The bank panic of 1837 can be attributed in part to decisions made by President Andrew Jackson. One key factor was Jackson's strong opposition to the Second Bank of the United States. He vetoed the recharter of the bank in 1832, effectively ending its existence, leading to a loss of faith in the banking system. Jackson believed that the bank was controlled by wealthy elites and that it had too much power over the economy. His actions contributed to the withdrawal of government funds from the bank, causing a contraction in the money supply and a credit shortage, which, in turn, triggered financial instability.
Furthermore, Jackson's issuance of the Specie Circular in 1836 had a significant impact on the panic. This executive order mandated that public lands be purchased with hard money (gold or silver) rather than banknotes. As a result, banks had to exchange their banknotes for specie, causing a drain of precious metals from the banks and a sharp reduction in the money supply. This move disrupted the credit market and further intensified the panic.
Jackson's fiscal policies, notably the distribution of the federal surplus to the states, also played a role in the panic. While it was meant to reduce the federal government's surplus, this policy led to a surge in state-level infrastructure and canal projects, often funded through state-chartered banks, exacerbating speculation and overextension of credit. These factors, combined with Jackson's broader disdain for banking institutions, contributed to the bank panic of 1837, which triggered a severe economic downturn.