The Sun.
London, England, 1857-10-27 00:00:00

TIIE GREAT MONBY PANIC IN THE

UNITED STATES.

Peon?, the IVew York Correspondent of the Times.)
NEW YORK, OCT. 14.
Picture to yourself the immense crowd that four
years ago lined the Strand to witness the funeral
procession of the Duke of Wellington, all clothed
in masculine habiliments, the universal black smoke
pipe of London exchanged for the many-coloured_
sloughed hats of New York, the smooth-shaved
faces covered with beards and the mouths draped
with moustaches, the jolly English expression elon-
gated and careworn, and the round cheek sunken ;
fancy those easy, careless sightseers
metamor-
phosed all pressing into Lombard-street thus
rd-street with a
hurried., anxious pace, crowding. and jostling their
until compelled by their
meighbouts in their hasteinto thec,slowl moving lines
very numbers to drop
roearchiue and countermarchino
Lomb rd-street t e
centre of excitement ; imagine ex-
paraded to twice its length, and its trotto'r enlarged
to more than twice the present width, and every
third house a bank, with depositors or billholders
bent upon obtaining gold for their debts, and you
will have a real idea of the condition of Wall-street
yesterday. New York was in a state of convulsion.
t financial earthquake was rocking its moneyed
institutions to their centre. One fell after another;
shock followed shock ; and, in the panic, no one
felt sure that, at the day's close, anything would
be felt to tell the tale of the wealth, the commercial
credit, and the mercantile honour of this commu-
nity. This morning the partial suspension of yes-
terday has become general, and New York is now
doing business on currency. On Saturday morn-
in, lest it was announced that the Illinois Central
Railway Company had yielded to the storm, and
had made an assignment ; that the Erie had al-
lowed its acceptances to go to protest ; and that
the Michigan Central had, in the modest language
of its Boston friends, deferred the payment of its
floating debt. Some of the sugar acceptances ma-
turing on that day were also lett to go to protest,
owing to the utter inability to get money. One
house of limited liability and undoubted means
and credit was obliged to suspend with the best
mercantile paper on hand only 15 days to run.
Notwithstanding this Monday went by without a
breakdown. There were several commercial failures,
but nothing indicating a general breakdown. At
four o'clock on Monday afternoon, after banking
Lours, the clearing-house statement for the week
was male public. It showed, as compared with
the statement of the week y •vious,
Decrease of loans
Increase of specie 75,831 „
Dacrease of undrawn deposits 3,0'3,190 „
Decrease of circulation 224,668 „
Decrease by failure of capital 656,000 „
In other words, the banks had, in the face of the
panic and the demand for money, preceeded with
their liquidations to the amount of 4,000,000 dole.
This statement shows, in round numbers, a liquida-
tion since the commencement of the panic of about
18,000,000 doll. by the contraction of loans. In
ordinary times, and with money at anything short
of extraordinary prices, it would have been thought
to be a favourable statement. With a contraction
of loans of over 4,000,000 dots., and a payment of
li abilities to depositors of over 3,000,000 doll., the
spe :irs reserve bad actually increased, notwithstand-
iag aid known t) be afforded to country banks, and
the known fact that depositors had been making a
run for gold. But in the present fevetish state
a contraction was regarded as the precursor of
still further trouble. Besides this I believe that
the country banks brought an hostile influence to
bear upon the city banks. The motives to this
were twofold-Ist. The domestic exchanges upon
New York from all parts of the country are at such
a premium as to entirely put a step to all business.
Not only is the transmission of gold impossible,
from the unwillingness to part with it, but the pro-
duce of the country is equally unavailable. Confi-
dence is so entirely destroyed that the farmer will
not sell to the local dealer, and the local dealer
cannot forward to New York. At this mo-
ment Chicago is filled with grain which the
machinery of commerce affords no means of
moving to New York, although Chicago owes New
York and wishes to pay the debt, and New York is
suffering, dying, I may almost say, from want of
the remittance. The Illinois Central Railway Corn-
pany has a large amount in the Chicago Land-office
for investment in its Construction Bonds. These
bonds are selling here at 50 ; it is ready to pay 65
for them in Chicago in the currency of that place ;
an 1 yet nobody can be found to undertake the
(gyp ration. This one illustration will show you how
completely the business of the country is blocked by
t',e unexpected and unaccountable destruction of
domestic exchange. Its wealth becomes unavail-
able. The resources relied upon to get out of its
difficulties prove unavailable. Sterling exchange,
to •, naturally sinks under the pressure, and New
York, the creditor of the country, is left to bear the
