Photo above: Independence Rock on the Oregon Trail. First mentioned by Parker in 1835, and carries an inscription on the rock with the names of early trappers and explorers. Photo William H. Jackson, circa 1870. Right: Painting by Percy Moran, 1912, reflects the intensity of the battle of the Alamo. Photo courtesy Library of Congress.
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1837 - Detail
May 10, 1837 - The global economic crises known as the Panic of 1837 begins with the failure of New York City banks and unemployment which would reach record levels.
Economic activity was plummeting and banks could no longer handle the effect that falling cotton prices, a real estate bubble, particularly with western land values, and the global problem with hard money, or specie payments. President Andrew Jackson had issued the Specie Act in 1836 and failed to recharter the Second Bank of the United States in 1832. He had taken the risk that the economy, which had been prospering for three years since 1834 due to high cotton prices, land values, and with much chagrin to even note, humans, would be able to withstand the change in policy. It could not.
During the economic boom, the United States had taken in a vast amount of silver from Mexico and China, but had also financed much of their western expansion, including transportation infrastructure, with bonds from Great Britain. When wheat harvests in Great Britain dipped in 1836, their banks, whose reserves were weakened, raised interest rates from 3 to 5 percent. United States banks followed by raising theirs. This caused the demand for cotton to plummet, 25% lower by March 1837. Without the Second Bank of the United States to back local banks (it had been defunded by Jackson in 1832), southern banks encountered severely lower reserves. This, combined with the Specie Act of 1836, an executive order by Jackson, which required gold and silver to purchase land in the west, and other federal bank policies, caused the real estate bubble to burst. Jackson's intent was to curb rampant land speculation, but his order destroyed it.
By the time Martin Van Buren was inaugurated as President in March 1837, there was little to be done to avoid the Panic. But the new President may have excacerbated its impact. His refusal to allow the government to step in and bolster employment with infrastructure projects or provide emergency relief to workers is sometimes argued as contributing as much to the Panic as Jackson's previous monetary policies.
How the Economy Suffered
One of the main contributors to the Panic was the March 1837 failure of the New Orleans cotton brokerage firm, Herman Briggs and Company.
Two months after the Panic of 1837, bank failures in New York had amounted to $100 million.
Of the eight hundred and fifty banks in the United States in 1837, three hundred and forty three closed.
Unemployment in certain cities and states is estimated to have risen to nearly 25%.
Losses due to bankruptcy reached $741 million with thirty-nine thousand Americans going bankrupt.
The states of Pennsylvania and Maryland defaulted on their bonds.
The depression caused by the Panic of 1837 lasted for nearly five years, rebounding in 1842.
How the Press Treated the Panic
The two engravings above and below account for several views of how the press treated the panic and how the public was affected. Above, a tradesman's plight, i.e. unemployment, is shown and the blame is put on the financial policy of Andrew Jackson and his successor Martin Van Buren. In quotes are the words, by the tradesman, "I have no money, and cannot get any work." His wife states, "My dear, cannot you contrive to get some food for the children? I don't care for myself." The children's words are, "I'm so hungry," "I say Father, can't you get some "Specie Claws?" and "Father can't I have a piece of bread?" At the door are the agents for the landlord, seeking to collect, stating, "Distraint for Rent." "I say Sam, I wonder where we are to get our Costs." The bottom engraving focuses on the effect of the Panic of 1837 in New York. Again, the blame is placed on President Jackson, with a focus on the effect on the working class.
Image above: Lithograph of the Panic of 1837, Specie Claws, 1838/9, Henry Dacre and Henry R. Robinson. Courtesy Library of Congress. Image below: Engraving titled The Times, about the Financial Panic of 1837, 1837, Edwards Williams Clay and Henry R. Robinson. Courtesy Library of Congress. Info Source: Wikipedia Commons; Library of Congress; The Great Financial Panics in History, Martin A. Armstrong, Armstrong Economics.