The Panic of 1837 began after President Andrew Jackson’s 1836 Specie Circular restricted federal land payments to gold and silver.
The measure was intended to curb land speculation by requiring buyers of public land to use specie rather than banknotes. It reduced demand for bank-issued paper money and contributed to a tightening of credit. At the same time, U.S. banks had expanded lending, land prices had risen rapidly, and international financial conditions were becoming less favorable.
A major wave of bank suspensions began in New York on May 10, 1837, when banks stopped redeeming paper currency in gold and silver. Stock prices, land values, and commodity prices fell, while businesses failed and unemployment increased. The depression that followed lasted for years.
The panic’s causes were multiple, so historians do not treat the Specie Circular as the sole explanation. The crisis is also sometimes described as the first major U.S. economic depression, though its impact varied greatly by region and industry.