SHOWING WHAT A PANIC IS—ITS CAUSES—ITS BEGINNING—ITS ADVANTAGES,
AND ITS CONSEQUENCES.—WITH THE AUTHOR’S LEAVE-TAKING.
A panic is one of those things in nature, which have existence without
entity—something which may be felt, but can neither be traced nor
followed. It has the power of motion and flight exceeding that of all
cognoscible beings—for it can pass from city to city, on the wings of
a single rumor. It has the power of making itself invisible, and can
stalk through the streets in the day time unseen, frightening every
body by its presence. It has the advantage of Archimedes’ lever, for
it has a fulcrum in the credulity of the man; and you may easily turn
the world upside down with it. It is, in fact, a kind of moral element,
and, like the fire, a single spark may kindle into a conflagration,
which the whole nation cannot extinguish; and it must be left to go out
of itself, when it has no more fuel to nourish it. It may be called
forth by a whisper, but a multitude cannot bind it. It is, therefore,
one of the most important of agents, but like fire also it is dangerous
to handle. It is a very good servant, but a very hard master, and
sometimes consumes those who kindle it.
A PANIC—WHAT IS IT?
The causes of panic, must not be sought for among natural phenomena—no
science of alchymy is necessary to compound it. It may be made up of
truth, composed of falsehood, or combined from both. It may be produced
by hatred, jealousy, or envy. It may arise from curiosity, or the love
of the marvellous, or, from a more villainous cause still, the desire
to profit by its effects. And with this knowledge of its causes, if men
were wise, they would give less heed to it.
The beginning of a panic in a small country town, is usually indicated
by the doctor’s riding through the village, without stopping to
recognise his acquaintance, or an old woman hastily putting on her
shawl, to run across the street to her neighbors.
What could it be for? says one.
Sure enough _what could_ it be for? says another.
A PANIC IN THE COUNTRY.
Don’t you think there is some bad disease about? says a third, and
before long, the interrogatory assumes the shape of a declaration, and
if not explained, and in less than a week, half the people of the town
are sick, through fear that they may be worse.
What is Mrs. Toddle running about the street for? says one.
I expect she has gone to enquire about the school mistress. Says
another.
I expect the school mistress will run away with that fellow yet, says
a third, (she ran away once herself.) And before the week is out, the
whole neighborhood is in a panic, for fear the school mistress should
run away, and their dear daughters be corrupted, by her example—while
the innocent subject of their fears is attending to her duties, all
unconscious of the commotion she has occasioned.
PANICS AND PANIC MAKERS.
In great commercial cities, a panic is a different thing, and first
indicates its approach in a different way. The subjects to which it
generally points, are politics, and money, chiefly the latter, and
never the first, except as it may have a bearing on the last. Like
great and pestilent diseases, it generally has premonitory symptoms,
which commonly exhibit themselves in plethora, and a wasteful
indulgence in luxury. And like those diseases also, it never attacks
or alarms those of regular habits, and an equal mode of living. In the
city there are regular panic makers! some of them work on their own
account, as Donald said he fought, when it was found that he had killed
more of his own clan, than of their enemies—and some of them work for
hire, as the penny-a-liners do, in fabricating marvellous stories; and
hence the opportunity and inducement for making panics in the city, far
exceed those in the country.
Political panics, and money panics, are like electric bodies, one is
positively charged, the other negatively, and the effect of this kind
is, that when they approach each other, they produce an explosion, like
the breaking of the Banks, &c. These are properly termed compound. A
simple panic is more harmless, and like the Simoon, if a man can stand
still, and hold his breath, it will pass by without harming him.
There is also another kind, called natural panics. These are such
as sometimes happen in churches, theatres, &c.—and, although they
have nothing to do with the subject about which I am writing, yet a
description of one of them may aptly illustrate the reasonableness of
the others.
NATURAL PANICS—A RUSH.
