Collection of the Museum of American Finance

By Peter C . Earle

“ About once in 10 years ,” wrote Matthew Hale Smith in 1879 , “ New York is visited by a great financial revulsion .” In the 14 decades since those words were written , it ’ s a pattern which has scarcely been broken . In just the previous quarter century , we ’ ve endured the COVID market crash , the 2008 Financial Crisis , the dot com bubble and subsequent 2000 – 2003 bear market and the 1998 Russian financial crisis . Smith continued :

It usually begins in Wall Street , and sweeps , like a tidal wave , over every part of the land — paralyzing every interest , and ruining men by the thousands … As the gates of the Temple of Janus , open or shut , indicated peace or war throughout the world — so , as Wall Street is , so is the country . When the bulls and bears are at peace — when money is plenty , when the Stock Exchange shows a brisk market and the sales are regular ; when the street is healthy — then it is known that peace , prosperity , and success cover the land . But when Wall Street is excited , every part of the nation is affected . Here is the seat of the commercial brain … Wall Street is the throbbing heart and the whole nation is the body through which the agitation flows .

In September 2023 , the Panic of 1873 will have occurred 150 years ago . Although the Vienna Stock Exchange crashed in May 1873 , the first cracks in the facade of US markets only materialized in early September 1873 . The New York Security and Warehouse Company was the first to suspend payments , a victim of the Missouri , Kansas & Texas Railway ( MK & T ) Company . Stock prices began falling . Five days later , on September 13 , the brokerage Kenyon Cox & Company closed . Of note because it was partially owned by Daniel Drew , the firm had been exposed to the Canada Southern Railway — a “ road ” by that time in such a precarious financial state that despite being “ 324 miles long … [ it ] had made no public reports of its operations doubtless because they were not worth reporting .”

The rush from the New York Stock Exchange on September 18 , 1873 .

26 FINANCIAL HISTORY | Summer 2023 | www . MoAF . org