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Cornell University Library 
 HB3711.J96 
 
 A brief history of panics and tlieir peri 
 
 3 1924 013 947 621 
 
A BRIEF HISTORY OF PANICS 
 
 AND THEIR PERIODICAL OCCURRENCE 
 IN THE UNITED STATES 
 
 CLEMENT JUGLAR 
 
 member of the institute, vice-president of la socl^t^ 
 d'^conomie politique 
 
 ENGLISHED AND EDITED WITH AN INTRODUCTORY 
 
 ESSAY SETTING FORTH THE INDICATIONS 
 
 OF APPROACHING PANIC 
 
 DeCOURCY W. THOM 
 
 MEMBER OF THt BALTIMORE STOCK EXCHANGE AND OF THE 
 CONSOLIDATED EXCHANGE OF NEW YORK 
 
 G. P. PUTNAM'S SONS 
 
 NEW YORK LONDON 
 
 27 W^ST TWENTY-THIRD STREET 24 BEDFORD STREET, STRAND 
 
 ®;^£ fnitkEtbotktr ^rcss 
 1893 
 
COPYRIGHT, 1893 
 BY 
 
 DeCOURCY w. thom 
 
 Electrotyped, Printed, and Bound by 
 
 Ube mnfcfeerbochec Tpress^ Iftew Korft 
 G. P. Putnam's Sons 
 
TO THE FRAGRANT MEMORY OF MY BELOVED WIFE 
 
 MARY GORDON THOM 
 
 to whom most of the translation was dictated 
 
 i dedicate this work 
 
 with love and remembrance that are 
 
 stronger than life 
 
 DeCourcy W. Thom. 
 
 Wakefield Manor 
 
 June 25M, 1892 
 
Cornell University 
 Library 
 
 The original of tiiis book is in 
 tine Cornell University Library. 
 
 There are no known copyright restrictions in 
 the United States on the use of the text. 
 
 http://www.archive.org/details/cu31924013947621 
 
INTRODUCTION 
 
 Comprising a Condensation of the Theory 
 OF Panics, by M. Juglar, Rendered into 
 English, with Certain Additional Ma- 
 terial, BY DeCourcey W. Thom. 
 
 In this translation, made with the 
 author's consent, my chief object being to 
 convey his entire meaning, I have unhesi- 
 tatingly rendered the French very freely 
 sometimes, and again very literally. Style 
 has thus suffered for the sake of clear- 
 ness and brevity, necessary to secure 
 and retain the attention of readers of this 
 class of books. This same conciseness has 
 also been imposed on our author by the in- 
 herent dryness and minuteness of his faith- 
 ful inquiry into hundreds of figures, tables 
 showing the condition of banks at the time 
 of various panics, etc., etc., essential to his 
 demonstration. As an extreme instance of 
 the latitude I have sometimes allowed my- 
 
2 introduction. 
 
 self, I cite my i-eodering of the title : " Des 
 Crises Commerciales et de Leur Retour 
 Periodique en France, en Angleterre et aux 
 jStats-Unis''^ merely as "Panics and Their 
 Periodical Occurrence in the United States": 
 for M. Juglar himself states that a commer- 
 cial panic is always a financial panic, as a 
 falling away of the metallic reserve indi- 
 cates its breaking out; and I have only 
 translated that portion dealing with the 
 United States, deeming the rest unneces- 
 sary, for this amply illustrates and proves 
 the theorem in hand. 
 
 To this sketch of the financial history of 
 the United States up to 1889, when M. 
 Juglar published his second edition, I have 
 added a brief account to date, including 
 the panic of 1890, the table headed "Na- 
 tional Banks of the United States," and 
 some additions to the other tables scattered 
 through this book. 
 
 From the prefaces to the French editions 
 of 1860 and of 1889, and other introductory 
 matter, I have condensed his theory as fol- 
 lows: 
 
 A Crisis or Panic may be defined as a 
 
Introduction. 3 
 
 stoppage 01 the rise of prices : that is to 
 say, the period when new buyers are not 
 to be found. It is always accompanied by 
 a reactionary movement in prices. 
 
 A panic may be broadly stated as due to 
 overtrading, which causes general business 
 to need more than the available capital, 
 thus producing general lack of credit. Its 
 precipitating causes are broadly anything 
 leading to overtrading : 
 
 In the United States they may be classed 
 as follows : 
 
 I. Panics of Circulation, as in 1857, when 
 the steadily increased circulation, which 
 had almost doubled in nine years, had ren- 
 dered it very easy to grant excessive dis- 
 counts and loans, which had thus over- 
 stimulated business so that the above 
 relapse occurred ; or, we may imagine the 
 converse case, leading to a quicker and 
 even greater disaster: a sudden and pro- 
 portionate shrinkage of circulation, which, 
 of course, would have fatally cut down 
 loans and discounts, and so precipitated 
 general ruin. 
 
4 Introduction. 
 
 2. A Panic of Credit, as iii 18(56, when the 
 failure of Overeud, Gnroey, <fc Co. rendered 
 the whole business world over cautious, and 
 led to a universal shrinkage of credit. [I 
 take the liberty of adding that it seems 
 evident to me that such a danger must 
 soon confront us in the United States, un- 
 less our Silver LaAv is changed, because of 
 a finally inevitable distrust of the govern- 
 ment's ability to keep 67-cent silver dollars 
 on an equality with 100-cent gold dollars.] 
 
 3. Panics of Capital, as in 1847, when 
 capital was so locked up in internal im- 
 provements as to prove largely useless. 
 
 4. General Tariff Changes. To the three 
 causes given above the translator adds a 
 fourth and most important one : Any 
 change in our tariff laws general enough to 
 rise to the dignity of a new tariff lias with 
 one exception in our history precipitated a 
 panic. This exception is the tariff of 1846, 
 which was for revenue only, and introduced 
 after long notice and upon a graduated 
 scale. This had put the nation at large in 
 such good condition that when the appar- 
 
Introduction. 5 
 
 ently inevitable Decennial Panic occurred 
 in 1848 recovery from it was very speedy. 
 The reason for this general effect of new 
 tariffs is obvious. Usual prices and confi- 
 dence are so disturbed that buyers either 
 hold off, keeping their money available, or 
 else draw unusually large amounts so as to 
 buy stock before adverse tariff changes, 
 thus tightening money in both ways by in- 
 terfering with its accustomed circulation. 
 This tendency towards contraction spreads 
 and induces further withdrawal of de- 
 posits, thus requiring the banks to reduce 
 their loans ; and so runs on and on to in- 
 creasing discomfort and uneasiness until 
 panic is speedily produced. The practical 
 coincidence and significance of our tariff 
 changes and panics is shown by an extract 
 below fi'om an article written by the trans- 
 lator in October-November, 1890, predict- 
 ing the recent panic which was hastened 
 somewhat by the Baring collapse.^ 
 
 ^ Inter-relations of Tariffs, Panics, and the Condition of 
 Agriculture, as Developed in the History of the United States 
 of America. 
 
 This brief sketch of our economic history in tlie United 
 States seeks to show that Protective Tariffs have always im- 
 
6 Introduction. 
 
 The retarding or precipitating influence 
 of a good or bad condition of agriculture 
 upon the advent of a panic is also indicated. 
 
 poverished a majority of our people, the Agriculturists ; that 
 agriculture has thus been made a most unprofitable vocation 
 throughout the States, and that this unsoundness at the very 
 foundation of the business of the American people has often 
 forced our finances into such makeshift conditions, that under 
 any unusual financial strain a panic, with all its wretched 
 accompaniments, has resulted. 
 
 To consider this properly, we must note the well known 
 fact that in this land, those who live by agriculture directly, 
 are more than one half of our population. Their votes can 
 cause to be made such laws as they see fit, hence, one would 
 expect the enactment of laws to raise the price of farm pro- 
 ducts, and to lower the price of all that the farmer has to buy. 
 But the farmers vote as the manufacturers and other active 
 classes of the minority of our voters may influence ; and only 
 twice in our history, from 1789 to l8o8, and from 1846 to 
 i860, have enough of the minority found their interests suffi- 
 ciently identical with that of the unorganized farmer-majority 
 to join votes, and thus secure at once their common end. In 
 consequence of this coalition during these two periods, two 
 remarkable things happened ; ist, agriculture flourished, 
 and comfortable living was more widely spread : 2d, panics 
 were very infrequent, and the hardships and far-reaching dis- 
 comforts that must ever attend adjustments to new financial 
 conditions after disturbances were, of course, minimized. 
 
 It is not fair to deduce very much from the first period of 
 prosperity among the farmers, 1789 to 1808, for, during this 
 time, there were no important business interests unconnected 
 with agriculture ; but we may summarize the facts that from 1789 
 to 1808, there was, ist, no protection, the average duty during 
 this time being 5 per cent., and that laid for revenue only ; 2d, 
 that agriculture flourished ; 3d, that there was not a single panic. 
 
Introduction. 7 
 
 The symptoms of approaching panic, 
 generally patent to every one, are wonder- 
 ful prosperity as indicated by very numer- 
 
 " The Embargo " of 1808, followed by the Non-Intercourse 
 Act in 1809 and the War of 1812-15, and the war tariff, by 
 which double duties were charged in order to raise money for 
 war purposes, caused us to suffer all the economic disasters 
 flowing from tariffs ranging between absolute protection, and 
 those practically prohibiting, and intensified by the sufferings 
 inseparable from war. 
 
 During this period agriculture, for the first time in our his- 
 tory, was in a miserable condition. It is significant that for 
 the first time too, we had a protective tariff. Though our 
 people made heroic efforts to make for themselves those articles 
 formerly imported, thus starting our manufacturing interests, 
 they had, of course, lost their export trade and its profits. 
 When the peace of 1814 came, we again began exporting our 
 produce, and aided by the short harvests abroad, and our own 
 accumulated crops, resumed the profitable business which for 
 six years our farmers and our people generally had entirely lost. 
 
 Our first panic, that of 1814, came as a result of our long 
 exclusion from foreign markets, being followed by the stimu- 
 lation given business through resumption of our foreign trade 
 in 1814, which was immensely heightened by the banks issuing 
 enormous quantities of irredeemable paper, instead of bend- 
 ing all their energies to paying off the paper they had issued 
 during the war. 
 
 But worse than the suffering entailed by this panic, was the 
 engrafting upon our economic policy of the fallacious theory 
 made possible by the Embargo and the Non-Intercourse Act, 
 (which was equivalent, let me enforce it once more, to that 
 highest protective tariff, a prohibitory one) that all infant 
 manufactures must be frotecteil, that is, gtiarnntiid a home 
 market, though such home market be one where all goods cost 
 more to the purchaser than similar goods bought elsewhere. 
 
8 Introduction. 
 
 0U8 enterprises and schemes of all sorts, 
 by a rise in the price of all commodities, 
 of land, of houses, etc., etc., by an active 
 
 and this in order that the compact little band of sellers in the 
 home market may make their profit. This demand for pro- 
 tection was made by those who had started manufactures dur- 
 ing the years from 1808 to the end of the war of 1815, when, 
 as we have seen, imports were practically excluded. 
 
 In 1816 their demand met explicit assent, for, in the tariff of 
 that year, duty for protection, not for revenue, was granted ; 
 and an average of 25 per cent, duties for six years, to be fol- 
 lowed by an average of 20 per cent, duties, was laid upon 
 imports. For a few years bad bread crops in Europe, demand 
 for our cotton, and an inflation of our currency delayed a 
 panic. 
 
 But, we had started on our unreasoning course. We had 
 tried to ignore the laws of demand and supply, and had for- 
 gotten that it is also artificial to attempt preventing purchases 
 in the cheapest, and selling in the highe-it markets ; and to 
 help a few manufacturers we had put up prices for all that a 
 large majority of our population, — the agriculturists mainly — 
 had to bu)-. In a short while the demand for what the 
 farmers had to sell fell away, and bills could not be met, and 
 their troubles were added to those of the minority of the con- 
 sumers of the country ; the volume of business fell off, and a 
 panic came in 1818. The influences that led up to it con- 
 tinued until 1846, as follows ; The great factors in producing 
 this state of affairs were the successive tariffs of 1818, with 
 its 25 per cent, duty upon cottons and woollens, and its in- 
 creased duties on all forms of manufactured iron, {the tariff of 
 1824 which increased duties considerably), and the tariff of 
 1828, imposing an average of 50 per cent, duties, and in which 
 the protective movement reached its acme {omitting, of course, 
 the present McKinley Bill with its 60 per cent, average duty). 
 In 1S32, consequently, a great reaction in sentiment took 
 
Introduction. 9 
 
 request for workmen, a rise in salaries, a 
 lowering of interest, by the gullibility of 
 the public, by a general taste for specu- 
 lating in order to grow rich at once, by a 
 growing luxury leading to excessive ex- 
 penditures, a very large amount of discounts 
 and loans and bank notes' and a very small 
 
 place, and the " Compromise Tariff " was passed and duties 
 were lowered. From this period, the advocacy of a high 
 tariff in order to protect " Infant Industries," no longer "In- 
 fant " was largely abandoned , and its advocacy was generally 
 based upon the fallacy, less obvious then than now, of secur- 
 ing high wages to laborers by means of high import duties. 
 This plea for high duties the laborer found to be fallacious. 
 
 They (agriculturists mainly) found that they had to pay 
 more for manufactured goods, so that the manufacturers 
 could still buy their raw materials at the advanced prices, pay 
 themselves the accustomed or increased profits, and then 
 possibly pay the laborer a small advance in wages. 
 
 The advance did not compensate for increased cost of nec- 
 essaries of life. If competition reduced the manufacturers' 
 profit, the first reduction of expenses was always in the 
 laborer's pay. The recognition of these truths brought about 
 the further reduction of duties until 1842, in which year the 
 tariff was once more raised. It was not until 1846 that we 
 enjoyed a tariff which sought to eliminate the protective 
 features. It is significant that a period of greater profit and 
 stability among our business men, but especially among our 
 
 ' Our recent banking history has proved rather an excep- 
 tion to this law as far as bank notes are concerned, because of 
 the obviously unusual cause of sudden and enormous calling 
 in of government bonds, the basis of bank-note issue. 
 
I o Introduction. 
 
 reserve in specie and legal- tender notes and 
 j)oor and decreasing deposits. 
 
 On the other hand, the lowest point of 
 
 farmers, was then inaugurated. This was the first tariff, since 
 that of iSi6, not affected by politics. It lasted until 1857, 
 and the country flourished marvellously under it. 
 
 From 1816, when protection was first resorted to, until to- 
 day, tariff rates have been almost continually raised, mainly 
 by votes of the agriculturists, misled by the manufacturers and 
 politicians, influenced by the manufacturers' money. And a 
 fact A\orth noting is that financial panics have come quick 
 and furious. They came in 1818, and in 1825-26, in 1829-30, 
 and so on, (see page 13). Sudden changes in our tariff rates 
 have unvaryingly been followed by financial panics within a 
 short period. Changes to lower rates have not brought panics 
 so quickly as changes in the reverse direction. 
 
 Low tariff without protective features, maintained steadily, 
 has been coincident with constantly increasing prosperity to 
 the country at large : but most especially to the agriculturists. 
 This is readilyunderstood, for purchases of imported and man- 
 ufactured goods and all outfit needed for the farmers' land 
 and family can be made at low — and owing to the competition 
 that always arises to supply a steady and natural market — low- 
 ering prices. Moreover, the settled prices prevailing through- 
 out the country allow of assured calculations and precautions 
 as to business ventures, and permit such a ratio to be es- 
 tablished between expenses and income, that at the end of the 
 fiscal year a profit, not a loss, may be counted upon. 
 
 This was the experience of our agriculturists during the 
 second and last prosperous time of our farmers, 1846-60. 
 During that period agriculture flourished ; the tariff was low 
 and there were only two panics, that of 1848, and the one of 
 1857, and the first (a non-protective one) should not be con- 
 sidered as precipitated by the tariff of 1846, except that some 
 few suffered briefly in readjusting themselves to the changed, 
 
Introduction. 1 1 
 
 depression following a panic is accom- 
 panied by the converse of tte symptoms 
 just enumerated. 
 
 (though better), condition of the new tariff. The vast majority 
 of the nation reaped enormous benefits from the changes 
 inaugurated. 
 
 The panic of 1857 was caused by over-activity in trade 
 speculation, and over-banking, and the tariff of the same year 
 was really passed to help avert the panic threatening. It had 
 the contrary effect, it is believed, for it still further, of course, 
 unsettled rates for goods, when prices were already unstable. 
 But the point is to be noted that in reality tariff change fol- 
 lowed practical panic in this instance rather than practical 
 panic tariff change. The high protective war tariffs, begin- 
 ning in i860, and increased for war purposes and granted 
 largely as an offset for those internal revenue taxes laid to 
 carry on the war, have been continued as a body ever since, 
 as is well known, despite the internal revenue taxes having 
 been abolished except on whiskey and tobacco. It is equally 
 well known that farming has grown less and less remunera- 
 tive since i860, and that the panics of 1864, 1873, and 1884 
 have been unfortunate culminations of almost unceasing 
 financial discomfort, which has been most forcibly exemplified 
 during the last two months. Even now the financial fabric is 
 in unstable equilibrium, and this latest monstrosity — the 
 McKinley Bill — imposing the highest tariff we have ever 
 exacted — an average duty of 60 per cent., and coming when 
 a panic was due, bids fair to hurry us into another and a ter- 
 rible financial panic. If it does not do so, it will be because 
 our crops are too bountiful to allow it, but it will at least 
 have made the agriculturists and all buyers of other commo- 
 dities than agricultural produce pay more for all purchases. 
 It will bring no more money into their pockets, but it must 
 take out considerably more. The people appreciate this. The 
 nation's pocket nerve has been touched. This is the meaning 
 
1 2 Introduction. 
 
 Bank balaace sheets reflect in cold 
 figures the result of the above influences. 
 Prices being high, and discounts and loans 
 
 of the recent election, it seems to the writer. But whether 
 the impending danger can be averted even if a prompt, though 
 wise and slow reversal of tariff policy can be forced by the 
 next Congress is doubtful, for unrest and timidity have been 
 evoked and require time to be allayed before easy and orderly 
 business operations will in general be resumed, tinless indeed 
 bountiful crops here and demand abroad once again reverse 
 the logic of the situation. 
 
 Certain it is that our tariff laws must interfere as little as 
 possible with the natural law of demand and supply in mak- 
 ing prices, or we must be content to suffer from the instability 
 that artificiality always brings with it. 
 
 Our plain duty is to enact as speedily as possible a tariff that 
 shall by small but continued changes cut down our protective 
 duties and substitute non-protective duties until our tariff is 
 for revenue only ; for thus and thus only can the vast majority 
 of the agriculturists buy what they need most cheaply, and so 
 find that to purchase necessaries does not cost them more than 
 the total of their sales ; and our exports of produce, chiefly 
 owing to agricultural prosperity, would increase, thus materi- 
 ally helping to build up our general business so that the other 
 nations will have to pay us, in the gold we require for comfor- 
 table management of our business, the growing trade balances 
 against them. 
 
 The rough table below suggests that sudden tariff changes 
 have precipitated panics, which have come quickly if the 
 change was to higher protective duties and somewhat slower if 
 the change was to lower protective duties ; that slow and well 
 considered changes doing away with protective duties gener- 
 ally have not caused disturbances ; and that agriculture has 
 flourished in proportion as we approached tariff for revenue 
 only. It has for obvious reasons required about one year for 
 
Tntreduction. 
 
 13 
 
 large in proportion to deposits, and hav- 
 ing steadily increased for years, danger 
 is near ; further, when discounts and loans 
 
 financial trouble to be shown by decrease in value of farm 
 produce as evinced by wheat-flour exports. 
 
 Special conditions, such as excessive wheat corps liere and 
 deficiency abroad or special tariff favors to flour export, may 
 even increase the amount exported despite an otherwise unto- 
 ward effect of the new tariff upon farmers. I have selected 
 flour exports as the article best reflecting the chief interest of 
 the farmers, and at the same time the state of general business 
 for manufacturing, transportation and such other branches as 
 are concerned with it. 
 
 
 They have 
 
 
 
 
 
 all been de- 
 
 
 Condition of agriculture and inci- 
 
 Tar- 
 iffs. ' 
 
 signedly Pro- 
 
 
 dentally of general b 
 
 usiness as 
 
 tective save 
 
 Panics. 
 
 suggested by export of 
 ■wheat-flour from 
 
 
 the one f 
 
 
 1790-1890. 
 
 
 
 .1846. 
 
 
 
 
 
 
 Year. Barrels. 
 
 Dollars. 
 
 
 
 1790. 
 
 . 724,623 
 
 4,591,293 
 
 
 
 1791. 
 
 . 619,681 
 
 3,408,246 
 
 
 
 1792. 
 
 . 824,464 
 
 
 
 
 1793- 
 
 .1,074,639 
 
 
 
 
 1794- 
 
 . 846,010 
 
 
 
 
 1795- 
 
 • 687,369 
 
 
 
 
 1796. 
 
 ■ 725,194 
 
 
 
 
 1797- 
 
 • 515,633 
 
 
 
 
 1798- 
 
 - 567,558 
 
 
 
 
 1799- 
 
 • 519,265 
 
 
 
 
 1800. 
 
 . 653,056 
 
 
 
 
 1801. 
 
 .1,102,444 
 
 
 
 
 1802. 
 
 .1,156,248 
 
 
 
 
 1803. 
 
 • 1,311,853 
 
 9,310,000 
 
 
 
 1804. 
 
 . 810,008 
 
 7,100,000 
 
 
 
 1805. 
 
 • 777,513 
 
 8,325,000 
 
 
 
 
 1806. 
 
 ■ 782,724 
 
 6,867,000 
 
14 
 
 Introduction. 
 
 are not only large in proportion to deposits, 
 having increased steadily for years, and 
 then suddenly fallen off noticeably for a 
 
 
 
 1807. 
 
 1,249,819 
 
 10,753,000 
 
 
 
 1808. 
 
 263,813 
 
 1,936,000 
 
 
 
 1809. 
 
 846,247 
 
 5,944,000 
 
 
 
 I81O. 
 
 798,431 
 
 6,846,000 
 
 
 
 i8n. 
 
 1,445,012 
 
 14,662,000 
 
 Say 
 
 ■ Practical exclu-] 
 sion of all importb I 
 through the war = ' 
 
 1814 
 
 '1812. 
 1813. 
 
 1,443,492 
 1,260,943 
 
 13,687,000 
 13,591,000 
 
 1814 
 
 1814. 
 1815. 
 
 193,274 
 
 1,734,000 
 
 
 , Prohibitory Tariff J 
 
 
 . 862,739 
 
 7,209,000 
 
 i8i6- 
 
 Duties for six 1 
 years @ 25^ and \ 
 thereafter (® 2o!S. t 
 
 
 ( 1816. 
 ( 1817. 
 
