<P> The Panic of 1837 was a financial crisis in the United States that touched off a major recession that lasted until the mid-1840s . Profits, prices, and wages went down while unemployment went up . Pessimism abounded during the time . The panic had both domestic and foreign origins . Speculative lending practices in western states, a sharp decline in cotton prices, a collapsing land bubble, international specie flows, and restrictive lending policies in Great Britain were all to blame . On May 10, 1837, banks in New York City suspended specie payments, meaning that they would no longer redeem commercial paper in specie at full face value . Despite a brief recovery in 1838, the recession persisted for approximately seven years . Banks collapsed, businesses failed, prices declined, and thousands of workers lost their jobs . Unemployment may have been as high as 25% in some locales . The years 1837 to 1844 were, generally speaking, years of deflation in wages and prices . </P> <P> The crisis followed a period of economic expansion from mid-1834 to mid-1836 . The prices of land, cotton, and slaves rose sharply in these years . The origins of this boom had many sources, both domestic and international . Because of the peculiar factors (Specie Circular) of international trade at the time, abundant amounts of silver were coming into the United States from Mexico and China . Land sales and tariffs on imports were also generating substantial federal revenues . Through lucrative cotton exports and the marketing of state - backed bonds in British money markets, the United States acquired significant capital investment from Great Britain . These bonds financed transportation projects in the United States . British loans, made available through Anglo - American banking houses like Baring Brothers, fueled much of the United States's westward expansion, infrastructure improvements, industrial expansion, and economic development during the antebellum era . </P>

When did financial panic begins and leads to an economic depression