The Elk County advocate. [volume] (Ridgway, Pa.) 1868-1883, 1873-10-09
The Panic OF 1861.
A Little Historical sketch.


Up to August, of 1857, that proved
so fatal to all the business interests Of
the country, says a commercial review,
commercial affairs have been pursuing
the even tenor of their wy on the high
road of prosperity. Everything pointed
to still more prosperous future. The
mania for building railroads had appar-
emily been nipped, il not in the bud, at
least before it had extended too greatly
the countrys credit, and, although
there were several hundred millions OF
foreign capital in use, in case of its be-
ing recalled the home market could
register the bonds which represented it
at half the par cost. The wisest Solo.
mons of banking saw no Indications of
the coming storm in the commercial
skies. When, on the Sth of August,
the loans reached the unprecedented
height of $122, ,000,0 900, even then q re-
duction of $4,000, 900 or $12, 2,000,00
during the autumn months without in
jury to commerce was declared posi-
bic, and inpursuance of this declaration
the banks began to contract their loans.
Never was an act followedby more fear
full consequences. The prices of secu-
rites at the Stock Board Immediately
fell. The failure of heavy produce
house, although accounted for by the
depression of that particular interest in
the market, and report of defalca-
ton in leading railway company
caused suspicion of coming crisis to
taint the public security, but failed to
seriously affect the general confidence.
On the Oath of the month the news of
the suspension of the Ohio Life In
surance and Trust Company came like
thunder from clear sky. The financial
circle vibrated to its centre banking
officers, panic stricken by the sudden
ness of the blow, at once lost their
heads. The days of '37 seemed once
more upon them, and financial chaos
was come again. Stocks and CONNER
cial paper were at once sacrificed at
ruinous rates, other failures were an
nounced, and rumors exaggerated each
calamity.
The Clearing house report for August
29-tbe first after the suspension of the
Trust Company-showed reduction of
$4, 900, 900 in the banks loans for the
previous week. A defalcation was an
nounced on the same day of $40, 900 in
one of the associated banks, and so
great was the general mistrust that 9th
er institutions Immediately became sus-
pected of similar dishonesty. The most
substantial securities in the market sold
for next to nothing at public sale, and
while the regular discounts of bills by
the banks had been nearly suspended,
street rates for money on the most ua-
questioned securities rose to what was
up to that time unheard of there, and
per cent. a month, and money could
not be had at any rate on ordinary prom
issory notes and bills of exchange
Commercial house after commercial
house, bank after bank succumbed to
the panic. The panic extended through
the entire country. The failure of the
Bank Of Pennsylvania, in Philadelphia,
was followed by that of the other banks
of that city, and by those of Baltimore
and of the Southern Atlantic States gen.
orally. The panic was no respecter OF
persons. Merchants, bankers, money
ed corporations, and manufacturing
companies were swept down without
distinction. Commercial business was
everywhere suspended, the purchase
and transportation of puoduce entirely
ceased. And the climax only was
reached when, on the 14th of October,
the bank suspensions of New York and
New England took place. For this al,
most universal suspension the banks
could not claim the want of faith among
the depositors to be the cause. Despite
the distrust that early began to effect
the entire country the depositors stood
well by their guns, and not till the 26th
of September did they begin to be
alarmed. For the five successive weeks
preceding they withdrew less fra m the
banks each week than the banks with,
drew from them by the depression oi
loans.
Although the panic started on the
25th of August, caused by the contrac
ton of loans, and was at once carried
by the telegraph with the speed of ight
to all parts of the country, no marked
withdrawal of deposits by individual
depositors took place anywhere til
more than an entire month later. UI
to that time the depositors presented {
steady front, apparently determined tt
sustain the public credit if everything
else failed. But when October came il
resistance seemed at once to cease to b,
a virtue, and on the Sd of that month
| Cuiuc ONeI SplTlu U
depositors. Over four millions of de
posits were withdrawn in the seven day
following, and over fourteen millions il
the next twenty. The 14th of Octobe
was the date of the banks suspension
On the day following withdrawal
ceased and restoration began. One O
the causes alleged by the banks them
selves for their suspension was the sud
den withdrawal of country balances
and for this the telegraph was re
sponsible. 1t not only took the new
to the country banks of the collapse o
credit i'll the city, but brought bacl
their orders demanding their deposit
in specie. The Clearing house, too
was alleged to aid in increasing the gen
eral collapse. It's daily settlements il
coin forced the smaller banks into con
tracting their loans, into sacrifices O
property, and finally into bankruptcy
Default at the Clearinghouse becam
the Banquo's ghost that appeared at th
bank board of all the smaller institu
tions. The most universally accepte
cause for the panic of 1857 is the vic
lent contraction of bank loans imme
diately after the oath of August. Am
this was entirely the action of the bank
and they had only themselves to blame
1t was, too, the expansion of banks pre-
vious to the panic that laid the founda
ton for the memorable commercia