Oh, How the Mighty Have Fallen: The Bank Failures and Near Failures That Started America’s Greatest Financial Panics

This paper examines the failures or in some cases near-failures of financial institutions that started the 12 most severe peacetime financial panics in the United States, beginning with the Panic of 1819 and ending with the Panic of 2008. The following generalizations were true in most cases, although not in all. (1) Panics were triggered by a short series of failures or near-failures; (2) many of the failing institutions were what we would now call shadow banks; (3) typically, the source of trouble was an excessive investment in real estate; and (4) typically, they had outstanding reputations for trustworthiness, prudence, and financial acumen—before they failed. It appears that in these respects the Panic of 2008 was an old-school panic.[a panic] occurs when a succession of unexpected failures has created in the mercantile, and sometimes also in the non-mercantile public a general distrust in each other’s solvency; disposing every one not only to refuse fresh credit, except on very onerous terms, but to call in, if possible all credit which he has already given.—John Stuart MillAll of this has happened before, and it will all happen again.—Peter Pan

The First Era of School Reform

This chapter explains how, during the 1810s and 1820s, a more effective political opposition to aristocratic education formed. In different ways, the “Jeffersonian Revolution” of 1800, the War of 1812, and the Panic of 1819 all helped bolster the critique of academies, and built popular support for public common schools. Historians often skip over this “first era of school reform” and look instead at Horace Mann and the common school reformers of the 1830s. But it was during this period that many northern states started investing in common schools, and also revamping academies and colleges to serve a new educational vision. These institutional changes were all geared toward overthrowing aristocratic education and instead trying to create widespread informed citizenship. But as education came to be seen as an important path to citizenship, the impulse to segregate public schools grew, confining their benefits primarily to white men.