Analyze the causes and consequences of the Panic of 1819. What led to the economic downturn?

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pohnpei397 | College Teacher | (Level 3) Distinguished Educator

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In a sense, the Panic of 1819 was caused by factors similar to those that caused our current economic problems.  There was too much credit available too easily and it caused a bubble.   Both the national government and the state banks were giving loans out much too easily because they thought land prices would keep increasing.   But eventually, people came to realize that the land prices were getting too high (just as people came to realize in 2008 that housing prices were getting too high) and the bubble burst.  This led to a situation where people owed more than actually had and were unable to pay debts.  That caused the Panic of 1819.


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