Gotham_ A History of New York City to 1898 - Edwin G. Burrows [671]
Order was restored. But no one, least of all the police, imagined that popular hatred of the new laws, and their defenders, had been other than driven underground for the moment. The superintendent of the Metropolitans recommended that ten officers in each ward be armed with revolvers—“for the suppression of riots.” Ominously, the state decided to build a new armory at 35th Street and Seventh Avenue, more than a mile closer to City Hall (and the Sixth Ward) than the existing one.
It seemed as if long-accumulating tensions were coming to a head, as if a cultural crossroads had been reached. On one side was the growing immigrant working class, with its own culture, its own politics. On the other side was a wealthy and anxious bourgeoisie, trying not very successfully to impose its vision of domestic and civic relations on those below.
For a time, it had looked as if Mayor Wood might be able to mediate this clash, but the upstate victory of the ultrareformers had put him in an impossible position. Either he enforced the liquor and police laws and lost his immigrant constituency, or he rejected reform and lost the fragile support of the rich and powerful. Faced with that choice he opted to secure his political base. In this he succeeded; in October, Wood, an idol to Democratic voters, gained Tammany’s renomination for the mayoral race. But the summer’s events had cost him dearly. Many reformers now turned away from him. Still, Wood might have been able to salvage the situation; he retained important upper-class support. But at just this point, the city was rocked by an economic earthquake that made glaringly apparent just how deep the fissures in civic life had become, just how wide a gap now yawned between the contending cultures, and just how unbridgeable they were by even the most heroic of political efforts.
47
The Panic of 1857
At the end of August 1857, little more than a month after the Dead Rabbits riot, the New York branch of the Ohio Life Insurance and Trust Company suddenly closed its doors. It soon transpired that the putatively rock-solid institution had been deftly looted by its manager, Edwin C. Ludlow. Worse, it had made loans with abandon to speculators playing the stock market—and done some gambling itself in railroad stocks, which had been gliding steadily downward. Since the Crimean War had ended the previous year—restoring Western Europe’s access to Russian grain—demand for American wheat had dropped steadily, shipments east had tapered off considerably, and railroad earnings (and stock prices) had dipped disappointingly. Farmers and merchants too had been squeezed; by the spring of 1857 metropolitan merchants found it difficult to collect on midwestern debts.
In August, unfortunately for Ohio Life, European farmers harvested a bumper crop, and the sudden glut threatened to further depress world farm prices. Worried midwestern businessmen had begun telegraphing New York banks, including Ohio Life, asking for the return of their surplus funds (which they had, as was customary, parked in the metropolis to garner high interest rates). Ohio Life, courtesy of Mr. Ludlow, was caught short, and the firm failed, leaving behind seven million dollars in debts. But Ohio Life had not been the only New York financial institution shoveling out shakily secured loans—indebtedness had reached an all-time high earlier in August—and many Manhattan banks had loaned funds to Ohio Life. Now, finding themselves suddenly and dangerously overextended, the banks panicked. Terrified that soon other institutions (or even their own) might be