The E-Sylum:  Volume 9, Number 11, March 12, 2006, Article 33

MAROTTA EXPLORES WILDCAT BANKING AND THE PANIC OF 1857

Mike Marotta writes: "What was the Panic of 1857?  I have been
working on a paper about so-called "wildcat banking."  My thesis
is that when farmers moved from New York to Michigan, we did not
call it "wildcat farming."  We do not have "wildcat apothecaries"
or "wildcat blacksmiths."  The fact is that risk is a metaphysical
reality for any enterprise.

I am also puzzled by the fact that people smart enough to invent
and construct a complex industrial civilization from the wilderness
were stupid enough to fall for the obvious ploys of "stumptail"
and "red pup" banks and their worthless notes.  I think the matter
is more complex.

I quickly came to discount all newspaper stories as firsthand
accounts of anything. We know from Louisa May Alcott and Mark
Twain that newspaper reporters were not history professors.  Today
we say, "If it bleeds, it leads."  Sensationalism sells papers.
Headlines declaring "Panic!" can only be substantiated with
independent facts.

In science we say that "absence of evidence is not evidence of
absence."  Just because you do not find something does mean that
it is not there.  That said, among the reliable references that
do not mention the Panic of 1857 is A HISTORY OF BANKING IN THE
UNITED STATES by John Jay Knox, written in 1903.

Specifically for the present numismatic markets, I have found two
recent books that claim that the loss of the "famous ship of gold"
(S.S. Central America) precipitated or exacerbated the "panic" of
1857.  Q. David Bowers and Douglas Winters are not to be passed
over lightly.  Yet, I have to ask where the substantiating evidence
is, since it is not in the most authoritative histories of the
times.

That there was a "panic" is pretty clear.  I do have other primary
materials in which merchants and bankers tell each other of their
problems from August through November of 1857.  Chemical Bank called
itself "Old Bullion" for surviving the run on hard money.

Socialists routinely claim that booms and busts are endemic in an
unregulated economy.  Libertarians reply that meddling by central
authorities only makes them worse.  That they exist is undisputed.
Perhaps it should be disputed.  Crops fail.  Banks fail.  Yet, one
of the interesting economic facts of life is that records from the
Middle Ages in England seem to indicate that the failure of crops
in one place resulted only in the transport of grain to that place,
with apparently little rise in price, and seemingly little, if any,
"panic."

  Wayne Homren, Editor

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