Discussion Paper

Crisis Chronicles: The Man on the Twenty-Dollar Bill and the Panic of 1837

Abstract: President Andrew Jackson was a 'hard money' man. He saw specie--that is, gold and silver--as real money, and considered paper money a suspicious store of value fabricated by corrupt bankers. So Jackson issued a decree that purchases of government land could only be made with gold or silver. And just as much as Jackson loved hard money, he despised the elites running the banking system, so he embarked on a crusade to abolish the Second Bank of the United States (the Bank). Both of these efforts by Jackson boosted the demand for specie and revealed the soft spots in an economy based on hard money. In this edition of Crisis Chronicles, we show how the heightened demand for specie ultimately led to the Panic of 1837, resulting in a credit crunch that pushed the economy into a depression that lasted until 1843.

Keywords: panic; 1837; jackson; specie; Bank of the United States; gold; hard money;

JEL Classification: N2;

Bibliographic Information

Provider: Federal Reserve Bank of New York

Part of Series: Liberty Street Economics

Publication Date: 2015-05-08

Number: 20150508