How was the Panic of 1819 similar in its causes and effects to our present economic problems? How was it different?
The Panic of 1819 was similar to the recent crisis in many ways. First, it was caused in part by foreign competition with American products. The end of the wars in Europe led to increased farm production there and less of a market for American goods. Our current problems stem to some degree from our inability to export as much as we import.
The Panic of 1819 was also caused by a "bubble." In 1819 it was a bubble caused by speculation in western lands. Today, it is speculation in housing.
The one major difference is that the Panic of 1819 was caused in part by a sharp contraction of credit by the Bank of the United States. In our situation today, the Fed actually helped things by expanding credit rather than hurting things by contracting it.
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