The Panic of 1819

The Panic of 1819

Reactions and Policies

By:

Murray N. Rothbard

Book Club members' rating

Click any button below to buy or to see prices and Amazon reviews:


Log in to add to wishlist, library or to rate the book

Summary

The panic of 1819 was America's first great economic crisis. And this is Murray Rothbard's masterful account, the first full scholarly book on the topic and still the most definitive. It was his dissertation, published in 1962 but nearly impossible to get until this new edition, the first with the high production values associated with Mises Institute publications.

The American Economic Review was wild for this book when it appeared: "Rothbard's work represents the only published, book-length, academic treatise on the remedies that were proposed, debated, and enacted in attempts to cope with the crisis of 1819," the reviewer wrote. "As such, the book should certainly find a place on the shelf of the study of U.S. business cycles and of the economic historian who is interested in the early economic development of the United States."

And specialists have treasured the book for years. It is incredible to realize that some American historians think of M.N. Rothbard as the author of this book and nothing else!

Rothbard tells the story of a disaster that could not be attributed to some specific government blunder. It seemed to originate from within the economic system itself. Its cause was not obvious to observers at the time. Confronted with something new, the panic engendered much discussion and debate about possible causes and remedies. As Rothbard observes, the panic provides "an instructive picture of a people coming to grips with the problems of a business depression, problems which, in modified forms, were to plague Americans until the present day."

The panic of 1819 grew largely out of the changes wrought by the War of 1812, and by the postwar boom that followed. The war also brought a rash of paper money, as the government borrowed heavily to finance the conflict. The government depended on note-issuing banks spread throughout the country. All of this put tremendous strains on the banks' reserves of specie held against such notes. This would inevitably lead to suspension of specie payments in some parts of the country in 1814.

Freed from the shackles of hard money, the suspension of specie led to a boom in the number of new banks started in the country, and a subsequent boom in note issuance. The war altered the economic pattern of production in a way very different from what would have evolved in the absence of war, and thus it placed the economy on a sandy foundation, vulnerable to distress when the war ended. Indeed, it was in this boom phase that the New York Stock Exchange was founded in 1817 — born in a bubble.

So, when peace did come, the revival of foreign trade began to reverse some of the trends started during the war. Swelling imports led to falling commodity prices. "The influx of imports spelled trouble for war-grown manufacturers, especially textiles, which suddenly had to face the onrush of foreign competition," Rothbard notes.

For the modern reader, this paints an all-too-familiar scene: the plight of the domestic manufacturer — one that continues to bedevil steel, lumber, and others today. As with all economic phenomena, however, there is crisis for some and opportunity for others. Exporters, for example, would thrive.

There were many cranky and contradictory remedies proposed, and Rothbard reviews each one. But in the end, there was no widespread confusion on what caused the downturn. Instead, it was widely known that false prosperity is a very dangerous thing. It always turns to bust. Bad legislation failed to pass, the government embarked on no New Deal planning, and there was no great reflation. Precisely because there was no intervention, the panic ended quickly and peacefully.

What we have here, then, is not only a dazzling historical account — the research here is deep and thorough, and the prose a model of exposition; it also points the way to how all economic downturns can and should be handled. For that reason, the Panic of 1819 offers important lessons for us today.

Summary courtesy of the Ludwig von Mises Institute. The Mises Institute is the premier organization in support of the free market, peace and prosperity. They provide free educational material, books audio books, lectures and courses that free your mind. This site would not exist were it not for the generosity, hard work and dedication of the Mises Institute, its employees, fellows and its benefactors. Books of Liberty is eternally grateful to all of their work and efforts. Please consider supporting the Mises Institute in any way you can.

Great Deals!

Do you want to get this and many other paperback/hardcover books delivered fast and free? Try Amazon Prime 30-Day Free Trial or give the Gift of Amazon Prime to someone who'd love it!

The FREE Kindle Reading App lets you read your favorite eBooks on most devices (PCs, smartphones, tablets, etc.). Click here to get the FREE Kindle Reading App.
However, you could read this and countless other books on a brand new Kindle E-reader for less than the price of a cup of coffee per week. Click here to choose your favorite Kindle E-reader.
And the best thing is that most Books of Liberty eBooks are actually available through Kindle Unlimited. Join Amazon Kindle Unlimited 30-Day Free Trial to read from over 1 million ebooks and listen to thousands of audiobooks, all for one fixed, low price.

