16173. Mechanics Bank (New York, NY)

Bank Information

Episode Type
Run → Suspension → Unsure
Bank Type
state
Start Date
May 10, 1837
Location
New York, New York (40.714, -74.006)

Metadata

Model
gpt-5-mini
Short Digest
4730f89c

Response Measures

Accommodated withdrawals, Public signal of financial health, Capital injected

Description

Articles span multiple episodes across years. In 1837 there was a general panic with runs and a suspension of specie payments (banks stopped specie payments on May 10, 1837) that affected Mechanics' Bank; later (1854, 1855) there are reports of renewed runs/panic and loss of confidence but no explicit, final closure or receivership described in these articles. Because suspension is clearly described for 1837 but reopening/permanent closure is not explicitly stated in the provided texts, I classify as run_suspension_unsure. 'Mechanics' Bank' kept city funds in later articles, supporting continued operation after 1837, but the articles do not explicitly state formal resumption details.

Events (4)
1. May 10, 1837 Run
Cause
Local Banks
Cause Details
Run followed failure/shut up of Dry Dock Bank and stoppage of three banks in Buffalo, producing a general run on city banks.
Measures
Banks by common consent suspended specie payments (stopped payment in specie).
Newspaper Excerpt
a general run on all the city banks; and on the 10th, the banks, by common consent, stopped payment in specie.
Source
newspapers
2. May 10, 1837 Suspension
Cause
Local Banks
Cause Details
Suspension of specie payments followed runs triggered by failures of other local banks (Dry Dock Bank) and stoppages elsewhere.
Newspaper Excerpt
on the 10th, the banks, by common consent, stopped payment in specie. The Legislature ... passed an act authorizing the suspension of specie payments by the banks of the State for one year.
Source
newspapers
3. October 17, 1854 Run
Cause
Rumor Or Misinformation
Cause Details
A crowd and confusion around payment procedures led to rumors the bank had stopped, prompting a run-like disturbance that officers quelled.
Measures
Bank officers intervened to resolve the payment difficulty and dispel the rumor.
Newspaper Excerpt
an immense crowd gathered round the bank. It was then rumored that there was a 'run on the Mechanics' Bank that the bank had 'stopped.' The activity of the bank officers, however, soon got over the difficulty...
Source
newspapers
4. August 7, 1855 Run
Cause
Bank Specific Adverse Info
Cause Details
Public suspicion of a cash deficiency and silence of the cashier harmed the bank's credit and kept up panic among depositors.
Measures
Public statements by the president claiming funds were all right (but no detailed remedial measures reported).
Newspaper Excerpt
The mystery connected with the Mechanics' Bank, has not yet been cleared up. Notwithstanding the published card of the President of the institution—stating that the funds were all right—there are many who still think there is a large deficiency in the cash account. The credit of the bank is materially injured...
Source
newspapers

Newspaper Articles (3)
1. July 31, 1854 The New York Herald New York, NY
Article from The New York Herald, July 31, 1854

