Rhode Island : three centuries of democracy, Vol. I, Part 67

Author: Carroll, Charles, author
Publication date: 1932
Publisher: New York : Lewis historical Pub. Co.
Number of Pages: 716

USA > Rhode Island > Rhode Island : three centuries of democracy, Vol. I > Part 67

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).

389

COMMERCE AND INDUSTRY-REHABILITATION

he should dispose of his goods for an article for which he has no use. View next the shop- keepers and country traders; they, too, must refuse it, because it will not satisfy the merchant who supplies them. The farmer cannot take it for his produce, because the merchants, shop- keepers and traders have no use for it. The mechanics and common laborers may close the scene, for they will neither be able to pass it for food or raiment." The petitioners regretted "the distresses of the times, which they conceive originated from the devastation of the late war and the heavy debt thereby incurred, as well as from the embarrassment of the trade of the United States in foreign countries, and some impolitic restraints among ourselves. To these causes may be added the almost total stoppage of the circulation of hard money, which adds a great artificial to some degree of real scarcity of that article, occasioned by the appre- hension of an emission of paper money." The petitioners suggested as measures for relief : "An addition to the impost, perhaps chiefly on specific articles to be enumerated-an excise on spirituous liquors and other luxuries-a tax on horses-laws to encourage the raising of wool and flax, for promoting our own manufactures, and for reviving industry and economy among all ranks of people." The appeal was effective only temporarily; the General Assem- bly rejected another bill proposing a "land bank" early in 1786.

Bounties were offered in 1786 to encourage raising hemp and flax, and sheep for wool, but repealed in 1787. An excise on a long list of articles was enacted as a revenue measure. Temporary relief for farmers was provided by the "tender act," which practically granted a moratorium of one year upon the tender of security for debts in the form of land and other assets at stated values. But the paper money party was not satisfied; it gathered strength as lines were drawn sharply on this significant economic issue.

PAPER MONEY PARTY WINS-In the spring election of 1786 the paper money party won a decisive victory at the polls and achieved control of the General Assembly. Governor Greene, who had opposed paper money vigorously, was defeated, and with him Deputy Gov- ernor Bowen. John Collins of Newport, was elected as Governor, and Daniel Owen of Glocester, a pronounced advocate of paper money, as Deputy Governor. Four of eight Assistants and more than half the Deputies elected were new. Barrington, Bristol, Newport, North Providence, Richmond and Westerly returned the same Deputies, but Charlestown, Cranston, Cumberland, East Greenwich, Exeter, Foster, Glocester, Johnston, Little Compton, North Kingstown, Portsmouth, Scituate, Smithfield, South Kingstown, West Greenwich and Warren sent entirely new delegations to the House of Deputies. The General Assembly elected four new of five justices of the Superior Court.

At the May session, immediately after completing the election, an act for emitting £ 100- 000 was passed. The bills of credit were to be loaned at four per cent. interest to freeholders upon the security of real estate of double the amount; interest was to be paid for seven years, and the loans were to be repaid into the treasury for sinking within another period of seven years, during which no interest was to be charged. To assure wide distribution, the issue was apportioned to freemen. The bills were legal tender for the payment of public and private debts, state taxes and the interest on loans. The excise act passed at the previous session was suspended, and the collection of a direct tax of £20,000 was postponed. The paper money advocates both had relieved themselves and their friends of the burden of taxes and had given them ready money with which to pay their debts and relieve themselves of interest charges-if they could find their creditors. "Beneficial, charitable and religious" corporations which had loaned endowment funds at moderate interest were protected from dissolution of their capital resources, should the paper money depreciate, by legislation prohibiting the tender of "gold, silver or any other species of money" in payment unless the debtor should be sued. The pro- jectors of the paper currency had foreseen a scramble to pay debts with the new currency, certainly as soon as depreciation started, which it did almost immediately. On July 1, 1786, six shillings of specie equalled nine shillings in paper in exchange value.

