What was the Panic of 1819 and the Panic of 1837?
This is a great question in view of the news headlines today. The panic of 1819 and 1837 both deal with economic hardships.
In 1819, there was a financial crisis, but this crisis was different than the ones previously. In the past, financial hardships were usually due to war and international problems, such as the Embargo act of 1812. However, in 1819, the financial hardship was due to internal problems. As for causes, it is not clear. Some economists (Keynesian school) argue that it was due to a natural cycle of ups and down (boom and bust cycles). Others economist of the Austrian school believe that it was caused by heavy borrowing for the war efforts of 1812 and the lack of the governments expansionary monetary policy.
The panic of 1837 was another financial crisis. The context of 1837 from a economic point is view was speculatory, that is, in the fairly new nation people began to take great risks in order to make money. This was also coupled by the printing of money from the Second Bank of the United States. All of this led to great inflation. But in 1837 all the banks in New York only took money that was gold and silver. This created a huge ripples in the economic system. In other words, this inflation that was going on was hit with strong deflationary measures.
The outcome was truly disastrous. Over 30% of banks in the United States closed down.