Disturbances from across the Atlantic in April of 1837 aggravated the monetary pressure in the Eastern cities and hastened the coming of the panic. Most serious was a renewed series of commercial bill rejections in England, though on this occasion the Bank of England took decisive action to support many houses involved in the American trade. News of the intervention, which reached New York in the first days of May, eased some of the tension in that city by making merchants and bankers more confident that specie exports would not become immediately necessary. By this time, however, the increasingly apparent effects of domestic monetary policies had already sown the seeds of panic among the working classes, and a crises could no longer be averted. International events thus played a contributing but secondary role in the panic. Do you want to take a loan without any efforts and troubles? you may write down in the search box speedy cash payday loans online the information you will find here helps you to estimate the advantages and disadvantages of this system.
Interestingly, another view of the panic emphasizes two increases in the Bank of England’s discount rate in the Summer of 1836 and the accompanying restrictions imposed upon merchant houses involved in the Anglo-American trade in late August as responsible for the rising monetary pressure in the United States. Specifically, Temin (1969, p. 146) states that “the crisis lasted as long as it did because the price of cotton reacted only with a lag to the restrictions on credit imposed by the Bank of England. In this section, I examine available evidence that is relevant to this hypothesis. Figure 5 presents a timeline of the key events.
Contemporary accounts suggest that the Bank’s first increase in its rate of commercial discount in fifteen years from 4 to 4 % on July 21, 1836 was expected (the Bank had raised the rate on temporary loans from 3 ^ to 4% only a few months earlier) and raised little concern in the British money market. Merchant bankers even came to accept the higher rate, often exceeding their credit limits with the Bank in mid- to late August in anticipation of yet another increase. Reactions in the American press to this increase in the Bank rate or to a second advance to 5 percent for all accommodations on September 1 are scarce. Niles’ Weekly Register does not mention either increase. The New York Herald reports on September 6 — one day after the packet ship with information of the first increase entered port — that “the advance created some pressure across the water that may reach this country through the exchanges.” It does not mention this change again. More importantly, the timing (see Figure 5) suggests that actions by the Bank of England could not have caused the monetary pressure that had existed in New York for months.
On August 26, 1836, the Bank of England ordered a rejection of bills submitted for discount by several first-rate Anglo-American mercantile houses at both its London office and Liverpool branches. Hidy (1949) views these rejections as part of a heightened offensive against the U.S. trade. The historical record, however, describes a brief incident with limited long-term impact. Indeed, the Bank had imposed such restrictions once before in late 1834 with no effect on the course of trade or the condition of the U.S. money market. Further, criticism of the policy in the London Times by merchant bankers and the financial community was universal and intense. When it became known to directors of the Bank of Liverpool that a campaign had been launched by the Bank, they sent a deputation to meet with the Bank’s directors in London on August 30 and ask how a reversal of the specie flow could possibly be accomplished by discouraging exports and the American houses engaged in their arrangement. Apparently recognizing their blunder and under increasing pressure in the press, the Bank directors agreed to reverse their policy, but the indignation of merchant bankers persisted. A meeting between the directors and representatives of the American houses on October 18 had a calming influence on the money market. People sometimes do not realize they are the members of the money market with all its ramifications. The problem is that we are made being involved in it. we are dependent on the economical situation in country where the banking service leaves much to be desire that’ s the Internet banks appear to make your life easy with speedy payday loans online.
The rejections of commercial bills of the American houses in August of 1836 may have generated brief uncertainty in the U.S. money market in early October, but only because a director of the Bank secretly warned one of the affected houses (Wiggins & Co.) of the intended policy in early August — three weeks in advance of the rejections. The leak finally reached the United States and appeared in the New York Herald on September 28. It took until October 10 for a packet ship with news of the actual rejections and the subsequent policy reversal to arrive. News of the second increase in the Bank rate arrived at the same time. Interestingly, little concern was raised in New York by the events. Indeed, the rise in the Bank rate was dismissed as a signal of England’s own excesses in stock and land speculations. The lack of concern is understandable. The troubles of the U.S. money market in late 1836 were due to distortions of domestic origin, and not actions by the directors of the Bank of England that had commenced in the Summer.
Fig. 5.- Events surrounding the monetary pressure in 1836.