390

RHODE ISLAND-THREE CENTURIES OF DEMOCRACY

WHEN GREEK MEETS GREEK -- One must try to know Rhode Island and to understand Rhode Islanders, if he would appreciate the unique history of the state for five years following the emission of bills of credit in 1786. The economist who ignores other factors finds in the depreciation of paper currency, issued inadvisedly on slow assets as security, only the operation of economic laws, and in the frantic efforts of the majority in the General Assembly to stay depreciation and to force acceptance and circulation of paper currency evidence only of agrarian fanaticism-of folly in the saddle riding headlong to destruction. The men directing affairs in Rhode Island were not crazy fanatics. The honest business man is easily convinced that increasing the volume of money as a measure to relieve debtors is unsound in practice as it tends to instability, which generally is detrimental to sound commercial and credit relations ; creditors usually are honest business men, and the honest business men, the merchants and traders, of Rhode Island were united in opposition to paper money in 1786. The men direct- ing affairs considered the merchants selfish oppressors of the poor, using the law and the monetary system of the time for their own advantage; this accusation against the money- lending, credit-carrying class is as old as history. The moralist may find the manipulation of a monetary system in such manner as to favor either creditors or debtors wholly dishonest ; bimetallists in 1896 accused advocates of the single gold standard of persecuting the debtor classes, and themselves were accused of attempting to foist a "dishonest dollar" upon the United States. A church excommunicated one of its members and a member of the Society of Cincinnati was expelled, during the paper money controversy, for tender of paper cur- rency in payment of debts. The Society of Friends petitioned the General Assembly to repeal the tender and lodgment provisions of the forcing acts.

The economic, business and moral aspects of the paper money controversy in Rhode Island, 1786-1791, were important, but not controlling; one may not understand the situation who neglects its political aspects. A group, strongly cemented because of common economic inter- est, had gained control of the General Assembly, the government, and was attempting to use the lawmaking function for its own advantage; another group, equally harmonious because of common economic interest, interposed determined resistance. The party in political control saw its pet economic measure frustrated by active, concerted opposition, when quiet acquies- cence or submission might postpone disaster if it did not avert it. The opposition defied the government ; the government was intent upon sustaining itself and took measures accord- ingly. Rhode Island was close to civil war in 1786-1791. The farmers of Rhode Island were honest men; they interpreted the paper money law of 1786 as a measure permitting them to borrow money from their state, with which to pay their debts and for which they gave mort- gage security ; if the operation of the law stopped there, it might be no more mischievous than private bank credit. The merchants and traders, as honest men, refused to accept payment of accounts in a currency which they believed would depreciate, and cause serious economic dis- tress eventually.

What time the new paper currency might circulate at par with specie had the people of Rhode Island not been stubborn individuals who refused to let other people-even their own General Assembly-think for them, must remain a subject for conjecture. The actual beginning of depreciation was hastened, and the progress of depreciation was accelerated after it had begun, by the measures of resistance undertaken by the merchants and their associates, the town people of the seaports. They would have none of the new currency, neither by bor- rowing the shares of it to which they were entitled as freeholders, nor by accepting it in pay- ment of debts or as the money of exchange for sales of commodities. Creditors for the time being, instead of dunning debtors, avoided them, lest the new currency be tendered in payment of debts. Merchants preferred other company to that of persons suspected of having the new notes in their pockets. Shopkeepers closed their places of business lest customers offer the paper currency in payment. Those who borrowed the new notes from the state found them

391

COMMERCE AND INDUSTRY-REHABILITATION

only paper that nobody else wanted. What had been planned as an alleviation of the distress of the farmer left him worse off than before; he had increased his indebtedness by borrowing from the state and his commitment for interest, and the proceeds appeared to have little value.

A group of determined men was proving the folly of inflation and throwing the burden of costly experience upon those who had hoped to profit from it. Incidentally they were dem- onstrating also the impotency of the government itself. Smug defiance of authority was resented by the General Assembly quite as much as the checkmating of plans for economic readjustment. The several "forcing measures" enacted purposed discipline as well as support for the new currency. The payment of the state's public debt, in large part owed to the mer- chants and traders, in notes of the new issues might be construed as a penalty imposed upon the opposition for their defiance of authority; if the notes had become worthless, there was retribution in the use of them to pay those who had accomplished depreciation and made them worthless.