 ■ 729,053 
 .1,479,198 
 
 7,712,000 
 17,751,376 
 
 _ 
 
 1818 
 
 "1818. 
 
 •1,157,697 
 
 11,576,970 
 
 
 
 1819. 
 
 . . 750,669 
 
 6,005,280 
 
 
 
 1820. 
 
 .1,177,036 
 
 5,296,664 
 
 
 Duties 255S on] 
 
 
 1821. 
 
 .1,056,119 
 
 4,298,043 
 
 
 Cotton and Wool- 
 
 
 1 1822. 
 
 . 827,865 
 
 5,103,280 
 
 i8i8- 
 
 lens, and all duties ■ 
 on Manufactured 
 
 
 ' 1823. 
 
 • 756,702 
 
 4,962,373 
 
 
 Iron increased. 
 
 
 1824. 
 
 • 996,792 
 
 5,759,176 
 
 
 1825-26 
 
 1825. 
 
 . 813,906 
 
 4,212,127 
 
 
 
 1826. 
 
 . 857,820 
 
 4,121,466 
 
 
 
 1827. 
 
 . 868,492 
 
 4,420,081 
 
 
 
 1828. 
 
 . 860,809 
 
 4,286,939 
 
 
 
 1829. 
 
 ■ 837,385 
 
 5,793,651 
 
 i828-{j^/"'"S'= "*"'>' °^j- 
 
 
 - 1830. 
 
 .1,227,434 
 
 6,085,953 
 
 
 1831. 
 
 .1,806,529 
 
 9,938,458 
 
 . 
 
 
 1 1832. 
 
 . 864,919 
 
 4,880,623 
 
 
 
 1833. 
 
 • 955,768 
 
 5,613,010 
 
 
 Compromise Tar- 
 
 
 1834- 
 
 • 835,352 
 
 4,520,781 
 
 
 iff, gradual reduc- 
 tion of duties from 
 
 
 1835. 
 
 ■ 779,396 
 
 4,394.777 
 
 
 50^ average until 
 in 1842 the average ■ 
 
 
 1836. 
 
 • 505,400 
 
 3,572,599 
 
 1833 
 
 1836-39 
 
 • 1837. 
 
 • 318,719 
 
 2,987,269 
 
 
 was 20^. But this 
 was levied for Pro- 
 tection not merely 
 
 
 1838. 
 1839. 
 
 . 448,161 
 . 923,151 
 
 3,603,299 
 6,925,170 
 
 
 for Revenue. J 
 
 
 1840. 
 
 .1,897,501 
 
 10,143,615 
 
 
 .1841. 
 
 .1,515,817 
 
 7,759,646 
 
 
 '1842. 
 
 .1,283,602 
 
 7,375,356 
 
 iSaa-* , I?^PO«'' higher! 
 ' 1 duties, ( 
 
 1843. 
 
 . 841,474 
 
 3,763,073 
 
 1844. 
 
 •1,438,574 
 
 6,759,488 
 
 
 
 ] 1 
 
 1 1845- 
 
 .1,195,230 
 
 5,398,593 
 
Introduction. 
 
 15 
 
 considerable time, tiuh to iucrease again, 
 danger is imminent. 
 
 On the other hand, a steady and i-adical 
 
 1846 
 
 Imposed lowerl 
 duties a D d these j 
 were not for Pr€>- \ 
 tectum purposes I 
 they were simply I 
 for Revenue. J 
 
 ' Reduced TaiiSI 
 ratesonaboreplan 1 
 because of redun- \ 
 dant prosperity, j 
 War Tariff pro-1 
 tection restored as j 
 compensation for \ 
 Internal Revenue j 
 .fares. j 
 
 1862. . As above 
 
 1864. .As above 
 
 1857- 
 
 i86a 
 
 1872 
 
 lotf rednction, bu t 
 oofieeand tea put 
 on Free List and 
 whiskey and to- 
 bacco taxes re- 
 .duced. 
 
 tarsi "* reduction! 
 "^^ \ above repealed. J 
 
 1940 
 
 1873 
 
 1357 
 
 1864 
 
 1846. 
 
 1847. 
 
 1848. 
 
 1849. 
 
 1850. 
 
 185 1. 
 
 1852. 
 
 1853- 
 
 1854- 
 
 1855- 
 L1856. 
 
 1857- 
 - 1858. 
 
 ( 1859- 
 
 i i860. 
 > 1861. 
 
 1862. 
 1863. 
 1864. 
 1865. 
 1866. 
 1867. 
 1868. 
 i86g. 
 1870. 
 L1871. 
 1872. 
 
 1873- 
 1874. 
 1875. 
 1876. 
 1877. 
 1878. 
 1879. 
 1880. 
 1881. 
 1882. 
 
 .2,289,476 
 .4,382,496 
 .2,119,393 
 .2,108,013 
 1,385,448 
 .2,202,335 
 
 2,799.339 
 .2,920,918 
 .4,022,386 
 .1,204,540 
 .3,510,626 
 3,712,053 
 .3.512,169 
 .2,431,824 
 
 11,668,669 
 26,133,811 
 13,194,109 
 11,280,5.32 
 7,098,570 
 
 10,524,331 
 11,869,143 
 
 14.783.39+ 
 27,701,444 
 10,896,908 
 
 29,275,148 
 25,882,316 
 19,328,884 
 14,433,591 
 
 .2,611,596 15,448,507 
 •4,323,756 24,645.849 
 
 .4,882,033 
 •4,390,055 
 
 ■3,557,347 
 .2,641,298 
 .2,183,050 
 .1.300,106 
 .2,076,423 
 .2.431,873 
 
 ■3.463,333 
 .3,653,841 
 
 ■2.514,535 
 .2,562,086 
 .4,094,094 
 • 3.973.128 
 •3,935,512 
 .3,343,665 
 
 •3,947,333 
 .5,629,714 
 .6,011,419 
 
 •7,945,786 
 ,5,915,686 
 
 27,534,677 
 28,366,069 
 25,588,249 
 27,507,084 
 18,396,686 
 12,803,775 
 20,887,798 
 18.813.865 
 21,169,593 
 24,093,184 
 17,955,684 
 19,381,664 
 29,258,094 
 23,712,44c 
 24,433,470 
 21,663,947 
 25,095,721 
 29,567,713 
 35,333,197 
 45.047,237 
 36,375,055 
 
i6 
 
 Introduction. 
 
 reduction of loans and discounts, following 
 a panic and extending until new enter- 
 prises are very scarce, till prices are very 
 low, till there is wide-spread idleness 
 among workmen, a decrease in salaries and 
 inintei'est rates, when the public is wary 
 and speculation dead, and expenditures 
 are cut doAvn as far as possible, may be 
 taken to mean a rapid and continued re- 
 sumption of every prosperous business : but 
 if the above process is only partially per- 
 formed, renewed trouble must result ; — in 
 other words, liquidation to really be helpful 
 (to congested business) must be thorough. 
 A study of the first of the following 
 tables, " National Banks of the United 
 States," illustrates the above generaliza- 
 tion. It is unnecessary to mention that 
 1873, 1884, and 1890 have been the 
 
 1890- 
 
 Duties really"! 
 raised on class of 
 goods most used, 
 but apparently I 
 lowered the tariff, 
 for it considerably 
 reduced rates on 
 many little used 
 classes of goods. J 
 
 McKinley Bill 
 average o f Go;.' 
 duty. 
 
 1890 
 
 883. .9,205,664 54,824,459 
 
 884. .9,152,260 51.139.695 
 885.10,648,145 52,146,336 
 886. .8,179,241 38,442,955 
 887.11,518,449 51,950,082 
 888.11,963,574 54,777,710 
 889. .9,374,803 45.296,485 
 890.12,231,711 57,036,168 
 891.11,344,304 54,705,616 
 
Introduction. 
 
 17 
 
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1 8 Introduction. 
 
 last three panic years. But it is very 
 necessary in studying this table, to bear in 
 mind that its figures are taken from the 
 standing of the banks at the first of the 
 year, while the panics generally occurred 
 later in the year : the last two, for instance 
 in the second and fourth quarter, respec- 
 tively. The third and fourth tables will 
 give more exact figures in this connection. 
 Table Two, dealing with State Banks, is 
 given merely to round out our banking 
 history as told in figures. 
 
 The increase or diminution of deposits 
 of course reflects a confident and success- 
 ful, or a panicky and impoverishing, state 
 of general business. 
 
 The adage " buy cheap and sell dear," 
 or its practical equivalent — so scary and 
 imitative are investors — Buy during the 
 last of a selling movement and sell during 
 the last of a huying movement, resolves it- 
 self, we venture to repeat, into : JBuy when 
 the decline caused hy a 'panic has prodiiced 
 such liquidation that discounts and loans, 
 after steady and long -continued diminu- 
 tion, either become stationary for a period, 
 
TABLE No. 2. 
 
 United States Table of Balance Sheets. 
 
 millions of dollars. 
 
TABLE No. 3. 
 
 United States Table of Balance Sheets of the National 
 
 Banks — Quarterly Statement. 
 
 millions of dollars. 
 
 cmcu- 
 
 SPECIE 
 
 
 DIS- 
 
 PNOI- 
 
 NUMBEK 
 
 
 SURPLUS 
 ANO 
 
 YEAR NA- 
 
 ON 
 
 
 LEGAL 
 
 COUNTS 
 AND 
 
 tffDUAL 
 
 OF 
 
 CAPITAL 
 
 UNOIVIOED 
 
 TION 
 
 HAND 
 
 TENDERS 
 
 LOANS 
 
 DEPOSITS 
 
 BANKS 
 
 
 PROFITS 
 
 
 MAXMIN, 
 
 MAX. 
 
 t\H. 
 
 MAX MIN 
 
 MAX. Ml\ 
 
 MAX Mm 
 
 MAXMIIM 
 
 MAX.MI^ 
 
 iMAX.MIN 
 
 1865 
 
 21°0UAR 
 
 
 66 
 
 
 ^ 
 
 TS- 
 
 /6A 
 
 
 m 
 
 /SOO 
 
 393 
 
 20 
 
 
 
 
 
 
 
 3«. „ 
 
 
 
 /a 
 
 
 Id9 
 
 
 
 
 
 
 
 
 4" ■• 
 
 ir/ 
 
 
 
 
 
 43? 
 
 
 
 
 
 
 
 1866 
 
 
 
 
 
 
 
 
 SOO 
 
 
 
 
 
 2«o .. 
 
 
 1/3 
 
 19 
 
 
 /a? 
 
 SOO 
 
 
 
 
 
 
 
 .3" " 
 
 
 
 
 
 
 
 
 
 5£Z 
 
 1644 
 
 ■US 
 
 71 
 
 A-'" " 
 
 Z60 
 
 
 
 
 
 
 
 
 
 
 
 
 1867 
 
 
 
 
 
 |0£ 
 
 603 
 
 
 S64 
 
 
 
 
 
 2."" " 
 
 
 
 
 9 
 
 
 
 
 556 
 
 
 
 
 
 3"° " 
 
 
 
 
 
 
 
 
 
 5/2 
 
 I64Z 
 
 42.0 
 
 86 
 
 V " 
 
 Z93 
 
 
 
 
 52 
 
 
 
 
 
 
 
 
 1868 
 
 
 
 BO 
 
 
 //4 
 
 9f 
 
 609 
 
 
 
 532 
 
 /643 
 
 4Z0 
 
 70/ 
 
 I 
 
 3«o ,. 
 
 
 
 
 
 
 
 
 
 
 / 
 
 
 
 4" " 
 
 195 
 
 
 
 
 
 
 
 
 
 / 
 
 
 
 1869 
 
 
 
 1.9 
 
 
 
 
 
 
 
 
 /6/7I 
 
 426 
 
 7/6 
 
 2"o „ 
 
 
 
 
 
 
 
 iS7 
 
 
 sao 
 
 
 
 
 
 3«o ,. 
 
 
 
 
 
 
 ao 
 
 
 
 
 
 
 
 
 4- .. 
 
 
 
 ^a 
 
 
 
 
 
 
 
 
 
 
 
 1870 
 
 
 
 
 
 
 
 666 
 
 
 S74 
 
 
 
 
 
 |H " 
 
 
 
 
 19 
 
 94 
 
 i£ 
 
 6B8 
 
 
 546 
 
 S// 
 
 /t46 
 
 4-iO 
 
 7Z4 
 
 4" " 
 1871 
 
 iSb 
 
 
 
 
 
 
 72S 
 
 
 
 so; 
 
 
 
 
 2_'*") 11 
 
 
 
 
 
 izz\ 
 
 
 
 
 
 
 
 
 3"" " 
 
 
 
 
 13 
 
 93 
 
 
 
 
 
 I7S0 
 
 456 
 
 740 
 
 4.- .. 
 
 3/6 
 
 
 
 
 97 
 
 
 
 
 
 
 
 
 1872 ^^ 
 
 
 
 
 
 
 83/ 
 
 
 611 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 3 no II 
 
 
 
 
 m. 
 
 
 
 
 
 
 1940 
 
 479 
 
 747 
 
 336 
 
 
 
 
 
 
 
 620 
 
 
 
 
 
 1873* 
 
 
 
 i 
 
 
 
 
 
 
 
 
 
 
 £"" " 
 
 
 
 / 
 
 16 
 
 /O 157 
 
 adi 
 
 
 656 
 
 
 
 
 
 3" " 
 
 J33 
 
 
 / 
 
 19 
 
 
 
 
 tzs. 
 
 6/6 
 
 1976 
 
 49/ 
 
 763 
 
 4" " 
 
 5i2 
 
 3i\ 
 
 
 U^ 
 
 sA 
 
 
 
 
 
 
 
 1874^^ 
 
 
 \ 
 
 
 /(J3\ 
 
 
 
 
 
 
 
 1" : 
 
 L 
 
 \ 
 
 Zl 
 
 180 
 
 697 1 
 
 sss 
 
 1 
 
 f^a 
 
 Z0Z7 
 
 493 
 
 773 
 
 595 
 
 1875 ^ 
 
 \ 
 
 
 \, 
 
 
 
 6S5I 
 
 
 
 
 3»» " 
 4™ - 
 
 \ 
 
 
 \* 
 
 
 
 \ 
 
 2037 
 
 504 
 
 IS2 1 
 
 \ 
 
 
 \ 
 
 
 
 V/a 
 
 
 / 
 
 
 A* 
 
 
 \ 
 
 
 
 
 
 / 
 
 / 
 
 *PANIC 
 
 \ 
 
 
 \ 
 
 
 
 \ 
 
 
 / 
 
 / 
 
 VEAHS 
 
 \ 
 
 
 J 
 
 
 
 _\ 
 
 
 / 
 
 / 
 

 
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 s g 
 
 — 
 
 5^ 
 
 
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 S 5) 
 
 
 
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 < 
 
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 ■it- 
 
 2 
 ^ 
 
 
 ^ 
 
 ^ 
 
 CO ^ >o 
 CO Pl c\J 
 
 10 "n ■JD 
 
 cvj O) 
 
 
 
 £ ■ ^ 
 
 58 
 
 
 — r^ 
 
 
 i 
 
 3 
 
 ry 
 
 
 S 
 
 CO 
 
 
 CO ro 
 
 
 u! 
 
 1 < t 
 
 ill 
 ~ > ^ 
 
 ■f 
 
 5] 
 
 5 S 
 
 
 
 
 5 
 
 Q to 
 
 
 
 
 
 ^ 
 
 i 
 
 5 3 
 
 s 
 
 ^ 
 
 
 1 
 
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 § 
 
 § 1 
 
 J 
 
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 3 
 
 SI 
 
 
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 to 
 
 
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 S ^ 
 
 
 s 
 
 "T" 
 
 
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 N 
 
 
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 * t-ool 
 
Introduction. i g 
 
 07" else increase progressively coincident 
 with a steady increase in a/oailable funds ; 
 and sell for converse reasons. 
 
 These conclusions are also reached by 
 our author through analyses of the Finan- 
 cial History of England, France, Prussia, 
 Austria, etc. These I omit as unnecessarily 
 wearisome to the reader since I give that 
 of our own country. Howevei', I will here 
 quote the following : " What must be noted 
 is the reiteration and sequence of the same 
 points ffaitsj under varying circumstances, 
 at all times, in all countries and under all 
 governments," and also thi-s table showing 
 all the panics and their practical coincidence 
 in the past eighty-five years, in 
 
 France 
 
 England 
 
 and the United States. 
 
 1804 
 
 1803 
 
 
 1810 
 
 1810 
 
 
 1813-14 
 
 1815 
 
 1814 
 
 1818 
 
 1818 
 
 1818 
 
 1825 
 
 1825 
 
 1826 
 
 1830 
 
 1830 
 
 1829-31 
 
 1836-39 
 
 1836-39 
 
 1837-39 
 
 1847 
 
 1847 
 
 1848 
 
 1857 
 
 1857 
 
 1857 
 
 1864 
 
 1864-66 
 
 1864 
 
 
 1873 
 
 1873 
 
 1882 
 
 1882 
 
 1884 
 
 1889-90 
 
 1890-91 
 
 1890-91 
 
20 Introduction. 
 
 Truly these thirteen panics in the three 
 countries have been practically simultane- 
 ous and one common cause must have orig- 
 inated them. The only cause common to 
 all was ovei'tr'ading to such an extent that 
 neither credit nor money were to be had, 
 so that a forced liquidation or panic inevit- 
 ably ensued. ^.^^ 
 
 The above table effectually does away 
 ^\'ith the theory that nev\^ tariffs are directly 
 productive of panics. For most certainly 
 new tariffs did not occur in England, France, 
 and the United States just before or during 
 all the panic years enumerated, and yet, 
 practically simultaneously in free-trade Eng- 
 land, high-protection France, and sometimes 
 low-tariff, sometimes high-protection United 
 States have panics occurred for eighty years. 
 
 But, as I have shown in a note attached 
 to this Introduction, a new tariff or a gen- 
 eral change of duties is apt to precipitate a 
 2-)anic, on account of the unsettling of busi- 
 ness, and that the consequent shaking of 
 credit adds its quota to the forces finally 
 culminating in a panic cannot be doubted. 
 As a matter of history \vith us, substan- 
 
Introduction. 2 1 
 
 tially new tariffs have always happened to 
 be the immediate forerunners of a panic, 
 and this I believe to be true in the case of 
 other countries. 
 
 Why is this ? Is it not because the peo- 
 ple instinctively turn to tinkering at and 
 changing their chief tax — the tariff' — when- 
 ever they as a whole need financial relief ; 
 and have we not shown that such relief is 
 needed almost every ten years, when the 
 overtrading, inseparable from the develop- 
 ment of all thriving communities has made 
 the call for credit impossible to grant ? 
 
 A new tariff may defer, or huny, or, 
 occurring simultaneously, will intensify a 
 panic, but it may not hope to avert one 
 when due : yet if its changes be very grad- 
 ual, fixed and long predicted, and of a nature 
 to bring about or confirm a judicious tariff 
 for I'evenue only, they will materially help 
 to put business on so firm and sound a 
 basis that recovery from the inevitable, and. 
 approximately decennial panics, will be 
 wonderfully expedited. Thus a new tariff 
 is a quite accurate forewarning of a panic, 
 and is also to no inconsiderable extent a 
 
2 2 Introduction. 
 
 contributory cause. (See foot-note on page 
 5, seq.^ Interrelations of P amies, Tariffs, 
 and the Condition of Agriculture, etc. ; 
 and especially what is said of the panic of 
 1848, on page lo.) 
 
 M. Juglar has fully analyzed the three 
 phases of our business life into Prosperity, 
 Panic, and Liquidation, which three consti- 
 tute themselves into the business cycle, 
 that for forty years past (that is, since 
 the present Bank of England Act, and prac- 
 tically since that of the Law governing the 
 Bank of France, both of which then in- 
 creased the required specie reserve) has 
 been of about ten years. These ten years 
 may be apportioned roughly as follows : 
 say, Prosperit}' for five to seven years; 
 Panic a few months to a few years,' and 
 Liquidation about a few j^ears. 
 
 I have already pointed out the signs of 
 prosperit)', of panic, and of liquidation, but 
 in view of existing conditions perhaps it 
 
 ' The panic after 1873 is the only one I know extending to 
 anything like the length it attained. This may be ascribed 
 to the immense development and consequent speculation, and 
 to the inflation of the currency coming after the period about 
 the Civil War. 
 
Introduction. 23 
 
 may be well to restate here the quite famil- 
 iar fact that the completion of liquidation 
 that precedes the beginning of another 
 period of prosperity is characterized by 
 lack of business, steady prices, and a 
 marked growth in available banking funds. 
 
 [The various tables spread through this 
 pamphlet are fully explained by their head- 
 ings and the text.] 
 
 In conclusion I wish to express my thanks 
 for the courtesy M. Juglar has extended 
 me, and to state my appreciation of the mo- 
 tives, painstaking patience, and undoubted 
 originality he has shown in explaining and 
 executing so faithfully and with such genius 
 a most laborious and yet spirited work. It 
 is only Justice that such an achievement 
 should have been awarded a prize by the 
 French Institute (Academy of Moral and 
 Political Sciences) and have gained for M. 
 Juglai' the Vice-Presidency of the " Societj^ 
 for the Study of Political Economy." 
 
 DeCourcy W. Thom. 
 
 Wakefield Manor. 
 
A HISTORY OF PANICS IN THE 
 
 UNITED STATES CONSIDERED 
 
 WITH SPECIAL REFERENCE 
 
 TO AMERICAN BANKS. 
 
 The English Colonies soon after their 
 settlement issued paper money. The first 
 was Massachusetts, which issued it even 
 before her independence, in 1690, to obtain 
 funds in order to besiege Quebec. 
 
 This example was followed to such an 
 extent that it caused a marked speculation 
 in favor of hard money, varying according 
 to the quantity of notes in circulation. In 
 1745, after a successful campaign against 
 Louisburg and the taking of that fortress, 
 two million pounds of paper money were 
 issued, which step decreased its value. 
 When liquidation occurred these paper 
 pounds were not worth 10 per cent, of 
 their face value. 
 
 The War of Independence obliged Con- 
 gress to issue three million of paper dollars. 
 
 25 
 
26 A Brief History of 
 
 This amount increased to $160,000,000, so 
 that Congress declared, in 1779, that it 
 would not issue more than $200,000,000. 
 Notwithstanding this guaranty, notwith- 
 standing the forced and legal rating con- 
 ferred by this enactment, notwithstanding 
 the war spirit, it depreciated; and in 1779 
 it was necessary to decree that, disregard- 
 ing its normal value, it should be taken at 
 its face. In 1780 it was no longer taken 
 for customs dues. In 1781 it had no rating 
 and was not even taken at 1 per cent, of 
 its face value. 
 
 Between 1776 and 1780 the issue of 
 paper money increased to $359,000,000. 
 
