Gotham_ A History of New York City to 1898 - Edwin G. Burrows [493]
The New York elite had long been more volatile than that of other American cities, as its members’ fortunes were more closely tied to mercurial mercantilism and speculative enterprise. But the novelty and thoroughness of changes in fortune wrought by the Panic of 1837 fascinated observers, generating a novel lore and literature of bankruptcy.
One visitor, Francis Grund, noticed that the commercial insolvency of New Yorkers “changes at once their friends, their associates, and often their nearest relations, into strangers. How many ties are thus broken by a single failure in business!” Some, Grund reported, positively relished news of others’ misfortune. One lady, on hearing of the return from London of “the wife of that vulgar auctioneer that wanted to outdo everybody,” remarked with satisfaction: “Well, she will find a sad change; her husband has failed since she was gone, and is said not to pay ten cents in a dollar.”
New York writer Charles Francis Briggs, who in 1839 penned perhaps the first depression novel—The Adventures of Harry Franco, a Tale of the Panic of 1837—followed it up, in 1843, with The Haunted Merchant, a study of ruination. Briggs compared the sudden collapse of a businessman to the shutting of a wild bird in a cage while its fellows soared above. The real horror, Briggs suggested, was less the loss of luxuries than the way former associates shifted their tone from familiarity to suspicion, from deference to insolence.
Such observations caught the brittleness of social ties within New York’s upper class but missed a deeper change in attitude toward failure ushered in by the panic. New York businessmen—and American capitalists in general—began shuffling off the stigma and shame once attached to insolvency. In the summer of 1839 city merchants started a campaign to allow them to discharge their debts through bankruptcy proceedings, freeing themselves to start up business again with a clean financial and moral slate. Reformers won passage of the Federal Bankruptcy Act of 1841, which, though repealed in 1842, lasted long enough for twenty-eight thousand debtors to shed $450 million dollars of debt.
Focusing on examples of the high-brought-low also overstated the collective vulnerability of the New York rich. Their ranks were far from decimated. Some had the wherewithal to survive even such a substantial setback. In 1838 Philip Hone declared that he, like half his friends, was deeply in debt, with no prospect of ever getting out. A year later, Hone was free and clear—albeit shorn of two-thirds his fortune—and had taken up his accustomed lifestyle again.
Hone did have the grace to wonder “how the poor man manages to get a dinner for his family,” as well he might have. Mass bankruptcies had produced massive layoffs. By April 1837 collapse of the real estate industry had already devastated the construction trades; one paper reported that “six thousand masons and carpenters and other workmen connected with building had been discharged.” A citywide survey that month estimated that one-third of all New York workers had lost their jobs and that in addition to these fifty thousand unemployed, another two hundred thousand were without adequate means of support. In May Captain Marryat observed that “mechanics thrown out of employment, are pacing up and down with the air of famished wolves.” Newcomers were particularly hard hit: “The Irish emigrant leans against his shanty, with his spade idle in his hand, and starves.”
The Tunes, a cartoon depicting the Panic of 1837 and its consequences. Lithograph by Edward W. Clay. Unemployed mechanics look for work on the right, a mother and child plead for assistance from a fat banker on the left, and a run on the Mechanics Bank unfolds in the background. (© Museum of the City of New York)
Men posted notices in City Hall offering to do work of