THE PANIC OF 1814.--An agreement took place at Philadelphia between the
bank and the chief houses allied with it to resume payments at the end
of the war.
Unhappily, the public did not demand the accomplishment of this promise
at the time fixed, and the banks, led on by the thirst of gain, issued
an unprecedented amount of bank notes. The general approbation brought
about a still further increase in their number: the bank notes of the
Bank of Philadelphia were at a discount of 80 per cent.; the others at
75 per cent, and 50 per cent., and metallic money disappeared to such an
extent that paper had to be used to replace copper coin. The
depreciation of fiat money raised the price of everything; this
superficial occurrence was looked upon as a real increase, and gave rise
to all the consequences that a general inflation of value could produce.
This mistake on the subject of artificial wealth made landed proprietors
desire unusual proceeds. The villager, deceived by a demand surpassing
his ordinary profits, extended his credit and filled his stores with the
highest-priced goods; and importations, having no other proportion to
the real needs than the wishes of the retailers, soon glutted the
market.
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