Panic of 1819

The Panic of 1819 was the first major financial crisis in the United States. It featured widespread foreclosures, bank failures, unemployment, and a slump in agriculture and manufacturing. It marked the end of the economic expansion that had followed the War of 1812.The Panic of 1819 resulted from the end of warfare between France and Great Britain.  These two nations had been at war with each other since the 1680s.  They finally settled their differences in 1815.  While these two nations had warred with each other, the United States had prospered.  These European nations needed American industrial and agricultural products to sustain themselves during the conflict.  Once the war ended, American products were no longer in such great demand.  Both the French and the British downsized their respective militaries.  Many of these former soldiers returned home and assumed their peacetime occupations, cutting into the need for American items overseas.

While United States goods, especially agricultural products, were in high demand, Americans had purchased Western land at an extravagant rate.  In 1815, Americans purchased roughly one million acres of land from the federal government.  In 1819, the amount of land had skyrocketed to 3.5 million acres.  Many Americans could not afford to purchase the land outright.  The federal government did allow Americans to buy the land on credit.  As the economy ground to a halt in 1819, many Americans 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. 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.

The Panic of 1819 also hurt industrial workers.  The United States had just begun to industrialize when these European wars ended.  American manufacturers now faced competition from older, more established firms in England and France.  Many early factories closed their doors because they could not compete.  Those businesses that stayed open frequently did so by cutting employee wages.

The Panic of 1819 and the resulting Banking Crisis contributed immensely to the rise of Andrew Jackson.  Many Americans viewed Jackson as one of them.  He argued against the Bank of the United States, a message many Americans and Ohioans wanted to hear.