The panic of 1873, so far as it resulted from contraction, had its main origin abroad, not in America, so that its subordinate causes were generally looked upon as its sole occasion; yet these bye causes were important. The shocking destruction of wealth by fires and by reckless speculation, of course, had a baneful effect. During 1872 the balance of trade was strongly against the United States. The circulation of depreciated paper money had brought to many an apparent prosperity which was not real, leading to the free creation of debts by individuals, corporations, towns, cities, and States. An unprecedented mileage of railways had been constructed. Much supposed wealth consisted in the bonds of these railroads and of other new concerns, like mining and manufacturing corporations. Thus the entire business of the country was on a basis of inflation, and when contraction came disaster was inevitable.

In the course of the summer solid values began to be hoarded and interest rates consequently to rise. In August there was a partial corner in gold, broken by a government sale of $6,000,000. In September panic came, with suspension of several large banking-houses in New York. Jay Cooke & Co., who had invested heavily in the construction of the Northern Pacific Railway, suspended on September 18th. When authoritative news of this event was made known in the Stock Exchange a perfect stampede of the brokers ensued. They surged out of the Exchange, tumbling pell-mell over each other in the general confusion, hastening to notify their respective houses. Next day, September 19th, Fiske & Hatch, very conservative people, went down.

September 19th was a second Black Friday. Never since the original Black Friday had the street and the Stock Exchange been so frantic. The weather, dark and rainy, seemed to sympathize with the gloom which clouded the financial situation. Wall, Broad and Nassau streets were thronged with people. From the corner of Wall Street and Broadway down to the corner of Hanover Street a solid mass of men filled both sidewalks. From the post-office along Nassau Street down Broad Street to Exchange Place another dense throng moved slowly, aimlessly, hither and thither. Sections of Broadway itself were packed. Weaving in and out like the shuttles in a loom were brokers and brokers' clerks making the best speed they could from point to point. All faces wore a bewildered and foreboding look. To help them seem cool, moneyed men talked about the weather, but their incoherent words and nervous motions betrayed their anxiety. The part of Wall Street at the corner of Broad Street held a specially interested mass of men. They seemed like an assemblage anxiously awaiting the appearance of a great spectacle. High up on the stone balustrade of the Sub-Treasury were numerous spectators, umbrellas sheltering them from the pelting rain as they gazed with rapt attention on the scene below. All the brokers' officers were filled. In each, at the first click of the indicator, everybody present was breathless, showing an interest more and more intense as the figures telegraphed were read off.

It was half-past ten in the morning when the Fiske & Hatch failure was announced in the Stock Exchange. For a moment there was silence; then a hoarse murmur broke out from bulls and bears alike, followed by yells and cries indescribable, clearly-audible on the street. Even the heartless bear, in glee over the havoc he was making, paused to utter a growl of sorrow that gentlemen so honorable should become ursine prey. The news of the failure ran like a prairie fire, spreading dismay that showed itself on all faces. Annotators of values in the various offices made known in doleful ticks the depreciation of stocks and securities. Old habitués of the exchanges, each usually placid as a moonlit lake, were wrought up till they acted like wild men.

At the corner of Broad Street and Exchange Place a delirious crowd of money-lenders and borrowers collected and tried to fix a rate for loans. The matter hung in the balance for some time until the extent of the panic became known. They bid until the price of money touched one-half of one per cent. a day and legal interest. One man, after lending $30,000 at three-eighths per cent., said that he had $20,000 left, but that he thought he would not lend it. As he said this he turned toward his office, but was immediately surrounded by about twenty borrowers who hung on to his arms till he had agreed to lend the $20,000.

The Stock Exchange witnessed the chief tragedy and the chief farce of the day. Such tumult, push and bellowing had never been known there even in the wildest moments of the war. The interior of the Exchange was of noble altitude, with a vaulted top, brilliantly colored in Renaissance design that sprang upward with a strength and grace seldom so happily united. A cluster of gas-jets, hanging high, well illuminated the enclosure. On the capacious floor, unobstructed by pillars or by furniture, save one small table whereon a large basket of flowers rested, a mob of brokers and brokers' clerks surged back and forth, filling the immense space above with roars and screams. The floor was portioned off to some twenty different groups. Here was one tossing "New York Central" up and down; near by another playing ball with "Wabash"; "Northwestern" jumped and sank as if afflicted with St. Vitus's dance. In the middle of the floor "Rock Island" cut up similar capers. In a remote corner "Pacific Mail" was beaten with clubs, while "Harlem" rose like a balloon filled with pure hydrogen. The uninitiated expected every instant to see the mob fight. Jobbers squared off at each other and screamed and yelled violently, flinging their arms around and producing a scene which Bedlam itself could not equal.