 Bank of North America.— In 1781 Mr. 
 Morris, Treasurer, persuaded Congress to 
 form a bank (the Bank of North America) 
 with a capital of $10,000,000, of which 
 $400,000 should be turned over to help 
 the national finances. The capital was too 
 insignificant and the course of politics too 
 unpropitious to accomplish this end. How- 
 ever, the example encouraged the States to 
 take up their paper money. Upon the 
 adoption of the United States Constitution 
 
Panics in the United States. 27 
 
 the issuiug of paper money ceased, and 
 gold and silver were the only means of 
 circulation. Thence ai'ose great embarrass- 
 ment for the Bank of North America, 
 which, hampered by its loans to the Gover- 
 ment, increased its note circulation to an 
 enormous proportion. The ebb of paper 
 through every channel finally aroused the 
 public fears, and people refused the notes. 
 Every one struggled to obtain metallic 
 money, hence it became impossible to bor- 
 row, and bankruptcy followed. Such was 
 the excitement that the Philadelphians as 
 a body demanded and obtained from the 
 Assembly of Representatives a withdrawal 
 of the charter ; but the Bank, relying 
 upon Congress, continued until March 17, 
 1787; succeeded even in extending its 
 charter fourteen years ; and later obtained 
 a second extension, limited, however, to 
 Pennsylvania. 
 
 The difficulty experienced in the manu- 
 facture of money led Mr. Hamilton, Secre- 
 tary of the Treasury, to propose to Con- 
 gress in 1790 the founding of a National 
 Bank. After some doubts as to the power 
 
28 A Brief History of 
 
 of Congress, it was authorized. It began 
 operations in 1794, under the title of 
 " Bank of the United States," with a capital 
 of ten millions, eight millions being sub- 
 scribed by private individuals, and two 
 millions by the Government. Two millions 
 of the first sum were to be paid in metallic 
 money, and six millions in 6 percent. State 
 bonds ; the charter was to run till March 
 4, 1811. It seemed to be a good thing for 
 the public and the stockholders, for during 
 twenty-one years it paid an average of 8 
 per cent, dividends. In 1819 the question 
 of renewing its privileges came up, the 
 situation being as follows : 
 
 ASSETS. 
 
 LIABILITIES. 
 
 6 per cent. 
 
 Capital 
 
 Paper.... $ 2,230,000 
 
 Stock. . . .$10,000,000 
 
 Loans and 
 
 
 Discounts. 15,000,000 
 
 Deposits 8,500,000 
 
 Cash 10,000,000 
 
 Circulation... 4,500,000 
 
 The profits from the Bank, the pros- 
 perous state of the country, and the in- 
 crease of productions led people to think 
 that the issuing of paper money caused it 
 all ; seduced by this alluring theory the 
 
Panics in the United States. 29 
 
 " Farmers' Bank " was founded in Lancaster 
 in 1810, with a capital of $300,000. Others 
 followed; such was the mania that the 
 Pennsylvania Legislature was forced to 
 forbid every corporation to issue notes. 
 Despite this preventive message the excite- 
 ment rose so high that companies, formed 
 to build harbors and canals, also put notes 
 into circulation ; in this way the law was 
 eluded. 
 
 From 1782 to 1812 the capital of the 
 banks rose to $77,258,000 ; upon the 1st 
 of January, 1811, there were already eighty- 
 eight banks in existence. Until the declara- 
 tion of wai' (June, 1812),the issuing of notes 
 was always made with the intention of 
 redeeming them, but the over-issue soon 
 became general, and depreciation followed. 
 The periodical demands for dollar-pieces 
 for the East Indian and Chinese trade were 
 warnings of the over-speculations on the 
 part of those companies whose members 
 were not personally liable. Traders, who 
 through their notes or their deposits had 
 a right to ci-edit with the banks, did 
 not hesitate to ask for $100,000, where- 
 
30 A Brief History of 
 
 as, formerly they would have hesitated to 
 ask for $1,000. The Avar put a stop to the 
 exportation of precious metals, which, in 
 the ordinary course of things, limits the 
 issue and circulation of paper. The upshot 
 of this was to redouble the note issue, 
 each one believing its only duty was to get 
 the largest amount into circulation. Loans, 
 and enormous sums of money, were distri- 
 buted above all reason among individuals 
 and among the States. The increase of 
 dividends and the ease of obtaining them 
 extended the spirit of speculation in certain 
 districts, and especially among those who 
 owned land. The remarkable results shown 
 by the Bank of Lancaster, the " Farmers' 
 Bank," \vhich,by means of an extraordinary 
 issue of notes, had yielded as much as 12 
 per ceut. and piled up in capital twice the 
 amount of its stock, caused it to be no 
 longer thought of as a bank intended to 
 assist trade with available capital, but as a 
 mint destined to coin money for all owning 
 nothing at all. Led bj^ this eri-oj', laborers, 
 shopkeepers, manufacturers, and merchants 
 betook themselves to quitting active oc- 
 
Panics in the United States. 3 1 
 
 cupations to indulge in golden dreams. 
 Fear alone restrained some stockholders 
 connected with the non-authorized com- 
 panies, and led them to seek for a legal 
 incorporation. 
 
 In Pennsylvania, during the session of 
 18*12, an act was passed authorizing twenty- 
 five banks, with a capital of $9,000,000. 
 The Executive nevertheless refused to 
 I'atify it, and returned it with some very 
 well-deserved comments. In a second de- 
 bate the first resolution was rescinded by a 
 vote of 40 to 38. In the following session 
 the proposition was renewed with more 
 vigor, and forty-one banks with a capital 
 of $17,000,000 were authorized by a large 
 majority ; the representations of the Execu- 
 tive proved useless, and they immediately 
 entered upon their duties with an insuffi- 
 cient capital. 
 
 To discount their own stock was a soon- 
 discovered method. They thus increased 
 the amount of notes, which depreciated in 
 comparison with hard money, and dissipa- 
 ted on all hands the hope of exchanging 
 with it. 
 
32 A Brief History of 
 
 In the absence of a demand from abroad 
 for hard money, the demand came from 
 within our o\vn borders. 
 
 The laws of New England, which were 
 very severe upon the banks, had placed a 
 penalty of 12 per cent, upon the annual 
 interest payments of those persons who did 
 not pay their notes. The natural result 
 was a difference of value between New 
 England and Pennsylvania, which meas- 
 ured the depreciation caused by paper in 
 the latter district. As remittances on New 
 England could only be made in hard 
 money, the equilibrium of the banks was 
 disturbed ; they were not able to respond 
 to the demands for redemption, and a sus- 
 pension of payments by the banks of the 
 United States, except those of New Eng- 
 land, took place in August and September, 
 1814. 
 
 The Panic of 1814. — An agreement took 
 place at Philadelphia between the bank 
 and the chief houses allied with it to re- 
 sume payments at the end of the war. 
 
 Unhappily, the j)ublic did not demand 
 the accomplishment of this promise at the 
 
Panics in the United States. 33 
 
 time fixed, and the banks, led on by the 
 thirst of gain, issued an unprecedented 
 amount of bank notes. The general ap- 
 probation brought about a still further in- 
 crease in their number : the bank notes of 
 the Bank of Philadelphia were at a dis- 
 count of 80 per cent. ; the others at 75 per 
 cent, and 50 per cent., and metallic money 
 disappeared to such an extent that paper 
 had to be used to replace copper coin. The 
 depi'eciation of fiat money raised the price 
 of everything; this superficial occurrence 
 was looked upon as a real increase, and 
 gave rise to all the consequences that a 
 general inflation of value could produce. 
 This mistake on the subject of artificial 
 wealth made landed proprietors desire un- 
 usual proceeds. The villager, deceived by 
 a demand surpassing his ordinary profits, 
 extended his credit and filled his stores 
 with the highest-priced goods ; and impor- 
 tations, having no other proportion to the 
 real needs than the wishes of the retailers, 
 soon glutted the market. Every one wished 
 to speculate, and every one eagerly ran up 
 debts. Such was the abundance of paper 
 
34 A Brief History of 
 
 money that the banks were alarmed lest 
 they could not alwuys And an investment 
 for what they manufactured. It thus hap- 
 pened that it was proposed to lend money 
 on collateral, while the greatest efforts to 
 bring about its redemption were being made. 
 This state of things lasted till the end of 
 1815, when it was recognized that the paper 
 circulation had not enriched the commun- 
 ity, but that metallic money had enhanced. 
 
 The intelligent portion of the nation 
 comprehended that even where the esti- 
 mated value of property had been highest, 
 the true welfare of society had diminished. 
 They learned too late the baleful effects of 
 this circulation of paper money ; the greater 
 part of the States and cities had nothing to 
 show for it. 
 
 A new class of speculators then ap- 
 peared, trying to pass these worthless bank 
 notes : forgers of paper money became 
 more active. In the midst of this disorder 
 a National Bank, which should afford a 
 solid basis for the paper circulation, was 
 considered. Influenced by these difficul- 
 ties, and in hopes of remedying them, the 
 
Panics in the United States. 35 
 
 Secretary of the Treasury proposed to 
 Congress, in September, 1814, a few days 
 after suspension, to found a national bank, 
 in order to re-establish metallic circulation, 
 an end which the State banks had failed 
 to accomplish. 
 
 This project, which lent the national 
 credit to the capital of the bank, was an- 
 tagonized by a good many members who 
 exaggerated its consequences ; at the same 
 time that they took more or less important 
 sums in bank notes, or borrowed from the 
 banks upon the nation's guaranty, in order 
 to re-establish the public credit and to ob- 
 tain means for prolonging the war. 
 
 Causes of the Panic of 1814. — ^The bank 
 directors laid the blame upon the blockade 
 of the ports, which, interfering with, indeed 
 even preventing, the export of products, 
 occasioned the outflow of the metals. The 
 national loans to cany on the war also had 
 their influence. From the beginning of hos- 
 tilities until 1814 they increased to $52,- 
 848,000, distributed as follows : Eastern 
 States, $13,920,000; New York, Pennsyl- 
 v^ania, Maryland, and District of Columbia, 
 
36 A Brief History of 
 
 $27,792,000 ; Southern and Western States, 
 $11,136,000. 
 
 Nearly all of this was advanced by the 
 cities of New York, Philadelphia, and Bal- 
 timore. The banks made advances beyond 
 their resources, augmenting their circula- 
 tion in consequence.' 
 
 From the 1st of January, 1811, to the 
 1st of January, 1815, one hundred and 
 
 ' The cause of the crisis, according to the Committee of the 
 Senate, was the abuse of the banking system ; the great num- 
 ber and bad administration of the banks ; and their speculations 
 designed to advance their stock, and to distrilrate usurious 
 dividends. When the Bank of the United States saw the 
 danger that menaced it, it reduced its discounts and circula- 
 tion. The circulation of the country banks fell from $5,000,- 
 000 to $1,300,000, and the total circulation from $10,000,000 
 to $3,000,000. 
 
 Increase and Decrease Circulation in Pennsylvania. 
 
 City Banks. Country. Total. 
 
 1814 $3,300,000 $1,900,000 $5,200,000 
 
 1815 4,800,000 5,300,000 10,100,000 
 
 1816 3,400,000 4,700,000 8,100,000 
 
 1817 2,300,000 3,800,000 6,100,000 
 
 1818 1, 900,000 3,000,000 4,900,000 
 
 1819 1,600,000' 1,300,000 2,900,000 
 
 Number 
 
 of Banks. Capital. Circulation. Specie. 
 
 1811 88 $52,00000 $28,00000 $15,00000 
 
 1815 208 82,00000 45,00000 17,00000 
 
 1816 246 89,000 00 68,000 00 19,000 00 
 
Panics in the United States. 37 
 
 twenty new banks were registered, thus 
 raising their capital to more than $80,000,- 
 000 ; this increase took place during a war 
 that entirely did away with foi'eign trade. 
 The expenses of the war declared against 
 Great Britain in June, 1812, were defrayed 
 by notes issued by the banks of the various 
 States. Six million dollars were obtained 
 from them in 1812, in the following year, 
 1813, twenty million, and then fifteen mil- 
 lion in exchange for twelve million of 
 Federal stock, issued at the price of $125 
 face for every $100 paid in. Until Janu- 
 ary 1, 1814, in order to avoid taxation, 
 Treasury bonds were issued in addition to 
 what was contributed by the banks. 
 
 In 1812 $3,000,000 
 
 " 18 13 6,000,000 
 
 " 1814 8,000,000 
 
 Up to this time no account of their 
 administration had been rendered, but now 
 Mr. Bland, a Maryland representative, 
 called attention to the fact that all their 
 operations seemed veiled from the public. 
 Unfortunately we have been unable to find 
 a statement of the discounts. 
 
38 A Brief History of 
 
 The suspension of specie payments dif- 
 fered with the corresponding state of affairs 
 in England, inasmuch as it was not genera], 
 and, since each State was independent, the 
 depreciation varied. It became very diffi- 
 cult to circulate paper, and the Government 
 was again obliged to issue Treasury bonds, 
 bearing 6 per cent, interest. In February, 
 1815, peace having been proclaimed, it was 
 hoped that the banks would resume specie 
 payments. There was no sign of it. The 
 re-establishment of peace merely made 
 some of the legal regulations seem less 
 pressing upon the banks. 
 
 In the middle of May, 1815, the first 
 English vessel arrived, and business became 
 very active again. In May, June, and July 
 it might have been said " This is the golden 
 age of commerce." Discounts of unsecured 
 paper were easy, and it was not an unusual 
 occurrence to have notes of $60,000 offered. 
 
 The banks had authoiized a suspension 
 of specie payment in order to force the 
 issue of hank notes, and to stimulate trade, 
 althougli Mr. Caivy pretends that no over- 
 trading had taken place. He blames them 
 
Panics in the United States. 39 
 
 for having restricted their h>ans in October 
 and November, thus producing a decline in 
 prices ; and the necessity of cutting down 
 credits came about, according to him, from 
 the speculations in National secui'ities. 
 
 Six Philadelphia banks with a capital of 
 $10,000,000 held $3,000,000 in Govern- 
 ment stock. 
 
 On the 15th of February, 1815, when 
 scarcely through with all this confusion, an 
 effort was made to re-establish for the second 
 time a United States Bank. It was author- 
 ized on the 10th of April, 1816, the Act 
 permitting the formation of a Company, 
 with a capital of $35,000,000, divided into 
 350,000 shares of $100 each, of which the 
 Govei'nment took 70,000 shares and the 
 jjublic 180,000 shares. These last were 
 payable in $7,000,000 of gold or silver, of 
 the United States of North America, and 
 $21,000,000 in like money, or, in the funded 
 debt of the United States either in the 6 
 per cent. Consolidated Debt at par, the 3 
 per cent, at 65, or the 7 per cent, at 106^ 
 per cent. ; upon subscription $30 was pay- 
 able, of which at least $5 had to be in gold 
 
40 A Brief History of 
 
 or silver ; in six months after, $35, of which 
 $10 had to be in metal, and twelve months 
 after the same amount was to be paid in the 
 same manner. The directors were author- 
 ized to sell shares every year to the amount 
 of $2,000,000, after having offered them at 
 the current price to the Secretary of the 
 Treasury for fourteen days. The Govern- 
 ment reserved the right to redeem the debt 
 at the subscription price. 
 
 The charter, made out in the name of 
 the president, ran until March 3, 1836. 
 There were twenty -five directors of the con- 
 cern, five of whom were appointed by the 
 President of the United States with the 
 consent of the Senate, and not more than 
 three by the State ; the stockholders chose 
 the others. 
 
 The corporation could not accept any 
 inconvertible property, or any farm-mort- 
 gage, unless for its immediate use, eithei' as 
 security for an existing debt, or to wipe 
 out a credit. 
 
 It had no right to contract any debt 
 greater than $35,000,000, more than its de- 
 posits, unless by special act; the directors 
 
Panics in the United States. 41 
 
 were made responsible for every violation, 
 and could be sued by each creditor. They 
 could only deal in gold and silver exchange, 
 and not in other country securities which 
 could not be realized upon at once. The 
 Bank could purchase no public debt nor 
 exceed 6 per cent, interest on its discounts 
 and loans. It could lend no more than 
 $500,000, to the United States, |50,000, to 
 each State, and nothing to foreigners. It 
 could give no bill of exchange greater than 
 $5,000 ; bank notes less than $100 were to 
 be payable on demand, and greater sums 
 were not allowed to run longer than sixty 
 days. Two settlements were to take place 
 every yeai'. 
 
 Branches were to be established upon 
 demand of legislative authorities, wherever 
 2,000 shares of stock were subscribed for. 
 
 Thei'e were to be no bank notes less than 
 $5.00, and every bill of exchange, or bill 
 payable at sight, was to be receivable by 
 the public Treasury. 
 
 The duty of the Bank was especially to 
 pay out and receive the public money, 
 without profit or loss. It was to serve as 
 
42 A Brief History of 
 
 agent for every State contracting a loan; 
 the cash belonging to the United States 
 was to be deposited at the Bank whenever 
 the Secretary of the Treasiiry did not dis- 
 pose of it otherwise, in which case he was 
 to notify Congress. 
 
 Neither the Directory nor Congress could 
 suspend payment of the bank notes, dis- 
 counts, or deposits : such refusal carried a 
 right to 1 2 per cent, intei'est. In exchange 
 for this charter the Bank was to give 
 $1,000,000, to the Government in three 
 instalments. 
 
 The charter was exclusive during its life, 
 excepting in the District of Columbia, 
 where banks might be authorized, provided 
 their capital did not exceed $6,000,000. 
 
 The Bank did not open at once, for it 
 sent an agent to Europe to look up bullion. 
 
 Between July, 1817, and December, 1818, 
 it thus procured $7, -^11, 750, at an expense 
 of $525,000. On the 20th of February, 
 1817, it was decided that, excepting 
 gold and silver and Treasury notes, no 
 notes would be received at the Government 
 Ti'easuries, save such as wei'e payable to the 
 
Panics in the United States. 43 
 
 banks in hard money. Notwithstanding 
 this discrimination the banks decided not to 
 resume specie payment until the Ist of 
 July, 1817. 
 
 In the meantime an immense speculation 
 had taken place in its stock, which was 
 compromising for the Bank and for the 
 ci'edit of its Directory, because several of 
 its Directors appointed by the Government 
 took part in it. For example, it became 
 customary to loan a very large amount of 
 money on the Bank's own stock, as much 
 as $125 on each share of $100. Thus 
 more than the purchase price was loaned 
 upon them : in furnishing the means of 
 paying for them by credit, speculation 
 was aroused, and on the 1st of September, 
 1817,the market price advanced to $156.50, 
 at which i-ate it continued until December, 
 1818, when it fell to $110. 
 
 At last the public perceived that the 
 excessive issue depreciated the bank-note 
 circulation, and that a greater shrinkage 
 was imminent. 
 
 An office for the payment of bank divi- 
 dends was opened in Europe, so as to 
 
44 A Brief History of 
 
 increase the price of the stock and the 
 speculation in it through this facility, 
 rather than for the permanent benefit of 
 the institution. Let us note here the short- 
 sightedness of the Directors, who thought 
 they would stem the depreciation of their 
 means of payment by persuading all the 
 banks to declare what was not true, that 
 the bank notes were worth par. 
 
 On the 21st of February, still aiming at 
 the same end, they announced the resump- 
 tion of specie payment. The State Banks, 
 remembering the embarrassment of the 
 puljlic, which for two years had paid an 
 exchange of 6 per cent., persuaded them- 
 selves that few people would dare to ask 
 for large sums. They hoped to come to an 
 understanding and to cause the acceptance 
 of a promise to pay upon a designated day. 
 
 We say " a promise to. pay," for this was 
 not a serious proposition, inasmuch as 
 foreign money and that of the United 
 States had enjoyed a higher market value 
 for a long time. 
 
 The depreciation of the bank notes might 
 result just as well, from the fear of the 
 
Panics in the United States. 45 
 
 public's enforcing its rights, as from a 
 refusal of the banks to make good their 
 promises. This understanding was not, 
 properly speaking, a i-esumption of specie 
 payment, but rather a kind of humbug. 
 
 In January the banks of New York, 
 Philadelphia, Baltimore, Richmond, and 
 Norfolk decided to resume specie payment 
 on the 20th of February, provided the 
 balance showing against them was not de- 
 manded by the Bank of the United States 
 before discounts became $2,000,000, at 
 New York, as much in Philadelphia, and 
 $1,500,000 in Baltimore ; and these condi- 
 tions were accepted. 
 
 The discount line of the Bank of the 
 United States was thus greatly increased ; 
 it grew from $3,000,000 on the 27th of 
 February to $20,000,000 on the 30th of 
 April ; to $25,000,000 on July 29th, and 
 to $33,000,000 on the 31st of October. 
 The Bank imported much metallic money, 
 I'edeemed its notes and those of its branches 
 without distinction; the notes of its East- 
 ern and Southern branches were returned 
 as soon as those of the North had paid 
 
46 A Brief History of 
 
 them, and they were newly issued ; conse- 
 (^uently eighteen months after this pi'ac- 
 tice began the cash boxes of the North 
 were drained of their capital, the length of 
 discount was reduced, and 5 per cent. 
 was charged for sixty days. On April 1, 
 1819, only 1^126,000, cash remained on 
 hand, on the 12th only $71,000, remained, 
 $196,000, was owed to the city banks. 
 
 Scarcely had the Directors of the Na- 
 tional Bank succeeded in replacing the 
 paper issued but not i-edeemed by their 
 bank-note circulation, being fully aware 
 from their nww experience that the circula- 
 tion couhl only reach a limited amount, 
 than they inundated the mai'ket Avith it, 
 and in a few months all reductions van- 
 ished. In this way the market price 
 shortly ]'esumed its former quotation, and 
 all the difficulties reappeared. This im- 
 prudent management necessarily threw one 
 portion of the public into debt, from which 
 it had saved itself ; and the other portion 
 into the vortex which it had avoided. The 
 critical moment was delayed somewhat, 
 but the day of reckoning was near. 
 
Panics in the United States. 47 
 
 The Panic of 1818. — The Bank at last dis- 
 covered that it had passed the bounds of 
 safety through its issues, and that it was 
 at the mercy of its creditors. It saw firstly, 
 on October 21, 1818, the payment of part 
 of the State of Louisiana's foreign debt 
 withdraw large sums, and then Chinese, 
 Indian, and other goods reach fancy prices 
 because of the depreciation of the circulat- 
 ing medium. All these influences produced 
 a demand for specie payment which the 
 Bank as a jjublic one was obliged to meet, 
 under penalty of 12 per cent, interest, and 
 without power to avail itself of the same 
 accounts as the State banks. 
 
 From this moment it thought fixedly of 
 its safety and of how to reduce its notes; 
 this reduction obliged the other banks to 
 imitate it, and a new crisis shook trade in 
 the end of October, 1818. During one 
 year the National Bank furnished from its 
 cash boxes more than $7,000,000, and the 
 others more than $3,000,000. 
 
