America's First Great Depression: Economic Crisis and Political Disorder after the Panic of 1837 [Kindle Edition]

When Americans think of a time of extreme economic distress, they naturally think of the Great Depression, which by this time has overshadowed the severe panics and depressions of the nineteenth century to the point that they are all but forgotten. But those early panics are worth studying both from an economic point of view and for their larger effects on American history. Alasdair Roberts examines the terrible times of the late 1830s and early 1840s in "America's First Great Depression."

In the mid-1830s, very easy credit led to a real estate boom followed by a subsequent crash (sound familiar?). Individual state governments at the time also discovered that they had bumped up against a limit because they borrowed far too much to fund internal improvements, much as our federal government is about to bump up against a limit due to being severely overextended due to unsustainable spending on entitlements.

Several state governments defaulted, and years passed before European investors got over their wariness about buying American bonds. Roberts describes how integrated the U.S. was into the British economy then, and suggests that we are entering a period in which, like in the nineteenth century, our economy will be less self-contained and more vulnerable to foreign developments.

The Panic of 1837 and its aftermath were deeply traumatic to America, with wide-ranging effects--there was much soul-searching as the depression affected our military readiness and foreign policy (there were a few war scares with the British during those years), led to political volatility, and caused episodes of severe social unrest. Roberts asserts that "the depression years became a long, painful test of the federal government's capacity to manage sectional and class conflict." Just as during our current crisis, back then there was also much uncertainty, which damaged the economic climate further.

This book should be required reading for those who believe that the Bush tax cuts caused our current economic downturn. Much, much larger tax cuts than the Bush tax cuts were passed during both the Kennedy-Johnson years and the Reagan years. Both cuts led to booms, with no severe bust to follow. On the other hand, in both the 1830s and 2000s, there were huge real estate bubbles fueled by easy credit and questionable lending practices. In both cases, the bubble burst and the economy eventually suffered a severe crash.

Because Roberts describes how the depression had not just economic consequences but had ripple effects that spread out in just about all areas of American life, "America's First Great Depression" ends up reading like an entire history of the era, and manages to offer instructive lessons for today as well.

History is repeated because the main actor, humans, remain the main character, the director and the audience. Roberts opens the curtain to another time but not another play.

The crisis of America's first Depression and our own Great Recession have lessons for us all, the voters, the leaders and our institutions of government and finance. Knowing the social and political consequences of economic collapse of the past should forewarn us to the concern of decline in both the effectiveness of our political creations and our confidence in them.

Anyone interested in current events must become acquainted with historical events. This work gives that understanding. It further teaches the fate of repeating history if we fail to learn from it. The current collapse in confidence, trust and civility is proof that we haven't.

Reading this text, however, will bring us a step forward in the right direction. It is worth every penny and then some. Getting our financial house in order will proceed political resolution but it is the political trust that is the barrier to the political solution.

War has been the solution in the past. Pray it is not this time, but if I were a weak country with a small military I would be careful.

Too bad real American History isn't taught in schools. Very important history of the 1800's. The Civil War is the only history of the 1800's taught. A must read.