Document generated on 09/26/2021 5:54 a.m. Ontario History A Season of Unusual Depression The Panic of 1857 and the Crisis of City Government in Toronto Eric Jarvis Volume 112, Number 1, Spring 2020 Article abstract The Panic of 1857 had a significant impact on Toronto, since the economic URI: https://id.erudit.org/iderudit/1069010ar depression that followed affected the city’s government, fiscal health, and public DOI: https://doi.org/10.7202/1069010ar services. Thus, it can be used as a case study of how a 19th century Panic and depression could change a city’s society, even to the point of “crisis”. Using city See table of contents records and newspapers, this analysis focuses on city debt management, tax collection and cutbacks on such new services as police, fire-fighting and street lighting. In addition, it discusses how a Panic could transform democratic Publisher(s) politics by decreasing the number of persons eligible for city council and the franchise. The mayor ceased to be an elected position. Such “reforms” would be The Ontario Historical Society used again following the more famous reforms of the 1890s depression. In fact, a pattern can be discerned: city democracy was increased by boom times and ISSN decreased by depressions. 0030-2953 (print) 2371-4654 (digital) Explore this journal Cite this article Jarvis, E. (2020). A Season of Unusual Depression: The Panic of 1857 and the Crisis of City Government in Toronto. Ontario History, 112(1), 58–81. https://doi.org/10.7202/1069010ar Copyright © The Ontario Historical Society, 2020 This document is protected by copyright law. Use of the services of Érudit (including reproduction) is subject to its terms and conditions, which can be viewed online. https://apropos.erudit.org/en/users/policy-on-use/ This article is disseminated and preserved by Érudit. Érudit is a non-profit inter-university consortium of the Université de Montréal, Université Laval, and the Université du Québec à Montréal. Its mission is to promote and disseminate research. https://www.erudit.org/en/ 58 ONTARIO HISTORY Season of Unusual A Depression The Panic of 1857 and the Crisis of City Government in Toronto By Eric Jarvis The Esplanade in Toronto in the mid-1850s. his study examines the impact of ment and the use of street lighting. These the Panic of 1857 and the eco- civic enhancements had been created Tnomic depression that followed during boom times and heralded as sym- it on the fiscal system, public services bols of urban progress and sophistication and urban democracy of Toronto during in mid-nineteenth century Toronto. The the 1860s. It will not focus on the con- Panic put a quick (though not long last- tinental origins of the Panic nor on the ing) end to those pretensions and, at the plight of the city’s poor or unemployed. same time, exposed the endemic prob- The municipality’s overworked charity lems of urban governments during an era and social welfare policies do not figure of economic panics and depressions that into this discussion either. All of these roiled nineteenth-century society. topics are, of course, very important but The Panic of 1857 also had signifi- the analysis here shifts instead to the in- cant impact on the attitudes of reformers ternal workings of the city government who pushed for the necessity of creating and into such issues as city debt loads, a less democratic form of city govern- the problems involving taxes and tax col- ment through alterations in the structure lection and cutbacks on such newly de- of city councils, the methods by which veloped urban services as a professional councilors were selected and the degree police force, an organized fire depart- of power and autonomy mayors should Ontario History / Volume CXII, No. 1 / Spring 2020 the panic of 1857 59 Abstract The Panic of 1857 had a significant impact on Toronto, since the economic depression that followed affected the city’s government, fiscal health, and public services. Thus, it can be used as a case study of how a 19th century Panic and depression could change a city’s society, even to the point of “crisis”. Using city records and newspapers, this analysis focuses on city debt man- agement, tax collection and cutbacks on such new services as police, fire-fighting and street lighting. In addition, it discusses how a Panic could transform democratic politics by decreas- ing the number of persons eligible for city council and the franchise. The mayor ceased to be an elected position. Such “reforms” would be used again following the more famous reforms of the 1890s depression. In fact, a pattern can be discerned: city democracy was increased by boom times and decreased by depressions. Résumé: La panique financière de 1857 eut un impact considérable sur Toronto, puisqu’elle fut suivie d’une crise économique qui affecta son gouvernement, sa santé budgétaire et ses ser- vices publics. Il est ainsi