Jacksonian Monetary Policy, Specie Flows, and the Panic of 1837

Peter L. Rousseau

NBER Working Paper No. 7528
Issued in February 2000
NBER Program(s):Development of the American Economy, Monetary Economics

The Panic of 1837 stands among the most severe banking crises in U.S. history, marking the start of a business downturn from which the nation would not recover for six years. Given the serious consequences of the panic for the rapidly evolving commercial and industrial sectors, it is thus not surprising that a number of hypotheses have emerged to disentangle the true' causes from a host of aggravating domestic and international shocks. To this day, however, the event remains not fully understood. In this paper, I organize previously unexploited information from the U.S. government documents and contemporary newspapers to take a fresh look at the panic. These sources point to a new explanation which places neither the official distribution of the federal surplus to the states in the Spring of 1837 nor an international shock at the heart of the crisis, although the latter may have served as a catalyst in the final weeks. Rather, a series of hitherto unremarked interbank transfers of government balances ordered in the year leading up to the crisis combined with a policy-induced increase in the demand for coin in the Western states to drain the largest New York City banks of their specie reserves and render the panic inevitable.

download in pdf format
   (267 K)

email paper

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w7528

Published: Rousseau, Peter L. "Jacksonian Monetary Policy, Specie Flows, And The Panic Of 1837," Journal of Economic History, 2002, v62(2,Jun), 457-488. citation courtesy of

Users who downloaded this paper also downloaded* these:
Wallis h0133 What Caused the Crisis of 1839?
Obstfeld and Taylor Globalization and Capital Markets
Eggertsson What Fiscal Policy is Effective at Zero Interest Rates?
Akcigit and Kerr w16443 Growth Through Heterogeneous Innovations
Wallis, Sylla, and Grinath w10753 Sovereign Debt and Repudiation: The Emerging-Market Debt Crisis in the U.S. States, 1839-1843
NBER Videos

National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email:

Contact Us