The Panic of 1837 was a major recession in the US economy that began in the spring of 1837 and lasted until the mid-1840s. During the “panic,” also referred to as “hard times,” hundreds of banks collapsed, currency lost value as prices soared, and farmers, merchants, and business owners across the country suffered severe financial losses or ruin.
In the early 1830s, US banks and American merchants relied heavily on trade with England and financing from British banks. In 1832, President Andrew Jackson vetoed the rechartering of the Bank of the United States—and to speed its demise, redistributed federal funds among smaller state banks across the country. The lack of a national bank meant little national standardization or oversight of banking practices. Hundreds of new banks opened in cities and towns across the country; many of them printed paper currency and made loans that far exceeded the value of gold and silver coinage, or specie, in their vaults. State governments, land speculators, and entrepreneurs took advantage of this financial climate by taking out loans to fund infrastructure projects, start new businesses, and buy federal land in the West as well as recently evacuated Indian land. Most of these transactions took place using various paper currencies and documentation, relying on all participants’ confidence that those documents could be redeemed for “real” money.
In 1836, however, British banks started to pull back on lending to the US. In that same year President Jackson issued the Specie Circular, an executive order mandating that federal land be purchased with specie, not paper currency. In the spring of 1837, the bubble burst. As people tried to cash in their paper money, overextended banks closed their doors and many collapsed entirely, leaving their customers with worthless currency. The panic also had political ramifications, as the Whig and Democratic parties were quick to blame each other for the financial crisis and use it as political ammunition.
This set uses primary sources to explore the financial practices that contributed to the Panic of 1837 and the impact of the crisis on America’s politics, economy, and people.
Additional resources for research
- “Panic of 1837,” Ohio History Central.
- “Nineteenth Century Banking and the Financial Panic of 1837,” The Joseph Smith Papers.
- “Martin Van Buren: Domestic Affairs,” Miller Center at University of Virginia.
- Checks and Balances exhibition, “Andrew Jackson,” Museum of American Finance.