16581. State Bank (New York, NY)

Bank Information

Episode Type
Suspension → Reopening
Bank Type
state
Start Date
September 11, 1839
Location
New York, New York (40.714, -74.006)

Metadata

Model
gpt-5-mini
Short Digest
1d218e4a

Response Measures

None

Description

Articles report the State Bank (New York) ceased redeeming Safety Fund (uncurrent) notes (partial suspension of redemption) on/around Sept 11, 1839, which created quite a panic in the street. That announcement produced heavy nervousness/withdrawal activity but there is no evidence of permanent failure or a receivership. Later coverage (Dec 1839) suggests the city banks gained strength; no permanent closure reported. I therefore classify as a suspension with subsequent recovery (suspension_reopening). Dates are taken from article datelines where possible.

Events (2)
1. September 11, 1839 Run
Cause
Bank Specific Adverse Info
Cause Details
Announcement that the State Bank would not redeem Safety Fund notes provoked a panic and heavy selling/withdrawal pressure in the market.
Measures
Brokers purchased the notes at heavy discount (2-2.5%), converting uncurrent into current by taking the loss.
Newspaper Excerpt
which announcement created quite a panic in the street. The merchants who had Safety Fund Bank notes to sell, to take up their own notes in bank, were in a panic for a moment
Source
newspapers
2. September 11, 1839 Suspension
Cause
Bank Specific Adverse Info
Cause Details
State Bank announced it would no longer redeem Safety Fund Bank notes; presumption it lacked funds to redeem, effectively ceasing redemption of certain country/uncurrent notes (partial suspension).
Newspaper Excerpt
The State Bank, which has had the redeeming of the Safety Fund Bank notes, gave out that it would no longer redeem them1reason not assigned
Source
newspapers

Newspaper Articles (4)
1. September 19, 1839 South Branch Intelligencer Romney, WV
Article from South Branch Intelligencer, September 19, 1839

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Article Text

a week. NEW YORK, Sept. 11. Wall street is blue, in the technical language of the day. The State Bank, which has had the redeeming of the Safety Fund Bank notes, gave out that it would nolonger redeem them-reason not assigned ; but the presumption is, it has not been provided with funds - which announcement created quite a panic in the street. The merchants who had Safety Fund Bank notes to sell, to take up their own notes in bank, were in a panic for a moment; but the brokers came in and bought them up at 2 and 21.2 per cent., which enabled them, submitting to the shave, to turn uncurrent into current money. The panic, or something else, which I have not time now to unravel, got into the stock market, and stocks went down like stacks of brick: The U.S. Bank began the tumble at $103 3.41-2-103-102,cash-and,atiast at the second Board of Brokers, 400 shares were sold at 100 cash. Two hundred shares Bank of Commerce were sold at 95; Kentucky Bank 79 1-2; Stonington Railroad 23; Illinois Bank 79; Dry Dock Bank 86,&c. &c. This ticklish condition of the slocks is almost unaccountable. The money market here, however, is in a very bad way. The Secretary of the Treasury, in June or July, stept into Wall street and absorbed about two millions and a half of its resources in Treasury notes. The States have also been here pressing their stocks. The post notes too have absorbed the cash of the capitalists usually on deposite. When promises to pay, conwill annum, stocks sidered cent. per secure, command must value accom- 18 of per the modate their price to the money on interest. The coming forward of the crops too now demands andthere is no money to meet mean time, the screws US down to screw it. money, England In the for Bank more it- of self up. Its gripe is on us specie, which, as the rate of exchange is, is likely to go. The rate on London now talked of, for the Great Western, is 110, and even 110 1-2, which must carry out specie. These are bad signs all. But the exchanges of the Union, horrible for six months past, are now excruciating. On Georgia the rates have gone up to 6 and 7 per cent. On Mobile exchange is 112142 How long the country can submit to this is a problem to be worked out: but it is certain somebody or other must be ruined amid such crushing operations. The fact is, now the vast mercantile interests of the country the producing classes also, are laboring for the benefit of a few great capitalists and the office-holders, who, come weal or come wo,regularly have their salaries; and the promise of the Government to make things better is but another experiment, in which practical business and menhave not the least confidence, which they know to be corrupting and Int.

