When the news of the firing upon Fort Sumter aroused the North, all
eyes were turned upon New York, not only as the monetary center of the
country, but as a city most closely allied in financial interests with
the South. The moneyed men of that city responded to the country’s
danger. Upon the stock exchange cheers were given for Major Anderson,
and April 17, 1861, resolutions were passed pledging the loyalty of
the institution to the government. Anderson and his command from Fort
Sumter reached New York on April 18, and on Saturday, April 20, a
monster mass-meeting was held in Union Square, where five speaker’s
stands had been erected. The resolutions adopted at this meeting not
only pledged the loyalty of the city, but provided for a Union Defense
Committee, comprising thirty of the most prominent financiers and
bankers headed by General John A. Dix, recently secretary of the
treasury under President Buchanan. The mayor and the comptroller of
the city were ex-officio members of this committee. The city council
appropriated $1,000,000 for the immediate needs of the New York
troops, and raised the funds by the sale of Union Defense bonds. The
Committee of Union Defense acted ex-officio as a federal agent,
attending to the equipment and dispatching of regiments, purchasing
steamers for transportation, feeding and sheltering the troops,
without waiting for the action of the federal authorities. At one time
three members of the committee were entrusted with $2,000,000 federal
money without security or compensation. By these means the Seventh New
York
Regiment was dispatched for the protection of Washington, and other
troops were moved toward the front. The Union Defense Committee was
maintained for about one year. Its later duties were concerned with
the care of funds raised for the benefit of the volunteers and their
families. It collected and disbursed for this purpose about
$1,000,000.
Meanwhile the city banks were loyally endeavoring to prevent a
financial crisis. April 25, 1861 they determined to hold all their
specie as a common fund, this being a precautionary measure to sustain
public confidence. There were in New York City fifty-four banks with a
capital of $69,907,000. Much of their paper was held in the southern
states, where debts to northern holders were quickly repudiated.
Nevertheless, in the entire state of New York only five banks
suspended during 1861, and none of these in New York City.
Following the example of New York, the banks of Boston and
Philadelphia pooled all their cash reserves. The Boston banks, of
which there were forty-two, with a capital of $38,231,000, and which
had a clearing-house system, aided in preventing an immediate panic.
Western banks were less well prepared to meet the emergency. Most of
them held southern state bonds as the basis of their currency system.
During 1861 bank after bank went to the wall, and the notes of others
depreciated with startling rapidity.
All the banks of that period were either state banks or private
banking concerns. The national banking-system did not come into being
until 1863. The first (though indirect) aid furnished by the banks in
the national crisis of 1861 was the preservation of their own
integrity, and therewith the entire credit system of the North, from
collapse. This was accomplished through the instrumentality of the
banks of the three chief cities of the East--New York, Boston, and
Philadelphia. In the West, a few banks in Cincinnati, Chicago, and
Milwaukee were strong enough to support the situation, even while the
larger part of the western banks went to the wall.
The direct aid furnished by the banks and bankers of the country to
the state and federal governments during the early years of the Civil
War may be classified under the three heads of contributions, loans,
and agencies.