The Panic of 1837 was the U.S. financial panic that followed rapid bank lending and Andrew Jackson’s removal of federal deposits from the Second Bank of the United States.
During the 1830s, land speculation, cotton exports, and easy credit fueled a strong expansion. Jackson distrusted the Second Bank and moved federal deposits into selected state banks, which critics called “pet banks.” His administration also issued the Specie Circular in 1836, requiring many federal land purchases to be paid for in gold or silver.
The boom ended when British investors reduced lending and demand for American cotton weakened. Banks suspended specie payments, meaning they stopped exchanging their paper notes for gold or silver. Bank failures, business closures, unemployment, and falling property prices spread through the United States.
The downturn lasted for years and was especially painful for merchants, farmers, and land speculators. The Panic of 1837 is often confused with the Panic of 1819, but it belonged to a later era and was closely tied to Jacksonian banking policy, land speculation, and the international cotton trade.