The Panic of 1837
In June of 1836, the United States Congress passed an act, known as the Distribution Act, which would require the federal government to distribute treasury reserves in gold and silver to the states on January 1st of the following year. Shortly after, then-President Andrew Jackson, passed an order to ban government land sale in paper currency, citing that only gold and silver could be used to purchase land – designed to curb speculation in the real estate market. These acts, combined to hugely contract the money supply by reducing the value of paper currency – a large part of the total supply.
Finally, in the middle of 1837, a speculative bubble in land and property burst, resulting in New York banks stopping payment in gold and silver entirely; a huge banking panic ensued, causing a five year depression, ending in 1842.