When I was a young man, I went to a popular lecture in an old wooden
church, which was very much crowded. During the service, as it appeared
afterwards, some boys without, threw a handful of small gravel stones
against the clap-boarding of the house, which made such a rattling,
that a general rush took place, and the church was tenantless in less
than a minute. Imagination pictured to some the tumbling walls. The
noise of the rush, stunned every one. Some smashed the windows, and
leaped to the ground, others, and some of them females, impatient to
reach the door, and as they supposed a place of greater safety, strode
over the heads of the dense crowd, making the most grotesque figures
imaginable. Some were trodden down, but none were killed; and when
all were safely out, with the exception of crushed hats, torn shirts,
sore bones, and lost reticules, the enquiry began to be made, what has
happened? I don’t know says one. Did you see any thing? asked another?
No—did you? No—Nor I, said a fourth, and a fifth—and when all were
satisfied that nothing had really happened, except a fright, they
began, one by one, to approach the house again, and cautiously peeping
in at the door, lest the walls might suddenly tumble about their heads,
they saw the light burning brightly, and the honest clergyman sitting
in his desk, the only man in the house, convulsed with laughter, at the
fright of his late audience.
And so, when a panic comes in Wall-street, if any man will take a
position, a little above the heads of the multitude, where he can see
their folly, he may safely enjoy a hearty laugh, instead of suffering a
fright.
A money panic, in the city, sometimes begins with a mere question of
doubt, as, what do you think of the condition of the banks? and this
question, handed from one to another, assumes new shapes, and gathers
strength and importance as it flies.
A MONEY PANIC.
Sometimes, it begins with a rattling noise, like the movement of
specie, upon which the panic makers immediately conjure up the ghost
of an earthquake, that is about to take place. Sometimes it is the
price asked, or the refusal of a broker to buy a foreign bank note,
for which he has no current money to give in exchange, which runs from
mouth to mouth, and from hand to hand, until half the people in the
town think their bank notes are worthless; and they will put them off
for apothecary’s physic, rather than keep them. And sometimes it is the
mere sympathy of suspicion, when every man suspects his neighbor to be
in possession of some secret, which he is not. And all, or any one of
these causes, is sufficient to make three fourths of the population of
the town tumble over each other in fright, while the rest laugh, and
scramble after the loose coppers, which they may let fall in the fray.
HOW IT WORKS.
When a panic proceeds from any matter of fact, it is commonly such as
this. The bank turns away some bad customer, who then spreads a report,
that the banks are “very short;” when, immediately, every one applies
for twice as much as he wants. In Wall-street phrase, “The offerings
become very large,” and then they all fight and jostle each other, to
see who shall stand first at the counter.
These are the incipient stages, which follow the first symptoms. Its
increase is only a multiplication and enlargement of the same things;
but when it is at its height, there is the greatest fun and fright,
frolick and fight, imaginable. But as I cannot get up a pantomime show
on paper, I will only relate a few anecdotes of actual occurrence, by
way of illustration.
MONSIEUR IN A FRIGHT.
In the panic of 1837, a merchant of high standing in Broad-street,
was indebted to a son of Johnny Crapeau, in the sum of three thousand
dollars, money deposited with him on interest. One morning, while the
merchant was busily engaged in his correspondence, Johnny came in in
great trepidation, and announced the object of his visit, by saying;
“Monsieur, I ver much want dat moneys _que vous me devez_.”
Ah! I thought it was to remain, we have paid you interest for it, when
it was of no use to us.
“Eh! mon Dieu! I shall lose.”
“If you are alarmed for its safety, we have no objection to paying you.”
“Sare, I must have.”
The merchant directed a check to be drawn, for the principal and
interest, which he handed to him, with a receipt for his signature.
“What is dis, monsieur?”
“That is a check for the money.”
“Den you pay?”
“Yes, you demanded your pay.”
“Eh! monsieur, (handing back the check)—I was alarm. If you pay, den I
dont want. If you no cant pay, den I must have.”
FOLLIES OF A PANIC.
