My research today started with Our Mysterious Panics by Charles Coleman, 1931. There is recounted the story of Jay Cooke. He was entertaining President Grant when he received word that "his wall street house, had announced its suspension on September 18, 1873." Mad panic carrying the entire financial world followed. Western Union lost 10 points in 10 minutes. Brokers tore their hair off and ran off mad.

The Commodore refused to help: "I am a friend of the iron road, but building railroads from nowhere to nowhere at public expense, is not a legitimate undertaking." The exchange was closed for a week. About this raged mad confusion. Rock Island was breaking in terrific fashion. Pacific Mail tumbled and Central and Wabash were being tossed from hand to hand. Their paper went to protest. Pale faced brokers, impotent slaves to the dominant catastrophe rushed out upon the floor. Our friend Henry Clews suspended.

But after the downfall—— Recovery. (canes). It may yet to be proved that "the riches of nations can be measured by the violence of the crises they endure" (a self fulfilling prophecy).

 Years after the derangement of 73 had spent themselves, an old man, whose long hair, side whiskers and beard flowed silvery white to the collar of his old fashioned cape coat, was to be seen wandering through Wall Street. He seemed bewildered. He was looking up some half remembered trail. He dropped into the offices of the Union. He was at once admitted to the private offices of Sidney Dillon, the President.

There sat next to him Jay Gould. "How are you Mr. Cooke?". The railway chief reminded him of a long forgotten incident. "I was in trouble then, and you staked me. I shall always remember that, Mr. Cooke. What do you say shall be done?"

Cooke unrolled his maps and presented his care to invest in some silver mines in Utah. In order to develop it, it was necessary to construct 176 miles of railway. "With us three men," observed Cooke as he gathered his documents, "is there the least occasion for a written agreement?" "No," was Gould's abrupt response. "We will take the remaining half interest and supply you with the money."

Cooke's silver mine proved of exceptional value. He sold his interest later for nearly a million dollars. The sum enabled him to regain possession of his old home in the Chelten Hills, Ogontz, from which his creditors had driven him.





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3 Comments so far

  1. Greg Rehmke on May 21, 2011 1:55 pm

    I know little of this period or of the panic. Panics thought, are the beginning of reality setting in, though they usually overshoot. So we should look to the three to five years before 1873 for the growing optimism to enthusiasm to madness of investors–from England and Germany especially, I would guess–shifting funds into the “limitless” potential of railroads, any railroads…

  2. Kelvin Meeks on May 21, 2011 4:31 pm

    A quick web search turned up this pdf on the St. Louis Fed web site which appears to be a bibliography of publications that may also be of some interest:

  3. jeff watson on May 22, 2011 8:31 am

    Here is a pdf of Clews original book, which is exacting in it’s description of the various and sundry characters, the panics, the market conditions, the prevailing winds, the railroads, the steamships, the bonds, the winners, the losers, and the marvelous corners. If you haven’t yet read this book, your education is very incomplete. Not to say that my education is complete……..


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