SHOWING WHAT A PANIC IS—ITS CAUSES—ITS BEGINNING—ITS ADVANTAGES, AND ITS CONSEQUENCES.—WITH THE AUTHOR’S LEAVE-TAKING.

A panic is one of those things in nature, which have existence without entity—something which may be felt, but can neither be traced nor followed. It has the power of motion and flight exceeding that of all cognoscible beings—for it can pass from city to city, on the wings of a single rumor. It has the power of making itself invisible, and can stalk through the streets in the day time unseen, frightening every body by its presence. It has the advantage of Archimedes’ lever, for it has a fulcrum in the credulity of the man; and you may easily turn the world upside down with it. It is, in fact, a kind of moral element, and, like the fire, a single spark may kindle into a conflagration, which the whole nation cannot extinguish; and it must be left to go out of itself, when it has no more fuel to nourish it. It may be called forth by a whisper, but a multitude cannot bind it. It is, therefore, one of the most important of agents, but like fire also it is dangerous to handle. It is a very good servant, but a very hard master, and sometimes consumes those who kindle it.

The causes of panic, must not be sought for among natural phenomena—no science of alchymy is necessary to compound it. It may be made up of truth, composed of falsehood, or combined from both. It may be produced by hatred, jealousy, or envy. It may arise from curiosity, or the love of the marvellous, or, from a more villainous cause still, the desire to profit by its effects. And with this knowledge of its causes, if men were wise, they would give less heed to it.

The beginning of a panic in a small country town, is usually indicated by the doctor’s riding through the village, without stopping to recognise his acquaintance, or an old woman hastily putting on her shawl, to run across the street to her neighbors.

What could it be for? says one.

Sure enough what could it be for? says another.

Don’t you think there is some bad disease about? says a third, and before long, the interrogatory assumes the shape of a declaration, and if not explained, and in less than a week, half the people of the town are sick, through fear that they may be worse.

What is Mrs. Toddle running about the street for? says one.

I expect she has gone to enquire about the school mistress. Says another.

I expect the school mistress will run away with that fellow yet, says a third, (she ran away once herself.) And before the week is out, the whole neighborhood is in a panic, for fear the school mistress should run away, and their dear daughters be corrupted, by her example—while the innocent subject of their fears is attending to her duties, all unconscious of the commotion she has occasioned.

In great commercial cities, a panic is a different thing, and first indicates its approach in a different way. The subjects to which it generally points, are politics, and money, chiefly the latter, and never the first, except as it may have a bearing on the last. Like great and pestilent diseases, it generally has premonitory symptoms, which commonly exhibit themselves in plethora, and a wasteful indulgence in luxury. And like those diseases also, it never attacks or alarms those of regular habits, and an equal mode of living. In the city there are regular panic makers! some of them work on their own account, as Donald said he fought, when it was found that he had killed more of his own clan, than of their enemies—and some of them work for hire, as the penny-a-liners do, in fabricating marvellous stories; and hence the opportunity and inducement for making panics in the city, far exceed those in the country.

Political panics, and money panics, are like electric bodies, one is positively charged, the other negatively, and the effect of this kind is, that when they approach each other, they produce an explosion, like the breaking of the Banks, &c. These are properly termed compound. A simple panic is more harmless, and like the Simoon, if a man can stand still, and hold his breath, it will pass by without harming him.

There is also another kind, called natural panics. These are such as sometimes happen in churches, theatres, &c.—and, although they have nothing to do with the subject about which I am writing, yet a description of one of them may aptly illustrate the reasonableness of the others.