Another instance quite as reasonable, and of equal notoriety, was a
French gentleman of respectable property, entirely out of business, and
out of debt. His sympathies were so much wrought upon, by the reported
distresses of the community, that he began to be alarmed for himself;
and accordingly applied to his bankers for a loan, which being granted,
he suffered the money to lie on deposit: but his excitement growing
warmer, he applied again and again, when being expostulated with by
the cashier, that he did not want the money, and that others did, he
replied, “sare I am afraid dat dis ting will me ruin. Sare, I must have
moneys. I shall starve, if I have not moneys. I must have de loan.” His
request was complied with, and when the excitement was over, without
ever having drawn a dollar from the bank, he paid his debts with the
loss of interest, and the gain of a good deal of mortification.
These are some of the follies of the panic. The villainies also deserve
some notice.
VILLAINIES THEREOF.
A notable whig, and a friend of the banks, who thought nothing so good
as bank notes, so long as their circulation yielded him interest, is
reputed to have borrowed all he could, and then to have drawn the
specie, which he hid away in his cellar, and stood sentry at the door
himself. Some supposed that he was alarmed for the safety of his
property, but more are of opinion, that his object was, to assist in
breaking the banks, and then pay his debts in their notes at a large
discount.
But I should trespass too largely on time and paper, to give one in
a thousand of the instances which may be cited, and I will therefore
illustrate the truth, by relating a few of the exploits of a notable
individual.
A CASE IN MORALS.
Mr. S. was a merchant of wealth and large business. Mr. A. his
debtor, was erroneously reputed to have failed, and being angry and
grieved withal by the slander, he went to his friend S. for advice
and consolation, and told him that so far from having failed, with a
very little sacrifice, he could pay all his debts on demand. Mr. S.
always governed by that cunning, which supreme selfishness and want
of principle dictate, advised his debtor to make the sacrifice, and
advertise for his notes, to be brought in for payment, as a means of
substantiating his credit beyond all doubt in future. His advice was
followed, and it so happened that Mr. S.’s was the first note sent in;
and report says, moreover, that having enquired of A., to whom he was
indebted, he went to the persons before the advertisement appeared, and
bought A.’s notes at a large discount, and sent _them_ in also.
This same gentleman had many customers in his business, and of
course many debtors. Their notes were always lodged in the bank for
collection, and when some of his customers came to him for partial
aid, to help take them up, his reply was, that he had no money to lend;
but, said he, “you can get the money for my note, and I will lend you
that for the ordinary commission of 2½ per cent., if you will secure
me for it.” The security was willingly given, and the customer was
told, if the bank don’t discount the notes, the brokers will; and as
soon as the customer was gone, instructions were sent to the brokers,
“if such a note appears, buy it for me at double rate of interest.” He
usually got possession of his notes again in this way, for be it known
that he was a director in the bank, and to add to the virtue of his
liberality, the money which should have been lent to his customers in
the first place, was lent to himself, with these views and for these
purposes.
I know not under what class of morals you will place this kind of
sagacity, but in Wall-street it is denominated “shrewdness,” and adds
greatly to one’s respectability and consequence.
CHARACTER IN, AND OUT, OF WALL-ST.
But that you may not be deceived in your judgment, I will go farther
and say, that what makes a character in Wall-street, does not make one
out of it. Here the standard is money, but elsewhere, it requires some
other ingredients to arrive at any level much above the lowest; and a
man destitute of education, intellect, genius, principle, morals and
religion, (though last here, yet not least,) can hardly arrive at a
condition of respectability, much beyond his own conceit of himself.
MONEY, KNOWLEDGE AND HONESTY.
I never knew such a man as Mr. S., who was not deficient of education
in every thing, except how to get money. The sum of his knowledge
is limited to the first rule of arithmetic—addition; and although
his wealth and credit may enable him to enlarge the sphere of his
observation, still, it is all brought to the same practical use,
addition.
Such a man always owes his little elevation to one of two things, to
fortuitious circumstances, or to his own villainy; and his mind is
incapable of appreciating any higher standard of morals than his own.
As I once heard one of them say, (inadvertently no doubt, but yet
in the honesty of his soul) when another was recommended to him for
credit, on the ground of his honesty, he replied, “a very good thing
for the owner, but a very poor commodity in the market.”
SOMETHING BY WAY OF CONTRAST.
