Rhode Island : three centuries of democracy, Vol. I, Part 68

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 68

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).

DRASTIC FORCE MEASURES-The Assembly returned in December to the problem of making the paper money act effective; it had been found that judges were reluctant to issue citation to creditors who refused to accept tender of payment in the new notes; the act was amended in such manner as to permit payment into the hands of a justice, which on notice to the creditor was made effective as a release, with forfeiture the penalty for neglect to accept the deposit within a stated time. At the same session, however, the earlier forcing legisla- tion, which was considered non-enforceable because of the decision in Trevett vs. Weeden, was repealed. The Assembly shortened the period in the statute of limitations to two years, as a measure to coerce creditors to sue and receive judgment in the new currency ; and ordered suits on promissory notes, whether negotiable or otherwise, brought only in the name of the payee, thus practically repealing the law merchant. The latter legislation had the effect of permitting the pleading of defences valid against the payee but not valid against holders for value in due course after negotiation. Particularly it permitted pleading in court to disclose the actual nature of the transaction witnessed by the note; if, for instance, a note was made payable in "lawful money" for an amount assumed to be sufficient to cover depreciation, but actually in excess of the amount of the loan, the exact amount could be pleaded to fix the lia- bility of the maker. Thus negotiable notes were stripped of one function, the expression of non-contestable commitments, which had made them popular with business men, and the effect

395

COMMERCE AND INDUSTRY-REHABILITATION

of the legislation reached further than enforcement of the currency law to destroy utterly the circulation of promissory notes as credit instruments, as which they might replace cur- rency in transactions between merchants. The Assembly also reenacted the excise and increased import duties, assessed a tax of f20,000, payable in the new currency, and ordered the General Treasurer "to pay all persons holding notes against the state and orders issued by the General Treasurer . . .. the one-fourth part of the nominal sum of such notes," excepting the four per cent. notes of the new currency. This payment was optional with the holders of treasury commitments, the statute expressly stipulating "if the said holders shall apply therefor." The response to this offer was practically negative, inasmuch as the new currency had depreciated to four to one. In March, 1787, the Assembly enacted "that all persons holding public securities . ... be directed to apply to the General Treasurer to receive five shillings on the pound in part of every such security held as aforesaid ... .; that all such persons neglecting or refusing to do the same shall forfeit to and for the use of the state the said fourth part . .; and that the interest arising upon the one-fourth part . . . be stopped immediately." This statute, requiring holders of state securities to accept part-payment in depreciated currency, on penalty of forfeiture, was an act of repudiation to the extent of the depreciation of the notes if payment was accepted, or an act of confiscation if payment was declined. Payment was offered in notes, part of which had been collected into the treasury as taxes and which were secured by land mortgages, and part of which had been returned to the treasury as not wanted by freeholders and were not supported by other secur- ity than the promise of the state to pay, there being no provision for sinking even by taxes. Notes of the latter type were distinctly fiat money ; in issuing them to creditors of the state as payment on other securities the Assembly was not only forcing an issue of notes not to be justified even as a loan to freeholders, but was actually refunding interest-bearing securities with non-interest-bearing paper money, which had depreciated even before it was paid from the treasury.

Indeed, the measure was probably intended to save the Assembly from the embarrass- ment of failure to float the emission. So far as the freeholders refused to borrow the notes- and that was the clear meaning of the return of notes to the treasury-the project had been a failure; and the plea of necessity could not be justified. The exigencies of politics demanded a disposition of the notes, and an ingenious Assemblyman suggested using them to pay the state's debt, in the first instance, and incidentally to punish those who held the state securities and who had been influential in deflating the emission of currency. They must take the hate- ful currency on penalty of forfeiting their claims against the state. The process of convert- ing the state indebtedness from securities into paper currency went forward rapidly; statutes offering payment of second, third and fourth quarters enacted in June, 1787, February, 1788, and May, 1788, were followed by other statutes forfeiting securities not converted voluntarily, in October, 1787, May, 1788, and June, 1788. Justices of courts were ordered to pay into the general treasury money placed in their hands as tenders; in June, 1788, the Assembly called in for repayment in the new notes, all outstanding notes of the war-time emission of 1780 not already sunk. At the October session, 1788, the Assembly announced its purpose "to discharge the domestic debt of this state as soon as it can conveniently be done without putting too great burden upon the inhabitants thereof," and proceeded to order the paying off of other indebtedness, always by the process of reissuing paper currency which had been returned to the treasury as taxes or otherwise. At the following March session an act was passed "for paying off the whole of the state's securities and orders on the general treasury now outstanding excepting the six per cent. notes heretofore declared to be forfeited whereof no part hath been paid and which did not originate from the four per cent. notes."