Behind the raised desk, in snowy shirt-front and necktie, stood the president of the Exchange, his strong tenor voice every now and then ringing out over the Babel of sounds beneath. The gallery opposite him contained an eager throng of spectators bending forward and craning their necks to view the pandemonium on the floor. The rush for this gallery was fearful, and apparently, but for the utmost effort of the police, must have proved fatal to some. Excitement in Wall Street not infrequently drew crowds to the main front of the Exchange; but hardly ever, if ever before, had the vicinity been so packed as now. Two large blackboards exhibited in chalk figures the incessantly fluctuating quotations. Telegraph wires connected the Exchange with a thousand indicators throughout the city, whence the quotations, big with meaning to many, were flashed over the land.

The first Black Friday was a bull Friday; the second was a bear Friday. Early in the panic powerful brokers began to sell short, and they succeeded in hammering down from ten to forty per cent. many of the finest stocks like "New York Central" "Erie," "Wabash," "Northwestern," "Rock Island," and "Western Union." They then bought to cover their sales. Bull brokers, unable to pay their contracts, shrieked for margin money, which their principals would not or could not put up. They also sought relief from the banks, but in vain. It had long been the practise of certain banks, tho contrary to law, early each day to certify checks to enormous amounts in favor of brokers who had not a cent on deposit to their credit, the understanding in each case being that before three o'clock the broker would hand in enough cash or securities to cancel his debt. The banks now refused this accommodation. In the Exchange, eighteen names were read off of brokers who could not fulfil their contracts. As fast as the failures were announced the news was carried out on the street. In spite of the rain hundreds of people gathered about the offices of fallen reputation, and gazed curiously through the windows, trying to make out how the broken brokers were behaving. Toward evening, as the clouds lifted over Trinity spire, showing a ruddy flush in the west, everybody, save some reluctant bears, said, "The worst is over," and breathed a sigh of relief. The crowd melted, one by one the tiny little Broadway coupés rattled off, one by one the news-boys ceased shrieking, and night closed over the wet street.

In deference to a general wish that dealings in stocks should cease, the Exchange was shut on Saturday, September 20th, and not opened again till the 30th. Such closure had never occurred before. On Sunday morning President Grant and Secretary Richardson, of the Treasury, came to New York, spending the day in anxious consultation with Vanderbilt, Clews, and other prominent business men.

Had the Secretary of the Treasury acted promptly and firmly he might have relieved the situation much; but he vacillated. Some $13,500,000 in five-twenty bonds were bought, and a few millions of the greenbacks which Secretary McCulloch had called in for cancellation were set free. But as Mr. Richardson announced no policy on which the public could depend, most of the cash let loose was instantly hoarded in vaults or used in the purchase of other bonds then temporarily deprest, so doing nothing whatever to allay the distress. On the 25th the Treasury ceased buying bonds. The person who, at the worst, sustained the market and kept it from breaking to a point where half of the street would have been inevitably ruined, was Jay Gould, mischief itself on the first Black Friday, but on this one a blessing. He bought during the low prices several hundred thousand shares of railroad stocks' principally of the Vanderbilt stripe, and in this way put a check on the ruinous decline.

The national banks of New York weathered this cyclone by a novel device of the Clearing-house or associated banks. They pooled their cash and collaterals into a common fund, placed this in the hands of a trusty committee, and issued against it loan certificates that were receivable at the Clearing-house, just like cash, in payment of debit balances. Ten million dollars' worth of these certificates was issued at first, a sum subsequently doubled. This Clearing-house paper served its purpose admirably. By October 3d confidence was so restored that $1,000,000 of it was called in and canceled, followed next day by $1,500,000 more. None of it was long outstanding. The Clearing-house febrifuge was successfully applied also in Boston, Philadelphia, Pittsburgh and other cities, but not in Chicago.

The panic overspread the country. Credit in business was refused, debtors were prest for payment, securities were rushed into the markets and fell greatly in price. Even United States bonds went down from five to ten per cent. There was a run upon savings-banks, many of which succumbed. Manufactured goods were little salable, and the prices of agricultural products painfully sank. Factories began to run on short time, many closed entirely, many corporations failed. The peculiarity of this crisis was the slowness with which it abated, tho fortunately its acute phase was of brief duration. No date could be set as its term, its evil effects dragging on through years.

1 From Andrews's "History of the Last Quarter-Century of the United States." By permission of the publishers, Charles Scribner's Sons. Copyright, 1895, 1896.
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