Hostname: page-component-78c5997874-v9fdk Total loading time: 0 Render date: 2024-11-18T21:20:03.042Z Has data issue: false hasContentIssue false
  • English
  • Français

The Influence of Depression Upon American Opinion, 1857–1859

Published online by Cambridge University Press:  03 February 2011

Samuel Rezneck
Samuel Rezneck
Affiliation:
Rensselaer Polytechnic Institute
Get access Rights & Permissions [Opens in a new window]

Extract

On August 26, 1857, just two days after the New York branchthe Ohio Life Insurance and Trust Company suspended payment, of, the New York Herald predicted that the financial difficulties then beginning were certain to acquire the proportions of a great crisis. It boasted, moreover, that it had foreseen and warned of this impending calamity for the preceding twelve months, but its warnings had been spurned. The Herald's vaunted prescience perhaps stemmed chiefly from the long-standing prejudice of its publisher, James Gordon Bennett, against the operations of speculators in Wall Street. As early as 1854, when the speculative boom in railroad stocks was halted by a sharp decline of prices, the Herald had predicted the imminent approach of a crisis, one that would mark the end of the current “Fitful Spasmodic System” of American business. During the winter of 1854–1855 business stagnated, unemployment increased greatly, and there was considerable distress and popular unrest, especially in New York City. Here was an advance view, as it were, of the pattern of depression which was to develop in 1857.

Type
Articles
Information
The Journal of Economic History , Volume 2 , Issue 1 , May 1942 , pp. 1 - 23
Copyright
Copyright © The Economic History Association 1942

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

1 New York Herald, August 26, 27, September 4, 1857; see also Train, G. F., Young America in Wall Street (New York, 1857), viiiGoogle Scholar.

2 New York Herald, January 4, 6, February 25, 1855; New York Tribune, October 25, December 6, 18, 1854; see the Twelfth Annual Report of the New York Association for Improving the Condition of the Poor (New York, 1855), 20ffGoogle Scholar.

3 Sumner, W. G., A History of Banking in the United States (New York, 1896), 424.Google Scholar

4 The contrasting trends of commodity and stock prices between 1854 and 1857 are illustrated statistically in Smith, W. B. and Cole, A. H., Fluctuations in American Business, 1790–1860 (Cambridge, Mass., 1935), 93ff., 108 ff.Google Scholar The Index Table of Railroad Stock Prices on page 184 reveals, for example, that by the end of 1854 the index was down to 67 from the base of 100 for 1853. It hovered at that level until July 1857, when it declined further, and was down to 39 by October. The index remained in the neighborhood of 50 for more than two years thereafter. Wholesale commodity prices, however, continued to rise after 1854, reaching a high peak of 133 in the summer of 1857 (the index being based on the average for the decade 1848–1858 as 100). This index did not decline sharply until October, and by the end of the year was down to 108. It was to hover at or below 100 until late in 1861 (table at page 167). See, however, Hutchinson, W. T., Cyrus H. McCormick (New York, 1935), II, 75,Google Scholar for the report that grain prices began to decline in 1856, after the conclusion of the Crimean War, and that poor crops and poor prices kept the West in a state of depression for several years thereafter.

5 Hunt's Merchants' Magazine (January 1858), XXXVIII, 100.

6 Gibbons, J. S., The Banks of New York and the Panic of 1857 (New York, 1858), 344 ff.Google Scholar The banks of Philadelphia and Baltimore had already suspended specie payments on September 24 and 25; and, after October 16, the only exception to the general bank suspension were the banks of Kentucky and five of the nine banks of New Orleans (Dunbar, C. F., “The Crisis of 1857,” in Economic Essays, New York, 1904, 280, 283).Google Scholar There was no real shortage of specie, however, and the premium was never higher than three per cent. The New York banks quickly accumulated a large supply of specie, so that they were able to resume payments in December. The Philadelphia and Baltimore banks did not resume until February, 1858, and resumption was general by midsummer of 1858 (Dunbar, 288; The American Almanac, Boston, 1859, 364 ff.)Google Scholar.

7 Gibbons, 345, 363, 373; Hunt's Magazine (12, 1857), XXXVII, 659Google Scholar.

8 Harper's New Monthly Magazine (12, 1857), XVI, 114Google Scholar; Dunbar, 279; Stunner, 426.

9 Gibbons, 344 ff.; Dunbar, 282; see Smith and Cole, 131–132, for an examination of the charges that the banks made the panic. This question will be considered more fully later on.

