May 31, 2012
I’ve spent the last couple days in the 1820s, reading and writing about the financial crisis precipitated by the real estate bubble that burst in 1819.
Many people had engaged in land speculation based on the supposition that since so many people were moving west, land prices would skyrocket. If everyone had refrained from going deep into debt in their land speculation, the whole thing might have worked — but, human nature being what it is, greed won out, and so the bubble burst (as bubbles are wont to do).
The result was that prices dropped dramatically (a house in Lexington that had received a $15,000 offer around 1818, was sold at auction for $1,300 in 1820). And when you looked at the money supply in Kentucky, there was not nearly enough cash in circulation for people to cover their debts (and the Bank of Kentucky only had 13 locations in the state).
So the legislature took prompt action: in 1818 they chartered 46 banks throughout the state, and permitted each bank to print their own money – up to $26 million in paper money. Just imagine the chaos! If I have a $5 bill from the Lexington bank, and I am in Bowling Green, a Bowling Green merchant might say, “but my local bank doesn’t take Lexington money — so it’s not worth anything here!” Banks and merchants had to quickly develop exchange rates for 46 different currencies! And since most people couldn’t figure out what the paper money was worth, it quickly lost its value. Two years later the legislature canceled the charters of the “Forty Thieves” (as the 46 independent banks had been nicknamed!).
Meanwhile even more people were now in debt! So in 1820 the legislature passed “replevin” laws. If you have never heard of replevy, I don’t blame you. They were declared unconstitutional in the 1820s, so no one has tried them since!
But the replevin laws in Kentucky permitted debtors to postpone repaying debts for a year (or two in some instances). The point of replevy was to modify the terms of the contract (against the will of the creditor) in order to enable the debtor to repay his or her debt.
(Does this sound familiar? The whole mortgage crisis of the last few years has been dealing with the exact same question. Have you ever wondered why Congress hasn’t “done” anything about it? It’s because Congress cannot force the banks to renegotiate contracts. They can only provide incentives to encourage them to do so).
Not surprisingly, at least one creditor in Kentucky objected to what he considered legislative interference with a valid contract! The case came before the Kentucky Court of Appeals, which determined that the replevin laws were unconstitutional ( the Kentucky Constitution stated: “no ex post facto law, nor any law impairing contracts shall be made,” and the U.S. Constitution has similar language).
The “Relief Party” in Kentucky was furious that “unelected judges” would seek to thwart the “will of the people” expressed through the legislature. Since they had a majority of the legislature, but could not muster a two-thirds vote to impeach the judges, they finally found another way: in January of 1825, they simply voted to eliminate the Kentucky Court of Appeals, and create a new state Supreme Court! (The Kentucky Constitution was silent on the manner of how the court was to be established).
Needless to say, the “Old Court” declared that this act was unconstitutional, and so refused to accept the new law, even as the “New Court” seized its records and began its work!
What does this have to do with Robert Jefferson Breckinridge?
Well, in August of 1824, RJB ran on the “Anti-Relief” ticket (what would soon be called the “Old Court” party) to represent Lexington in the state legislature. Temperatures ran hot that summer — and I don’t know what the weather was like!
On the third day of the elections in Lexington, as the various candidates gathered at the court house, electioneering was in full swig (and no, that is not a typo — candidates regularly offered alcoholic beverages to their supporters). Shouting led to fisticuffs, and fisticuffs led to brickbats. The streets of Lexington offered excellent weapons, as crews of men with picks and axes tore up the brick streets to provide missiles for their allies. Then someone shouted that he was going to get his gun.
As RJB later recalled the incident, his own election was already certain, but other elections were in doubt. “Suddenly the storm burst; a thousand men rushed furiously on each other, and seizing such weapons as their frenzy supplied, dealt murderous blows upon all who stood before them. Fire-arms were called for and eagerly demanded; and the air was darkened by deadly missiles of every kind. Some of the most distinguished citizens – some of the ministers of God’s sanctuary, had tried in vain, at the hazard of their lives, to appease the tumult. At this dreadful moment, I saw the doors of the hall of Justice suddenly thrown open, and from them emerge two young men. They bore upon a staff a white flag, and rushing between the combatants, and into the thickest of the danger, they cried with loud voices – ‘Shame, shame upon ye — ye are all brethren!‘ The generous hearts of their countrymen melted under the intrepid appeal; and they who a moment before sought each other’s lives, literally rushed into each other’s arms. Sir, I will name one of those young men; it was the present General John M. McCalla of Lexington. The other is willing to be forgotten.” [Other accounts said it was RJB and Charlton Hunt.]
While the threat of violence continued (indeed there were rumors of outright civil war in Kentucky), by the summer of 1825 the Old Court party had regained the majority, and by 1826 the Old Court was restored to its function.
