The Panic of 1837 began after U.S. banks suspended specie payments and triggered a severe economic depression.
Specie payments meant exchanging banknotes for gold or silver. A combination of land speculation, falling cotton prices, tighter British credit, and controversial U.S. monetary policies weakened banks. On May 10, 1837, New York City banks suspended specie payments, meaning they would no longer redeem their notes in metal.
The panic spread through the banking system and financial markets. Banks failed, businesses collapsed, investment fell, and unemployment rose. The downturn lasted for years and became one of the most severe economic crises in the United States before the Civil War.
The crisis occurred during President Martin Van Buren’s administration, although many causes developed during Andrew Jackson’s presidency. It is often confused with the Panic of 1819, another early U.S. banking and credit collapse.