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The Panic of 1837
The financial panic of 1837 was the result of many factors. Some of the main factors which could be attributed to the economic collapse were unbounded speculation, and the executive experiments on finances. The result was the first depression in American history. Banks lost money, people lost faith in banks, and the country lost faith in President Martin Van Buren.

Causes
The economic harvest of the Jackson years is the Panic of 1837, with an ensuing depression. During these years cotton production increased in the South, agriculture expanded in the West, cities grew, and manufacturing replaced trade as the economic base in the North. These phenomena were accompanied by a rise in the sales of land, and also in the price paid for land.

There was a need for internal improvements, roads, canals, etc. and these had to be financed by states and private companies. Inevitably, speculation and inflation accompanied such activities, and President Jackson hoped to curb the unhealthy aspects of a growing economy by extirpating the central bank, which he considered the root of the evil.

When Andrew Jackson became President, in 1829, he very quickly manifested an enmity to the National Bank, which he declared to be corrupt, dangerous, and unconstitutional. His first hostile measure was to remove from it the government deposits, which he distributed among the State banks. This measure produced a storm of opposition, greatly disturbed the conditions of business, and caused general distress in the industrial community. But Jackson was unyieldingly obstinate in his opinions, and his hostility to the bank was next displayed in a veto of the bill to renew its charter, which would expire on March 3, 1836. The State banks took advantage of this condition of affairs to expand greatly their discounts, new banks came rapidly into existence, and the banking facilities were enormously increased, the discounts augmenting from $200,000,000 in 1830 to $525,000,000 eight years afterwards.

A series of wild speculations attended this expansion: foreign goods were heavily imported, and enormous operations took place in government lands, in payment for which paper money poured profusely into the treasury. Such was the state of affairs at midsummer of 1836. To check these operations,specie circular was issued by the Secretary of the Treasury, which required payment for government lands to be made in gold and silver after August 15, 1836. The effect of this series of executive actions, and of the fever of speculation which existed, was disastrous. The species which was expected to flow into the treasury in payment for public lands failed to appear.

Financial aftermath
The banks refused discount and called in their loans. Property was everywhere sacrificed, and prices generally declined. Then, like an avalanche suddenly falling upon the land, came the business crash and panic of 1837, which caused the financial ruin of thousands. During the first three weeks of April two hundred and fifty business houses failed in New York. Within two months the failures in that city alone aggregated nearly one hundred millions of dollars. Throughout the whole country the mercantile interests went down with a general crash, involving the mechanic, the farmer even the humblest laborer, in the ruinous consequences of the disaster. Bankruptcy everywhere prevailed, forced sacrifice for valuable merchandise was the order of the day, on less than eight of the States partially or wholly failed, even the general government could not pay its debts, trade stood still, business confidence vanished, and ruin stalked unchecked over the land.

The panic of 1837 was not due solely to the causes above enumerated. Many influences converged to produce this result, and to give rise to the fever of speculation which was its immediate predecessor. As one of its results the banking system of the country suffered a general collapse. Out of eight hundred and fifty banks, three hundred and forty-three closed entirely, sixty-two failed partially, and the system of State banks received a shock from which it never fully recovered. The compromise tariff of 1833, though which the tariff was to be annually reduced until it should reach a general twenty per cent. Level in 1842 added to the distress, and recovery only fairly took place after 1842 in which year new tariff bill was passed, imposing a thirty percent ad-valorem rate on all imported goods except in certain special cases. In 1846 a low tariff bill was again passed, which continued in force until 1860 when in the Morrill tariff bill was resumed the protective principle which has been ever since maintained.

Political Effects and Aftermath
The panic of 1837 loosened the political moorings of the thirties. For eight years- from 1828 to 1836- the Democratic Party was the most dominant party in the nation. For eight years it weathered the storms of nullification, bank, tariff, internal improvements, speculations, and foreign affairs. But the commercial crisis of 1837 was to seal its doom. The long pent up emotions of the people, the discordant clashing of capital and labor, the rival aspirations of party leaders, and the last phase of the struggle between “bank and state” were to find their outlet in the money stringency. To Van Buren, the successor of Jackson, was left the handling of these manifold questions. To him remained the burden of proof that the Democratic administrations had not caused these evils.

By April of 1837 the president began to receive letters from his associates expressing anxiety about the political prospects of the party. In May came evidence of the defecation within the party, the lack of organization and incentive, the wearisome of the public mind with the long strife, and the determination of the opposition to turn the panic to political account. Urgent appeals poured into the white house for relief until at last, on May 15, Van Buren issued his proclamation for an extra session to meet in September.

On September 4, 1837 Van Buren read his message to congress and advised the creation of an independent treasury to care for the finances of the government. At once a storm of protest arose on all sides. In Virginia but one press agency defended the sub treasury scheme. Many of the most influential democratic papers in the Union considered the system unwise and inexpedient.

Immediately a section of the Democratic Party under the leadership of Nathaniel P. Tallmadge, of New York, and William C. Rives, of Virginia, broke with the president. Candidates were called upon for their opinions on the Sub Treasury bill while the diversity of thought on the subject continued to grow in the democratic ranks.

With the projection of the sub treasury into the political arena, Van Buren had appealed to the political arena. Van Buren had appealed to the people for a complete divorce of state and bank. Throughout his whole administration, in the state elections and in the congress, this question was to be uppermost, and upon it was to rest the fate of the Whig and the Democratic parties, the relation of capital and labor, the fate of a national bank. By using the commercial crisis and the sub-treasury plan as weapons, the Whigs were to mount to power, and an examination of the state elections from 1837 to 1840 discloses this titanic struggle between bank and government for supremacy.