Conditions That Led to the Panic of 1837

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The Panic of 1837 was an economic depression resulting from Andrew Jackson's economic policies, which included the refusal to renew the charter for the Second Bank of the United States. Another policy was the Coinage Act by Jackson, which required payment for public lands to be in gold and silver. The actions of Andrew Jackson resulted in the accusation of Martin Van Buren, Jackson's successor, for causing the Panic of 1837. Van Buren's refusal to involve the government in the economy was said to have stimulated the damages. Bank irresponsibility, both in causing rampant speculation and by introducing paper money inflation was also a root of the problem. This was caused by banks issuing paper money they couldn't redeem in gold or silver coin; these notes then lost value over time, so that more were needed to buy the same thing as had been bought before for less. The Inflationary Boom, which led to the Panic of 1837, of the 1830's began by the construction of new canals. The Federal government sold millions of acres of public lands in western states, mostly to speculators who resold and bought, waiting for the increase in value once the finished turnpikes, canals, and railroads brought settlers looking for land. Paper money, issued by banks, was stunting the nation's economy because it was unable to redeem gold and silver. Another condition that led to the Panic of 1837 was the Jacksonian hard money (gold and silver) policy. The Tariff of 1833 was reducing the Federal government's income, which thus depended more heavily on excise taxes, while at the same time Andrew Jackson's administration worked to pay off the national debt. The Jackson Administration favored hard money and was suspicious of the large amount of paper money. Thus the Specie Circular was issued by Andrew Jackson, which commanded the U.S. Treasury not to accept banknotes, and recognize only gold and silver coinage as payment for public lands. Many state banks did not have specie to support their...
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