10 Gibbons, 373; '37 and '57: A Brief Popular Account of All the Financial Panics in the United States (New York, 1857), 39 ff.Google Scholar; see Hunt's Magazine (02, 1858), XXXVIII, 195,Google Scholar for a summary of falling prices and property values; also Cole, A. C., The Era of the Civil War (vol. III of the Centennial History of Illinois, Springfield, 1919), 100; andGoogle ScholarEvans, D. Morier, The Crisis of 1857–58 (London, 1859), 135,Google Scholar for a tabular view of business failures reported by the American Commercial Agency.

11 Bankers' Magazine (Baltimore, 05, 1860), XIV, 833Google Scholar; Dunbar, 289 ff.; New York Tribune, 06 15, 07 1, 08 5, 1858Google Scholar; January 1, 1859: “The prospect of relief is distant … Immigration has almost ceased. Wages, rents, and profits have greatly fallen. Yet such is the power of the human mind to adjust itself to circumstances that, although nobody anticipates, as almost everybody did a year ago, a speedy issue out of these troubles, the general feeling, nevertheless, is much less gloomy than then.”

12 Quoted in Smith, T. C., Parties and Slavery (American Nation Series, Boston, 1907), 180Google Scholar; The South in the Building of a Nation (Richmond, 1909), V, 440. SeeGoogle Scholar Dunbar, 291, 294, for the opinion that the South withstood the depression better than the rest of the country.

13 New York Herald, 09 29, 10 7, 22, 25, 1857.Google Scholar

14 Train, 345.

15 Quoted in the New York Herald, 11 2,1857Google Scholar.

16 Dunbar, 294 ff.

17 Gibbons, 347.

18 Atlantic Monthly (11, 1857), 1,115.Google Scholar

19 See the “Defence of Bubbles,” which was reprinted from an English journal in the Eclectic Magazine in April, 1853 (XXVIII, 474 ff.),Google Scholar in which the author waxes eloquent on the benefits of the current “commercial excitement,” and defies the panic to come, “as I believe it surely will. I have little hesitation in affirming that the good will have outbalanced the evil.”

20 North American Review (01, 1858), LXXXVI, 172 ff.Google Scholar

21 Journal of Commerce, 11 7,1857.Google Scholar

22 '37 and '57,44, 47.

23 Peterson's Magazine (01, 1858), XXXIII, 61Google Scholar; see also another “True Story of the Hard Times” in the February issue.

24 New York Herald, 12 12, 1857Google Scholar; Fuller, Hiram, Belle Brittan on Tour (New York, 1858), 238Google Scholar; Train, 222; Branch, E. Douglas, The Sentimental Years (New York, 1934), 200Google Scholar.

25 Hunt's Magazine (07, 1857), XXXVII, 70.Google Scholar

26 North American Review (01, 1858), LXXXVI, 171Google Scholar; '37 and '57, 44; The Knickerbocker Magazine (09, 1858), LII, 298Google Scholar.

27 New York Herald, 08 26, September 1, 2, 4, December 13, 1857Google Scholar; Medbury, James K., Men and Mysteries of Wall Street (Boston, 1870), 306, 313 ffGoogle Scholar.

28 '37 and '57, 46; New Englander (11, 1857), XV, 705. SeeGoogle ScholarWirth, Max, Geschichte der Handelskrisen (first edition, Frankfurt, 1858), for an account of the special characteristics of the American depression in the setting of the world depression (334 ff. of the third edition of 1883) ; alsoGoogle ScholarRosenberg, Hans, Die Weltwirtschaftskrisis von 1857–59 (Stuttgart, 1934,, 36 ffGoogle Scholar.

29 Hunt's Magazine (11, 1857), XXXVII, 594; XXXVIII, 723Google Scholar; New York Herald, 08 30, 1857,Google Scholar quoting the Boston Advertiser. On the development of the call-money market, see Myers, Margaret S., The New York Money Market (New York, 1931), I, 122Google Scholar; Hedges, Joseph E., Commercial Banking and the Stock Market before 1860 (Baltimore, 1938), 102, 116 ff.Google Scholar; Smith and Cole, 133. See also Evans, 114, for the view that after 1837 New York had won out over Philadelphia and Boston in the rivalry for financial leadership, and that the current crisis involved a struggle with London; in time New York “will become the financial centre, not only of the New World, but also, to a great extent, of the Old World.”

30 Train, 250 ; press quotations in the New York Herald, 08 1, 27, 28, 30, September 2, 3, 13, 1857Google Scholar; New York Tribune, 11 6, 1857Google Scholar.

31 Medbury, 7 ff.; Myers, I, 38. Henry Clews recalled years later that the Board of Brokers underwent a shaking up in 1857, and that “a younger race of financiers,” including himself, then arose and displaced “the old crew” in Wall Street (Clews, H., Twenty Eight Years in Wall Street, New York, 1888, 5 ff.)Google Scholar.

