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Bank of England Assists New York to Resume Specie Payment (1838)

Massachusetts Historical Society Proceedings of the Massachusetts Historical Society (10/1/1861)

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[Proceedings of the Massachusetts Historical Society, First Series Vol. 5, page 289-290]

"Whilst these bills could be discounted by the Bank of England, all went smoothly; and the system went on until the amount of the accommodation-bills, drawn upon nothing, became excessive. The Bank of England became alarmed at the amount, and refused to discount them.

"The failure of several large houses took place; others could only be saved by large remittances from America. This demand produced a call on the banks for specie; a violent pressure upon the money-market took place; a number of failures wholly unprecedented occurred in New York; the panic was tremendous; and at length, after a struggle of a month, the banks of New York yielded to the storm, and suspended specie payments, about the 1st of April, 1837. The banks throughout the whole country followed suit with great joy and alacrity. I was in Europe at the time, but returned in September, 1837. The banks of New York had got from the Legislature an extension of this suspension for a year; which expired in May, 1838. A call was made for a convention to meet in New York in April, to consider the subject of a general resumption. In November, 1837, I commenced a series of four numbers in the "Boston Daily Advertiser," advocating an early resumption of specie payments, and the sending delegates to the proposed convention at New York. The idea of resumption cause great alarm, and met with much opposition; but it was agreed to send delegates to the convention. I was, however, carefully excluded, as too radical in favor of resumption. Philadelphia, under the influence of Mr. Biddle, was utterly opposed to resumption, and persuaded Boston to go with her. Under the influence of Mr. Gallatin and Mr. Ward (of Prime, Ward, and King), the Legislature of New York was prevented granting a further extension; and the banks of New York actually resumed about the 1st of May. To assist the resumption, at the suggestion of James G. King, then in England, the Bank of England sent out by him a million of sovereigns, to be remitted for in bills of exchange then below par; under the influence of which, both Boston and Philadelphia resumed soon after.

"I was in Philadelphia about this time, and had a conversation with Mr. Biddle, in the course of which I was exceedingly disgusted with the views which he expressed. There can be but little doubt that he contemplated compelling the New-York banks again to suspend, and was in fact defeated by this timely supply of gold from the Bank of England.

"in 1840, Mr. Clay determined to bring forward his project for another Bank of the United States. I published, with my name, a pamphlet on "Currency and Banking," one motive of which was to show the danger from an institution of so great power. I had become satisfied, from my own observation, that it was a power too great to be entrusted to any one man.

"in 1839 (October), the Bank of the United States, acting under its Pennsylvania charter, again suspended payment, and proved desperately insolvent; carrying with it the Philadelphia banks, who foolishly involved themselves in its fortunes, from which they were only relieved by a large loan from Boston and New York. In arranging this loan, I took a leading and active part. Philadelphia did resume in consequence, on the 15th of January, 1841; but the Bank of the United States broke down after ten days" trial. The other banks of Philadelphia again followed suit, and did not finally resume until ----.

"During all this period, from 1837, I was frequently writing for the newspapers in Boston and Philadelphia, urging upon Philadelphia and the South to restore their currency."

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