of property were destroyed, not one merchant failed; and she continues, “It seems now as if the commercial credit of New York could stand any shock short of an earthquake like that of Lisbon.” That was the prophecy of 1836. Where is the commercial credit of New York now in 1837?!!!
The distress for change has produced a curious remedy. Every man is now his own banker. Go to the theatres and places of public amusement, and, instead of change, you receive an IOU from the treasury. At the hotels and oyster-cellars it is the same thing. Call for a glass of brandy and water and the change is fifteen tickets, each “good for one glass of brandy and water.” At an oyster-shop, eat a plate of oysters, and you have in return seven tickets, good for one plate of oysters each. It is the same every where.—The barbers give you tickets, good for so many shaves; and were there beggars in the streets, I presume they would give you tickets in change, good for so much philanthropy. Dealers, in general, give out their own bank-notes, or as they are called here, shin plasters, which are good for one dollar, and from that down to two and a-half cents, all of which are redeemable, and redeemable only upon a general return to cash payments.
Hence arises another variety of exchange in Wall Street.
“Tom, do you want any oysters for lunch to-day?”
“Yes!”
“Then here’s a ticket, and give me two shaves in return.”
The most prominent causes of this convulsion have already been laid before the English public; but there is one—that of speculating in land—which has not been sufficiently dwelt upon, nor has the importance been given to it which it deserves; as, perhaps, next to the losses occasioned by the great fire, it led, more than any other species of over-speculation and over-trading, to the distress which has ensued. Not but that the event must have taken place in the natural course of things. Cash payments produce sure but small returns; but no commerce can be carried on by this means on any extended scale. Credit, as long as it is good, is so much extra capital, in itself nominal and non-existent, but producing real returns. If any one will look back upon the commercial history of these last fifty years, he will perceive that the system of credit is always attended with a periodical blow up; in England, perhaps, once in twenty years; in America, once in from seven to ten. This arises from their being no safety valve—no check which can be put to it by mutual consent of all parties. One house extends its credit, and for a time, its profits; another follows the example. The facility of credit induces those who obtain it to embark in other speculations, foreign to their business; for credit thus becomes extra capital which they do not know how to employ. Such has been the case in the present instance: but this is no reason for the credit system not being continued. These occasional explosions act as warnings, and, for the time, people are more cautious: they stop for a while to repair damages, and recover from their consternation; and when they go a-head again, it is not quite so fast. The loss is severely felt, because people are not prepared to meet it; but if all the profits of the years of healthy credit were added up, and the balance sheet struck between that and the loss at the explosion, the advantage gained by the credit system would still be found to be great. The advancement of America depends wholly upon it. It is by credit alone that she has made such rapid strides, and it is by credit alone that she can continue to flourish, at the same time that she enriches those who trade with her. In this latter crisis there was more blame to be attached to the English houses, who forced their credit upon the Americans, than to the Americans, who, having such unlimited credit, thought that they might advantageously speculate with the capital of others.
One of the most singular affections of the human mind is a proneness to excessive speculation; and it may here be noticed that the disease for (such it may be termed) is peculiarly English and American. Men, in their race for gain, appear, like horses that have run away, to have been blinded by the rapidity of their own motion. It almost amounts to an epidemic, and is infectious—the wise and the foolish being equally liable to the disease. We had ample evidence of this in the bubble manias which took place in England in the years 1825 and 1826. A mania of this kind had infected the people of America for two or three years previous to the crash: it was that of speculating in land; and to show the extent to which it had been carried on, we may take the following examples:—
The city of New York, which is built upon a narrow island about ten miles in length, at present covers about three miles of that distance, and has a population of three hundred thousand inhabitants. Building lots were marked out for the other seven miles; and, by calculation, these lots when built upon, would contain an additional population of one million and three-quarters. They were first purchased at from one hundred to one hundred and fifty dollars each, but, as the epidemic raged, they rose to upwards of two thousand dollars. At Brooklyn, on Long Island, opposite to New York, and about half a mile distant from it, lots were marked out to the extent of fourteen miles, which would contain an extra population of one million, and these were as eagerly speculated in.
At Staten Island, at the entrance into the Sound, an estate was purchased by some speculators for ten thousand dollars, was divided into lots, and planned as a town to be called New Brighton; and had the whole of the lots been sold at the price for which many were, previous to the crash, the original speculators would have realised three million of dollars. But the infatuation was not confined to the precincts of New York: every where it existed. Government lands, which could only be paid for in specie, were eagerly sought after; plans of new towns were puffed up; drawings made, in which every street was laid down and named; churches, theatres, hospitals, rail-road communications, canals, steam-boats in the offing, all appeared on paper as if actually in existence, when, in fact, the very site was as yet a forest, with not a log hut within a mile of the pretended city. Lots in these visionary cities were eagerly purchased, increased daily in value, and afforded a fine harvest to those who took advantage of the credulity of others. One man would buy a lot with extensive water privileges, and, upon going to examine it, would find those privileges rather too extensive, the whole lot being under water. Even after the crisis, there was a man still going about who made a good livelihood by setting up his plan of a city, the lots of which he sold by public auction, on condition of one dollar being paid down to secure the purchase, if approved of. The mania had not yet subsided, and many paid down their dollar upon their purchase of a lot. This was all he required. He went to the next town, and sold the same lots over and over again.
To check this madness of speculation, was one reason why an act of Congress was passed, obliging all purchasers of government lands to pay in specie. Nevertheless, government received nine or ten millions in specie after the bill passed. Now, when it is considered what a large portion of the capital drawn from England was applied to these wild speculations—sums which, when they were required, could not be realised, as, when the crisis occurred, property thus purchased immediately fell to about one-tenth of what was paid for it—it will be clearly seen that, from this unfortunate mania, a great portion of the present distress must have arisen.
The attempt of General Jackson and his successors, to introduce a specie currency into a country which exists upon credit, was an act of folly, and has ended in complete failure. (See note 1.) A few weeks after he had issued from the Mint a large coinage of gold, there was hardly an eagle to be seen, and the metal might almost as well have remained in the mine from whence it had been extracted. It was still in the country, but had all been absorbed by the agriculturists; and such will ever be the case in a widely extended agricultural country. The farmers, principally Dutch, live upon a portion of their produce and sell the rest. Formerly they were content with bank bills or Mexican dollars, which they laid by for a rainy day, and they remained locked up for years before they were required. When the gold was issued, it was eagerly collected by these people, as more convenient, and laid by, by the farmers’ wives, in the foot of an old worsted stocking, where the major part of it will remain. And thus has the famous gold-currency bill been upset by the hoarding propensities of a parcel of old women. (See note 2.)
Note 1. One single proof may be given of the ruinous policy of the Jackson administration in temporising with the
