America’s Long Journey: Jackson and the Cherokee Removal

 

The story of the Five Civilized Tribes, as they were called, demonstrates at least two things. First, the Indians were able to adopt white man’s ways when they chose to, including literacy, fixed residence, even slave-holding and Christianity. Second, doing so didn’t spare them from their white neighbors’ racism or their greed for gold and land.

The five tribes were the Choctaw, Chickasaw, Cherokee, Creek, and Seminole. By the 1830s, under constant pressure from settlers, each tribe had ceded most of its lands, but sizable self-governing groups lived in Georgia, Alabama, Mississippi, and Florida. All of these (except the Seminoles) had had adopted many of the colonists’ customs and had generally good relations with their neighbors. They didn’t want to move.

Unfortunately for the Cherokees, their land, as defined in an 1819 treaty, contained gold. The first gold rush in American history was sparked by the discovery of gold in 1828 in Dahlonega, Georgia, north and a little east of present-day Atlanta.

What phenomenon exemplifies greed and gambling-lust more than a gold rush? It is the perfect embodiment of get-rich-quick. Once the gold was discovered, first came trespass, then came politics, and then came exile. All quite illegal, but the white men had the money, the troops, the interested parties, and thus, soon enough, the legal decisions. In 1831, in “Cherokee Nation v. Georgia,” the Supreme Court said that the Cherokees were not a sovereign and independent nation, and therefore had no right to sue.

The story of the forced relocation of the Cherokee Nation from their lands east of the Mississippi to what is now eastern Oklahoma is a major blot on Jackson’s presidency. Most of the actual relocation took place in the presidency of his successor, Martin Van Buren, but the treaty mandating it was signed and ratified in 1836, when Jackson was in the White House. Cherokee relocation was opposed, and not merely by tender-hearted (and geographically distant) New Englanders like Emerson, but by frontier stalwarts like Davy Crockett and Sam Houston, both Jackson allies who on this issue saw the injustice of what was happening. So why did Jackson let it happen?

Partly, perhaps, from principle. To understand his position, we must see it with his eyes, not the eyes of posterity. In his first annual message to Congress as president, in December, 1829, he had called for Indian tribes either to relocate beyond the white man’s civilization, or conform to its uses. “This emigration should be voluntary, for it would be as cruel as unjust to compel the aborigines to abandon the graves of their fathers and seek a home in a distant land. But they should be distinctly informed that if they remain within the limits of the States they must be subject to their laws.”

(Fair enough, from the viewpoint of his society in his day, and perhaps two different kinds of society – one settled, one nomadic — could not live intermingled. But the Cherokees were living settled lives.)

Partly perhaps from practical politics. He was authorized by the Indian Removal Act of 1830 to negotiate to buy tribal lands in the east in exchange for lands west of existing state borders. With the nullification crisis brewing, he didn’t need to provoke another conflict over states’ rights by interposing the federal government between the Cherokees and the state of Georgia.

So, there came the Treaty of New Echota, exchanging Cherokee land for lands in the Indian Territory (eastern Oklahoma), signed in December, 1835, by small group of Cherokees who argued that it would be better to make a deal sooner (with the federal government), rather than later (with state officials and who knew what others). The following February, some 13,000 tribal members (of a total of 16,000 counted by the U.S. War Department itself ) signed protests saying that this treaty was not the will of the majority. Naturally, this being inconvenient, it was ignored. The treaty was ratified by the Senate (by a single vote) in May, 1836, and the tribe was given a two-year grace period to move “voluntarily” to the Indian Territory.

A few hundred did, accepting government funds for subsistence and transportation. Most did not. As the deadline neared, President Van Buren sent U.S. General Winfield Scott to enforce the treaty. Scott arrived at the Cherokee capital of New Echota in May, 1838, in command of about 7,000 soldiers and state militia. They removed men, women, and children from their homes at gunpoint and gathered them in camps, then marched them overland to departure points at present-day Chattanooga, and put them onto flatboats and steamers.

