until May 10th, 1838, without any violation of their charters. In August, 1838, the banks of Philadelphia resumed specie payments; and by the 1st of January, 1839, there was at least a nominal resumption of specie payments throughout the Union. From 1837 to 1841 there was great distress among the people of the country, especially in the well-settled Eastern states. Prices were abnormally high, and inflated land values in the Western states and territories collapsed as the currency depreciated. Although business throughout the country was revived slightly in 1838-9, the weak and crippled condition of the banks in general made them easy victims to the so-called "after panic of 1839." The immediate cause of this after panic was the failure of the United States Bank of Pennsylvania, immediately followed by the suspension of all the banks of Philadelphia. By the end of the year 1839 out of 957 banks and branches in the United States 343 of these had suspended ' specie payments entirely, 62 in part, and 56 had failed; during that year only 48 of the suspended banks had resumed specie payments, The State Bank of Missouri did not suspend specie payments on its own notes, but as it traded on the notes of other Western banks, it became an issuer of inconvertible paper money. The banks of Rhode Island soon resumed specie payments. The banks of South Carolina resumed specie payments in July, 1840, and all the other banks to the South and West of New York, with the exception of East Jersey and a few scattered banks of different places continued to refuse specie on demand. On January 15th, 1841, the banks of Philadelphia resumed specie payments and sustained them for about twenty days. They then for the fourth time suspended specie payments and did not resume again until the 10th of March, 1842. In November, 1839, the State Bank of Indiana suspended specie payments, but left it to the discretion of the branches as to whether they should suspend specie payments or not. During the year 1840, ten of the branches did not uniformly I Report of Secretary of Treasury, January 8, 1840. pay specie upon their notes and it is probable that the other three branches would have refused to pay specie if their notes had been presented in any large amounts by people from without the state. This bank resumed specie payments in accordance with an act of the Legislature on June 15th, 1842, and never defaulted again. By an act of special session of the Legislature of Illinois, the State Bank of Illinois was authorized on the 10th of July, 1837, to suspend specie payments without forfeiture of its charter. This was to continue in force until the next special or general session of the Legislature. It was necessary that certain provisions should be followed by the banks in order that this suspension should be legalized. They were to make no dividends before resuming specie payments; nor to dispose of any specie except for change and for no sums over five dollars; make monthly returns to the Governor ; not increase its circulation beyond the amount of the capital stock actually paid in; receive and pay out any funds belonging to the state free of charge and to allow such of its debtors as were citizens or residents of the state of Illinois to pay their debts in installments of 10 per cent., upon their executing new notes with approved security. They were to surrender their charter if any of these conditions were violated. Before December, 1838, they had all resumed specie payments. In 1839 the suspension of specie payment was again legalized against the Governor's recommendation to the contrary. The conditions of suspension were the same as those of 1837. In January, 1841, the condition of suspension of specie payment was legalized until January 1st, 1843. But by that time the affairs of the bank had reached such a state that it was necessary to pass a law to close up its business. In 1842 the condition of affairs was such that there were 32,899 applications for the benefit of the bankrupt act in the United States, excluding North Carolina, Louisiana, Western Mississippi and the Territory of Iowa. Of these 34 were discharged. The condition of the people of the United States subsequent to the panic of 1837 and 1839 was deplorable. The North American Review for January, 1844, fully described their condition: In some of the new states, it was difficult even for the wealthy to obtain money for the daily uses of life. We have heard of farmers, owning large and well-stocked farms, who could hardly get money enough to pay postage on a letter. They had scarcely any currency, and most of that which they had was bad. In the commercial states, matters were but little better. Failures were almost innumerable. Trade had fallen off, and, when prosecuted, was hazardous. A deep gloom settled upon men's minds. * The physical means of making payment of their debts were wanting in some states, for there was no money to be had. 6 The Standard of February 19, 1840, in an article on Tinkering with the Currency" gives a graphic description of the general condition of the Territory as viewed by a Whig newspaper: "This Territory has not passed unscathed through the disastrous revulsions which have followed so close upon the track of the Administration upon the country. You were not affected by the evils following from the Tinkering with the Currency' as soon as the older sections of the country, but you felt its withering blight none the less forcibly. It lost none of its power from the distance, which intervenes between our beautiful Territory and the commercial emporiums of our nation. You have felt the effects in the scarcity of money and the low price of the productions of the prolific soil of our Territory, and you have seen in the Tinkering with the Currency' the effects in the check which emigration has received." The condition of the farmers of Iowa in part is told in a communication in the Iowa Standard of March 3, 1840: "We are many of us in debt. We came here some two, some six years ago to settle upon land that was not in the market and was not expected to be for some time after we were settled. By the opening of the Government Land offices for the sale of the land we are now obliged to borrow money at from 25 1 Of Bloomington, Iowa. L per cent. to 75 per cent., and pledge our homes for the payment of these debts. The prices of all products are low and it is almost an impossibility to sell enough of them to pay the taxes upon our property." 7. Suspension of Specie Payment by the Miners' Bank. The Miners' Bank of Dubuque formally suspended specie payments on March 29, 1841, by the official adoption by the directors of a preamble and series of resolutions. These state the condition of the bank and the reasons for its suspension. From the resolutions it is found that it was the intention of the bank to have continued specie payments; and that it would have been "entirely convenient" for the bank to have redeemed the amount of outstanding notes that would have returned to it in the course of its ordinary business. But the course pursued by a large banking firm in St. Louis forbade its carrying out its original intentions. While discrediting the notes of the Miners' Bank in St. Louis this firm purchased the notes in large quantities and demanded specie for them, using it for "speculation purposes." The directors deemed this an advantage to a few persons but a detriment to the bill holders at large, as well as making it an expensive operation for the bank to maintain the resumption of its notes in specie. Therefore, out of regard for its own, as well as its creditors' interests, the bank declined to pay specie upon its notes, "except in small amounts as shall be required for the convenience of transacting business." The directors stated that there was "no wellfounded cause for alarm upon the part of the bill-holders, as regards the ultimate ability and disposition of this bank to redeem its liabilities." In the resolutions they call attention to the statement of the condition of the bank which has been prepared "with a particular regard to the accuracy in setting forth the amount of Liabilities and Assets of this bank." They promise to publish a quarterly statement of the bank's condition, during the suspension of specie payments, for the 1 Iowa Standard, April 16, 1841. |