The Panic of 1819 is considered the United States’ first major peacetime financial crisis.
The panic followed rapid postwar expansion in land prices, bank lending, and cotton exports. When the Bank of the United States tightened credit and British demand weakened, land values fell and many banks could not redeem their notes.
The crisis began a severe economic contraction. Businesses failed, unemployment rose, and borrowers who had purchased public land on credit faced foreclosure. The effects were especially severe in western and southern states.
The Panic of 1819 is sometimes confused with the Panic of 1837, another major early American crisis. The later panic followed a different set of policies and banking pressures, while 1819 was closely tied to the post-War of 1812 boom and its abrupt reversal.