There were several other panics in the 1800s but going through them all might make this become too wordy, and I think I have done an outstanding job at brevity so far.
Panic of 1837
Andrew Jackson decided to take much of the capital held by the national bank and distribute it among the states. It was probably a power play more than anything. Normally I would say that weakening a “national” bank is a great thing for capitalism, but not if you are going to turn one government bank burdening the capitalistic system into more than a dozen. This drastic action sparked capitalism to react by tightening the rules it had relaxed in the years after the system had managed to balance out the changes created from government’s response to 1819. Speculators had begun carelessly investing money in companies without much investigation or thought. Business was growing rapidly, but it was mostly artificial growth fueled by speculators investing money based on the growth that was resulting from the investments. Capitalism would have corrected this without the government upsetting the balance, but the correction would have probably caused most of the pain on those ignoring its guiding principles. Instead, the instant upheaval of the banking system led to closer inspection of companies that owed money to banks, which led to the revelation that these companies were nothing more than a paper trail, culminating with a wave of bankruptcies, bank failures, widespread fear, and an electorate throwing another tantrum.
Panic of 1857
The first truly inflationary Panic. I know I mentioned inflation in 1819, but at that time it was just the concept of inflation that caused fear, not the actual severity of the inflation. California gold rush in 1849 caused a massive influx of gold causing our gold backed currency to hyperinflation. Foreign investors pulled money out of our banks because who wants to have dollars that are worth 50p today and 20p tomorrow when you can just have pounds. Crimean war, Mexican American war also caused disruptions in international trade. Inflation was deadly for the banks. It’s something people often forget…If you are in major debt inflation is the best thing that could happen to you. Which also means that for banks that only profit by giving people debt, rapid inflation can result in being paid back less real dollars than you initially loaned. As always, once the banks start to fail everyone freaks out. (Have I mentioned that some tings never change?) Government reacts just as any frustrated mom would. Civil war was coming anyway, but this didn’t help.
Panic of 1869
Perhaps the silliest of all the panics. Reconstruction, cost of the civil war, and adjustment to changes in labor practices in the south certainly had economic impact. But the catylist for one was a handful of mischievous super rich men pulling some shenanigans on Wall Street to drive up the price of gold. It ticked the government off, who dumped several million dollars (that’s like 100 trillion dollars today 
) worth of gold into the market causing an immediate crash of gold prices. Sure, this caused these rich ravel rousers to lose money, but it also caused many other people to lose money as well. By the way, President Grant…you should have taken a break from the Jack Daniels long enough to ask someone if destroying the value of gold might have some impact on your gold backed currency….Inflation…Bank Failures…widespread panic and mayhem…people running in the streets with their hair in flames..oh yea, and a tantrum followed by a government who just wants the screaming to stop because Mr. President has a hangover.
Panic of 1879
This is the first one where it is just as much Capitalism’s fault as governments. Competition is the fuel that powers the wealth generating machine that is capitalism. In the years since the last panic a handful of shrewd but very evil corporate titans began to use all sorts of bullyish tactics to force their competition out of business. Think Wal-Mart without the door greeter. Several industries had fallen under the thumb of a single corporation. Obviously a market system cannot function properly if there is only one seller for buyers to choose from. Eventually, the forces of a free market would have reemerged after these monopolies became so arrogant that their greed created a situation where wealth became so concentrated that the depletion of wealth outside their pockets let them without customers who could afford their goods. This type of gross abuse of the free market is not (well, theoretically) possible if the system is unabated and its ability to correct and rebalance is in tact. The cumulative effects of periodic government meddling over the past century surely had something to do with the market getting abused so easily. Oh yea, did I mention that there was yet more inflation due to even more gold mining? I bet you can tell me what comes next… Bank failures. This one resulted in a number of changes. The spoiled toddlers were whining yet again. This time they wanted the government to protect them from their employers, who had been taking advantage of the workers knowing that they were the only employer in town. They asked to replace the gold standard with silver standard or at least use them both to help stop the inflation. Of course government would also lay the smack down on big business for being so greedy, but it would be a few years before anything was really enforced.
-Next installment will discuss the Great Depression, but it won’t be today.
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