The Panic of 1837

Cheap credit, a boom in cotton, and frenzied speculation in western land — much of it bought with banknotes from banks that printed their own — ended when the government demanded payment for public land in gold or silver only. The paper was suddenly worth what it was actually backed by. Banks suspended payment, cotton prices collapsed, and the United States entered a depression lasting six years, with unemployment in the cities and states defaulting on their debts. It was the first time the young republic learned that a land boom financed by paper is a claim on a future that has to arrive.