When I was a young man, I went to a popular lecture in an old wooden church, which was very much crowded. During the service, as it appeared afterwards, some boys without, threw a handful of small gravel stones against the clap-boarding of the house, which made such a rattling, that a general rush took place, and the church was tenantless in less than a minute. Imagination pictured to some the tumbling walls. The noise of the rush, stunned every one. Some smashed the windows, and leaped to the ground, others, and some of them females, impatient to reach the door, and as they supposed a place of greater safety, strode over the heads of the dense crowd, making the most grotesque figures imaginable. Some were trodden down, but none were killed; and when all were safely out, with the exception of crushed hats, torn shirts, sore bones, and lost reticules, the enquiry began to be made, what has happened? I don’t know says one. Did you see any thing? asked another? No—did you? No—Nor I, said a fourth, and a fifth—and when all were satisfied that nothing had really happened, except a fright, they began, one by one, to approach the house again, and cautiously peeping in at the door, lest the walls might suddenly tumble about their heads, they saw the light burning brightly, and the honest clergyman sitting in his desk, the only man in the house, convulsed with laughter, at the fright of his late audience.

And so, when a panic comes in Wall-street, if any man will take a position, a little above the heads of the multitude, where he can see their folly, he may safely enjoy a hearty laugh, instead of suffering a fright.

A money panic, in the city, sometimes begins with a mere question of doubt, as, what do you think of the condition of the banks? and this question, handed from one to another, assumes new shapes, and gathers strength and importance as it flies.

Sometimes, it begins with a rattling noise, like the movement of specie, upon which the panic makers immediately conjure up the ghost of an earthquake, that is about to take place. Sometimes it is the price asked, or the refusal of a broker to buy a foreign bank note, for which he has no current money to give in exchange, which runs from mouth to mouth, and from hand to hand, until half the people in the town think their bank notes are worthless; and they will put them off for apothecary’s physic, rather than keep them. And sometimes it is the mere sympathy of suspicion, when every man suspects his neighbor to be in possession of some secret, which he is not. And all, or any one of these causes, is sufficient to make three fourths of the population of the town tumble over each other in fright, while the rest laugh, and scramble after the loose coppers, which they may let fall in the fray.

When a panic proceeds from any matter of fact, it is commonly such as this. The bank turns away some bad customer, who then spreads a report, that the banks are “very short;” when, immediately, every one applies for twice as much as he wants. In Wall-street phrase, “The offerings become very large,” and then they all fight and jostle each other, to see who shall stand first at the counter.

These are the incipient stages, which follow the first symptoms. Its increase is only a multiplication and enlargement of the same things; but when it is at its height, there is the greatest fun and fright, frolick and fight, imaginable. But as I cannot get up a pantomime show on paper, I will only relate a few anecdotes of actual occurrence, by way of illustration.

In the panic of 1837, a merchant of high standing in Broad-street, was indebted to a son of Johnny Crapeau, in the sum of three thousand dollars, money deposited with him on interest. One morning, while the merchant was busily engaged in his correspondence, Johnny came in in great trepidation, and announced the object of his visit, by saying; “Monsieur, I ver much want dat moneys que vous me devez.”

Ah! I thought it was to remain, we have paid you interest for it, when it was of no use to us.

“Eh! mon Dieu! I shall lose.”

“If you are alarmed for its safety, we have no objection to paying you.”

“Sare, I must have.”

The merchant directed a check to be drawn, for the principal and interest, which he handed to him, with a receipt for his signature.

“What is dis, monsieur?”

“That is a check for the money.”

“Den you pay?”

“Yes, you demanded your pay.”

“Eh! monsieur, (handing back the check)—I was alarm. If you pay, den I dont want. If you no cant pay, den I must have.”

Another instance quite as reasonable, and of equal notoriety, was a French gentleman of respectable property, entirely out of business, and out of debt. His sympathies were so much wrought upon, by the reported distresses of the community, that he began to be alarmed for himself; and accordingly applied to his bankers for a loan, which being granted, he suffered the money to lie on deposit: but his excitement growing warmer, he applied again and again, when being expostulated with by the cashier, that he did not want the money, and that others did, he replied, “sare I am afraid dat dis ting will me ruin. Sare, I must have moneys. I shall starve, if I have not moneys. I must have de loan.” His request was complied with, and when the excitement was over, without ever having drawn a dollar from the bank, he paid his debts with the loss of interest, and the gain of a good deal of mortification.

