Many state banks collapse, and enormous amounts of Western real estate are foreclosed by the Bank of the United States. But there are more fundamental causes for the crisis, of which the credit collapse is only a consequence and a symptom. The swollen demand for the products of American farms and factories, resulting from scant supply of such goods at home and abroad during the war, is now satisfied: the market is declining. As prices fall, money becomes difficult to come by, but the habit of borrowing, formed in the expansive years, cannot be shaken. Those who insist on a return to specie-hard money, are seen as turning the clock back.

Third Annual Message 

During the term of James Monroe while in office as President March 4, 1817, to March 4, 1825.

Washington, December 7, 1819

Fellow-Citizens of the Senate and of the House of Representatives:

A) Derangement in moneyed institutions:

Volume II Page: 54 (extract) "In bringing to view the incidents most deserving attention which have occurred since your last session, I regret to have to state that several of our principal cities have suffered by sickness, that an unusual drought has prevailed in the Middle and Western States, and that a derangement has been felt in some of our moneyed institutions which has proportionally affected their credit."

B) Labor, fall in prices

Page: 61 " The great reduction in the price of the principal articles of domestic growth which has occurred during the present year, and the consequent fall in the price of labor, apparently so favorable to the success of domestic manufactures, have not shielded them against other causes adverse to their prosperity. The pecuniary embarrassments which have so deeply affected the commercial interests of the nation have been no less adverse to our manufacturing establishments in several sections of the Union."

C) Failures frequent in large cities.

Page: 61 " The great reduction of the currency which the banks have been constrained to make in order to continue specie payments, and the vitiated character of it where such reductions have not been attempted, instead of placing within the reach of these establishments the pecuniary aid necessary to avail themselves of the advantages resulting from the reduction in the prices of the raw materials and of labor, have compelled the banks to withdraw from them a portion of the capital heretofore advanced to them. That aid which has been refused by the banks has not been obtained from other sources, owing to the loss of individual confidence from the frequent failures which have recently occurred in some of our principal commercial cities.

An additional cause for the depression of these establishments may probably be found in the pecuniary embarrassments which have recently affected those countries with which our commerce has been principally prosecuted. Their manufactures, for the want of a ready or profitable market at home, have been shipped by the manufacturers to the United States, and in many instances sold at a price below their current value at the place of manufacture. Although this practice may from its nature be considered temporary or contingent, it is not on that account less injurious in its effects. Uniformity in the demand and price of an article is highly desirable to the domestic manufacturer.

It is deemed of great importance to give encouragement to our domestic manufacturers. In what manner the evils which have been adverted to may be remedied, and how far it may be practicable in other respects to afford to them further encouragement, paying due regard to the other great interests of the nation, is submitted to the wisdom of Congress.

JAMES MONROE

Second Inaugural Address 

During the term of James Monroe while in office as President March 4, 1817, to March 4, 1825.

Washington, March 5, 1821

Volume II Page: 91(Extract ) "Under the present depression of prices, affecting all the productions of the country and every branch of industry, proceeding from causes explained on a former occasion, the revenue has considerably diminished, the effect of which has been to compel Congress either to abandon these great measures of defense or to resort to loans or internal taxes to supply the deficiency. On the presumption that this depression and the deficiency in the revenue arising from it would be temporary, loans were authorized for the demands of the last and present year. 

Anxious to relieve my fellow-citizens in 1817 from every burthen which could be dispensed with, and the State of the Treasury permitting it, I recommended the repeal of the internal taxes, knowing that such relief was then peculiarly necessary in consequence of the great exertions made in the late war. I made that recommendation under a pledge that should the public exigencies require a recurrence to them at any time while I remained in this trust, I would with equal promptitude perform the duty which would then be alike incumbent on me.

By the experiment now making it will be seen by the next session of Congress whether the revenue shall have been so augmented as to be adequate to all these necessary purposes. Should the deficiency still continue, and especially should it be probable that it would be permanent, the course to be pursued appears to me to be obvious. I am satisfied that under certain circumstances loans may be resorted to with great advantage. I am equally well satisfied as a general rule, that the demands of the current year, especially in time of peace, should be provided for by the revenue of that year.

JAMES MONROE

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