When low water stymied this effort, Gen. Scott suspended it, and the Cherokees who had not yet been transported were put into eleven internment camps. There they remained through the summer of 1838, suffering about 350 deaths through illness. Scott granted a petition for delay until cooler weather, and Cherokee Principal Chief John Ross, accepting defeat, arranged for the remainder of the removal to be supervised by the Cherokee Council. The remaining 11,000 Cherokees were removed under the supervision of Chief Ross in 12 wagon trains, each with about 1,000 persons, with expenses paid by the Army.

How many died along the “trail of tears”? The short answer is, nobody knows. The highest estimate is 6,000; the lowest, 2,000. The intermediate figure of 4,000 is the most often cited, as being the difference between the 16,000 Cherokees enumerated in the 1835 census (omitting 2,000 slaves), and 12,000 counted in the emigration. But Cherokees who lived on private, individually owned lands (rather than communally owned tribal land) were not subject to removal. Some 1,500 Cherokees remained in North Carolina, and many more in South Carolina and Georgia. And it is guessed that perhaps another thousand evaded the soldiers.

As so often in the history of white-Indian relations, it came down to might makes right. As usual, a fig-leaf of legality was employed to cover naked theft. As usual, a relative few enriched themselves by using the government for their own purposes. And, as usual, the events really happened, but not quite in the way they are remembered.

America’s Long Journey: Jackson and the Bank

When we have worked our way back to the earliest days of the new republic, we will find George Washington’s cabinet of only four men bitterly divided between the views of Thomas Jefferson and Alexander Hamilton. The two had very different visions of America’s future: Jefferson’s, a predominantly agricultural America, with few great cities; Hamilton’s, an urban America centered on vibrant commerce and industry.

We know which vision prevailed, and perhaps this lends a sense of inevitability to the outcome of the argument. But in Jackson’s day, the two forces were still contending, and it was Old Hickory who dealt the Hamiltonian vision one of its few setbacks. He did it in the year of his re-election campaign, and did it regardless of political consequences, and did it in characteristically forthright, uncompromising fashion. The electorate, as usual when they witness that kind of determination, approved. Jackson won re-election with 55% of the votes in a four-man race, and 219 electoral votes to Henry Clay’s 49), and perhaps he owed that victory partly to the Second Bank of the United States.

”The Bank,” as it was called, was a private corporation centered in Philadelphia (but with 25 branch offices elsewhere) that handled fiscal transactions for the federal government. The second such federally authorized Hamiltonian bank, it was given a 20-year charter in February, 1816, at the end of James Madison’s second term. The bank issued credit to government and private concerns, served as a depository of government revenues, and was supposed to maintain a sound and stable national currency. Theoretically accountable to Congress and the US Treasury, which held 20% of its shares, in fact the bank management was accountable to no one. The federal investment was far outvoted by the other 80%, which was owned by a few hundred wealthy Americans and a thousand European investors.

Although the Bank of the United States was a depository for federal funds and paid national debts, it answered only to its directors and stockholders and not to the electorate.

In January 1832, the Bank’s charter had four years to run, but banker Nicholas Biddle and his Congressional supporters thought they’d put one over on Jackson. Knowing that the existing Congress would vote to recharter the bank, they calculated that Jackson would not dare veto the bill for fear of jeopardizing his re-election. Daniel Webster and Henry Clay introduced the Bank Recharter Bill and got it through both houses.

Imagine counting on putting one over on Jackson! Imagine expecting Jackson to flinch from a confrontation! On July 10, 1832, Jackson vetoed the bill and sent it back to the Hill with a stinging message spelling out the reasons the institution deserved to die, labeling the Bank elitist and anti-republican, arguing that the Bank was unconstitutional and that it was neither necessary nor proper for the federal government to authorize and permit the existence of a big and powerful institution that directly benefited only a privileged few. (Where is Jackson today, when we need him?)

The following September, he issued an executive order ending the deposit of federal funds into the Bank, instead placing them in selected state banks. Biddle retaliated by tightening the money supply, causing an economic contraction. The financial crisis was initially blamed on Jackson, but by 1834, Biddle’s tactics had backfired, as the people concluded that the Bank was every bit as powerful and dangerous as Jackson had been saying right along. People had blamed the Bank for the Panic of 1819, and here it was doing the same thing again. The panic was short-lived, the cause of recharter was abandoned, and, in February, 1836, Biddle turned the Bank into a private Pennsylvania corporation. Only three years later, its insolvency caused it to suspend payments. It was liquidated in 1841, and the bank’s critics felt vindicated by events.

