The panic of 1837 was and still is today considered the First Great Depression that faced the United States of America.
"1837, Panic of: wood engraving".Photograph. Encyclopædia Britannica Online. Web. 03 Jul. 2013.
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The above photo depicts life during the Panic of 1837. Life was hard especially out west where the value of money was very low. This was caused by the overenthusiastic lending and spending of banks in their quest for more revenue as people moved west into the great unknown. There is a lot of ideas into the realities of what caused the first great depression, one key thing that keeps coming up is that the housing market took a turn for the worst. Banks lent out too much money and could not back it up in hard currency (gold or silver bullion) . There were a lot of assumptions made about the value of the land and what it would become after the mass exodus of people who started to move to the west (33-34, Roberts).
In the years and months leading up to the 1837 panic people viewed the housing market as stable and a great investment. Many invested and borrowed money from lenders in an attempt to make a profit. Most of these lenders were from international sources based mostly in England. This however proved to be a huge mistake. When these lenders learned about the down turn that had started happening they refused to lend more money to any investor in the United States. They also went to the bank and called in their debts but in doing so refused to take any form of paper currency because it held no value to them they wanted to be repaid in gold and silver. This further depleted the amount of readily available currency in the United States driving the country into a worse financial state (46, Roberts).
This first depression happened suddenly caused by banks stopping Specie payments (43, Roberts). This however proved bad because the United States government had decided that all land transactions out west must be done using Specie payments. This lead to people having paper currency that essentially had no value because they were not regulated (38-39, Roberts). The general population largely blamed the government mainly the Jackson administration. They blamed him because he in 1832 didn't agree to renew the contract for the United States Bank to continue on a federal level. This led to smaller city banks upping their spending and dispersion of paper currency under questionable means because they couldn't back it any longer because the Bank of the United States was declining and no longer a major player in the Financial World (34, Roberts).
In the years and months leading up to the 1837 panic people viewed the housing market as stable and a great investment. Many invested and borrowed money from lenders in an attempt to make a profit. Most of these lenders were from international sources based mostly in England. This however proved to be a huge mistake. When these lenders learned about the down turn that had started happening they refused to lend more money to any investor in the United States. They also went to the bank and called in their debts but in doing so refused to take any form of paper currency because it held no value to them they wanted to be repaid in gold and silver. This further depleted the amount of readily available currency in the United States driving the country into a worse financial state (46, Roberts).
This first depression happened suddenly caused by banks stopping Specie payments (43, Roberts). This however proved bad because the United States government had decided that all land transactions out west must be done using Specie payments. This lead to people having paper currency that essentially had no value because they were not regulated (38-39, Roberts). The general population largely blamed the government mainly the Jackson administration. They blamed him because he in 1832 didn't agree to renew the contract for the United States Bank to continue on a federal level. This led to smaller city banks upping their spending and dispersion of paper currency under questionable means because they couldn't back it any longer because the Bank of the United States was declining and no longer a major player in the Financial World (34, Roberts).
For the photo in the header
H. A. Boardman to W. T. Eustis, Jan. 15, 1838. Oriental Bank (Boston, Mass.) and Nahant Bank (Lynn, Mass.) Records. Baker Library Historical Collections, Harvard Business School.
H. A. Boardman to W. T. Eustis, Jan. 15, 1838. Oriental Bank (Boston, Mass.) and Nahant Bank (Lynn, Mass.) Records. Baker Library Historical Collections, Harvard Business School.