 The State banks naturally followed the 
 same policy in their connection, and their 
 circulation became reduced as follows : 
 
48 A Brief History of 
 
 On November i, 1816, to $4,756,000 
 
 " 1817, " 3,782,000 
 
 " 1818, " 3,°i 1,000 
 
 ■' 1819, " 1,318,000 
 
 It will give a faint idea of the excessive 
 issue to state that the only difficulty was 
 the impossiliility of examination by the 
 President and Cashier, and of their jointly 
 signing the notes, which was made obliga- 
 tory by the regulations ; hence they asked 
 power from Congress to grant this right to 
 the Presidents and Cashiers of the Branch 
 Banks. This facility was refused, but 
 Congress gi'anted a Vice-President and a 
 Vice-Cashier to sign. With these issues 
 and a simple capital of $2,000,000, the Bank 
 discounted as much as $43,000,000, during 
 one year, in addition to $11,000,000, to 
 $12,000,000, loaned upon public securities. 
 
 In order to carry on its operations, it ex- 
 changed in Europe a portion of its funded 
 debt for gold and silver, and bought specie 
 in the West Indies. From July, 1817, to 
 July, 1818, it imported $6,000,000, of specie, 
 at an expense of $500,000, but the exces- 
 sive issue of paper drained away the cash 
 more rapidly than the Bank could import 
 
Panics in the United States. 49 
 
 it. In the face of this hopeless struggle, 
 in July, 1818, it entirely changed its course 
 and reduced its discounts, and 10 per cent, 
 premium was then paid for cash, and the 
 reduction of nearly $5,000,000, in the dis- 
 count line in three months only had a dis- 
 astrous effect, while at the same time they 
 would only receive for redemption the 
 notes issued by each Branch Bank : hence 
 general embarrassment arose, and as the 
 Bank of the United States was withdraw- 
 ing cast from the local banks, Congress 
 wished to forbid the exportation of gold 
 and silver. The committee appointed on 
 the 30th of November, 1818, to examine 
 the affairs of the Bank concluded that it 
 had violated its charter : 
 
 1. In buying $2,000,000, of the Public 
 Debt. 
 
 2. In not requiring from the purchasers 
 of its stock the payment of the second and 
 third instalments in cash, and in the Public 
 Debt of the United States. 
 
 3. In paying dividends to purchasers 
 of its stock who had not entirely paid 
 up. 
 
50 A Brief History of 
 
 4. In allowiug voting by proxy to a 
 greater extent than the charter permitted. 
 
 Upon receipt of the report the Governor 
 fled, and the shares fell to $93. In 1818 
 the speculation was so wild that no one 
 failed on account of a smaller sum than 
 $100,000. A drawing-room that had cost 
 $40,000, and a bankrupt's wine-cellar esti- 
 mated to have cost $7,000, -were cited as 
 instances of the general prodigality. 
 
 The Senatorial Committee of Inquiry de- 
 clared that the panic imposed ruinous losses 
 upon landed propei'ty, which had fallen 
 from a quarter to even a half of its value. 
 In consequence forced sales, bankruptcies, 
 scarcity of money, and a stoppage of work 
 occurred. House-rents fell from $1,200, to 
 $450 ; the Federal stock alone held its own 
 at 103 to 104. 
 
 On the 13th of December, 1819, a Com- 
 mittee of the House of Representatives re- 
 ported that the panic extended fi'om the 
 greatest to the smallest capitalists. It 
 concluded by demanding the intervention 
 of the legislative power to restrain the cor- 
 poration, which, spreading its branches 
 
Panics in the United States. 5 1 
 
 throughout the Uuiou had inundated it 
 with nearly $100,000,000, of new circula- 
 ting medium. Those who unfortunately 
 owed money lost all the fruit of long work, 
 and skilled laborers were obliged to ex- 
 change the shelter of their old homes for 
 the inhospitable western forests. Forced 
 sales of provisions, merchandise, and. imple- 
 ments were made, greatly below their pur- 
 chase price. Many families were obliged to 
 limit their most necessary wants. Money 
 and credit were so scarce that it became 
 impossible to obtain a loan upon lands with 
 the securest titles ; work ceased with its 
 pay, and the most skilful workman was 
 brought to misery ; trade restricted itself 
 to the nai-rowest wants of life ; machinery 
 and manufactories lay idle; the debtor's 
 prison overflowed ; the courts of justice 
 were not able to look after their cases, and 
 the wealthiest families could hardly obtain 
 euougt money for their daily wants. 
 
 The Committee apj)ointed by the Senate 
 of Pennsylvania reported on the 29th of 
 January, 1820, that, to prevent a bad ad- 
 ministration of the banks, it was necessary : 
 
52 A Brief History of 
 
 1. To forbid them to issue more than 
 half of their capital in notes. 
 
 2. To divide with the State all divi- 
 dends in excess of 6 per cent. 
 
 3. Excepting the president, that no 
 director should be re-appointed until after 
 an interval of thi'ee years. 
 
 4. To submit to the State's inspection 
 the bank's business and books. 
 
 From this period excessive profits and 
 losses ceased on the part of the American 
 banks. The change of directory of the 
 National Bank, called forth by the unfor- 
 tunate experience of 1818, was the begin- 
 ning of a very fortunate epoch. As was 
 always the case, business aflEairs resumed 
 their usual course when liquidation ceased. 
 Among the various causes assigned for the 
 panic, the increase of import duties had to 
 be pointed out, and the decrease of the 
 Public Debt which was reduced between 
 1817 and 1818 more than $80,000,000. 
 
 It was impossible to turn any portion of 
 the public deposits in proper time either 
 into Fedei'al stock or such other forms of 
 value as its creditors might demand, with- 
 
Panics in the United States. 5 3 
 
 out shaking or breaking down any respect- 
 able institution whatever. But these seem 
 to be only secondary causes. 
 
 Panic of 1825 to 1826. — In 1824 in Penn- 
 sylvania there was a new I'age for banks, 
 and in 1825 there was a repetition of the 
 marvellous days of 1815. American bank- 
 ing bubbles have always been exactly 
 similar to the English South Sea bubble, 
 and to Law's bank in France. In July, 
 after an advance dating from 1819, there 
 Avas a reaction, a panic, and liquidation. 
 Here we cannot point out any of the causes 
 which we have indicated above ; the growth 
 of trade and the exaggeration of discount 
 sufficiently explain the difficulties of the 
 situation. 
 
 In Pennsylvania in 1824 a bill was 
 passed re-establishing the charters of all 
 the banks which had failed in 1814. In 
 New York they thought of banks alone ; 
 companies with a capital of $52,000,000 
 were formed. Ready monej^ had never 
 been so abundant, if we can judge of it by 
 the amount of subscriptions and the great 
 speculations in stocks. 
 
54 ^ Brief History of 
 
 Three millions were subscribed to the 
 " New Jersey Protection Company " iu one 
 day. But iu July, when the decline on 
 the London market \\as reported, the want 
 of hard money forced itself into notice. 
 Exchange on England rose from 5 per cent, 
 to 10 per cent.; the discount on New Or- 
 leans notes, from 3 per cent, became 50 per 
 cent., and on the 4th of December it had 
 fallen back to 4 per cent. What fluctua- 
 tion ! What disastei's ! 
 
 Mr. Biddle, the President of the United 
 States Stock Bank, said that the crisis of 
 1825 was the most severe that England had 
 ever experienced, superinduced as it was 
 by the wild American speculation in cottons 
 and mines. Cotton cloth fell from 18 to 
 13 cents per yard ; and out of 4,000 weav- 
 ers employed in Philadelphia iu 1825 not 
 more than 1,000 remained. The reaction 
 of liquidation was experienced in 1826, and 
 from 1827 money was abundant. 
 
 Embarrassment of the Local Banks in 
 1828 to 1829. — Is it necessary to mention 
 these embarrassments ? The trouble of 1828 
 affected only the local banks and not at 
 
Panics in the United States. 55 
 
 all those of the United States. The chief 
 cause was the Bank of the United States' 
 increase of circulation from August, 1822, 
 to August, 1828. From $5,400,000 it had 
 become $13,000,000 without adding any- 
 thing to the cii'culation, merely displacing 
 an equal amount of local bank notes through 
 drafts of branches that it put into circula- 
 tion. These branch banks' drafts were in 
 form of bank notes, signed by the chief 
 employees of the branches, drawn, it might 
 be, on each other or on the main bank. A 
 great issue of paper ^vas thus brought 
 about ; without this roundabout method 
 it would have been impossible to have 
 forced the issue of the notes from the mere 
 physical inability of the president and 
 cashier to sign so large a number. Con- 
 gress had always refused to delegate this 
 power to any other persons ; in consequence 
 of this practice the inevitable result oc- 
 curred in 1828, as might have been foreseen, 
 and a conflict between notes of the Bank 
 of the United States and that of the local 
 banks occurred. 
 
 These drafts circulated eveiywhere ; the 
 
56 A Brief History of 
 
 branch banks received them on deposit, 
 but did not redeem them : hence it was 
 necessary to guai'd against panic by keep- 
 ing hold of cash. This course increased 
 the issue of the Bank of the United States, 
 and of the local banks which discounted 
 the paper of the central bank as if it were 
 so much cash. The local banks, then, whose 
 paper did not widely circulate, exchanged 
 their bank notes for drafts, thus reducing 
 the amount of circulation of the first, in- 
 creasing that of the central bank, and 
 hence that of the total issue of its bank 
 notes ; the local banks continued to ex- 
 change theii' paper with its narrow and 
 limited circulation for drafts of this latter, 
 which passed everywhere. 
 
 There occurred, then, in 1828 and 1829 
 an accidental and very brief scarcity of 
 cash, whose cause we have Just indicated; 
 but since the second half of the year 
 difficulties arising from metallic circulation 
 had disappeared. 
 
 Panic of 1831. — The course of business, 
 having scai'cel}' suffered a stoppage, con- 
 tinued until 1831, and not till then did 
 
Panics in the United States. 5 7 
 
 embarrassment occur (Oct. 8, 1831). 
 Until then business operations were very 
 active and money easy ; the revolution in 
 Europe rendered capital available in 
 America, whilst the cholera and the revolu- 
 tion restrained the importation of foreign 
 goods. Discounts at the central bank rose 
 from $24,000,000 in 1826 to $44,000,000 
 in 1831, and the circulation from $9,000,- 
 000 to $22,000,000. The same increase 
 was observable in the banks of the differ- 
 ent States. 
 
 In March, 1830, the Bank of the United 
 States had in its vaults $8,000,000, which 
 was more than it had ever had before. 
 
 In 1829 the Bank of New York claimed 
 to have so much money that it did not 
 know what to do with it. In 1829, 1830, 
 1831, the banks extended their operations, 
 and a rise in prices accompanied the ease 
 of getting credit; but in November, 1831, 
 very urgent demands for money were 
 heard. 
 
 The branch drafts, exchanged with the 
 local banks, allowed them to increase their 
 circulation and consequently their dis- 
 
58 A Brief History of 
 
 counts. American \viiter8 boasted greatly 
 about tbe assistance the Bank of the 
 United States yielded both to business and 
 the nation. Nevertheless, in 1829, Presi- 
 dent Jackson declared the conduct of the 
 Bank to be such that its usefulness had 
 been justly doubted by many citizens, and 
 that the end desired, a uniform and regular 
 circulation, had not been reached. The 
 Senate and the House of Representatives 
 appointed a commission that expressed an 
 opinion contrary to that of the Pi'esident. 
 Panic of 1837 to 1839.— lu the midst of 
 all these troubles the Secretary of the 
 Treasuiy informed the President of the 
 Bank in 1S.'^2 that the Government in- 
 tended, wherever it had representatives, to 
 redeem half of the 3 per cent, stocks by 
 paying each holdei' for half of his certifi- 
 cates. The President answered that at 
 that time (March 29th) this redemption from 
 the European creditors would very greatly 
 embarrass home business, and that therefore 
 delay was necessary. He reqiiested a delay of 
 three months, because trade circles of New 
 York had alreadv received larw advances. 
 
Panics in the United States. 59 
 
 The Bauk, being the agent of the 
 Treasury and having $11,600,000 on deposit, 
 would have been forced to become a bor- 
 rower in order to pay out the $2,700,000 
 demanded from it. However, its request 
 was granted. 
 
 Jackson soon learned with surprise that, 
 business being more impeded than ever, 
 the President had despatched an agent to 
 England to contract with the Barings a 
 loan of $6,000,000. Seeing the Bank to 
 be insolvent he resolved not to renew its 
 charter. The Bank tried to hide its 
 insolvency by the most foolish land specu- 
 lations, which had already caused such 
 great disaster in 1818 and 1820. The issue 
 of bank notes had given fresh spirit to 
 speculation. These bank notes were 
 received by the National Treasury and 
 returned to the Bank on deposit, which 
 again loaned them to pay for land upon 
 security of the land sold, with the result 
 that the credit granted the Nation was 
 merely fictitious. 
 
 In 1832, Congress having voted for the 
 extension of the Bank's charter, President 
 
6o A Brief History of 
 
 Jackson refused to ratify it on account 
 especially of certain changes it sought to 
 introduce. "Why," said he, "grant a 
 capital of $35,000,000 when the first com- 
 pany only had $11,000,000 'i " 
 
 But though the Bank's charter could not 
 be arranged, the law of July 10, 1832, 
 dealing with the regulation of banks, pre- 
 scribed that " a report " upon their exact 
 condition should be submitted to Congress 
 every year. 
 
 In 1833 General Jackson ordered the 
 withdrawal of the Government deposits 
 from the Bank. The law required that 
 the reasons for the withdrawal of the 
 deposits should be given, and the secre- 
 tary, Mr. Duane, refused to give them, 
 saying the Bank was not insolvent. He 
 was dismissed and replaced by a more 
 amenable secretary. The deposits were 
 withdrawn and placed in different State 
 Banks. The Bank of the United States 
 was obliged to limit its discounts and 
 loans, thus causing trouble : however, the 
 President wished at any loss to establish 
 a metallic circulation. 
 
Panics in the United States. 61 
 
 Congress was busy through the whole 
 session of 1833-1834 upon the withdrawal 
 of the deposits from the Bank. The Senate 
 sided with the Bank and condemned the 
 President's resolution : the House of Repre- 
 sentatives, on the contrary, approved his 
 conduct. The Bank stopped its dealings 
 with the Government in 1836: the Presi- 
 dent, Mr. Biddle, whom the stockholders 
 had complimented by presenting him a 
 silver service, obtained through a gift of 
 $10,000,000, whose distribution was en- 
 tirely shrouded in mystery, the especial 
 charter of the Bank of Pennsylvania. He 
 was unwilling to render any account to Con- 
 gress, notwithstanding reiterated demands. 
 His charter terminated in 1836, and two 
 years after he no longer had the right to 
 transact any business. 
 
 When they had obtained the extension 
 of the charter of the Bank of Pennsyl- 
 vania, the Directors apparently gave no 
 attention to paying their obligations to 
 the Government ($16,000,000). They 
 had turned over books, papers, notes, 
 and engagements to the new corpora- 
 
62 A Brief History of 
 
 tion, which opened as a successor to the 
 former one. 
 
 They had already put bank notes in cir- 
 culation, despite a notification to redeem 
 them, and to destroy those which remained 
 in their hands. 
 
 President Jackson and his successor. Van 
 Buren, considered the excessive issue of 
 paper money as the principal cause of the 
 panic, as well as of the overdoing of every 
 branch of trade, of the boundless specula- 
 tions, the increase of foreign debts, of 
 imprudent land speculations, and of the 
 alarming increase of a luxury fatal to 
 the springs of industry and to the moral- 
 ity -of the people. President Van Buren 
 said that the §30,000,000 entrusted to 
 the Bank had fostered lawless specula- 
 tions. He strained every effoit to re- 
 establish metallic circulation : the banks 
 whose notes were below $5 were no 
 longer I'ecognized by the National Treasury. 
 Until the 3d of March, 1837, it was allow- 
 able to make payments -with %\<) notes, 
 after that time with |120, and finally the 
 banks wei-e only to accept notes whose 
 exchange Avas at par. 
 
Panics in the United States. 63 
 
 President Adams favored small paper 
 notes of 25 to 10 cents, to the extent of 
 $1,000,000. From 1831 to 1837, $3,400,- 
 000 twenty-five cent notes, $5,187,000 ten- 
 cent notes, and $9,771,000 five-cent notes 
 were issued. To prevent an abuse of this 
 it was necessaiy to resume a metallic 
 circulation immediately. In 1833 the 
 amount of small notes issued had already 
 reached $37,000,000; in 1837 it became 
 $73,000,000; it even exceeded these fig- 
 ures ; it was this circulation of small paper 
 notes that had to be made smaller than 
 $120,000,000. 
 
 Notwithstanding these frequent panics 
 the national prosperity and the increase of 
 wealth were unquestionable and astonished 
 all observei's. 
 
 From 1817 to 1834 the national expenses 
 diminished from $39,000,000 to $24,000,- 
 000, decreasing even to $14,000,000 in 1835, 
 while the income grew to $37,000,000. 
 
 From 1826 to 1836 the condition of 
 business, despite the panic of 1831, grew 
 easier. Industries, agriculture, and com- 
 merce were prosperous and every enter- 
 prise was successful. Both in New Orleans 
 
64 ^ Brief History of 
 
 and in New York there was much building, 
 and more than 1508 houses were erected 
 between January 1 and September 1, 
 1836. This general prosperity canied 
 with it the seeds of trouble. 
 
 The rapid increase of the National rev- 
 enue gave birth to the belief that capital 
 had increased in the same proportion. 
 This superabundance of income produced 
 temporarily by the inflation in business 
 was I'ecklessly thrown away. People spec- 
 ulated in land, projected a hundred rail- 
 roads, canals, mines, and every sort of 
 scheme, which would have absorbed $300,- 
 000,000 if carried out. 
 
 The national capital being insufficient, 
 loans were made in England and Holland, 
 where the rate of interest being more mod- 
 erate stimulated the passion for enterprises. 
 Finally, in order to stop the flow of Eng- 
 lish capital to America, the Bank of Eng- 
 land raised the rate of interest ; this brought 
 people to theii' senses. They saw the im- 
 possibility of cai'rying out a third of their 
 schemes. Cotton fell, and panic seized the 
 public. 
 
Panics in the United States. 65 
 
 Since 1818 a period of flow and ebb in 
 trade had been seen every five or six years, 
 but this stoppage was much more serious. 
 The lack of ready money and capital de- 
 stroyed confidence. Money was not to be 
 had upon any collateral; and the banks 
 stopped discounting. The people lacked 
 bread, the streets were deserted, the thea- 
 tres empty ; social observances were in 
 abeyance, there were no more concerts, and 
 the whole social round was stopped. 
 
 The Bank of the United States used 
 vaiious expedients to temporarily moderate 
 the crisis until the very moment that it 
 burst all the more violently in 1839, and 
 brought about a new and i-adical reform. 
 
 From the time that the separation of the 
 Bank of the United States from the Gov- 
 ernment and the cessation of its operations 
 as the National Bank was brought about, the 
 quotation on bank notes considerably de- 
 creased, as well for those payable at sight 
 as for the deferred notes payable in twelve 
 months. The President sent an agent to 
 London to raise money upon the bank 
 shares. 
 
66 A Brief History of 
 
 Fearing that General Jackson would not 
 establish a new bank, and by way of coun- 
 terpoise, one hundred banks were created 
 with a capital of more than $125,000,000; 
 issues of bank stock were not to exceed 
 three times the amount of the capital, but 
 this provision was not observed ; the issue 
 was without regulation and without limits, 
 and during an inflation in prices of the 
 necessaries of life which had doubled in 
 value, and which had turned the people's 
 attention to agriculture. The price of land 
 had for some time advanced tenfold, and 
 the advance in cotton caused the Southern 
 planters to abandon indigo and rice. 
 
 Imports in 1836 exceeded the exports 
 by $50,000,000, which had to be paid in 
 gold or silver. This outflow of metal 
 created a great void. 
 
 The advance in the discount rate in the 
 Bank of England under such circunastances 
 came like a thunder-clap, and the distended 
 bladder burst. Banks suspended payment, 
 and bank notes lost from 10 to 20 per cent. 
 Exchange on France and England rose to 
 22 per cent., all metal disappeared from 
 
Panics in the United States. 67 
 
 circulation, and a thousand failui'es took 
 place. The English export houses lost 
 from £5,000,000 to £6,000,000 sterling; 
 values fell from maximum to minimum. 
 The losses in America were even greater ; 
 cotton fell to nothing. At the Avorst of 
 the panic people turned to the Bank of 
 the United States, and its President, being 
 examined as to the means of remedying 
 the trouble, stated that it was above all 
 necessary to maintain the credit of the 
 Bank of England in stead and in place of 
 private credit, which had disappeared. He 
 proposed to pay everything in bank paper 
 on Paris, London, and Amsterdam. 
 
 When the panic came the Bank was very 
 much shaken. At the beginning of April, 
 1837, the New York banks suspended pay- 
 ments because demands for hard money for 
 export played the chief role ; the other 
 banks suspended in their turn, promising 
 to resume with them. 
 
 The Bank of the United States sus- 
 pended also, Mr. Biddle, the President, as- 
 serting that it would have continued to 
 pay were it not for the injury done by New 
 
68 A Brief History of 
 
 York. This was false, for the New York 
 banks shortly after resumed payment, hop- 
 ing they would be imitated, but the other 
 banks refused to do so. Mr. Biddle wished, 
 in the first place, to await the result of the 
 harvest. To uphold the Bank, he tried to 
 bring about exchanges, both with banks 
 and general business, not only in America 
 but in Europe, in order to establish a unity 
 of interests which would sustain him and 
 conceal his real condition. In this he was 
 successful to a certain degree, for in 1840 
 in his balance sheet $53,000,000 of paper 
 of the different States was stown up. He 
 wished above all to secure the monopoly 
 of the sale of cotton : a senseless specula- 
 tion hitherto unexampled,^ the like of 
 which may never be seen again. 
 
 Whilst the Bank came to the relief of 
 New Y'ork business through its exchange 
 and its deferred notes, Biddle posed as 
 the great cotton agent, on condition that 
 the Bank's agents should be consigned to 
 at Havre and Liverpool. In their embar- 
 
 ' A similar episode has occurred in our time in the specula- 
 tion in metals by the " Comptoir d'Escompte. " 
 
Panics in the United States. 69 
 
 rassment this proposition was accepted by 
 the planters. Cotton was thus accumu- 
 lated in those two places. This monopoly 
 advanced the price, and vast sums were 
 realized, which enabled him to enlarge the 
 scope of his business. In 1837 he was en- 
 abled by this means to draw on London 
 for £3,000,000 sterling ; the difference be- 
 tween 5 to 6 per cent, interest and dis- 
 count at 2 per cent, pi'oduced a very 
 handsome profit. The cotton merchants 
 prospered as well as the exchange agent, 
 and Mr. Biddle paid the planters in bank 
 notes which the Bank could furnish with- 
 out limit, while he received in Europe 
 hard money for the cotton ; this aroused 
 opposition. 
 
