1 8 Ira Ryner 



posedly the strongest of all, for the year preceding March, 1837, 

 the loans on stocks and other than personal security had increased 

 $7,821,541, while bills discounted on -personal security and do- 

 mestic exchange had actually decreased $9,516,463. The Girard 

 Bank of Pennsylvania had a discount line of six or seven mil- 

 lions, with scarcely two hundred thousand -dollars in active busi- 

 ness paper.^ Banks in general were in a very unsound condition. 



It is here in connection with banking that we have a typical 

 case of complicated action and reaction between causes and occa- 

 sions. The rapid launching of new railway enterprises, the ex- 

 tension of the cotton area, and the sale and improvement of west- 

 ern lands created a demand for increased banking facilities; 

 while, looking at the phenomenon from the other side, we see 

 that increased banking facilities would have a very strong ten- 

 dency to encourage -new business undertakings. There was un- 

 doubtedly such a series of reciprocal influences that neither of 

 the phenomena could be termed pure cause or pure result. 



That a part of the banks founded constituted an occasion is 

 evidenced by 'the fact that there was a maximum number of 

 banks during the crisis period as shown by the following table :^ 



1829 329 1839 840 



1834 506 1840 901 



1835 704 1841 784 



1836 713 1842 692 



1837 788 1843 691 



1838 829 1844 696 



In other words, a considerable surplus of banks was formed, 

 which were beyond the normal need of the times and destined 

 not to become a part of the permanent environment. 



July II, 1836. the specie circular was issued. It abolished the 

 system of credit land sales and provided that all payments for 

 land be made in specie. For the moment it checked the impulse 

 for speculation and aggravated the money stringency which had 

 already begun to be felt. As early as April, 1836, best New 

 York commercial paper was quoted at 30 and 40 per cent per 



^Sumner, History of Banking in the United States, 226. 

 ^Ht-wty, Financial History of the United States, 225. 



160 