These are some of the follies of the panic. The villainies also deserve some notice.

A notable whig, and a friend of the banks, who thought nothing so good as bank notes, so long as their circulation yielded him interest, is reputed to have borrowed all he could, and then to have drawn the specie, which he hid away in his cellar, and stood sentry at the door himself. Some supposed that he was alarmed for the safety of his property, but more are of opinion, that his object was, to assist in breaking the banks, and then pay his debts in their notes at a large discount.

But I should trespass too largely on time and paper, to give one in a thousand of the instances which may be cited, and I will therefore illustrate the truth, by relating a few of the exploits of a notable individual.

Mr. S. was a merchant of wealth and large business. Mr. A. his debtor, was erroneously reputed to have failed, and being angry and grieved withal by the slander, he went to his friend S. for advice and consolation, and told him that so far from having failed, with a very little sacrifice, he could pay all his debts on demand. Mr. S. always governed by that cunning, which supreme selfishness and want of principle dictate, advised his debtor to make the sacrifice, and advertise for his notes, to be brought in for payment, as a means of substantiating his credit beyond all doubt in future. His advice was followed, and it so happened that Mr. S.’s was the first note sent in; and report says, moreover, that having enquired of A., to whom he was indebted, he went to the persons before the advertisement appeared, and bought A.’s notes at a large discount, and sent them in also.

This same gentleman had many customers in his business, and of course many debtors. Their notes were always lodged in the bank for collection, and when some of his customers came to him for partial aid, to help take them up, his reply was, that he had no money to lend; but, said he, “you can get the money for my note, and I will lend you that for the ordinary commission of 2½ per cent., if you will secure me for it.” The security was willingly given, and the customer was told, if the bank don’t discount the notes, the brokers will; and as soon as the customer was gone, instructions were sent to the brokers, “if such a note appears, buy it for me at double rate of interest.” He usually got possession of his notes again in this way, for be it known that he was a director in the bank, and to add to the virtue of his liberality, the money which should have been lent to his customers in the first place, was lent to himself, with these views and for these purposes.

I know not under what class of morals you will place this kind of sagacity, but in Wall-street it is denominated “shrewdness,” and adds greatly to one’s respectability and consequence.

But that you may not be deceived in your judgment, I will go farther and say, that what makes a character in Wall-street, does not make one out of it. Here the standard is money, but elsewhere, it requires some other ingredients to arrive at any level much above the lowest; and a man destitute of education, intellect, genius, principle, morals and religion, (though last here, yet not least,) can hardly arrive at a condition of respectability, much beyond his own conceit of himself.

I never knew such a man as Mr. S., who was not deficient of education in every thing, except how to get money. The sum of his knowledge is limited to the first rule of arithmetic—addition; and although his wealth and credit may enable him to enlarge the sphere of his observation, still, it is all brought to the same practical use, addition.

Such a man always owes his little elevation to one of two things, to fortuitious circumstances, or to his own villainy; and his mind is incapable of appreciating any higher standard of morals than his own. As I once heard one of them say, (inadvertently no doubt, but yet in the honesty of his soul) when another was recommended to him for credit, on the ground of his honesty, he replied, “a very good thing for the owner, but a very poor commodity in the market.”

It is not against the people of Wall-street, or Pearl-street, or South-street, or any particular branch of business that I would be understood to aim the bitter shaft of sarcasm, but against those individuals of known delinquency, and against those principles and practices, which have, of late, obtained a tolerance that, in times gone by, would not have been suffered. And were it proper for me to do so, by way of contrast, I would here sketch a portrait of some among the many I know, who hold a just balance, and the even tenor of their way, whether in peace or in panic; but I could not do it faithfully, without pointing too clearly at those who have no need of my commendation, and who would choose that their reputation should rest on their own unaided merits.