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Article Text

a panic occurred among the billholders and depositors, causing quite a run upon the bank. This was soon quieted by the election of Jacob Lorillard, a large capitalist and stockholder, as President of the bank, he offering to pledge his whole fortune to redeem the bills of the bank. This affair was followed by a run upon the Dry Dock Bank, and the other city banks refusing to sustain that institution, it was shut up by a decree of the Vice Chancellor on the 8th of May. This circumstance, with the stoppage of three banks in Buffalo, caused a general run on all the city banks; and on the 10th, the banks, by common consent, stopped payment in specie. The example was followed by every bank in the United States and in Canada. On the 10th of May the Legislature of New York, then in sea sion, passed an act authorizing the suspension of specie payments by the banks of the State for one year. On the 1st of January, 1837, the New York city banks, by their reports to the bank commissioners, had an aggregate capital paid in of $20,361,200, and a surplus of profits on hand of $3,263,226, or nearly sixteen per cent. Consequently, their stock, previous to the suspension, was generally very high in the market. The Mechanics' Bank for a long time sold from 127 to 130, but immediately after the difficulties, in May, 1837, the stock fell to 60. An examination of the affairs of the bank, by the directors and the bank commissioners, showed that heavy losses had been sustained by loans to brokers and others, on stocks of various institutions, which had either greatly declined in value, or become worthless. It is believed that the Mechanics' Bank has never sustained any heavy losses by its legitimate business of discounting the notes of mechanics and merchants. The same remark would, doubtless, apply to most of our city banks. Their great losses, amounting in the aggregate to millions of dollars, have been occasioned by loans on stocks to brokers and speculators, whose defalcations the stockholders of banks have thus been called on to make up. In consequence of the losses of the Mechanics' Bank, not only was their surplus fund swallowed up, but they were compelled to suspend their divider ds for several years, until the Legislature reduced their capital from two millions to one million four hundred and forty thousand-the reduction being $560,000-and their losses must, therefore, have exceeded one million of dollars. A similar amount of losses was sustained by the Manhattan Company, which bank having got into trouble in 1839,

2. October 19, 1854 The Daily Union Washington, DC
Article from The Daily Union, October 19, 1854

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Article Text

COMMERCIAL FROM OUR COMMERCIAL CORRESPONDENT NEW YORK, Oct. 17, 1854. Almost all business has during the week been greatly offeeted by the awful catastrophe of the Arctic. No cireumstance hardly ever occurred which so generally elicited the sympathies of the commercial world as that sad event. At the Merchants' Exchange and at the Corn Exchange business was suspended for the day, and the week has been a broken one. The pecaniary loss connected with the Aretie is not so great here as was apprehended; it may reach $1,000,000, ship and cargo, of which one-half is held abroad. The item is, however, an important one when added to the losses previously sustained during the past year on shipping. This interest for the moment is exceedingly depressed, through the reaction of causes which for several years have combined to confer great prosperity upon that interest. The Mexican war caused a demand for vessels on the part of the government, and that demand has been sustained in various ways up to the present time. The famine of 1847 put into requisition all the mercantile navy of the world, and ships-of-war were even required to transport food. The California fever continued the demand for vessels, improved by the Australian excitement of last year, when also the recurring short crops of Europe again gave extensive employment to mercantile tonnage. In all these séven years the building of ships has not ceased largely to increase, until the tonaage now owned in the Union is 4,407,006, against 3,527,115 in 1850 an increase of nearly one million tons, or 30 per cent., in three years. With such means of transportation the demand has fallen off. The trade to California and Australia is next to nothing. The exports of produce to Europe, which were last year so active, are now nearly ceased, while the cotton is not yet active: and the European war, which it was hoped would cause a demand for the neutral bottoms of the United States, has ceased to have any influence. It is not, therefore, a matter of surprise that freights are very low and the value of shipping diminished. The new banks of the city, which have been started recently in such profusion, have also undergone reaction, and three of them have gone down during the week. The difficulty with the concerns was, that they were forced into existence by the payment of the capitals in stock notes, which have not been paid up, and the banks have struggled for existence by attempting to live on credit. Opposed to this were three difficulties: 1st, no notes could be issued without actual security being deposited with the comptroller; 2d. a weekly publication of the condition was required. These are legal regulations. The old banks established a new one of their own in the clearing house, where every bank is required to settle its balances in cash every day. This was fatal; no needy directors could get anything out of the bank for longer than a day, because whatever he got would certainly appear next morning at the clearing house against the institution. The clearing house was for a long time very indulgent, by which is meant that the strong banks were not disposed to press the weak ones. This course, however, soon became impossible, and is now no longer tolerated. The Knickere bocker, the Suffolk, and the Eighth Avenue, have been excluded, and have failed. Some of the officers of the "up town" banks displayed a good deal of feeling, and resorted to queer tricks to affect the old banks-as thus : the city funds a are kept in the Mechanics' Bank, and are usually checked out by the proper officer in favor of the city creditor. On Wednesday there were some two hundred hands to be paid small sums, and an unseen influence induced the drawing of the checks "to order," which required each to endorse his e check. This, to many, was an impossible performance, and it was suggested to them that it was only a trick of the bank e to avoid payment; symptoms of a row became manifest, an r immense crowd gathered round the bank It was then run mored that there was a "run on the Mechanics' Bank that e the bank had "stopped." The activity of the bank officers, e however, soon got over the difficulty, and the plan fell through e The returns of the banks to-day are as follows e New York City Banks