brunt of the battle. The country banks, who feared
that a continuance of the present sate of things
world drain them of spe3ie for New York remit-
teiees, have been naturally anxious to create a
suspension here, in order by that means to restore
th equilibrium in exchange, and prevent the drains
of geld. 2d. They have also been influenced by.
Vie desire to protect their circulation. The cur-
rency of the interior is supplied by means of bank-
tes, issued upon a deposit of State securities with
the Controller of the State. The stringency of the
nr ,ney-market h'is compelled the retirement of this
tireulation to a large amount, and the redemption
or' these securities for the purposes of sale. The
adiount thus forced upon the market has reduced
the value of State Stocks. Simultaneously with this
a new issue of bonds has become necessary for
covering certain State canal liabilities. These
securities have not been nego'iab'e within the line
reluired by law ; it is reasoned that if specie pay-
ment be suspended in New York, there will again
b a demand for country currency, and an up-
ward turn given to State securities. There is reason
to believe that the movements of yesterday were
entirely without concert of action. The final
b'o however, was as rapid, and apparently as un-
peemeditated as the blow that brought about the
French revolution of 1848 ; like that, there was a
c ncealed power that excited and directed the
po aular feeling.
The first run yesterday was made upon the smaller
lanks outside of Wall-strut, that afford accommo-
(la, ion and circulation for the tradespeople, artisans,
shopkeepers, hotelkeepers, &..c. These institutions
were naturally in a less rong position than the
ike doing business with the mercantile classes,
a.d less able to stand a run. They opened at 10,
and before 12 had fallen. Up to 1 o'clock every-
thing was quiet in Wall-street—as quiet, that is, as
has been any day for the past three weeks. There
was a steady payment of specie over the counters
to depositors, but nothing indicating a general alarm.
Almost in an instant the street was crowded, and
a run begun upon the American Exchange Bank,
the weakest of the largest institutions. I had
passed the Exchange a few minutes before ; there
was no appearance of unusual commotion. When
I looked from my window there was a crowd of
some hundreds (or thousands rather) gathered in
front, and a long line of bill-holders and depositors
formed en queue. Mr. David Lemitt (of North
American Trust and Banking Company fame)
mounted a step, and treated the crowd to the uni-
versal Anglo-Saxon panacea—a speech ; and the
cr ,wd partially dispersed, but the bill holders kept
up the run. From every direction men now poured
into Wall-street. The marble steps of the Custom-
house, the classic entrances to the banks, the noble
spaces around the Exchange, the ugly stoops (an
inheritance from the architects of Amsterdam) that
geve a ladder-like entrance to the offices, were all
alike quickly c-)vered with curious spectators.
The desks of the offices were deserted and the
windows crowded. From the American Exchange
Lank the attack was shift?d to two or three
banks further up the street. The Bank of
America and the Mechanics' Balk were partici:.
lady selected. The stream of the anxious in-go?rs
steadily increased ; as they came out, widi
bends filled and pockets bulging out with gold,
'roe looked happy —more looked uneasy and
foolish. From Wall-street the rush extended into
Pine and Nassau, and the large Broadway banks ;
and before 3 o'clock the specie reserve w.is reduced
to 5,500,000 dole. The whole thing was as sudden
as a tornulothe comparison also bears good as to
t.lo effect.
Eighteen loans of 21%hteen wanks fell, with a united line
New
York ,000 dols. The banking commu-
nity of
less than two hours.wa''leio,
called upon to liquidate in
bank could have s old
the pressure. Last night y met in
those that had gone
safely through the
andulresuulnteeill.
lasted un:il 11 o'clock, The session
-
mous agreement to suspend Specie payment in an my"'
the counter ; to petition the Governor ar ove
r
an extra s ssion the Leglslatere for the passage
cal
l of
of laws to protect the banks, and preventraaBge
sum-
mary and forced liquidation that would de,troy
all
the capital inve,ted in them ; and to resume specie
praymen's at the earliest possible moment. I 7i'•l
trot try to sye.cula,te upon the causes that have
brought New York to bankruptcy at a time when
there is more actual wealth in the c)uutry than
there has ever been befor e. If the West had made
a vigorous exertion to pay its debts to New York,
which mature at this time of the year, it would have
been averted. There is plenty of property there,
but an absolute inability to forward it. More than
six months ago I wrote you the., when the October
and November dry
goods' payments should mature
there would be trouble owing to the expanded state
of the West. The intervention of the September
panic has changed the anticipated pressure into a
universal bankruptcy. The - -
certainty of the pressure
ailed upon the banks to maintain a bold front and