Do you read the articles you post? Here's what caused the panic of 1812, according to your article:
The United States had been a major exporter of agricultural products and importer of manufactured products before the War of 1812. During the war, imports were greatly diminished and as a result, the manufacturing sector exploded to meet the new demand. This overzealous expansion, coupled with lax banking practices, government overborrowing, returning international competition, a lack of hard currency, increased credit lending, a surging real estate boom and the widespread growth of speculation and development of public land, all helped set the stage for disaster. Sound familiar? A LACK OF HARD CURRENCY! SOUND FAMILIAR?
And also from your article...once again, f__king with the value of money and letting banks create credit with little to no reserves, just like we do today...NOT suprisingly causes panics in the masses, because they lose confidence in the store of value of the currency. Lesson: stop f__king with the value of the currency and put a regulatory straight jacket on banks so they have very high reserves to back their credit leant out.
As for Jay Cooke, his name may not be widely remembered, but he had a large impact on the history of the United States. He was instrumental in financing the Union's Civil War effort and lobbied heavily for the National Banking Acts, which laid the foundation for our current Federal Reserve System. The National Banking Acts also led to the pyramid structure of reserves that was the major linchpin of the 1873 panic -- Cooke's bank was a sizeable chunk at the very bottom of the pyramid. |
