Effects Of The Panic Of 1837 - 1681 Words

The panic of 1837 was arguably more devastating than the depression of the 1930’s, yet less well known. During the period of roughly 7 years between 1837 and the mid 1840’s the U.S. economy underwent massive economic hardships and consequences which many economists ultimately believe helped lead to the American civil war in 1861. Causes for the panic include: government policies, speculative lending practices, decline in cotton prices, a collapsing land bubble, international cash flow and restrictive lending policies (Wiki). Historians believe that it was Jackson s policies that lead to the inflationary boom and the Panic of 1837, which suspended the convertibility of paper money into specie. Historians point the finger to three of Jackson s policies. The first was Jackson s veto of a bill to recharter the second Bank of the United States, in 1832. The federal reserves of the Bank of the United States were distributed to the state-chartered banks that were favored by Ja ckson. Historians believe that this led to the reserve ratio being reduced because there was no central bank regulating the banks. This led to an increase in the money supply and inflation (Sylla). The second policy was the Deposit Act of 1836, which was the distribution of the surplus in paper money to the states, after the National Debt was paid (Sylla, Rothbard 99). This extra money caused an increase in spending by the states (Rothbard 100). The last policy led to the Panic of 1837; the SpecieShow MoreRelatedAmerica s First Great Depression : Economic Crisis And Political Disorder Essay856 Words   |  4 Pages Alasdair Roberts book entitled America s First Great Depression: Economic Crisis and Political Disorder After The Panic of 1837 introduces the reader to challenges the United States dealt with in terms of economic and political crisis. 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