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The Panic of 1837

It is too easy to blame President Andrew Jackson for strangling the 2nd Bank of the United States and causing an economic Panic. Granted, he didn't help the situation, but analysts cannot agree as to the direct cause of the Panic of 1837. Nevertheless, it is clear that specie (that is, real "Heavens to Betsy!" coin money) is moving west along with the massive migration of people. It is emptying the New York coffers. (For context, the cities of Chicago and Houston are incorporated this year.) Martin Van Buren has replaced Jackson as President, but before he left, Jackson had withdrawn the deposits of the United States government from the Federal banks and distributed the coin to state banks of uneven reliability. For better or worse, that moved a lot of coin out of New York and drained their reserves to a dangerously low level. At this time, the only legal tender is gold or silver coins. Banknotes are NOT legal tender, so when people try to redeem them for real-coin-money (maybe to cover their stock market losses or to move west for better pastures) the banks run out of real-coin-money and refuse to redeem their private banknotes. Many banks close their doors. By next year the economy will improve only to take a nosedive the year after that. The economy is riding a roller-coaster, and a lot of people are going to get hurt. [1] [2] [3] [4] [5]

My Take by Alex Shrugged
Most people today engage in electronic funds transfers such as credit card purchases and direct deposit. This makes the coin-shortage issue go away... mostly. People trust electronic notations in computer ledgers... until they don't. When Cyprus banks were collapsing in 2013 due to the economic upheavals of Greece, the account holders took a 47.5% haircut... in exchange for the equivalent in bank stock. (Thanks a lot!) Why didn't depositors pull their money out first? The banks were closed and electronic withdrawals were limited until the required amount was digitally transferred to Germany. It was a "one-time" event, and it always is.... until the next time. Maybe "Grandpa" wasn't so crazy when he started hiding money in coffee cans under his bed. Bitcoin could solve an individual's initial problems by shielding a certain amount of money, but one must own a bitcoin first. And thus we return to the age-old problem... if I am not holding an acceptable "coin" in my hand, transactions soon break down into a barter economy until enough acceptable "coin" is available to act as money. (That is my thinly veiled attempt to advise the listener to have cash on hand, just in case. You probably won't be given much warning before the government decides that you don't really need all that money to get by.) [6] [7] [8]

Kindergarten: It's for the Children!

The road to educational reform is paved with good intentions. It begins in Germany with the youngest students. Friedrich Froebel believes that children have individual abilities and their needs must be addressed as individuals. Until recently, he ran an orphanage in Switzerland and published an educational magazine entitled "Features of Human Education", but he is back in Germany now, and he wants to put his ideas to work. He opens a school for youngsters called the "Play and Activity Institute". He will later call it "Kindergarten" and thus the word will enter the lexicon of German and English speakers. He will also develop an educational tool kit for preschoolers called Froebel Gifts. It includes, among many things, a ball, a wooden cube and a wooden sphere. He has noticed that the children delight in the shapes. (You can see where this is going. Right?) This is education through play. (Adults are so sneaky!) Any modern person would take one look at the kit, and recognize its purpose instantly, but in 1837 it's going to take some education of the adults first. A Prussian government official will soon ban all kindergartens as the tool of godless demagogues. He will mistake Friedrich Froebel for Karl Froebel who is an art teacher and apparently, a godless demagogue. [9] [10]

My Take by Alex Shrugged
FYI, in the same year Horace Mann was appointed to the newly formed Massachusetts Board of Education... the first in the country. He had no background in education which made him the perfect person for the job. No preconceptions. Right? (Strike palm to forehead vigorously.) However, he was a graduate of Brown University and gave a speech entitled, "The Progressive Character of the Human Race." As I have said before, education is a form of indoctrination. Most people don't like indoctrination because at some point they don't agree with what is being indoctrinated. In a group situation there will always be an objection to what is taught even when they are teaching handwriting. Practicing handwriting always involves copying an existing phrase or sentence. Hmmm... which sentence shall we choose for our young children to copy and remember? Whatever your answer, the parent standing next to you will be tempted to swat you right in the back of the head. That is why homeschooling is increasingly popular. It's not just because of same-sex bathrooms or gender identification issues. Parents want a say over what their children are taught and as their pleas fall on deaf ears, they will quietly toddle off to handle it on their own. [11]

