Banks of New York (banking institutions of New York City)

Bank Information

Episode Type: Suspension → Reopening
Bank Type: state
Start Date: October 13, 1857
Location: New York, New York (40.714, -74.006)

Metadata

Model: gpt-5-mini
Short Digest: c6246299

Response Measures

None

Description

Article (New Orleans Daily Crescent, Aug 31/Sept 1 1858) reviews the 1857 crisis and states that New York banking institutions were compelled to suspend coin payments on October 13, 1857. The piece discusses a systemic panic affecting many New York banks (macro-level shock). The article does not describe a depositor run on a specific individual bank nor describe permanent closure or receivership; historically this was a suspension of specie payments during the 1857 panic, so I classify as a suspension with implied later resumption (no explicit reopening statement in the text).

Events (1)

1. October 13, 1857 Suspension

Cause: Macro News
Cause Details: Panic/revulsion of 1857 (systemic financial crisis) led New York banks to suspend specie/coin payments
Newspaper Excerpt: on the 13th of October, its banking institutions were compelled to suspend coin payments
Source: newspapers

Newspaper Articles (1)

1. September 1, 1858 New Orleans Daily Crescent New Orleans, LA

Article from New Orleans Daily Crescent, September 1, 1858

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Article Text

Dew Orleans Daily Crescent. REVIEW OF NEW ORLEANS MONEY MARKET And Retrospect of Financial and Commercial events for the year ending August 31, 1858. CRESCENT OFFICE, August 31, 1858. The commercial year of New Orleans having been for many years closed on this day, financially we have concluded to adopt the same. We now present our fourth yearly retrospect of the general money market of our emporium, this being for the last twelve months. Taken in financial aspect, this has been one of the most remarkable years recorded in the history of Louisiana. Commercially, the effects of the crisis of last autumn have not left any blight nor depression. The great water course of the world and its tributaries have maintained an almost uninterrupted trade with the vast extent of country in fifteen States and Territories since the commencement of the year, which has sussained the prominence of our locality. The commenc ment of the greatness, the Influence and control, the great commerce, the Increase in population, the general extension of our city, dates back scarcely more than a quarter of a century, and still, apparently in its infancy, it has now assumed the highest standing, credit and importance in the commercial and financial world. In the mechanical and industrial arts and trades, It is making advances yearly, and bids fair to attain in these branches of wealth and importance an elevated position. It is, however, to the mighty agricultural connections, through natural channels, that we are now, and shall continue to be, indebted for eminence, fame, wealth and prosperity. The commanding position and influence, and the growing power of our city, have been manifested and confirmed bylthe arrents which have transpired during the present year. To. wards the close of August, 1857, a rumbling was heard, and in flientions discerned of a pressure in the money market of what has been considered the commercial and financial center of this continent. No apprehensions were entertained th its force would have extended to this section. On New York the pressure came, early resolved into R panic, from panic to revulsion, failures and suspensions: exhibiting proud New York, supposed to have been gigantic in resources and wealth, wrapped 3 in apparent towering strength of commercial solidity, trusting to its previous unrivaled position, and assuming to be the pedestal of commerce and finance of the Western world, aided by the great and varied interests of manufacturers, mechanics, farm ers, merchants, bankers, the great shipping and steamboat interest, with its immense foreign import trade, prestrated. It reeled, it tottered, panicized, and on the 13th of October, its banking in. stitutions were compelled to suspend coin payments, and it now stands in the eyes of the enlightened and intelligent of the financial world as second to the Crescent City. The great financial revolution of 1857 made the first developments in the city of New York, in the month of August, led off by the failure of the Ohio Life Insurance and Trust Company "a thing," we term it, cbartered by the State of Ohio, having its principal in Cincinnati, with a branch in New York, fol. lowed by the Mechanics' Banking Association, Island C ty Bank, Empire Bank, Institutions of New York city, with private firms, denominated bankers, followed daily for weeks by merchants, traders, and stock jobbers of every class and hue. Ani one of the most noted incidents was the failure of an exchange house connected with New Orleans, involving its merchants and banks to the amount of nine hundred and fifty thousand dollars, in the shape of bills of exchange drawn on New York. The banks of the city