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The Suffolk Bank and the Panic of 1837

Quarterly Review 2421 | Spring 2000

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Authors

photo of Arthur J. Rolnick

Arthur J. Rolnick Senior Vice President and Director of Research, 1985-2010

Bruce D. Smith

The Suffolk Bank and the Panic of 1837

Abstract

The Suffolk Bank in Boston is well known as having been the clearinghouse for virtually all the banknotes that circulated in New England between 1836 and 1858. An examination of 19th century bank balance sheets shows that during and after the U.S. banking Panic of 1837, this private commercial bank also provided some services that today are provided by central banks. These include lending reserves to other banks (providing a discount window) and keeping the payments system operating. Because of Suffolk’s activities, banks in New England fared better than banks elsewhere during the Panic of 1837. And after the panic, when much of the United States suffered a prolonged economic slowdown, New England fared better than the rest of the country, at least partly because of Suffolk’s central bank-like activities.