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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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Handle: RePEc:nbr:nberwo:7528

Note: DAE ME
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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, October.
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Cited by:
  1. Peter L. Rousseau, 2013. "Politics on the road to the U.S. monetary union," Vanderbilt University Department of Economics Working Papers 13-00006, Vanderbilt University Department of Economics.
  2. Matthew Jaremski & Peter Rousseau, 2012. "Banks, free banks, and U.S. economic growth," Vanderbilt University Department of Economics Working Papers vuecon-12-00012, Vanderbilt University Department of Economics.
  3. 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.
  4. Charles Calomiris, 2009. "Banking Crises and the Rules of the Game," NBER Working Papers 15403, National Bureau of Economic Research, Inc.
  5. 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.
  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 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, vol. 40(3), pages 223-250, July.
  8. 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.
  9. repec:van:wpaper:vuecon-sub-12-00014 is not listed on IDEAS
  10. 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.

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