USA > Tennessee > History of Tennessee the making of a state > Part 20
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Carroll bore the impress of a widely different mould. He was born near Pittsburgh, Pennsylvania, in 1789, and was intended for a mercantile career, but removed to Nashville in 1810, and opened a nail store, the first in the State. He had a tall, athletic figure, refined face, and graceful bearing. He was fond of studying military tactics, and in 1812 was elected captain of the " Nashville Uniform Volunteers." He was at first a favorite with
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Jackson, who treated him. with great consideration. In 1813 he was made brigade inspector of the command sent by the United States to defend the lower Mississippi River, and the same year was elected major of militia. When Jackson received the appointment of major-gen- eral in the regular army, Carroll was elected major-gen- eral to succeed him in the command of the Second Division of Tennessee Militia. After the return from the lower Mississippi, Carroll fought a duel with Jesse, the irascible and volcanic brother of Thomas H. Benton. It appears to have had its origin in the prejudice against interlopers, which is characteristic of fools and school-boys. It would have been remarkable if Jackson were preoccupied when pistols were being primed. He acted as Carroll's second, who shot Benton in a part not generally exposed to hostile fire by brave men. Out of Jackson's action in this mat- ter grew the encounter between him and the Bentons. When the trouble was brewing on the eve of the meeting in Nashville, Carroll left town, pleading pressing business, and carrying with him Jackson's sneer that he wanted no man to fight his battles. Shortly after the Creek War began, Carroll entered service with his reputation for valor badly besmirehed. His duel with Jesse Benton alone gave him grace. When the war was over, Carroll returned to Nashville. He had proven himself a good tactician, a good drill master. a clear-headed commander, quick and full of resources. But above all he had made a reputation for cool, desperate bravery and hard fighting, equaled only by Jackson himself and John Coffee. After the war, Carroll appears to have turned his attention to trade again, and in 1818 the first steamboat floated under the Nashville bluffs. It was owned by Carroll, who, prob- ably to propitiate his old commander, named it " Gen. Jackson." Jackson apparently remained unsoftened. for he was an active friend of Ward's, voted for him and urged his claims. Cordial relations were, however, sub- sequently reestablished between them.
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Carroll's natural disposition was frank, open, and cor- dial. IIe was always at his ease, and was always ready to enter into the spirit of any occasion, especially at the country dances which were so distasteful to Ward. When se met one of his old soldiers, he always stopped him for a . take of the hand, and generally knew his name. It was
red against him by Ward's friends that he had allowed mis note to be protested. This was an unfortunate accu- sation, for it developed the fact that he had become bank- rupt by going security for his friends. There was a popular uprising for Carroll. He was toasted at every
banquet, and cheered at every barbecue. The grand jury of Montgomery County "presented " him as their preference. The battle raged in the newspapers, and this is _emarkable as the first local contest in Tennessee in which the newspapers openly advocated the cause of dif- ferent candidates. The " Nashville Whig" supported Ward. The " Nashville Clarion " supported Carroll. The claims of each were violently assailed, and hotly de- fended, generally by open letters. In one letter headed derisively, " Hurrah for Ward," the latter is praised as being a wise man, because like the wise man in the prov- erb, he had changed his opinion. Having been a Feder- alist in Virginia, he had become a Republican in Tennes- see. On the Fourth of July, the "Clarion " published a letter in which " A Big Fish " gives his reasons for not vot- ing for Carroll : Because he is of humble but poor parents. Because it would be a shame for the son of an old Revolu- tionary farmer to rule over " the quality" of the State. Because he has never learned Latin and Greek. Because, as a boy, he had plowed and had been handy at reap- ing, log-rolling, and country weddings, all of which is coarse and vulgar. Because he is not rich and did not stay at home during the war. Because, if elected gov- ernor, he would be unable to support the dignity of the State with fine dinners, splendid carriages, liveried ser-
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vants, state balls. ete. ; because he does not carry himself with sufficient dignity and austerity, but will heartily shake the hand of a ragged fellow soldier, thus doing away with the distinctions of rank. Because, if elected, he would not shake off his old friends. It was well enough for low-born loons like him to fight the battles of his country, but the nobility ought to have the honors and rewards. The actual votes for each candidate make a fitting climax to this long score of derision. Carroll re- ceived 42,246 votes, and Ward 11,200. Carroll's ma- jority was the largest ever given in this State before the war, and he broke the strength of what would now be called the bureaucracy.
