Paterson Bank - Paterson, NJ

Bank Information

Episode Type: Suspension → Closure
Bank Type: state
Start Date: April 1, 1826*
Location: Paterson, New Jersey (40.917, -74.172)

Metadata

Model: gpt-5-mini
Short Digest: 39de00d0

Response Measures

None

Description

Article (Richmond Enquirer, 1844) recounts the 1825-26 convulsion and explicitly lists 'Paterson Bank of New Jersey' among banks that was bankrupt in April 1826. No run is described; the bank is described as failing/bankrupt during the 1826 crisis. I infer suspension/closure (permanent failure). Bank type assigned as 'state' based on period naming; if uncertain, could be 'unknown'.

Events (1)

1. April 1, 1826* Suspension

Cause: Macro News
Cause Details: Part of the general 1825-26 commercial collapse/revulsion following a speculative expansion; the bank is listed among institutions that went bankrupt in April 1826 during the panic/contraction period.
Newspaper Excerpt: the Jersey City bank, and Paterson Bank of New Jersey, the Green County bank, the United States Lombard, the Franklin Manufacturing Company, and the New York Life Insurance Company, of New York; and, at a short time after, they were followed by a shoal of insurance and stock-jobbing companies, which had been spawned in the previous expansion, and had not strength to bear the first shock.
Source: newspapers

Newspaper Articles (1)

