The Present Commercial Panic in the United States, its Causes and its Effect Upon Us, Should the Same Continue (1861)

Source: The Polynesian. Saturday, January 19, 1861.

The last mail brought intelligence of a commercial crisis in the Atlantic seaboard States, which bids fair to surpass in its deplorable effects upon trade the revulsion of 1857, inasmuch as it is more extended in its influence, and springs from other than the natural causes which have governed part stringencies and collapses of markets. 

The pecuniary panic to which we allude has been mainly brought about by political causes, and the cloud at present no bigger than a man's hand may yet assume such a portentous aspect, that it will behoove every merchant to take in sail in time and get his ship of adventures under snug sail to meet the coming storm.

It is a pecuniary panic springing it is said from political causes, which is worse than one arising from financial derangements, because it is more difficult for business men to understand its workings, and to handle the matter. It is so Protean in the shapes it assumes, that no sooner is one phase met, than lo! another arises to bewilder the negotiant. In a few words, then, it appears from what we can gather from the public prints from the Northern, Southern and Western sections of that great Republic, that the South has initiated an attempt to commercially to cut clear from trading with the North. She has refused to take any manufactured goods from the North, and to accept nothing but gold for the balance of her last crop, and expresses a firm determination not to let a bale of the present crop go North, nor aloo a single article of goods manufactured at the North to come in at the South, thus virtually tabooing all commercial intercourse. This has produced an immediate derangement of inland and foreign exchanges always the commercial pulses that show the state of the fever that rages inwardly. The magnitude and intimacy of the commercial relations of the United States with all the world is so great, that whatever affects them may extend to those nations with whom they trade; and it is from this possibility, that a panic originating in the struggle between the North and South, is but the commencement of one of those great commercial revulsions, which may to some extent create embarrassment in pecuniary matters throughout the world.

The South, it is said, will not sell her cotton to England unless for gold. Should this be so, the Bank of England will raise its rates of interest to prevent its efflux, which in such an event will be followed by immense embarrassment and failures in that country. 

Should this estrangement of the South from the North continue, and end in secession, how will it effect us? If the South will not supply cotton to the North, for their manufactories, nor purchase northern manufactures when made, the Boston and New York manufactures will cease to give orders to the factories, and turn their capital to other branches of trade. These steps will compel the manufacturers to discharge their workmen, and stop their works. This will affect at once the price of oil, shutting it off as it will so great an outlet for the consumption of that article. 

Should the difficulties between the North and South end in disunion, sugar, rice, tobacco, cotton, and all the products of the Southern States, can be raised in our Kingdom, and they will immediately feel the impetus given by the disintegration of the United States to these articles, which, in the language of the Southern States "is King." 

Louisiana, which has always controlled the sugar interests in the Republic, and used her influence to keep up the duties, will belong to the Southern Confederacy, and the North, the great consumer, will probably admit our sugars duty free. This course and the difficulties there, would immediately bring further capital and emigration to our shores, and lead to a development of the industrial resources of our islands. 

But the foregoing reasonings may all be conjectures, nevertheless, it is impossible for the careful business man to look at the state of affairs at present existing in the United States, and the tone of the most conservative of its journals, to avoid shuddering at the distress which, commercially, is in prospect, should it continue.