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Panic of 1819

A sample research paper introduction of the panic of 1819:

The Panic of 1819 was the first major collapse of the American economy, lasting until 1821. Following the Treaty of Ghent in 1814, the United States’ economy had begun to grow largely on a financial bubble of land speculation, similar to the housing bubble of the early 21st century. The main reasons the Panic of 1819 occurred were:

  1. Scarcity in hard currency
  2. Cheap British Imports
  3. Rise in the number of unregulated State Banks
  4. Too much paper currency in circulation

The Napoleonic Wars in Europe contributed to a scarcity in hard currency (silver) and cheap British goods began to flood into America, harming American manufacturers.

Banks Play Role in Panic of 1819

At the same time, the failure to re-charter the First Bank of the United States led to a rise in a number of unregulated state banks, and large amounts of paper currency in circulation without the backing of hard currency. In an effort to restore America’s credit, the Second Bank of the United States was chartered in 1817. In the summer of 1818, the Bank of the US began to tighten credit. Dropping agricultural prices led to a chain reaction of foreclosures on land, bursting the bubble.

Poverty and Panic of 1819

The Panic of 1819 revealed deep problems with the Jeffersonian economic model. The extreme poverty that many Americans suffered led to the issue of relief for the poor being brought into government policy. Attempts to solve the problem of poverty in America also brought about education reform and the first public school systems. The restructuring of the American economy allowed the United States to transition into a modern business cycle and paved the way for Industrialization.

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