This
imprudent management necessarily threw one portion of the public into
debt, from which it had saved itself; and the other portion into the
vortex which it had avoided. The critical moment was delayed somewhat,
but the day of reckoning was near.
THE PANIC OF 1818.--The Bank at last discovered that it had passed the
bounds of safety through its issues, and that it was at the mercy of its
creditors. It saw firstly, on October 21, 1818, the payment of part of
the State of Louisiana's foreign debt withdraw large sums, and then
Chinese, Indian, and other goods reach fancy prices because of the
depreciation of the circulating medium. All these influences produced a
demand for specie payment which the Bank as a public one was obliged to
meet, under penalty of 12 per cent. interest, and without power to avail
itself of the same accounts as the State banks.
From this moment it thought fixedly of its safety and of how to reduce
its notes; this reduction obliged the other banks to imitate it, and a
new crisis shook trade in the end of October, 1818. During one year the
National Bank furnished from its cash boxes more than $7,000,000, and
the others more than $3,000,000.
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