Question

Explain how speculation and false demand played a major role in the Panic of 1837

Answer 1

Land speculation and the false demand of that land played a role in the Panic of 1837 for two reasons: First, land speculators of the time were buying up huge amounts of land all across America betting that the westward expansion would help the land appreciate in value. These speculations would later fail along with the economy because the government stopped accepting the state run bank bills as forms of payment. Second because the economy would soon enter a recession, the demand for the land would not come to fruition like the speculators hoped. These two things were part of the reason the following recession would be as bad as it was.