Disaster | Economics

The Panic of 1837

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Political cartoonists across the country commented on the ongoing economic panic. Financial capitals like New York City were hardest hit. High unemployment ensured that families struggled to make ends meet.
A perfect storm of a national banking and real estate crisis catapulted the United States into the Panic of 1837.

Financial panic cast a dark shadow over the United States starting in 1837. Though rays of hope shined through at times, it would take the country seven years to recover from its first devastating depression. Earlier in the decade, a wave of naïve optimism characterized commerce. Silver from abroad poured into the United States, paving the way for Western Expansion. With freed-up lands resulting from Indian removal, a speculative bubble formed. Land was overvalued and the bubble's bursting in 1837 sent shockwaves throughout the domestic and global economy. Mirroring real estate, banking collapsed. The national bank, which stabilized the country's financial system, lost its charter. This jolt summersaulted the country towards the panic. With no central bank, each of the country's 850 banks began printing its own currency, causing inflation. In the chaos, businessmen were ruined and nearly half of the banks closed causing sky-high unemployment. Out of work families relied on charity for their next meal. By 1844, the depression lifted but not before these hard times had become the worst in the country's young history.

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Cartoons reflected the growing anxieties of the era: Entire fortunes were lost and many people fell into poverty.

 

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With the dissolution of the national bank, there was no universal legal tender. Local and state banks began issuing their own notes, which caused inflation and chaos.

 

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Unable to pay their mortgages, some families were evicted from their houses and farms and left homeless during the Panic of 1837.

 

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President Martin Van Buren was condemned for the Panic of 1837. Many Americans believed his continuation of Andrew Jackson's policies (including the dissolution of the national bank) only exacerbated the depression.