Prosperity Becomes Panic
During Jackson's last years as president, the nation prospered. But because it was easy to borrow money, people took out loans and bought land. The economy boomed, but the banks issud too much paper money, and inflation occurred. Inflation is the increase in prices and decrease in the value of money. Due to the sudden inflation, Jackson ordered that all land purchases be made in gold or silver.
When Jackson left office, the nation was prospering. But it was an exaggerated prosperity. It had little substance to it. Because of Jackson's newfound prosperity, Vice-President Van Buren won the presidential election of 1836. Soon after the election, a widespread panic about the economy swept through the country, and became known as the Panic of 1837.
People started rushing to the banks to swap their paper money for gold and silver. The banks soon ran out, and when the government tried to get it's money back, the banks could not pay. Soon the banks went out of business, and a depression - a severe economic slump - followed.The Depression caused many problems throughout the nation. Because people ran out of money, manufacturers had no customers to buy their products. Almost 90 percent of all factories in the Northeast went out of business in 1837. The unemployed had no way of of paying for food or rent. People went hungry, and lived in shelters or out on the streets, where many froze to death during the winter. The depression hit hardest in the cities. At least the farmers could grow their own food.
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