USA > New York > New York City > New York city and vicinity during the war of 1812-15, being a military, civic and financial local history of that period, Vol. II > Part 25
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 | Part 33 | Part 34 | Part 35
CHAPTER XLVII. .
National Financial Condition-Loans Obtained at Great Dis- count on United States Securities-More United States Treasury Notes Issued-Paper Money Abundant-High Prices-Banks Loan the Government-National Direct Taxes Increased-Quota for New York City.
HE financial outlook for the continuance of the war was never more discourag- ing. · The situation up to September, 1814, has already been shown in a previous chapter (ante, pp. 269-277).
The true financial situation was studiously kept from the people as much as possible. This led the people and capital- ists to be all the more wary and cautious, and the Government had to pay dearly for it when loans were sought or its obligations offered.
No offers were made to take any part of the six million loan previous to the capture of Washington, as already stated in a previous chapter.
A part of this six million loan was subsequently offered to be taken at eighty per cent a few days be- fore the suspension of specie payment, and after- wards some of it was taken in the depreciated paper
402
LOCAL CURRENCY.
currency of the suspended banks, so that the Gov- ernment realized much below eighty per cent in cur- rency for the stock.
Specie was offered for the loan below sixty-five per cent after suspension of specie payment, but was rejected by the Secretary of the Treasury.
After the Cabinet ministers had returned to Wash- ington, in September, they opened a new negotia- tion for the six million loan, and it was made by accepting the depreciated bank bills and Treasury notes which had also greatly depreciated, and from that time all loans were offered or accepted by speci- fying the particular locality of the bank whose bills were offered. It was called local currency, and the discount varied according to the locality of the banks ; that is, New York, Philadelphia, Baltimore and the Western banks had each a price .* The
*Previous to the adoption of Federal money in 1785, money accounts in the United States were kept in pounds, shillings, pence and farthings, En- glish currency. Local currency differed from it.
At the time Federal currency was adopted the Colonial currency or bills of credits, issued by the colonies, had more or less depreciated in value : that is, a Colonial pound was worth less than a pound sterling ; a Colonial shilling than a shilling sterling, etc .; this depreciation being greater in some colonies than in others gave rise to the differ- ent values of the State currencies.
A pound was nominally twenty shillings, but the shillings were of much less value than an English shilling. The number of Colonial pence that made a Colonial shilling also greatly varied. It then took more (New) York shillings to make an American
403
LOCAL CURRENCY.
New England banks used exclusively the bills of the suspended banks and made loans in that cur- rency only.
Some of the banks of New York city continued to make loans to the United States Government
dollar and more (New) York pence to make a dollar than it did in many of the other colonies. Taking the Federal dollar as a standard it was as follows :
In New York, North Carolina, Ohio and Michi- gan eight shillings made one dollar, and as twenty shillings made a pound it was theu worth only $2.50 ; while in English currency a pound was worth about five dollars ($4.84).
A Federal cent, or one-hundredth part of a dollar, in New York currency was called a penny or pence because it took twelve and one-half of them to make a Colonial York shilling.
The fractional part of a shilling was called pence and penny as in English currency, while relatively it varied greatly in value from it and also in the different colonies.
A pound of twenty shillings in New England cur- rency would be of more value than a (New) York pound because the shillings were of more value.
All arithmetics taught in American schools prior to the civil war and the adoption of the national bank currency in 1863 contained a part called " Reduction of Currencies," which specially treated of the differences of money. The following table is taken from Adams' Arithmetic, published in 1827 :
In New England currency, Virginia, Kentucky, Tennessee, Indiana, Illinois, Missouri and Missis- sippi, 6s. make $1.
In Pennsylvania currency, New Jersey, Delaware and Maryland, 7s. 6d. make $1.
In Georgia currency, and South Carolina, 4s. Sd. make $1.
In Canada currency and Nova Scotia, 5s. make $1.
404
LOANS BY JACOB BARKER.
and to others as usual, but in paper currency, after their suspension of specie payment.
It was on account of this six million loan that Mr. Jacob Barker subsequently claimed that he should be allowed a further discount, as a large part of that loan was afterwards taken at a much larger discount than he was allowed on the twenty-five million loan.
The rate of the parts of the $25,000,000 loan called the ten million and the sixteen million loan under act of 24th March, 1814, was as follows : $15,366,- 111.21, at 80 per cent ; $165,658.82, at 85 per cent ; $47,627.79, at 902 per cent, and $82,420.72, at 90} per cent.
