PANIC OF 1857

PANIC OF 1857. At the beginning of 1857 banks had invested in businesses that were failing, and this was causing the American people to panic. Investors were losing heavily in the stock market and railroads were unable to pay their debts. Land speculators who had counted on the construction of new railroad routes were losing money. People feared financial ruin. They ran to the banks to withdraw their money, but the banks did not deal in paper money. They used silver and gold. With their failed investments, it was impossible for the banks to gather all the gold their customers demanded.

The financial rescue lay below the decks of the ship “Central America” which was bringing millions of dollars of needed gold to shore up eastern banks. On August 24, 1857, however, the ship was sunk by a violent hurricane off the cost of Florida. The country, whose banks were now powerless, was plunged into the Panic of 1857.

On August 24, 1857, the New York branch of the Ohio Life Insurance and Trust Company failed. Soon all across the nation, banks began to collapse. The Panic of 1857 led to a severe economic depression in the United States that lasted three years. (1)

In October, 1857, economic panic which had swept the rest of the country struck this city.

The houses of Flaven & Co., Flinn & Bro. and A. C. Pearson suspended. Mass meetings of citizens decided it prudent for the harbor companies to issue post notes to relieve the situation. Later Cameron & Fry and Kemler & Cannon suspended. In January, 1858, Gray & Waldron and C. W. Arthur closed business. (2)

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Source:

1. "S. S. Central America," http://en.wikipedia.org/wiki/SS_Central_America

2. Oldt, Franklin T., History of Dubuque County Iowa. Chicago: Goodspeed Historical Association, 1880. http://www.ebooksread.com/authors-eng/franklin-t-oldt/history-of-dubuque-county-iowa-being-a-general-survey-of-dubuque-county-histor-tdl/page-14-history-of-dubuque-county-iowa-being-a-general-survey-of-dubuque-county-histor-tdl.shtml