The Panic of 1819 was the U.S. financial crisis widely described as the country’s first major nationwide depression.
The crisis followed the economic expansion that came after the War of 1812. Banks issued substantial amounts of credit, land prices rose, and farmers and merchants borrowed heavily. When the Second Bank of the United States sought to restrain lending and foreign demand for American agricultural goods weakened, land and commodity prices fell.
Many banks could not meet demands for payment, and borrowers defaulted on mortgages and business loans. The resulting bank failures and foreclosures caused severe unemployment, falling wages, and business closures. Western farmers were especially affected because their land purchases had depended on rising prices and easy credit.
The panic also shaped American politics. Anger over foreclosures and the power of banks contributed to later debates about banking, debt relief, and monetary policy. It predates the Panic of 1837, another major U.S. collapse, by nearly two decades; the two crises are therefore often mixed up in lists of early American depressions.