The following letter contained the proposal of Mr. Barker :
" WASHINGTON, 4th Mo., 30th, 1814.
" Respected Friend :- I will loan to the Govern- ment of the United States five millions of dollars, receiving one hundred dollars six per cent stock for each eighty-eight dollars paid ; and will pay the money in the proportions and at the periods men- tioned in thy advertisement of the 4th April, to their credit in such banks in the United States as may be agreeable to thee.
"On the payment of each installment, and satis- factory assurances for the payment of the others, funded stock to be issued. It being understood and agreed that if terms more favorable to the loaners be allowed for any part of the twenty-five millions authorized to be borrowed the present year, the same terms are to be extended to this contract. The
.
405
JACOB BARKER'S CLAIM.
commission of one-quarter of one per cent men- tioned in thy advertisement to be allowed me on the amount loaned.
" With great respect and esteem, "I am thy assured friend, "JACOB BARKER. " To Hon. GEORGE W. CAMPBELL,
"Secretary of the Treasury."
This offer of Mr. Barker was accepted in writing on 2d May, 1814. He had made several other offers and propositions, and had various schemes and plans that he thought would help the Government in obtaining the loan and be to its financial advan- tage, but he never neglected to look out for his own advantage and profit in them all.
The sums offered for the ten millions loan amounted to $11,900, 806, of which $2,671, 750 were at rates less than eighty-eight per cent, and $1,183, - 400 at rates less than eighty-five per cent. The market price of Government stock in New York at that time was eighty-five per cent.
The following offers by residents of New York City were rejected as being too low :
Henry Escher (at seventy-six), $150,000.
Joseph Dederer (at eighty-five), $25,000.
Whitehead Fish (at eighty), $25,000.
The rate of interest in New York State at that time (May) was seven per cent.
The whole subject of Mr. Barker's claim came up before Congress from time to time, and the last was not until February 25, 1855, when a report of the Judiciary Committee in favor of a bill for the
406
U. S. TREASURY NOTES.
relief of Jacob Barker's assignees, Messrs. R. R. Ward, Fitz-Green Halleck and Jacob Little, was authorized to be prepared, when a law was passed by Congress establishing the Court of Claims, under which this claim and many others before the House were transferred to it by resolution of the House.
This claim was subsequently reported adversely, ten per cent having been given to Mr. Barker in 1814.%
The loan of May, 1814, having been made at the rate of one hundred dollars in stock for eighty-eight dollars in money, and the loan of August, 1814, hav- ing been made at the rate of one hundred dollars in stock for eighty dollars in money, the amount of additional stocks which the holders of the stock of the May loan were entitled to and did receive ten dollars in every hundred dollars of stock they held. This additional bore interest from the date of the original stock.
The accounts of the Treasury Department showed that there was outstanding $10,649,800 Treasury notes on September 30, 1814, nearly one-half of which would become due before January 1, 1815, and the balance before July, 1815.
These notes were all issued under the act of 24th March for the twenty- five million loan. t
*See Report on Claim of R. R. Ward et al. (Jacob Barker's claim), December 18th, 1860. No. 258, 36th Congress, 2d Session, Vol. I, pp. 372, 377, 390, 414, 456.
1 On 1st January, 1811, the banking operations within the States were as follows :
CAPITAL.
BILLS. $5,400,000
Bank of United States ... $10,000,000 88 State Banks. . . . .. . ,. ... 42,610,601
22,700,000
SPECIE. $5,800,000 9,600,000
407
PAPER CURRENCY.
Few banks at that time were obliged to make any report of their condition, and it is, therefore, almost impossible to ascertain the amount of bills in circu- lation at any given period. Many of the State banks, particularly in the Middle States, made large loans to the Government, and this was done princi- pally in bills of their own in exchange for United · States stocks and Treasury notes. This greatly augmented the currency. The issues of these banks must have greatly increased from that caus ?.
Mr. Crawford, while Secretary of the Treasury in 1820, estimated the paper circulation in 1813 at about $62,000,000, and the specie circulation at about $8,000,000, exclusive of United States Treas- ury notes. In 1816 the former at $90,000,000 and specie at $11,000,000. In November, 1813, Mr. Jefferson estimated the circulation at $200,000,000.