The contrast between Carroll and M'Minn is especially marked. The latter was, in all things, a conseientious and painstaking officer, but he was essentially a man of the present tense, and he possessed none of the powers of combination which enable more gifted minds to forecast the future. Carroll had not only seen much of the world, he had also profited by his experience. His position on the public questions which came up for discussion during his long administration was often very far from being the popular position, but it is remarkable that no other gov- ernor ever had so much influence over the legislatures to whom his messages were addressed.
CHAPTER XXVI.
BANKS OF TENNESSEE.
THE financial history of Tennessee, which really began under M'Minn's administration, is instructive, though elaborate and intricate. But even the broad outlines are full of interest, and throw much light on the progressive development of the State.
The Nashville Bank, chartered in 1807, was the first bank incorporated in Tennessee. Among the reasons urged for its establishment were the accommodations which it was expected to extend the State in anticipation of uncollected revenue. The amount of its stock was limited to $400,000. It entered into operation several years after incorporation. The affairs of the bank pros- pered, and it was long one of the soundest financial institutions of the Southwest.
In 1811 it was feared that the State would lose the advantages of a sound and sufficiently abundant circula- ting medium, through the extinction of the United States Bank, which Congress had refused to recharter. To rem- edy this evil, and also to reap the large profits supposed to flow from banking operations, it was proposed to estab- lish a State Bank, of whose constitutionality no doubt could arise, and the Bank of the State of Tennessee, at Knoxville, was the result. Judge Hugh L. White was made president, and continued in office until 1827. It was due to his conservative management that this bank weathered all the financial storms which wrecked so many Southern and Southwestern banks. It never failed to
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redeem its notes in specie. During the War of 1812 the whole country, thrown by the Embargo Act upon its own resources, was compelled to turn its attention to home in- dustries. The demands of trade, agriculture, and manu- factures gave an impetus to banking that called many new enterprises into existence. In addition to this, the prominent part taken by Tennessee in the War of. 1812 and the Creek War, under the impulse of local pride, eaused the State to put forth exertions in furnishing sup- plies that strained its resources to the utmost. The Nash- ville Bank was especially liberal in advances, and one of the excuses offered by its directors when subsequently embarrassed was that its difficulties all dated from the loans it had made during the period of the war. In 1815 were incorporated the Fayetteville Tennessee Bank, the Holston Tennessee Bank, at Jonesboro, and the Franklin Tennessee Bank. They were in the main modeled upon the State Bank. In 1817 the name of the Holston Ten- nessee Bank at Jonesboro was changed to the Eastern Bank of Tennessee, and all three were allowed to become branches of the State Bank. In 1817 a general banking act established banks at Gallatin, Carthage, Rogersville, Nashville, Kingston, Columbia, Maryville, Shelbyville, and Murfreesboro. All of these banks were established for the public benefit and to ease the stringency of the money market which followed the importation of foreign goods after the peace of 1815. Each of them could issue bills and notes. The charter of each was so worded as to allow it to become, if accepted by the Nashville or State banks, branches of these institutions. It was generally supposed that the peace of 1815 would bring on a state of prosperity hitherto unknown to the people of the coun- try. But instead, various causes, whose influence could not be clearly estimated at the time, produced a financial crash that for years clogged the financial industries of the country. The multiplication of state banks on every
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hand during and immediately following the war, the issues of which were not based on any sound foundation, and could not be converted into specie, drove out of circu- lation all the gold and silver in the country. It rapidly made its way to New England, whose banks had never suspended specie payment, to the strong boxes of cautious old men and the stockings of still more cantious old women.