The Bank was dead. That doesn’t mean that everyone lived happily ever after. At first, yes. Money withdrawn from the Bank went to state and local banks, all of whom were ready and willing to lend to investors. As we saw in the section on the Panic of 1837, which was soon to follow, easy money led to speculation and over-investment as usual – in land, canals, cotton, factories. While credit kept expanding, everybody was smiling. But in 1836, Jackson issued the Specie Circular, requiring buyers of government lands to pay in specie, and that sobered up the party in a hurry.

We don’t much use the word “specie” any more. It means hard money — silver or gold coins – as opposed to soft money, basically paper. Today, the overwhelming majority of money isn’t even paper, but is digital, a computerized accounting that may or may not have anything tangible backing it. And what digital money is to us, paper money was to the nineteenth century. Many people didn’t trust paper money, for the simple reason that it wasn’t trust-worthy. Paper money is a promise to pay; specie, by contrast, is itself valuable. If you have a ten-dollar bill, you have a promise that what you hold is redeemable for ten dollars’ worth of value. If you have a ten-dollar coin, you hold (assuming honest coinage) ten dollars’ worth of gold or silver.

State and local banks were issuing painless paper dollars with abandon, and people were using this paper money to buy government land, particularly in the West and South, where most of the available land was.) By issuing the Specie Circular, Jackson said, in effect, “Sorry, boys, to buy government land you’re going to need real money, not paper money.” The natural (but apparently unforeseen) result was a great demand for specie in exchange for paper notes. Many banks didn’t have enough specie to cover their paper, and these banks collapsed, which led directly to the Panic of 1837.

Does that mean Jackson was wrong to issue the circular? Wrong to kill the Second Bank of the United States? Or were other factors more to blame for the financial chaos that followed? Really, no one knows. As to what would have happened on the road not taken – no one can say. Economists still argue the question up one side and down the other.

The danger on the one side is wild, runaway inflation, that destroys the value of money as a store of value, and the danger on the other side is a grinding, intensifying economic contraction, crippling society’s ability to produce and distribute goods and services. We’ve experienced each, at one time or another. About the only thing we can say for sure is that if there is any financial arrangement that guarantees perpetual prosperity in reality (as opposed to in theory), the economists don’t seem to have discovered it.

Drunk history

They have a point. It always astonishes me, saddens me, too, when people say history is dull, is nothing but lists of dates, etc., etc. Not so. History is STORIES. Once experience the endless fascination of it, you’re hooked for life. But, it’s all in how they’re told.

Via the History News Network sponsored by my alma mater, the history department of The George Washington University.

https://studybreaks.com/tvfilm/drunk-history/

America’s Long Journey: Andrew Jackson

Andrew Jackson

He was 61 when he assumed the presidency, and for all we know he may have thought that the presidency would be relatively peaceful. It wasn’t. Two of his major struggles – against the idea of nullification and against the Bank of the United States – were important enough to require separate sections. But to understand those events, it will help to have a sense of the man himself. In character, in firmness of intention, in unflinching nationalism, he was the strongest man to hold the presidency between Washington and Lincoln. The effects of his presidency, good and bad, were unmistakable and far-reaching.

The facts of Jackson’s life and times are easily found. Since we are working our way backwards, we have to touch on matters that happened earlier, but have not yet been discussed. Jackson, born in 1767, was orphaned at 14, and made his way in the world by his own strength of will. At 6 feet, 1 inch tall, and weighing only about 140 pounds, he was as slim and tough as the hickory tree he was often compared to. In his long turbulent frontier life, he raised himself to prosperity, became the hero of two wars, defied the empires of both England and Spain, and was the man primarily responsible for the U.S. acquisition of Florida from Spain. His marriage of more than 35 years was a happy one, but on this inauguration day, March 4, 1829, his wife Rachel was ten weeks in the grave, having died suddenly the previous December. When he died, in 1845, he left no children, but he adopted three sons, and acted as guardian for eight other children.