2. December 11, 1839 Morning Herald New York, NY
Article from Morning Herald, December 11, 1839

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Article Text

# MONEY MARKET. Tuesday, Dec. 10-6 P. M. The market generally remains without material alteration. At the stock exchange a little more firmness in prices was dis- played, and a demand for cash stocks in some instances, caused an improvement over the rates of yesterday. United States improved 2 per cent-Harlem per cent-North American Trust & Banking Co per cent-Ohio Trust & per cent-Me- chanics Banking Association declined per eer cent. Some little improvement took place in Philadelphia exchanges $7,000 were sold at the board, at 8 per cent discount, which is an advance of per cent, In sterling exchange there is very little doing, the rate has somewhat improved and is now 9 per eent or $4 85 the £ sterling. $4 86] is par. The packets which sailed today, had specie on board as follows: Toronto to Londen, $110,000 Independence to Liverpool, 20.000 Suliy to Havre, 40,000 Total shipment of specie, $230,000 The market presents the appearance of inactivity incident upon the stagnation of business and the gradual settlement of outstanding paper. At the time of the Philadelphia suspension the market was well supplied with southern bills and the pressure of uncurrent money upon the city was so great as to cause the State Bank to cease redeeming them. These two events caused naturaly a great increase of discount beyond what the natural balance of trade indicated. The conse quence of these high rates, was an immediate retirement of the bills and a gradual reduction of the discounts. This decrease of the circulating medium does not appear to have given rise to any additional inconvenience to the public, be- cause the indebtedness of all classes has been gradually liquidat- ed, and at this moment with a smaller circulation there are less complaints than was the case six weeks since. The retail trade of the city is as good as has ever been the case at this season, and the medium o' circulation is perhaps more sound and healthy than ever before. This has arisen from the fact above stated, that uncurrent money has let the city in the hands of speculators. At the same time our city Banks, daily gaining strength, have been enabled to discount promptly all the short business paper predicated on the home trade. The decline in the prices of goods, provisions, and the common necessaries of life has also eased the market by rendering a less amount of money necessary to transact the same business. Money is more freely offered for business pa- per at 1 per cent per month. The Philadelphia and Boston papers also report the same general feature, a decline in the demand for money, notwithstanding that the New York and Boston Banks steadily refuse to discount any except strictly business paper. This determination on the part of the banks cuts off even really wealthy men from the means of realising the wherewith to meet their old engagements, and causes the occasional failures which are reported. It is this demand for money by a certain class which gives encouragement to the many institutions which are continually starting under the new law. They are started by men who do not understand the prin- ciple of the revolution going forward. A demand for money is apparent-they therefore discount notes and soon find they cannot keep out a circulation payable on demand. The next step is the issue of post notes, but time which matures the notes does not render their securities convertable and they stop. This evil must soon cure itself. The course of trade must be followed not forced. The Directors of the State Bank of Tennessee have voted to locate a Branch at Shelbyville in that State. The State of Illinois paid $11,000 interest on their bonds on the 23d ult. # THE CONDITION OF THE BANKS IN GEORGIA,