Mr. Gallatin gives the circulation of 208 State banks in 1815 at $45,500,000 in bills and $17,000,000 in specie in bank vaults.
The amount of Treasury notes in circulation in March, 1815, was $18,452,000.
Many banks had refused from the first to receive, credit, re-issue or circulate the United States Treas- ury notes in deposits or in payments to and from the bank. Among them were the following named banks in New York city : Bank of New York, New York Manufacturing Co. (Phoenix Bank), Bank of America, Union Bank, Merchants' Bank.
Bank bills were received for dues to the Govern- ment.
On 15th June, 1815, the Treasury Department
408
NEW LOAN OFFERED.
issued a notice " that on the 1st day of August next instructions would be issued forbidding the collect- ors of duties on imports and tonnage, the collectors of the internal duties and taxes, and the receivers of all public dues whatsoever, to receive in payment of such duties, taxes and dues the bank notes of any bank which does not on demand pay its own notes in gold and silver, and, at the same time, refuses to receive, credit, re-issue and circulate the Treasury notes emitted upon the faith and security of the United States in deposits or in payments to or from the bank in the same manner and with the like effect as cash or its own bank notes."
The said banks in New York city refused to accede to the proposition of the Treasury Depart- ment, and their notes were prohibited from being received for any dues to the United States.
Instead of continuing to borrow under the twenty . five million law (not one-half of the loan had been taken) a new law was passed by Congress on 15th November, 1814, authorizing a loan of three million dollars, limiting it to the precise purposes of the twenty-five million loan, with authority to receive in payment Treasury notes or approved bank notes, and authorizing the banks of the District of Colum- bia to lend any part of this sum.
The law also required the Secretary of the Treasury to lay before Congress an account of all the moneys obtained by the sale of the United States stock, with the statement of the rate at which the same may have been sold.
This was called temporary loans.
409
TEMPORARY LOANS.
Temporary loans in local currency made to the United States Government under act of 15th Novem- ber, 1814, by New York banks :
Manhattan Company. $200,000, 7 per cent
Mechanics' Bank
200,000, 7
City Bank.
200,000, 7 66
City Bank.
75,000, 6
Mechanics' Bank.
75,000, 6
Manhattan Company
75,000, 6
Bank of America.
75,000, 6
Total
$900,000
On 26th December, 1814, an act was passed au- thorizing the issuing of $7,500,000 of Treasury notes in place of portions of the loans authorized on 24th March and 15th November of that year, not already placed, and $3,000,000 more for expenses of the War Department. These notes were similar to those under the act of 1813, and a portion were of denominations of twenties and fifties, and none for a less sum. Under this act $8, 318,400 were issued.
It had long been the custom of banks not to issue · bills for less than five dollars. The withdrawal of specie for small change had induced the issuing of fractional parts of a dollar for convenience. In De- cember the banks in New York issued bills of $1, $1.12 1-2, $1.25, $1.50, etc., for convenience of trade, but had no bills for less than one dollar.
One of the features of the times was the adver- tisement of G. & R. Waite, booksellers and sta. tioners, at 64 Maiden lane, New York, that United States Treasury notes would be taken at par in ex-
410
EFFECT OF PAPER CURRENCY.
change for lottery tickets. Lotteries were not illegal in New York State at that time.
The great volume of paper currency caused high prices for all kinds of merchandise. In his "Recol- lections of a Lifetime," Mr. S. G. Goodrich says :
"At this period all kinds of British merchandise had become very scarce, and many had entirely vanished from the market. There was a small sup- ply of certain articles, from time to time, furnished by the vessels captured by our ships and privateers, and some convenient and necessary goods were smuggled in from Canada. There was, in fact, a large amount of money, and this was all specie, sent to the British Provinces for pins, needles, jewelry, laces, muslins, cambrics, chintzes, silks, sewing silks, buttons, etc. These merchandises were so costly that a man would frequently carry the value of a thousand dollars in a pair of saddlebags, some- times on his shoulder, sometimes on horseback. The life of the smuggler along the line at this period was one of danger and adventure.
"In some instances persons laid the foundations of future fortunes in this illicit traffic. I recollect very well the prices at which we sold some of these articles. Calico, now (1856) twelve and one-half cents, readily brought seventy-five cents the yard ; cotton cambrics, now twenty cents, then a dollar ; linen handkerchiefs, now fifty cents, then two dol- lars ; fine broadcloth, now five dollars, then twelve or fifteen dollars. The average prices of British goods at retail were about four times what they are now (1856).