Jackson’s iron will held together a mass of contradictions. Count them. He was a man of the people who fought for democracy all his life; and he was a wealthy slaveholder. He believed in the small, limited federal government that the constitution prescribed; and he greatly strengthened the powers of the presidency. He was a proud Southerner, greatly loved in the South; and he promised that if certain politicians led South Carolina into secession, he would hang them higher than Haman.

Jackson was born in the western part of North or South Carolina (at a time when the boundary had not yet been adequately surveyed in those parts), less than two years after his parents came to America from Northern Ireland. His father died before he was born. He picked up a backwoods kind of education. During the American revolution, age thirteen, having been captured and held prisoner while serving as a courier for the local militia, he was ordered to clean a British officer’s boots, and got slashed with a sword when he refused. This left Jackson with scars on his head and his left hand, and an intense hatred for the British which intensified when his mother died of cholera the following year while nursing prisoners of war. It took 35 years, but he did get his revenge, as we shall see.

After the revolution, Jackson taught school, studied law, and in 1787 was admitted to the bar of North Carolina. He moved to what was then the Western District of the state, on what was then the frontier, practiced as a country lawyer, and moved into politics. In an active couple of years, he was elected as a delegate to the Tennessee constitutional convention in 1796, was elected as Tennessee’s first Representative, was elected U.S. Senator the following year, resigned within a year, and was appointed a judge of the Tennessee Supreme Court, where he served until 1804. At the same time, in his private life, he became a land-owner, a planter and slave-owner, growing cotton. He was also a major land speculator in West Tennessee and was one of the three original investors who founded Memphis.

In 1806, at 39, he acquired a reputation as a violent and vengeful man. He never lived the reputation down, and yet, was it a just accusation?

Here’s what happened.. After a man attacked him in print, Jackson issued a written challenge to a duel, even though the man was known to be an expert marksman. Jackson coolly – some thought cold-bloodedly — let his opponent fire first, hoping that the man would miss his aim through hurrying his shot. He did, but not by much. Jackson took a bullet in his lung that turned out to be too close to the heart to be safely removed. (He carried that bullet for the rest of his life. It left him subject to a hacking cough which sometimes brought up blood and made his whole body shake.) But Dickinson, having fired, then had to remain still as Jackson took aim and killed him. The “men of honor” of the state called the duel a cold-blooded killing, and it made Jackson a social outcast. One wonders: Did this treatment not confirm him in his distaste for aristocracies?

We will look at his military exploits in the Creek War and the War of 1812 in due course. but this should be enough for the moment to give a sense of the man who would dominate American political life in the 1830s.

America’s Long Journey: Old man eloquent

Old man eloquent

It was a strange, improbable political afterlife.

President John Quincy Adams’s decisive defeat for re-election in 1828 by Andrew Jackson was the end of an era, as we shall see, but it wasn’t the end of Adams, even politically. In 1830 he was offered the nomination for his local Congressional seat, and won, and was re-elected, and re-elected several times after that. He served in Congress literally for the rest of his life, and in the course of his 17-year post-presidential political career, he became more than John Adams’ son, more than Federalist-turned-Republican, more than repudiated statesman, more than a somewhat chilly intellectual. He became a crusader against slavery, and in that crusade he found a voice.

As early as 1820, in his private journal, Adams said to himself that the slaveholders, “look down upon the simplicity of a Yankee’s manners, because he has no habits of overbearing like theirs and cannot treat negroes like dogs…. [W]hat can be more false and heartless than this doctrine which makes the first and holiest rights of humanity to depend upon the color of the skin?” But his four years as president (1825-1829) had not been marred by slavery-related controversies. The closest thing to it was the so-called Tariff of Abominations, which he signed in his final full year in office, which indirectly led to the Nullification Crisis in his successor’s term. But Adams, as Congressman, helped defuse the crisis by authoring a compromise alteration to the tariff, which Jackson used, together with the Force Bill, to bring the Southerners up short.

Adams was an active congressman, chairing the committees on Foreign Affairs, on Indian Affairs, and on Commerce and Manufactures. Among his achievements was that of preventing the legacy that set up the Smithsonian Institution from being diverted to other purposes. He opposed Texas annexation, and then the Mexican War, correctly predicting that the end result would be civil war. But as time went on, he focused more and more on the ills and dangers of slavery. Like everything Adams ever did, his post-presidential career proceeded from his principles. An anti-slavery man from an anti-slavery family, he answered the call of duty, and one thing led to another.

