No more loan certificates were issued until the year 1873, when for the first time the Clearing House associations of other cities, seeing their great practical utility, began to avail themselves of their use. In the year mentioned the association at New York followed the precedent established in 1860, and the same course was taken by the Clearing House Associations at Boston, Philadelphia, Baltimore, Cincinnati, St. Louis and New Orleans. The panic which called forth such united action was one of unusual severity. It reached its climax in September, and so severe were its ravages that the New York Stock Exchange closed its doors on the 20th of the same month, for an indefinite period, but reopened them ten days thereafter.
The usual resolutions were passed by the Clearing House Association, authorizing the issue of certificates, and on September 22d the first issue was made. The amount was fixed at the outset at $10,000,000, which, with the announcement that the Government would purchase the same amount of bonds, caused an immediate subsidence of the panic, and in less than three days its most acute stages were over. During the two months referred to, certificates to the amount of $26,565,000 were issued.
New Orleans alone issued certificates in 1879, the amount being $54,000. New York alone issued certificates in 1884, the amount being $24,915,000.
The next certificates were issued Nov. 12, 1890, and the issue ceased December 22d, amounting in the aggregate to $16,645,000; the largest amount outstanding at any one time was $15,205,000, on December 12th; and the last certificates were retired February 7, 1891, less than three months from the date of the first issue. Boston and Philadelphia followed. Then came one of the memorable panics, 1893.
The issue was commenced June 21, 1893, and ceased September 6th of the same year, the total issue having been $41,490,000. The largest amount outstanding at one time ($38,280,000) was attained August 20th, which amount remained unaltered until September 6th. Then followed Philadelphia, Baltimore, New Orleans, Cincinnati, Buffalo, Atlanta and Birmingham. Birmingham to protect its cash issued denominations all the way from twenty-five and fifty cents up to $1, $2, $5, $10, and all the larger amounts.
Besides the loan certificates issued in 1893, there was a considerable amount of emergency circulation taken out by the banks in the Southeast, under the title of "Clearing House certificates," in cities where no Clearing Houses existed. In adopting the name of Clearing House certificates, it was not the purpose of the banks to practice deception on the people, but to indicate what was really true and what the term would seem to imply, namely, that such certificates were temporary loans made by the banks associated together, and that the banks were pledged for their redemption. The denominations in the cities referred to were: Albany, Ga., $10, $5, and $1; Chester, S.C., $10, $5, and $1; Columbia, S.C., $50, $20, $10, $5, $2 and $1; Danville, Va., $100, $50, $20, $10, $5, $2, and $1; Newman, Ga., $10, $5 and $1; and Rock Hill, S.C., $5, $2 and $1. There is no doubt that the relief afforded in this manner was of great public assistance in the several communities where it was given, effecting results similar to those accomplished by the actual Clearing House loan certificates in the great centres. Business houses and corporations came to the relief of the situation and among them was the New Bedford Mfg. Co., Social Mfg. Co., Hartford, Conn., Eagle and Phœnix Mfg. Co., Columbus, Ga., Swift Mfg. Co., Columbus, Ga., Arnold Print Works, North Adams, Mass., Richmond Locomotive Works, Richmond, Va., Minneapolis and Northern Elevator Co., City of Tacoma, City of Richmond, City of Johnstown, Pa., Loomis and Hart Mfg. Co., Chattanooga, Tenn.
So much for panics up to our last. Then came the panic of 1907. Of this a prominent banker and economist has said: "The truth is that responsibilities for the panic of 1907 lie at the door of our currency system. No other adequate cause can be found. We do business by the modern system of bank credits, but we have failed to supplement this machinery with the means for readily converting bank credits into cash."
On Oct. 26, 1907, New York issued Clearing House loan certificates. On Oct. 26, 1907, Chicago also issued Clearing House loan certificates. On Nov. 6th, Chicago issued Clearing House checks for $1, $2, $5, $10, amounting to $7,500,000. These checks were secured by Clearing House loan certificates.
On November 16th, Philadelphia issued Clearing House certificates and the business houses issued pay checks for wages which were cleared through the Clearing House.
During the fall many cities issued Clearing House checks in small denominations which were used for currency. Canton issued pay checks for $1, $2, $5 and $10, amounting to $200,000, which had no security back of them.