The first major U.S. financial crisis is commonly called the Panic of 1819.
The crisis followed the economic expansion that came after the War of 1812. Banks issued large amounts of credit, land prices rose, and speculation spread, especially in western territories. When commodity prices fell and the Second Bank of the United States tightened credit, many borrowers could not repay their loans.
Bank failures, foreclosures, falling land prices, and unemployment followed. The downturn was especially severe because the United States had little experience with nationwide financial instability. It also damaged public confidence in banks and contributed to political opposition to concentrated banking power.
The Panic of 1819 is sometimes described as the first major peacetime economic crisis in the United States. It is distinct from the Panic of 1837, which occurred after another credit-fueled expansion and was associated with President Andrew Jackson’s banking policies.