602 



PANICS, FINANCIAL, OP THE NINETEENTH CENTURY. 



The bullion in the Bank of England was reduced 

 to 6,484,095, and the minimum rate of discount 

 was advanced to 10 per cent. 



1858 to 1867. After the panic of 1857 the 

 recovery was comparatively rapid, aided by abun- 

 dant crops. The public debt was increased by 

 the issue of Treasury notes in 1857 from $28,- 

 099,832 in that year to $64,842,288 on Jan. 1, 1860. 

 The largest amount of these notes outstanding 

 at any time was $52,778,900. In 1858 a 5-per- 

 cent, fifteen-year loan amounting to $20.000,000 

 was issued. In 1859 political movements indi- 

 cated that the tension between the two great 

 parties in the country was growing more severe, 

 threatening speedy rupture. The presidential 

 election of 1860 was the most exciting ever known 

 in the country, and the choice of Mr. Lincoln 

 was regarded in financial circles as almost cer- 

 tain to result in violent rupture of the Union. 

 The outbreak of the civil war, in April, 1861, 

 precipitated a panic in stocks, and, indeed, in 

 every security in the country, and at the same 

 time it had a paralyzing effect upon all business. 

 The number of stocks then actively dealt in on 

 the exchange was about 37, and the number of 

 members fewer than 250. Speculative interest 

 centered upon only a few of these stocks, notably 

 Harlem, Erie, Lackawanna, Michigan Southern, 

 Delaware and Hudson, Fort Wayne, Illinois Cen- 

 tral, and Ohio and Mississippi. There were oc- 

 casional wide fluctuations in some of these, and 

 one feature was the Harlem corner, which cul- 

 minated in June. 1864, when the price was forced 

 to 285. The rapid increase in the public debt 

 from $58,496,838 on Jan. 1, 1860, to $524,176,412 

 on the same date in 1862, and the expected author- 

 ization of an issue of $150,000,000 demand notes, 

 in addition to the $50,000,000 authorized by the 

 act of July 17, 1861, brought about a general sus- 

 pension of specie payments, and speculation in 

 gold began early in January, 1862. The move- 

 ments in it thereafter during the war were influ- 

 enced by the varying fortunes of the armies, by 

 the increase in the public debt, and by the issues 

 of paper currency by the Government. There 

 were minor crises following important battles 

 that resulted adversely to the national forces, and 

 sharp declines succeeding victories; and even after 

 the war was ended the speculation continued, at 

 times assuming large proportions, affecting im- 

 portant interests, and embarrassing the Govern- 

 ment. In April, 1864, the price of gold in currency 

 advanced to 171, and Secretary Salmon P. Chase, 

 regarding the advance as part of a conspiracy to 

 depress the credit of the Government, asked Hon. 

 Reverdy Johnson, chairman of the Senate Fi- 

 nance Committee, to introduce a bill prohibiting 

 speculation in gold. A measure having this ob- 

 ject in view passed the Senate April 16 and the 

 House June 14, and it was signed by President 

 Lincoln June 17. It forbade the making of con- 

 tracts for future deliveries of gold, or upon any 

 other terms than the actual deli very of the metal, 

 imposed severe penalties for violation of the law, 

 and declared void all contracts made contrary to 

 the act. While the bill was pending gold con- 

 tinued to advance, touching 190 in May and 197| 

 June 16. The dealings in the metal up to this 

 time were in the offices of the bullion dealers 

 Transactions then ceased there, but trading was 

 conducted upon the street, and by the end of 



June the price had reached 250. This continued 

 advance deranged all business operations based 

 upon gold throughout the country, and mem- 

 bers of Congress were petitioned to repeal the 

 gold bill. On June 22 Senator Reverdy John- 

 son introduced a bill to repeal the act. On 

 July 1 he obtained unanimous consent for its 

 consideration, asserting that the universal im- 

 pression was that the prohibitory law was doing 

 nothing but mischief ; a vote was taken without 

 debate, the bill passed the Senate, was sent to 

 and concurred in by the House, and was signed 

 by the President July 2. Then, speculation 

 in gold again being free, trading was resumed. 

 The price advanced July 11 to 285 the highest 

 on record influenced by the issue of new loans 

 and by manipulation. On the surrender of Gen. 

 Lee there was a sharp fall of 9 points, followed 

 by a rapid rise on the news of the assassination 

 of President Lincoln. Soon after the war the 

 speculation in stocks became an important 

 feature, stimulated by liberal additions to the 

 list, by the inflation of the currency, and by the 

 distribution of enormous stock dividends, and 

 the tone was generally buoyant. 



1868 to 1872. In 1868 the list of active 

 stocks embraced 108 issues. In that year the 

 operations of Messrs. Jay Gould, James Fisk, 

 Daniel Drew, Cornelius Vanderbilt, and Henry 

 Keep exerted an important influence upon the 

 speculation, and Erie stock began to be enor- 

 mously increased, causing wide fluctuations. 

 There" were corners in Erie, in Chicago and 

 Northwestern, and in Milwaukee and St. Paul. 

 The most important event of 1869 was the Black 

 Friday panic of Sept. 24, which resulted from 

 an attempt by Jay Gould to corner gold, which 

 rose to 162, and then rapidly fell to 133 because 

 of sales of the metal by the Government. Clear- 

 ings at the Gold Exchange bank were made 

 impossible, a receiver was appointed, and fail; 

 ures of stock houses occurred because of the 

 stringency in money and the consequent de- 

 rangement of business on the exchanges. The 

 panic was brief, but it left the market feverish, 

 and its influences were felt in the ensuing year 

 when the speculation was comparatively quiet. 

 The Chicago fire panic of Oct. 9, 1871, which 

 resulted in a loss of $150,000,000, caused a gen- 

 eral decline in stocks and the suspension of 

 several insurance companies. The Boston fire 

 panic, Nov. 10, 1872, had a brief unsettling ef- 

 fect, as also did the Northwest corner Nov. 23, 

 when the price of the stock was advanced to 

 230. The most sensational event of the year 

 was the arrest of Messrs. Gould and Smith in 

 the Erie suit, and the restitution by Mr. Gould 

 of about $9,000,000, claimed by the stockholders. 

 The market was in a state of tension at the end 

 of 1872, and speculators looked to the Treasury 

 Department for relief, expecting that some por- 

 tion of the $44,000,000 legal-tender notes in the 

 department would be reissued. 



Panic of 1873. In January the most im- 

 portant event was the formation of a syndicate 

 to negotiate the remaining 5-per-cent. United 

 States bonds. Manipulation of money in the 

 following month, which forced the rate to the 

 equivalent of 96 per cent, per annum, tempora- 

 rily disturbed the markets, and this manipula- 

 tion was renewed in April, when a rate equal to 



