Department or Program


Primary Wellesley Thesis Advisor

Eric Hilt


In the substantial body of literature that has been written about the Panic of 1837, two schools of thought have become dominant. One focuses on domestic factors such as Andrew Jackson’s Specie Circular and legislation to distribute the federal surplus, while the other focuses on an international shock stemming from changes in the Bank of England’s lending policies. Although there is compelling evidence supporting each of the theories, the Panic remains imperfectly understood. This paper uses new bank-level data to econometrically test each of the existing theories and to explore an additional trigger. I find that the effects of the distribution to be overemphasized and that while some evidence supports the theory focused on international factors, the data strongly suggests that the Panic was in fact due to the collapse of confidence in Andrew Jackson’s pet banking system.