Read or listen for free

Buy elsewhere

Tags

Similar Books

loading

Related Starting Points

Economics

The economics category, as expected, is very well represented within the pages of this site. Of all the economics books, around half are explicitly Austrian Economics texts, and (with a significant overlap) around half discuss monetary theory. You may search specifically for economic treatises or books about economists; you will find historical or theoretical accounts of financial crises; you will stumble upon recent books on crypto-currencies (like bitcoin), books covering topics like income or wealth inequality, as well as more technical subjects like price theory, monopoly, division of labor, public choice theory and others. Additionally, critiques of Keynesian economics are to be found throughout the books in this category.

Of the Austrian Economics books, the largest portion discuss The Austrian Business Cycle and praxeology or human action, but you will find many covering to one degree or another topics like time preference, capital and interest, subjective value, and economic calculation, to name a few.

And for those interested in currency or money, whether sound money or fiat money, you will find books arguing the benefits of the gold standard, debates on inflation and deflation, banking, central banks and the Federal Reserve specifically.

At the heart of the free market system of unregulated, voluntary trade stands capitalism and its emphasis on private property. Unsurprisingly, a large collection of books are available on this subject, many of which outline quite clearly the fundamentals and the outcomes of capitalism, especially in contrast to other economic systems like socialism. Additional related topics, such as free trade, decentralization, risk, uncertainty, and the market process can be found in such books.

A note from the curator: Liberty Classroom provides courses like: Austrian Economics Step by Step, two courses on the History of Economic Thought, and What’s Wrong with Textbook Economics, to name a few. With courses like these, how can you not become a fan of Liberty Classroom? I know I am.

And would you like your homeschoolers to learn economics right the first time around? The Ron Paul Curriculum homeschool program covers 12th grade economics from teachers you can trust. In full disclosure, Books of Liberty will get a small advertising fee for purchases made through our links.


History

One of the most popular topics on this site, history, is a fascinating subject to read. Given the nature of this site it didn’t quite make sense to create a category of ‘revisionist history’ since most of the history books featured are of that nature. Sure enough, we have uncontested historical accounts of various historical events, but when you search for history and drill further down into a specific topic (such as various wars, Pearl Harbor, The New Deal or the Great Depression), you are going to get intellectually honest ‘revisionist’ accounts of these events.

While you may expand your history search by historical event or by selecting US history or the history of some other area or nation, we have classified the history texts by period as well. You can indulge your curiosity if you are an avid reader of one of or more of the following periods: Antiquity, Biblical period, Classical period, Medieval period or the Middle ages, Early modern period, the Renaissance, or specifically within the last few hundred years, as grouped by: 16th Century, 17th Century, 18th Century, 19th Century, or the 20th Century.

And speaking of indulging yourself, with several dozen books on conspiracy theories, you may brush up on such topics as 9/11, the New World Order, False Flag operations, or on the Kennedy deaths, or various institutions and secret societies like The Illuminati, The Freemasons, Bilderberg Group, Trilateral Commission, Council on Foreign Relations, Tavistock Institute, or even Skull & Bones.

A note from the curator: The variety of history courses within Liberty Classroom, including two US History courses, two Western Civilization courses, and many (many!) more will, no doubt, make you as big of a fan of Liberty Classroom as I am. The Western Civilization courses are also available to students of the Ron Paul Curriculum homeschool program along with many other courses you will not find in public schools (or most private schools either).

In full transparency, I have no direct experience in homeschooling but if you want your kids to learn the real history you were never taught, you can’t get much better than providing them Ron Paul’s program. Books of Liberty is happy to promote both these programs in exchange for a small advertising fee because I cannot reiterate enough what terrific history resources these programs are.


Other classifications

To make things easier to find, we created a few groupings that allow you to narrow down certain topics that include a large number of named individuals, geographical locations, or geopolitical entities. We created the topics: people and groups; areas and nations; economists; and politicians (who, within it, include also nation state leaders and US presidents).

And if you want a book that seems to have a wide variety of topics, you may just want to filter with the word smorgasbord and see what books come up.