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America's First Great DepressionEconomic Crisis and Political Disorder after the Panic of 1837$
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Alasdair Roberts

Print publication date: 2012

Print ISBN-13: 9780801450334

Published to Cornell Scholarship Online: August 2016

DOI: 10.7591/cornell/9780801450334.001.0001

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The States’ Crisis

The States’ Crisis

(p.49) Chapter 2 The States’ Crisis
America's First Great Depression

Alasdair Roberts

Cornell University Press

This chapter discusses the profound impact of the First Great Depression on state government. In the 1830s, many American states borrowed heavily from British investors to finance canals, railroads, banks, and other projects. When the economy collapsed the states could not repay these loans unless they established new taxes, which they refused to do. And so many states defaulted. Outraged British investors, lacking any effective remedy in American courts, hurled angry rhetoric instead, and sent lobbyists to state capitals to campaign for repayment of their loans. State governments were faced with a choice: should they levy new taxes or simply repudiate their debts? Here was a direct collision between the ideal of political sovereignty and the expectations of the international financial markets.

Keywords:   economic crisis, First Great Depression, state government, national government, Britain, state debts, default, international financial markets

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