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ABSTRACT
This article argues that Americans, influenced by British economist David Ricardo, initially blamed banking and the decay of America’s ethic of labor for causing the Panic of 1857. Americans’ stress on the negative influence of banking on labor set the terms for political debate about the Panic. Southern radicals used the Panic to justify slavery and secession. Republicans and other antislavery partisans, meanwhile, pointed to the Panic as evidence of the need to increase the tariff to insulate northern workers from southern slavery. These opposing narratives of the Panic reinforced the concept of the “irrepressible conflict.”
Disclosure statement
No potential conflict of interest was reported by the author(s).
Notes on contributor
Eric M. Sears is a PhD candidate in American History at Saint Louis University. His research centers on the history of money, banking, the business cycle, and economic theory in nineteenth-century America. He is currently in the process of completing his dissertation, “The Political Economy of Crisis, 1848–1860: Money, Banking, and the Atlantic Origins of America’s Panicked Decade,” which explores the role of money and banking in the creation of both the business cycle of the 1850s and the emergence of mass antislavery politics in the Old Northwest.
Notes
1 “Bank Reform,” Detroit Free Press, October 13, 1857, 2.
2 See, for example, Cary, A Practical View of the Business of Banking, esp. 4–5. In the secondary literature, see Lamoreaux, “Information Problems and Banks’ Specialization,” 161–203.
3 Calomiris and Schweikart, “The Panic of 1857,” 817.
4 Huston, The Panic of 1857 and the Coming of the Civil War. Huston’s work is the only comprehensive economic, intellectual, and political history of the Panic. However, in it, Huston treats only Ricardo’s theory of rent and wages, the refutation of which was a primary impulse among American protectionists in the North in the wake of the Panic (99–105). This emphasis, of course, reflects Ricardo’s general place in the history of economic thought: his theory of rent and wages served as a primary foundation of classical nineteenth-century economics.
5 It is important to note here that, while historians and economists in the twentieth and twenty-first centuries have debated the causes of the Panic, none have supported contemporaries’ strictly Ricardian explanation. Van Vleck, in The Panic of 1857, argued that the Panic originated with overinvestment in western railroads and was triggered by the upward movement of Bank of England (BOE) interest rates in 1856. This theory has found some support in Fishlow, American Railroads, esp. 114–15, 180–1; and Temin, “The Panic of 1857,” 1–12. Huston has argued that the Panic was caused by the collapse of Western Europe’s demand for Old Northwestern grain after the close of the Crimean War (The Panic of 1857 and the Coming of the Civil War, 1–34). Most recently, Calomiris and Schweikart and Jenny B. Wahl have argued that the Panic was caused by the temporary decline of western land values after the Supreme Court’s Dred Scott v. Sandford decision (Calomiris and Schweikart, “The Panic of 1857,” esp. 816; Wahl, “Dred, Panic, War,” 159–201).
6 “History of Our Abused Credit,” Plymouth Democrat. Plymouth, Indiana. December 10, 1857, 1.
7 See especially Huston, “A Political Response to Industrialism,” 35–57. Huston further demonstrates the significance of protectionist doctrine to Republican political victories in both the 1858 midterm and 1860 presidential elections in The Panic of 1857 and the Coming of the Civil War, 139–72, 231–60.
8 See Huston, The Panic of 1857 and the Coming of the Civil War. Other important, though more general, works which relate to the political history of the Panic include Hammond, Banks and Politics in America; Foner, Free Soil, Free Labor, Free Men; and Stampp, America in 1857.
9 See note 8 above.
10 “Ohio Life and Trust Company,” Mount Vernon Republican. Mount Vernon, Ohio. September 1, 1857.
11 New York Herald, June 27, 1857. See also “Members of the New York Press,” esp. 44.
12 Ricardo, On the Principles of Political Economy, and Taxation, 507.
13 King, David Ricardo, 121. See also Perlman, “The Bullionist Controversy Revisited,” 745–62. Specie redemption by the BOE did not resume until 1821.
14 Ricardo, The High Price of Bullion, 15; Roncaglia, The Wealth of Ideas, 198.
15 King, David Ricardo, 146–7.
16 David Ricardo to James Mill (January 1, 1811), in Sraffa, ed., The Works and Correspondence of David Ricardo, Vol. 6: Letters, 1810–1815, 16.