3. February 7, 1840 Morning Herald New York, NY
Article from Morning Herald, February 7, 1840

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Article Text

MONEY MARKET. THURSDAY, Feb. 6-6 P. M. The success of the non-resumption policy in Philadelphia, and the anticipation of favorable aews by the Liverpool, have imparted a great degree of buoyancy to the stock market this morning. The sales were not very extensive, but prices rose rapidly. Harlem improved 2 per cent; New Jersey Railroad 1 per cent; Stonington 1 per cent; V. S. Bank 3 per cent; North American Trust and Banking Company 2) per cent; Delaware and Hudson 1) per cent; Dry Dock 2 per cent; Farmers' Trust 1 per cent. Exchange on Philadelphia declined to 6) per cent discount. After the Board adjourned, a rumor of defalcation in the Dry Dock Bank became current. Nothing definite transpired. It was stated that forged drafts, to the amount of $80,000, had been paid; another, that large loans had been made on Kentucky stock, which had depreciated on their hands below what is sufficient to cover the loans. Out of this rumor grew the report, that there were difficulties in the Manhattan Bank, which is not the case. The windin; up of the City Bank of Buffalo, is a prelude to fresh explosions, and a further derangement of the state currency. The present difficulties are clearly the result of the mismanagement of the state finances. The improvidence of the state officers in the employment of the state funds, last sammer, was the cause of much embarrasement to the State Bank, in this city, and connected with other events, forced her twice to suspend the redemption of the country money, and entailed an immense loss upon the business community, in consequence of the heavy discount they had to pay, by reason of the non-redemption The state office appears, without any plausible reason, loaned to three of the Beffalo Banks, $400,000 of the state's money, belong - to the Cabil Feed This money was, by contract, to be paid over to the Star Bank in instalments The use of this money vold have emailed the State Bank to employ a larger capital 19 the cedric time of coantry money; but the loan to the Buffalo Bauki stips lated them to over issues, and cause that great inflax of Buffalo bank bills in this city, which depreciated Cheir Sale This unnatural action speedily involved the issuing banks in difficulty; and on the 11th of November, when the first in stalment fell due to the State Bank, by for City Bank of Buf falo, it was not paid. One of the Bank thank the time being. to Buffalo, and en arrangement was made donand certain of the papers of that city tradict the rumor, that an injunction had the sult of this patching up has been an state loges $400,000 of the Canal Famil Fund is nearly annibilated. $817,900 The Bank Fund was, on the 19th January The circulation to be paid out of it, is, for $123,408 the Bank of Buffalo, Commercial Bank of Buffalo, 104,914 " City

