This research examines financial panics, depressions, and crises that have occurred in the United States from the time the nation was founded through 1987. Particular attention is given to those crises occurring or beginning in or near the years of 1837, 1857, 1873, 1893, 1907, 1929, and 1987. A liberal definition what constitutes a financial panic, depression, or crisis is observed in this research, because some of these crises affect professional investors to a much greater extent that the general economy is affected, while other crises were manifestations much broader sets of problems, the combined impact of which was detrimental to the general economy of the United States (Kindleberger, 1989, pp. 232 238). Further, the duration of the effects of the various financial crises also tends to vary widely.
Financial crises are closely associated with the nation's banking system and financial securities markets. Commercial banking in the United States developed "concurrently with the growth in population, agriculture and manufacturing output, and transportation facilities" in the country (Fenstermaker, 1965, p. 1). Prior to 1791, there existed little need for commercial banks in the US, because of the relatively low level of overall economic activity. The types of banks and their functions that existed in the nation's early years were determined largely by state governments because little federal control over banking
existed. Prior to 1837, the principal types of banks found in the country were unincorporated banks, private incorporated banks, real estate banks, and state owned banks. All banks, including the unincorporated banks were permitted to issue notes, or money (Fenstermaker, 1965, p. 21). Few states controlled the issue of money by private banks, and those that did exercised only limited control. One result was the issuance of notes by many banks in amounts far in excess of that warranted by th...