Panic of 1857

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Panic of 1857
The decline of foreign economy and the growth of local businesses prompted the financial crisis of 1857 (Fulfer 1). Acute financial disturbance and widespread bank failures accompanied by regional tensions characterized the economic situations of this severe financial history. In October 1857, John Livingston went to the bank to convert his two circulations of notes with a face value of $ 100 each into specie only to be turned down by the bank employee upon presentation of the paper currency for redemption. Later that day, member banks of the New York Clearing House (NYCH) suspended the conversion of circulating notes into specie.
The economic prosperity was visible before the crisis, but later got accelerated by the tons of gold mined in California, leading to the vast money supply. Due to the reduction of the amount of gold mined, eastern banks became wary and refused to accept issued paper currency from other banks from the west (Ross 8). After the Supreme Court ruling in Dred Scott case for freedom, the federal government looked as if it could not abolish the slave trade, thus significantly impacting the development of western territories (Ross 41). Stock bubbles increased speculative entries into the fray, further affirming the uncertainty of railroads.
Livingston sued to dissolve the bank of New York purposely to extract his $ 200 in specie. The arguments presented were that inability to pay as a result of unexpected contingencies is not evidence of insolvency within the statute. Traders who protested due to failure to receive services from those they had relied on or in cases where the debtors are declared bankrupt would not be sufficient reason to declare insolvency. Such also applied even in situations where one failed to fulfill the obligations. The inability to pay is a result of stringencies in the monetary affairs of the country.
Since banks’ discount procured bills receivables to mee...