Within the Haunting Bedrock | Part 13. Lower Manhattan and the Panic of 1837

As the nation’s financial center, New York City’s merchants, shipping firms, bankers, insurers, and brokers played a major role in international trade. After the devastating Great Fire of 1835, they all began rebuilding. Loans financed most of the rebuilding efforts. Large amounts of financed land speculation in the West also contributed to the Panic. Then, President Jackson ended centralized federal banknotes and instead gave several smaller banks that ability. People used gold and silver coins, along with the new banknotes, for their financial transactions. However, many banks did not back up their notes. The bank might have $100,000 in gold and silver, but $500,000 in notes. People rushed to redeem their notes when New York banks stopped exchanging them for gold and silver on May 10, 1837. The banks did not have the gold or silver, so they closed.

British banks became concerned about speculation in America and tightened credit. Their investors demanded repayment of the debts. Cotton exports, which generated much of the nation’s foreign earnings, collapsed. The Panic of 1837 was now in full swing. It upended daily life on the streets of Lower Manhattan into the 1840s.

The hardest-hit neighborhoods lie around Wall Street, Pearl Street, South Street, Front Street, Hanover Square, and the East River docks. When merchants failed, they dismissed their employees, who could remain unemployed for months. Fewer goods moved through the East River docks, affecting every worker. Entire networks of people depended on every ship entering the harbor. Fewer jobs were available everywhere, and they paid less, no matter the type.

Many people who could no longer afford private spaces moved into cheaper boardinghouses. Middle-class families rented out spare rooms. Junior clerks and laborers might share rooms with several others. The city was not yet the tenement city of the late nineteenth century, but crowding increased as incomes fell.

Growth, immigration, and construction continued, but caution and anxiety laid a pall over everything and everybody.