What Are The Causes Of The Panic Of 1837

He believed that the Bank has to be abolished due to several reasons. First of all, the bank concentrated the nation's wealth in a single institution which created an unhealthy for the economy monopoly. Second of all, he believed that the bank favored the wealthy over the common people. The third reason was that the bank had too much control over members of Congress. In other words, the subsidy of the bank to one particular party or the lack of the finance could influence the results of the elections at some point. And the bank also favored northeastern states over southern and western states. Thus, Jackson succeeded in destroying the Bank by vetoing its 1832 re-charter by Congress and by withdrawing U.S. funds in 1833. This action led to federal money being put into state banks who then loaned it out freely leading to inflation. State banks were issuing paper banknotes that were not backed by gold or silver reserves which led to rapid inflation. Moreover, the expansion of credit and speculation took place. As a result, state banks collapsed which was a cause of the Panic of 1837. However, despite the crisis and depression, the liquidation of the Bank was an achievement of Jackson’s presidency and led to trivial of the economy later on.

The panic of 1907 and the Great Recession of 2007-2009 has both been major economic events in the United States economic history. This paper compares and contrasts these two major events and enables us to understand importance of certain financial institutions and regulations during troubled times in the financial sector. In this paper, both panics of 1907 and 2007 are historically analyzed and compared.

These periods of financial panics along with the inelastic money supply had long beleaguered the country. Bank failures, business bankruptcies, and unstable economic development were results of the lack of a central banking system (Federal Reserve System 8th ed. pp. 6-7). The Panic of 1907 was a bank run of epic proportions that exacerbated the problem. Depositors withdrew their savings from the second and third largest banks in the country. These banks were not able to generate enough funds to cover the demand and subsequently closed their doors. Their closings rapidly spread fear across the country leading to one of the largest runs on the banks the nation had ever witnessed (Schlesinger pp. 41).

Since the national bank was now destroyed, Jackson did not have a place to put it, so he decided to divide the money among the states. This is where it went downhill since the states begin printing massive amounts of money and quickly got out of hand and resulted in one of the longest depression in U.S history. As a result, The United States begin borrowing money again and the debt soon begin.

Throughout the 19th century, the American market saw drastic changes in infrastructure and production. The agriculture sector was no different, as new technologies and modes of transport led the way for farmers to sell goods and work their land, easier and faster. New laws and regulations also paved the way towards cheaper food throughout America. However, as prices dropped, and production flourished, a minority of Americans suffered the consequences of starvation, while farmers suffered low gains. The agricultural picture of the 1800s paints an image of new technologies and a transformed transport sector, which gave way to lower consumer prices and hardships for farmers.

During the years of 1893 to 1898, the United States went through an economic depression that severely damaged the economy. The final days of the Harrison administrations consisted of the financial failure of the Philadelphia and Reading Railroad in January of 1893, the United States was in deep trouble. After the financial railroad of Philadelphia and Reading Railroad, the National Cordage Co. Railroad failed in May, the Erie Railroad in July, the Northern Pacific in August, the Union Pacific in October and the Atchison, Topeka and Santa Fe Railroad in December (Watkins, n.d.). There was an average of 24 businesses failing per day in the month of May (Schoonover, LaFeber, n.d.). In addition, the Sherman Silver Purchase Act and the “Billion Dollar Congress” caused the nations gold reserved to decline as the government began to use a bimetallic monetary system.. The nations reserves dropped under $100 million after President Cleveland was sworn in March of 1893. People began to panic and this led to a plunge in the stock market and European investors began to pull their funds from the United States frightened by the weakening economy. This led to a four year depression in which 15,000 companies and 600 banks closed with about one billion dollars worth of bonds defaulted (Schoonover, LaFeber, n.d.).

There were many causes that led up to the Panic of 1893. Economics were doing so well in the 1800’s. They had been expanding tremendously due to the railroads, but railroads were being over built. There had was many competitions for growth that speculated between many companies. They were trying to take over one another which put each one a risk (Romer, 1984). The Philadelphia and Reading Railroad was one of the first railroads