Perhaps you have already anticipated some of the advantages which may arise from a panic, but my description would be incomplete, were I to omit to sketch a few of them.

The spirit of our institutions does not admit of the concentration or entailment of property. And here, if a man has property, and will act honestly, he need not wait the term of his mortal existence, for his children to ruin themselves afterwards, by spending it. He can ruin himself, and them too, by simply placing himself in the vortex of a single panic. But, on the contrary, if his tastes lead him to choose the former expedient, this affords him an ample field, for no scheme can be devised better calculated to make the rich richer than this is. It places the dependent debtor wholly in the power of the creditor, and he may take his pound of flesh with interest, without extracting a groan or a sigh from his patient. Nay, he will rise up from the operation, and thank him for not taking two. A panic, then, serves to hasten changes of property from one to another, and thereby acts in accordance with the spirit of our institutions, which encourages rotation.

Its advantages, also, to the separate classes of dealers, who inhabit Wall-street, deserve each a passing notice.

It enables the stock-dealer, who has heavy contracts to fulfil, to complete his engagements at a great profit to himself. It is of no consequence that what he gains, another must lose; the advantage to him is unequivocal, and, accordingly we find that these gentlemen are great panic makers on their own account.

It enables exchange dealers to demand double rates on all distant places, and, although the effect is to reduce the value of all debts due from those sections to citizens here in the same proportion—yet, he is benefited, and if people will not pay him his rates, they have the option to go and collect their money themselves. The greater and the more frequent the panic, therefore, the better for the exchange dealer. It also enables those Banks which have a speculative turn, to divert their capital from the paltry business of discounting, to speculating on their customers’ wants, by becoming dealers in exchange. It greatly increases the profits of the Bank-note dealer, by enabling him to increase the rates of discount, and one peculiar beauty of his business is, that the more discount he asks, the more ready his customers are to sell. This class of dealers are deserving the particular regards of the country Banks, since their interest advances exactly in proportion as they can discredit them.

I have passed hastily over all these classes, although the ways and means by which each one of them contrives to turn a panic to their advantage, contain a fund sufficient for a long evening’s entertainment. But my descriptions are not intended to be wire-drawn, and, besides, I wish to leave room for future lucubrations, without the necessity for gleaning too closely.

The consequences of a panic are those portions of it which “may be felt;” and they begin to be felt, when people begin to count their losses, I have before said that a panic was like fire, and the simile holds good, except in one particular. The fire destroys—the panic only changes property. In both cases people are prodigiously frightened; many wounds and bruises are received, and not a few are driven from their business, and made houseless, and homeless. In the panic, as in the fire, also, there are both incendiaries and thieves, and it is a matter of doubt, which requires the most vigilance to protect one’s self from.

The scenes exhibited when a pestilence has passed through the city—bringing suffering and bereavement to hundreds—when a storm has swept along the coast, strewing its shores with the ships and the treasures, which the day before floated securely on the bosom of the waves—when the locusts have passed over the fields, leaving nothing but the ravages of destruction behind—and when business men have passed through the ordeal of a panic—are of one and the same character, with this difference only; the first are events directed by Providence, which men have not the power to avert, and the last is the result of their own folly, or the wicked designs of a few. But it will be said that no single voice, nor even many voices, can control the multitude—very true; but when a mob takes place, if every man would go straight about his own business, instead of stopping to join in the hue and cry—there would be no mob. And if the magistrates join in the mob themselves, there is no authority left by which to control it. When a panic in money matters begins, there seems to be a predisposition in the bystanders, either from want of employment, the love of story-telling, or the desire of mischief, to aid all they can in spreading it.

I might add, too, that many newspapers are not among the least, in bestowing their influence in this way. Some of them wish to appear wise above their fellows—and I consider it not at all derogatory to the general character of ability which they possess, to say that, in money matters, some of their editors really know very little of the things about which they prate. I believe it often happens that what they publish, is but the proclamation of those who design to increase the panic—and if they are to be believed themselves, some of them have published things contrary to their better judgment, and perhaps their own knowledge.

