Measures for Resumption

Meantime the New York banks had been vigorously contracting to prepare for resumption. Their issues were reduced from $25,480,000, HIST0RY 0F AMERICAN CURRENCY. January i, 1837, to $12,920,000, January 1, 1838. The exchanges turned and gold flowed in, the Bank of England sending ;£ 1,000,000, an act which Macleod vehemently condemns, seeing that the exchanges were adverse.* Early in 1838 Congress passed an act to forbid the Pennsylvania Bank of the United States from using old notes of the United States Bank: penalty, on the president or agents, fine not to exceed {$ 10,000, and imprisonment not less than one nor more than five years. Meantime, the bank, finding that it could sell its post notes in Europe, had issued more of them and made a business of it. April 15, 1838, a convention of 143 bankers met at New York, by invitation of the New York banks, to discuss resumption. The majority wanted to resume January 1, 1839, but the New York banks were under the compulsion of State law to resume May 10, 1838. They resumed on * In a sketch of the life of James G. King in the Merchants' Magazine for January, 1854, it is said that he negotiated this loan from the Bank of England to enable the American banks to resume ; and the object was the ultimate advantage from setting American business once more in operation.

HISTORY OF AMERICAN CURRENCY. that day, and nearly all the other banks in the Union, except those of Philadelphia, followed. Philadelphia bills were at a discount in New York, and prices were higher in Philadelphia than in New York. A balance of trade adverse to Philadelphia arose between the two cities, with a movement of specie from Philadelphia.* The New York legislature passed a bill in this year providing for securing banknotes by a deposit of stocks. A committee of New York merchants now gave a statement of the causes of the suspension far more correct to the facts than the one made in the first heat of excitement. " The immediate causes which compelled the banks of the city of New York to suspend specie payments on the ioth of May last are well known. The simultaneous withdrawing of the large public deposits, and of excessive foreign credits, combined with the great and unexpected fall in the price of the principal articles of our exports, with an import of corn and bread-stuffs, such as had never before occurred, and with the consequent inability of the * Condy Raguet, Currency and Banking.

7 146 HISTORY OF AMERICAN CURRENCY. country, particularly in the South-western States, to make the usual and expected remittances, did, at one and the same time, fall, principally and necessarily, on the greatest commercial emporium of the union." In July, 1838, the United States Bank called a convention of bankers at Philadelphia, at which it was agreed to resume August 12. The exampie of the banks which had resumed made it necessary for others to follow. Thus, at the end of 1838, the great majority of the banks throughout the country had resumed, at least nominally. The Bank of the United States had given as a reason for not resuming with the New York banks, that it was bound to consider its weaker brethren. All the questions between this bank and its enemies must be decided now in view of subsequent developments, which all went to show that the bank was at this time in no condition to perform its functions, but was working mischief.