The refusal to recharter the United States Bank in 1811, and the winding up of its affairs had caused about $7,000,000 of specie to be transported to England to pay the foreign stockholders. The heavy importation of Eng- lish goods still further increased the drain of gold to that country, and, besides destroying the sale of American man- ufactured products, caused nearly every shop in America to close or to be run at a loss. There was a general lack of confidence in all those transactions where confidence is an essential ingredient of prosperity. The banks of New England distrusted those of Philadelphia, and these again distrusted the banks of Louisville and Nashville : the people distrusted the banks, and the banks distrusted the people. A traveler from Nashville to New York was either compelled to pay a ruinous price for New England exchange, or he was compelled to have the value of his money computed in the local currency by an elaborate process, whenever he stopped for a night at an inn. The profits of this process were among the emoluments of the broker, who, like the tavern keeper himself, the barber, the blacksmith, and the man of livery, was one of the necessary institutions of every town.
A general suspension of specie payment took place throughout the entire country. except New England, about 1814. It is to the honor of Tennessee that its two lead- ing banks struggled on without resorting to this expedient until 1819, and that even then the State Bank, under the management of the illustrious White, refused to suspend
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but continued to redeem its notes in specie without a single interruption. But, on the whole, suspension was unavoid- able. When it came, however, it brought with it an unexpected stringeney. The charters of the banks had limited the quantity of bills and notes that could be issued, and these of themselves were not sufficient to supply the necessities of trade. The notes of other than Tennessee banks had totally disappeared. This scarcity of circulating medium would have been oppressive in a community free from debt and engaged in the ordinary transactions of daily exchange and trade. But it was disastrous to a community such as Tennessee then was, having little or no reserved capital, heavily in debt, and at the end of a speculative and expansive era. Governor M'Minn, in 1820, speaks of a "general pressure, unex- ampled in the history of our government." Various rem- edies were suggested to relieve the depression and to make " money matters easy." Among the number was the suggestion that the State Bank and the Nashville Bank should consolidate. and a law was passed for this purpose. Indorsement and stay laws were passed forbidding ex- ecution to be issued upon a judgment in less time than two years, unless the creditor agreed by indorsement upon the execution that he would take the notes of banks in the State at par. Governor M'Minn suggested that this remedy, usually called " property laws," be tried in Ten- nessee, which was done. Under his administration, and upon his suggestion, was exhibited the strange paradox of a democracy exhibiting the most pronounced features of the so-called parental or patriarchal form of govern- ment. Another suggestion made by him in his message to the called session of 1820 produced results which were prolific of many evils to the State. This was the estab- lishment of a loun office.
In 1817 the legislature of Tennessee passed an aet tax- ing heavily any bank established in this State by any
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authority other than the laws of this State. This was done in order to prevent the establishment in Tennessee of a branch of the United States Bank, newly chartered. A town meeting was held at Nashville to protest publiely against the passage of this law. Among those who took a prominent part at this meeting were Felix Grundy and William Carroll. In anticipation of the establishment of a branch of the United States Bank despite this law, Andrew Jackson recommended two names, one for president and one for cashier, to William Jones, president of the United States Bank. Grundy wrote a private letter, suggesting certain names as a fit directory. These facts were subse- quently used with telling effect against both Jackson and Grundy by White, during the days of his candidacy for the presidency.