At the turn of the nineteenth century, the American populace was concentrated along the coast, but according to the population density map by 1820, modest-sized establishments of 18-45 people per square mile had begun to spring up as far west as Missouri (Doc E). Men such as Calhoun noted the alarming rate of Westward Expansion, and, in accordance with the American System, advocated the further creation of a system of roads and canals to connect the east and west and safeguard against disunion (Doc B). This unification effort further increased the influx of Easterners pouring into West in search of new land with arable soil. Land sales mushroomed and land prices increased exponentially, leading to speculative land ventures. Uncontrolled wildcat state banks funded these endeavors, often lending recklessly, ultimately creating a bubble. When the National bank, observed this abuse of credit, it recalled its deposits from the state banks. Mass foreclosures coupled with the foreign competition that reduced the demand for American foodstuffs plunged several farmers into debt, ruining their livelihoods during the six year, systemic collapse, known as the Panic of 1819. The National Bank, which had at first initiated friction between states and the federal government because of its intrusive measures in state economic

To understand the Panic of 1893, one must look back 20 years to a very similar situation that arose with the Panic of 1873. The country was experiencing a post-Civil War hangover that caused the economy to experience inflation. After the war, efforts were increased to expand the railroad. These efforts required substantial investments that were mostly unbacked. The country was already running on a large trade deficit. The large trade deficit along with these investments put a massive strain on bank reserves, which plummeted in New York City during September and October 1873 from $50 million to $17 million. Similar causes came 20 years later with the 1893 panic.

After shutting down the Bank of the United States in 1836, President Andrew Jackson did not receive what he had hoped for in exchange. The Bank War surely had a profound effect on the future of the United States including everything that led up to the panic of 1837. Bray Hammond in his essay The Jacksonians: Expectant Capitalists states how Jackson's advisors blinded him to facts and the actual usefulness of the bank. They allowed Jackson to destroy the bank instead of correcting its flaws, a decision that would later create an economic boom in the United States. Many believe that Jackson allowed himself to also be blinded by his ego and agrarian beliefs which resulted in profound consequences in the end.

During the Panic of 1837, banks closing and the collapse of the credit system cost many people their savings, bankrupted hundreds of businesses and put more than a third of the population out of work.

He sought to follow in Jackson’s footsteps of running the country. Immediately upon his arrival into office, the Panic of 1837 began, resulting in the country’s worse depression. The depression lasted seven years. The cause of the Panic of 1837 can be contributed to the plummeting demand of cotton, which triggered the decline in the cost of the cotton. This, in conjunction with a suddenly weak wheat crop caused a decline in revenue and income throughout the states. State bank closures and an increase in state debts were immediately seen. The national bank which had been shut down was designed to help keep the economy afloat and prevent a depression from occurring, the state banks were not equipped to do so. They continued to print paper money, yet had no actual money to back up the paper money. Van Buren felt that assistance to those individuals affected by the economy should be provided by the state government, not the federal government. He then enacted the Independent Treasurery Act, which called for the government to house its own gold and silver, and to eliminate the use of paper money by the federal government. The Act did little to help the

Andrew Jackson's economic policies, including his views on banking during the mid-19th century had a rather large impact on the United States during the time. Jackson was a president who thought himself to be a protector of the "common man" and that certain rights and privileges should be enjoyed by every citizen. However, in attempting to doing so, Jackson's economic policies such as his veto against the National Bank, his use of "pet banks" to deposit government money instead of the National Bank, and the passing of the Specie Circular, created a government that was limited in every regard, resulting in great economic instability, contributing to the Panic of 1837. The Second Bank of the United States faced

As a result of Congress not re-instating the Bank of the United States, the new state charter banks were able to issue more currency than previously done by the Bank of the United States and the state banks while it was around. By 1815, “there were 256 state chartered banks and almost $70 million in their bank notes in circulation.” (Shmoop, 2008) which in comparison to the Bank of the United States who back in 1809 only had $6 million in circulation in their bank notes. Later the Bank of the United States was re-instated but only took over some of the nation’s money supply, and even after its reinstatement the value of the circulating bank notes reduced to $45 million which was still a vast improvement to the $6million before the new state chartered banks. The state chartered banks made capital available to a larger audience than ever before and had such a critical impact on the American

Primarily, Andrew Jackson's political actions helped to reshape American society between 1820 and 1848. Andrew Jackson was an American soldier and statesman who served as the seventh President of the United States from 1829 to 1837. One distinct event during this time period was the Panic of 1837. The Panic of 1837 was a financial crisis in the United States that touched off a major recession that lasted until the mid-1840s. Profits, prices, and wages went down while unemployment went up. The Panic of 1837 was influenced by the economic policies of President Jackson. During his term, Jackson created the Specie Circular by executive order and refused to renew the charter of Second Bank of the United States, leading government funds to be withdrawn from the bank. For a