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How Did The Bank War Lead To The Panic Of 1837

1395 Words6 Pages

Economic issues are not uncommon in America. The panic of 1837, Depression during the 1920’s, stock market crash in 1929, $17 trillion debt America is in today, and a multitude of other issues are all proof that America is perhaps less financially stable than it seems to be. The Bank War is one of the many puzzle pieces that fit together in the intricate financial history of the United States. Linking Jackson’s role in the Bank War directly to the Panic of 1837 would not only be inaccurate, but would deny the complexity of other causes that were contributing factors. A further analysis of the sequence of events revolving around the Bank War depict that Jackson is only one of many other causes that led to the Panic of 1837. Jackson’s opposition …show more content…

Some historians question whether or not this was a victory. Despite Jackson winning the Bank War, there were still many currency issues in America that remained unresolved. Some of these issues included 40% of money circulating in America was foreign currency, debates about gold over silver, and issues of hard money versus paper money. (Markham 54) As America struggled with financial issues, it only worsened when the Coinage Act of 1834 passed. The change from gold to silver created new problems, including the over-value of gold, almost wiping out silver from circulation, and the weight of the dollar going down by 6%. (Markham 54) Since only Jackson focused on taking power away from people who would monopolize the bank, it distracted him fixing the escalating economic issues in America prior to the Panic of …show more content…

Markham states that “a speculative fever had seized the nation and the growth of the state banks after the deposits were removed from the Second Bank led to the expansion of credit and inflation of prices”. (55) The speculative fever had many people buying land even though there was a high financial risk in doing so. To combat this, Jackson passed the Specie Circular in 1836 which required payment for public lands to be coins rather than banknotes also known as specie. As a result, the Specie Circular decreased the amount of money and a big portion of specie was removed from private holders. Although Jackson was successful on combating speculative investments, people were unable to pay off their debt which caused a financial crisis for banks. Risky investments in property and the Specie Circular intertwine as a new contributing factor the panic that would come in

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