John Howland, sometimes garrulous in his relation of events, but always a keen observer, described conditions in Providence in 1786 as follows :

It was determined to turn out those who had carried us successfully through the war of the revolution, and place others in their room who were opposed to the payment of debts. This took place at the May election. . . . A large batch of paper money was emitted, and made a lawful tender. If a creditor refused to take it and cancel the debt, the debtor had only to deposit the bills in the state treasury, and the debt was declared void. This was done in many instances. But another difficulty arose. The paper money party, as they were called, who wanted to purchase goods from the shops could not induce the shopkeepers to trade. To remedy this, the Assembly passed an act that any person who had articles of any description to sell, and refused to take the paper money at par should pay a fine of £100. The person offering the paper was to state the refusal to a judge of the court, who had authority to decide without jury, and order the penalty paid. On the passage of this, which was called the penal law, all the shops in town were shut up. The market house was closed. The country people brought nothing in to sell, though they were all paper money men. They came in to buy, but found nothing for sale. Paper money would not purchase a dinner. People dodged out of the way when a debtor appeared in sight, for fear of a tender of paper to cancel the debt. One day, three or four of us, neighbors, were standing in front of Elisha Brown's shop, when all the shops were closed. Judge Thompson,* who lived opposite, came out and asked Brown why he kept his shop shut. He wanted to go in for some necessary things. Brown replied that, as the law stood, he dare not open it. It would not do for him to sell for paper money, as he could not buy anything with it, and if he refused to take it he must pay £100, which he could not afford. The judge said, "Neighbor Brown, I tell you open your shop. I will insure you against any penalty." Brown quickly replied, "Will you, Judge?" "Yes," answered the judge, "open the shop." Mr. Brown took the key from his pocket and opened the door. The judge entered and bought what he wanted. Brown then put his goods out as usual. This, for several days, was the only shop opened in town.

Howland continued, relating an offer to purchase a jackknife and the tender of paper money for it, refusal and the entry of a complaint according to law. When time for trial came "the judge took his great chair at the end of the table, and the case was opened." Counsel for the defence argued "against the constitutionality of the law. He contended that no man could be deprived of his property, or life, without a trial by a jury of his peers. . ... When the attorneys had ceased, the judge arose. He said : 'The honor and dignity of the state must not be violated. The laws must be respected. The character of the state required it. If the people thought the laws were not good, they had the power, at the next election, to put in other men to alter them. In the present case, a great deal had been said about constitutions and bills of rights and other things; the court will take time to consider. Adjourn the court to next Monday.'" At the adjourned session counsel repeated and reinforced their arguments, and the judge again took time to consider, and adjourned court for another week. At the time for the third session of the court, the judge was reported by his servant as gone to look for a

*Ebenezer Thompson, Chief Justice of the Court o Common Pleas for Providence County.

392

RHODE ISLAND -- THREE CENTURIES OF DEMOCRACY

lost cow, "and thus ended the great and important case of the jackknife. . ... The shops were no longer closed. The paper money passed with those who chose to take it, at five for one, and it was eventually sunk by an act of the Assembly in paying the state tax at one silver dollar in lieu of fifteen in paper." Such flaunting of law constrained the determined men in the General Assembly to adopt coercive measures.

THEN COMES A TUG-OF-WAR-Depreciation had begun almost as soon as the new cur- rency was printed. The law had been in operation scarcely a month, when the General Assem- bly, at the June session, 1786, attempted to arrest depreciation by making refusal to accept the new currency at par value in payment of accounts or discrimination betwixt it and specie an offence punishable by fine and loss of the rights and privileges of freemanship. The "tender act" of March was repealed, as no longer necessary for the protection of debtors. The tax postponed in May, and another of equal amount were levied. In face of the threatened forc- ing measure, and its drastic penalties, business was discontinued, and shops and stores were closed. Farmers retaliated by undertaking to starve the inhabitants of the commercial towns by withholding their produce from market. They were accused of hauling their produce beyond the borders of the state to sell for "real money," and of entering Rhode Island com- mercial centres to buy only with paper money. Providence was reduced to such distress because of shortage of food that a town meeting on July 24 ordered the purchase of corn in Connecticut, and distribution of it to the inhabitants by the town council. The town meet- ing also urged opening shops for barter with farmers who could be induced to haul their pro- duce to town. There was rioting at Newport with the purpose of forcing grain dealers to sell corn for paper money. Providence County farmers met at Scituate on August 10, to consider reprisals against the town people, but adjourned to meet in state convention at East Greenwich on August 22. Sixteen towns were represented at East Greenwich, including Providence, which sent a delegation to urge conciliation. The convention rejected overtures and voted to support the General Assembly's policy and measures.