All through his political career he had spoken from prepared addresses. Now, in the House, he began to speak extemporaneously, and found to the surprise of himself and others, that he was far more powerful as a speaker than as a reader of prepared thoughts. His passionate arguments supported the pursuit of scientific knowledge, and universal education, and freedom of speech and especially liberty as against slavery. So effective was he as speaker that he became known as “Old Man Eloquent.”

To take things out of order, in February, 1841, he was asked by anti-slavery activists to argue the Amistad case before the U.S. Supreme Court. Amistad was a Spanish ship carrying captured Africans to Cuba to be sold as slaves. The Africans seized control, killed the officers, and were trying to bring the ship back to Africa when it was captured by the US Navy. The Van Buren administration wanted to deport them for having mutinied. Adams argued that they should neither be extradited nor deported into slavery in Cuba, because they were not slaves and had only killed in resisting the slave trade, which had been illegal since 1808 in the United States. Adams won the case, and did not charge for his services. His defense of the Amistad rebels, like his father’s defense of the British troops involved in the Boston Massacre of 1770, was pure Adams – action taken on principle that could not conceivably do him any good and could easily do irreparable political harm. Probably the risk combined with the appeal to principle made the action irresistible (in both cases).

But the Amistad case came in the middle of his longest-running fight, against the gag rule. What was called the gag rule was adopted as one of the rules of the House in 1836, and was not overturned until 1844. It immediately and automatically tabled petitions concerning slavery, thus preventing any Congressional discussion of the subject. Adams had been presenting anti-slavery petitions on the floor of the House since he was first elected to the Congress. But as abolitionist tracts and publications were barred from the mails throughout the South, the number of petitions brought to the house floor concerning the matter skyrocketed. A representative from South Carolina – it would be a South Carolinian – persuaded the House to eliminate any discussion of the issue from the House floor. Adams challenged not only the specific rule itself but the principle of the House’s adoption of any rule that would limit debate. He used his formal legal training and his formidable intellect to mount an attack against the gag rule. It was an attack that would continue for eight years.

He argued that the right to petition was a universal right, granted by God, and he questioned why the House would limit its own ability to debate and resolve questions internally. Later, when he led a committee to reform the House rules, he tried to repeal the gag rule, but narrowly lost, due to the opposition of some northerners who worked hand in glove with southerners.

Finally, Adams pushed his opponents far enough that they moved to censure him. That was fine with him – was what he was hoping for, in fact. Since he was threatened by censure, he had the right to defend himself on the floor. And, having the floor, he changed the focus from himself to the actions of the defenders of slavery, and thus was able to attack the slave trade, and slavery itself. When his opponents realized what he was up to, they tried to bury the censure motion, but he didn’t let them. For two weeks, he held the House’s attention on the subject the slavers most wanted kept off the floor, condemning slavery as immoral and citing chapter and verse as to why — and in the end, the censure motion failed anyway. (Had it succeeded, he intended to resign and run for re-election.) His personal victory did not end the gag rule. But his actions, and the actions of others trying to silence him, brought into greater prominence the questions of the right to petition, and the right to legislative debate, and the morality of slavery.

On February 21, 1848, Adams, in the minority as so often, stood up in his place, answered a question put forth by the Speaker of the House, and collapsed of a cerebral hemorrhage. It was a suitably dramatic exit, active and combative to the last. On the day he died, the House, and the country, united for the moment in honoring his lifelong service, and his greatness of intellect and heart.

John Quincy Adams’ last words were, “This is the last of earth. I am content.” One hopes that the Almighty was adequately prepared to defend His actions from Adams’ searching criticisms.

 

 

America’s Long Journey: Jackson and nullification

On the last day of his two terms as president, Andrew Jackson is reported to have said that he had but two regrets, one of which was that he hadn’t hanged John C. Calhoun. It is a great pity that he didn’t. Calhoun was far more responsible for the attempt to destroy the Union than Jefferson Davis ever was. Even though he was nearly eleven years in his grave by the time the Civil War began, he bore perhaps graver responsibility for that tragedy than any other man. He laid the powder trail that led to the cannon.

