The U.S. financial crisis that began in 1837 after banks suspended specie payments was the Panic of 1837.
“Specie” meant gold or silver coin. On May 10, 1837, New York City banks suspended converting banknotes into specie, effectively acknowledging that they could not meet demands for hard currency. The suspension followed years of land speculation, unstable banking, credit expansion, and monetary policies associated with President Andrew Jackson’s administration.
The crisis triggered a severe economic depression. Banks failed, businesses closed, unemployment rose, and cotton prices declined. The downturn lasted for years, although the severity and timing varied across regions. Britain’s financial difficulties and reduced lending also contributed to pressure on the American economy.
The Panic of 1837 is sometimes confused with later U.S. panics because each involved bank failures and credit contraction. Its distinctive identifying fact is the 1837 suspension of specie payments by banks in New York and elsewhere.