Panic of 1837
On May 10, 1837, banks in New York suspended specie payments — they would no longer redeem paper notes for gold or silver. The trigger was the Specie Circular of 1836, an executive order from Andrew Jackson requiring federal land purchases be paid in hard money, which collapsed the credit-fueled western land boom. Within weeks, banks across the country had suspended payment. Cotton prices fell by half. Roughly 40 percent of US banks failed over the next five years. The recovery did not begin until 1843.
The 1837 panic was the first major American crash to be transmitted across state lines via the postal system in something close to real time. By the standards of the era, news moved fast. The mechanism that 1857 perfected over telegraph was already running in 1837 over horseback courier — slower, but recognizable.
03 · American Panics
Between Andrew Jackson and J.P. Morgan, the United States went through six major financial panics. They are often left out of the popular crash canon because no single one of them produced the institutional changes that the 1929 crash later did. But they were each, in their time, severe — and the pattern they established (credit boom, opaque institutions, sudden refusal to pay, contagion via the new communication infrastructure of the era) is the same pattern every later crash has run.
Read the full era →