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16 Legislative Leadership They want Mr. Grundy out of the way.    —Clarion and Tennessee Gazette he Panic of 1819 brought economic distress that engulfed the nation over the next several years. Baltimore’s leading commercial house, Smith & Buchanan, collapsed and took down more than one hundred merchants. The leader of the Republican Party in Virginia, George Nicholas’s brother Wilson Cary, also failed, exacerbating the financial problems of Thomas Jefferson, who had cosigned notes. In Tennessee, Davidson County recorded the filing of an estimated five hundred debt suits in the first six months of 1819, and William Carroll reportedly lost $66,500. Readers poured over newspapers to see whose farm would be next to fall for delinquent taxes. A grand jury called for a special session of the legislature to protect citizens against the “evils of a deficient , decreasing and defective currency.” Merchants and farmers, who were most adversely affected, blamed bankers and land speculators. The Murfreesboro Courier, more thoughtful than some papers, attributed the calamity to the fall of foreign markets and the lack of circulating specie and dolefully reported that owners of property being sold to pay off debts would probably only realize about one-fifth of the property’s alleged real value.1 Grundy, who had been required to resign his seat when he took on the Kentucky -Tennessee border dispute, ran for the Tennessee legislature again, announcing his candidacy by May 23, 1820. He and other relief leaders called for a special legislative session to address the crisis. His endorsement law failing to satisfy the popular temper, Grundy now proposed a state loan office, which would issue paper notes. The Blount faction and its paper, the Nashville Whig, opposed Grundy, while the Erwin group and its paper, the Clarion and Tennessee Gazette, notwithstanding its unhappiness with the resolution of the border dispute, vigorously supported him. The Blount interests feared that a state loan 140 T Legislative Leadership � 141 office would end their banking monopoly and that any government issuance of paper would further devalue bank notes. The Clarion and Tennessee Gazette referred to Grundy’s genius and eloquence and charged that opposition came only from land speculators, moneyed aristocrats, and East Tennesseans: “They want Mr. Grundy out of the way.” When the polls closed, it was obvious that there were not enough land speculators or moneyed aristocrats; Grundy had a comfortable majority of 883 votes to 644 for his opponent, Colonel Thomas Williamson.2 At the special session at Murfreesboro on June 26, Governor McMinn, acting in concert with Grundy, proposed a state loan office that would issue treasury certificates and a stay law that would postpone judgments for two years unless the loan office certificates were accepted at par. This approach, a refinement of Grundy’s election proposal, was referred to a special joint committee proposed by Grundy, of which he was a member. After political jostling, four additional members joined the committee, Grundy became chairman, and the committee reported the bill on July 4. In the extensive debate that followed , Pleasant Miller raised a variety of objections, including the unconstitutionality of the measures. An initial version passed the house, 26–13, and then was revised by Grundy in a joint committee of the senate and the house. The final bill, passed by the legislature on July 26, created the Bank of the State of Tennessee, with capital of $1 million, a headquarters bank at Nashville, and a branch at Knoxville. The bank was authorized to issue notes up to five hundred dollars to individuals at 6 percent, with funds allocated among counties based on tax payments and population. The legislation provided that revenues of the state not otherwise appropriated and receipts from sale of certain Indian lands would be pledged as security. The notes would be legal tender and could be used to pay off debts and thereby relieve economic suffering in the state.3 The bill passed with a significant, if unintended, assist from Andrew Jackson . Jackson, by 1820 an advocate of hard money, visited Murfreesboro to oppose the state loan office. In typical fashion, he became incensed and at a tavern in Murfreesboro called all those who had voted for the bank “d——d perjured sons of b——s.” Jackson’s efforts to drum up opposition backfired, with some legislators objecting to his remonstrance as dictatorial and intemperate. William B. Lewis wrote Jackson that he considered the loan-office bill a dangerous experiment but that most people in his vicinity favored it...

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