Episode 2 of 3
Unsustainable Liability Ratio
- When
- July 1818
- Where
- Philadelphia, Pennsylvania
By July 1818, the bank's demand liabilities exceeded $22.4 million against a $2.4 million specie fund, creating a 10:1 ratio double the sustainable level.
The bank's financial position was precarious. Its demand liabilities were ten times its specie fund, far exceeding the 5:1 ratio considered sustainable. This imbalance resulted from earlier failures to secure sufficient specie, forcing the bank to operate with excessive risk and prompting the subsequent policy reversal.
Sources
- Panic of 1819 Wikipedia, revision of 2026-07-01
Machine-drafted from the cited Wikipedia passages and checked by a reviewing model, not by a human editor. Every passage cites the revision it was written from; dates and places follow those passages.