banks of New Orleans - New Orleans, LA

Bank Information

Episode Type: Suspension → Reopening
Bank Type: state
Start Date: June 1, 1837*
Location: New Orleans, Louisiana (29.955, -90.075)

Metadata

Model: gpt-5-mini
Short Digest: 432c70a3

Response Measures

None

Description

Article (Dec 17, 1839) describes an earlier suspension of New Orleans banks in mid-1837 following large volumes of protested bills drawn on England; by December 1838 banks were preparing for resumption. No discrete depositor run is described — the trigger was protested correspondent bills and speculative overextension. I corrected timeline inference from the article text (suspension ~ June 1837; resumption preparations Dec 1838).

Events (2)

1. June 1, 1837* Suspension

Cause: Correspondent
Cause Details: Large amounts of bills of exchange drawn on England were returned protested, producing a mass of unavailable paper and causing immediate suspension.
Newspaper Excerpt: This was practised to a greater extent in New Orleans than, perhaps, in any other part of the Union, and caused the immediate suspension of the banks on the return of the protested bills.
Source: newspapers

2. December 1, 1838* Other

Newspaper Excerpt: in Dec. 1838, when the banks were preparing for resumption, we find the loans $5,000,000 more than at the time of the suspension.
Source: newspapers

Newspaper Articles (1)

1. December 17, 1839 Morning Herald New York, NY

Article from Morning Herald, December 17, 1839

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Article Text

This table shows that, in the year ending August, 1836, there had been an increase of near $14,000,000 in the bank loans, notwithstanding the year 1835 was noted for the failure of the sugar crop and large deficits in the cotton crops, ou the Mississippi. At the close of the year, the factors were under heavy advances to the planters, which were not ret. At the same time, large amounts of accommodation bills were discounted with bills of exchange, drawn by the bank on England, and most of which came back protested. In this manner a large ameunt of the increased loans was made up of paper based on no real transaction, but drawn on distant places, merely to raise money. This was practised to a greater extent in New Orleans than, perhaps, in any other part of the Union, and caused the immediate suspension of the banks on the return of the protested bills. At the time of the suspension, the policy of the banks does not appear to have been altered, but in December, 1837, six months after the suspension, the loans had increased $4,000,000, and was still further increased through the succeeding year, causing that inflation of prices which has resulted in loss to the planters. This was part of the policy of the U. S. Bank, and in Dec. 1838, when the banks were preparing for resumption, we find the loans$5,000,000 more than at the time of the suspension. From that time the policy of the banks has been to contract, and the loans during the past year have decreased $7,000,000. This arose from the great decrease of the cotton crop of that year, and the necessity of maintaining specie payments; at the same time the position of the cotton trade promising to be very lucrative, made New Orleans the theatre of speculation. The competition of the banks, Vincent Nolte and others, run up the prices to an enormous rate; the result of which has been the heavy losses, that have fallen upon the banks Had the market last year been left to the influence of the natural emand, at specie prices, there is no doubt but that a small profit would have been made on it by the planters. The market was ruined by the speculators, and the losses on their operations are now coming back upon the banks in the shape of protested bills. The New Orleans Courier states that $500,000 dishonored bills were received there on the 2d inst. With the mass of unavailable paper which the banks of the south and west held last year, a resumption was out of the question, without the assistance of the U. S. Bank, by which means a large amount of southern funds came in to thepossession of that institution. These funds she is now turning into cotton. The agent at Mobile is stated to be Mr. W. H. Robertson, who is buymg cotton at 11a13, which can be purchased with specie funds at 9a10. His movements there are accompanied by corresponding movements of the Bank agents here, Robert Dyson and S. V. S. Wilder. Many vessels, among others the Orpheus, have been chartered indirectly by the Bank, to take out its cotton from the Southern ports. These movements of the Bank, although the most judicious for her interest, are destined to have a serious effect on mercantile affairs. The cotton taken out of the market to pay the Bank's debts in Europe will be just so much deducted from the means of the merchants to pay their foreign debts, and must therefore greatly influence the rate of sterling bills, and endanger a drain of specie. # Sales at the Stock Exchange.