32 Medbury, 317, 327, Hunt's Magazine (09, 1857), XXXVII, 325, 378, 665.Google Scholar Admitting that the railroads had not averaged one per cent a year in dividends, the argument, nevertheless, concluded that they were “a success.” Under the heading “Advice to the Wise,” people were urged “to buy now that the prices of the stocks were low” (p. 646). On “the extensive absorption of capital from the floating to the fixed state,” see Miller, H. E., Banking Theories in the United States Before 1860 (Cambridge, Mass., 1927), 206; alsoCrossRefGoogle ScholarNew Englander (11, 1857), XV, 705Google Scholar.

33 Evans, 122; '37 and '57, 54; New York Tribune, 10 19, 1857, January 4, 1859Google Scholar; New York Journal of Commerce, 11 7, 1857Google Scholar; Fuller, 232; Everett, Edward, The Mount Vernon Papers (!New York, 1860), 179Google Scholar; see also Gibbons, 375, for a criticism of the current confusion between personal and true commercial credit.

34 New York Tribune, 10 14, 1857, December 25, 1858Google Scholar; Hunt's Magazine (10, 1857), XXXVII, 444Google Scholar; Hutchinson, II, 70 (McCormick found the farmers eager to buy reapers but unable to pay for them).

35 Hunt's Magazine (11, 1857), XXXVII, 533; Miller, 216Google Scholar; Harper's Monthly Magazine (12, 1857), XVI, 115Google Scholar.

36 The American Almanac (1859), 138, 148.Google Scholar Between the fiscal years ending on June 30, 1857 and 1858, respectively, the Federal revenues fell from nearly sixty-nine million to forty-five million dollars, while expenses rose to more than seventy-one million dollars.

37 Hunt's Magazine (12, 1857), XXXVII 674, XXXVIII, 532 ff.Google Scholar; North American Review (01, 1858), LXXXVI, 174ffGoogle Scholar.

38 North American Review, LXXXVI. 179.

39 New York Tribune, 01 8, 1858Google Scholar; Cole, A. H., “The New York Money Market, 1843–1862,” in Review of Economic Statistics (08, 1929), XI, 167Google Scholar; Dunbar, 287; Hunt's Magazine, XXXVIII, 533. (Early in 1857, all the bank deposits totaled 230 million, and the notes in circulation 214 million dollars.)

40 Hunt's Magazine, XXXVII, 641; Gibbons, 356 ff.; Cole, 168; Bankers' Magazine (02, 1858), XII, 601,Google Scholar

41 Quoted in Miller, 199.

42 Gibbons, 365, 369 ff., 387.

43 Gibbons, 388 ff.; see Train, 333, for the proposal of “a congress of merchants, bankers, manufacturers, and farmers,” to discuss practical needs, but no “isms.”

44 Gibbons, 368; New York Tribune, 01 6, 1858Google Scholar; for the report and recommendations of the Boston Board of Trade, see Hunt's Magazine (06, 1858), XXXVIII, 722 ff.; alsoGoogle ScholarBankers' Magazine (05, 1860), XIV, 834Google Scholar.

45 North American Review (01, 1858), LXXXVI, 178Google Scholar; Hunt's Magazine (12, 1857), XXXVII, 677Google Scholar; New Enylander (11, 1857), XV, 713Google Scholar; New York Tribune, 01 8, 1858:Google Scholar Hedges, 127,131.

46 Journal of Commerce, 11 4, 1857Google Scholar; Train, 324; Fuller, 263.

47 New York Tribune, 01 8, 1858Google Scholar; Atlantic Monthly (02, 1858), I, 392Google Scholar.

48 Train, 330 ft. This, together with other similar theories, bears resemblance to the better known ideas of Edward Kellogg, whose speculations about some kind of national currency dated back to the panic of 1837 and first appeared in published form in 1843 (Currency, The Evil and the Remedy).

49 Dealtry, William, Money, Its History, Evils, and Remedy (Albany, 1858), 26 ff.Google Scholar

50 Mason, John,An Inquiry into the Laws Which Regulate the Circulation and Distribution of Wealth (New York, 1858), 1 ff.Google Scholar

51 Richardson, James D., A Compilation of the Messages and Papers of the Presidents (1907), V, 437, 440, 520 ff.Google Scholar

52 Hunt's Magazine, XXXVIII, 71; Harper's Weekly, 05 13, May 15, 1858Google Scholar; New York Tribune, 04 21, 1858Google Scholar; Harper's New Monthly Magazine (04, 1859), XVIII, 687Google Scholar; Rhodes, J. F., History of the United States (New York, 1895), III, 56Google Scholar.

