The New York Clearing House in September adopted a measure which permitted dealings to continue. It authorized the banks to deposit the bills on hand, or the other securities they had accepted, in exchange for which they issued certificates of deposit bearing 7 per cent. in notes of $5,000 to $10,000 to the extent of 70 per cent. of the security deposited. Thus $26,565,000 of them were put into circulation.
Furthermore, they made a common fund of the legal tenders belonging to the Associated Banks for mutual aid and protection. The suspension of payment took place first in New York and then extended to the large cities of the Union; it lasted forty days, until the 1st of November; this measure was looked upon as having prevented the greatest disasters.
The table setting forth the situation, compared with the balance sheets of the Associated Banks of New York on January 1st, April 1st, July 1st, September 1st, and October 1st of the years 1870, 1871, 1872, and 1873, shows us the following changes: discounts had fluctuated from $250,000,000 in January, 1870, to $309,000,000 in September, 1871; they had become reduced to $278,000,000 in September, 1873, on the eve of the panic, and from the month of September, liquidation of the panic having begun, they were reduced to $250,000,000. Deposits from $179,000,000 in January, 1870, rose to $248,000,000 in July, 1871, with $296,000,000 of bills discounted, and once more reached $198,000,000 in September, 1873, with $278,000,000 of discounts and $195,000,000 in December.
Even at the most critical moment of the panic they continued larger than the usual average of the preceding years.
The metallic reserves played too feeble a role to have caused failure;
they had varied from $34,000,000 in June, 1870, to $9,000,000 in
September, 1871, $18,000,000 in September, 1873, and $23,000,000 in
December, 1873.
The circulation varied still less: from $34,000,000 in January, 1876, it decreased to $27,000,000 in July, 1872, and remained at the same figure during the year 1873, if we can judge of this by the balance sheet rendered on the first day of each quarter. In each case there is no opportunity for us to charge an excessive issue.
According to the statement of the Comptroller of the Currency, paper discounted decreased between the 12th of September and the 1st of November from $199,000,000 to $169,000,000.
To sum up, the circulation had fluctuated very little; deposits from $99,000,000 had increased to $167,000,000 between the 12th and 20th of September, at the most critical period; and when suspension was universal, they had declined to $89,000,000. After the breaking out on the 18th of October, and since then from the 22d of November, they had risen to $138,000,000.
The metallic reserve, after a brief revival from $14,000,000 to $18,000,000 between the 12th and 20th of September, had fallen back to $10,000,000, only to rise to $14,000,000 in November.
In the midst of these difficulties, the securities of the various States held up. Since the first months of 1873, the demands of the English market caused an upward movement in them; in September it was impossible to make a loan, without using them as collateral. In order to help the market somewhat, the Treasury bought about $13,000,000 of National securities on the Stock Exchange, but, lacking resources, that was the only effort it could make. The German Government invested quite a large sum in the new five per cents., so that the advance in public securities lasted through the whole year: the market rate for 5-20's advanced from 91 per cent. in April to 96 per cent. in October, in the midst of the market's panic.