Martin Van Buren & the Panic of 1837

Instructor: Logan Thomas

Logan has taught college courses and has a master's degree in history.

President Martin Van Buren faced one of the greatest economic recessions in U.S. history. In this lesson, we will learn how he tried to ease the Panic of 1837.

Facing Down a Panic

People can enter into an endless debate over whether 'depression' sounds worse than 'panic', or vice versa. In the 19th century, however, people referred to economic recessions as 'panics' rather than a recession or depression.

A 'panic' was the last event anyone expected in the United States during the 1830s. Following the removal of eastern Native American tribes, the United States had plenty of land and momentum to populate the area west of the Appalachian Mountains. However, the primary cause of the Panic of 1837 in the United States had to do with the buying and selling of that land as a great debate loomed over westward expansion. Would these lands be purchased through paper money or only with gold and silver?

Martin Van Buren
Van Buren

President Martin Van Buren, a Democrat who believed in limited government intrusion, took office in 1837 just as the banking crisis was about to take the United States by storm.

Events Leading to the Panic

The outgoing president, Andrew Jackson, had removed remaining Native American tribes and opened vast swaths of land for settlers to move west of the Mississippi. Jackson was known for ignoring the U.S. Supreme Court and swatting down attempts at the creation of a national bank. In the process, Jackson had earned many political opponents.

Andrew Jackson
Andrew Jackson

Jackson's political opponents were known as Whigs because they felt they battled against the king-like enemy of Jackson and his supporters. The Whig Party mounted an energetic political fight against anyone following the outgoing president. While Jackson repeatedly utilized his veto power to limit government, Whigs favored a national bank and additional government regulation.

For his part, Jackson believed in the use of hard money, meaning he wanted gold and silver to backup transactions. He thought hard money would prevent unethical business owners from compensating workers with cheap paper money. In 1836, he supported the 'Specie Circular' that stipulated land speculators had to use gold and silver to purchase government land.

The 1836 policy sank prices, reduced sales of the former Native American land, slowed the economy, and lessened the federal surplus. Frightened these economic policies would lessen the value of their paper money, people rushed to the banks to exchange their money for coins. Some banks found themselves unable to comply as the supply ran dry, deepening the uncertainty among the public. Van Buren, who would run for president in the fall of 1836, inherited from Jackson an economy teetering on the edge of collapse.

Widespread Panic

A Democratic candidate and lifelong politician, Van Buren won the election of 1836 over three Whig candidates from different sections of the country. Just as Van Buren was about to take office in 1837, the economic crisis began to take hold as banks ceased loaning out money and people failed to find credit to maintain businesses, buy land, or purchase homes. As the economy worsened, Van Buren resisted calls for federal funding and the prices in the country continued to plummet. Banks failed and businesses across the country closed their doors.

Worried investors pull their savings from bank during the Panic of 1837
bank run

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