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A number of hypotheses attempt to disentangle the “true” causes of the Panic of 1837 from domestic and international factors that came into play as the crisis approached. I analyze U.S. government documents and contemporary newspapers to reconsider the role of domestic factors. These sources place neither the official distribution of the federal surplus nor an international shock at the center. Rather, a series of interbank transfers of government balances and a policy-induced increase in the demand for coin in the Western states drained the largest New York City banks of their specie reserves and rendered the panic inevitable.

Corresponding author
Peter L. Rousseau is Assistant Professor, Department of Economics, Vanderbilt University, Box 1819 Station B, Nashville, TN 37235, and Faculty Research Fellow, National Bureau of Economic Research. E-mail:
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The Journal of Economic History
  • ISSN: 0022-0507
  • EISSN: 1471-6372
  • URL: /core/journals/journal-of-economic-history
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