There was no single panic in 1819, as some would claim occurred in later nineteenth-century financial crises. Instead, a variety of economically troubling forces began to converge. Urban workers were already experiencing the hardships of joblessness when the Second Bank of the United States, which was responsible for servicing the Louisiana debt, began demanding coin in exchange for all the other banks’ paper. This resulted in a contraction of the money supply at exactly the same time that the price of both wheat and cotton plummeted. By 1820, most banks suspended specie payments; some failed outright.
Soon everyone experienced hard times. Purchasers of western lands defaulted on their debts to the federal government, thus threatening the nation’s finances. Congress passed a new law changing the terms of federal land sales to provide leniency for debtors, but this led to political backlash for the single dominant political party. Children of unemployed urban workers starved as local governments’ austerity measures slashed almshouse budgets. Before abandoning their unprofitable farms, northwestern families fed their wheat to their pigs, an effort to recoup some of their hard work by letting the wheat walk to market in the form of pork.
After being forcibly migrated to the new Alabama cotton fields and then mortgaged to pay for their own sales, enslaved people harvested increasingly larger cotton crops to prevent their bodily repossession by banks seeking to satisfy the debts of their enslavers. Men and women, old and young, black and white, seemingly rich and obviously poor, North and South, East and West, city and country—the hard times reached everyone.
The hard times in the 1810s and early 1820s looked totally different from Roosevelt’s 1930s. Unlike Roosevelt’s fireside chats, President James Monroe barely mentioned the nation’s economic troubles in his public addresses. The downtrodden of the early republic did not find a federal government concerned about the poor; they found a Washington unable and unwilling to pass legislation ending imprisonment for debt. There was no New Deal on the horizon, just the impoverishment of debtors’ prison for failed businessmen, the punishing labor of the local poor house for penurious families, the sex trade for unemployed women, malnourishment for children, and the auction block for the enslaved.
The effects of the Panic of 1819 were staggering: the creation of new political parties, the expansion of the electorate to all white men, a rare increase in the national debt during peacetime, the rise of sectional identities, a cultural shift toward demonizing the poor, a change in diplomatic and trade relations, new legal support for corporations, and much more.