Question

Which was a cause of banks going bankrupt in the Panic of 1837?

Answer 1

The Panic of 1837 was a crisis in financial and economic conditions in the nation following changes in the banking system initiated by President Andrew Jackson and his Specie Circular that effectively dried up credit. Other causes of the Panic of 1837 included the failure of the wheat crop, a financial crisis and depression in Great Britain that led to restrictive lending policies. President Martin Van Buren was blamed for the Panic of 1837 and proposed the system for the retaining government funds in the United States Treasury and its sub-treasuries to address the situation but met with strong opposition by the Whigs, led by Henry Clay.

Answer 2

The Panic of 1837 was a financial crisis in the United States that touched off a major recession that lasted until the mid-1840s. Profits, prices, and wages went down while unemployment went up. Pessimism abounded during the time. The panic had both domestic and foreign origins. Speculative lending practices in western states, a sharp decline in cotton prices, a collapsing land bubble, international specie flows, and restrictive lending policies in Great Britain were all to blame. On May 10, 1837, banks in New York City suspended specie payments, meaning that they would no longer redeem commercial paper in specie at full face value. Despite a brief recovery in 1838, the recession persisted for approximately seven years. Banks collapsed, businesses failed, prices declined, and thousands of workers lost their jobs. Unemployment may have been as high as 25% in some locales. The years 1837 to 1844 were, generally speaking, years of deflation in wages and prices. Hope this helps.