"the hungry forties," america's first great depression -- 7/29/19

Today's selection -- from Nicholas Biddle: Nationalist and Public Banker 1786-1844 by Thomas Payne Govan. In the U.S., the excesses of the 1830s had brought on a depression in the 1840s, a decade that became known as the "hungry forties." The impact was felt in Europe, where leaders denounced the United States. Leaders in the U.S., notably United States Bank president Nicholas Biddle, returned the acrimony:

"[In the late 1830s], the United States had gone through a period of too rapid expansion. Too many public improvements had been undertaken simul­taneously; too much land had been purchased and turned into farms; too many factories had been built; and too much indebtedness had been in­curred. If times and means were provided, this debt could be paid through the normal instruments of goods and money, but if the process of deflation continued, the debt would be eliminated by universal default. ...

"[The United States Bank, formerly known as the Second Bank of the United States] continued [its] preparations for the resumption of specie pay­ments, and this addition to the deflationary pressures further reduced prices and economic activity. Mortgages on houses and farms were fore­closed; solvent merchants, unable to collect debts due them or to sell, closed their doors; and there was no money except gold and silver, most of which was locked up in the vaults of the banks. ...

An 1837 caricature blames Andrew Jackson for hard times.

"The decade [of the 1840s] as a whole became known as 'the hungry forties', and in the long years of depression that followed the failure of United States Bank, the Chartist movement in Great Britain and the more radical revolutionary movements on the Continent gained increasing strength. The established leaders of these nations seemed incapable of suggesting effective reforms. Instead, they denounced the United States and its republican institutions and blamed many of their political and economic difficulties upon the American failure to pay what was owed.

"Pennsylvania was one of the states forced to default on their interest payments, and [United States Bank president Nicholas] Biddle, in an effort to show how the state could regain its reputation for financial probity, published a series of letters in a Philadelphia newspaper. ...

"Pennsylvania and other American borrowers, it was true, had acted ir­responsibly in accumulating too large a debt in order to undertake too many internal improvements simultaneously and, through careless vision and construction, had permitted the costs to be at least a third greater than they needed to be. But they had been encouraged in this course by the willingness of the Europeans to lend when economic circumstances had indicated that the proper policy was to contract. In Biddle's opinion, the Bank of England bore the larger part of the responsibility for the undue expansion of the sale of American securities by reducing its re­discount rate in the autumn of 1838 in spite of the large exportation of bul­lion made necessary by the failure of Britain's crops. It 'took in no sail as the squall was coming,' he said, but, on the contrary, increased its loans, and 'thus to the eye everything in the English monied market seemed rose­-colored, money being abundant and stocks high.' "


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Thomas Payne Govan


Nicholas Biddle: Nationalist and Public Banker 1786-1844


University of Chicago Press


1959 by The University of Chicago


383, 402-404
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