On the panic of 1837

Mises:

[R]eserve ratios varied considerably from region to region—New England banks consistently kept a lower proportion of reserves relative to all other regions—it does not tell us whether the level of reserves was rising, falling, or staying the same for the country as a whole. When all the banks of the union are considered together, reserve ratios did fall from 18% in 1830 to 15.2% in 1833 (the year Jackson withdrew the government deposits from the federal bank). From 1833 to 1837 (the eve of the panic), reserve ratios fell again from 15.2% to 13.7%.

[...]Furthermore, there is evidence that the state-bank depositories did lend out at least part of the public deposits with which they were entrusted. Treasury Secretary Taney informed them that they were expected to increase their discounts after receiving the government funds; and when the government in 1837 called on the banks to pay out the remainder of the surplus fund s deposited with them in previous years, the banks replied that the money was gone. Thus, it seems clear that by depositing the government's funds in the state banks, President Jackson did contribute to the inflation of the mid-1830s.

[...]From January 1830 to December 1833, the number of banks increased from 330 to 506, a 53% increase. Then, from 1833 to 1837, the number of banks increased from 506 to 788, a 56% increase. The chartering of so many new banks meant that the banking system as a whole could inflate the money supply significantly even while maintaining the same proportion of reserves. Contemporary political economists (Gallatin, Gouge, and Raguet) all cited Jackson's campaign against the federal bank as spurring a bank mania in the states.

[...]They went from $4.2 million in 1833 to $6.1 million in 1834, $16.2 million in 1835, and $24.9 million in 1836, and $6.9 million the first few months of 1837 before the panic. While the price of public land was fixed by law, its price could, and did, rise after it was sold to the first purchaser (often a land speculator who bought up large amounts only to sell it at a profit).


Table II: The 1830s Inflation under the B.U.S. (Check link for full charts)

Total Money Supply
1830 (Jan.): $134m.
1833 (Dec.): $186m.
Increase: 39%
Inflation: 53%


Total Money Supply
1833 (Dec.): $186m.
1837: $311m.
Increase: 67%
Inflation: 64%