396

RHODE ISLAND-THREE CENTURIES OF DEMOCRACY

THE ASSEMBLY RELENTS-And then the tide that had "liquidated" the state's indebted- ness began to ebb. By September, 1789, the General Assembly had become so far convinced of the difficulty of substituting statutes for economic law that it resolved: "Whereas, the bills of credit ordered to be emitted by this Assembly at the session held in May, 1786, have gradually depreciated, insomuch that great injustice will take place unless some remedy be provided : . . . it is enacted that the operation of the act making the aforesaid bills a legal tender, so far as respects a tender and lodgment thereof, be and the same is hereby suspended until the rising of this Assembly at the next adjournment." The short statute of limitations, two years, was repealed in October ; in March the English statute of limitations was repealed, and a general statute of limitations fixing the period for bringing most actions at six years was enacted. A new "tender law," substituting real and personal estate, in lieu of money, for payment of debts was enacted. The depreciation of the paper currency of 1786 by that time had reached the ratio of fifteen for one, as indicated by a resolution of the General Assembly, which ordered a claim for f112 9s. 5d. paid in currency of equal value, to the amount of f1687 Is. 3d. At the same session a committee was appointed "to ascertain the gradual depre- ciation of the bills of credit emitted by this state in May, 1786, from the time of its first being emitted to the present time." An act passed in September, 1790, permitted borrowers of the bills of credit on mortgage security to pay off their indebtedness in silver at the ratio of "one silver dollar for fifteen dollars" in paper, declaring "it will be for the interest and tend to promote the tranquillity of the state that the redemption of the lands so mortgaged should be completed at an earlier period than is prescribed . ... and may tend to give a circulation to the paper money so emitted." The paper money party had lost control of the General Assembly, and Rhode Island at that time, by ratification of the Constitution had become one of the United States of America. The Constitution forbade emission of paper money by states, but Rhode Island continued thereafter to order payments from the General Treasury sometimes in specie, but sometimes also from time to time in bills of credit of the issue of May, 1786, at fifteen for one.

REPUDIATION REPEALED-The repudiation and confiscation acts of 1786-1790 were repealed in June, 1791, to the extent that the General Assembly, on passage by Congress of an act assuming payment by the federal government of a large part of the debt of the states incurred for war purposes, reinstated securities declared void for failure of the holders to present them to the Treasurer for payment, and ordered indorsement, on securities wholly or partly paid off in currency, of the amount actually paid and the specie value of the payment according to a table of depreciation indicating the changing ratio from July 1, 1786, when nine shillings in paper equalled six shillings in specie, to July, 1789, when ninety shillings in paper equalled six shillings in specie. The purpose of the measure was not resumption by the state of its repudiated debt, but only reinstatement of part of the debt for assumption by Congress. On claims amounting to more than half a million dollars, $420,000 was paid by the federal government. Rhode Island issued four per cent. notes to cover the ascertained balance, and purchased those notes from time to time at favorable discount. In 1847 a balance of unpaid claims amounting to less than $50,000, a large part of which was interest, was repudiated. The controversy at that time on the question of paying or repudiating provoked acrimonious discussion and became a political issue. Many of the alleged claims were spurious, resting on securities redeemed but not cancelled because of the careless conduct of public business; and others were held by speculators who had purchased them at excessive discounts from persons who could not afford to await repayment at the convenience of the treasury. Bills of the issue of 1786 in the treasury were ordered burned in 1792.