 In the second half of 1837 he established 
 in Missouri, Arkansas, Alabama, Georgia, 
 and Louisiana a number of new banks, to 
 make advances to the planters, and to sell 
 their products for them in Eui'ope. They 
 started with very slight capital, they ob- 
 served no rules in issuing paper, their 
 bank notes fell 30 per cent, in 1838, and 
 the planters would not take them. 
 
70 A Brief History of 
 
 The Bauk of tbe United States, fearing 
 lest foreign capitalists should take advan- 
 tage of the difficulties of the planters by 
 buying this cotton, cheapened on account 
 of the encumbrances upon the district pro- 
 ducing it, resolved to come to the rescue of 
 the Southern banks, and to join them in 
 their operations by purchasing their shares 
 and their long-time paper, having two 
 years to run. It thus put |1 00,000,000 
 into the l)usiness, and in 1888 it had loaned 
 them upon theii' cotton crops not less than 
 i{^20,000,00() at 7 per cent., payable in three 
 years. 
 
 It had bought the bank shares at 28 per 
 cent, below par ; through its help they 
 had risen again to ^kt ; and then it threw 
 them upon the London market, which ab- 
 soi'bed them. In oi'der to explain the im- 
 mense credit enjoyed in Eurojie by the 
 United States and their banks, we must 
 observe that the extinguishment of the 
 National obligations through surplus crops 
 threw a false light upon the credit of the 
 States, as well as particularly upon that of 
 the corporation. For manj^ years Amer- 
 
Panics in the United States. *]t 
 
 icau investments had been sought for 
 above all others in London, and as nothing 
 happened during the first year to destroy 
 that confidence, the amount thus employed 
 increased from $150,000,000 to $200,000,- 
 000 in 1840. In Pennsylvania $16,000,000 
 of European money was used in the Bank 
 of the United States, and $40,000,000 in 
 those of the different States, all of which 
 was payable in two or three years. 
 
 Ml'. Biddle had succeeded in sustainins; 
 the different States with the National cre- 
 dit. He knew how to utilize the credit of 
 American goods in Europe, and drew from 
 the London market an immense sum 
 against exchange long-time paper and 
 paper payable in America. The Bank's 
 paper fell from 4 to 6 per cent., and it was 
 in such demand that the Bank of England 
 took it at 2 to 3 per cent, discount. But 
 finally the market had all that it could 
 take. The attention of merchants was at- 
 tracted to Mr. Biddle's gigantic specula- 
 tions, who j)aid paper in America and col- 
 lected hard money in London. Business 
 interests complained about the contraction 
 
72 A Brief History of 
 
 in the market. The Bank's stock of cot- 
 ton increased steadily, and between June 
 and July it rose from fifty-eight to ninety 
 million bales. 
 
 This speculation had already yielded 
 $15,000,000 profit, but the market was 
 overloaded, and quotations could not keep 
 up. The planters had made a great deal 
 by the advance in cotton, but the paper 
 money remitted them lost from 15 to 
 25 per cent. A panic was approach- 
 ing. The cotton crop, amounting to 
 400,000 bales, was one fifth less than was 
 expected ; they awaited an advance in 
 pi'ice, but the contrary occurred. The high 
 prices had brought out all the stored cot- 
 ton ; the factories had reduced their work. 
 Nevertheless bale after bale was forwarded 
 to Liverpool and to Havre. The sale in 
 this last port in February and March, 1839, 
 having produced a loss, they continued to 
 store it. As soon as Mr. Biddle was aware 
 of this stoppage he sought to hide the dif- 
 ficulty by extending his business. He pro- 
 posed to start a new bank in New York 
 (the other had headquarters in Philadel- 
 
Panics in the United States. 73 
 
 phia) with a capital of $50,000,000. He 
 once more issued long-time paper, and 
 bought with American paper canals, rail- 
 roads, and shares which he threw upon the 
 English market. This lasted until the 
 long-time paper lost 18 per cent, in 
 America, and until American exchange and 
 investments were no longer received on the 
 Continent. 
 
 The Parisian house of Hottinguer like 
 its other agents, sold little until the first of 
 July, and when it saw that the effort to 
 monopolize cotton could not succeed, fear- 
 ing to continue this gigantic operation, it 
 declared that it employed too much capital. 
 In the midst of all this, some new bills of 
 exchange reached Paris without consign- 
 ment of corresponding value ; and the house 
 of Hottinguer protested. 
 
 Hope of Amsterdam discontinued his 
 connection. The London agent called upon 
 the Bank of England for help, which was 
 granted upon the guaranty of certain firms 
 of that place and a deposit of good Ameri- 
 can paper. 
 
 Rothschild accepted the refused bills of 
 
74 A Brief History of 
 
 exchange, after having found out that a 
 sum of £400,000 would suffice for Mr. Bid- 
 die's agent ; these J6400,000 offered as a 
 guaranty consisted of Government stock, 
 and of shares in railroads, canals, and banks. 
 This agreement was not given out freely, 
 which still fuj'ther increased the feeling of 
 distrust. A crisis in which $150,000,000 
 of European capital were destined to be 
 engulfed was rapidly approaching. 
 
 Breaking out of the Panic of 1839. — The 
 English papers had already warned the 
 people to be distrustful. The Times said 
 it was impossible to have any confidence in 
 the Bank as long as it would not resume 
 specie payments. Mr. Biddle defended 
 himself through papers paid for the pur- 
 pose, finally in the Augsburg Gazette, 
 -while he waited for the soap bubble to 
 burst. His retained defenders claimed that 
 the 150,000 bales of cotton sent to Europe 
 had not been sold, but received on com- 
 mission. Advances in paper had been 
 made which in the month of August, 1839, 
 were to be paid in notes by the Southern 
 banks, for a new grant made to the Bank 
 
Panics in the United States. 75 
 
 by the State of Peuosylvania permittetl it 
 to buy the shares of other banks, and by 
 this means to gain their management; 
 their notes lost 20 to 50 per cent, as com- 
 pared with the Northern banks. 
 
 Through his profit upon the difference of 
 the notes, and through the payment for the 
 cotton in paper, and through the sale of 
 bullion exchange, Mr. Biddle had made five 
 to six million dollars, which lay at his com- 
 mand in London. 
 
 The protection of his bills of exchange 
 made a great impression in England ; the 
 rebound was felt in America, where the 
 panic, moderated in 1837 through the in- 
 tervention of the Bank, burst forth with 
 renewed fury in 1839, and brought about 
 the complete liquidation of that establish- 
 ment. 
 
 At the same time the English market 
 was very much pressed, for, according to a 
 notice of the Chamber of Commerce, the 
 number of that year's bankruptcies was 
 greater than usual. From June 11, 1838 
 to June, 1839, there were 306 bankruptcies 
 in London, and 781 in the "provinces," — in 
 
76 A Brief History of 
 
 all, 1,087. At Mauchester there were 82, at 
 Birmingham 54, at Liverpool 44, at Leeds 
 33. The Loudon Exchange was flooded 
 Avith unsalable paper, an occurrence which 
 had also taken place on a smaller scale in 
 1837. 
 
 Such was the interruption of business 
 that interest for money rose to 20 per cent., 
 and the discount rate for the best paper to 
 15 or 18 per cent. 
 
 The various States in the Union had 
 contracted debts with inconceivable ease, 
 and interest payments were provided for 
 by new loans. President Jackson de- 
 clared it necessary to make a loan in order 
 to pay interest moneys. It was deemed 
 inexpedient to impose new taxes to pro- 
 vide for the cost of the public works. 
 Great was the embarrassment in America, 
 and as no more money came from England, 
 it was necessary for the Americans to look 
 for it in their own country. 
 
 Business circles were flooded with long- 
 time paper running at a discount of one 
 half of 1 per cent, a month. Discount 
 rose to 25 per cent. The panic was so 
 
Panics in the United States. jy 
 
 great that all confidence was destroyed. 
 The Bank of the United States, in order 
 to maintain its credit, paid its depreciated 
 long-time paper. 
 
 The struggle between the Bank and its 
 opponents, led by President Van Buren, 
 re-commenced. These last declared that 
 the Bank had erred in circulating the 
 $4,000,000 of notes of the old bank, which 
 should have been retired coincidently with 
 the charter ; and the Senate forbade their 
 circulation. 
 
 The Grovernment claimed large sums 
 fi'om the Bank, the statement of which 
 showed close to $4,000,000 ; and, as it 
 could not secure this amount in money, it 
 was decided to issue $10,000,000 of Treas- 
 uiy bonds. The Bank party wished to 
 jjush the Government into bankruptcy, in 
 order to induce it to turn to them for helj), 
 and, through the issue of " circular specie," 
 oblige it to adopt a system of paper money. 
 
 A bill was brought forward with this 
 view. Biddle, who wished to increase the 
 circulation, said he could resume specie 
 payments, and thus forced his shares to 
 
78 A Brief History of 
 
 rise ; but the rejoicing of the Bank party 
 was soon disturbed by the fact that col- 
 lectors of taxes were forbidden to receive 
 any bank note for less than $20, which 
 was not redeemable in hard money. 
 
 After a struggle of eight years the sep- 
 aration became complete, and the adminis- 
 tration of National finances was withdrawn 
 from the Bank. 
 
 In 1836, a law was passed providing 
 that upon the expiration of its charter, the 
 National funds should be again deposited 
 with it, as soon as the Bank resumed specie 
 payment. Upon the suspension in 1837, 
 the Government was forced to abate the 
 law, in order to protect the specie, and im- 
 posed on its financial and postal agents 
 some of the duties of the Treasury. In 
 1840, the management of the public Treas- 
 ury constituted a separate and distinct de- 
 partment. Such was the liquidation fol- 
 lowing the panic, that Congress granted 
 the Bank three months in which it must 
 either resume specie payment or liquidate. 
 To conform to this decree the State of 
 Pennsylvania fixed the resumption of 
 
Panics in the United States. 79 
 
 specie payments by its banks, for January 
 15, 1841. The shares of the Bank, which 
 had yielded no dividend in 1839, and 
 offered a similar outlook for the first half 
 of 1840, fell to $61. They had been 
 quoted as high as $1,500. General liqui- 
 dation and a loss of 50 per cent, was in- 
 evitable. This occurred in 1841. Thus 
 ceased for a time the bank mania in the 
 United States. 
 
 We will recall here Buchanan's opinion 
 about the Bank: "If the Bank of the 
 United States, after ceasing to be a 
 national bank, and obtaining a new 
 charter in Pennsylvania, had restrained 
 itself to legitimate banking, had used its 
 resources to regulate the rate of home ex- 
 change, and had done everything to hasten 
 the resumption of specie payments, it 
 would have resurrected the National Bank. 
 
 " But this is no longer possible ; it has 
 defied Congress, violated the laws, and is 
 mixed up in politics. The people have 
 recognized the viciousness of its adminis- 
 tration ; the President, Mr. Biddle, has 
 concluded the work Jackson began." 
 
8o A Brief History of 
 
 Tables indicating the banks which sus- 
 pended during the panic : In 1814, 90 ; in 
 1830, 165 ; in 1837, 618 ; in 1839, 959. 
 
 The last panic, from 1837 to 1839, pro- 
 duced, according to some pretty accurate 
 reports of 1841, 33,000 failures, involving 
 a loss of $440,000,000. 
 
 Panic of 1848. — The entire discounts, 
 which had risen to $525,000,000 in 1837, 
 fell to $485,000,000 in 1838, only to rise 
 again to $492,000,000 in 1839, and the 
 real liquidation of the panic occurred only 
 then. Discounts fell at once to $462,000,- 
 000, then $386,000,000 ; the abundance of 
 capital, and the low price at which it was 
 offered, cleared out bank paper until it 
 was reduced from $525,000,000 to $254,- 
 000,000 in 1843.' 
 
 The metallic I'eserve increased from 
 $37,000,000 to $49,000,000 (1844); the 
 circulation was reduced from $149,000,000 
 to $58,000,000. 
 
 The number of banks in 1840, from 901 
 fell to 691 in 1843, and the capital itself 
 
 ' We have not the outside figures, the maximum or mini- 
 mum. 
 
Panics in the United States. 8 1 
 
 from $350,000,000 in 1840 was reduced to 
 $200,000,000 in 1845 and to even $196,- 
 000,000 in 1846. 
 
 All these figures clearly indicate liquida- 
 tion. The market, freed from its exchange, 
 was enabled to permit affaii's to resume 
 their ordinary course. 
 
 In fact an upward movement was taking 
 place. Discounts rose from $264,000,000 
 to $344,000,000 in 1848. 
 
 Banks increased from 691 in 1843 to 
 751 in 1848, and their capital grew from 
 $196,000,000 in 1846 to $207,000,000. 
 The paper circulation rose from $58,000,- 
 000 to $128,000,000 in 1848. Deposits 
 from $62,000,000 reached $103,000,000 in 
 1848. The metallic reserve alone fell from 
 $49,000,000 in 1844 to $35,000,000 in 
 1848. 
 
 The consequences of the Eui'opean panic 
 were felt in America, but without causing 
 much trouble. The liquidation of the 
 panic of 1839 was barely over, and Avas 
 still too recent to have permitted sufficient 
 extension of business 
 
 Embarrassments were slight and brief ; 
 
82 A Brief History of 
 
 discounts, nevertheless, fell from $344,000,- 
 000 to $332,000,000. 
 
 The store of bullion, in spite of the sur- 
 plus and the favorable balance produced 
 by the export of grain to Europe, fell from 
 $49,000,000 to $35,000,000 ; with the fol- 
 lowing year the forward movement recom- 
 menced. 
 
 Panic in 1857. — The stoppage in 1848 
 was very brief. Discounts rose regularly 
 from $332,000,000 to $364,000,000, $413 
 000,000, $557,000,000, $576,000,000, $634,^ 
 000,000, and finally $684,000,000 in 1857 
 The progression was irresistible. The cir 
 cuktiou rose from $114,000,000 to $214, 
 000,000. The banks increased at such a 
 rate that, from 707 in 1846, with a capital 
 of $196,000,000, there were in 1857 1416, 
 whose capital had risen to $370,000,000,— 
 a vejy inferior figure, in comparison to the 
 number of banks, to that of 1840, when 
 901 banks only had a capital of $358,- 
 000,000. 
 
 The metallic reserve, from $35,000,000 
 in 1847, easily reached $59,000,000 in 
 1856: but it was in proportion neither 
 
Panics in the United States. 83 
 
 with the number of the banks nor their 
 discounts and circulation ; and, after all, 
 this is only a moderate sum. We have 
 not the extreme maximum or minimum, 
 and the suspension of specie payments 
 took place notwithstanding the amount of 
 cash on hand, which was greater in 1857 
 than in 1856. 
 
 Deposits accumulated from $91,000,000 
 to $230,000,000 ; they rose to their greatest 
 height in the very year of the crisis ; never- 
 theless, they could not be drawn out. 
 
 During the Eastern war the prosperity 
 of the United States had been so great 
 that the clearing-houses established in New 
 York in 1853, and in Boston in 1855, 
 offered only a slight opposition to the 
 excessive issue : at least, in 1837 the Con- 
 gressional report stated the cash on hand 
 was $6,500,000— that is to say, $1.00 in 
 metal to each $6.00 in paper. 
 
 In 1857 cash on hand was $14,300,000, or 
 $1.00 in hard money for each $8.00 in paper. 
 
 The banks had attracted deposits by 
 high interest, and loaned the money to 
 wild speculators. On the 22d of August, 
 
84 A Brief History of 
 
 1857, the amount of loans had become al- 
 most $12,000,000, counting together metal, 
 notes, and deposits. 
 
 From December, 1856, to June, 1857, 
 they had shown gi-eat strength. Discounts 
 had risen from $183,000,000 to $190,000,- 
 000 in June ; cash on hand had risen from 
 $11,000,000 to $14,000,000. The only evi- 
 dence of weakness, so to speak, was that 
 the withdrawal of deposits had risen from 
 $94,000,000 to $104,000,000, while the cir- 
 culation diminished $1,000,000. 
 
 In June " the position of the Bank ought 
 not to have caused any fear, to the most 
 far-sighted," says the report of the Com- 
 mittee of Inquiry. 
 
 Foreign exchange was favorable, and it 
 is known that is the bankers' guide. June, 
 July, and August were tranquil, except for 
 a slight disturbance in business experi- 
 enced by the country bankers through the 
 constantly increasing amount of notes pre- 
 sented for redemption, and among the city 
 bankers by requests for discount. 
 
 The collapse of the " Ohio Life," which 
 had the best New York connection, was 
 
Panics in the United States. 85 
 
 the first muttering of the storm, and 
 was soon followed by the suspension of 
 the Mechanics' Banking Association, one 
 of the oldest banks in the country. The 
 suspension of the Pennsylvania and Mary- 
 land banks followed. Public confidence 
 remained unshaken — it relied upon the 
 circulating medium. 
 
 Only one bank went to protest, and that 
 on September 4th, on a $250 demand. An- 
 other protest followed on the 12th, a third 
 on the 15th, both for insignificant amounts. 
 Demands in the way of withdrawal 
 amounted to almost nothing, and there 
 was nothing like a panic. 
 
 The deposits at the savings banks were 
 a little less, but this did not continue. 
 Only at the close of September was the 
 demand by the country banks for payment 
 upon the Metropolitan American Exchange 
 Bank for payment greater than it had ever 
 been. 
 
 On the 13th of October, with exchange 
 at par, an abundant harvest, with a pre- 
 mium of 1^ to ^ per cent, on metal, the 
 banks suspended specie i^ajvaeVii, but 
 
86 A Brief History of 
 
 resumed it ou the 11th of December. The 
 most critical period lasted about a month. 
 The first step towards resumption of pay- 
 ments was made after the resolution 
 adopted by the Committee of Liquida- 
 tion to call upon the country banks to re- 
 deem the notes of the Metropolitan Bank, 
 paying an allowance of :^ of 1 per cent, in- 
 terest, running from the 20th of November. 
 
 At this time the city bankers held, in 
 bills issued and in signed parcels of $5,000 
 each, about $7,000,000 due by the country 
 banks. They were thus enabled to accom- 
 plish the payment of theii' notes at the 
 rate of 20 per cent, a month by the 1st of 
 January, 1858. The same favor of repay- 
 ing their notes at the rate of 6 per cent, 
 was granted to the citj^ banks. 
 
 We need not inquire if, having granted 
 this delay, the banks proved their libei'- 
 ality. The abundant harvest also assisted 
 liquidation. 
 
 From 1853 to 1857 the metallic reserve 
 fell to $7,000,000, deposits rose to |99,- 
 000,000, and discounts and loans to $122,- 
 000.000. 
 
Panics in the United States. 87 
 
 BANKS OF NEW YORK. 
 
 
 
 
 Proportion 
 of the Me- 
 tallic Re- 
 serve to 
 Deposits. 
 
 Metallic Reserve. 
 
 Deposits. 
 
 Discounts, 
 Advances. 
 
 1854. . . .$15,000,000 
 
 $ 58,000,000 
 
 $ 80,000,000 
 
 26 i^ 
 
 1855. . . . 9,qoo,ooo 
 
 85,000,000 
 
 101,000,000 
 
 II % 
 
 1856 io,ooo,oco 
 
 100,000,000 
 
 112,000,000 
 
 10 % 
 
 1857 7,000,000 
 
 99,000,000 
 
 122,000,000 
 
 1% 
 
 The reduction of the metallic reserve, 
 increase of deposits and of discounts and 
 of advances, are here clearly indicated. 
 
 From 1853 to 1857 the bank circulation 
 hardly varied $100,000, indicating that the 
 demand for hard money came from abroad 
 and from the interior. The circulation was 
 not the cause of the suspension, — at least 
 such was the opinion exjjressed by the 
 superintendent of the New York banks in 
 his report. 
 
 In 1856 twenty-five companies were 
 started, and three bankers opened business 
 with a capital of $7,500,000, of which 
 $7,200,000, was paid in. 
 
 In 1857 there were only five of these 
 banks and three bankers having a capital 
 of $6,000,000, of which only $4,000,000 
 were jjaid in. The collateral deposited by 
 the banks represented $2,500,000 in 1856, 
 
88 A Brief History of 
 
 on which credit of $2,000,000 in notes was 
 granted. 
 
 In 1857 the same collateral did not ex- 
 ceed $560,000 estimated value, on which 
 a credit of $383,000 in paper was granted. 
 
 At the height of the crisis failures were 
 so numerous that a general suspension of 
 payments, and, in consequence, a stoppage 
 of business was dreaded. This suspension, 
 in place of being general, turned out to be 
 merely partial ; it occurred at a juncture 
 when it might well be feared that 
 it would lead on to the very greatest 
 disasters, but, far from harming, it helped 
 the market. The banks had suspended 
 payment upon a common understanding 
 among themselves and with business circles. 
 The critical moment having passed, tran- 
 quillity reappeared as soon as the course 
 determined on was known. 
 
 If suspension of payment hurts the credit 
 of a bank, it does not necessarily lead to 
 the depreciation of its bank notes. 
 
 There are a good many proofs of this : in 
 1 796, when the Bank of England suspended, 
 its bank notes did not depreciate ; and if 
 
Panics in the United States. 89 
 
 this state of things did not last, the blame 
 must be laid upon the excessive issue. 
 And in France, in 1848 as well as in 1871, 
 the Bank of France suspended without the 
 depreciation of its bank notes becoming 
 very noticeable. So, in New York, bank 
 notes passed at 2 or 3 per cent, loss at this 
 crisis. 
 
 The crisis disappeared with the end of 
 the year, and resumption of payments took 
 place between New York and Hamburg, 
 with the return of specie and a rate of 4 
 per cent. 
 
 It was the same in France and England. 
 A more serious panic and a more ra})id 
 recoveiy had never been seen. The rigid- 
 ness and not the severity of the pressui-e 
 that had to be exercised shows the condi- 
 tion of business. There had been most 
 blamable practices employed ; but the 
 market as a whole was sound, and had 
 faced the storm. 
 
 Only four banks had suspended, three 
 of which were shaky before the panic, and 
 the fourth had already resumed payments. 
 
 At no other period could one Iiave ob- 
 
go A Brief History of 
 
 tained such an amount of credit upon a 
 simple paper circulation ; fictitious paper 
 was the source of all the wrecks. To get 
 it into circulation the most varied contri- 
 vances were resorted to, and fraud itself 
 ^vas not wanting ; the signatures even be- 
 came fictitious, their owners could not be 
 found. Shams and discriminations under 
 all forms, designed to permit speculation 
 without capital, \vithout exchange of goods, 
 without real transactions between the 
 drawer and the acceptor of the bill of 
 exchange, were rife. 
 
