Are we reliving the Panic of 1857?

I usually do not reference Wikapedia because of it’s inaccuracies but this is pretty interesting, right down to the Hurricane of 1857.

"Panic of 1857
From Wikipedia, the free encyclopedia

The Panic of 1857 was a sudden downturn in the economy of the United States that occurred in 1857. A general recession first emerged late in 1856, but the successive failure of banks and businesses that characterized the panic began in mid-1857. As the overall economic. More than 5,000 American businesses failed within a year, and unemployment was accompanied by protest meetings in urban areas. Eventually the panic and depression spread to Europe, South America and the Far East. No recovery was evident in the United States for a year and a half, and the full impact did not dissipate until the American Civil War.

Causes:
The recession ended a period of prosperity and speculation that had followed the Mexican-American War and the discovery of gold in California in the late 1840s. Gold pouring into the American economy played its part by helping inflate the currency. Changes in worldwide economic trade, caused by the Crimean War between Britain and Russia, had pushed American firms into a precarious worldwide market. (McPherson, p. 189) The immediate event that touched off the panic was the failure on August 24 of the New York City branch of the Ohio Life Insurance and Trust Co., a major financial force that collapsed following widespread embezzlement. In the wake of this event, a series of other setbacks shook the public’s confidence, including:

The decision of British investors to remove funds from U.S. banks, which raised questions about overall U.S. economic soundness
The fall of grain prices, which spread economic misery into rural areas, because of the end of the Crimean War and Russian re-entry into global markets
The collapse of land speculation programs that depended on new rail routes, ruining thousands of investors
These triggers lowered the value of stocks and bonds held by American banks, further reducing their investment assets.

Investor confidence was further shaken in mid-September when 30,000 pounds (14,000 kg) of gold were lost at sea in a shipment from the San Francisco Mint to eastern banks. The gold and more than 400 lives were lost when the SS Central America sank during the North Carolina Hurricane of 1857. Public confidence in the government’s ability to back its paper currency with specie was shaken as well.

Remedies
At the suggestion of Howell Cobb, Secretary of the Treasury, President James Buchanan proposed to Congress that the Treasury be authorized to sell revenue bonds for the first time since the Mexican-American War.

In October, a bank holiday was declared in New England and New York in a vain effort to avert runs on those institutions."

Embezzlement from Financial Institutions, collapse of land speculation, lack of confidence in the government, foreign investors pulling money out of US Banks…:hmmm:

I’ve been wondering the same thing. I heard Robert Reich on radio and the cable news channels the other day saying that what’s been lost isn’t just money but trust – and nowadays that’s what backs our money rather than specie.

Right now no one knows what assets banks and other financial institutions have or whether they are worth anything. Derivatives, “creative” bonds, projected income being counted as current assets. I think it’s crazy of banks to be buying investment houses, they have no idea what liabilities they’re getting into.

Hang on, folks, it’s gonna be a bumpy ride.

Well, ya all might want to check your Banks and if you are insured to start with. :shrug: Check the

FDIC Estimator Link

I remember studying this in high-school and it is amazing how robber Barron’s like this continue. Billions of dollars in profits were made during this current crisis and the money is being sucked out of the tax payers to replace it.

I wonder if the laws will be changed to prevent this from happening again?

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