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Railroads and Wall Street

1820 - 1860
by

RJ Tee

on 21 October 2009

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Transcript of Railroads and Wall Street

Railroads and Wall Street Asher Dunn
Bryce Richardson
Richard Tee Introduction The 18-Teens 1820's 1830's 1840's 1850's March 16 1830: only 31 shares of
stock traded at $3,470.25

Introduced railroad issues this year (1930) Tariff of 1833 led to huge land sales National debt paid off in 1835 1836
President Jackson issued specie circular 1837
New York bank failure losses
aggregated almost $100,000,000

343 out of 850 banks closed completely

62 failed partially

System of State banks received a shock from which it never fully recovered The Panic caused a six year depression land was priced by law at $1.25 per acre

total land sales jumped from $2.6 million to $3.9 million in 1833 The War of 1812 Peace of Paris restored status quo ante bellum

European imports & exports
America had to rely upon internal resources

Congress had to borrow money

Treasury issued notes

120 charters issued for banks 1816
Rise in tariffs

1817
Exports and imports rose above pre-war levels
British securities sales in Philadelphia it the US financial leader
New York brokers copied the charter of Philadelphia’s better organized brokers
Constitution of 1817
Group of NY brokers renamed “New York Stock and Exchange board
Canal Mania
1819 depression

Panic of 1819
1st major US financial crisis
Tariff raise in 1816 facilitated post-war industry transitions

Overseas American Security Sales (American stocks and bonds)
Canal Mania

Technology advances lowered risk and price of canals

Exotic risky

Structure of Canal companies
Individual states would charter and operate the canal (public and privately operated canals)
Subsidization necessary due to large capital requirements
1822

Supply of canal stock exceeded demand

Price of canal stock rose
E.g., Morris Canal & Banking Company

Erie Railroad
Completed 1825 1828

Jackson elected over Adams
Anti-British

Wall Street was dominated by English investors
First administration
did little to hamper growth of railroads canals
1829

Safety Fund statute passed by NY legislature
insured banknotes of state chartered banks for full value
state chartered banks must contribute 0.5% annually of their paid-in capital until they contribute 3%

Railroads emerged as competition to railroads
E.g., Chesapeake and Ohio Canal failures fueled B&O success
Increased railroad construction providing alternate routes and lower rates

Dispatched trains with telegraph starting in 1951

Hudson River Railroad Completed 1951

1956 freight revenue surpassed passenger revenue

New York Central became largest corporation in US

Railroad a foundation for a transcontinental nation

Full transcript