411
EFFECT OF PAPER CURRENCY.
" Domestic products were enormously dear ; flour at one time eighteen dollars a barrel in Boston.
"I remember perfectly well the universal state of anxiety and depression which prevailed in New England at this time. The acts of government, the movements of fleets and armies, furnish no idea of the condition of society in its daily life. Let me give you a few items as indications of the embar- rassments, vexations and privations which the war had brought unto every man's house and home. Such a thing as silver or gold money was almost un- known. The chief circulation consisted of bills of suspended banks or what were called 'facilities,' that is, bank notes authorized by the Legislature of Connecticut, redeemable in three years after the war. These were at fifteen to twenty-five per cent discount compared with specie. Banks issued notes of fifty, twenty-five and twelve and a half cents. Barbers put out bills payable in shaving, and va- rious institutions adopted a similar course. The whole mass acquired the title of 'rag money,' 'shin- plasters,' etc. A large portion of it was notoriously worthless, either as being counterfeit or issued by irresponsible parties, yet it generally passed without scrutiny. I recollect a person at a turnpike gate offered a five-dollar bank note and received in change a large greasy wad of bills of various names, hues and designs. He glanced at it, and said to the keeper : ' Why, half of this is counterfeit !' 'I know it,' was the reply, 'but it passes just as well as any other.'
412
U. S. DIRECT TAX.
" A specie bank bill was almost an object of wor- ship. The New England banks continued to pay specie, but their notes were rare. The bills of sus- pended banks of the Middle States and 'facilities ' constituted the chief money in circulation. An anecdote will illustrate this. In our city of H -- there was a shrewd man and a greedy man, who had some dealings with each other about these days, when the following scene occurred :
"Shrewd Man-Do you recollect giving me a ten- dollar bill in change yesterday, Mr. C. ?
"Greedy Man-No, I don't ; why do you ask ?
"S. M .- Well, I found a specie bill of ten dollars in my purse, and I thought perhaps I might have re- ceived it of you. You remember I was only en- titled to a facility and not to a specie bill ?
"G. M .- Well, I dare say you had it of me-let me see it.
"S. M .- There it is.
"G. M .- Oh, yes ; I recollect it perfectly. I'll take it and give you a facility. There !
"S. M .- Are you sure, Mr. C., that you gave me that specie bill ?
"G. M .- Certainly, certainly ! I recollect it dis- tinctly.
"S. M .- Well, I am glad you are sure, for they tell me the specie bill is counterfeit !"
On the 22d December, 1814, Congress passed an act laying a direct tax of six millions, apportioned among the States, upon the same property as that of 1813. The quota for New York State was $860, - 282 ; of this, $177,410.68 was upon the city of New .York.
413
ASSESSMENTS IN NEW YORK CITY.
By the valuation of lands, lots with their improve- ments, dwelling houses and slaves for the year 1815, as revised and settled by the State Board of United States Assessors, New York City and County was valued at $56,320,852, and the City quota of United States direct tax, viz., $177,410.68, was at the rate of $3.15 on each thousand dollars of valuation. The State quota under the law of 1813 was $420,141.
The city quota for 1813 was $109,230 for the three million direct tax.
Personal property was not taxed by the United States direct tax. This induced many rich men to invest in Government stocks and other personal property. The city tax, however, was upon real and personal property, and all stocks, etc., were taxable in the hands of the holders. The names of all per- sons in the city of New York, in 1815, that were assessed for $5,000 and over on personal property can be found in the appendix to this volume.
.
CHAPTER XLVIII.
State and City Financial Condition-Loan by the City to United States on Treasury Notes Guaranteed by Governor Tompkins- State Militia Paid Off-City Banks Loan to Pay New Jersey Militia-Governor Tompkins' Patriotie Action-Martin Van Buren on Governor Tompkins-Government Suit Against Him -His Vindication by a Jury and by Congress-Repaid by the National Government-What New York city should do.
HE State and city finances were in much better condition than were those of the nation.
The State had obtained no loans for the purpose of defence, but only made appropriations of specific sums for specific purposes.
On the 22d October, 1814, a State law was passed compelling the Bank of America and the City Bank in New York city to advance to the order of the State Comptroller the amount they were bound to loan under their charter.
