Question

Describe the Panic of 1819. in at least 400 words.

NOTE: HISTORY 011: Pol&Soc Hist  

Answer 1

• The Panic Of 1819:-
• It was the first major economic depression that happend in American history.It was quit harsh and was caused by various factors,but the major cause was irresponsible banking policies.
• In the 1800s,banks used to give loans to everyone regardless of credit or income,which doesnt happen now.Such loans were speculatory,as the banks had no clue on what the money would be spent on.The loans were set up to bepaid back with higher interest rates and the baks started to issue bank notes for loans,which were just paper certificates that had no actual value in gold or silver.
• So when banks had to collect back loans,they couldnt, since they had nothing to prove about the actual worth of notes and slowly the banks when out of business.This served as the building block for the Panic.
• The Second Bank of the United States which was a national bank was the main culprit in all this chaos,leading to panic.Banks would call out for the loans to repaid,but since the paper notes were worthless and the speculatory loans were not clear as to what would be purchased,no body knew how much amount was owed to whom.So,banks had no money hand as most of it was loaned,and customers couldnt withdraw their own money.
• The panic had other causes as well like,,the effect of 1812 war ended,decline in cotton prices happened which triggered unemployment,an 1817 congressional order which required hard currency payments for land purchases and also closing of many factories due to foreign competition.