There was a recent article in the Post-Gazette about the news in Pittsburgh from 1837, the beginning of a five-year depression. In 1837, many people still preferred to use specie (gold and silver coin); they were highly skeptical of the new paper money and its use had to be legislated.
The columnist, Len Barcousky, described the situation: “Economists say that what became known as the Panic of 1837 had at least two causes. One was a federal policy requiring that most purchases of western lands be made with specie — gold or silver money — rather than bank notes. The second was a decision by the struggling Second Bank to call in many of its outstanding loans after Jackson withdrew federal deposits from the institution. The results were less credit, a shrinking money supply, business bankruptcies and rising unemployment. ”
Well, we knew this wasn’t the first financial crisis. Let’s just hope the recession doesn’t turn into a five-year depression.
(above: An 1837 political cartoon depicts President Van Buren recoiling in horror at the sight of the “ghost of commerce” in the midst of the economic crisis of the Panic of 1837. Image from the Library of Congress.)