 In his message, President Buchanan 
 ascribed the crisis to the vicious system of 
 the fiduciary circulation, and to the ex- 
 travagant credits granted by the banks, 
 although he was aware that Congress had 
 no power to curb these excesses. When 
 there is too much paper, when the public 
 has created an endless chain of bank notes, 
 representing no real value, it is enough that 
 the first ring bi-eak for the whole gear, thus 
 no longer held together, to fall to pieces. 
 
 If we maik the situation of the New 
 York banks before and during the panic — 
 
Panics in the United States. 91 
 
 that is to say, in 1852 and in 1857, we will 
 ascertain as follows : 
 
 June, 1852. June, 1856. June, 1857. 
 
 Capital I 59,700,000 $ 92,300,000 $107,500,000 
 
 Circulation 27,900,000 30,700,000 27,100,000 
 
 Deposits 65,600,000 96,200,000 84,500,000 
 
 Paper discounted 127,000,000 174,100,000 170,800,000 
 
 Cash on hand .. . 13,300,000 18,500,000 14,300,000 
 
 This table demonstrates that two items 
 show a gi'eat increase : capital increased 
 $47,000,000 and paper discounted $43,000- 
 000 ; while, in face of an increase of 
 $1,000,000 of specie on hand, the note cir- 
 culation decreased $800,000. 
 
 Far from finding a mistake, we find a 
 proof of the Directors' prudence. If there 
 was an error in the issuing of paper, it was 
 not on the side of the banks ; it was the 
 public itself that was chiefly in fault. 
 
 We find the causes of the panic in the 
 issues of railway obligations and shares, 
 which had chiefly been placed in European 
 markets, and whose gross amount was 
 estimated at £1,000,000. The speculation 
 in land and railroads had been carried on 
 either with borrowed money or by open 
 credits, and by accommodation notes, back 
 of which there was no second party. 
 
92 A Brief History of 
 
 The mistake of the banks was in trying 
 to conduct their whole business by their 
 note circulation and to concentrate their 
 capital in the bank offices, and meanwhile, 
 as they refused to loan to the stockholders 
 of the banks, discounts in New York fell 
 ofe $10,000,000. Finally the capital could 
 not be entrusted to the disposal of the 
 banks and it was necessary to compel them 
 to make a deposit of $100,(tOO for each as- 
 sociation, and $50,000 for each banker. 
 
 Such were the final advices given by the 
 inspector-general of the banks of New 
 York at the close of his report, dealing with 
 how to prevent the recurrence of panics. 
 To have confidence in their efficacy, it was 
 necessary to forget the past and its 
 lessons. 
 
 The reforms already made and those still 
 asked for in the bank system could yield 
 no remedy for those abuses lying beyond 
 legislative action. The American news- 
 papers did not hesitate to demand them, 
 well aware that they would produce no 
 effect ; howevei-, they congi'atulated them- 
 selves with having drawn away from effete 
 
Panics in the United States. 93 
 
 Europe oue million sterling now realized 
 upon the soil of the United States without 
 any equivalent given for it to the foreign 
 lenders. 
 
 Panic of 1864. — The crisis of 1864 was 
 mixed up in the United States with the 
 War of Secession ; it was a political crisis, 
 and is not properly to be considered here. 
 
 Panic of 1873. — During the last two months 
 of 1872 the American market had been very 
 much embarrassed ; the lowest I'ate of dis- 
 count was 7 per cent., and in December 
 it was quoted at even ^^^ of 1 per cent, or 
 a quarter of 1 per cent, a day ! 
 
 The year 1873 was anxiously awaited in 
 hope of better times. In the middle of 
 January, 1873, the rate of interest declined 
 a little to 6 or 7 per cent., but soon 
 the rate of -^-^ of 1 per cent, per day re- 
 appeared and continued until the month 
 of May. 
 
 In the first days of Api'il the market was 
 in full panic ; it grew steadier in the first 
 week of May, and in the month folloAving. 
 It relapsed on September 1st, and requests 
 for accommodation redoubled until the 
 
94 A Brief History of 
 
 sharpest moment of the panic. On that day 
 there were no quoted rates ; money could 
 not be had at any price : some few loans 
 were made at 1^ per cent, per day. 
 
 This panic broke forth on September 
 18th, through the failure of Jay Cooke, 
 after a miserable year, during which money 
 was constantly sought for and was held at 
 very high prices in all branches of business. 
 As to the loans for building railroads, they 
 followed one another so rapidly that, from 
 the month of October, 1871, to the month 
 of May, 1873, they could not be placed at 
 a lower rate than 7 per cent. Bankers 
 succumbed beneath the burden of their un- 
 salable issues. This was a grave misfor- 
 tune for the railroads. In the single year 
 1873 there were constructed 4,190 miles of 
 I'ailroad in the United States, which, at 
 $29,000 per mile, represented the enormous 
 sum of $121,000,000, and in the last five 
 years $1,700,000,000. 
 
 The commercial situation was not so 
 bad, and the number of failures did not 
 reach the proportion that might have been 
 feared. 
 
Panics in the United States. 95 
 
 After the failure of Jay Cooke came 
 those of Fiske & Hatch, of the Union Trust 
 Company, of the National Trust Company, 
 and of the National Bank of the Common- 
 wealth. On the 20th of September, for 
 the first time, the Stock Exchange in New 
 York City was closed for ten days, during 
 which legal-tender notes were at a pre- 
 mium of \ per cent, to 3 per cent, above 
 certified cheques. 
 
 On the 18th there was a run on the 
 deposits. Withdrawals continued on the 
 19th and 20th, especially by the country 
 banks, and the banks' correspondents. No 
 security could be realized upon ; and in 
 order to relieve the situation the Secretarj^ 
 of the Treasury bought $13,500,000 of 
 National 5-20 bonds, stating that he could 
 do no moi'e. 
 
 The New York Stock Exchange was 
 reopened September 30th, without any 
 notable occurrence; but everything was very 
 low. Several other suspensions occurred — 
 for instance, that of Sprague, Claflin, & Co. 
 
 The raite of discount being 9 per cent., 
 a panic was feared in London. The banks 
 
96 A Brief History of 
 
 passed the most critical period on October 
 14th; out of $32,278,000 legal-tender dol- 
 lars at the beginning of the panic, only 
 $5,800,000 remained on hand. Not until 
 the middle of November did the decline 
 stop and a slight advance take place. 
 
 Throughout the panic the bank reserves 
 were much below the legal requirement of 
 25 per cent. ; from the 13th to the 20th of 
 September they fell to 24.44 and 23.55 per 
 cent. 
 
 The New York Clearing House in Sep- 
 tember adopted a measure which permitted 
 dealings to continue. It authorized the 
 banks to deposit the bills on hand, or the 
 other securities they had accepted, in ex- 
 change for which they issued certificates of 
 deposit bearing 7 per cent, in notes of 
 $5,000 to $10,000 to the extent of 70 per 
 cent, of the security deposited. Thus $26,- 
 565,000 of them were put into circulation. 
 
 Furthermore, they made a common fund 
 of the legal tenders belonging to the Asso- 
 ciated Banks for mutual aid and protection. 
 
 The suspension of payment tdok place 
 first in New York and then extended to the 
 
Panics in the United States. 97 
 
 large cities of the Union ; it lasted forty 
 days, until the 1st of November; this 
 measure was looked upon as having pre- 
 vented the greatest disasters. 
 
 The table setting forth the situation, 
 compared v^^ith the balance sheets of the 
 Associated Banks of New York on January 
 1st, April 1st, July 1st, September 1st, and 
 October 1st of the years 1870, 1871, 1872, 
 and 1873, shows us the following changes: 
 discounts liad fluctuated from $250,000,000 
 in January, 1870, to $309,000,000 in Sep- 
 tember, 1871 ; they had become reduced to 
 $278,000,000 in September, 1873, on the 
 eve of the panic, and from the month of 
 September, liquidation of the panic having 
 begun, they were reduced to $250,000,000. 
 Deposits from $179,000,000 in January, 
 1870, rose to $248,000,000 in July, 1871, 
 with $296,000,000 of bills discounted, and 
 once more reached $198,000,000 in Septem- 
 ber, 1873, witli $278,000,000 of discounts 
 and $195,000,000 in December. 
 
 Even at the most critical moment of the 
 panic they continued larger than the usual 
 average of the preceding years. 
 
98 A Brief History of 
 
 The metallic reserves played too feeble a 
 role to have caused failure ; they had varied 
 from $34,000,000 in June, 1870, to $9,000,- 
 000 in September, 1871, $18,000,000 in 
 September, 1873, and $23,000,000 in De- 
 cember, 1873. 
 
 The circulation varied still less : from 
 $34,000,000 in January, 1876, it decreased 
 to $27,000,000 in July, 1872, and remained 
 at the same figure during the year 1873, if 
 we can judge of this by the balance sheet 
 rendered on the first day of each quarter. 
 In each case there is no opportunity for us 
 to charge an excessive issue. 
 
 According to the statement of the Comp- 
 troller of the Currency, paper discounted 
 decreased between the 12th of September 
 and the 1st of Novemberfrom $199,000,000 
 to $169,000,000. 
 
 To sum up, the circulation had fluctuated 
 very little ; deposits from $99,000,000 had 
 increased to $167,000,000 between the 12th 
 and 20th of September, at the most critical 
 period ; and when suspension was universal, 
 they had declined to $89,000,000. After 
 the breaking out on the 18th of October, 
 
Panics in the United States. 99 
 
 and since then from the 22d of November, 
 they had risen to $138,000,000. 
 
 The metallic I'eserve, after a brief revival 
 from $14,000,000 to $18,000,000 between 
 the 12th and 20th of September, had fallen 
 back to $10,000,000, only to rise to $14,- 
 000,000 in November. 
 
 In the midst of these difficulties, the 
 securities of the various States held up. 
 Since the first months of 18V3, the demands 
 of the English market caused an upv^^ard 
 movement in them; in September it was 
 impossible to make a loan, without using 
 them as collateral. In order to help the 
 market somewhat, the Treasury bought 
 about $13,000,000 of National securities 
 on the Stock Exchange, but, lacking re- 
 sources, that was the only effort it could 
 make. The German Government invested 
 quite a lai'ge sum in the new five per cents, 
 so that the advance in public securities 
 lasted through the whole year : the market 
 rate for 5-20'8 advanced from 91 per cent, 
 in April to 96 per cent, in October, in the 
 midst of the market's panic. 
 
 The $15,000,000 of indemnity awarded by 
 
loo A Brief History of 
 
 the Geneva Court of Arbitration, and paid 
 by England for having admitted privateers 
 into her ports, was put into 5-20's. Apart 
 from this strength in the public securities, 
 the railway obligations, especially those 
 upon new roads, were very much depressed ; 
 they could no longer be placed, ninety new 
 companies having stopped paying their 
 coupons, whilst those of the old lines held 
 their quotations. 
 
 Great speculators, Yanderbilt at the 
 head, formed syndicates, embracing several 
 companies, and made prices as suited their 
 plans. The death of Mr. Clarke in June 
 dealt the first blow to this combination, and 
 the failure of George Bird Grinnell brought 
 about its dissolution. 
 
 The liquidation of this tremendous con- 
 cern kept down prices for a long time. 
 
 The price of gold, still quoted at 112| 
 per cent, in Januaiy, 1873, rose to 119^ per 
 cent, in April, superinduced by speculation, 
 for at the height of the panic it declined to 
 106 on the 6th of November. It is true 
 that at that time all doubtful accounts were 
 liquidated, and demands for gold had dis- 
 
Panics in the United States. i o i 
 
 appeared ; if we were to rely upon the ex- 
 port figures only, we would find them less 
 than in the preceding years. 
 
 Exchange rates were much more de- 
 pressed ; from 109.45, representing par, they 
 fell to 107.25 for the best 60-day paper. 
 This paper was much sought after by spec- 
 ulators, who, when discounting it, procured 
 bonds authorizing them to transfer the 
 titles unless payment was made promptly 
 at maturity. Prices fell so low that it was 
 often impossible to negotiate paper at any 
 price. The activity reigning at the begin- 
 ning of the year showed itself in the Ex- 
 change movement ; the excess of imports 
 over exports rose in the first months to 
 $100,000,000, whilst in the preceding year 
 it did not exceed $62,000,000 ; prices ruling 
 in the American market attracted goods 
 from all quarters. 
 
 Panic of 1884. — The panic which burst 
 upon the United States in 1884 was 
 the last thunder-clap of the commercial 
 tempest which had reigned since the month 
 of Januarj-, 1882. Public opinion already 
 recalled the decennial period which sepa- 
 
I02 A Brief History of 
 
 rated the existing panic from that of 1873. 
 The acute period was of short duration ; 
 the crash occurred on May 14th, and the 
 decline of values had touched bottom by 
 the end of June. From the 9th of June 
 the people began to steady up, they felt 
 the ground firmer under their feet. The 
 situation gave evidence of great strength; 
 and, notwithstanding the dearness of money, 
 and an enormous fall in prices, there were 
 only a few failures, and at the close of the 
 year equilibrium was re-established, al- 
 though the liability of the losses had risen 
 to $240,000,000. These losses, it is true, 
 were almost entirely borne by financiers and 
 speculators, rather than by manufacturers 
 and traders. 
 
 The month of May, 1884, concludes the 
 prosperous period which followed the cri- 
 sis of 1873. During this period the most 
 gigantic speculations in railroads occurred; 
 the zenith of the movement was in 1880, 
 and as early as 1881 a retrograde move- 
 ment began, only to end in the disasters in 
 question. The decline in prices had been 
 steady for three years ; they had sunk 
 
Panics in the United States. 103 
 
 little by little under the influence of a ruin- 
 ous competition, caused by the number of 
 new lines and the lowering of rates, but 
 above all through the manipulations by 
 the managei's on a scale unexampled until 
 now. In connection with the disasters of 
 May, 1884, the names of certain speculators 
 who misused other people's money, such as 
 Ward, of Grant & Ward ; Fish, President 
 of the Marine Bank; and John C. Eno, of 
 the Second National Bank, will long be re- 
 membered. General Grant, who was a silent 
 partner in Ward's concern, was an innocent 
 sufferer, both in fortune and reputation. 
 
 The Marine Bank suspended on the 5th 
 of May, and in the following week the 
 Metropolitan drew down in its train a large 
 number of bankers and houses of the sec- 
 ond order. The confusion was then at its 
 height. Owing to the very delicate mech- 
 anism of the credit circulation, the banks 
 and the clearing house were the first 
 attacked and the most shaken, but they 
 immediately formed themselves into a syn- 
 dicate to resist the storm which was upset- 
 ting all about them. As cheques were no 
 
I04 A Brief History of 
 
 longer paid, settlements no longer took 
 place, and the credit circulation was sus- 
 pended ; this stoppage was liable to in- 
 duce the greatest consequences, hence it 
 was necessary to be verj^ circumspect. 
 Here it was not possible to suspend the 
 law, as in England the Act of 1844 was 
 suspended, pei'mitting an excess of the 
 official limit for the note issue, but the 
 banks could have been empowered to de- 
 mand authority to change the proportion 
 enacted by the law creating National 
 Banks. They had no recourse to any of 
 these violations of the Statutes, which prove 
 only too often under such circumstances 
 that regulation by la■\^■ is impossible ; they 
 satisfied themselves, without having the 
 public powers intervene, with issuing 
 cleaiing-house certificates, that is to say, 
 promises, \vhich they were bound to accept 
 as cheques in settling up the operations of 
 each day. It was through this help that 
 the Metropolitan Bank was enabled to re- 
 sume payments on the 15th of May, the 
 e\'ening of the day following its suspen- 
 sion. The Second National Bank was a 
 
Panics in the United States. 105 
 
 loser through the acts of its President, Mr. 
 John C. Eno, but his father and the Directors 
 hastened to make good the deficit. At 
 this moment the excitement was intense, 
 deposits were withdrawn, and 1 per cent. 
 a day was paid, and even more, to obtain 
 ready money or credit ; under the influence 
 of numerous sales of securities, exchange 
 fell rapidly, metallic money was secured in 
 London even, to be hurried to New York. 
 Never could purchases be made under bet- 
 ter auspices. Above all is this true when 
 we observe that the condition of companies 
 was much better known than in 1873. 
 
 The year 1883 had been disturbed by 
 numerous failures. There had been no 
 crash, but prices, far from advancing, had 
 held their own with difficulty. On the eve 
 of the breaking out of the panic there was 
 complaint about the accumulation of goods 
 in the warehouses, and of the difficulty of 
 making exports. No scheme worked out, 
 despite a very high protective tariff, and 
 people were asking themselves what was 
 its effect under the influence of unfavorable 
 exchanges. Gold flowed away from the 
 
io6 A Brief History of 
 
 countiy, and cash on hand decreased each 
 day. 
 
 On the 1st of January, 1884, the New- 
 York & New England Railroad was placed 
 in the hands of a receiver by order of the 
 court. The same thing happened on the 
 12th of Januai'y to the North River Com- 
 pany. In February, March, and April 
 many houses exhibited their balance sheets. 
 The fall in prices grew accentuated not 
 only on the Stock Exchange, but in all 
 markets. The discomfort increased until 
 the 6th of May, the day on which occurred 
 the failure of the National Marine Bank, 
 whose President was associated with the 
 house of Grant and Ward, which went 
 down shortly afterwards with a liability of 
 $17,000,000. This financial disaster made 
 a great stii'. Anxiety spread everywhere, 
 when on the 13th of May the President of 
 the Second National Bank of New York 
 was also forced to suspend payment with a 
 liability of $3,000,000 ; this was the final 
 blow to credit. Every operation was sus- 
 pended, all exchange became impossible ; 
 not securities but money was lacking. At 
 
Panics in the United States. 107 
 
 one time the panic was such that the rate of 
 discount and loans I'ose to 4 per cent, a day ! 
 
 Although the panic was general, it was 
 rather a panic of securities in the chief 
 places of the United States, especially in 
 New York. 
 
 One no longer knew on whom to count 
 to provide ready money. Offerings were 
 made on the Stock Exchange where there 
 were no bidders, and the market disap- 
 peared in the midst of a panic which para- 
 lyzed every one. 
 
 This melancholy state of things was still 
 further aggravated on the 14th of May by 
 the failure of Donnel, Lawson, & Simpson 
 and Hatch &, Foote. On May 15th it was 
 the turn of the Savings Banks of New 
 York, of Fiske &, Hatch, and of many 
 others. It was impossible to obtain any 
 credit from the banks, and all securities 
 were unsalable, unless at ruinous rates. 
 Reduced to such an extremity, it was 
 necessary to adopt some course to help the 
 market and avoid suspension of payments. 
 
 The certified checks issued by the banks 
 did not answer, and it was necessary to 
 
io8 A Brief History of 
 
 have recourse to a new means of settlement. 
 The members of the clearing house emerged 
 from their usual passive role to intervene 
 and to do a novel thing: they issued certifi- 
 cates that they accepted in the name of 
 the most embarrassed institutions whose 
 fall they wished to avert, in order to pre- 
 vent the failure of others. Then, as every- 
 body was making default, the Secretary of 
 the Treasury in his turn wished to aid the 
 common effort to sustain the credit of the 
 situation, and, in order to accomplish this 
 by the most regular methods, he pledged 
 himself to prepay the debt, whose term 
 was close at hand. 
 
 Despite these last helps it was easily seen 
 how great must be the disorder, to induce 
 recoui'se to such methods. Never had they 
 been employed until now, which is proof 
 enough of the enormity of the situation, 
 whose equilibrium had been disturbed 
 since 1887, the year in which high prices 
 in everything had been reached on the 
 Stock Exchange. 
 
 To still further increase the joint respon- 
 sibility of the members of the clearing 
 
Panics in the United States. 1 09 
 
 house, it was agreed that a committee 
 should be charged with receiving as col 
 lateral bills and securities in exchange for 
 which certificates of deposit bearing 3 per 
 cent, were issued at the rate of 75 per cent 
 of the amounts deposited. This agree 
 ment being adopted, a way to re-open the 
 National Metropolitan Bank was sought. 
 A selection made from its collection of 
 bills showed the securities it could pledge 
 for clearing-house certificates ; and, its cir- 
 culation being thus re-established, it was 
 enabled on May 15th to take part in set- 
 tlements. 
 
 Upon the announcement of a syndicate 
 composed of the banks and the clearing 
 house, things settled down ; the general 
 distrust diminished ; there was the necessity 
 and wish to realize, but funds were lack- 
 ing- 
 
 The rise in the discount rate attracted 
 foreign capital little by little, and exchange 
 grew easier. With the help of the syndi- 
 cate the credit circulation became re-estab- 
 lished, and the rate of discount declined to 
 5 per cent. For commercial needs money 
 
no A Brief History of 
 
 was always to be had at 4^ per cent, and 
 at 5 per cent, when at the Stock Exchange 
 it was necessary to pay 4 per cent, per 
 day! 
 
 The panic was terrible from the 3d to 
 the 10th of May; for two days no one 
 wished to part with his money ; it was im- 
 possible to borrow on any collateral, at 
 any price whatever. Hence came a decline 
 in the public securities, which fell below 
 the low prices of 1873. 
 
 The public complained that it could not 
 have foreseen the panic, because the loss of 
 gold had been concealed by the oft-repeated 
 assurance that there was a reserve of $600,- 
 000,000 in Washington. 
 
 Similar situations in 1857 and in 1873 
 were recalled, and it was remai'ked that 
 like troubles had not occurred until after a 
 long period of high prices, ^vhen capital 
 was scarce and the rate of intei'est high, 
 whereas this was far from being the case 
 at this period. 
 
 It was nevertheless notorious that the 
 decline in piices began two years back, that 
 the advance in prices had been stopped by 
 
Panics in the United States. 1 1 1 
 
 the breaking out of the panic of 1882 in 
 Europe, at Paris, and that since that 
 moment prices had begun to decline, less 
 rapidly, however, than in Europe, because 
 the shock had then merely disturbed a 
 market which had not yet recovered from 
 the panic of 1873, from which, in conse- 
 quence of the Franco-Prussian war, France 
 had escaped. The mine not being suffi- 
 ciently charged in the United States the 
 explosion had not recurred. Speculation, 
 unable to restore a new impulse to the rise 
 in prices, was nevertheless able to hold its 
 own, until May, 1884, when the delayed 
 explosion finally occurred, covering the 
 market with ruins and bringing about a 
 liquidation with its accustomed train, a 
 great and lengthy decline of prices. 
 
 We may here note similar delays in the 
 breaking out of panics, in the period of 
 1837, 1839, 1864-1866 in France and in 
 England. Even an involved state of affairs 
 may be hidden by certain conditions, and 
 the situation, although itself exposed to the 
 same excessive speculation, may witness 
 the breaking out of the panic which has 
 
112 A Brief History of 
 
 been delayed for a certain time, only to 
 occur simultaneously witli the beginning of 
 a decline of prices, and when it is thought 
 that danger has been escaped. 
 
