Leadership failures

I recently had the pleasure of addressing Leadership Greater Little Rock on the history of leadership in Arkansas. This leadership development program is a project of the Greater Little Rock Chamber of Commerce.

Since it is not possible for me to address every leadership issue I raised in the class, today I will limit myself to three major failures of leadership which set back our state.

What better place to begin a discussion of our leadership failures than our inability to start a public school system, and the neglectful manner in which federal support for a “seminary of learning” was flitted away by ignorance and avarice. I will conclude with a brief look at our early failed foray into banking, a fiasco that meant Arkansas would not have a banking system until after the Civil War.

Arkansas became a state in 1836 under a constitution that authorized state officials to develop a public school system. However, when the federal government set aside every 16th section of land in every township in the state to sell for education purposes, state officials deferred to local officials in selling the land, overseeing the income, and running the schools. Only a few communities had anything approximating a real school.

Early efforts to establish a state university—or “a seminary of learning” in the language of the day—came to naught as well. When the federal government offered large tracts of land to sell to endow a university, Arkansas leaders reacted slowly and without resolve. Squatters who were living illegally on federal land were given title to the land without having to buy it. Prices were drastically reduced from the original $10 per acre.

In 1950 the great Boston Brahmin historian Samuel Eliot Morison published a revised edition of his majestic history of the United States,

The Growth of the American Republic, which contained this biting comparison of the sister states of Michigan and Arkansas: “The first Michigan legislature created a university, at Ann Arbor. The first Arkansas legislature was remembered for a fatal brawl, when the Speaker of the House came down from his chair and slew a member with his bowie-knife.” Morison could have gone on to say that Arkansas did not get a state university for many more years—until Reconstruction.

The Arkansas historian and educator John Hugh Reynolds has noted that the failure of the early leaders of Arkansas to take advantage of the seminary lands set Arkansas back for years: “How heavily Arkansas lost in her failure to regard the university fund as a sacred trust is beyond estimate.”

If you are shocked that our antebellum ancestors missed the boat in failing to create an educational infrastructure for Arkansas, be prepared for even worse results when it came to setting up a banking system for the new state. As with education, the 1836 state constitution provided for creating a system of banks. The state set up two separate banks, the Real Estate Bank, which was intended to provide credit to farmers and planters, and the State Bank, which was meant to meet the needs of the merchant community.

The State Bank was the first to be launched. By the autumn of 1837 state bonds in the amount of $300,000 had been sold to the Secretary of War. The State Bank erected a fine headquarters in Little Rock with branches in Fayetteville, Arkansas Post, and Batesville. The State Bank loaned money with abandon and little oversight. The Arkansas Post branch loaned $60,000 on its opening date alone.

The Real Estate Bank got its start in 1838 when the state managed to sell $1.5 million in state bonds. U.S. Senator Ambrose H. Sevier of Arkansas browbeat the newly endowed Smithsonian Institution into buying $500,000 in bonds. The Real Estate Bank was, as historian Michael B. Dougan has written, a “planter-run bank.” Land provided the security for loans from the Real Estate Bank, often at inflated prices. Oversight was minimal. Sen. Sevier himself got a $15,000 loan backed by 1,080 acres of land.

The first bank to fail was the State Bank with $2 million in debt by 1839. The Real Estate Bank declared bankruptcy in July 1841. In the aftermath of the failure of its initial banking system, Arkansans reacted by outlawing banks altogether. This left our state without a source of much needed capital—and without funding to develop the infrastructure of a fledgling frontier state.

These are my first three nominations for leadership failures in Arkansas history. And we are still paying the price for those failures.