of New York commenced like charlatans in commerce, and empiries in finance and banking, to curtall and reduce their loans and discounts, after attaining an expansion unheard of in the annals of finance, so, that by the end of the month of September their discounts were reduced from one hundred and twenty-two millions of dollars, in August, to one hundred and seven millions of dollars at the close of the month of September, which was season of the year when the produce of the country had all been forwarded to market, the proceeds realized and disbursed, and at the time there was no basis, no foundation to sustain the credit of the country and contend against the mighty convulsion then progressing The policy of contraction, the dogmatism and imperiousness, assumed by New York and dictated to most every city and State, met with no response in this city. We cared not for the balances held by New York banks against Philadelphia, Boston, Baltimore and other places. Our banks and community went forward regardless of any course that might be followed by New York financiers and stock jobbers. There was no contraction in loans and discounts by our banks in the month of September. Neither did our merchants and traders follow those of New York, Boston and Philadelphia, and suspend pay ments. One failure only occurred. On the 25th and 26th days of September, the banks of Philadelphia suspended payment. We, also, began to receive accounts from England of great closeness and stringènèy in the London and continental markets. Nevertheless, sanguine, confident and having full faith in the commercial and financial structure of our city, we passed the month of September without pressure or alarm, not anticipating that the rottenness and wild investments of other plac 8 would redound on us in a short time, although in h mild form. It would be almost a work of supererogation to write a history of the crisis of 1857. It came unawares, did its work, passed off and has long since been forgotten in this section, and al though it is not our intention to write its history, yet we cannot overlook the fact, that President Buchanan, in his message to the National Legislature, deemed the crisis of so great importance as to devote large space to suppose causes, with which we do not acquiesce. He says it is our duty (Congress, to enquire what has produced such nnfortunate results, and whether their recurrence can be prevented. In all former revulsious, the blame might have been fairly attributed to variety of COet operating causes but, not so, on the present occasion. It is ap. parent that our existing misfortunes have proceeded solely from our vicious and extravagant system of paper currency and bank W credits, exciting the people to wild speculations and gambling in stocks. These revulsions must continue to recur, at succes sive intervals, 80 long as the amount of currency and bank loans and discounts of the country shall be left to the discretion da of fourteen hundred irresponsible banking institutions, which, from the very law of their nature, will consult the interest of th their stockholders rather than the public welfare.' tal Although the President regarded the banks as the chief in cause of the revulsion yet it is impossible, in our view, for bu majority of writers on finance, or for the followers of commersta sur cial pursuits to arrive at the same conclusion. It is well known there are no banks in Hamburg, that in fact it is R real hard money community, yet there was no place, city, village or localgar the ity, where the panie of 1857 was more severely felt. Admitting that the increase of banks and bank paper from about 1847-the tra close of the war with Mexico-when the General Government at had to borrow largely until 1857, was greater than It ought to in have been, or that the people or the legitimate business of the her country really required, the inflation and crisis cannot be chargdec ed to the banking system. There are black sheep in all flocks, for and there are a confounded many among the fourteen hundred wit banks of the United States, and one-half of the number located bei in agricultural districts ought to be swept in oblivion. There is we no doubt but the great increase of the internal commerce of our of country has required currency to conduct it, but the steady cen increase in gold ought to be ample to meet such wants of trade, hur and it undoubtedly would be, if the people would refrain from cre extravagance, check the heavy importation of foreign mercha chandise, refrain from anticipating crops or the proceeds thereof, from one to two years in advance. Ne @9 At the commencement of the present commercial year, New @8 Orleans was in its banking, as it appears on the first Saturday o of the month of September, 1857, in the following position, Sept, 5, 1857 Circulation $ 8,365,379 Deposits 9,991,4.0 Cir Due District Banks 559,521 De Specie. 6,233,269 Dis Short Loans 19,276,000 Oth Exchange 2,086,340 Total amount of Long and Short Loans was. 24,403,000 It will be seen that we commenced the with just sufficio