here is the actual text....welcome to America....Banks fail!
History of U.S. Bank Failures
In its short history, the U.S. has seen its share of economic panics that have resulted in runs on banks and bank collapses. Although the COVID-19 pandemic and the Great Recession of 2009 are still very fresh in our minds, it makes sense to start at the beginning.
The Panic of 1819
The history of bank failures in the U.S. begins just over 40 years after the Declaration of Independence was signed. In 1819, the aftermath of the Napoleonic Wars led to global market adjustments that tossed the U.S. into its first of many financial crises. England and France had been fighting for centuries, and the U.S. reaped the benefits by supplying agricultural products to both feuding countries. When they stopped fighting, the demand for U.S. products tumbled.
To compound the effects of this crisis, rampant speculation in public lands fueled by loose issuance of paper currency by governments drove the economy into a tailspin that persisted through 1821. During this crisis, the Second Bank of the United States (SBUS) – the successor to the First Bank of the U.S. – was heavily impacted and began reducing the credit it made available to state-chartered banks. Without this flow of funds, state-chartered banks began to collapse. Because the FDIC had yet to be created, when a bank failed, its customers lost their deposits. This led to runs on banks which led to more bank failures.
Despite the government’s efforts to curtail the damage, many farmers lost everything. This crisis led to several state-charted bank failures and paved the way for Andrew Jackson to close the SBUS in 1833.
The Panic of 1837
The financial crisis of 1837 began a recession that lasted until the mid-1840s. Some of the issues that are thought to have caused this panic were speculative lending practices in western states, a sharp decline in cotton prices, and a land price bubble. Andrew Jackson’s financial policies are also considered a major contributing factor to this crisis.
During this time, 343 out of 850 U.S. banks closed entirely. In addition, 62 banks partially failed, and numerous state banks were stressed to a point where the state banking system never fully recovered. Without the FDIC to protect them, many Americans lost their life savings.
The Panic of 1873
Like the prior crises, and those that are to come, the Panic of 1873 was greatly impacted by rampant speculation, but this time in railroads.
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