Killing Lovejoy

I can't let this event go by without note. The abolitionist Elijah Lovejoy is murdered by anti-abolitionist terrorists as he attempts to protect his own printing press from destruction. This is not the first attempt and Lovejoy will die during the last. His feelings on this inevitable outcome are noteworthy... [12]

"... I trust, that through the grace of God, I am prepared to meet them — even unto death itself. My friends are trembling, my enemies -- numerous and influential -- are open and fiercer in their threats, but I can truly say I was never more calm."
-- Elijah Jovejoy, living in Illinois, a free state. [13]

In Other News

  • The cell theory of biology becomes reality. A plant biologist and an animal biologist are having dinner and talking shop when the discussion turns to those strange elements floating inside the cell. The elements are so much alike that they soon realize that all living things are composed of cells. [14] [15]
  • Giuseppe Mazzini is exiled to London. He will foster a number of revolutionary groups across Europe including "Young Italy" and "The Young Turks". Thus Italy will be united as a country one day and Turkey will come into being. [16] [15]
  • The electric telegraph is patented. Also that new-fangled Code of Samuel Morse will be demonstrated... Morse Code. It will soon be adopted as the standard. [15]

This Year in Wikipedia

Year 1837, Wikipedia.

See Also


  1. Panic of 1837 - Wikipedia (2015). Retrieved on 5 January 2015.
  2. Jack Ryan: Shadow Recruit (2014) - IMDb. IMDb.com (2014). Retrieved on 5 January 2015. “Jack Ryan, as a young covert CIA analyst, uncovers a Russian plot to crash the U.S. economy (similar to the Panic of 1837).”
  3. Specie - definition of specie (2016). Retrieved on 28 July 2016. “Coined money; coin.”
  4. Rousseau, Peter L. (June 2002). "Jacksonian Monetary Policy, Specie Flows, and the Panic of 1837". The Journal of Economic History (Cambridge University Press on behalf of the Economic History Association) 62 (2): 457-488. http://www.jstor.org/stable/2698187. Retrieved 28 July 2016. 
  5. Greenback (1860s money) - Wikipedia (2016). Retrieved on 28 July 2016. “Before the Civil War, the only money issued by the United States was gold and silver coins, and only such coins ('specie') were legal tender; that is, payment in that form had to be accepted. Paper currency in the form of banknotes was issued by privately owned banks; the notes being redeemable for specie at the bank's office. They were not legal tender. Such notes had value only if the bank could be counted on to redeem them. If a bank failed, its notes became worthless.”
  6. Everything You Need to Know About the Cyprus Bank Disaster. The Atlantic (March 18, 2013). Retrieved on 28 July 2016. “There are four things you need to know about Cypriot banks. First, they have assets equal to roughly eight times the country's GDP. Second, they get a huge percentage of their deposits from tax-dodging Russians. Third, they invested a ton of money in Greece. And fourth, they are highly dependent on central bank financing to stay afloat. In other words, Cypriot banks are too big for Cyprus to save. But somebody needs to save them.”
  7. "Bank of Cyprus depositors lose 47.5% of savings", USA Today (Associated Press), July 29, 2013. Retrieved on 28 July 2016. “Depositors at bailed-out Cyprus' largest bank will lose 47.5% of their savings exceeding 100,000 euros ($132,000), the government said Monday. The figure comes four months after Cyprus agreed on a 23 billion-euro ($30.5 billion) rescue package with its euro partners and the International Monetary Fund. In exchange for a 10 billion euro loan, deposits worth more than the insured limit of 100,000 euros at the Bank of Cyprus and smaller lender Laiki were raided in a so-called bail-in to prop up the country's teetering banking sector.” 
