Panic of 1837
Date: From 1836 to 1838
The United States experienced a period of economic expansion in the mid-1830s, during which prices rose sharply while land speculation and foreign investment increased. In 1836, the British government raised interest rates, which caused American banks to do the same, prompting a major recession in which prices and wages decreased and specie became scarce. States like Illinois that had incurred heavy debts to finance the building of canals and railroads defaulted on loans and neared bankruptcy. As a result of the Panic of 1837, the Illinois legislature largely dismantled their internal improvement system by 1841. Illinois did not begin to recover economically until 1843.
Alasdair Roberts, America's First Great Depression: Economic Crisis and Political Disorder after the Panic of 1837 (Ithaca, NY: Cornell University Press, 2012), 19, 33, 38, 59-60; Robert P. Howard, Illinois: A History of the Prairie State (Grand Rapids, MI: William B. Eerdmans, 1972), 196, 203-05, 228-30; An Act to Amend an Act entitled "An Act to Provide for the Settlement of Debts and Liabilities Incurred on Account of Internal Improvements in the State of Illinois," Approved February 1, 1840