America’s First Great Depression: Economic Crisis and Political Disorder after the Panic of 1837

“Earlier than many other states, Pennsylvania tried to raise taxes to cover its mounting interest costs. By 1842, total tax revenue was almost twice what it had been in 1835, but this was still far too little to restore the state’s finances. The state also resorted to other tactics to avoid collapse. In April 1840, legislators compelled banks with state charters to lend three million dollars to cover the state’s deficit, but the banks themselves were near collapse. A year later, the state treasury began paying many of its creditors with small denomination relief notes, which were often returned to the state for payment of taxes and did little to improve its ability to pay overseas lenders.

“By the end of 1841 the state was desperate. Philadelphia merchant Sidney Fisher wrote in his diary in early December that ‘the doctrine of repudiating state debts is spreading rapidly, is spoken of openly and boldly defended by many presses and leading politicians.’ A public meeting at the Philadelphia courthouse later that month passed resolutions denying that Pennsylvanians were under any ‘moral, legal or political obligation’ to repay the ‘so-called state debt.’ In early 1842, the state met interest payments by scavenging from the assets of the Bank of the United States, which had collapsed in January. By August 1842, the treasury had nothing but its own relief notes, and Pennsylvania finally defaulted. ‘The substance of our State is swallowed up,’ wrote a correspondent to the local newspaper in Smethport, Pennsylvania, ‘and repudiation stares us in the face.’ …

http://www.amazon.com/Americas-First-Great-Depression-Political/dp/0801450330/ref=sr_1_1?s=books&ie=UTF8&qid=1381513393&sr=1-1&keywords=america%27s+first+great+depression

Leave a Reply

Your email address will not be published.

*