The rapid increase of the National revenue gave birth to the belief that
capital had increased in the same proportion. This superabundance of
income produced temporarily by the inflation in business was recklessly
thrown away. People speculated in land, projected a hundred railroads,
canals, mines, and every sort of scheme, which would have absorbed
$300,000,000 if carried out.

The national capital being insufficient, loans were made in England and
Holland, where the rate of interest being more moderate stimulated the
passion for enterprises. Finally, in order to stop the flow of English
capital to America, the Bank of England raised the rate of interest;
this brought people to their senses. They saw the impossibility of
carrying out a third of their schemes. Cotton fell, and panic seized the
public.

Since 1818 a period of flow and ebb in trade had been seen every five or
six years, but this stoppage was much more serious. The lack of ready
money and capital destroyed confidence. Money was not to be had upon any
collateral; and the banks stopped discounting. The people lacked bread,
the streets were deserted, the theatres empty; social observances were
in abeyance, there were no more concerts, and the whole social round was
stopped.

The Bank of the United States used various expedients to temporarily
moderate the crisis until the very moment that it burst all the more
violently in 1839, and brought about a new and radical reform.

From the time that the separation of the Bank of the United States from
the Government and the cessation of its operations as the National Bank