The paper money law of 1786, and the subsequent legislation of the period inflicted

397

COMMERCE AND INDUSTRY-REHABILITATION

embarrassment but little actual hardship on public creditors, saved as they were by the legis- lation of 1791 reinstating claims not actually paid off at specie value. Heavy losses, probably, were borne by some private creditors, through forced receipt of depreciated currency in pay- ment of claims, or through forfeiture of the latter for refusal to accept tender of payment. The laws did not countenance payment of claims by debtors from other states to Rhode Island creditors by tender, and the courts eventually worked out a way of defeating redemp- tion of mortgages or cancelling large claims by refusing to count money offered as tender or to accept the count of other persons; in consequence it became difficult to prove a tender. Moreover, the courts, finding the volume of litigation increasing, made no effort to speed trials, and thus avoided hearing cases because of crowded dockets. Staunch resistance like- wise saved creditors from greater losses, possibly and probably. It is to be regretted that there are no records available from which to compute actual losses at the time for compari- son with the effect, for instance, of modern bankruptcy laws upon the percentage of claims that may and that may not be collected. The narratives of contemporaries are prejudiced by the strong passions evoked, and emphasize the evasion of debt made possible by the laws rather than the extent to which debtors actually were successful in obtaining lawful release. Business acumen undoubtedly helped the merchants and traders to devise ways to curtail losses by price adjustments ; and there were, besides, many freeholders and inhabitants who joined with the merchants in opposition and who refused to take advantage of the currency law.

IDENTIFICATION OF PAPER MONEY ISSUE WITH CONSTITUTION ISSUE-With an economic issue-the paper money question-clearly defined and political party lines squared true to the issue, it was not strange, but rather to be expected, that the precipitation into the political arena of the question of ratifying or rejecting the Constitution of the United Statest-of becoming a member state in the new federal union, or of pursuing the career of a sovereign state whose independence had been achieved-should intensify party strife in Rhode Island. In this connection it should be recalled that the movement that produced the constitutional convention at Philadelphia originated in an interstate conference to promote better commercial relations between states, and that the Constitution in its original form-until the bill of rights had been introduced in the first ten amendments-though hailed by statesmen viewing it externally as accomplishing the union of thirteen states in a new nation, dealt internally more with property rights and commerce than with the rights of man. As a device of merchants and traders for improving the conditions under which they might inaugurate and operate commercial enterprises, the new Constitution did not appeal to farmers. There was no reason why a proposition to strengthen the central government should find favor with those elements in the population who anticipated in successful revolution relief from oppressive government, who had become restless under drastic taxation and a depressing economic situation, and who irked the restraints of state government. Among other restrictions in the new Constitution was one forbidding states to emit bills of credit and explicitly placing the power to coin and regulate money in Congress. The new issue did not change-it strengthened-the alignment in Rhode Island, which had been town-specie vs. country-paper money, and was now town- specie-federalist vs. country-paper money-antifederalist. The decisions on major issues were reached almost simultaneously.

The General Assembly that showed weakening faith in its ability to float paper money by repealing the tender and lodgment provisions of the forcing act, yielded also in opposition to calling a constitutional convention .* Yet the federalists, in spite of the approaching success

tChapter XIV.

*It is true that the October election of Deputies intervened, but there was little change in the Assembly resulting therefrom.

398

RHODE ISLAND-THREE CENTURIES OF DEMOCRACY

of their favorite measures, were not so strong that they might venture to hope to win a state election. Governor Collins had incurred political unpopularity by casting the deciding vote for the constitutional convention ;¿ this he alleged in making application to President Wash- ington for appointment to a federal office, even before Rhode Island had completed ratifica- tion of the Constitution. He was scarcely eligible for renomination by the party whose policy he had defeated. Daniel Owen, Deputy Governor, did not choose to run, once his favored policies had been discarded. As presiding officer in the constitutional convention he earned the thanks of the members for his courtesy and fairness. He had been elected as a justice of the Superior Court, while Deputy Governor, in 1790; he was Chief Justice from May, 1791, to June, 1795. Arthur Fenner, antifederalist, as Governor; Samuel J. Potter, federalist, as Deputy Governor ; and ten Assistants, five antifederalists and five federalists, were elected in 1790 by agreement. The antifederalists carried the election in instances of contest; yet they were the survivors of a party that for the time being was stripped of compelling issues. The intense struggle of the period had been marked by passion and bitterness recalling the Hop- kins-Ward controversy of colonial days, and had produced the charges of bribery and cor- ruption that seem to be almost inevitable under similar circumstances, in which issues are prin- cipally economic. An act "to prevent bribery and corruption in the election of public officers in this state," passed in March, 1787, imposed penalties and required electors assembled in town meeting for election to take an oath against bribery and corruption. Later in the year, at the October session, the General Assembly, resolving that "it frequently happens in the choice of officers within the towns in this state, that the moderator of the meeting puts up the person nominated for the suffrages of the freemen, by the sign of holding up the hands; whereby persons are frequently appointed to offices who would not be appointed if the suf- frages of the people were taken by ballot," enacted that all votes in town meetings "for the choice of any representation, or delegating any power of the freemen to any one or more delegates, or the choice of any officer whatever, should be by ballot, or a vote in writing," on the request of one freeman seconded by another. Lawyers, because for the most part they were town men, and found their most profitable clients among merchants, were not popular with the antifederalists; the lawyers, as might be expected, were keen in perceiving advan- tage in the complicated parliamentary procedure of the period, and were able in argument. A bill to exclude them altogether from membership in the Assembly was considered but failed to pass. Readjustment of representation in the House of Deputies also was agitated. New- port sent six Deputies, Portsmouth, Providence and Warwick, four each; other towns, two each ; it was proposed to make the representation of towns equal. The measure, which for the time being would favor the farming towns by reducing seaport representation, failed to pass. The General Assembly was solicitous to maintain the respect to which, as the legisla- ture of a sovereign state it was entitled. Jacob Richardson, postmaster, who was accused of insulting Governor Collins by refusing to deliver a letter to the Governor without receiving prepayment of the postal fee, was reprimanded. Two other freemen were haled before the Assembly to answer charges of contempt, and the justices who rendered the decision in Trevett vs. Weeden were called to the bar, and four of them were not reelected.