The thing to remember about Calhoun is that he was a nationalist only as long as he saw the nation’s interests as being compatible with the interests of his section, or, more specifically, his State, or, more specifically, the slave-owning class that dominated his state. As soon as those interests diverged, or whenever he thought they diverged, he had no interest whatever in preserving the Union. Thus, he was one of the pre-eminent War Hawks who got us into the nearly fatal War of 1812, as we shall see. But when Congress passed a tariff that favored Northern interests over Southern, he had no ear for arguments that it was in the national interest to protect manufacturing until it could compete with English trade on even terms. In all his long career from 1812 to 1850, he never once put the national interest above the interests of the South, nor those above the interests of South Carolina, nor those of the state in general above the interests of the slave-owning class.

The nullification crisis of 1832 was an example of Calhoun at his worst.

Years before the panic of 1837, in the 1820s, the economy of South Carolina suffered a economic downturn, and its politicians blamed the policy of high tariffs against foreign goods, which had been adopted (after the War of 1812 showed the nation’s economic vulnerability) to encourage American manufacturing by making competing European goods more expensive.

In 1832, South Carolina passed an ordinance maintaining that the federal tariffs of 1828 and 1832 were unconstitutional, hence null and void within state limits. Why unconstitutional? Because their purpose was not only to provide revenue for the federal government, but to protect domestic manufacturing interests. South Carolina had no manufacturing interests, and so received no direct benefit from high tariffs, but it had to pay higher prices for manufactured goods. This, its representatives argued, was discriminatory in effect, if not in intent, and the state would interpose its power to protect its citizens. In this, they were following Calhoun’s arguments made four years earlier. About half of the southerners in Congress had supported the tariff, but a South Carolina state convention declared that the tariffs, being unconstitutional, would not be enforced in the state after February 1, 1833. Calhoun supported the idea. He had argued that a state could veto any law it considered unconstitutional, or could secede from the Union if it saw fit, an argument rejected by no less a Southern statesman than former president James Madison, the chief architect of the constitution.

Calhoun now helped form the Nullifier Party within South Carolina.

President Jackson supported states’ rights, and sympathized with the South in the tariff debate, but he believed in the protection of the domestic manufacture of goods necessary for the military. Nor did he want to reduce the tariff until the national debt was fully paid off (which, in 1835, briefly, it was). Besides, he could see that if any state could unilaterally opt out of any federal measure it disapproved, the Union could not survive, and all his life he vigorously supported a strong union. He said that, “To say that any State may at pleasure secede from the Union is to say that the United States is not a nation,” which presages Lincoln’s later argument that the right of unilateral secession would make the Union “a rope of sand.”

After Jackson’s re-election, Congress passed a Force Bill, empowering the president to use military power to force states to obey all federal laws – and no one who knew Jackson doubted that he would use force if need be. He sent warships to Charleston harbor, and talked of hanging Calhoun.

South Carolina then nullified the Force Bill!

The situation might have gotten uglier, but for the Compromise Tariff of 1833, which let South Carolina claim victory and climb off the limb before Jackson sawed it off. Its Nullification Ordinance was repealed in the following month.

After the immediate crisis was over, Jackson wrote that “the tariff was only a pretext, and disunion and southern confederacy the real object. The next pretext will be the negro, or slavery question.” And, of course, that is exactly what happened. From then on, Southern politicians assumed that all they needed to do, to get their own way, was to threaten to secede from the Union. They almost did it in 1850, as we have seen.

Plotting to destroy the government under which you live is revolution only if it succeeds. Otherwise, it is treason. If Jackson had hanged Calhoun during the nullification crisis, perhaps the South Carolinian would have been as discredited as Aaron Burr. Perhaps Southern politics wouldn’t have been reshaped on sectional lines. Perhaps, just perhaps, we would have found a way to avoid civil war a generation later. Instead, Calhoun’s insane baleful influence continued to spread, even after his death in 1850. The issues over which the Civil War was fought – the balance of power between federal and state governments, and the existence of slavery – were difficult and perhaps could never have been solved peacefully. But Calhoun and his influence helped make peaceful, reasonable solutions impossible The Union, and the South particularly, paid dearly for one man’s monomania.

