The Panic of 1819

The Panic of 1819:

There was little time to celebrate The Transcontinental Treaty of 1819,  a treaty between Spain and the United States, that gave the United States Florida. The sudden fall of the of the cotton prices helped lead to the Panic of 1819. Thomas Jefferson said that "we are a bank under pressure that would soon burst" prior to this he made the statement "we are ruined by paper.." But we all know hindsight is 20/20

The collapse of the cotton prices were due to the fact that cotton could be obtained cheaper through East India.   This is something that is still done today with outsourcing. The demand for American goods also followed the collapse of cotton. Americans were hit hard by this. This was do to the fact that banks handed out huge loans for lands that during the crises many were unable to repay.  This reminds me of current times with the recession. People were able to get loans for their homes but as recession came about jobs were lost and so was the ability to repay loans.

The banks were also hit hard with the embezzlement of money and fraudulent activity.



 As a way to increase income more loans were made without the backing of gold and/or silver as redemption.



 Langdon Cheves came aboard as the new president of The Second Bank of The United States. He was set to the task of helping to bring about some financial stability and to bring the bank out of devastation. Cheves tried to accomplish this by putting more of the strain on banks at the state level. As a result there was no longer an "ease" of getting or renewing loans.  By this time the damage had been done, many Americans had a distrust in the banking system. This Panic lasted for approximately three years, and during this time many were homeless and out of work. The Panic of 1819 is considered by most the first major us depression. 

There was little time to dwell on the Panic of 1819 because there was dissension on the horizon.