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.

The Missouri Compromise

The Missouri territory had a part of the Louisiana Purchase excluding the Arkansas territory. There were many ways as to how they found a way to moves slaves around from territory to territory. In 1819 the House of Rep. approved a legislation allowing the Missouri territory to move the state constitution. It had came to the point where James Tallmadge, congressman, did no longer allow any more slaves into Missouri. The House of Representative did pass the Tallmadge Amendment that allowed a voting event. The voting was rejected due to the North overpowering the South. Slavery continued with no objections until Jesse Thomas came along and was able to end somewhat part of the controversy. He decided to prolong the Missouri compromise by setting an amendment to exclude slavery from the Louisiana Purchase north of 36 degrees 30’, which means Missouri’s southern borders. With the amendment it did break apart Missouri.

It was now only slavery in part of Missouri. They named the new division New State of Missouri that still participated in slavery along side Arkansas territory. Although slavery was overpowering freedom the pro-slavery faction seem to put more tension in an unsettling situation. Missouri’s convention inserted in a proviso excluding free blacks. There were free blacks as citizens in states such as North Carolina. What stirred up next was a more so a confession to admit Missouri as a state.

Henry Clay former lawyer born in Virginia was part of the Senate in the House of Representatives. He created the second Missouri Compromise, which depended on the Missouri legislature would not be able to deny free blacks to their constitutional rights.  It had seemed to settle the population more then it had been for a while. The compromise seemed to fit them well, so well the legislature considered and adopted a pledge. A pledge that did not mix legislation with the people of state and not involving people with state decisions. August 10, 1821 President Monroe announced that Missouri would be known as the 24^th state. The compromise the first time seemed not to be enough for the people to settle with. Some wanted slavery some did not. Some wanted to rule with the free states others agreed more with the slave states. Henry Clay must have made quite a difference if the so-called second compromise seemed to work for the people.