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A Note on the Interpenetration of Anglo-American Finance, 1837–1841

Published online by Cambridge University Press:  03 February 2011

Joseph Dorfman
Joseph Dorfman
Affiliation:
Columbia University
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Extract

There is a widespread impression among students of American financial history that, in the period immediately following the panic of 1837, American financiers engaged in sharp practices amounting to the wholesale deception of British bankers and European investors. This impression has been fostered especially in connection with the well-known episode of the partial or complete repudiation of state bonds by Arkansas, Illinois, Indiana, Mississippi, Louisiana, Michigan, and Florida in the 1840's. According to the charge, the large British bankers originally transacted business in the United States only through old and established bankers and agents. This enabled them to avoid the more speculative securities. Much of the distribution of bonds in England was done through three British firms, which were prominent in the merchant-banking business for the American trade: Thomas Wilson & Co., Timothy Wiggin & Co., and Geo. Wildes & Co.—popularly known as the 3 W's. A change for the worse occurred—so the charge runs—when these firms were forced to suspend payments because of the financial strain in England and the United States in 1837. After the resumption of specie payments in the United States the following year, a more speculative type of American banker, assisted by high-pressure salesmen who were sent to England, was prominent in financiering. These agents were so persuasive that they involved the British bankers in the wildest of schemes, and these bankers, in turn, disposed of American securities to equally innocent investors.

Type
Articles
Information
The Journal of Economic History , Volume 11 , Issue 2 , Spring 1951 , pp. 140 - 147
Copyright
Copyright © The Economic History Association 1951

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References

1 McGrane, Reginald C., Foreign Bondholders and American State Debts (New York: The Macmillan Co., 1935), pp. 14–19, 251Google Scholar; Ratchford, B. U., American State Debts (Durham, N.C.: Duke University Press, 1941), pp. 93–94Google Scholar.

2 Shaw v. Lea fill, 3 Sandf. Ch. 178, at 179 (N.Y. 1845).

3 A copy of the circular letter is in the Gallatin Papers, New York Historical Society.

4 Palmer to Shaw, March 3, 1838; Shaw to Gallatin, April 13, 1838, Gallatin Papers.

5 John L. Graham, “Statement… in Reply to … David Leavitt, Esq., Receiver of the North American Trust and Banking Company,” The Morning Courier and New York Enquirer, March 5, 1884; Leavitt v. Blatchford. 5 Barb. 9 at 16 (N.Y. 1848).

6 Joseph D. Beers to Palmer's, January 16, 1839, in Tracy v. Talmage, in Chancery, E.J. 1860, No. 557, Hall of Records, New York City; Leavitt v. Yates, 4 Edw. 139, at 180 (N.Y. 1850); Curtis v. Leavitt, 15 N.Y. 2, at 39 (1857). On Senior's investment see Levy, S. Leon, Nassau W. Senior (Boston: B. Humphries, Inc., 1943), pp. 284, 421.Google Scholar

7 Thomas Puzey of the Drawing Office of the Bank of England bought through Thomas Wilson & Co. in 1840 a five-year £ 500 sterling bond at 10 per cent discount.—“Petition of Thomas Puzey,” Tracy v. Talmage, in Chancery, BM-T-983, Hall of Records, New York City.

8 Shaw to Joseph D. Beers, April 13, 1839, in Shaw v. Leavitt 3 Sandf. Ch. 178, at 182 (N.Y. 1845).

9 Leavitt v. Palmer, 3 N.Y. 19, at 20 (1849); Leavitt v. Yates, 4 Edw. 139, at 180 (N.Y. 1850); Graham, “Statement” above cited.

10 “Blatchford & Talmage Trust (Bank of England Trust),” Tracy v. Talmage in Chancery, BM-T-983, Hall of Records, New York City; Thomas G. Talmage, “To the Public,” The Morning Courier and New York Enquirer, March 12, 1844.

11 The “Murray debentures” took their name from being issued in behalf of the company by a director, Colonel James B. Murray, while he was its confidential agent in London from the spring of 1839 to July 1841. When Murray was temporarily absent from London, Shaw acted as his deputy. See Murray to Joseph Langdon, September 30, 1840, Shaw to Langdon, December 8, 1840; in Tracy v. Talmage. In the Matter of the Claim of the Bank of Liverpool C.L. 81, Hall of Records, New York City.