possible de la considérer comme étude de cas sur la manière dont une panique et une crise au XIXème siècle pouvaient changer la société d›une ville, jusqu›à un point extrême. En utilisant les archives et les dossiers de la ville, cet article porte sur la gestion de la dette, la collection des impôts et les réductions de nouveaux services tels que la police, les pompiers et l’éclairage public. En outre, cette analyse examine aussi comment une panique pourrait transformer la politique démocratique en diminuant le nombre de personnes éli- gibles au conseil municipal et le nombre de personnes pouvant voter. Le maire a cessé d›être un poste électif. Des réformes similaires seront utilisées encore une fois lors de la crise plus connue des années 1890. En fait, certaines tendances se dégagent : la démocratie urbaine augmenterait lors des périodes d’expansion et diminuerait pendant les crises. have. Also suggested were changes in the disrupt the enthusiasm of a prosper- rules for voting in city elections that less- ous era. Motivated by the psychologi- ened citizens’ influence and that would, it cal symptoms of fear and uncertainty, a was hoped, contribute to the distancing Panic was often triggered by the collapse of municipal government from politics. of a well-known banking house or of an Overall, the Panic appeared to uncover important business firm, especially those many of the deficiencies, both financial based in either Britain or the United and structural, that bedeviled cities of States. Rumours fed the Panic and accel- the nineteenth century. erated its spread into a world-wide phe- Panic was a term that began to be nomenon that undermined the health of commonly used by the 1830s to label a the economic system of the era. sharp economic break in what had been This system relied heavily on a net- a boom era. It was the rough equivalent work of credit, since credit was the fi- of the more modern terms ‘Crisis’ and nancial lifeblood that kept a boom alive. ‘Crash’. As such, it represented a wrench- It worked well if all else appeared to be ing loss of confidence that could quickly working well but when a Panic hit credit 60 ONTARIO HISTORY flows began to dry up, debts which had ket economy. As Friedrich Engels put it, accumulated during the era began to be such a cycle would “reappear as regularly called in and the entire economy started as the comets.” This became increasingly to contract. The increasing inability to apparent as the sequence kept repeating either pay off, or to collect on, debts af- itself, most noticeably with the Panics fected individuals, companies, banks and of 1819, 1837, 1857, 1873, 1893, 1907 governments at all levels. Bond and de- and, one could argue, 1929. It seemed benture sales became virtually impossible to be an unavoidable aspect of the man- to consummate as closings and defaults made, roller-coaster nature of the capital- multiplied. Governments that had used ist environment.1 credit to build canals, railroads and in- As was the case with most North frastructure faced potential bankruptcy. American cities that had to face an eco- As a result, the overall economy slipped nomic Panic in that century, Toronto was into a depression that could last years, engulfed by it because of its overexpan- one that translated into stagnating trade, sion of urban projects and resulting accu- high unemployment, labour unrest, bank mulation of debts from the boom period runs, higher taxes, deflation of prices of the 1850s. The subsequent economic and hardship for social relief agencies. depression following the Panic of 1857 Eventually, however, the economy would then forced an examination by Toronto’s gradually improve and then finally move city council into the problems involving back into a new boom period. the municipality’s economic and politi- By the later decades of the nineteenth cal systems that had been exposed by the century it had become clear to many that harsh reality of fiscal distress. The prima- such a boom-Panic-depression-recovery ry culprit in the city’s cycle of financial cycle would be a commonplace, predict- expansion and contraction was familiar able feature of an unregulated, free-mar- to North American urban centres during 1 Jessica M. Lepler, The Many Panics of 1837: People, Politics and the Creation of a Transnational Fi- nancial Crisis (N.Y.: Cambridge University Press, 2013), 3-7, 235-29, 242, 245, 249-20, 252-23 (for the Engels quotation, 237); Alasdair Roberts, America’s First Great Depression: Economic Crisis and Political Disorder After the Panic of 1837 (Ithaca: Cornell University Press, 2012), 42-47; James L. Huston, The Panic of 1857 and the Coming of the Civil War (Baton Rouge: Louisiana State University Press, 1987), 17-22; Samuel McSeveney, The Politics of Depression: Political Behavior in the Northeast, 1893-1896 (N.Y.: Oxford University Press, 1972), 32-33; Michael F.