On the 24th October a State law was passed authorizing the State to repay the money advanced for purchase of arms for the defence of New York city.
No appropriation had been made for the payment
.
415
PAYMENT OF MILITIA.
of the militia that served in the defence of New York city during the Summer and Fall of 1814. How was this to be done? Their term of service had expired and they were in need of their pay.
The corporation had obtained a loan of one million dollars for the defence of the city (Ante, p. 239), and placed it in the hands of the Committee of Defence, and it was in the hands of T. R. Mercein, treasurer of the committee. An application was made to obtain some of this money from the city for that purpose. It came up before the Common Council. On the 23d December a resolution to loan the United States $400,000 on United States Treasury notes for six months was passed by eleven yeas. There were seven nays and three members not vot- ing (absent).
This loan was also guaranteed by the personal liability of Governor Tompkins. The sum of $400,- 000 was advanced by the city.
In a speech in the New York State Senate in 1820 by Martin Van Buren (afterwards President of the United States) it appears that Governor Tompkins had obtained loans for the use of the State militia upon United States Treasury notes by making him- self expressly personally liable for the loans as fol- lows :
Manhattan Company, Bank of America, New York State Bank, Farmers' and Mechanics' Bank of Albany, City Bank of New York ; Corporation of New York, in 1814, one of $400,000, and another of $100.000, with a certificate of T. R. Smith, secretary of the Committee of Defence, that said loans were
416
GOV. TOMPKINS' ACTION.
made upon the promise and that Governor Tomp- kins had made himself personally responsible by indorsing the Treasury notes which were given for said loans. This last loan was for the payment of the New Jersey militia in service in the defence of New York.
The Bank of America loaned in December, 1814, $150,000 to Governor Tompkins for public purposes, on $165,000 United States Treasury notes, which the bank was authorized to sell at par. The Treas- ury notes were sold in 1815 and the proceeds were deposited to the credit of the United States Govern- ment. The bank received one-eighth per cent on the loan and other great advantages from the Gov. ernment. At least one third of the deposits of the United States were made there.
In regard to the loans in New York city, Mr. Van Buren said :
" Look sir, at the state of the country and of the city of New York in particular, when the loans from the Bank of America and the other public bodies in that city were obtained, and reflect on the uses to which they were appropriated ! The capitol of the nation had been laid in ashes by a ruthless foe, and the heads of our government driven from their oc- cupations by his victorious arms ; Baltimore had been saved by a providential interposition ; your frontiers were threatened in all directions ; large hostile armaments were known to be on the ocean, and New York believed by every one to be the des- tined scene of their operations ; the invasion of that was hourly expected. To meet this perilous crisis,
417
MARTIN VAN BUREN'S STATEMENT.
Governor Tompkins had declined the honor and the comparative ease of the 'Department of State, ten- dered to him by the President. He called from vari- ous and remote parts of the State its best blood and its noblest spirits for the defence of New York. He contributed the advantage of his well-deserved pop- ularity and favor with the militia, and took upon him- self the actual command. But to give the deepest shade to the gloomy aspect of our affairs, and add to the difficulty of their redemption, the National Government was literally penniless. Kept without pay and deprived even of the means to obtain sup- plies, discontent and murmurs pervaded the camp- discontents which even the warmth of their attach- ment to their chief could not subdue. At this critical moment he applied for these loans, and offered to deposit with these banks the most valu- able securities of the Government to amounts larger than the loans which were asked-securities which would only fail with the Government itself, but "tell it not in Gath, publish it not in the streets of Askalon," that under such circumstances like these, when the city of their fathers was threatened with destruction, and the ashes of these fathers exposed to indignity-when the venerable institu- tions, the monuments of the arts and the proud improvements of ages were exposed to the hand of violence and the torch of the incendiary-when the excesses of Hampton and of Havre de Grace were staring them in the face and their wives and daughters were to be protected from pollution, - at such a time, sir, so eminently calculated to rouse
418
PAYMENT OF NEW JERSEY MILITIA.
into action the strongest feelings of their nature, these loans were refused, unless this individual, who was as it were a stranger in their city, would bind his body and his estate for their payment ? They would not trust the Government of their country unless he would give his bond for its solvency ! He did it, and the danger passed by."
The money obtained from the two Albany banks was for the supplies of the army at Sackett's Har- bor.
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.