Our ancestors’ lives were impacted by events surrounding them, just as our lives often are. As you research your ancestors’ lives, you can learn about the economic and societal events of their time in order to understand where they were living and what was going on around them. The Panic of 1837 is one event that affected and impacted our ancestors on a global scale.
The Panic of 1837 was a financial crisis which affected the global economy. A downturn in the economy led investors to withdraw their money from banks. This had a profound influence on those living in the United States from the late 1830s to the mid-1840s.
To understand what happened and why, we need to take a quick look at what was happening during that time period.
In the United
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Native Americans were resettled from their native areas to land west of the Mississippi River when the Indian Removal Act was signed in 1830. In addition to having devastating consequences for Native Americans, it opened land for agriculture in the American South and increased slave traffic. Andrew Jackson was President of the United States from 1829 to 1837, followed by Martin Van Buren, who was President from 1837 to 1841, William Henry Harrison (who died 32 days after his inauguration), and John Tyler, who was President from 1841 to …show more content…
States used bonds and loans from the British money markets to finance transportation projects, westward expansion, infrastructure improvements, and economic development. Because of the budget surplus, there was an overabundance of currency in circulation, and inflation began to rise.
Several banking policies of Andrew Jackson contributed to the bank panic of 1837. In 1833, in part because of his distrust of bankers, he vetoed a bill to recharter the Second Bank of the United States, the nation’s central bank and fiscal agent. He then moved treasury money to state and local banks in the deposit act of 1836.
Unfortunately, these smaller banks, called Pet Banks, often engaged in speculative lending practices without enough money in reserve. Then, in July 1836, he issued the Specie Circular executive order that limited buying more than 320 acres of land to only specie. The idea was to curb inflation and speculative land purchases, but it caused a decline in monetary reserves from $7.2 million in September 1836 to $1.5 million in