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Warren County Local History by Dallas Bogan

Vicious Paper Money Flooded Warren County And The Miami Valley Early in the Last Century

Dallas Bogan on 27 September 2004
The following is taken from Dallas Bogan's book, "The Pioneer Writings of Josiah Morrow."
Return to Index to see a list of other articles by Dallas Bogan

Striking Illustrations of The Great Evils of An Irredeemable Currency Found In An Old Account Book--Many Local Banks Break In 1819-1820--Trouble Caused
By Their Depreciated Paper.

December 22, 1910.

Last week was given an account of the Cotton Factory established at Freeport on the Little Miami in 1816 by a company called the Miami Manufacturing Company and mention was made of the old account book of the company recently found in Lebanon. This book is now in my possession.
The account book does not give the names of the members of the company which built the factory, but it seems to fix the date of the opening of the factory as in May, 1816 and of its destruction by fire as in September, 1819. After the fire most of the accounts seem to have been placed in the hands of Burwell Goode, one of the trustees, for settlement. Goode was a leading citizen of Wayne township, a farmer, county commissioner and magistrate, and highly esteemed by neighbors. Some of the entries are in his hand writing.

Difficult Collecting.

The loss resulting by the burning of the factory must have been considerable. In the list of notes and accounts in favor of the company in Goode's handwriting some are marked worthless and others were left in the hands of justices of the peace for collection. These justices resided in different townships and among their names are Thomas Smith, Barnhart-R.R. Barnhart and Patrick Meloy.
The largest of the accounts was one against Nebo Gaunt, the pioneer miller at Freeport and one of the founders of the town. On this account Gaunt confessed judgment for $148.00 on the docket of Thomas Smith, J.P.
Some accounts were settled in farm produce and this produce had to be sold. Mention is made of a trip to Cincinnati with bacon in April, 1821, when payment for bacon was received in the paper of the Miami Exporting Co., of Cincinnati, which was worth less than fifty cents on the dollar.
Even after getting judgments on some of the claims the company was often compelled to accept payment of the judgments in the depreciated paper currency which then flooded the western country.
Old account books are sometimes collected for the facts they furnish concerning the financial and mercantile history of the times in which they were kept. I have never seen any old manuscripts which show in a stronger light the evils of a paper currency issued by irresponsible banks than the few pages which have been preserved of the accounts of the Miami Manufacturing Co. The trustees were compelled to exchange considerable sums in depreciated paper currency for one-half or one-fourth of its face value in good money.
I copy the following from a single page of the account book:

Bad Paper Money.

1823--Dec.--"Two hundred and seventy-two dollars and 81 1-4 cents in Miami Exporting paper and one dollar and 50 cents in Lawrence, all amounting to $274.31 1-4 was changed for seventy-three dollars and fifty cents in good money.
1824--March 27--"Isaac John changed forty-two dollars and 75 cents of the bank paper in his hands for ten dollars and 68 1-2 cents.
"Burwell Goode changed 53 dollars and 12 1-2 cents of Piatt paper and thirty dollars on the bank of Cincinnati for twenty-seven dollars.
"Also four dollars of Hamilton paper for three dollars ad fifty cents.
"Also two of Lebanon for one of good money.
"Also changed with Smith-G.J.G.J. Smith $100 of Piatt paper for 63 dollars.
"Bank paper on hand on Brookville branch, including two counterfeit notes, one dollar each, $14.56 1-2."
The last entry in the handwriting of Burwell Goode and signed by him is as follows:
"March the 27th, 1824--Received of Isaac John by direction of the trustees all the notes and monies as charged against him on pages 5, 6 and 7, for the use of the company including his receipts for disbursements, allowing the discount made on bank paper changed by him, which will appear by the receipt given him by the trustees on settlement, which is as follows: Receipts and notes including $317.15 1-2 which was changed by the said John for good money at the rate of 26 cents to the dollar; who including $1.68 3-4 in notes on Cincinnati and Piatt banks.
"Pursuant to the decree of the Supreme Court and the direction of the trustees I have paid over all the monies charged to me as being in my hands open pages 1, 2, 3, and 9, of this book for which I hold receipts.
Burwell Goode,
One of the Trustees."

Broken Banks.

The largest amounts in depreciated currency mentioned in the accounts were in "Miami paper and Piatt Paper."
The Miami Exporting Company was organized in 1803 by Cincinnati business men, designed mainly at first to facilitate trade with New Orleans. It was a mixed commercial and banking enterprise and opened its banking business, March 1, 1807, being the first bank in Cincinnati. Finding its commercial department unprofitable, it confined its transactions to banking. Its capital stock was $150,000 a large sum in those days.
Various banks were established in Ohio before the close of the war in 1815 and there was a liberal supply of bank notes, the effect of which was an over stimulation of business. In 1815 these banks were compelled to, suspend specie payment. It is doubtful if there was coin enough in all the west to redeem one-fourth of the bank issue.
John H. Piatt & Co.'s bank was opened at Cincinnati in 1817 and soon the large amount of depreciated currency already afloat was increased by "Piatt's Shinplasters." Altho specie payment was suspended the Ohio and other western banks issued notes without limit. The circulating notes were all below par, the best Ohio bank paper being at a discount of 8 to 15 per cent. Merchandise had two prices, one in specie and another in paper.
In the winter of 1819-1820 the United States branch bank at Cincinnati called in all its accounts and entered suit in case of non-payment. The Miami Exporting Co. went down with a crash, creating great excitement and adding to the general distress. Its failure was speedily followed by two other Cincinnati banks and the local banks of Ohio were effectively squeezed out of existence. The only Lebanon paper mentioned in the accounts is two dollars which was worth fifty cents on the dollar. The only bank that had been opened in Lebanon was that of the Lebanon Miami Banking Co., organized in 1814. The company comprised some of the leading business men and lawyers of the county. On February 2, 1819, the directors resolved "that it is expedient for this institution to close its business as soon as practicable. That is not expedient that this resolution be now made public." The business was not closed up until 1822.
This depreciated currency issued on a bad banking system produced not only great inconvenience but in many cases great distress. It became exceedingly difficult to collect debts at all.
Bad as was this vicious paper currency, it had not yet become so worthless as the government paper at the close of the revolution. One writer says: "I have seen a barber shop in Boston papered with Continental Money, and sailors who were paid their wages in great bundles of this trash, for the fun of the thing, paraded the streets with bills that once represented thousands of dollars."
Few of us appreciate the greatness of the blessing our paper currency of today which is at par in all sections, in every city and village.

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This page created 27 September 2004 and last updated 28 September, 2008
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