Today, the Civil War Commemorative Gold Five Dollar Coin remembers the banks and their decisions 154 years ago.
Two newspaper articles, one from Baltimore and another from Providence, give us insight into what the people of the day saw regarding their banks and their money.
American and Commercial Advertiser; Baltimore, Maryland
The Suspension of Specie Payments.
The telegraph announces the simultaneous suspension of specie payments by the banks of New York, Philadelphia and Boston.
The New York Times says:
A Committee representing the Banks of this city met on Saturday evening, and after a prolonged sitting, determined to suspend specie payment, to take into effect today.
It was voted to make a further payments of $3,500,000 on the last $50,000,000 loan, for the purpose of enabling the Secretary of the Treasury to meet his January interest, and to pay a requisition in favor of the State of New York, for advances made the National Government.
The associate Banks of Philadelphia and Boston have undoubtedly taken a similar step, which will be followed by all the Banks of the country.
A suspension was inevitable, because the flow of money was all in one direction—from the cities to the country. A well devised system of taxation would have corrected this. Had it existed, it would, very probably, have left the specie in the vaults of the Banks, in effect undisturbed.
So far the expenses of the war have been almost solely met by borrowing. The ordinary revenues of Government had fallen off nearly two-thirds their usual amounts. The tax bills passed at the extra session of Congress were not to take effect within the current year. These will soon cause a return flow from the extremes to the centers.
To these bills we presume Congress will immediately add others, increasing at the same time the rates already imposed, so that the internal taxes will produce, say $150,000,000 or $200,000,000.
The levying and collection of such taxes will tend to restore the exchanges of the country to their normal condition, and will, at the same time become the basis for the circulation of Treasury notes to an equal amount, and in which Government dues will be made payable.
In this way the whole strength of the county can be immediately utilized, and ample means placed in the hands of Government for its present necessities, while the adoption of a sound system of finance will give such a credit to its bonds as will enable it to realize from the sale of these what cannot be raised by direct taxation, to meet a present emergency.
There is no doubt whatever that the steps taken by the banks will be regarded as a measure of relief both to the Government and the public. It has absolved both the former and the banks from a standard which neither could maintain, while it will lead to measures by which the capital of the country can be more effectually reached, at the same time relieving the business man of all apprehensions as to the future.
We can be mainly indifferent as to the effect of the measure abroad. As the balance of exchanges is largely in our favor, foreigners must continue to add to our stocks of specie, instead of drawing upon them.
Specie is not likely to be really any less abundant after than before suspension. There is at the lowest estimate$250,000,000 in the loyal states—probably a much larger sum.
We doubt whether gold tomorrow will command a premium even if wanted for shipment abroad. There is enough in the country for every commercial want that can arise.
Suspension resulted not from a scarcity of it, but from a disturbance in the internal exchanges for the want of a law to make the burdens of the war uniform upon all parts of the country.
This evil, which will undoubtedly be speedily corrected, will return to the banks all the specie they have parted with, and cause it to move throughout the country in harmony with the ordinary laws of trade.
The Providence Daily Post; Providence, Rhode Island
Suspension of Specie Payment.
The telegraph announces the suspension of specie payment by the banks in New York, Pennsylvania, Albany and Boston. This is a sudden movement, it being to some extent supposed that there would be no suspension before ht last of January next.
Without going into any speculation as to the immediate cause or causes that have resulted in so sudden a movement on the part of the banks, we may simply state what is generally known, that the sale of American Securities within the past fortnight has been very heavy. Of these securities it is estimated that England holds about $400,000,000.
We may add that the Banks of this city, at a meeting holden yesterday afternoon, decided to act in harmony with the banks of the cities above name. We subjoin an authentic copy of their proceedings.
“At a meeting of the Providence Banks, held at the Bank of North America, on Monday, December 30th, 1861, at 3 o’clock, pm Seth Padelford was chosen Chairman, and Henry C. Cranston, Secretary.
“The following preamble and resolutions were adopted:
“Whereas, It has come to the knowledge of this meeting that the Banks in Boston, New York and Philadelphia have suspended the payment of specie; and
“Whereas, The present financial condition of our country requires the adoption of new measures of relief, therefore,
“Resolved, That the Banks in this city hereby agree to suspend specie payments from this date.
“Voted, That a committee of five be appointed to devise and report some plan of exchange, and to regulate the currency between the banks during the suspension of specie payment.
“Voted, That the present system of exchange be continued until the above committed report.
“The meeting adjourned to Friday next, at 3 o’clock, pm, at the same place.”
The New York Herald of yesterday, speaking of the suspension in that city, says:
The government will of course follow suit today. It is a judicious movement, and will not prove any degree prejudicial to our business affairs.
A short time ago our city banks had a specie accumulation of some forty millions of dollars. It has been reduced to twenty-five millions—a reduction which indicates a drain and a strain which it is prudent to stop.
In looking out for their own interests at this crisis the banks are consulting those of the government and the country, for they are intimately blended with each other.
Our financial affairs will now go on smoothly.
No country of modern times has ever yet been involved in a great war without being compelled to resort to the precautionary measure of a bank suspension of specie payment. By this movement the two hundred and seventy-five millions of specie in the country will be retained here for our own use.
The New York World says that the banks have been driven to this measure by the failure of Congress to adopt the requisite legislation for putting the financial system of the country on a sound basis.
The New York Times says the suspension resulted not from a scarcity of gold, but from a disturbance in the internal exchanges for the want of a law to make the burdens of the war uniform upon all parts of the country. This evil will undoubtedly be speedily corrected.
The New York Tribune says the heavy drafts on the coin of the banks caused by their large advance to the Government rendered this step, in their judgment, necessary.
The Civil War Commemorative Gold Five Dollar Coin shows beside an artist’s view of people reading the war news on Broadway in New York, circa 1861.