The Panic of 1819, the first major…

The Panic of 1819, the first major peacetime financial crisis in the United States, is also partially due to international events.

European demand for American foodstuffs has decreased because agriculture in Europe is recovering from the Napoleonic Wars, which had decimated European agriculture.

War and revolution in the New World have destroyed the supply line of precious metals from Mexico and Peru to Europe.

American bankers and businessmen had started issuing false banknotes to quickly expand credit.

American bankers, who have little experience with corporate charters, promissory notes, bills of exchange, or stocks and bonds, had encouraged the speculation boom during the first years of the market revolution.

The banks will call these loans by the end of 1819.

President Monroe, interpreting the economic crisis in the narrow monetary terms current at this time, limits governmental action to economizing and ensuring fiscal stability.

He acquiesces in suspension of specie payments to bank depositors, setting a precedent for the Panics of 1837 and 1857.