The management of the United States Bank refused to establish a branch in a state where the will of the people had been expressed in opposition. A strong sentiment be- came general in favor of some measure for the "inflation of the currency." Governor M'Minn suggested "the issuance of treasury certificates circulating upon the faith of a public responsibility and resting for their final re- demption on the sale of lands in the Hiwassee District, as well as upon the ordinary revenues of the State." These certificates were to be put into circulation through the agency of a loan office. The capital stock was fixed at $1,000,000, in bills payable to order or to bearer, all of which " shall be emitted on the credit and security of the borrowers, and the whole to be warranted by the State on the proceeds of the sale of its unappropriated lands, the interest of the money arising from the sale of lands south of the French Broad and Holston." Loans were to be made to citizens upon bills of exchange, notes, and real and personal property, the former to be secured by indorsement, the latter by mortgage and power of attor- ney to confess judgment. The rate of interest was six
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per cent. per annum. Notice must be given before call- ing in more than ten per cent. of the amount loaned. One ageney was to be established in each county, and the amount loaned in each county was to be determined by the relative amount of taxes paid into the publie treasury for the year 1819. The name of this institution was to have been " Loan Office." The bill establishing it was prepared in the main by Felix Grundy. It is not known whose audacity suggested the device, but the caption of the bill on its passage was changed to " An Act to estab- lish a Bank of the State of Tennessee." White after- wards charged that this was done in order to give the new bank the influence of the confidence reposed in the State Bank already in existence. This charge was made in the United States Senate when Grundy was present, and there was no denial. Another episode which occurred during the discussion of this measure was the remon- stranee against its establishment. This was signed by sundry citizens of Davidson County. Among the num- ber was Andrew Jackson, who aroused the ire of some of the legislators by remarking that "any member who voted for it would perjure himself." In a protest entered on the House Journal, two members speak of "that most chimerical of all political schemes of the State of Ten- nessee."
From the first the new bank was a failure, and in 1821 Governor M'Minn was forced to acknowledge that it had not met the expectations of its friends. In 1821 William Carroll was elected governor. It is scarcely probable that the loan office of 1820 would have been established if Carroll had been elected two years earlier. With the exercise of that clear judgment and sound practical view of things which distinguished him, he discards in his first message the make-shifts which had been resorted to by the previous administration. He puts aside the "property laws," the "replevin and stays laws," the "indorsement
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HISTORY OF TENNESSEE.
laws," and the issuance of large quantities of paper money as totally inadequate. Instead he recommends economy and industry. lle urges as prompt a return to specie payment as the eircumstances will permit. He disposes of the proposition to unite the Nashville and State banks by an unanswerable syllogism. "Their strength consists in their solvency ; if they are solvent and continue so, they have nothing to fear. If they are unsound, a union of unsound parts can never make a perfect whole." In place of this, he suggests a thorough examination of all the banks, and the appointment of a day for the resump- tion of specie payment. A law was at once passed in accordance with these suggestions, and the first day of April, 1824, was appointed. The effect of Carroll's mes- sage was in every way beneficial. It aroused the people of the State from a lethargic dependence upon the hope that the General Assembly would do something to relieve their distress, and it set them to work. In his message of 1822, Governor Carroll says : " I am happy in having it in my power to say that the pecuniary embarassments of the country have been greatly diminished by the indus- try of our citizens and the surplus produce of last year." A slight depression in 1823 again alarmed the pessimists, and a law was passed directing the banks to loan out, as soon as received, all moneys received from the sale of public lands. A unique resolution, adopted in 1823, is peculiarly characteristic of the times, and gives a striking illustration of the force of Governor Carroll's influence. The resolution recommends the members of the next Gen- eral Assembly " to appear in clothing entirely of domestic manufacture," and the people of the State generally are advised to " manufacture their own clothes and live within their means and not go in debt."
In the spring and summer of 1825 the price of cotton and tobacco went up very considerably, and as a result brought a great influx of capital back to the State. In
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addition to this, there had been a steady inflow of popula- tion from the older States since the crash of 1819. in consequence of which there was a constant widening of the area of cultivation and increase in the aggregate products of the State. In 1825 Governor Carroll finds it " pleasing to reflect on the happy and prosperous condi- tion of the State." "Our citizens . . . have been relieved by economy and their own exertions and not by the passing of laws interfering between debtor and creditor which never fail to injure the interests of both." " Our population," he adds, "is increasing with astonishing rapidity."