COMMERCE AND MANUFACTURING-Rhode Island needed economic rehabilitation. The paper money doctors had tried to revive prosperity by inflation of currency, and had failed. The General Assembly had enacted measures purposing to promote improvement by regula- tion of relations of debtors and creditors, with doubtful or negligible, if not altogether nega- tive, results. Law may favor or retard prosperity; the latter cannot be created by legisla- tion. The initiative that builds a substantial commercial and that maintains a wholesome

#Chapter XIV.

OLD VARNUM HOUSE, BUILT 1767, EAST GREENWICH

VARNUM MEMORIAL ARMORY, EAST GREENWICH

399

COMMERCE AND INDUSTRY-REHABILITATION

economic life originates always with those who venture. "If I should never venter nothing, I should never have nothing," wrote Obadiah Brown to his brother James, in 1738. Two significant effects of the Revolution had been (1) the removal of those restrictions on manu- facturing that Great Britain had imposed upon her colonies with the purpose of promoting the interests of English manufactures; and (2) the opening up of opportunities for trade with other nations that had been forbidden under the navigation acts. A new prosperity for Rhode Island could be built securely upon the foundations of home production and trade; here was the challenge for Rhode Island in the new situation. Rhode Island had sons who were keen in perceiving advantage, daring in initiative, resourceful in enterprise. The awak- ening in manufacturing was delayed not long beyond the close of hostilities. Daniel Anthony, Andrew Dexter and Lewis Peck organized a company in 1786 to produce textile machinery driven by water power; for them Daniel Jackson constructed the first spinning jenny made in the United States, operating twenty-eight spindles. A spinning frame and carder were set up in 1787 in a chamber of the Market House in Providence to manufacture jeans, a cloth with linen warp and cotton filling. The Rhode Island interest in power-driven textile machin- ery continued with the experiments made by Samuel Slater, of Pawtucket, financed by Moses Brown, which were the first successful applications in America of water-power to textile manufacturing on a productive basis.

The iron industry, strictly restricted in the colonial period to smelting iron in furnaces and to casting in foundries, had been developed during the war period by the casting of can- non and shot, and the manufacture of muskets and other weapons. War necessity spurred to other productive processes, including the manufacture of paper. Two lotteries (1789, 1792) were granted to promote the building of nail mills in South Kingstown and Exeter, and a rolling and slitting mill was set up in Providence in 1789. Both rolling and slitting processes were forbidden in colonial days. The development of the iron industry was remarkable, in view of the limited extent of ore deposit easily worked; of it Moses Brown wrote in 1791 : "We have in this county ( Providence) one furnace for making pig iron in Scituate, the ore bed in Cranston. The water from the pit is discharged by a steam engine, also made here and at the furnace. We have twelve or thirteen forges, which make bar iron out of pig ore, scrap iron and black sand. The latter is brought from the south shore of the state mostly. A slit- ting mill has been lately erected in this neighborhood. It also plates iron, makes hoops and rails, shovels and spades, of which articles many are made for exportation. Anchorsmiths are ancient, but as the business has increased, divers have set up the business, and many are made for exportation. The steel manufactory is perfected, as to the kind blistered and drawn equal to imported, and is made so low that the importation has mostly ceased. Ten per cent. on a hundredweight of bar iron turns it into good blistered steel, weight for weight. The making of all kinds of screws for paper mills, clothiers, etc., is carried on to advantage, and New York, Connecticut, etc., have been supplied with them. The making of cold nails, from card tacks to shingle nails, and some up to ten-penny is largely carried on. Ten-penny nails and downward are made so cheap and plenty as to prevent their importation from our neigh- bor states, who furnish hot-made nails in plenty."