It is not against the people of Wall-street, or Pearl-street, or
South-street, or any particular branch of business that I would be
understood to aim the bitter shaft of sarcasm, but against those
individuals of known delinquency, and against those principles and
practices, which have, of late, obtained a tolerance that, in times
gone by, would not have been suffered. And were it proper for me to
do so, by way of contrast, I would here sketch a portrait of some
among the many I know, who hold a just balance, and the even tenor
of their way, whether in peace or in panic; but I could not do it
faithfully, without pointing too clearly at those who have no need of
my commendation, and who would choose that their reputation should rest
on their own unaided merits.
Perhaps you have already anticipated some of the advantages which may
arise from a panic, but my description would be incomplete, were I to
omit to sketch a few of them.
ADVANTAGES OF PANICS.
The spirit of our institutions does not admit of the concentration or
entailment of property. And here, if a man has property, and will act
honestly, he need not wait the term of his mortal existence, for his
children to ruin themselves afterwards, by spending it. He can ruin
himself, and them too, by simply placing himself in the vortex of a
single panic. But, on the contrary, if his tastes lead him to choose
the former expedient, this affords him an ample field, for no scheme
can be devised better calculated to make the rich richer than this is.
It places the dependent debtor wholly in the power of the creditor,
and he may take his pound of flesh with interest, without extracting
a groan or a sigh from his patient. Nay, he will rise up from the
operation, and thank him for not taking two. A panic, then, serves
to hasten changes of property from one to another, and thereby acts
in accordance with the spirit of our institutions, which encourages
rotation.
Its advantages, also, to the separate classes of dealers, who inhabit
Wall-street, deserve each a passing notice.
It enables the stock-dealer, who has heavy contracts to fulfil, to
complete his engagements at a great profit to himself. It is of no
consequence that what he gains, another must lose; the advantage to
him is unequivocal, and, accordingly we find that these gentlemen are
great panic makers on their own account.
WHY SOME MEN LOVE PANICS.
It enables exchange dealers to demand double rates on all distant
places, and, although the effect is to reduce the value of all debts
due from those sections to citizens here in the same proportion—yet,
_he_ is benefited, and if people will not pay him his rates, they have
the option to go and collect their money themselves. The greater and
the more frequent the panic, therefore, the better for the exchange
dealer. It also enables those Banks which have a speculative turn,
to divert their capital from the paltry business of discounting,
to speculating on their customers’ wants, by becoming dealers in
exchange. It greatly increases the profits of the Bank-note dealer,
by enabling him to increase the rates of discount, and one peculiar
beauty of his business is, that the more discount he asks, the more
ready his customers are to sell. This class of dealers are deserving
the particular regards of the country Banks, since _their_ interest
advances exactly in proportion as they can discredit them.
I have passed hastily over all these classes, although the ways
and means by which each one of them contrives to turn a panic to
their advantage, contain a fund sufficient for a long evening’s
entertainment. But my descriptions are not intended to be wire-drawn,
and, besides, I wish to leave room for future lucubrations, without the
necessity for gleaning too closely.
CONSEQUENCES OF PANIC.
The consequences of a panic are those portions of it which “may be
felt;” and they begin to be felt, when people begin to count their
losses, I have before said that a panic was like fire, and the simile
holds good, except in one particular. The fire destroys—the panic only
changes property. In both cases people are prodigiously frightened;
many wounds and bruises are received, and not a few are driven from
their business, and made houseless, and homeless. In the panic, as in
the fire, also, there are both incendiaries and thieves, and it is a
matter of doubt, which requires the most vigilance to protect one’s
self from.
HOW TO PREVENT PANIC.
The scenes exhibited when a pestilence has passed through the
city—bringing suffering and bereavement to hundreds—when a storm
has swept along the coast, strewing its shores with the ships and
the treasures, which the day before floated securely on the bosom
of the waves—when the locusts have passed over the fields, leaving
nothing but the ravages of destruction behind—and when business men
have passed through the ordeal of a panic—are of one and the same
character, with this difference only; the first are events directed
by Providence, which men have not the power to avert, and the last is
the result of their own folly, or the wicked designs of a few. But it
will be said that no single voice, nor even many voices, can control
the multitude—very true; but when a mob takes place, if every man
would go straight about his own business, instead of stopping to join
in the hue and cry—there would be no mob. And if the magistrates
join in the mob themselves, there is no authority left by which to
control it. When a panic in money matters begins, there seems to be a
predisposition in the bystanders, either from want of employment, the
love of story-telling, or the desire of mischief, to aid all they can
in spreading it.
