Friday, May 10, 2013

May 10 (1837) NY Banks say paper (specie) not worth paper it's written on; Panic ensues


On this day, May 10 in 1837, New York banks stopped redeeming paper and coins (specie) at full face value. Depositors demanded to have their deposits withdrawn causing several bank failures. A depression followed that lasted until the 1843.

The above cartoon, created in 1837 by Edward Williams Clay and currently at the Library of Congress provides a commentary on the depressed state of the American economy, particularly in New York, during the financial panic of 1837. 

"The blame is laid on the treasury policies of Andrew Jackson, whose hat, spectacles, and clay pipe with the word "Glory" appear in the sky overhead. Clay illustrates some of the effects of the depression in a fanciful street scene, with emphasis on the plight of the working class. A panorama of offices, rooming houses, and shops reflects the hard times. The Customs House, carrying a sign "All Bonds must be paid in Specie," is idle. In contrast, the Mechanics Bank next door, which displays a sign "No specie payments made here," is mobbed by frantic customers. Principal figures are (from left to right): a mother with infant (sprawled on a straw mat), an intoxicated Bowery tough, a militiaman (seated, smoking), a banker or landlord encountering a begging widow with child, a barefoot sailor, a driver or husbandman, a Scotch mason (seated on the ground), and a carpenter. These are in contrast to the prosperous attorney "Peter Pillage," who is collected by an elegant carriage at the far right. In the background are a river, Bridewell debtors prison, and an almshouse. A punctured balloon marked "Safety Fund" falls from the sky. The print was issued in July 1837. A flag flying on the left has the sarcastic words, "July 4th 1837 61st Anniversary of our Independence."

http://en.wikipedia.org/wiki/File:The_times_panic_1837.jpg

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Flannery O'Connor

You shall know the truth and the truth shall make you odd.