In the same letter Moses Brown mentioned also: (1) Spermacetti manufacture, practi- cally discontinued during and since the war because of the interruption of the whale fishery ; (2) distilleries, a continued industry, turning after the war to making gin; (3) sugar houses, with business slackened for want of stocks of brown sugar; (4) the manufacture of cotton and woolen cards, including the making of the leather backs, and cutting and bending teeth from wire imported from England and Germany; (5) two paper mills, for making "good writing paper, press paper, bonnet paper, sheathing," etc .: (6) hand and water mills for ginning cotton; (7) increase in the number of "fulling mills," and the production of linen

400

RHODE ISLAND-THREE CENTURIES OF DEMOCRACY

and cotton textiles at Almy & Brown's factory, 780 yards a month through the year of "vel- vets, thicksets, corduroys, fancy goods, royal ribs, denims, jeans, fustians," etc .; (8) "the spinning of warps by water on the Arkwright principle," from which mill yarn is furnished to other manufactories in this state and Connecticut; (9) "chocolate and snuff mills, which go by water, besides the usual mills for sawing, grinding, etc., by water, and the usual manu- facture of hats, girt webs, saddle fringes"; (10) duck and twine manufactory, in addition to rope. John Jenks and Luke Arnold were granted the exclusive right to use water-driven machinery for cutting marble (1784) to encourage them to invest their money and to under- take to cut slabs, columns and chimney pieces.

Rivers had been dammed before the war to hold back water for use in manufacturing processes ; there was, however, a prophetic significance in the frequent reference in the post- war period to waterpower; it forecasted the development of one of Rhode Island's greatest natural assets. These ventures indicated also an effort to increase real wealth, as distinguished from money, which aside from its most important function as a medium of exchange, some- times represents wealth. Not all Rhode Islanders were downhearted; a group of enterpris- ing inhabitants of Providence asked for a lottery in 1784 to build a second market house, and a second bridge across the Moshassuck River. Providence was growing and spreading west and east of the river; on the east side the steady climb up the hill from Town Street was marked by the laying out of Back Street (later Benefit Street), and the removal of private family graveyards to make way for the public improvement, only the old Tillinghast cemetery in the churchyard north of Transit Street remaining in the twentieth century. Whereas in the colonial period the proprietors had built their dwellings facing the Town Street, with warehouses and stores on the western side between the street and the edge of the river, the splendid new Georgian mansions of the prosperous merchant-princes of Providence, built toward the end of the eighteenth and near the beginning of the nineteenth century, rose along the crest of the east side hill, east of Back Street, with spacious grounds and usually a com- manding outlook upon the town below and the harbor. Roads leading across the state into Connecticut, avenues for a developing interstate trade, were newly surveyed to curtail encroachment, and occasionally new locations were sought to assure better travel by avoiding hills and other obstructions; a law for better keeping public roads passable in winter was enacted in 1786. A lottery was granted to raise money to clear the course of the Pawcatuck River by cutting through shoals and bars; the River Machine Company was chartered to keep the channels of Providence River open, with grant of a tonnage charge on vessels to cover expenditures. The company petitioned Congress for a continuation of the latter after Rhode Island had entered the union and Congress had undertaken control of navigable waters, including the dredging of harbors as public waterways .* Commerce was revived after the war. Newport had lost its most enterprising merchants with the departure of the Hebrews, but even in Newport recourse was had to ships and shipping, and Newport developed a prof- itable commerce, particularly after the rebuilding of Long Wharf from the proceeds of a lottery granted in 1795.

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 68

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