The Panic of 1837 was a financial crisis that led to a major depression lasting until the mid-1840s. It resulted from speculative lending, a land bubble collapse, declining cotton prices, international economic factors, and the lack of a central bank. A bank run in May 1837 worsened the crisis, leading to widespread deflation, unemployment, and business failures. Despite economic struggles, industrial advancements and westward expansion eventually helped recovery. The discovery of gold in California in 1848 spurred new economic growth.
Started, May 10, 1837
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The bank run came to a head on May 10, 1837, when banks in New York City ran out of gold and silver. They immediately suspended specie payments, and would no longer redeem commercial paper in specie at full face value. A significant economic collapse followed: despite a brief recovery in 1838, the recession persisted for nearly seven years. Over 40% of all banks failed, businesses closed, prices declined, and there was mass unemployment.