17 Ricardo, Proposals for an Economical and Secure Currency, 66.
18 Dorfman, The Economic Mind in American Civilization, lxvii, 601–36; Blau, “Introduction: Jacksonian Social Thought,” xii; Benson, The Concept of Jacksonian Democracy, 96; Rader, “William M. Gouge: Jacksonian Economic Theorist,” 443–53; Sellers, Jr., James K. Polk, Jacksonian, 1795–1843, 177–8; and Sklansky, The Soul’s Economy, 79.
19 See especially Mill, Principles of Political Economy; Martineau, Illustrations of Political Economy and Berkeley the Banker.
20 Carey, “To the Hon. Robert J. Walker,” 404.
21 Gibbons, The Banks of New-York, 374–5.
22 Ibid., 370.
23 “Theodore Parker on the Revulsion,” in “Members of the New York Press,” ’37 and ’57, 47–9. Emphasis original to the primary source.
24 “The Revulsion of 1857: Its Causes and Results,” New York Herald, January 26, 1858.
25 In many instances, banks and paper money were characterized as a disease or as a haunting “ghost” – that is, something out of human control – that preyed on labor. See, for example, “Inscription for the Back of a Bank-Note,” Putnam’s Monthly, 557, wherein paper currency is described in part as “Bank-note – foul note! Industry’s curse; Ghost of coin, that mocks at toil … .”
26 Perceptions of dishonesty in the monetary system in the later antebellum period are explored in Sharp, The Jacksonians versus the Banks; and Siddali, “Regulating the Jackals of the Monetary World,” esp. 395–8.
27 Shade, Banks or No Banks, 112–98.
28 “The Banking System,” Spirit of the Times. Ironton, Ohio. January 29, 1856, 1.
29 “Has this Panic Come Without Warning?” American Railway Times, 2. Emphasis original to the primary source.
30 “The Monetary Crisis,” National Era, October 15, 1857.
31 “From Washington. Correspondence of the N.Y. Tribune. Washington, Sept. 24, 1857,” New-York Tribune, September 28, 1857.
32 “Debt,” Fayetteville Observer. Fayetteville, North Carolina. October 8, 1857.
33 Baldwin, The Flush Times of Alabama and Mississippi, 81–91.
34 The Evils of Long Credits, 8.
35 Appleton, Remarks on Currency and Banking, esp. 36–41. See also Shade, Banks or No Banks, 207–23; and Huston, The Panic of 1857 and the Coming of the Civil War, 46–7.
36 The Evils of Long Credits, 4.
37 See: Stampp, America in 1857, 232–3; and Huston, The Panic of 1857 and the Coming of the Civil War, 35–110, and note their argument that free traders and protectionists were rigidly distinct on their analysis of the Panic.
38 Henry Carey, “Letter Third [to W.C. Bryant, Esq., January 17, 1860],” in Carey, Financial Crises, 12–15. Carey claimed that Americans’ contraction of unsustainable debts before the Panic came from those who refused to labor or compete “for the purchase of labor.”
39 “The Financial Crisis of 1857: Its Leasons [sic] and Results,” San Francisco Daily Evening Bulletin, May 22, 1858. See also Stampp, America in 1857, 227–8, 235.
40 Brownson, “Article VI: The Eastern Question Not Yet Settled,” 542–56.
41 “Anti-Bank Panic,” The Daily Cleveland Herald, October 15, 1857.
42 Stampp, America in 1857, 230–6; and Huston, The Panic of 1857 and the Coming of the Civil War, 53–8.
43 Shade, Banks or No Banks, 199–215; “First Annual Message, Washington, December 8, 1857,” in Richardson, A Compilation of the Messages and Papers of the Presidents, 437.
44 Shade, Banks or No Banks, 206–7; and Huston, The Panic of 1857 and the Coming of the Civil War, 57.
45 Huston, The Panic of 1857 and the Coming of the Civil War, 43–4.
46 “The Times are Out of Joint,” DeBow’s Review, 654–5. For similar commentary, see also “The Panic – The Past Week in Raymond,” Hinds County Gazette. Raymond, Mississippi. October 21, 1857; and “The Effect of the Panic,” Charleston Mercury, October 2, 1857.
47 “State of the Country – Retributive Judgments,” reprinted in the New York Herald and other papers as “The Financial Revulsion and the Abolitionists,” October 27, 1857.
