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proved rotten, they demanded payment of all matured loans from all their debtors. In the ensuing fiscal sauve quipeut, “stony-hearted directors and inflexible cashiers” refused (as George Templeton Strong noted) to make loans on promissory notes or bills of exchange, despite pitiful pleading from straitened merchants, and went so far as to demand certified checks from even the bluest of their blue chip customers. The banks thus jammed on the credit brakes at precisely the moment businessmen were in direst need of accommodation. The financial institutions, especially banks newly hatched during the boom, saved themselves but forced merchants into bankruptcy.

Panic spread quickly. “The Foundations of financial confidence appear to have been knocked from under the Stock and Money markets,” worried the Times. In the days that followed, hundreds of other firms failed as well, and panicky brokers were observed pummeling one another with their fists on the floor of the Stock Exchange. Each day brought new lists of failures or suspensions, with each misfortune posted in large type on the bulletin boards in front of newspaper offices, attracting crowds. Handbills with the latest lists of broken banks and suspect banknotes were cried about in the streets by boys at “a penny a piece.”

Depositors lined up to withdraw gold. By mid-September the specie reserves of New York banks had shrunk from $94.5 million (in August) to $75.8 million. Desperate to augment their holdings, they demanded payment from stockbrokers of call loans, exacerbating the crisis at the Exchange, and pressed small banks in the interior for payment, generating a widening pool of failures. New York bankers hoped a forthcoming gold shipment from California would relieve the pressure, but just at the moment when everyone was scrambling for specie, and a heavy payment was due English creditors, word came that the steamer Central America had gone down on September 12 in a terrible hurricane, with the loss of four hundred passengers and crew, and $1.6 million worth of precious metal. The catastrophe precipitated a new wave of failures.

Now the banking system itself began to buckle. Philadelphia’s institutions suspended—refused to honor their legal commitment to redeem paper for gold—and banks across the nation were forced to follow suit, with legislators duly authorizing their actions. As credit dried up, manufacturing and transport wound down, construction ceased, produce was neither demanded nor shipped, and prices of western staples and southern cotton plummeted. By the first week of October, the nation’s trade was at a standstill. Only New York banks held out, and they were under siege, with tens of thousands of noteholders thronging Wall Street demanding redemption. “We seem foundering,” Strong wrote on October 10. “People’s faces in Wall Street look fearfully gaunt and desperate.”

The “excitement today is fearfull,” Brown Brothers officials advised their London partners on October 13. “Some banks have stopped and we don’t know whether the balance can hold out.” Broadway omnibuses were packed with people trying to get downtown. By three P.M. eighteen banks had suspended specie payments, and crowds milled from Water to Broadway, numb with fear and disbelief. Prices plunged on the stock market as investors dumped thousands of shares in a vain race to stay ahead of the avalanche. As sell orders were telegraphed to exchanges elsewhere, the crisis spread like a “malignant epidemic” across the country. Soon almost half the brokers on Wall Street, including Jacob Little, were wiped out.

The “bursting of bubbles in New York,” the Chicago Tribune had soothed at first, “need not alarm anybody in the West,” for regional prosperity rested on solid foundations. But as the panic radiated outward from the metropolitan center, howls were heard

Wall Street, Half Past 2 O’clock, October 13, 1857, by James H. Cafferty and Charles G. Rosenberg. Among the nervous bankers and brokers gathered outside the Merchants Exchange are Cornelius Vanderbilt, on the far right with a walking