In 1837, President Martin Van Buren confronted a dilemma over the appropriate federal response to the recent Panic of 1837 that seemed to undercut the policies and power of Andrew Jackson's "Democracy." Now, Van Buren must decide how best to harness the civic reaction in stabilizing the financial system and returning the American economy to growth.Van Buren's dilemma occurs in the midst of a dramatic regime shift in American politics. The rise of Whig politicians in reaction to the populist policies of Jackson marked 1837 as a historic pivot point. It is useful to consider how the Panic of 1837 contributed to that pivot and how the subsequent civic reaction to the panic developed. The A case frames Van Buren's dilemma of choosing among three policy options for addressing the weaknesses of the nation's financial system: (a) recharter the Second Bank of the United States (Second Bank), (b) simply continue Jackson's system of "pet banks," or (c) implement a new proposal for a system of independent subtreasuries. The dilemma is framed by the "market revolution" occurring in the US economy and the political factions that emerged. The Panic of 1837 has exposed structural weaknesses in the US financial system that must be remedied. This Abridged case consolidates the A and B cases (F-1785 and F-1786), indicates Van Buren's support for the Independent Treasury proposal, and invites the student to frame a message to Congress that assesses the advantages and disadvantages of various policy options under consideration.
This case series is a vehicle for (a) illuminating the dynamics of financial crises; (b) comparing alternative ideologies regarding banking in the United States; and (c) exploring the dynamics of government policy-making in the context of a regime shift in political sentiment.