4. May 21, 1840 Morning Herald New York, NY
Article from Morning Herald, May 21, 1840

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Article Text

# MONEY MARKET. Wedhesday, May 20-6 P. M. The movements at Harrisburg, and the precarious situation of the State of Pennsylvania have a depressing effect upon the markets at the Stock Board to-day. Sales were small, and prices fell. U. 8. Bank declined per cent.; North Am. T. & Banking Co., per cent.; Del. & Hudson, per cent.; Harlem, 4 per cent. There is but little doing in domestic bills, and the discount is increasing, particularly on Georgia and Mobile. The country money of this State is again becoming deranged. It will be recollected, last fall, after the State Bank ceased to redeem Safe-ty Fund money in this city. the rate of discount rose very high, and continued so until the 9th of Nov., when a convention of Safe-ty Fund Banks was held at Auburn, whereby it was arranged that a bank should be appointed in Albany or Troy, to act as agent to seal up the bills and notify each bank by mail of the amount of its notes then on hand for redemption. The Bank so notified to redeem its bills, so sealed up at the end of 16'days after the sealing by drafts or funds current in Albany. The agency charged 1-10 of 1 per cent for conducting the business. The new banks generally came into this arrangement, under which the rate of discount gradually fell from 5 a 6 per cent to 1 a 11 per cent, both for Red Back and Safety Fund. The banks were to keep the system of exchanging with each other, and adjusting the balances. To this arrangement, the Safety Fund Banks still adhere, but most of the banks under the new law have been thrown out at the agency, and the discount on them is rapidly rising. The following is a list of those still redeemed at the agency:- All the Utica Banks, Geneva Ithica Genessce Bank at Le Roy, Mohawk Valley, All Safety Fu..d Banks All Syracuse, "Watertown. "Rochester, except Western New York, Fort Plain, Agricultural Bank, Herkimer. These bills are taken in Wall street at 11 a 2 per cent discount, and all other free bank bills at 3 per cent discount. The position of the red money is very uncertain. The brokers buy very cautiously, and that which is redeemed today may not be redeemed tomorrow. Many of the new banks are on the eve of an explosion, and agents of some of the western banks in this city are selling their bills at a constantly increasing discount. Many of them will be unable to comply with the terms of the new law, requiring them to keep funds in Albany or New York for the redemption of their bills. The law goes into operation on the 1st of July, and every means is used meanwhile, on the part of the weak banks, to force a circulation, depreciate their bills, and buy them in at a discount, or explode with a large circulation out. It will be recollected that Mr. Humphreys was appointed, some time since, as receiver, by the Court of Chancery, to wind up that infamous concern called the City Trust and Banking Company. That gentleman was unable to attend to the duties, and Joseph Willoughby, Esq. has now been appointed to the office, and enters upon the duties immediately. It appears that this concern has on deposite with the comptroller $2,000 of Arkansas stock, worth 76 per cent, and has out $1,200 of the bills obtained from the comptroller. So far the operations were honest. It has, however, in circulation at the south, west, and southwest, upwards of $800,000 of post notes; to meet which it has assets of $70,000, nominally, in bonds and mertgages. Of these, two only are of any value; one is for $7,000 on two farms in Geneva, and the other $12,000 on a farın in Virginia, This latter mortgage has been abstracted from the bank in the following manner:-It stood in the name of Greeley, of the firm of Weston & Greeley, brokers, in Wall street, for $15 000. Weston, being one of the directors, went into the bank room with the president and one or two others, and they passed a resolution to receive their post notes in pay-ment of mortgages. Immediately after, Weston went to the teller, Ackerman, and asked him to lend him $15,000 post notes; he had, however, but $14,950 on hand, and Munson found $50 more, which made up $15,000. Weston then paid this to Abbott, the cashier, who delivered him the mortgage. This Weston gave to Greeley, and Abbott gave back the post notes to Ackerman. Measures are taken to recover this document for the beneft of the creditors of the bank. There is great hopes hat this concern will be made an example of. The tea sale to-day exhibited the same features which characterised the former ones. It was well attended, and went off with spirit. The details will be found under the head of "State of Trade," as also a sale of real estate, under a chancery order, at prices which indicate the depreciation of that description of property. The Pennsylvania Legislature as yet have done nothing. A bill has been introduced to establish a branch of the U. S. Bank at Pottsville, with a capital of $1,000.000. This is probably part of the locofoco anti-bank principles. Nothing has been done towards providing the means of paying the interest on the State debt in August next. The subject does not seem to be worthy of notice. The credit and standing of the State of Pennsylvania, and with it the whole United States, depends upon the manner in which she discharges her present present indebtedness, and provides for future contingencies. A few short weeks may find her prostrate, and yet no movement is made to avert the impending fate. Her faith seems to be as strong in the U. S. Bank as in the days of its most undoubted credit. The assets of that institution are, it is well known, dependent upon that section of the country whose chief means of wealth is in its production of cotton. The culture of that article has been, for the last few years actually a means of impoverishing the coun-try in which it is raised. The producers of it have purchased their supplies from other sections, at prices regulated by our own fluctuating currency, while their sales have been made in a foreign and dearer currency. The proceeds of cotton in a specie currency have formed the means of purchasing of ali the southern States. By the operation of credit, the currency of this country has been inflated until prices of supplies have risen much higher in proportion than that of cotton. Therefore, while the power of purchase among the cotton growers has been regulated abroad, the rates at which they purchase has been regulated at home; the consequence has been, that cotton has been a losing business. The following is a table of the crop of cotton and its value for each year, from 1833 to 1840:- CROFS AND VALUE OF COTTON IN THE UNITED STATES, WITH THE VALUE OF BREADSTUFFS CONSUMED ANNUALLY IN THE COTTON GROWING STATES. Crops. Price. Value. Value of Price of Baies. Breadstuffs, Flour. 1592 1.078.000 10 cts $42 880 000 $36-000-000 $5