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The Panic of 1819
reactions and policies
murray n. rothbard
Ludwig
von Mises
Institute
AUBURN, ALABAMA
Copyright © 1962 by Columbia University Press
Copyright © 1973 by AMS Press
Copyright © 2007 by Ludwig von Mises Institute
All rights reserved. No part of this book may be reproduced in
any manner whatsoever without written permission except in the
case of reprints in the context of reviews. For information write
the Ludwig von Mises Institute, 518 West Magnolia Avenue,
Auburn, Alabama 36832.
ISBN 10: 1-933550-08-2
ISBN 13: 978-1-933550-08-4
C
ONTENTS
Preface . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .vii
I. The Panic and Its Genesis: Fluctuations In
American Business, 1815–21 . . . . . . . . . . . . . . . . . . . . . . . . .1
II. Direct Relief of Debtors . . . . . . . . . . . . . . . . . . . . . . . . . . .37
III. State Proposals and Actions for Monetary Expansion . . .81
IV. Proposals for National Monetary Expansion . . . . . . . . . .149
V. Restricting Bank Credit: Proposals and Actions . . . . . . .179
VI. The Movement for a Protective Tariff . . . . . . . . . . . . . . .209
VII. Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .241
Appendices
Appendix A Minor Remedies Proposed . . . . . . . . . . . .251
Appendix B Chronology of Relief Legislation . . . . . . .259
Bibliography . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .263
Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .279
v
P
REFACE
The Panic of 1819 was America’s first great economic crisis and
depression. For the first time in American history, there was a crisis
of nationwide scope that could not simply and directly be attributed
to specific dislocations and restrictions—such as a famine or wartime
blockades. Neither could it be simply attributed to the machinations
or blunders of one man or to one upsetting act of government,
which could be cured by removing the offending cause.In such a way
had the economic dislocations from 1808–15 been blamed on “Mr.
Jefferson’s Embargo” or “Mr. Madison’s War.”1 In short, here was a
crisis marked with strong hints of modern depressions;it appeared to
come mysteriously from within the economic system itself. Without
obvious reasons,processes of production and exchange went awry.
Confronted with a new, vital phenomenon, Americans looked
for remedies and for understanding of the causes, the better to
apply the remedies. This epoch of American history is a relatively
neglected one, and a study of the search for remedies presents an
instructive picture of a people coming to grips with the problems
of a business depression, problems which, in modified forms, were
to plague Americans until the present day.
1W.R.Scott found that early business crises in England—in the sixteenth and
seventeenth centuries—were attributable to specific acts of government rather
than to the complex economic causes that marked modern depressions. W.R.
Scott,The Constitutions and Finance of English, Scottish, and Irish Joint-Stock Companies
to 1720 (Cambridge,Mass.:Cambridge University Press,1912),pp.465–67.
vii
viii THEPANICOF1819
The 1819–21 period in America generated internal controversies
and furnished a rich economic literature. The newspapers in partic-
ular provide a relatively untapped vein for study.The leading editors
were sophisticated and influential men, many of them learned in
economics. The caliber of their editorials was high and their rea-
soning keen. The newspaper editors constituted, in fact, some of
the leading economists of the day.
The depression galvanized the press; even those papers that
had been wholly devoted to commercial advertisements or to par-
tisan political squabbles turned to writing and arguing about the
“hard times.”
In order to provide the setting for the discussion of remedial
proposals, Chapter I presents a sketch of the economy and of the
events of the postwar period. The postwar boom and its culmina-
tion in the crisis and depression are also set forth. In addition to its
major function of indicating the economic environment to which
the people were reacting, this chapter permits us to decide to what
extent the depression of 1819–21 may be considered a modern
business-cycle depression.
The bulk of the work deals with the remedial proposals them-
selves,and the speculations,controversies,and policies arising from
them. Arguments were especially prevalent over monetary propos-
als, debtors’ relief—often tied in with monetary schemes—and a
protective tariff. At the start of the depression each of these prob-
lems was unsettled: the tariff question was not resolved; the mone-
tary system was new and troublesome. But the depression greatly
intensified these problems, and added new aspects, and made solu-
tions more pressing.2
2Very little work has been done on the Panic of 1819,either on its events
or on contemporary opinion and policies.Samuel Rezneck’s pioneering article
dealt largely with Niles’ Register and the protectionist controversy. William E.
Folz’s unpublished dissertation was devoted mainly to a description of the
events of the pre-Panic period,especially in the West.Thomas H.Greer’s use-
ful article dealing with the Old Northwest overemphasized the traditional sec-
tional and class version of debtors’relief controversies,in which the West was
PREFACE ix
This book would never have come into being without the inspi-
ration, encouragement, and guidance of Professor Joseph Dorf-
man. I am also indebted to Professors Robert D. Cross, Arthur F.
Burns, and Albert G. Hart for many valuable suggestions.
considered to be almost exclusively in favor of debtors’ relief and the East
opposed.Samuel Rezneck,“The Depression of 1819–1822:A Social History,”
American Historical Review 49 (October 1933): 28–47; William E. Folz, “The
Financial Crisis of 1819—A Study in Post-War Economic Readjustment”
(unpublished Ph.D. dissertation, University of Illinois, 1935); Thomas H.
Greer, “Economic and Social Effects of the Depression of 1819 in the Old
Northwest,”Indiana Magazine of History 49 (September 1948):227–43.
