Page:A History of Banking in the United States.djvu/479



CHAPTER XVI.—

§ 2.—The Banks at the Outbreak of the Civil War; 1860 to 1863.

"The year 1860 will long be remembered as one of the most extraordinary of the century in its commercial and financial features. No previous year has exhibited stronger indications of prosperity amongst merchants, manufacturers', capitalists and the great agricultural interests of the country at large. We speak of these in their aggregates." The crops of hay, corn, wheat, cotton and tobacco were all large. "The only speck in the horizon is the threat of secession in the South."

At the beginning of October there was a very active bull market for stocks. Railroad earnings were large and stocks showed a great advance from the prices at the beginning of the year. There was some reaction against this, and disappointment at results on the western railroads, before the political influences began to have effect. The Pennsylvania election early in October indicated the probability of Lincoln's election. At the end of the month the bears prevailed. In November a contraction of credit took place. In Virginia, Georgia, and South Carolina the restrictive laws on banks were repealed or relaxed, in preparation for revolution. On the 20th and following days the banks of Virginia, North Carolina, Georgia, Charleston and St. Louis suspended. They were followed by those of Baltimore and Philadelphia. At the last city there was an important run on the banks. The suspension of the Philadelphia banks caused that of the banks of West Jersey. On the 12th there was a panic on the New York stock market, with a decline of 8 to 12 points on the price of stocks.

The New York banks determined on a policy of freer loans in order to quell the panic. At a meeting, November 21, it was agreed that the clearing house should appoint a committee who should receive and hold New York or United States securities, and issue thereon certificates for