Money Mayhem

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Banking, for the most part, is taken for granted today. We use its services to pay our bills and make purchases and don’t worry too much about the safety of our funds. Of course, that security wasn’t always a given. We’re going to look at a couple examples from pre-Civil War America to see what happened in the far more perilous 1830s and ’40s, when financially bad things frequently happened to good people.

The Free-Wheeling 1830s

Our first story takes place in Decatur, Mississippi, in 1838-39. Decatur, named after U.S. Navy hero Stephen Decatur, was founded as the county seat of Newton County around 1836. Nestled in east central Mississippi, the town was small (the entire county’s population was only 2,527 according to the 1840 census) and did not seem like a particularly good location for a bank. In the free-wheeling days of the 1830s, however, that did not stop a group of “bankers” from establishing the grandly named Mississippi & Alabama Real Estate Banking Company there around 1838, apparently without the pesky formality of a state charter. The bank’s capital was secured by real estate and was to be paid in cotton, as stated on each note. The timing in forming such a bank was exquisitely bad. The Panic of 1837 caused real estate values to collapse and placed severe strain on the banking system.

Disastrous Fire

Not surprisingly, a bank whose security was based on real estate was not in a good place during these perilous times, and apparently redeeming notes was not high on the bank’s list of priorities or even possibilities. Residents expressed their disappointment and frustration in a very direct way. As related in the Southern Argus newspaper on May 21, 1839: 

“ANOTHER BLOW UP—The Decatur Miss Real Estate Bank has followed the footsteps of some of its illustrious predecessors; and such was the excitement of the people on the occasion, that the building in which the banking operations were carried on, was burned, together with all the books and papers, nothing was saved. It was feared that the mob would wreak their vengeance on the persons of the directors of the bank.”

The gentlemen associated with the bank were, fortunately, out of town on the night of the fire. Needless to say, this ended the corporate life of the Mississippi & Alabama Real Estate Banking Company in an abrupt, if not spectacular, manner.

Cincinnati Crisis

Such reactions were not limited to rural areas. Fast forward to January 10, 1842, in Cincinnati. The Panic of 1837 had been unkind to the Miami Exporting Company. Chartered in 1803 by one of the first acts of the new Ohio state legislature, the company had initially focused on moving agricultural products from the Ohio Valley via the Ohio and Mississippi Rivers to ports such as New Orleans. Over time, the allure of banking proved irresistible. The firm increasingly shifted its attention to financial activities, which had become its sole line of business by 1807. The recession that followed the War of 1812 caused the company to cease active operations and remain dormant from 1822 until 1834. 

With its charter set to expire in 1843, the Miami Exporting Company, somewhat unexpectedly, refused to redeem its notes and closed its doors on January 10, 1842. On January 11, when news reached the streets that the company had suspended operations, an angry mob gathered in front of the Miami Exporting Company downtown. The nearby Bank of Cincinnati had opened without a state charter in 1814, finally obtaining one in 1816. Like the Miami Exporting Company, the bank faltered in the aftermath of the War of 1812. It closed in 1819, reopened in 1820, and closed for a second time in 1821. The Bank of Cincinnati was revived in 1837, just in time for the Panic of 1837, which placed it on an equally perilous financial footing. 

The sudden failure of the Miami Exporting Company and the Bank of Cincinnati’s ill-advised notice of temporary closure caused citizens to ransack these institutions during the 1842 Cincinnati bank riots. (Photos: Wendell Wolka)

Angry Mob

When the officers of the Bank of Cincinnati heard that the Miami Exporting Company had gone under, they preemptively posted a notice on its doors stating that it was suspended for 20 days. This caused the already agitated rioters, who now filled the downtown streets, to turn their attention to the Bank of Cincinnati. The bank’s employees, fearing for their lives, fled the premises. The mob stormed the bank, throwing furniture, bank records, and virtually everything else outside. Once their work at the Bank of Cincinnati was completed, the rioters returned to the Miami Exporting Company and ransacked that institution as well, strewing its contents into the streets. 

It was later revealed that the vault of the Miami Exporting Company, which had been breached, contained $224,000—comprising $218,000 of its own notes, $4,739 in other bank notes, and $1,261 in specie. Civil authorities’ attempts to restore order failed, and two additional banks, Bates’ Exchange Bank and the firm of Lougee & Moore, which had been deemed “bad actors” by the city’s residents, were entered and similarly ransacked. After a day of riots, the four downtown banks were essentially gutted shells, devoid of doors, windows, or contents. As you can tell, people took their banks seriously in the early 1800s!

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A version of this article appears in the March 2026 issue of The Numismatist (money.org)