Jackson could have saved his country a lot of trouble if he had been able to nullify Calhoun.

America’s Long Journey: The Panic of 1837

The Panic of 1837

Brace yourself: This entry is about economics. But actually it is neither as dull nor as dismal a subject as you might expect. It is curious that the Great Depression of the 1930s, which was the nation’s worst financial crisis ever (at least, so far), was mirrored a century before by the nation’s first.

The business cycle consists of alternating expansions and contractions of credit, that is, loosening or tightening of the conditions under which banks will lend money. A sudden contraction of credit, leading to business slowdowns, used to be called a “panic,” perhaps because of its connection with bank failures.

The Panic of 1837 was the first contraction of credit since the country began to industrialize, and it touched off the nation’s first major recession. In the new economic and social conditions, the panic’s effects manifested in unfamiliar ways. Nobody quite knew what was going on, and so everybody blamed it on somebody else’s villainy or stupidity. (Where was the Internet when it was really needed?) Vindictive and fearful know-it-alls spread conspiracy theories with their usual certainty, although not at electronic speed, and it helped poison the body politic.

Today, we know some of the factors that helped cause it.

As usual, the financial crisis was the result of a previous period of expansion, in which the prices of land, cotton, and slaves had risen sharply. Abundant amounts of silver were coming into the United States from Mexico and China. Land sales and tariffs were generating substantial federal revenues. Cotton exports and the marketing of state-backed bonds in British money markets attracted significant capital investment from Great Britain, which financed railroads and canals and industrial growth.

Then, in 1836, directors of the Bank of England raised interest rates in order to rebuild its financial reserves, for reasons that had little or nothing to do with the United States. But Great Britain in those days was what New York is today, and the British Pound Sterling was the world’s reserve currency. When British banks said “frog,” American banks in the United States had to say, “how high?”

On May 10, 1837, banks in New York City announced that they would no longer redeem commercial paper in specie (coin) at full face value. They scaled back on lending, and raised interest rates, which forced down the price of American securities. The demand for cotton fell by 25% in two months, and the price per bale followed the drop in demand. This was disaster in itself, as the country depended heavily on stable cotton prices to balance its trade deficit and procure foreign exchange earnings, but its effects down South were just catastrophic. The sharp decline in cotton prices led to over-extended plantations being foreclosed, and banks (from whom they had borrowed money on future expectations) collapsing.

This rippled through the economy, and the reduced availability of capital led to the collapse of the contemporary land bubble. Over the next seven years, banks collapsed, businesses failed, prices declined, and thousands lost their jobs. (You might think that declining prices are a good thing, but they aren’t so good if you are a producer, or if you are a consumer who loses his job because the producer he worked for has to reduce his outgoes, or goes out of business.)

Virtually the whole nation felt the effects of the panic. Of 850 banks in the United States, nearly half either closed entirely (343) or failed partially (62). In the absence of deposit insurance, runs on banks were common, bringing down even banks that were healthy, or at least forcing them to call in loans and demand payment from their borrowers, which further restricted the circulation of money in the economy, and made things worse.

In some places in the cities of the East, unemployment was later estimated to have been as high as 25 percent, as in the Great Depression of the 1930s. The agricultural states of the Midwest (then referred to as the West) were unaffected until 1839, when crop prices fell, and then they joined their compatriots in economic misery.

The cotton states of the South got the worst of it. Many southern planters speculated in land, cotton, and slaves, taking out loans from banks under the assumption that cotton prices would continue to rise. When cotton prices dropped, and the planters could not repay their loans, many of their banks were jeopardized.

Many individual states defaulted on their bonds, which hurt British creditors, who had long memories. It made it harder to obtain international finance to help build future railroad and other infrastructure. In fact, the United States withdrew from international money markets until the late 1840s.

None of this was particularly the fault of President Martin Van Buren. He was in office only five weeks when the panic began. But, like Herbert Hoover nearly a century later, he was blamed for being the heir of the policies of his popular predecessor, and for not finding a way to fix what was broken. As happened to Hoover in the 20th century, Van Buren’s opponents maintained that the damage and duration of the panic had been worsened by his refusal to respond with government intervention. Perhaps so. In any case, the panic and its consequences shook the nation’s confidence as never before.