 As in Bi'ussels and in the United States 
 in 1837-1839 and in England in 1864-1866, 
 large houses and powerful institutions of 
 credit had maintained a whole scaffolding 
 of speculation which was already out of 
 plumb, but still able to stand upright 
 through the general effect of the parts 
 which connected them, and in this unstable 
 equilibrium it sufficed for a single one to 
 detach itself in order to overthrow the 
 whole edifice at a juncture at which it was 
 hoped it would continue to stand and even 
 grow stronger. Does not this prove that 
 after these epochs of expansion and activity 
 characterizing prosperous periods (and there 
 is no prosperous period without a rise in 
 prices) a stoppage is necessary, a jo^nic 
 allowing a jDeriod of rest to permit the 
 liquidation of transactions employed in 
 helping to make a series of exchanges at 
 high prices, and to allow the capital and 
 savings of countries which had been too 
 
Panics in the United States. 1 1 3 
 
 rapidly scattered and exhausted to recon- 
 struct themselves during these years of 
 tranquillity and of slackening business ? 
 
 Confidence had already retui-ned in New 
 York despite the steady demands of the 
 country bankers upon their cori'espondents, 
 which pulled down the reserve below the 
 legal limit ; nevertheless in the midst of all 
 the failures there was no suspension of 
 specie payments. 
 
 The crisis of 1884, according to the 
 Comptroller of the Currency, had been less 
 foreseen than the crisis of 1873, and this 
 notwithstanding it was sufficient to observe 
 the number of enterprises and schemes 
 flung as a prey to speculation, in order to 
 foresee that financial troubles and disasters 
 to the country must result. 
 
 The continuation of payments in gold, 
 the low piices, and the outlook for a fine 
 harvest gave courage, preserved the re- 
 maining confidence, and already allowed a 
 speedy I'esumption of business to be antici- 
 pated. 
 
 The panic, although spreading over the 
 vphole Union, raged especially in New York. 
 
114 A Brief History of 
 
 Without wishing to expatiate upon its pri- 
 mary causes, the Comptroller of the Treas- 
 ury could not help remarking that it had 
 shown itself under the same circumstances 
 as recently as in 1873; above all there were 
 issues for new enterprises ; the speculation 
 had rushed to take them up at a premium, 
 and people now asked their true value. 
 
 At this juncture railroad earnings, in- 
 stead of increasing, showed weakness, and 
 suffered a slight reaction ; the solvency of 
 houses interested began to be doubted ; new 
 loans were refused them, and immediately 
 the artificially constructed edifice gave way. 
 
 To advance prices on the Stock Exchange, 
 the banks had made immense loans on the 
 shares and obligations of the new railway 
 issues, and as soon as quotations, artificially 
 maintained at the rates to which they had 
 been carried, began to drop, everything be- 
 came unsalable. Until this occurrence, led 
 on and fascinated by the rise in prices, 
 every one had bought ; hardly was the ad- 
 vance arrested when every one reversed 
 their operations at the same time. The 
 bankers had loaned not only their capital 
 
Panics in the United States. 1 1 5 
 
 but iu addition a part of their clients' de- 
 posits ; brokers had encouraged a specula- 
 tion which brought them business; and thus 
 it was that all hands had flung themselves 
 upon a path that could only lead to ruin. 
 
 The Comptroller of the Currency remarks 
 with pride that, in the midst of the general 
 upheaval and numerous failures of honor- 
 able houses, only two National Banks were 
 involved : one of them failed, the other 
 suspended payment. 
 
 The amount of liability of the banks and 
 bankers of New York who succumbed 
 during the month of May was estimated at 
 $32,000,000, whereas that of the only Na- 
 tional Bank which shai'ed their fate did 
 not exceed $4,000,000, the bank which 
 suspended not having occasioned any loss. 
 
 Unhappily the year did not pass without 
 its being necessary to mention new misfor- 
 tunes : eleven National Banks failed, and it 
 is a fact that among the banks and private 
 bankers more than a hundred were counted 
 in the list. 
 
 Despite the close watch bestowed upon 
 the banks it was surprising to uncover all 
 
1 1 6 A Brief History of 
 
 the tricks to which the National Marine Bank 
 of New York was given over, and which 
 until now had escaped the official examiners. 
 
 It suspended payment on May 6th, and 
 the same day it was debited with $555,000 ; 
 the books had been erased and overcharged 
 for the benefit of one client alone to the 
 amount of $766,000. He was a debtor to 
 the amount of $2,400,000, six times the 
 Bank's capital, and a portion of this debt 
 was under a good many names of subordi- 
 nate clerks. This same client had three 
 open accounts, one as administratoi', then a 
 general account, and a special account. The 
 whole thing was fictitious ; the schemers 
 sought to conceal irregularities, and had 
 thus imposed on the examiners and on the 
 Directors themselves. 
 
 The certificates, issued by the clearing 
 house, when credit had entirely disappeared, 
 rendered a great service and sustained a 
 great number of houses in equilibrium, 
 which without this assistance must have 
 succumbed. They were granted especially 
 to the banks belonging to the Association, 
 in order to make their daily settlements. 
 
Panics in the United States. 1 1 7 
 
 During the crisis of 1873 the same means 
 had been resorted to, but too late ; the 
 panic was already at its height and the 
 commotion general, so that nothing could 
 re-establish confidence. This was not the 
 case in 1884: the i-apidity and decision 
 with which the Associated Banks took 
 steps gradually re-established confidence 
 throughout the country. The maximum 
 of issue did not exceed $24,900,000, of 
 which $7,000,000 were for the National 
 Metropolitan Bank; from the 10th of June 
 balances at the clearing house were paid in 
 legal money. Commercial paper, which for 
 the most pai't was the collateral for these 
 certificates, had already been redeemed. 
 The Metropolitan National Bank alone 
 requested time to liquidate. 
 
 The issue of these certificates was very 
 rapid : $3,800,000 on the 15th day of May, 
 $6,800,000 on the 16th, $6,700,000 on the 
 17th, or more than $17,000,000 in these 
 first three days; then on the 19th, 20th, 
 and 22d, $1,500,000, and that was all. 
 The remainder of the amount was given in 
 driblets. Payments, although slower, were 
 
1 1 8 A Brief History of 
 
 made from the 1st of July to the 1st of 
 August. 
 
 Let us uow run over these occurrences : 
 in 1873 instead of $24,900,000 in certifi- 
 cates 126,565,000 had been issued; |22,- 
 000,000, had been issued between the 22d 
 and the 29th of September, the redemp- 
 tions took place from the 3d of November 
 to the 31st of December. 
 
 In both cases the same amount, so to 
 speak, had been sufficient to answer for all 
 needs. If so small a difference sufficed to 
 save a disordered market, people could not 
 understand why panics could not be pro- 
 vided against. It was necessary to remem- 
 ber that this assistance was only felt when 
 the decline of prices had already re-establish- 
 ed an exchange of goods, bringing about the 
 liquidation of houses unfortunately involved. 
 
 From the month of June, owing to the 
 bank balances or the rate of exchange, the 
 tranquillity and steadiness which had be- 
 come re-established grew daily ; after the 
 storm of the first few days no new dis- 
 asters had occui-red except the failures of 
 Mathew and of Morgan. 
 
Panics in the United States. 119 
 
 The position of the market grew firmer 
 and the clearing house reduced its loan 
 certificates, which now replaced the former 
 excessive issues of bank notes. From $24,- 
 000,000 they had already deci'eased to 
 $18,000,000; of this amount $6,000,000 
 were taken by banks as a last resource, and 
 there then remained only $12,000,000 in 
 circulation. These $6,000,000 had served 
 to sustain the shaken banks, and it is 
 pleasant to state that outside of these re- 
 quirements the amount needed was no 
 larger. 
 
 Failures had ceased in the great centres, 
 but they continued in the interior of the 
 country ; the shock, like a great wave, took 
 a certain time to overrun the various 
 States. 
 
 Succession of Panics in the United States 
 Studied through the Balances of the Banks. 
 
 — Following the historical summary of 
 panics in the United States it will be use- 
 ful to have a general table, so as to glance 
 at the very rare documents which permit 
 us to follow the working of the Banks 
 through their balance sheets. We know 
 
I 20 A Brief History of 
 
 their organization, and we take upon our- 
 selves to state results flowing from it. 
 
 It strikes us at once that abuses and 
 panics have constantly occurred. Can we 
 note a difference in the frequency and 
 gravity of the casualties, according to 
 whether we observe them working under 
 the former or the new (the National Bank) 
 system, inaugurated during the "VVai- of the 
 Secession in 1864, when the machinery for 
 the issue of bank notes was insufficient for 
 the new requirements ? 
 
 Without lingering over the regulations 
 before and after 1864, let us consider the 
 differences we may ascertain by examining 
 the balance sheets. Unfortunately, the 
 exactness of our observation is lessened on 
 account of the very diversity of the field 
 it covers. 
 
 In the case of the banks of the United 
 States we have had to content ourselves 
 with the returns that the Comptroller of 
 the Currency gives in his annual repoi't on 
 a stated day during the months of Febru- 
 ary, May, June, October, and December, 
 beginning with the year 1865. Before 
 
Panics in the United States. \ 2 1 
 
 that period we had only the yearly situa- 
 tion of the banks of the different States 
 upon one given day ; we are better in- 
 formed on the second period; however, 
 basing our conclusions upon the few bal- 
 ance sheets we possess, we ascertain the 
 same series of development and increase. 
 Although there are lapses, still, from 
 another point of view, the table will 
 be more complete, because it embraces 
 all the banks of the United States. On 
 such an extended field, it is true, we risk 
 seeing great discrepancies disappear and 
 lose themselves in the magnitude of the 
 amounts whose movements we follow. In 
 order better to grasp them, we have put 
 before us the returns of the banks of the 
 United States, together with those of the 
 Associated Banks of New York City ; we 
 may thus recognize and follow the share 
 played by each of them. 
 
 During the first period of the State 
 Banks (1811-1864), the increase in the 
 number of the banks was continuous, except 
 for two stoppages, in 1841 and in 1.S62; 
 in 1841, during the liquidation of the 
 
12 2 A Brief History of 
 
 panic of 1839, and in 1862 at the begin- 
 ning of the War of Secession ; the crisis of 
 1857 did not interrupt the movement. 
 
 The capital of the banks had followed 
 the same changes. From $52,000,000 in 
 1811 to $358,000,000 in 1840, a reduction 
 to $196,000,000 in 1846, and finally the 
 last maximum reached in 1861, $429,000,- 
 000, at the breaking out of the war. In 
 1864 a new organization of the banks 
 under the name of "National Banks" 
 presented to the State Banks, without 
 suppressing them, a state of affairs des- 
 tined to cause their liquidation, which, in 
 fact, practically occurred. 
 
 As in England and France, the amount 
 of discounts, as the balance sheets give it 
 to us, rose each year during the prosper- 
 ous period. 
 
 Thus from 1830 to 1839 it reached 
 $492,000,000 from $200,000,000, to decline 
 again to $254,000,000 at the end of the 
 liquidation in 1843. 
 
 In the following period the same rising 
 movement from $254,000,000 to $344,000,- 
 000 was reproduced in 1848. The panic 
 
Panics in the United States. 123 
 
 in Europe burst forth in 1847 ; it re- 
 sounded very slightly in the United States 
 in 1848, as its subsequent liquidation in 
 1849 indicates, which only reduced the 
 local discounts to $332,000,000. 
 
 A new period of prosperity followed the 
 preceding events ; the growing movement 
 re-appeared, and from $332,000,000 carried 
 the amount of the discounts to $684,000,- 
 000 between 1849 and 1857. The panic 
 broke out simultaneously throughout the 
 whole world ; but notwithstanding the 
 wrecks it caused, such was the saving al- 
 ready, so healthy was the general situation 
 of business, that, after having thrown out 
 a little scum, the current of affairs resumed 
 its course until 1861, and discounts had al- 
 ready reached the amount of $696,000,000. 
 This amount is greater than that we have 
 noted in 1857, but at that time (whilst the 
 movement continued in Europe up to 
 1864), despite the shock it received by the 
 declaration of war here, there was com- 
 plete stoppage until the end of the strug- 
 gle ; we have here come across a political 
 panic, not a business one. Peace re-estab- 
 
1 24 A Brief History of 
 
 lished, the movemeut resumed its course 
 under uew conditions and with a reorgani- 
 zation of the banks under the name of 
 " National Banks." A change was due, 
 but, as everything was made ready^ it 
 was speedy. The first balance sheet of 
 the National Banks dates from 1864. 
 The amount of discounts had already 
 exceeded the sum of $100,000,000 in 
 1865, and grew to $500,000,000 in 1866. 
 Once started the movement took its own 
 course : 
 
 1865 $166,000,000 1870 $725,000,000 
 
 1866 500,000,000 187 1 831,000,000 
 
 1867 609,000,000 1872 885,000,000 
 
 1868 657,000,000 1873 944,000,000 
 
 1869 686,000,000 
 
 The yearly progression was interrupted 
 as in Europe, and the explosion occurred 
 at the same time. The rise in prices 
 stopped, and incipient liquidation became 
 apparent at the end of the year, and re- 
 duced the amount of paper on hand to 
 $846,000,000, but, instead of lasting, as in 
 Europe, a movement of revival, analogous 
 to that which had followed the panic of 
 1864 in England, occurred. The amount of 
 
Panics in the United States. 1 2 5 
 
 discounts rose from $856,000,000 to $984,- 
 000,000 in 1875, and then, and then only, 
 the real retrograde movement showed itself 
 as in Europe, and reduced the amount of 
 the discounts to $814,000,000 in 1879, 
 simultaneously with the movement in 
 France and in England, when prices had 
 reached the lowest quotations, and when a 
 resumption of business was about to occur. 
 In a word, affairs resumed their course ; 
 from the end of the year the amount of 
 paper discounted rose to $933,000,000, and 
 the steady advance as set forth in table 
 No. 3 continued each year, until it reached 
 $1,300,000,000 in 1884. The panic had 
 burst forth in Europe in 1882, and the 
 agitation, so lively was its impulse, lasted 
 during eighteen months ; but, as we have 
 stated, the rise in prices ceased in 1882. 
 
 Starting from this time, a reaction ap- 
 peared. The paper on hand lowered to 
 $1,200,000,000 in 1885. This liquidation 
 was scarcely noticeable, because we cover 
 the whole Union, and there is always an 
 upward movement in the new portions of 
 it which have not yet taken part in busi- 
 
126 A Brief History of 
 
 ness movements. If we note wliat occurred 
 in the Associated Banks of New York, the 
 very place where the greatest amount of 
 business is carried on, the depression of 
 the amount of paper on hand is most 
 noticeable after the inflation observed at 
 the height of the panic, while the decrease 
 that we point out showed itself more 
 slowly with the slackening of business. 
 Thus, in the last period, the greatest amount 
 of paper appears on hand — at the close 
 of 1881, 1350,000,000, and the minimum 
 in December, ISS-t, the very year the panic 
 had burst foi-th, and when, during the first 
 months, the sum of $351,000,000 reappeared 
 once more ; except for a million, exactly the 
 same amount there was in 1881. 
 
 This maximum amount was only an 
 accident, under the influence of pressing 
 needs at the time of the difiiculty, for since 
 1881 the yearly reduction of the maximum 
 and minimum amounts ensued. This ten- 
 dency had occurred suddenly, and disap- 
 peared likewise ; the resumption dating 
 from 1885, a year sooner than in Europe. 
 
 The discounts of the New York Banks, 
 
Panics in the United States. 127 
 
 which had been reduced to $287,000,000, 
 rose immediately upon the opening of the 
 new period of prosperity, and a growing 
 activity carried them to $408,000,000 in 
 1889 ; after a few more fortunate years we 
 come to the end of the period of prosperity 
 and high prices. 
 
 We gather the following about discounts 
 from the balance sheets of the Associated 
 Banks of New York. If we cast our eyes 
 over the balance sheets of the National 
 Banks of the Union, we must note a falling 
 off of $100,000,000 in the paper discounted, 
 that is, from $1,300,000,000 to $1,200,000,- 
 000 (1884-1 885). After this short period 
 of stoppage, clearly indicating the neces- 
 sity for liquidation, discounts resumed their 
 steady expansion, and rose to $1,470,000,- 
 000 in 1886, to $1,587,000,000 in 1887, and 
 finally to $1,684,000,000 in 1888, when we 
 were in the midst of a period of develop- 
 ment and consequently of high prices and 
 of prosperity ; and the same is true in 
 France and England. 
 
 The study of a single section of the 
 balance sheets, that of discounts and loans. 
 
128 A Brief History of 
 
 has allowed us to follow the periods of 
 prosperity, of panic, and of liquidation. 
 When we next consider the other sections, 
 we find the confirmation of our anticipa- 
 tions. Among these sections, in the order 
 of importance, we notice first, public de- 
 posits in the form of running accounts ; 
 they constitute the reverse of the loans and 
 discounts, whose total is immediately 
 credited to the banks' clients, and the in- 
 crease of paper on hand also follows. 
 From 1865 to 1873 the steady increase 
 was uninterrupted, viz., from $183,000,000 
 to $65(3,000,000 ; the maximum amount 
 shows itself in the first quarter of 1873, 
 eight months before the maximum of 
 discounts and loans ; in 1888 they ran 
 down to $622,000,000 ; there is, say, a 
 difference of $300,000,000 between the 
 two totals, and this difference is the same, 
 we observe, as that between the highest 
 and the lowest of the two sections, as 
 we notice it in the same year, during 
 the liquidation of the panic of 1873.' 
 
 ' See table of balance sheets of the Hanks of the United 
 States. 
 
Panics in the United States. 1 29 
 
 111 the last period the progression is the 
 same ; from $598,000,000 the amount of 
 deposits advanced to $1,350,000,000, whilst 
 discounts and loans reached $1,684,000,000 ; 
 that is to say, there was still a difference 
 of $334,000,000. The relationship of the 
 two sections was much more marked than 
 in France and in England, where the 
 amounts carried in accounts current vary 
 more. 
 
 In the United States we then experi- 
 enced a market based on credit, which, 
 through discounts or loans by the banks, 
 had reached the amount of the accounts 
 current, and was about to call the clearing 
 house into action to settle debts every- 
 where. 
 
 The office of the circulation of bank 
 notes, subsequent to the severe regulations 
 enacted in 1863 for the organization of 
 National Banks, had varied in the last two 
 periods that we are studying. From 1863 
 to 1873, after the war troubles, in propor- 
 tion as greenbacks were withdrawn, the 
 bank notes issued by the National Banks 
 not only took their place, but replaced 
 
1 30 A Brief History of 
 
 those of the State Banks, whose position 
 the National Banks had taken. 
 
 We observe them rise firstly from $66,- 
 000,000 to $341,000,000 (1865-1873) at 
 the sharpest period of the panic. We might 
 even charge them with causing it, if the 
 disproportion alone of the two sums, $341,- 
 000,000 bank notes compared with $944,- 
 000,000 of bills discounted, did not at once 
 repel this theory. It is only necessary to 
 glance at this idea to see its falsity. 
 
 The maximum circulation of bank notes 
 has here coincided with the panic, a thing 
 which had not happened either in France 
 or in England for a long time, and instead 
 of presenting its highest figure during the 
 liquidation of the panic of 1873, it shows 
 us its lowest figure, $290,000,000 in 1877. 
 Far indeed from increasing at this time as 
 happened in Europe, the amount of bank 
 notes in circulation decreased by means of 
 the ebbs of metallic cash into the coffers of 
 the banks : in reality the cause was lacking 
 here; the ebb of specie was hardly felt at all. 
 
 With $4,000,000 in 1865, the reserve 
 was poorly provided, increasing to 
 
Panics in the United States. 1 3 1 
 
 000,000 in 1870. At the end of the burst- 
 ing forth of the panic of 1873 it became 
 reduced to $10,000,000, at the worst of the 
 panic to $16,000,000 ; then, under the in- 
 fluence of a slight whirl, it rose to $33,- 
 000,000 in 1874, without reaching the 
 highest figure of the preceding period, but 
 soon the flow reappeared and reduced this 
 metallic reserve to $8,000,000 in 1875. It 
 was not until after this depression that the 
 true ebb reappeared, when the circulation 
 of bank notes was at its lowest figure 
 ($290,000,000). 
 
 Whilst the $8,000,000 specie reserve 
 grew successively to $54,000,000, $79,000,- 
 000, $109,000,000, and finally to $128,000,- 
 000 in 1878, 1879, 1880, and 1881 ; that is 
 to say, upon the approach of the panic, the 
 circulation also expanded from $290,000,- 
 000 to its highest figure $323,000,000 in 
 
 1882, the year of the European crash and 
 of the stoppage of the rise of prices in the 
 United States. As to the minimum amount 
 of the specie reserve, it is to be noted in 
 
 1883, between the critical years 1882 and 
 1884. 
 
132 A Brief History of 
 
 Metallic reserves are too small in the 
 United States for their fluctuations to ex- 
 hibit the same regular course they offer us 
 in Europe ; the least need exhausts them, 
 and the smallest payments fill them to over- 
 flowing. The panic soon brought about a 
 default in payment and a need of metallic 
 money to re-establish equilibrium, but this 
 remedy, if it does precede panics, sometimes 
 precedes them by a year, as we have ob- 
 served in 1883, and the same irregularity 
 is apparent whether we observe the banks 
 of the whole United States, or the Asso- 
 ciated Banks of the City of New York. 
 
 After the panic of 1882-1884, the ebb of 
 specie into the coffers of the National 
 Banks of the United States and of the 
 Associated Banks of New York I'esumed 
 its usual course, and raised its level in the 
 case of the National Banks from $97,000,- 
 000 to $177,000,000 between 1883 and 
 1885, and even to $181,000,000 in 1888. 
 This ebb occurred both in England and 
 France at the same time, pi'oving that cash 
 reserves do not increase to the detriment of 
 each other ; it is a flood of specie or of bar- 
 
Panics in the United States. 133 
 
 gold rendered easily available, through the 
 conclusion of the decline of prices and the 
 slackening of business, extending to the 
 whole world, and in which each one par- 
 takes in proportion to its wealth, and above 
 all in proportion to its credit circulation, 
 and of the perfection of the settlements by 
 means of clearing houses. 
 
 This regular course in the metallic re- 
 serves is no longer to be noted in the cir- 
 culation of bank notes; instead of increas- 
 ing and of entering its exchanges during 
 the return of specie into the coffers of the 
 banks, they again took pai't in the paper- 
 money reserves. From $323,000,000 in 
 1882 we see the circulation of bank 
 notes decrease each year little by little 
 until it is reduced to $151,000,000 in 1888 ; 
 and this remarkable fact confronts us in 
 the face of an unheard of expansion of 
 business, almost 50 per cent, greater than 
 in 1873 ; and of a twofold simultaneous 
 reappearance of $84,000,000 specie and of 
 $172,000,000 bank notes. What then is 
 the role of specie and of bank notes in the 
 course of business in the United States ? 
 
