The Panic of 1819 and the accompanying Banking Crisis of 1819 were economic crises in the United States principally caused by the end of years of warfare between France and Britain.
These two nations had been at war since the 1680s. They finally settled their differences in 1815. While these nations had warred with each other, the U.S. prospered. They each needed U.S. industrial and agricultural products to sustain themselves during the conflict. When the war ended, U.S. made products were no longer in great demand.
During the various British-French conflicts, U.S. goods, especially agricultural products, were in high demand in Europe; the U.S. public had purchased Western land at an extravagant rate. In 1819, the amount of land had skyrocketed to 3.5 million acres. Many people in the U.S. could not afford to purchase the land outright; the federal government allowed buying the land on credit. As the economy ground to a halt in 1819, many people in the U.S. did not have the money to pay off their loans. The Bank of the United States, as well as state and private banks, began recalling loans, demanding immediate payment. The banks' actions resulted in the Banking Crisis of 1819 and helped lead to the Panic of 1819. The federal government tried to alleviate some of the suffering with the Land Act of 1820 and the Relief Act of 1821, but many farmers, Ohioans included, lost everything.
As a result of the Bank of the United States' actions, money became scarce, making it even more difficult for people to pay their debts. Several states, including Maryland and Ohio, implemented taxes on the Bank of the United States, hoping by taxing the banks, money would enter the grasp of state governments. The state could make loans to their citizens, thus relieving the money shortage. In 1819, the case of McCulloch v. Maryland reached the United States Supreme Court. Maryland had created a tax on the Bank of the United States’. Although the federal government had the power to tax state and private banks, the federal government contended that states could not tax the Bank of the United States. The Supreme Court agreed with the federal government's position.
The Panic of 1819 and the Banking Crisis left many Ohioans destitute. Thousands of people lost their land due to their inability to pay off their mortgages. United States factory owners also had a difficult time competing with earlier established factories in Europe. Many people in the U.S. could not afford the factories' goods due to the lack of money in circulation. The United States did not fully recover from the Banking Crisis and the Panic of 1819 until the mid-1820s. These economic problems contributed immensely to the rise of Andrew Jackson. Many in the U.S. viewed Jackson as one of them. He argued against the Bank of the United States, a message many in the U.S. and Ohio wanted to hear.
Source: Panic of 1819
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