TIP #420 - THE FORTY THIEVES After the collapse of many of the banks and the Ohio River trade, Kentucky was deep into an economic depression by 1818. Kentucky was one of the states hit the hardest. Again, most of the problems came from the banking industry itself by its licensing forty under-capitalized private banks. These banks were known as the "Forty Thieves." The only truly stable banks, that weren't in that good a shape was the Bank of Kentucky and the Second Bank of the United States. The latter had branches in Louisville and Lexington, KY. These two banks began calling in all the notes and the Forty Thieves closed their doors. Suddenly, money just disappeared in Kentucky. Farmers and business owners had to barter to stay in business. One couldn't obtain credit anywhere - no matter how financially stable the individual was. It was impossible to buy the things needed to live on; seeds, tools, nothing was available. Mercantiles closed shortly after the banks, factories closed in the bigger cities and the average citizen sat in his cabin or small home and just wondered how long they could make out. It was then that citizens began to rebel. Committees were formed, meetings were called and they demanded legislative intervention now! The Frankfort Resolutions were written in 1819 that demanded a three-year debt delay and attempted to push the legislators to step in and do something. Relief parties were formed in Kentucky, Ohio, Missouri and Tennessee and other states in dire straits. There sprung up anti-relief parties right along side of them. Oral fights continued between the two sides and within the sides on why, how and if something should be done. Senator Joseph Bledsoe led the Relief party in the beginning, urging a return to the Jeffersonian republicanism. In 1820 James Davis and others advocated creating a public bank to be called the Commonwealth Bank of Kentucky. In 1821-22, the Relief party was claiming victory and the majorities needed for both houses. Gov. John Adair and Lt. Governor William T Barry supported them and they ruled the House and Senate. Many journalists in the Kentucky papers rallied to the cause including Francis Preston Blair Sr and Amos Kendall. The Commonwealth Bank of Kentucky began business in May of 1821. But, almost immediately the Kentucky Court of Appeals along with the 7th Circuit Court for the District of Kentucky stated that most of Kentucky's debtor relief system was found unconstitutional. It was only the abolition of the debtor's prisons that finally made it into law. By 1824, with the battles still raging, the "New Court of Appeals" was erected and the Old Court abolished. The financial crisis ended with this step and a renewed prosperity in the state. When elections were held 1824-1825, the Relief Party - now called the New Court Party collapsed. Governor Joseph Desha who supported the Relief party was left alone and either some of the earlier pro-relief supporters such as Robert McAfee and Samuel Davis, began to speak more and more as anti-reliefers. For further information see: Arndt Stickles, The Critical Court Struggle in Kentucky, Bloomington, IN, 1929. And the Kentucky Encyclopedia, The Relief Party. Next week: My annual Christmas story. (c) Copyright 12 Dec 2002, Sandra K.Gorin, All Rights Reserved. sgorin@glasgow-ky.com Col. Sandi Gorin Publishing: http://ggpublishing.tripod.com/ GORIN worldconnect website: http://worldconnect.rootsweb.com/~sgorin SCKY resource links: http://www.public.asu.edu/~moore/Gorin.html