II 
THE PANIC OF 1819 AND RELIEF MEASURES 
The federal government had aided business men and manu- 
facturers in 1816 by establishing the first protective tariff and 
creating the Second United States Bank. These measures 
had probably helped some, but neither the weather at home 
nor political conditions in Europe were conducive to good 
crops or good business.^^ The United States had had several 
successive bad harvests. It is true there was an artificial 
prosperity caused by the creation of many banks in almost 
all the states, the reckless issuing of paper money, the under- 
taking of unnecessary frontier developments and improve- 
ments that could not be paid for, and by senseless speculation 
everywhere, but it soon became evident that real, material 
progress rested on a foundation of sand. As early as August, 
1818, financial troubles began to appear in the eastern states. 
In Virginia, for example, there were many failures, and it was 
declared that property would bring only as many hundreds as 
it would have commanded thousands of dollars eighteen months 
earlier. Eastern banks were calling loans and western banks 
were closing their doors. Hard times spread westward rapid- 
ly and continued in parts of the country as late as 1825.^^ 
Conditions in Kentucky probably were not worse then than 
in many other states, but, as has been previously shown, they 
were bad and could not stand a prolonged period of financial 
stress. Tobacco and wheat prices began to fall rapidly early 
in 1819, and soon pressure came from the United States 
Bank. There was due at this time to the two branch banks 
in Kentucky $2,690,760, and calls came from them for pay- 
ment in specie. Besides this there was considerable money 
due the government land offices. Doubt was expressed 
whether all the specie and federal and state paper money in 
Kentucky would be sufficient to redeem this debt. The Ken- 
tucky Gazette at this time said ‘‘Our extravagance in the im- 
portation and consumption of foreign luxuries must be 
checked, or we are a ruined people.'’^^ The amount due the 
Schouler, History of the United States of America dander the Constitution, 1783- 
1865, III, 118, 119. 
“*2 Channing, History of the United States of America, V, 314. 
Editorial, May 21, 1819 ; Niles’ Register, XV, 385. 
( 62 ) 
