On the seaboard,
extravagance abounded as a reaction from the economies of war times,
imported manufactures found a ready market, and the domestic
factories were in distress.
While state banks greatly multiplied and expanded their circulation
freely to meet the demands of borrowers, [Footnote: Stunner, Hist,
of Banking, I., chaps, iv.-vi.] the United States Bank not only
failed to check the movement, but even contributed to it. After a
dance of speculation, the bank, in the summer of 1818, was facing
ruin, and it took drastic means to save itself. Its measures
compelled the state banks to redeem their notes in specie or close
their doors. [Footnote: Catterall, Second Bank, chap. iii.; Dewey,
Financial Hist, of the U. S., chap, vii.; Babcock, Am. Nationality
(Am. Nation. XIII.), chap. xiii.]
By the spring of 1819 the country was in the throes of a panic.
State-bank issues were reduced from one hundred million dollars in
1817 to forty-five millions in 1819. Few banks in the south and west
were able to redeem their notes in specie before 1822; but they
pressed their debtors harshly.
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