134 A Brief History of 
 
 Much inferior to that which it plays in 
 Europe in the absence of the machinery of 
 a clearing house embracing the whole 
 country, instead of being limited to some 
 laro;e cities. 
 
 The multiplicity of banks has strikingly 
 helped the economic progress of the 
 United States. From 1,500 National Banks 
 in 1865 with a capital of $393,000,000, the 
 number rapidly rose to 2,089 in 1876. 
 
 The panic of 1873 did not hinder the 
 movement ; however, during its liquida- 
 tion, the number shrank to 2,048, only to 
 rapidl}' advance to 2,500 by the close of 
 1882, and 2,664 in 1884, and this move- 
 ment did not even suffer a slackening as in 
 1873 during the liquidation of its crisis ; it 
 continued steadily, and we enumerate 3,120 
 banks in 1888. 
 
 The increase is a third more than in 
 1876, but it is far from being thus in the 
 case of the capital, which only rose from 
 $504,000,000 to $588,000,000— that is, only 
 16 per cent. The small banks in the new 
 centres of population are the factor, then, 
 which annually increases the number. 
 
Panics in the United States. 135 
 
 The Condition of Business in 1888-92.'— 
 
 The year 1888 was fairly prosperous de- 
 spite a Presidential election, but securities 
 were heavy, depression was general, and 
 some few stocks shrank amazingly. Exces- 
 sive issue of new railroad securities and 
 disastrous competition between certain of 
 the Southwestern roads were without 
 prudence. Money was easy, bank-note 
 circulation continued to decrease till it was 
 only $151,000,000, and legal tenders to 
 $81,000,000, but specie reserve rose to 
 $181,000,000, the banking capital to $592,- 
 000,000 plus, the exports to $1,350,000,- 
 000, and discounts and loans rose to 
 $1,684,000,000. 
 
 The sharp speculations in wheat and the 
 formation of the French copper corner 
 caused a certain fluctuation in general busi- 
 ness. Large crops, excepting wheat,; a 
 flourishing cotton manufacture, a decline 
 in production of petroleum by agreement, 
 a 6 per cent, decline in pig-iron production, 
 a very heavy one in Bessemer iron, and a 
 
 ' The facts I state in this resume are based upon statistics 
 printed in the Commercial and Financial Chronicle. — DeC. 
 W. Thom. 
 
136 A Brief History of 
 
 very small export trade as compared with 
 imports occurred. But in the year 1889, 
 the export movement, consisting largely of 
 cotton, was very great, beicg the greatest 
 since 1880, and near the maximum, and 
 compared favorably with the immense 
 imports induced by the new tariff of 1890. 
 In fact, the year 1889 surpassed all its 
 predecessors in the volume of trade move- 
 ments ; the bank clearings showing an 
 increase of 13 per cent, over 1888. The 
 cotton, corn, and oats crops were the largest 
 ever raised, and the wheat crop was almost 
 the largest. But cotton brought fair prices, 
 and cotton manufactures and production 
 of iron were also considerably ahead of 
 any previous year, while petroleum played 
 an important part at good prices. Railroad 
 earnings showed a wonderful recovery 
 from 1888, and many reports gave the 
 largest figures ever recorded. 
 
 During this year many consolidations 
 and a number of foreclosures occurred. 
 Railroad building fell to 5,000 miles com- 
 pared to 7,000 in 1888. In general busi- 
 ness, manufacturing and trade were ex- 
 
Panics in the United States. 1 3 7 
 
 tremely active, yielding plenty of work, 
 good wages, and fair profits. 
 
 But the wool crop and its manufacture, 
 a decline in the anthracite coal production, 
 farm-mortgage pressure in the middle 
 West, and low rates for corn and oats 
 were untoward circumstances. Specula- 
 tion on the general exchange was small, 
 indicating a growing congestion, as was 
 proved by the low bank reserves, especially 
 in the last quarter of the year ; but there 
 was a heavy absorption of investment 
 securities. 
 
 Gold, to the amount of $37,000,000, was 
 exported in the first six months. A small 
 amount of it returned before 1890. 
 
 Failures exceeded those of 1888 by 203 
 in number and about 20 per cent, in money. 
 The woollen trade contiibuted much of this 
 showing. 
 
 Importations surpassed all previous years, 
 while exports exceeded them by nearly 
 $20,000,000, and the net export of gold 
 amounted to nearly $40,000,000. Money 
 was easy during the first quartei', and then 
 for a week a 10 [)er cent. I'ute occun-ed. 
 
138 A Brief History of 
 
 Thereafter, excepting the usual July 1st 
 hardening, easy rates prevailed till August. 
 Stiffening and fluctuating rates ensued till 
 30 to 40 per cent, in exceptional cases had 
 been reached in December. 
 
 During the year, bank circulation de- 
 clined to $126,000,000. Specie reserve 
 sank to $164,000,000 and rose to |171,- 
 000,000 with the ending of the year ; legal 
 tenders to $84,000,000, and the number of 
 banks rose to 3,326 ; their capital to 
 $617,000,000; their deposits to $1,436,- 
 000,000, and their discounts and loans to 
 $1,817,000,000, and surplus and undivided 
 profits to $269,000,000. 
 
 Unused deposits, capital, surplus, and un- 
 divided profits were growing vfery small in 
 comparison with loans and discounts at the 
 end of the year. 
 
 The banks had to work closely, and the 
 demands of the South and West for cur- 
 rency Avere severely felt. 
 
 Panic of 1890. — In this condition the 
 year 1890 opened, and, with ever growing 
 pressurefor bank accommodation, displayed 
 great activity throixghout all depai'tments 
 
Panics in the United States. 139 
 
 of trade and traosportation, with an un- 
 equalled volume of transactions. 
 
 But it was as impossible to grant to the 
 overtrading the money needed, — though the 
 Secretary of the Treasury, in seventy days, 
 threw a million a day into the market by 
 buying Government Bonds, — as it had been 
 for the " Gentleman's Agreement " of 1888 
 — that of the chief railroad presidents — to 
 maintain rates, to permanently sustain 
 prices of railroad securities against an over- 
 supply of them ; however, both delayed 
 the inevitable. 
 
 The debates on the silver question in 
 Congress, leading to hopes of cheap money, 
 and the higher prices due to this temporary 
 and delusive stimulus ; the large gross 
 railroad earnings, demand for structural 
 iron ; the Buenos Ayres crisis, leading 
 London to ship us large amounts of our 
 securities; our small wheat, oats, and corn 
 crops, and large cotton crop ; the tariff dis- 
 cussion, ending with the McKinley Bill on 
 October 6th, and the low bank reserves and 
 money pressure beginning in August and 
 lasting pretty steadily till December, and 
 
I40 A Brief History of 
 
 an immense shrinking of securities, were 
 the chief features of the year ; and failures 
 beginning with that of Decker, Howell, <fe 
 Co., in New York, on November 11th, and 
 reaching a climax with the embarrassment 
 of Baring Brothers ' in mid-November, 
 which failure itself greatly accelerated the 
 panic, were the chief events of the year. 
 Railroad building had increased to 6,081 
 miles, and the consequent new securities 
 were poorly absorbed. Manufactures were 
 generally prosperous. 
 
 The huge imports to take advantage of 
 
 ' Meanwhile Messrs. Charles M. Whitney & Co., David 
 Richmond, J. C. Walcott&Cc, Mills, Roberson, & Smith, 
 Randall & Wierum, Gregory &Ballou, P. Gallaudet& Co., had 
 failed in New York, the North River Bank of that city had 
 been thrown into a receivership, and in Philadelphia the failure 
 of Messrs. Barker Brothers, had been followed by a number of 
 others. This was all bad enough, but sinks into insignificance 
 when we recall the financial terror inspired by the great and 
 historic house of Baring Brothers proving unable to meet its 
 engagements, amounting to about ;f 28, 000,000. The Bank of 
 England received notice of its difficulties on September 7th, 
 and by the 15th had secured from a syndicate, composed of the 
 great London houses, a. guaranty that it would be protected 
 from loss to the amount of ;^4,ooo,ooo if it would liquidate 
 the Barings' business, and from the British Government the 
 right to issue ;^7,ooo,ooo of notes provided that sum was used 
 to loan the Barings, and it therefore assumed on that date the 
 task of paying the Barings' acceptances of ;^2I,000,000 and 
 
Panics in the United States. 1 4 1 
 
 old tariff rates absorbed much money, 
 while the Baring liquidation and that of 
 other houses identified with South Amei-i- 
 can enterprises, and the distrust bred by 
 our Silver Bill caused a return of our se- 
 curities, necessitating such a curtailment 
 of credit that our panic took place. From 
 July through December 31st, money ruled 
 high and fluctuating. 
 
 The year shows a decline in circulation 
 to $123,000,000, a decline of specie reserve 
 to $178,000,000 with a subsequent rise to 
 $190,000,000, a decline in legal tenders to 
 $82,000,000, and of deposits to $1,485,- 
 
 ;^7, 500,000 of other liabilities. Thus was averted what would 
 probably have been the greatest panic in the world's history. 
 That which occurred was a mere bagatelle to what was threat- 
 ened. It is difficult to bestow too much credit upon Mr. 
 William Lidderdale, Governor of the Bank of England, for 
 conceiving and managing this plan. He has saved hundreds of 
 thousands of homes and interests from misery. Under his 
 able administration it is expected to extinguish the Barings' 
 liabilities without calling on the Government, and it is be- 
 lieved something will be saved for the Barings from their 
 former assets in business. This is deeply to be wished, for 
 though the Barings have continued business under form of a 
 stock concern with a million pounds. capital, they are wonder- 
 fully restricted as compared with their former state. They 
 have performed in banking too many helpful actions in fur- 
 therance of civilization to be eclipsed without sincere regret. 
 
142 A Brief History of 
 
 000,000, while the banks increased to 3,573 
 with a capital of $657,000,000, and a sur- 
 plus and reserve of $316,000,000, and dis- 
 counts and loans rose to $1,932,000,000. 
 
 The year 1891 has exhibited the usual in- 
 cidents succeeding a time of reorganizations 
 after panics and, after a period of selling 
 and settlement, a rehabilitation of affairs 
 and the consequent advance in prices of 
 securities. The unprecedented abundance 
 of our crops as a whole, coupled with the 
 almost universal shortage in European 
 countries, lai'gely aided the rehabilitation. 
 Bank balances reflected this startlingly. 
 On February 26, 1891, loans and discounts 
 and over-drafts amounted to $1,927,654,- 
 559.80. On May 4, 1891, loans and dis- 
 counts and over-drafts amounted to $1,969,- 
 $46,379.67. On the former date capital, 
 deposits, surplus, and undivided profits 
 amounted to $2,462,456,677.92, and on the 
 latter date to $2,567,288,143.45. 
 
 On July 9, 1891, discounts, loans, and 
 over-drafts amounted to $1,963,704,948.07, 
 and capital, deposits, surplus, and undivided 
 profits to $2,522,609,679.78. 
 
Panics in the United States. 1 43 
 
 Coufidence is restored and prices have 
 advanced, and should advance still further. 
 There seem to be only three things that 
 could check the advancing market, and of 
 those the two chief ones seem pretty surely 
 relegated to a fairly distant future. These 
 latter two are, in the order of importance : 
 (1) a free silver law, i.e., a law making, say, 
 67 cents' worth of silver pass foi' an equiva- 
 lent of a 100-ceut dollar; and (2) a very 
 radical and abrupt change in our tariff law. 
 The remaining and very minor influence is 
 the breaking out of a general European 
 war, which would at first induce a selling 
 of our securities, and so lower pi'ices, but 
 which finally and shortly would benefit us 
 by a subsequent returning flood of money 
 exchanged for our various bread-stuffs, and 
 supplies, and even securities of different 
 sorts. 
 
 It would be better for our future if the 
 liquidation of the last panic had been more 
 radical in some cases, notably in land specu- 
 lation. In this liquidation has not been 
 thorough, and, as far as these cases influence 
 the market, it has remained for a longtime 
 
1 44 Panics in the United States. 
 
 unsound, and even now is not fully re- 
 covered. 
 
 The past twelve months have witnessed 
 a continued settling of old accounts, and 
 the undertaking of new business, in a limited 
 way, despite a some\vhat uneasy feeling 
 about silver and the now accomplished 
 Presidential election. But the fact that an 
 analysis of the bank returns to the Comp- 
 troller of the Ti'easury shows that available 
 resources (capital, deposits, surplus, and 
 undivided profits), as compared with de- 
 mands (loans and discounts), are good and 
 growing, considered in regard to the other 
 signs indicating prosperity (see Introduc- 
 tion), justifies the prediction of the steady 
 development of a prosperous period. 
 
INDEX. 
 
 Adams, President, 63. 
 
 Advances of banks beyond their resources as cause of panic, 36. 
 
 Agriculturists, how affected by protective tariffs, footnote, 5, 6. 
 
 Alabama indemnity, gg. 
 
 Amount of money obtained from banks in 1S12, 1813, and 1814 
 
 to carry on vtsir, 37. 
 Antagonism to foundation of national bank, 35. 
 
 B 
 
 Bank of England, extends help to America in i83g, 73 ; sus- 
 pension of, in I7g6, 88 ; footnote, 140. 
 
 Bank of France, suspension of, in 1848 and 1871, 8g. 
 
 Bank of Lancaster, 2g, 30. 
 
 Bank of North America, formation of, 26. 
 
 Bank of New York, 57. 
 
 Bank of the United States, formation of, 28 ; reduces dis- 
 counts and circulation, footnote, 36 ; re-establishment of, 3g ; 
 terms and conditions of charter of, 40 seq. ; examination of, 
 by Congressional Committee, 4g ; violation of charter of, 
 4g ; insolvency of, 5g ; withdrawal of Government deposits 
 from, 60 ; action of, in panic of i838-3g, 67 ; liquidation 
 of, in i83g, 75 ; renewal of struggle with tjnited States 
 Government, 77 ; opinion of Buchanan concerning, 79, 
 
 Bankruptcies, number of, in England in 1839, 75> l^- 
 
 Bankruptcy, endeavor of United States Bank to force the 
 Government into, 77, 78. 
 
 Baring collapse, prediction of, 5. 
 
 Baring Brothers, footnote, 140, 141. 
 
 Barker Brothers, footnote, 140. 
 
 Biddle, Mr., 61, 67, 71, 72, 74. 
 
 Bland, Mr., 37. 
 
 Buchanan, President, opinion of, concerning United States 
 Bank, 7g. 
 
 Buchanan, President, message of, in 1857, go. 
 
 Buenos Ayres crisis, 139. 
 
 145 
 
1 46 Index. 
 
 Capital, panics of, 4. 
 
 Carey, Mr., 38. 
 
 Causes of panic of 1814, 35. 
 
 Circulation, panics of, 3. 
 
 Clarke, Mr., effect of death of, 100. 
 
 Commercial and Financial Chronicle, footnote, 135. 
 
 Condition of business in 1888-92, 135. 
 
 Congress votes to extend charter of Bank of United States, 59. 
 
 Consequences of panic of 1818, 50. 
 
 Cooke, Jay, failure of, 94. 
 
 Cotton, monopoly in, 69 ; overproduction of, 72. 
 
 Credit, extension of, by artificial demand, 33 ; of the United 
 
 States in Europe, immensity of, 70 seq.; panic of, 4. 
 Crisis of 1814, attributed by committee of Senate to the abuse 
 
 of the banking system, footnote, 36. 
 Crisis or panic, definition of, 2, 3. 
 
 D 
 
 Decennial panic, 5. 
 
 Decker, Howell & Co., 140. 
 
 Definition of a crisis or panic, 2, 3. 
 
 Discount, resulting from increased issue of bank notes, 33. 
 
 Donnel, Lawson & Simpson, failure of, 107. 
 
 Duane, Mr,, 60. 
 
 Economic history of United States, sketch of, footnote, 5. 
 
 Effects, of circulation of paper money, 34 ; of new tariffs, 5. 
 
 Embarrassment of the local hanks in 182S to 1829, 54. 
 
 England, large number of bankruptcies in 1839, 75, 76. 
 
 English export houses, losses of, 67. 
 
 Eno, John C, 103. 
 
 Expenses of war of 1812 defrayed by notes issued by banks, 37. 
 
 Failures, total number of, during panic of 1838-39, 80. 
 
 Fall of circulation of country banks in 1814, footnote, 36. 
 
 Fiske & Hatch, failure of, 95-107. 
 
 Fish, Mr., 103. 
 
 France, table of panics of, ig. 
 
Index. 147 
 
 Gallaudet & Co., P., footnote, 140. 
 
 "Gentleman's Agreement," 139. 
 
 Germany, Government of, invests in public securities in 
 
 1873, 99. 
 Gold rises to lig^ per cent, in 1873, 100. 
 Grant, Genl. U. S., 103. 
 Grant & Ward, failure of, 106. 
 Gregory & Ballou, footnote, 140. 
 Grinnell, George Bird, failure of, 100. 
 
 H 
 
 Hamilton, Alexander, 27. 
 Hatch & Foote, failure of, 107. 
 Hope, Mr., of Amsterdam, 73. 
 Hottinguer et Cie., 73. 
 
 House of Representatives, report of committee of, on panic 
 of 1818, 50. 
 
 I 
 
 Imports, great excess over exports in 1836, 66. 
 Increase of national loans in 1814, 35. 
 Insolvency of Bank of United States, 59. 
 Interest, laws of New England relating to, 32. 
 
 J 
 
 Jackson, President, 66-76 ; refuses to ratify extension of 
 
 charter of Bank of United States, 60. 
 Juglar, M., 2. 
 
 Lidderdale, William, footnote, 141. 
 
 London Times, attack on United States Bank, 74 ; defence of 
 Mr. Biddle, 74. 
 
 M 
 
 Marine Bank, suspension of, 103, 116. 
 Mechanics' Banking Association, 85. 
 Metropolitan Bank, 117. 
 Mills, Roberson & Smith, footnote, 140. 
 Morris, Mr., 26. 
 
148 
 
 Index. 
 
 X 
 
 National bank, consideration of, 34. 
 
 National Bank of the Commonwealth, failure of, 95. 
 
 National banks of the United States, table of, 17. 
 
 National finances, administration of, withdrawn from United 
 
 States Bank, 78. 
 National prosperity in spite of panics, 63. 
 National Trust Co., failure of. 95. 
 New England, laws of, relating to interest, 32. 
 New York Clearing House, action of, in 1873, 96 ; action 
 
 of, during panic of 1884, 108, 109. 
 New York, establishment of bank in, to avert panic in 1839, 
 
 72. 73- , . 
 
 New York Stock Exchange, suspension of business of, in 
 
 1873, 95- 
 N. Y. & N. E. Railroad Co., receiver appointed for, 106. 
 North America, Bank of, 26. 
 North River Bank, footnote, 140. 
 North River Co., receiver appointed for, 106. 
 
 O 
 
 " Ohio Life," collapse of, 84. 
 Overend, Gurney & Co., failure nf, 4. 
 
 Panic, or crisis, definition of, 2, 3 ; cause of, footnote, 7, 32 
 seq. ; of 1814, cause of, footnote 7, page 35 ; of 1818, 47 ; 
 of 1825 to 1826, 53 ; of 1831, 56 ; of 1837 to 1839, 58 ; 
 of 1838 to 1839, action of Bank of United States, 67 ; of 
 outbreak of the crisis, 74 seq. , of liquidation of the United 
 States Bank, 75 ; of pressure of the English market, 75 ; 
 of renewal of struggle between United States Bank and 
 the Government, 77 ; of total number of failures, 80 ; of 
 1848. 80; of 1857, 82; of 1857, condition of New 
 York banks during five years ending June, 1857, 87, 91 ; 
 of 1864, not strictly a financial crisis, 93; of 1873, 93; of 
 1884, 101-119; disregard of evidences of its approach, 
 no seq. ; of 1890, 138. 
 
 Panics, of capital, 4 ; circulation, 3 ; credit, 4 ; United States, 
 classes of, 3 seq. ; symptoms of approaching, 7 seq. 
 
 Paper money, issued by Congress during war of independence, 
 25 ; issued by the English colonies, 25 ; issued by Massa- 
 chusetts, 25 ; used to replace coin, 33. 
 
Index. 1 49 
 
 Pennsylvania banks, table of increase and decrease in circula- 
 tion of, footnote, 36. 
 
 Pennsylvania, passage of act in 1812 authorizing banks, 31 ; 
 refusal of Executive to ratify same, 31; Senate of , report of 
 committee appointed by, in relation to panic of 1818, 51, 52 ; 
 starting of banks in 1813, 31. 
 
 Proposition to Congress by Secretary of Treasury to found a 
 national bank, 1 8 14, 35. 
 
 Protective tariffs, effect of, footnote, 5. 
 
 R 
 Railroads, loans for building, one of chief causes of panic in 
 
 1873. 94- 
 
 Randall & Wierum, footnote, 140. 
 
 Re-establishment in 1824 of Pennsylvania banks which failed 
 in 1814, 53. 
 
 Reports of committees of Senate and House of Representa- 
 tives on panic of 1818, 50. 
 
 Resumption of commerce with England in May, 1B15, 38. 
 
 Richmond, David, 140. 
 
 Rothschild, Baron, 73, 74. 
 
 Savings banks of New York, failure of, 107. 
 
 Second National Bank, treatment of, by John C. Eno, 104-5 ; 
 
 suspension of, 106. 
 Senatorial Committee of Inquiry on Panic of 18 18, report of, 
 
 50. 
 Sprague, Claflin & Co., suspension of, 95. 
 Succession of panics of United States studied through the 
 
 balances of banks, 119 seq. 
 Symptoms of approaching panics, 7 seq. 
 
 Tables, export wheat-flour, 13 seq. 
 
 Tariff, general changes of, as cause of panic, 4. 
 
 Treasury bonds issued in 1812, 1813, and 1814, 37. 
 
 U 
 
 Union Trust Company, failure of, 95. 
 
 United States, classes of panics of, 3 seq.; immense credit of, 
 
 in Europe, 70 seq. 
 United States Treasury, purchase of national securities by, in 
 
 1873, 99. 
 
150 Index. 
 
 \ 
 
 Violation of charter by United States Bank, 4Q. 
 
 \V 
 
 Walcott & Co., J. C, footnote, 140. 
 Ward, Ferdinand, 103. 
 Wheat-flour, tables of export, 13 seq. 
 Whitney &Co., Charles M,, footnote. 140. 
 Withdrawal of Government deposits from Bank of United 
 States, 60. 
 
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