of fine cloths rose to nine and ten dollars a yard, and the demand for merino wool maintained a high price despite the great increase of the sheep herds. Woolen factories sprang up under the encouragement of such favorable conditions, without apparently injuring household manufactures. Rather more intense was the zest with which the spinning wheels of the hearth were turned.
Need help finding more records? Try our genealogical records directory which has more than 1 million sources to help you more easily locate the available records.