3. August 8, 1855 Daily American Organ Washington, DC
Article from Daily American Organ, August 8, 1855

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Article Text

communication. Correspondence. NEW YORK, Aug. 7, 1855. The mystery connected with the Mechanics' Bank, has not yet been cleared up. Notwithstanding the published eard of the President of the institution-stating that the funds were all rightthere are many who still think there is a large deficiency in the cash account. The credit of the bank is materially injured, and the interest of the stockholders demands an early investigation into its affairs. A card has been looked for from the cashier, but he still keepssilent, which adds much to keep up the panic. The weekly bank statement, published this morning gives the loans and discounts a little over $100,000,000, which is over one million higher than at any time since the commencement of the advertising of the statements. The increase in deposites is a little over a million and a half. In specie and circulation there is no material change from the previous week. On the whole, the statement is quite as favorable as could be expected. The money market is well supplied with funds, although there is a slight increase in the rates. Stock sales have been light for some time, without much change in prices. Virginia State stock has improved, the last sales having been made at 98 1 2, and in most other descriptions the prices have been sustained. The banks discount freely, as will be seen by the above statement, very little paper being thrown out, in fact none at all but what is of a doubtful character. Several new banks are in embryo, and, when in operation, will add some ten millions to our city bank capital. The one most prominent is an opposition to the Broadway Bank, and among its directors are some of the most substantial men of the city. When fairly in operation, this bank will be of great importance, as it is to be situated in the neighborhood of Broadway and Park Place, where our large dry goods houses are mostly located. Mr. Edmonds, the ex-cashier of the Mechanics' Bank, is spoken of as cashier, and, should he accept the office, the bank will be sure to get the city funds, as he has been chamberlain to the city for a long time ; and, should everything prove satisfactory at the bank he has left, name will add greatly to the character of the new institution. A very large indignation meeting was held last evening on the Battery, the object of which was to take into consideration the action of the Commissioners of Emigration. A strong and growing opposition to the Castle Garden being used as an emigrant depot, is manifested, and strong resolutions were passed at this meeting. Many of our wealthy men of the lower part of the city were in attendance and took great interest in the proceedings. The news from Kentucky, which was published in our city papers this morning, has created an intense excitement, and we await further intelligence from Louisville with great solicitude. Where there are so many foreigners as in Louisville it may be considered doubtful by many who will get the upper hand, although there is no difficulty in deciding on which side justice is. If such bloody riots are to take place at this early day, what may we not expect at the next Presidential election Let us hope before that time the American people will have their eyes fully open, and see their perilous position, which is now as plain as the noonday sun. There must be a check put to this foreign influence, and that soon, or farewell to our free institutions. The number of deaths which have already taken place, caused by the fire in Chatham street, on Sunday evening, is four, and one or two more are not expected to recover. Mr. Jacobs, the father of the family, who was arrested on suspicion of having caused the fire, has been honorably discharged, he having proved an alibi. This arrest was entirely uncalled for, as there was not the least ground for it. Stringer & Townsend's last original novel, " Mary Lyndon, an Autobiography," is attracting more attention than any similar work lately published. Of course the book is highly spoken of by some, while others condemn it, as is always the case with critics but it is not often, in my opinion, that we find a better written story, although there are ideas in it which I should be sorry to subscribe to. The language is beautiful, and, whether written by Mrs. Gove Nichols, or not, it has much in it which would point that way. Whoever is the author, it will add much to their reputation as a brilliant writer. OMICRON.