On the first of September. 1826, about a year and a half later than the time appointed, all the banks in Ten- nessee, except the Nashville Bank and its branches, re- sumed specie payment. There were not wanting voices to exclaim that it was bad policy to resume at that par- ticular time. The good results which flowed from this were enhanced by the establishment of a branch of the United States Bank at Nashville, the previous law having been repealed. The Bank of Nashville, however, was seriously crippled. Its notes in 1826 were at a discount of 37} per cent. Its management, in pursuance of the policy of straightforward honesty which had distinguished it from the first, decided to wind up its affairs, which was accordingly done with but small loss to any one.
The failure of the Nashville Bank increased a suspicion which had become eurrent that the new State Bank was in trouble. It was now patent to all that, in so far as the ob- ject of its creation was concerned, it was a pronounced fail- ure. It had not benefited the State. It had not benefited the citizen. It was estimated that debtors paid from twelve to twenty-five per cent. for every dollar they borrowed. and that the State gained only three per cent. net on the money invested in the bank even when honestly conducted. Between the adjournment of the General Assembly in
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1827 and the reassembling in 1820, three hundred judg- ments against debtors of the bank had been recovered at Nashville alone. In 1829 Governor Carroll said : " As, however, the avowed causes which induced the legislature to establish the Bank of the State of Tennessee have happily passed away, a fit occasion seems to present itself to inquire whether a due regard to sound poliey and to the best interests of the country does not require that mneas- ures should be adopted to settle the affairs of the institu- tion by calling in the debts due to it with as little delay as possible, taking care not to injure or oppress those who are indebted to it." In pursuance of this suggestion, a resolution was passed directing the committee on banks " to inquire into the policy and expediency of closing the concerns and finally winding up the business and repeal- ing the charter of the Bank of the State of Tennessee." The committee went earnestly to work. The managers of the bank became frightened. On January 3, 1830, the capital was startled by the announcement that gross irregu- larities had been discovered in the State Bank, and that the cashier, Joel Parrish, was a defaulter for a considerable sum. Being pressed by the committee, Parrish conceived the daring design of making away with the books of the bank in order to destroy the only evidence upon which he could be convicted. He and the clerk were arrested, but not until the books had been secreted.
The amount of the defalcation was discovered to be very nearly $200.000, a large part of which had been drawn out by friends of the cashier who had nothing to their credit. The clerk had embezzled about $15,000. The latter obtained an entire release by giving a lien on real estate. Parrish eventually returned the books of the bank upon an agreement that he should not be criminally prosecuted. Close investigation revealed the fact that the agencies, especially those in West Tennessee and in the Western District, were in a worse condition than the main
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bank.1 New officers were elected and were instructed to bring the affairs of the bank to a speedy close. A law was passed directing the funds of the bank remaining after payment of all indebtedness to be turned over to the board of publie-school commissioners in the various counties.2 In 1833 the committee appointed to report upon the winding up of the affairs of the bank estimate the probable losses in closing up the bank's business to be about 8153,344.05. The whole profits from the beginning amounted to 8341,639.62, and the entire expenses had been $153,884.26, leaving a balance of $187,755.36, or very little more than enough to cover the estimated losses.
The next financial venture of Tennessee was the Bank of Tennessee, chartered December, 1831. This charter was repealed in October, 1832. by the same act that established the celebrated Union Bank. The capital stock was to be 83,000,000, of which the State was to take 8500,000, issuing bonds therefor. The State was to re- ceive a bonus of one half of one per cent. on the capital stock and interest on deposits of state funds. Profits arising from the state stock. the bonus, and the interest on deposits, after the payment of the bonds, were to go to the common schools. In case of a violation of the pro- visions of the charter, the directors voting for it were made responsible in their private property for any loss or damage, and next the stockholders to the amount of their stock. Suspension of specie payment was expressly forbid- den, and holders of notes who had demanded and been refused specie were entitled to recover ten per cent. interest from the date of the demand. The notes of the bank were receivable for all dues to the State. The public faith of
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