53 Train, 328 ff.

54 Journal of Commerce, 11 4, 1857.Google Scholar

55 New York Tribune, 12 24,1858, January 20, 1859, March 11, 1859Google Scholar; Harper's Weekly, 10 10, 1857; Gibbons, 364Google Scholar; Bankers' Magazine (05, 1858), XII, 849Google Scholar; Fourth Annual Report of the Boston Board of Trade (Boston, 1858, 11,Google Scholar which cautioned, however, against the overexpansion of domestic industry and recommended that manufacturing corporations be required to keep adequate working capital as a safeguard against excessive borrowing for commodity speculation. A similar plea, coupled with the recommendation of “moderation in business, in private and public expenditure, in legislation and in everything else,” appeared also in the New Englander (XV, 715).

56 Carey, Henry C., Letters to the President on the Foreign and Domestic Policy of the Union (Philadelphia, 1858), passim; alsoGoogle ScholarFinancial Crises, Their Causes and Effects (Philadelphia, 1864), 4, 18 ff.; seeGoogle ScholarNevins, Allan, Abram S. Hewitt (New York, 1935), 190,Google Scholar for the suggestion that the crisis thus became a factor in the election of Lincoln in 1860; also , Hutchinson, McCorniick, II, 69Google Scholar(depression and “the hope of relief sent many into the ranks of the Republican Part y between 1856 and 1860”).

57 Hunt's Magazine, XXXVII, 582; New York Herald, 10 22, 1857Google Scholar; Train, 319; Dunbar, 290; Fifteenth Annual Report of the New York Association for Improving the Condition of the Poor (1858), 29, 57Google Scholar.

58 See the Annual Reports of the Association, passim, but especially the Twelfth (1855), Fifteenth (1858), Sixteenth (1859), 47. For the controversy over the relief of unemployment in this period, see Feder, L. H., Unemployment Relief in Periods of Depression (New York, 1936), 18 ffGoogle Scholar.

59 Fifteenth Annual Report, 22, 28, 32.

60 Fifteenth Report, 20; New York Tribune, 11 3, 10, 12, 1857Google Scholar; New York Herald, 11 13, 16, 1857Google Scholar; Journal of Commerce, 11 6, 10, 11, 12, and 20, 1857Google Scholar; Carey, Crises, 22; Hutcheson, A. E., “Philadelphia and the Panic of 1857” in Pennsylvania History (07, 1936), III, 193Google Scholar.

61 Fifteenth Report, 20; Fuller, 238.

62 New York Herald, 11 12, 1857Google Scholar; Journal of Commerce, 11 13, 1857Google Scholar; Harper's Weekly, 11 14,1857Google Scholar; Fuller, 236.

63 Fifteenth Annual Report (1858), 19; New York Herald, 10 23, November 25, 1857Google Scholar.

64 Journal of Commerce, 11 16, 18, 20, 21, 1857Google Scholar; New York Herald, 12 2,1857Google Scholar.

65 '37 and '57, 53; Journal of Commerce, 11 10,1857Google Scholar.

66 New York Tribune, 11 26, 1857.Google Scholar

67 '37 and '57, 56. During the hard winter of 1854–1855, unemployment and distress among the workers had also brought forward a similar harvest of “Plain Words to Mechanics,” advising them, for example, to “boggle at nothing which will save a few pennies,” or “No American has ever fairly tried what he can live upon, if driven to a stress.” (See The New York Times, 12 26, 1854Google Scholar; New York Tribune, 12 28, 1854.)Google Scholar

68 New York Tribune, 10 22, November 7, 10, 1857, January 1, December 3, 1859.Google Scholar

69 Journal of Commerce, 11 4, 10, 1857Google Scholar; New York Tribune, 11 11, 1857Google Scholar.

70 Thirty-Second Annual Report (1875), 70 ff.Google Scholar

71 New York Tribune, 04 6, May 3,1859.Google Scholar

72 Harper's Monthly Magazine (04, 1858), XVI, 695.Google Scholar

73 Journal of Commerce, 11 26, December 2, 1857; Branch, 32.Google Scholar

74 New York Tribune, 05 1, April 3, 5, 1858.Google Scholar In April the Tribune issued a Special Revival Edition.

75 On the supposed connection between the depression and the revival, see Harper's Monthly Magazine (05, 1858), XVI, 839 ff.Google Scholar; New Englander (08, 1858), XVI, 656Google Scholar; Rhodes, III, 102; Cole, A. C., The Irrepressible Conflict (New York, 1934), 252Google Scholar.

76 Weiss, John, Life and Correspondence of Theodore Parker (New York, 1864), II, 248–249.Google Scholar Only Garrison, the abolitionist, protested that “the whole thin g is an emotional contagion without principle …” (Garrison, W. L., The Story of His Life [New York, 1899], 111, 463)Google Scholar.