Notes on the Presidency of James Buchanan
The Panic of 1857
The third crisis of Buchanan's first half-year in office was a financial panic that broke in August 1857. It was caused by domestic and foreign factors . However, the crisis was to enflame the sectional crisis. The worse effects were in the North, with the collapse of hundreds of manufacturing companies and mass Northern unemployment. In contrast, the South weathered the crisis better. Cotton prices fell, but slowly, and world markets for cotton quickly recovered.
In response, Buchanan followed the accepted economic wisdom of laissez faire economics. However, this further aggravated northerners who wanted Buchanan's regime especially as many wanted them to take firm action to help their plight. Indeed, many Northern businessmen tended to blame the depression on the Democratic Tariff of 1857, which had put rates at their lowest level since 1816. Therefore, sectional divisions were again increased.
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