A WORD TO CERTAIN EDITORS.
I might add, too, that many newspapers are not among the least, in
bestowing their influence in this way. Some of them wish to appear wise
above their fellows—and I consider it not at all derogatory to the
general character of ability which they possess, to say that, in money
matters, _some_ of their editors really know very little of the things
about which they prate. I believe it often happens that what they
publish, is but the proclamation of those who design to increase the
panic—and if they are to be believed themselves, _some_ of them have
published things contrary to their better judgment, and perhaps their
own knowledge.
They can all point to the right quarter, and none of them will consider
this a slander, but such as know they deserve it.
If, therefore, when a panic begins, men would improve what they know
for themselves, instead of giving their neighbors the benefit of what
they don’t know, but have only heard or surmised—If the magistrates,
the leaders and controllers of the money market, would consult
something else besides their own interest, in promoting it, or their
immediate safety, by escape—we should have a less frequent occurrence
of panic. And, being convinced of these facts, every man can easily
understand, and no doubt does understand, what he ought to do in such a
case.
A DARK PICTURE.
But I perceive I am getting wide from my subject, and prating about
the causes of a panic, instead of its consequences. If we would follow
these out to their end, we must leave the disorganized condition of
business, and follow men into their secret communings with themselves;
and mark the anguish of despair, the bitterness of cursing and
disgust with their fellow men, occasioned by their blasted hopes—we
must follow them in their principles, and see how many are corrupted
by example, and how many have done their first act of villainy, in
the vain hope of escaping from its consequences. We must follow
them in their morals, and see how many have, by the excitement of
circumstances, lost their self-respect and control. And we must follow
them to their homes, and see the desolation wrought by a sheriff’s
levy, or a bill in chancery, and witness the broken repose, and see the
tearful eyes of loved ones: and then let any one make a levy or file a
bill, or aid in a panic, who chooses.
But the mind sickens at the picture, and I turn it with pleasure to a
better light, to bring out its now hidden colors.
ENCOURAGEMENT AND KINDLY ADVICE.
Every man must have felt, many times in his life, that it is better
to laugh than to cry. In this case, it certainly is, the proverb of
Solomon to the contrary notwithstanding; and among the many who, in
the last few years, have been the victims of panic, not a few I trust
are, by this time, ready to agree with me. Many an oak has been shorn
of its boughs, and lived to withstand a hundred storms; many a ship,
dismantled of her spars, has gained her port,—and floated again as
gallantly as ever; and many a man bereft of his fortune, has lived to
dispense large bounties of charity from his store; many a one too, who
has long fainted beneath the load of his griefs, has lived to command
those who oppressed him.
Experience is sometimes a very hard, but always an efficient teacher;
and those who have suffered will have the satisfaction to know better
hereafter, who to trust and what to trust, and taught to rely more on
themselves. And if afraid of a panic in future, he will be able to
prepare himself on the first appearance of the “premonitory symptoms,”
and when he sees it coming on the wings of the wind, like the man in
the simoon, he may then safely turn his back, hold his breath, and let
it pass by. At any rate, like the people I described in the church,
he will find himself more comfortable and happy to return, and take
his seat, than to be wandering about in the cold, among the multitude
without, to find out what has happened.
AUTHOR’S LEAVE-TAKING.
I have now finished six days in Wall-street, which, by the only book
of Ethics that I have ever learned, are the whole of the week that is
at my disposal. I can hardly suppose that any man in his senses, has
followed me through all the descriptions of truth and villainy, fact
and fiction, sense and nonsense, which I have here given; but if any
one has been so patient, I am bound to take a courteous leave of him.