They can all point to the right quarter, and none of them will consider this a slander, but such as know they deserve it.

If, therefore, when a panic begins, men would improve what they know for themselves, instead of giving their neighbors the benefit of what they don’t know, but have only heard or surmised—If the magistrates, the leaders and controllers of the money market, would consult something else besides their own interest, in promoting it, or their immediate safety, by escape—we should have a less frequent occurrence of panic. And, being convinced of these facts, every man can easily understand, and no doubt does understand, what he ought to do in such a case.

But I perceive I am getting wide from my subject, and prating about the causes of a panic, instead of its consequences. If we would follow these out to their end, we must leave the disorganized condition of business, and follow men into their secret communings with themselves; and mark the anguish of despair, the bitterness of cursing and disgust with their fellow men, occasioned by their blasted hopes—we must follow them in their principles, and see how many are corrupted by example, and how many have done their first act of villainy, in the vain hope of escaping from its consequences. We must follow them in their morals, and see how many have, by the excitement of circumstances, lost their self-respect and control. And we must follow them to their homes, and see the desolation wrought by a sheriff’s levy, or a bill in chancery, and witness the broken repose, and see the tearful eyes of loved ones: and then let any one make a levy or file a bill, or aid in a panic, who chooses.

But the mind sickens at the picture, and I turn it with pleasure to a better light, to bring out its now hidden colors.

Every man must have felt, many times in his life, that it is better to laugh than to cry. In this case, it certainly is, the proverb of Solomon to the contrary notwithstanding; and among the many who, in the last few years, have been the victims of panic, not a few I trust are, by this time, ready to agree with me. Many an oak has been shorn of its boughs, and lived to withstand a hundred storms; many a ship, dismantled of her spars, has gained her port,—and floated again as gallantly as ever; and many a man bereft of his fortune, has lived to dispense large bounties of charity from his store; many a one too, who has long fainted beneath the load of his griefs, has lived to command those who oppressed him.

Experience is sometimes a very hard, but always an efficient teacher; and those who have suffered will have the satisfaction to know better hereafter, who to trust and what to trust, and taught to rely more on themselves. And if afraid of a panic in future, he will be able to prepare himself on the first appearance of the “premonitory symptoms,” and when he sees it coming on the wings of the wind, like the man in the simoon, he may then safely turn his back, hold his breath, and let it pass by. At any rate, like the people I described in the church, he will find himself more comfortable and happy to return, and take his seat, than to be wandering about in the cold, among the multitude without, to find out what has happened.

I have now finished six days in Wall-street, which, by the only book of Ethics that I have ever learned, are the whole of the week that is at my disposal. I can hardly suppose that any man in his senses, has followed me through all the descriptions of truth and villainy, fact and fiction, sense and nonsense, which I have here given; but if any one has been so patient, I am bound to take a courteous leave of him.

First I am bound to thank him for the “high consideration” given me. And should his better feelings tell him that I am too severe, I only request him to ponder what is true—

Nor set down aught in malice.

But if when he shuts this book, he shall say, amen, he is entitled to my thanks for his patience and a double congee for his approval. No one will of course take any thing that is here written to himself, unless he discovers in it some features of his own portrait, and to those who can make such discovery, we owe neither apology nor sympathy.

I have now taken leave of my venerable friend the Chronicler; but I have no doubt that while he lives, he will continue to visit Wall-street daily, as he does also some other popular places of resort, to “catch the manners living as they rise.” And although I shall not be favored with his oral communications any more, yet he has promised me the free use of his diary while he lives, and of his manuscripts when dead, which are said to contain many important histories, not only of things long past, but also of the current events of the day, together with many valuable reminiscences intended only for posthumous publication.

But should the good people of Gotham, take so lively an interest in these revelations, as to invite their continuance, by buying this book, I can not say that such inducement will not call forth another compilation, from the mass of materials now at my disposal.