United States Economic History: 19th Century -- Panic of 1837

election of 1840
Figure 1.--This is a contemporary cartoon of the reults of the Panic of 1837 and subsequent depression. It was the worst economic decline experienced by the United States up to that time. It was caused by President Jackson's policies, but as Jackson's term was over, it was President Van Buren who got the blame in the public mind. The result was a Whig victory in the 1840 election. Notice the mother and child seeking alms. The child looks like a girl to the modern eye, but is probanly a boy wearng a tunic suit and pantalettes.

President Jackson's decision to destroy the Bank resulted in one of the most serious financial crisis of the 19th century. Martin Van Buren was a major factor in getting Jackson elected. He was far more than a campaign manager. He virtully created the modern political system. He proved better at obtaining political power than actually using it. Van Buren after helping to get Jackson elected twice was reqarded by Jackson with his support for president in 1836. He saw financial problems brewing as a result of Jackson's policies, especially killing the Second Bank of the United States. Jackson also issued the Specie Circular pursuant to the Coinage Act required payment for government land to be in gold and silver. Van Buren saw the problems coming even before he was inagurated. He inherited Jackson's financial policies nd had to defend them. It was Van Buren that vhad to enforce the Specie Circular. The result was the Panic of 1837. Fortunately for Jackson's reputation, he was gone, but Van Buren had to pay the consequences. And the Panic turned out to be the worst economic diown turn up to that time. With the Second Bank oif the United States, the country had an extrodunarily weak babnking system. The Panic of 1837 caused a sharp economic decline resulting in wide spread bank failures. Economic tranactions were frozen because of lack of faith in paper currency, at the time issued by the many stsate banks, commonly with no assetts to back up the bills issued. Banks stopped payment in specie (gold and silver coinage). Economists estimate that over 600 banks failed. City Bank was very nearly one of them. Fur trade magnate John Jacob Astor bailed out City and put Moses Taylor in charge. The banking powerhouse that Taylor created helped bankroll the Federal Government during the Civil War. The cotton market imploded in the South. The result was the Depression of 1839–43.


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Created: 11:17 PM 9/22/2018
Last updated: 11:17 PM 9/22/2018