48 Huston, The Panic of 1857 and the Coming of the Civil War, 63.
49 Speech of Hon. James H. Hammond, of South Carolina, on the Admission of Kansas, Under the Lecompton Constitution, 13.
50 Fitzhugh, Sociology for the South; and Fitzhugh, Cannibals All! See also Huston, “The Panic of 1857, Southern Economic Thought, and the Patriarchal Defense of Slavery,” 163–86. Ricardo’s conception of social class relations is largely embedded in his theory of rent and of value (Ricardo, On the Principles of Political Economy, and Taxation, 49–76, 458–75, 549–89). The term “Ricardian socialism” was first introduced in 1899 by H.S. Foxwell in his introduction to the English translation of Anton Menger, The Right to the Whole Produce of Labour, lxxxiii. The most high-profile works in the “Ricardian socialist” tradition include Bray, Labour’s Wrongs and Labour’s Remedy; and Hodgskin, Labour Defended Against the Claims of Capital.
51 Fitzhugh, Sociology for the South, 22–3.
52 Thompson, The People’s Science.
53 Fitzhugh, Cannibals All!, 278.
54 The strikes and stoppages culminated with shoemakers in Lynn, Massachusetts, who began organizing for a strike in 1858 and staged a stoppage in February-April of 1860 (Huston, The Panic of 1857 and the Coming of the Civil War, 25–28, 220–1, 224–30). See also pg. 26 and note 72 below.
55 “The Late Financial Difficulty – Southern and Northern Labor,” Russell’s Magazine, 260–4.
56 “From the Richmond South: Slave Labor and Hireling Labor – Climate and Competition,” Charleston Mercury, September 25, 1857.
57 Reprinted in the Mississippi Free Trader. Natchez, Mississippi. November 6, 1857. See also Huston, The Panic of 1857 and the Coming of the Civil War, 62–3.
58 “Moral and Political Uses of the ‘Panic’,” Daily National Intelligencer. Washington, DC, November 12, 1857.
59 Ticknor, “Southern Dependence Denied,” 160. Emphasis in the final clause is this author’s.
60 “Art. VII – Southern Wealth and Northern Profits,” 197–216.
61 “Art. VIII – A Southern Confederacy: Its Prospects, Resources, and Destiny,” 571–8. See also Hazzard Wigg Barnwell, “To the Honorable William H. Gist, Governor of the State of South Carolina,” Charleston Mercury, December 8, 1859.
62 Goldstein, Ideas, Interests, and American Trade Policy, 65–71.
63 Howe, The Political Culture of the American Whigs, 77; Filler, The Crusade Against Slavery, 260.
64 The North’s culture of free labor is the fundamental topic of Foner’s Free Soil, Free Labor, Free Men. See also Glickstein, Concepts of Free Labor in Antebellum America. On the Slave Power conspiracy, see Gienapp, The Origins of the Republican Party; and Richards, The Slave Power.
65 Hofstadter, “The Tariff Issue on the Eve of the Civil War,” 50–5.
66 Ricardo, On the Principles of Political Economy, and Taxation, 92.
67 “Slave Labor in Competition with Free Labor,” Pennsylvania Freeman, August 14, 1851.
68 “Article V: Slavery – Its Effects on the Property, Intelligence, and Morals of the Whites – Olmstead on the Seaboard Slave States,” New Englander, 264.
69 Stampp, America in 1857, 233.
70 The largest episode of labor unrest occurred in New York City, where laborers rioted for bread on November 5, 1857. Labor stoppages also occurred at Bergen Tunnel in New Jersey, at Lancaster, Pennsylvania, and culminated with shoemakers in Lynn, Massachusetts, who began organizing for a strike in 1858 and staged a work stoppage in February–April of 1860. See also 21 and note 55 above. Unrest occurred across coal regions, dockyards, and railroad depots throughout the North. See Palladino, Another Civil War, 56–62.
71 Cummings, quoted in Huston, The Panic of 1857 and the Coming of the Civil War, 107.
72 The persistence of the tariff in northern politics after the Panic was partially enabled by congressional Democrats’ stonewalling in Congress. Huston summarizes the political problems this caused for northern Democrats, particularly in Pennsylvania, in The Panic of 1857 and the Coming of the Civil War, 206.
73 “Gov. Corwin,” Holmes County Republican. Millersburg, Ohio. September 23, 1858.
74 Huston, The Panic of 1857 and the Coming of the Civil War, esp. 134–8.
75 McMichael, quoted in Huston, The Panic of 1857 and the Coming of the Civil War, 135.
76 Miner’s Journal. Pottsville, Pennsylvania. June 12, 1858.
77 “Letter from B. Rush Petriken, Esq.,” Potter Journal. Coudersport, Pennsylvania, August 12, 1858.
78 This is empirically shown in Huston, The Panic of 1857 and the Coming of the Civil War, 139–72 and 231–60.
79 “The Effect of It.” New Hampshire Patriot and State Gazette. Concord, New Hampshire. October 31, 1860.