LOOKING BACK over his long career, Horace Greeley, reformer, Whig politician, and editor of the New York Tribune, recalled the distress caused by the Panic of 1837.
Manufactories were stopped, and their "hands" thrown out of work. Trade was almost stagnant. Bankruptcies among men of business were rather the rule than the exception. Property was sacrificed at auction -- often at sheriff's or assignee's sale -- for a fraction of its value; and thousands, who had fondly dreamed themselves millionnaires, or on the point of becoming such, awoke to the fact that they were bankrupt.1
There are indications, however, that the economic collapse did not hit Pennsylvania, New York, and the other states of the Northeast as hard as the states in the other three sections. The price indices of Charleston, Cincinnati, Oew Orleans, and Philadelphia demonstrate that prices in Philadelphia declined only about half as much as in the other three cities. While the Philadelphia price index dipped from about 98 in 1836 to 75 in 1843, the Charleston index dropped from 121 to 66, the Cincinnati index from 145 to 72, and the New Orleans index from 132 to 70.2 Although specie ratios would indicate that northeastern banks were as overextended as those elsewhere, generally they were sound institutions and better able to weather the storm than those elsewhere. In great part this was because the public had confidence in them and because their loans were more liquid. Banks in and north of New York managed to keep paying specie in 1839 when the second____________________