The Assembly met at Newport on August 22, in special session called by the Governor. To strengthen the credit of the new currency, the General Treasurer was ordered to receive the bills in payment of arrears of continental taxes, and new and novel court procedure was established as a measure for enforcing acceptance of the new bills at par. Resolving that "it is an established maxim in legislation, and ought to be strictly and most punctually adhered to in all wise governments, that process upon the breach of penal laws be immediate, and the penalty be inflicted or exacted directly consequent upon conviction," and that "the usual and stated methods and times of holding court within this state are impracticable, inexpedient and inapplicable to the true intent and meaning" of the act to emit paper currency, and "alto- gether insufficient to carry into effect the good purposes of this legislature touching the same," the General Assembly ordered the issue of summons by any judge of the Superior Court or of the courts of common pleas for immediate appearance, and trial by the court, also specially summoned, three judges being a quorum, without a jury, and without appeal. If effective and enforceable the legislation up to this stage in the episode compelled a creditor to receive and accept payment of his accounts in bills of the new issue, and compelled merchants and tradesmen to sell commodities for bills of the new issue, on penalty, for refusal, of immediate arrest, trial without jury, and fine or imprisonment. Another farmers' convention met at Smithfield on September 13 to consider other measures, which included outlining a plan for placing the state of Rhode Island directly in business as an importer and exporter, thus to replace the merchants, and a cooperative plan for state marketing and buying.

TREVETT VS. WEEDEN-The first effective pause in the agrarian movement occurred when John Weeden, butcher, of Newport, refused to sell meat to John Trevett, also of Newport, who tendered new paper money in payment. Weeden was summoned to appear before the

393

COMMERCE AND INDUSTRY-REHABILITATION

Superior Court under the procedure outlined by the General Assembly in the act of August, 1786, and the case was tried before the full panel of five justices on September 25, 1786. Weeden's attorney filed a plea denying the Superior Court's jurisdiction, and the case came on to be heard on arguments of counsel, including Henry Goodwin, for the complainant, and James M. Varnum and Henry Marchant, for the defendant. Goodwin asserted the supreme legislative authority of the General Assembly as unrestricted, there being no bill of rights in force in Rhode Island. Varnum argued that the legislation was unconstitutional as a viola- tion of common rights, besides sustaining the pleas that the statute had expired and that the Superior Court was not the tribunal designated by the act for trying cases brought under its provisions. The case of Trevett vs. Weeden attracted unusual attention at the time, and is still cited frequently as the earliest precedent for the doctrine of judicial review developed subsequently by Chief Justice Marshall of the Supreme Court of the United States, and now accepted generally as fundamental to the principle of an independent judiciary. The Superior Court actually dismissed the case of Trevett vs. Weeden for want of jurisdiction with the words: "The said complaint does not come under the cognizance of the justices here present." The plea to the jurisdiction of the court, on which the trial proceeded, alleged ( 1) that the act under which the complaint was brought had expired; (2) that the jurisdiction lay in special courts, not in the Superior Court ; and (3) that denial of trial by jury rendered the act uncon- stitutional. The first allegation was supported by the sixth section of the act, which could be construed, because of an error in drafting, as limiting the special process "until the expira- tion of ten days after the rising of the Assembly"; the second by construction that, whereas process for summoning defendant and judges might be issued by a justice of any court, trial jurisdiction actually lay with the court of common pleas for the county and not with the Superior Court exercising appellate jurisdiction generally. The "Newport Mercury," report- ing the trial, quoted the judges as declaring, in their discussion of the matter in open court before decision, "the penal law to be repugnant and unconstitutional," and of noting repug- nancy in the provision for procedure "without trial by jury .... according to the laws of the land." The General Assembly construed the decision as a declaration of unconstitution- ality ; at a special session, October 2, it was resolved, "whereas it appears that the honorable justices of the Superior Court . ... at the last September term of the said court, in the county of Newport, have by a judgment of the said court, declared and adjudged an act of the supreme legislature of this state to be unconstitutional, and so absolutely void; and whereas, it is suggested that the aforesaid judgment is unprecedented in this state, and may tend directly to abolish the legislative authority thereof," to order "all the justices of the said court . . to give their immediate attendance on this Assembly, to assign the reasons and grounds of the aforesaid judgment. . Three of the judges appeared before the General Assembly at the session in Providence opening on the last Monday in October, with the record of the case, and were "fully heard" by the Assembly, which voted "that no satisfactory reasons have been rendered by them for their judgment on the foregoing information ... .; and that as the judges . . . are not charged with criminality in giving judgment upon the information, John Trevett vs. Weeden, they are therefore discharged from any further attend- ance on that account." David Howell, one of the justices, argued before the Assembly that the court was not accountable to the General Assembly for its decisions, and his associates, Joseph Hazard and Thomas Tillinghast, concurred. Four of the five justices, all except Chief Justice Mumford, who had issued the summons in the case of Trevett vs. Weeden, were not reelected in May, 1787.

