trygg on Nostr: It was today, in 1837, that NYC Banks - experiencing the beginnings of a run on their ...
It was today, in 1837, that NYC Banks - experiencing the beginnings of a run on their deposits - announced they would cease the redemption of paper notes in exchange for gold & silver coins, sparking the Panic of 1837.
A recession would follow, lasting several years. Nearly half of all banks and businesses failed, prices and wages declined rapidly, and mass unemployment ensued.
Leading up to the panic, the Bank of England - at the time the world's most prominent central bank - began raising interest rates; the rest of the world, including the US, followed suit.
The increase in rates had a detrimental impact on the economy, slowing activity and driving down prices of goods. Slowly, then suddenly, the people withdrew their deposits from the banks to cover the costs of living. This came to a head when the largest banks in NYC ran low on their supply of "specie" (gold & silver coins), and announced they would no longer redeem federal notes for their coins.
Some blamed Presidents Jackson & Van Buren for eliminating the Second Bank of the US (one of the predecessors of the Federal Reserve) who could have intervened, while others blamed the bankers themselves for mismanaging customers deposits. One thing is certain though: the printing of fiat currency without the backing of hard, sound money was a major cause.
In the end, it was the people who suffered most: after losing access to their hard money, they were left to live in a dampened economy without a sound medium of exchange to drive production and trade.
Closing side note: In a somewhat-familiar turn of events, the people organically began to use their own, privately minted currencies: "Hard Times Tokens," which were typically struck from copper and used to represent a half or full cent.
The one pictured below bears the inscription:
"WALL ST NEW YORK
BUILT 1827BURNT 1835
MILLIONS FOR DEFENCE
NOT ONE CENT FOR TRIBUTE"
Hope you enjoyed, friends; will aim to write up more short stories from history going forward. As always, appreciate you taking the time to read and show your support. Skol!
A recession would follow, lasting several years. Nearly half of all banks and businesses failed, prices and wages declined rapidly, and mass unemployment ensued.
Leading up to the panic, the Bank of England - at the time the world's most prominent central bank - began raising interest rates; the rest of the world, including the US, followed suit.
The increase in rates had a detrimental impact on the economy, slowing activity and driving down prices of goods. Slowly, then suddenly, the people withdrew their deposits from the banks to cover the costs of living. This came to a head when the largest banks in NYC ran low on their supply of "specie" (gold & silver coins), and announced they would no longer redeem federal notes for their coins.
Some blamed Presidents Jackson & Van Buren for eliminating the Second Bank of the US (one of the predecessors of the Federal Reserve) who could have intervened, while others blamed the bankers themselves for mismanaging customers deposits. One thing is certain though: the printing of fiat currency without the backing of hard, sound money was a major cause.
In the end, it was the people who suffered most: after losing access to their hard money, they were left to live in a dampened economy without a sound medium of exchange to drive production and trade.
Closing side note: In a somewhat-familiar turn of events, the people organically began to use their own, privately minted currencies: "Hard Times Tokens," which were typically struck from copper and used to represent a half or full cent.
The one pictured below bears the inscription:
"WALL ST NEW YORK
BUILT 1827BURNT 1835
MILLIONS FOR DEFENCE
NOT ONE CENT FOR TRIBUTE"
Hope you enjoyed, friends; will aim to write up more short stories from history going forward. As always, appreciate you taking the time to read and show your support. Skol!