how canal fever screwed michigan: > 1837, michigan just became a state > they decide to go all-in on canals and railroads, this being the middle of the canal craze > they decide to float $5 million in bonds to pay for it > this right as the panic of 1837 is starting, though people don't know it yet > the bonds don't sell, and the deal with the broker (the morris canal and banking company) is about to expire. > the state is desperate to start their projects, the broker is desperate for their commission. so: > a last minute deal > all of the bonds are bought by the bank of the united states and the morris canal and banking company > the broker buying the bonds and getting the commission, the broker bank already connected with bank of us > the deal is made, and the first payment is made with a trunk of morris notes. but then... > panic of 1837 hits > both the morris bank and b o us are ass deep in debt > both use the michigan bonds as collateral for new loans from european banks to stay afloat. > it doesn't work, and both banks go insolvent, and both fail in their loan repayment. the net result: > michigan now owes $5 million to european banks > all they have to show for it is a trunk full of now-worthless morris notes
United States