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Jacksonian Monetary Policy, Specie Flows, and the Panic of 1837

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  • Peter L. Rousseau

Abstract

The Panic of 1837 stands among the most severe banking crises in U.S. history, marking the start of a business downturn from which the nation would not recover for six years. Given the serious consequences of the panic for the rapidly evolving commercial and industrial sectors, it is thus not surprising that a number of hypotheses have emerged to disentangle the true' causes from a host of aggravating domestic and international shocks. To this day, however, the event remains not fully understood. In this paper, I organize previously unexploited information from the U.S. government documents and contemporary newspapers to take a fresh look at the panic. These sources point to a new explanation which places neither the official distribution of the federal surplus to the states in the Spring of 1837 nor an international shock at the heart of the crisis, although the latter may have served as a catalyst in the final weeks. Rather, a series of hitherto unremarked interbank transfers of government balances ordered in the year leading up to the crisis combined with a policy-induced increase in the demand for coin in the Western states to drain the largest New York City banks of their specie reserves and render the panic inevitable.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 7528.

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Date of creation: Feb 2000
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Publication status: published as Rousseau, Peter L. "Jacksonian Monetary Policy, Specie Flows, And The Panic Of 1837," Journal of Economic History, 2002, v62(2,Jun), 457-488.
Handle: RePEc:nbr:nberwo:7528

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  1. John W. Kendrick, 1961. "Productivity Trends in the United States," NBER Books, National Bureau of Economic Research, Inc, number kend61-1, July.
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Cited by:
  1. Michael D. Bordo & David C. Wheelock, 2004. "Monetary Policy and Asset Prices: A Look Back at Past U.S. Stock Market Booms," NBER Working Papers 10704, National Bureau of Economic Research, Inc.
  2. Andrew T. Young & John A. Dove, 2010. "Policing the Chain Gang: Panel Cointegration Analysis of the Stability of the Sufforl System, 1825-1858," Working Papers 10-20, Department of Economics, West Virginia University.
  3. Charles Calomiris, 2009. "Banking Crises and the Rules of the Game," NBER Working Papers 15403, National Bureau of Economic Research, Inc.
  4. Matthew Jaremski & Peter L. Rousseau, 2012. "Banks, Free Banks, and U.S. Economic Growth," NBER Working Papers 18021, National Bureau of Economic Research, Inc.
  5. repec:van:wpaper:vuecon-sub-12-00014 is not listed on IDEAS
  6. John Joseph Wallis, 2001. "The Property Tax as a Coordinating Device: Financing Indiana's Mammoth Internal Improvement System, 1835 to 1842," NBER Historical Working Papers, National Bureau of Economic Research, Inc 0136, National Bureau of Economic Research, Inc.
  7. Wallis, John Joseph, 2003. "The property tax as a coordinating device: Financing Indiana's Mammoth Internal Improvement System, 1835-1842," Explorations in Economic History, Elsevier, Elsevier, vol. 40(3), pages 223-250, July.
  8. Peter L. Rousseau, 2013. "Politics on the road to the U.S. monetary union," Vanderbilt University Department of Economics Working Papers, Vanderbilt University Department of Economics 13-00006, Vanderbilt University Department of Economics.
  9. Charles W. Calomiris, 2007. "Bank Failures in Theory and History: The Great Depression and Other "Contagious" Events," NBER Working Papers 13597, National Bureau of Economic Research, Inc.
  10. John Joseph Wallis, 2006. "The Concept of Systematic Corruption in American History," NBER Chapters, in: Corruption and Reform: Lessons from America's Economic History, pages 23-62 National Bureau of Economic Research, Inc.
  11. John Joseph Wallis, 2004. "The Concept of Systematic Corruption in American Political and Economic History," NBER Working Papers 10952, National Bureau of Economic Research, Inc.
  12. Bordo, Michael D., 2012. "Could the United States have had a better central bank? An historical counterfactual speculation," Journal of Macroeconomics, Elsevier, Elsevier, vol. 34(3), pages 597-607.
  13. Edward L. Glaeser, 2013. "A Nation of Gamblers: Real Estate Speculation and American History," American Economic Review, American Economic Association, American Economic Association, vol. 103(3), pages 1-42, May.

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