Gotham_ A History of New York City to 1898 - Edwin G. Burrows [247]
Early in March, while promoters of the three new banks maneuvered for money and legislative approval, stock prices leveled off, then declined. Coincidentally, the government notified Duer of a $250,000 discrepancy in his accounts as assistant treasury secretary. Cornered, and no longer able to raise cash, Duer began to sell. On March 10, as panic engulfed New York, he stopped payment on all his debts; two weeks later his creditors had him arrested and thrown in debtor’s prison. Macomb and Walter Livingston soon went to jail as well; John Pintard escaped his creditors by fleeing across the Hudson to Newark.
New York appeared to have been struck by a disaster of staggering proportions. Duer alone owed more than $750,000. Judge Thomas Jones said that estimates of all losses ran as high as three million dollars—a huge sum, representing the savings of “almost every person in the city, from the richest merchants to even the poorest women and the little shopkeepers.”
“Everything is afloat and confidence is destroyed,” one man grieved. “The town here has rec’d a shock which it will not get over in many years.” No one escaped—“shopkeepers, widows, orphans, butchers, carmen, Gardeners, market women & even the noted bawd, Mrs. McCarty,” lost their life savings. “Such a revolution of property perhaps never before happened.” All told, two dozen leading merchants were ruined; the Million Bank and its competitors never opened their doors. Business languished, and ships lay at the wharves with no one to buy their cargoes. Artisans, mechanics, and cartmen couldn’t find employment. Farmers couldn’t sell their produce. Over in Paterson, the directors of the SUM (absent Duer and Macomb) forged ahead with plans for the construction of factories and housing for workers, but the wounds were fatal, and within a few years the project foundered.
Hamilton, watching the nation’s first financial crisis unfold, was appalled. The whole point of his financial program was to transform the nation’s public creditors into a class of proto-capitalists able to lend the government stability and facilitate the production of tangible wealth—not reel off on speculative binges that paralyzed the economy. “There should be a line of separation between honest men and knaves,” he fumed, “between respectable stockholders and mere unprincipled gamblers.” In March and again in April he ordered the treasury into the market in an effort to restore confidence and give “a new face to things.” It helped, but not much. Where, and how, to draw the line between “respectable stockholders” and “gamblers” would remain a central dilemma of American capitalism for the next two centuries. The demise of the SUM had meanwhile soured Hamilton’s interest in such projects, and when Congress refused to act on his Report on Manufactures, he quickly lost interest in the subject.
Duer was lucky to be behind bars. Everyone blamed him for the panic, and threats against his life were commonplace. “I expect to hear daily that they have broken open the jail and taken out Duer and Walter Livingston, and hanged them,” wrote one resident. On the night of April 18 a stone-throwing crowd of between three and five hundred persons, working people as well as merchants, converged on the jail shouting, “We will have Mr. Duer, he has gotten our money. “Nothing much happened, but the scene was repeated