  8. Alex Shrugged notes: Problems occur when there is a shortage of physical, real-coin-money. Although Bitcoin is not physical money, it would suffer a similar problem, though less so. Bitcoins are infinity divisible so if I own one, I can split it up to pay my bills and we can trade bitcoins across distances so that solves one physical problem that real-coin-money has which is carrying the thing from one place to another. BUT splitting up a bitcoin tends to change the value of other bitcoins, causing a fluctuation in value. Also, such a splitting depends on my actually owning a bitcoin. Without one, I am reduced to bartering just as I would be if I was without real-coin-money. Maybe it would only be a problem in a "Mad Max" breakdown of society, but then again... Cyprus... Cyprus.
  9. Friedrich Fröbel - Wikipedia (2016). Retrieved on 28 July 2016. “He created the concept of the 'kindergarten' and also coined the word now used in German and English. He also developed the educational toys known as Froebel Gifts.”
  10. Fröbel, Karl. Fröbelsche Zeichenschule für Volksschulen und Fortbildungsklassen. Klinkhardt. 
  11. Horace Mann - Wikipedia (2016). Retrieved on 28 July 2016. “It was not until he was appointed secretary in 1837 of the newly created board of education of Massachusetts (the first such position in the United States) that he began the work which was to place him in the foremost rank of American educators. Previously, he had not shown any special interest in education. He was encouraged to take the job only because it was a paid office position established by the legislature. He began as secretary of the board. On entering on his duties, he withdrew from all other professional or business engagements and from politics.”
  12. Elijah Parish Lovejoy - Wikipedia (2015). Retrieved on 15 July 2015. “In May 1836, after anti-abolitionist opponents in St. Louis destroyed his printing press for the third time, Lovejoy left the city and moved across the river to Alton in the free state of Illinois. In 1837 he started the Alton Observer, also an abolitionist paper. On November 7, 1837, a pro-slavery mob attacked the warehouse where Lovejoy had his fourth printing press. Lovejoy and his supporters exchanged gunfire with the mob, which fatally shot him. He died on the spot and was soon hailed as a martyr by abolitionists across the country. After his death, his brother Owen Lovejoy entered politics and became the leader of the Illinois abolitionists.”
  13. Stand-Alone Courage (video subscription, 17 minutes into broadcast). The Glenn Beck Show (July 6, 2015). “In the 'Observer' of Thursday I shall come out, openly, fearlessly, and as I hope, in a manner as becomes a servant of Jesus Christ when defending His cause. And whatever may be the consequences, I think, I trust, that through the grace of God, I am prepared to meet them — even unto death itself. My friends are trembling, my enemies -- numerous and influential -- are open and fiercer in their threats, but I can truly say I was never more calm. -- Elijah Jovejoy”
  14. Theodor Schwann - Wikipedia (2016). Retrieved on 16 June 2016. “In 1837, Matthias Jakob Schleiden viewed and stated that new plant cells formed from the nuclei of old plant cells. While dining that year with Schwann, the conversation turned on the nuclei of plant and animal cells. Schwann remembered seeing similar structures in the cells of the notochord (as had been shown by Müller) and instantly realized the importance of connecting the two phenomena. The resemblance was confirmed without delay by both observers, and the results soon appeared in Schwann's famous Microscopic Investigations on the Accordance in the Structure and Growth of Plants and Animals, in which he declared that 'All living things are composed of cells and cell products'. This became cell theory or cell doctrine.”
  15. 15.0 15.1 15.2 Grun, Bernard. The Timetables of History: A Horizontal Linkage of People and Events. Simon and Schuster, 402-403. 
  16. Giuseppe Mazzini - Wikipedia (2016). Retrieved on 28 July 2016. “On 28 May 1834 Mazzini was arrested at Solothurn, and exiled from Switzerland. He moved to Paris, where he was again imprisoned on 5 July. He was released only after promising he would move to England. Mazzini, together with a few Italian friends, moved in January 1837 to live in London in very poor economic conditions.”

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