Gotham_ A History of New York City to 1898 - Edwin G. Burrows [673]
around the country. The New Orleans Crescent railed against New York—“the centre of reckless speculation, unflinching fraud and downright robbery”—the city whose “rotten bankruptcies” were “permeating and injuring almost every solvent community in the Union.” The impact proved far greater than that, however.
The panic soon reached London and Paris, affecting more than a third of the stocks traded on Lombard Street and the Bourse. In Britain, only Bank of England intervention held the line. Modern communications sped the panic along to northern Germany, then Scandinavia, leaving a trail of bankruptcies and unemployment. From Europe, the crisis hopscotched back across the Atlantic to South America. Though the ensuing depression had many causes, New Yorkers could (had they wished) have taken a perverse pride in having managed to trigger a crisis of the entire world capitalist system. Karl Marx, then ensconced in the British Museum writing the Grundrisse, forerunner to Das Kapital, was ecstatic. To Friedrich Engels he wrote: “Despite my financial distress, I have not felt so cozy since 1848.” Engels’s response was similarly gleeful: “The general aspect of the Exchange here was most delicious in the past week. The fellows grow black in the face with rage at my suddenly rising good spirits.”
“APPALLING PICTURE OF SOCIAL WRETCHEDNESS”
Spirits recovered rapidly on Wall Street, however, as suspension of specie payments, in freeing banks from the pressure of their own creditors, gave them time to bolster their reserves. This they did with dispatch, and by December 14 New York had gone back on a hard money standard. Several financiers had meanwhile seized the opportunity to profit from the failure of others: Moses Taylor, president of City Bank, gobbled up railroad stocks and the city’s largest gas company; Commodore Vanderbilt began to move in on financially troubled railroads, starting with the New York and Harlem, a course that within a decade would make him master of the mighty New York Central; and his partner-to-be Leonard Jerome became a millionaire by the simple expedient of selling short during the crisis.
For everyone else in New York, however, the recession was just getting under way. By December 985 merchants had failed, with losses totaling $120,000,000, and the shock waves from their collapse had toppled many other kinds of enterprises.
J. A. Westervelt and Company defaulted; one of the city’s largest shipbuilding firms, it was headed by a former mayor. Maritime construction collapsed in general, laying off between two-thirds and three-quarters of the city’s shipbuilders. The clipper ship industry, already weakened by tremendous competition from railroads and steamers, would never recover from the panic, and the city’s merchant marine, which lost federal subsidies in 1858, went into steady decline, losing much of its mail, passenger, and freight traffic to British rivals within a few years.
The New York and Erie Rail Road was forced into receivership, halting work on its Jersey City terminal. Foundries laid off hundreds of mechanics. Four-fifths of the city’s coopers lost their jobs. Textiles were badly hurt: the giant Hanford and Lewis collapsed, Brooks Brothers let go a thousand workers; the mantilla and cloak industry collectively laid off two thousand more. Garment workers who retained their jobs found their wages cut from $1.25 to eighty-five cents a day. Retailers suffered accordingly. “Almost every shop has its placards,” said Strong “announcing a great sacrifice, vast reduction of prices, sales at less than cost,” and, as in 1837, the stock of bankrupt tradesmen was snapped up by more fortunate merchants. Even “Chinamen who peddle cigars” and Italian “organ grinders” were hard hit, noted Bryant’s Post.
The communications world was pummeled. Putnam’s Magazine went under, and Putnam’s publishing house nearly followed, but Washington Irving helped rescue it by giving Putnam the plates for his Collected Edition. The printers