If the legislature had not been chastened by the decision in Trevett vs. Weeden, it had become more cautious. Early in October, 1786, the draft of an act entitled "An act to stim- ulate and give efficacy to the paper bills emitted by this state in May last" was ordered

394

RHODE ISLAND-THREE CENTURIES OF DEMOCRACY

referred to the town meetings for discussion and instruction to their Deputies. This bill, called the "test act," would exclude from political rights, including suffrage, office holding and testifying in court procedure, all persons who did not take a solemn engagement to endeavor to maintain the paper money at par with specie, and not to sell or offer for sale any article at a lower price for specie than for paper. The opposition to this measure, as might be expected in Rhode Island, where test oaths never had been popular, was almost statewide, and the bill was rejected at the late October session. Resolutions against the bill adopted by the Providence town meeting included such declarations as these: "The representative body are not authorized to ascertain the value of the property of individuals and to decide on what terms, excepting by equal taxation, they shall part with it. In that case there could be no private property, but all property would, in fact, be a joint stock and the property of the rep- resentative body; the idea of private ownership being done away. ... Barter was the first mode of exchanging property, and the moment a man is deprived of his right to barter, or to sell for silver only, or for gold only, or for paper only, or for any other description of what he may deem an equivalent, and on his own terms, that moment he becomes a slave. . . . Any measure, however unjust or romantic, . ... might be fortified by the party in power with a test act, and all those who refused to comply therewith disfranchised. Even a minority . . might in this way perpetuate their measures and hold their seats against the voice of the great bulk of the people. What are our liberties if we are to be deprived of them in this way?" The General Assembly voted to raise 120 soldiers pursuant to a requisition by Congress "for the service of the United States against the wars and depredations of their enemies that have commenced or may be commenced." Ostensibly for service against the Indians, the real pur- pose of the raising of an army at the time was the suppression of Shays' rebellion in Massa- chusetts, which collapsed before the enlistment had been completed. Rhode Island ignored a request for extradition of some of the leaders, who escaped punishment in Massachusetts by flight into Rhode Island; the General Assembly voted down a resolution directing the Gov- ernor to issue a proclamation for the arrest of the fugitives. While the action of Governor and Assembly on this matter might be interpreted as reflecting sympathy with the Shays movement, refusal of extradition might be justified on the ground that the offences of the fug- itives were political rather than criminal.

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.

Rhode Island : three centuries of democracy, Vol. I, Part 67

Author: Carroll, Charles, author Publication date: 1932 Publisher: New York : Lewis historical Pub. Co. Number of Pages: 716

Author: Carroll, Charles, author
Publication date: 1932
Publisher: New York : Lewis historical Pub. Co.
Number of Pages: 716