|
Panic of 1837 for kids: Background History of the Panic of 1819
The Panic of 1837
occured just 5 weeks into the presidency of Martin Van Buren. The
events leading to the Panic of 1837 took place during President
Andrew Jackson's term of office, and even before his presidency. The
earlier
Panic of 1819
was caused by the bad management of the
Second Bank
of the United States and had resulted in serious hardship for
the people in the two year depression that followed.
Panic of 1837 for kids: Background History of the Bank War
Andrew Jackson, the 'man of the people', had also suffered
financially during the Panic of 1819. The
experiences suffered by so many American citizens, including Andrew
Jackson, fostered a profound mistrust of banks, bankers and paper
money. When Jackson became president
he swore to bring about the destruction of the
Second Bank of the United States and so the
Bank War
began and the national bank was destroyed. Government money was
deposited into Jackson's state "Pet
Banks". Unregulated Wildcat banks also emerged,
especially in the frontier towns of the west, where there was
extensive land speculation. The Wildcat Banks were not backed
by specie (meaning gold and silver) and distributed practically
worthless currency backed by questionable securities.
Panic of 1837 for kids: Background History of the Specie Circular
There were massive amounts of banknotes in circulation without
deposits, or gold or silver to cover them. Andrew Jackson issued the
Specie Circular
at the end of his presidency to end reckless land
speculation. The Specie Circular demanded that payments for the
purchase of public lands were made exclusively in gold or silver. It
also dried up credit, leading to the Panic of 1837.
Causes of the
Panic of 1837: Problems with Trade
Just to add
to the financial and economic crisis of the nation the 1836 wheat
crop had failed causing hardship for the northern farmers in 1837.
The South also suffered because there was a depression in Great
Britain and the sale of cotton dropped dramatically. The British
depression led to restrictive lending policies by Great Britain that
curtailed the flow of money and credit to the United States.
Panic of 1837 for kids: Deposit and Distribution Act of 1836
The Second
Bank had been closed. The government had paid their debts. The
government needed a plan to distribute surplus government money - it
had to be stored somewhere. The plan was to loan the surplus
revenues to the states in proportion to their electoral votes -
three payments were made to the states. The Deposit and Distribution
Act of 1836 placed federal revenues in various banks across the
nation.
Causes of the
Panic of 1837:
Martin Van Buren and the
chain of events
The Panic of 1837 gripped the country just 5 weeks after Martin Van
Buren was made president - he got the blame for the panic and given
the nickname 'Martin Van Ruin'. This is the chain of events and
causes that led to the Panic of 1837
● When the
Specie Circular was issued, people who held paper money
immediately went to the banks to get gold and silver in exchange
for their paper money in order to pay for the lands bought from
the government
● The
government had to borrow money and call in loans to pay its own
necessary expenses
● The banks
were obliged to sell their property and to demand payment of
money due them
● People
wanted to sell but few were able to buy
● Credit
dried up, profits plummeted
● 343 banks
closed (out of 850 banks), another 62 banks partially failed
Effects of the
Panic of 1837
The
effects of the Panic of 1837 were:
●
Foreclosures and Bankruptcies
● Factories,
mills and mines were closed
●
Unemployment soared
● Bread
riots broke out
Martin Van Buren and the
Panic of 1837:
"What should be done
with the government's money?"
President Van Buren was faced with finding ways to
resolve the financial crisis. The immediate question to be answered
was "What should be done with the government's money?"
● There was
no national bank and no one would consider depositing it with
the state banks
●
Henry Clay and his supporters
favored the establishment of a new United States Bank
● President
Van Buren opposed a new national bank - he had shared Andrew
Jackson's distrust in the first national banks
● Martin Van
Buren therefore proposed the establishment of an independent
treasury that would be isolated from all banks
Panic of 1837 for
kids
The info about the Panic of 1837 provides interesting facts and
important information about this important event that occured during the presidency of the 8th President of the United States of America.
Martin Van Buren and the
Panic of 1837: The Independent Treasury and the Sub-Treasuries
Martin Van
Buren's plans for an independent treasury were based on the idea of
building vaults for storing money in Washington and in the leading
cities of the nation. The main storehouse (the Treasury) was to be
built in Washington and other vaults (sub-treasuries) were to be
established in the other cities. The collectors of customs would pay
the money collected by them into each of the sub-treasuries. By
using this system the government would become independent of the
general business affairs of the nation. The Deposit and Distribution
Act of 1836 placed federal revenues in various banks across the
nation
Martin Van Buren and the
Panic of 1837: Opposition to the Independent Treasury
There was considerable opposition to the idea of the treasury.
● The
Independent Treasury Act failed to pass the House of
Representatives in 1837
● The
Independent Treasury Act failed to pass the House of
Representatives in 1838
● The
Independent Treasury Act failed to pass the House of
Representatives in 1839
The
Independent Treasury Act was passed by Congress in 1840 but there
were many requirements to put the plan into effect and before the
Treasury system was in full working order Martin Van Buren was no
longer President and the nickname 'Martin Van Ruin' stuck. In 1841
the Whigs, who wanted a new central bank, repealed the law. The
Whigs plans to establish a new central bank failed due to a veto by
President John Tyler on constitutional grounds. The Democrats won
the election of 1844 and re-established the Independent Treasury
System in 1846 in the Independent Treasury Act of August 1846 during
the presidency of James Polk.
Significance of the
Panic of 1837
The
significance of the Panic of 1837 was:
● Martin Van
Buren was blamed for the Panic of 1837 and the economic
depression that followed it. He was not re-elected president
● The
recession continued for nearly 7 years
● The system
of State banks never fully recovered
● The system
for the retaining government funds in the United States Treasury
and its sub-treasuries continued to exist from 1846 to 1921
The
Panic of 1837 for kids
The Panic of 1837
was one of a series of financial crisis to cripple
the economy of the United States - refer to the
Panic of 1819,
the
Bank War
and the
Panic of 1857
for additional facts and information.
Panic of 1837 for kids - President Martin Van Buren Video
The article on the
Panic of 1837 provides an overview of one of the Important issues of his presidential term in office. The following
Martin Van Buren video will
give you additional important facts and dates about the political events experienced by the 8th American President whose presidency spanned from March 4, 1837 to March 4, 1841.
Panic of 1837
●
Interesting Facts about
Panic of 1837 for kids and schools
●
Facts, causes and significance of the Panic
of 1837
●
The Panic of 1837, a Important
event in US history
●
Martin Van Buren Presidency and the Panic of 1837
●
Fast, fun,
interesting facts about the Panic of 1837
●
Foreign & Domestic
policies of President Martin Van Buren
● Martin Van Buren Presidency and
Panic of 1837 for schools,
homework, kids and children |
