The standard interpretation of the Panic of 1837 and subsequent recession blamed state bank monetary inflation abetted by President Jackson's removal of the federal deposits from the Bank of the United States. This interpretation was rooted in sound economic analysis by contemporary Jeffersonian and hard-money critics of Jackson such as Nathan Appleton (the Massachusetts' conservative textile manufacturer and banker), Albert Gallatin (Jefferson's treasury secretary and now a New York banker) and Condy Raguet (the Philadelphia political economist and free-trade leader). It was extended and refined in the late nineteenth century by William Graham Sumner, the Yale political economist, classical liberal, and economic historian.
This paper was originally read at the Mises Institute in March 2002.