1. October 24, 1844 Richmond Enquirer Richmond, VA

Article from Richmond Enquirer, October 24, 1844

Click image to open full size in new tab

Article Text

To Messrs. F. H. Hill, William Finks, and others, Madison C. H., Va. (From the Democratic Review of August.) # ONE NATIONAL BANK-SHALL WE TRY ANOTHER? [CONCLUDED.] II. WHAT THE BANK DID FOR OUR COMMERCIAL STABILITY. In an essay published by Mr. Biddle, in the National Gazette, on the 10th of April, 1828, occurs the following passage:- "If a Bank lends its money on mortgages or stocks, for long terms, and to persons careless of protests, it incurs this great risk, that, on the one hand, its notes are payable on demand; while, on the other, its debts cannot be called in without great delay-a delay fatal to its credit and character. . . A well-managed Bank has its funds mainly in short loans to persons in business-the result of business transactions-payable on a day named." Such a risk it was that the Bank of the United States ran at two distinct eras in its history. When, on the 17th of January, 1817, it went into operation, it made no hesitation in offering its discounts, and issuing notes, upon almost every imaginable security, at the most protracted dates. Instead of $7,000,000 being paid in specie, as the charter required, little more than one third that amount was received. But the day for the resumption of specie payments was drawing nigh, and the rapid expansion which marked its first year was succeeded by a still more rapid contraction. In eight months, between the 30th July, 1818, and the 1st of April, 1819, loans were drawn in, to the amount of $6,530,000. The Bank found itself on the verge of bankruptcy, and only recovered itself by means which brought the mercantile interests to the dust. After pampering and indulging its debtors, renewing their notes when they became due, and increasing their loans when it was desired, it suddenly called in its dues, and, without a moment's grace, commenced a course of treatment as stringent as that which had preceded was lax. Such was the secret of the great convulsion of 1818-19, by which credit was upset, and an amount of bankruptcy incurred which threw into the worst confusion our commercial relations. Throwing out of the calculation the first four years of the Bank's history, when its aberrations may be excused on the ground of the novelty of the experiment and the inexperience of those engaged in its management, there remain, from 1821 to 1836, fifteen years of corporate existence, ample enough and recent enough to enable us to discover, with some accuracy, how much, during so long a course of power, the Bank did for the commercial community. It is here that we are able to go home to its own assumptions, and determine from fact, not from theory, how far they have been made good. Let it be inquired, briefly, 1st, How far it equalized the vicissitudes of trade; 2dly, How far it controlled the exchanges of banking; 3dly, How far it levelled the inequalities of exchange. Such, in fact, were the three great attributes which were claimed for it by its most eminent advocate; and, if it be shown that the Bank, by its history, has negatived the claims which are thus made, it is difficult to see on what species of reasoning it can in future be supported. 1st. How far the Bank equalized the vicissitudes of trade. 1821. The severe contraction of 1818-19 beginning to give place to more genial measures, the speculating interests awoke from their torpor, and, on the strength of fresh issues and increased discounts from the Bank, prices rose rapidly, and fancy investments thickened. 1822. A reaction began about May, and, during the whole year, the money market was tight, and the business interests distressed. 1823.-The Bank took a fresh start, and threw out on the world a vast quantity of notes-(so many, that the number at last was checked only from the physical inability of the officers to sign any more)-and discounted with great profuseness. 1824-5-The mercantile interests were stimulated by the liberality of the Bank, and engaged in a number of enterprises, to meet which their paper was freely discounted. So great was the excitement among the moneyed interests, that, in one day, (April 9, 1825,) seven expresses arrived at Philadelphia from New York, with news of the rise of the Liverpool cotton market. The price of cotton rose one-third; sugar doubled; cotton goods rose sixty per cent.; and wages participated in the universal jump. Every day, according to the newspapers of the time, reports were to be heard of men, who, by one operation, had made thirty, forty, or fifty thousand dollars. The Charleston Patriot, to show the state of feeling, mentioned that, in many cases, so great was the activity of the market, "the same parcel of cotton had changed owners six or seven times in a week, without leaving the hands of the factor."- In May, 1821, the famous Pennsylvania Bank bill was passed, which established, in the State, $15,000,000 banking capital. The fury spread over the whole country; in New York alone, $52,000,000 of corporative capital were chartered, and not a State was exempt from the contagion. In July, 1825, the bank, finding its notes were not paid, became alarmed, and began drawing in its accommodations. A general suspension of specie payments was threatened by the directors not only of the local Banks, but even, at one period, of the parent institution. Of four thousand weavers employed at Philadelphia in the beginning of 1825, only one thousand could find work at the same time in the following year. 1826.-In April, 1826, the Marble Manufacturing Company, one of the new banks, was bankrupt, and in its wake, with all imaginable rapidity, swam the Dundaff and New Hope Banks of Pennsylvania, the Jersey City bank, and Paterson Bank of New Jersey, the Green County bank, the United States Lombard, the Franklin Manufacturing Company, and the New York Life Insurance Company, of New York; and, at a short time after, they were followed by a shoal of insurance and stock-jobbing companies, which had been spawned in the previous expansion, and had not strength to bear the first shock. 1827. The bank, feeling a little more easy, and seeing that business was beginning to rally, crawled out of the shade, and determined gradually to relax the severe measures which the late revulsion had forced upon it. But so sensitive had the commercial system become, under the violent excesses to which it had been subjected, that the slight stimulant thus administered, and the increasing accommodations thus given, led to a great rise in prices, and fresh attempts at speculation. The bank, a little more cautious than before, immediately shrunk in its circulation, and pared down its discounts. 1829-About the beginning of 1828 the country gradually relapsed into the distress which had characterized 1825-6. At the North the pressure was extreme. The President of the Bank, in a letter to the Secretary of the Treasury, dated July 18th, 1829, says that the office at Portsmouth "last year was nearly prostrated in the general ruin which spread over the country. Out of $160,000 of loans, $148,000 were thrown under protest: still further protests were expected; and the actual loss sustained there will not be less than $112,000." 1830. Money became more plentiful, and the Bank, desirous of keeping up its dividends, discounted once again with liberality. 1831. Another relapse, severe but transient, was experienced, and after a short recoil, prices appeared to have found their true level, and labor its safe market. It was about the close of 1831 The preceding table is taken, in some measure, from a book already mentioned, but whose usefulness cannot be too often adverted to, Gouge's History of Banking &c.