What Caused the Panic of 1837?

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The Panic of 1837 was an period of economic crisis in the United States under President Martin Van Buren; the cause of this financial crisis has been tied to different causes by various scholars, including changes in banking policy at the federal level and a real estate bubble. The real estate bubble resulted from banks extending a large amount of credit to individuals who wanted to develop the newly available land in the West. Although Van Buren served as president during the panic of 1837, his predecessor, Andrew Jackson, arguably was responsible for the events that triggered the crisis because he divested funds from a federal bank and distributed that money to smaller state banks, which had less strict credit policies, leading to the real estate bubble.

Although the Panic of 1837 took place before most modern technology existed and while slavery was still a big part of the American economy, it is an example of a financial crisis triggered by a real estate bubble similar to the financial crisis of 2007. The availability of easy credit led to a dramatic upswing in prices for things like land, cotton and slaves. Jackson's policies also allowed multiple banks to issue private banknotes, which further complicated the financial situation that eventually led to a dramatic crash.