First I am bound to thank him for the “high consideration” given me.
And should his better feelings tell him that I am too severe, I only
request him to ponder what is true—
Nor set down aught in malice.
But if when he shuts this book, he shall say, amen, he is entitled to
my thanks for his patience and a double congee for his approval. No
one will of course take any thing that is here written to himself,
unless he discovers in it some features of his own portrait, and to
those who can make such discovery, we owe neither apology nor sympathy.
MORE YET TO COME.
I have now taken leave of my venerable friend the Chronicler; but
I have no doubt that while he lives, he will continue to visit
Wall-street daily, as he does also some other popular places of resort,
to “catch the manners living as they rise.” And although I shall not
be favored with his oral communications any more, yet he has promised
me the free use of his diary while he lives, and of his manuscripts
when dead, which are said to contain many important histories, not
only of things long past, but also of the current events of the day,
together with many valuable reminiscences intended only for posthumous
publication.
But should the good people of Gotham, take so lively an interest in
these revelations, as to invite their continuance, by buying this
book, I can not say that such inducement will not call forth another
compilation, from the mass of materials now at my disposal.
* * * * *
Transcriber’s Notes (continued)
The original text contains errors and many inconsistencies in spelling,
hyphenation and capitalisation. The author acknowledges this in a
light-hearted _nota bene_ to the Preface, adding that he “thought it
best to leave their correction to the intelligent and good humored
reader”.
In that spirit, minor punctuation errors have been fixed. Other
typographical errors have been corrected as follows:
“bim” changed to “him” (enabled him to slide)
“both-shores of the atlantic” changed to “both shores of the Atlantic”
“ceriificates” changed to “certificates” (bonds or certificates)
“cheqners” changed to “chequers” (like children at chequers)
“esconce” changed to “ensconce” (he was fain to ensconce himself)
“fortuitious” changed to “fortuitous” (fortuitous circumstances)
“He” capitalised (He banished the thought at once; but who is)
“suthers” changed to “authors” (against the innocent authors of them)
“there” changed to “three” (three hundred and fifty thousand dollars)
“two” changed to “too” (the too frequent gorging of stocks)
Inconsistencies have been fixed where a consensus usage was obvious.
Hence the following changes to the original text:
“abreviate” changed to “abbreviate”
“Apalache” changed to “Apalchi”
“accomodations” changed to “accommodations”
“Bank-credit” changed to “Bank credit”
“controled” changed to “controlled”
“embarrasment” changed to “embarrassment”
“fancy-stocks” changed to “fancy stocks”
“general Jackson” changed to “General Jackson”
“indorsing” changed to “endorsing”
“land lopers” changed to “landlopers”
“major Downing” changed to “Major Downing” (but “the major”,
etc., used as per American style)
“mastadon” changed to “mastodon”
“Mr. Eaves-dropper” changed to “Mr. Eavesdropper”
“Mr. Single-eye” changed to “Mr. Single-Eye”
“negociating” changed to “negotiating”
“negociation” changed to “negotiation”
“negociator” changed to “negotiator”
“panic-makers” changed to “panic makers”
“post mortem” changed to “post-mortem”
“rail road” changed to “railroad”
“Rail-Road” changed to “Railroad”
“state-bonds” changed to “state bonds”
“stock-holders” changed to “stockholders”
“to-day” changed to “to day”
“United States bank” changed to “United States Bank” (but “the bank”,
etc., used as per American style)
“wholestock” changed to “whole stock”
However “New York” and “New-York” have been left unchanged as are
other instances of inconsistent hyphenation and capitalisation or
archaic/obsolete spelling. The latter includes colloquial usage in
quoted conversations and correspondence.
The page headers of the book have been inserted in the transcribed
text as centred section headers placed above the start of an
appropriate paragraph. On pages of the book without any paragraph
breaks it has been necessary to create a new paragraph at an
appropriate location on the page and the page header placed there as
above. This was required at 16 places in the transcribed text.
Footnotes have been re-indexed using numbers and collected together
at the end of each chapter.
End of Project Gutenberg's A Week in Wall Street, by Frederick Jackson