Panic of 1819

The first major peacetime financial crisis in the United States, marked by bank failures, deflation, foreclosures, and widespread unemployment.

Second Bank of the United States: A federally chartered bank that operated from 1816 to 1836 and regulated much of the nation’s credit and currency. Its contraction of lending and calls for repayment helped spread the crisis.
War of 1812: A war between the United States and Britain from 1812 to 1815, fought over maritime rights and other disputes. Wartime finance and disrupted imports helped set the stage for postwar expansion.
James Monroe: The fifth president of the United States, serving from 1817 to 1825. His administration confronted the crisis and its political consequences.
Missouri Compromise: A 1820 agreement admitting Missouri as a slave state and Maine as a free state while restricting slavery in part of the Louisiana Purchase. Economic distress intensified sectional pressures surrounding the compromise, though slavery drove its central dispute.
Cotton price collapse of 1819: The sharp fall in cotton prices around 1819 after a period of high postwar prices. Lower export earnings left Southern planters less able to repay loans.
Land speculation: The purchase of land chiefly to resell it later at a higher price. Speculative purchases on credit magnified losses when land prices fell.
Era of Good Feelings: The period of American politics after the War of 1812, associated with one-party dominance and national confidence. The apparent postwar prosperity concealed fragile credit and regional tensions.
William Jones: An American merchant and public official who served as the first president of the Second Bank of the United States. His bank’s early management and lending policies drew scrutiny as the crisis developed.
Relief laws: Statutes that postpone, reduce, or otherwise modify obligations owed by debtors. States adopted debtor-relief measures in response to foreclosures and insolvency.
Second Bank of the United States crisis of 1819: The financial and management troubles facing the Second Bank of the United States during the 1819 downturn. The bank’s distress illustrates how an institution intended to stabilize credit could deepen contraction.

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