American Consequences - June 2019

of 1812 part of the hostilities.) But mostly the Panic of 1819 was caused – as financial crises always are – by the government monkeying around with our money. Initially the government monkeyed around by simply monkeying around doing nothing. The U.S. had a kind of proto-Federal Reserve, the First Bank of the United States, established in 1791, but its charter was allowed to lapse in 1811... leaving the country without anything resembling central banking. This may sound like a libertarian ideal, but the result was an increase in state-chartered banks, which grew in number from 88 in 1811 to 205 in 1815. All of these were poorly regulated, most were undercapitalized, and many issued their own banknotes, which,

inventor, and self-help guru 200 years before the term was coined – became a very wealthy man. Thomas Jefferson – with 16,000 acres at his magnificent Monticello estate – died in debt. His slaves were put on the auction block. Franklin died owing – and owning – no one. The Toledo land bubble, sensible or not, burst anyway in the Panic of 1819. (A “panic” being what an economic panic was called before less panicky terms such as “depression,” “recession,” and “market correction” were invented.) It was the first major financial crisis in U.S. history. The Panic of 1819 was caused partly by a global economic slump following the economic stimulus of the Napoleonic Wars. (Not so economically stimulating if you died in them, as 15,000 Americans did in our War

Right: Miami & Erie Canal in 1929, long past its glory days (such as they were). Bottom: JesupW. Scott who thought Toledo would become “The Future Great City of the World” and who, as a matter of fact, did great as a land speculator in Toledo.

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