Investor confidence is further shaken in mid-September…

Investor confidence is further shaken in mid-September after thirty thousand pounds (thirteen thousand five hundred kilograms) of gold are lost at sea, together with more than four hundred lives, in a shipment from the San Francisco Mint to eastern banks by the SS Central America, which sinks during the North Carolina Hurricane of 1857.

Public confidence in the government's ability to back its paper currency with specie is shaken as well. (Recent research by Charles Calomiris and Larry Schweikart has suggested that the political fallout of the 1857 Dred Scott decision, which had threatened to open up all of the western territories to slavery, played an important part. As a result, the bonds of east-west running railroads—but not those of the north-south railroads—plummet, and when those bond assets collapse, it provokes a run on the major New York banks.)

At the suggestion of Howell Cobb, Secretary of the Treasury, President Buchanan proposes to Congress that the Treasury be authorized to sell revenue bonds for the first time since the Mexican-American War.