The Writings of
Thomas Jefferson

editor H.A. Washington
New York :  H.W. Derby
To John Adams, Esq.
Monticello, November 7, 1819.

DEAR SIR,—Three long and dangerous illnesses within the last twelve months, must apologize for my long silence towards you.

The paper bubble is then burst.  This is what you and I, and every reasoning man, seduced by no obliquity of mind or interest, have long foreseen; yet its disastrous effects are not the less for having been foreseen.  We were laboring under a dropsical fulness of circulating medium.  Nearly all of it is now called in by the banks, who have the regulation of the safety-valves of our fortunes, and who condense and explode them at their will.  Lands in this State cannot now be sold for a year’s rent ;  and unless our legislature have wisdom enough to effect a remedy by a gradual diminution only of the medium, there will be a general revolution of property in this State.  Over our own paper and that of other States coming among us, they have competent powers ;  over that of the bank of the United States there is doubt, not here, but elsewhere.  That bank will probably conform voluntarily to such regulations as the legislature may prescribe for the others.  If they do not, we must shut their doors, and join the other States which deny the right of Congress to establish banks, and solicit them to agree to some mode of settling this constitutional question.  They have themselves twice decided against their right, and twice for it.  Many of the States have been uniform in denying it, and between such parties the Constitution has provided no umpire.  I do not know particularly the extent of this distress in the other States ;  but southwardly and westwardly I believe all are involved in it.  God bless you, and preserve you many years.

To William C. Rives.
Monticello, November 28, 1819.

DEAR SIR,—The distresses of our country, produced first by the flood, then by the ebb of bank paper, are such as cannot fail to engage the interposition of the legislature.  Many propositions will, of course, be offered, from all of which something may probably be culled to make a good whole.  I explained to you my project, when I had the pleasure of possessing you here ;  and I now send its outline in writing, as I believe I promised you, Although preferable things will I hope be offered, yet some twig of this may perhaps be thought worthy of being engrafted on a better stock.  But I send it with no particular object or request, but to use it as you please.  Suppress it, suggest it, sound opinions, or anything else, at will, only keeping my name unmentioned, for which purpose it is copied in another hand, being ever solicitous to avoid all offence which is heavily felt, when retired from the bustle and contentions of the world.  If we suffer the moral of the present lesson to pass away without improvement by the eternal suppression of bank paper, then indeed is the condition of our country desperate, until the slow advance of public instruction shall give to our functionaries the wisdom of their station.  Vale, et tibi persuade carissimum te mihi esse.

Plan for reducing the circulating medium.

The plethory of circulating medium which raised the prices of everything to several times their ordinary and standard value, in which state of things many and heavy debts were contracted; and the sudden withdrawing too great a proportion of that medium, and reduction of prices far below that standard, constitute the disease under which we are now laboring, and which must end in a general revolution of property, if some remedy is not applied.  That remedy is clearly a gradual reduction of the medium to its standard level, that is to say, to the level which a metallic medium will always find for itself, so as to be in equilibrio with that of the nations with which we have commerce.

To effect this,

Let the whole of the present paper medium be suspended in its circulation after a certain and not distant day.

Ascertain by proper inquiry the greatest sum of it which has at any one time been in actual circulation.

Take a certain term of years for its gradual reduction, suppose it to be five years ;  then let the solvent banks issue 5/6 of that amount in new notes, to be attested by a public officer, as a security that neither more nor less is issued, and to be given out in exchange for the suspended notes, and the surplus in discount.

Let 1/5 of these notes bear on their face that the bank will discharge them with specie at the end of one year ;  another 5th at the end of two years ;  a third 5th at the end of three years ;  and so of the 4th and 5th.  They will be sure to be brought in at their respective periods of redemption.

Make it a high offence to receive or pass within this State a note of any other.

There is little doubt that our banks will agree readily to this operation ;  if they refuse, declare their charters forfeited by their former irregularities, and give summary process against them for the suspended notes.

The bank of the United States will probably concur also ;  if not, shut their doors and join the other States in respectful, but firm applications to Congress, to concur in constituting a tribunal (a special convention, e.g.) for settling amicably the question of their right to institute a bank, and that also of the States to do the same.

A stay-law for the suspension of executions, and their discharge at five annual instalments, should be accommodated to these measures.

Interdict forever, to both the State and national governments, the power of establishing any paper bank ;  for without this interdiction, we shall have the same ebbs and flows of medium, and the same revolutions of property to go through every twenty or thirty years.

In this way the value of property, keeping pace nearly with the sum of circulating medium, will descend gradually to its proper level, at the rate of about 1 every year, the sacrifices of what shall be sold for payment of the first instalments of debts will be moderate, and time will be given for economy and industry to come in aid of those subsequent.  Certainly no nation ever before abandoned to the avarice and jugglings of private individuals to regulate, according to their own interests, the quantum of circulating medium for the nation, to inflate, by deluges of paper, the nominal prices of property, and then to buy up that property at 1s. in the pound, having first withdrawn the floating medium which might endanger a competition in purchase.  Yet this is what has been done, and will be done, unless stayed by the protecting hand of the legislature.  The evil has been produced by the error of their sanction of this ruinous machinery of banks; and justice, wisdom, duty, all require that they should interpose and arrest it before the schemes of plunder and spoliation desolate the country.  It is believed that harpies are already hoarding their money to commence these scenes on the separation of the legislature ;  and we know that lands have been already sold under the hammer for less than a year’s rent.

To Hugh Nelson, Esq.
Monticello, March 12, 1820.

I thank you, dear Sir, for the information in your favor of the 4th instant, of the settlement, for the present, of the Missouri question.  I am so completely withdrawn from all attention to public matters, that nothing less could arouse me than the definition of a geographical line, which on an abstract principle is to become the line of separation of these States, and to render desperate the hope that man can ever enjoy the two blessings of peace and self-government.  The question sleeps for the present, but is not dead.  This State is in a condition of unparalleled distress.  The sudden reduction of the circulating medium from a plethory to all but annihilation is producing an entire revolution of fortune.  In other places I have known lands sold by the sheriff for one year’s rent ;  beyond the mountain we hear of good slaves selling for one hundred dollars, good horses for five dollars, and the sheriffs generally the purchasers.  Our produce is now selling at market for one-third of its price before this commercial catastrophe, say flour at three and a quarter and three and a half dollars the barrel.  We should have less right to expect relief from our legislators if they had been the establishers of the unwise system of banks.  A remedy to a certain degree was practicable, that of reducing the quantum of circulation gradually to a level with that of the countries with which we have commerce, and an eternal abjuration of paper.  But they have adjourned without doing anything.  I fear local insurrections against these horrible sacrifices of property.  In every condition of trouble or tranquillity be assured of my constant esteem and respect.