Banks of New York (multiple)

Bank Information

Episode Type: Suspension → Reopening
Bank Type: state
Start Date: October 14, 1857
Location: New York, New York (40.714, -74.006)

Metadata

Model: gpt-5-mini
Short Digest: 57899ef6

Response Measures

None

Description

Article (Oct 20, 1857) reports that following an Oct 12 meeting of NY bank officers, two days afterwards most of the Banks of the city suspended payment. This refers to the 1857 suspension of specie payments by New York banks during the panic; no permanent closure or receivership is mentioned and the context implies a temporary suspension (later resumed).

Events (1)

1. October 14, 1857 Suspension

Cause: Macro News
Cause Details: Widespread financial panic / money-market distress in October 1857 and related unfounded alarm leading to suspension of specie payments by New York banks.
Newspaper Excerpt: it appears, however, that two days afterwards most of the Banks of the city suspended payment.
Source: newspapers

Newspaper Articles (1)

1. October 20, 1857 New Orleans Daily Crescent New Orleans, LA

Article from New Orleans Daily Crescent, October 20, 1857

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Article Text

Dew Orleans Daily Grescent. THE COMMERCIAL DEPARTMENT. Hew Orleans Money Market. CHESCENT OFFICE, No. 70 Camp street. Monday Evening, Oct. 19, 1857. The week commences very quietly. Some few transactions in cotton have taken place, but there is no change in the general position of the money market from Saturday. The difficulties in negotiating large sums of exchange are just as great as ever, and cannot be obviated until we are in receipt of coin, or a share of that which was drawn from the Banks last week is returned to them. The Canal Bank is now prepared to draw sight and short sight exchange on New York, and will take sterling exchange in pay. ment for any liabilities due it. Daylight is again dawning on us. We shall get to work briskly in a short time, if a few hundred thousand dollars incoin received. The Bank of Louisiana gives notice that it will receive ap. proved sterling exhange in payment of discounted paper by the Bank. That is, if the house of A B has a note or acceptance under discount, failing due in the Bank, it will take approved sterling exchange for it. This is a broad qualification, as the word approved can be closely or broadly construed. Now, we suppose factors can sell a few thousand bales of cotton, and the arrangement be a benefit for perhaps thirty six hours. As it will take only about $3,000,000 of exchange to cover the entire amount of discounted paper, maturing within the next 90 days, the Bank may have falling due on Tuesday, (to-morrow) Wednesday, the next day, and Thursday, the next regular discount day, say from $150,000@$200,000 in discounted paper. How much of this may be cotton factors acceptances, have not the means of ascertaining. Sterling exchange will, however, be received for it, provided the factors can effect sales of cotton take the bills and endorse them, provided, we presume, they keep an account in the Bank. This, however, would be to the factors no more than a return to the mode of selling cotton in vogne twenty to thirty years ago-that was, selling cotton direct for exchange. This will prove a very decided facility to a large class of buyers, provided the Bank considers them of an approved character. But this question of relief, partial only, may be of some service, though rather tardy. We can only say to the directory of the Bank that the question of relief to this community ought to have been considered on Monday, 12th inst., and carried through on last Wednesday. The President pro tem. of theBank of Louisiana and the majority of the Directory have or have not much to answer for in the public estimation. Which Bank it was that first discredited the notes of the three free Banks on Wednesday last will have to bear the greatest censure. The Bank of Loui siana was in line on that morning two hundred and thirty thousand dollars. This sum would have saved the commotion and panic which we have passed. It is idle to suppose that the free Banks were any less solvent on the above day than they were at d any other time within the last twelve months. The paper market is unsettled. Five per cent. per month continues to be offered for money. In fact, it is useless to talk of negotiating paper on the street. There will be no discounts made to-morrow by the Banks, and none this week unless the Directory of the Bank of Louisiana should repent on Thursday, and then it might do a little. The Canal may do a few thousands on Wednesday, but it is very doubtful. We can only add that our mercantile community cannot expect any aid of consequence from the Banks for some time, only in the way of renewals. This will do great service. Some share of the public seem to rely greatly on the course the Bank of Louisiana may pursue. We may as well remove the impression at once, and say, that isolated as the Bank is, being strong. very strong in its position, it must keep EO. It cannot, in the present state of affairs, render only very limited service. The other old chartered Banks cannot do anything, and it is idle, very idle, for people to think that the Bank of Louisiana can render them any essential service. The day for its good and benefit in this crisis is passed. It ought to have acted in concert with the other old Banks before the panic. Now it is too late to be anything more than partial service, and if we mistake not, it will take care of itself, and that with a few discounts and exchange operations, are all that can be expected at this time. We shall return to this subject again. An explanation is required from some quarter. Local causes have had much to do with the recent panic-more than the public are aware of. Very little done in exchange to-day. Some sales of sight on New York were made at par, ½ and 1 per cent. discount, and some small transactions in sterling at rates from 90@95. We heard of no transactions in francs, and the day in general closes very heavy. The following is the result of a meeting of Bank Presidents in New York on Monday last. It appears, however, that two days afterwards most of the Banks of the city suspended payment. It will be well enough for all parties to wait & day or two longer to understand the New York suspension. It is hardly possible that men of information (Directors of Banks) should pass so strong resolutions as the following, and within forty hours Safterwards the Banks represented suspend specie payments: as At a meeting of the bank officers, held this day, at the Clear17 ing House, Thomas Tileston was appointed Chairman, and James Gallatin, Secretary, when, on motion, the following resolutions were adopted Whereas, There is no demand for specie upon the banks of les this city for exportation, and can be none at present but, on the contrary with the present low rate of exchange, affording a esprofit of from to 10 per cent. on its importation, there must be a speedy influx of it from Europe-for whether anybody here a can draw for it or not, the inevitable laws of trade must be all eyedob-and specie will come to the point of greatest demand. And where as, All demands for specie upon the banks of this city from the interior, 80 far as they could arise from natural causes, have already been met H, And whereas, The exchanges with every-part of the country on are in favor of New York, creating a current of specie toward it for the payment of debts and the purchase of goods iz: And whereas, we are in the semi monthly receipt of large ow accessions debts: of gold from California, sent here for the payment of are And whereas, The United States Treasury is rapidly disbursing coin in the public expenditure, and for the redemption of the public debt: And whereas, In this state of things every natural and healthy tendency is to accumulate specie in the banks, and to LE enable them to diffuse it throughout the country, as the basis of credits by which the abundant crops rovidence has given, more mp bountiful than ever, may be brought to market, confidence may 1y revive, the circulation of commodities be resumed, the internal exchanges restored, the wheels of industry be set in motion, and employment once more be given to labor NO er. And whereas, In the jndgment of this meeting, there exists at the present time no obstacte whatever to the accomplishment f of objects 80 desirable, unless it be in an unfounded and unnecessary alarm which keeps specie from its natural uses, and from RT performing its appropriate functions ing Therefore, Resolved, That the banks of the city of New York in are determined, at all hazards and under all circumstances, to perform their duty to the country, and all its great interests, in the maintenance of all specie payments, and that all classes of the nation. community should sustain them in carrying out this determiResolved, That in the judgment of this meeting, even for this of object, no further contraction of loans is necessary, nor will there exist any obstacle to such an expansion of them, as will afford the necessary aid to bring forward the crops, and alleviate the present commercial distress, unless it shall be created by the demands of a causeless alarm. and TILESTON, Chairman. ive JAMES GALLATIN, Secretary. Monday, Oct. 12, 1857. ST and The following, from the New York Express, applies very well to a house in this city which performed the same operation last