A friend thinks it's the ultimate proof that the ABCT is false. I can't find much about it, except a few scattered, snippets here and there. It seems it wasn't a very severe panic.
Read my Nolan Chart column "Me & My Big Mouth"
Twas during the era of wildcat banking. See here
Though there could be economic crashes in the free market. Say for example if storms in the ocean made 20% of trade impossible, that would probably have very negative repercussions.Austrians are suspicious of the claim that free markets spontaneously fail. This is because while entrepreneurs do fail all the time, there is no reason for them to fail all at once. There has to be a common vector between them. Sure, they could have all bought lottery tickets or maybe they thought the world was going to end in 2012, and that might cause a crash. Or it might be credit expansion like in ABCT. But I think we need to concede that its possible for other weird things to happen on the free market that could cause depressions.Its just that, like, every single f*cking depression ever has been caused by government meddling :P
McDuffie: A friend thinks it's the ultimate proof that the ABCT is false. I can't find much about it, except a few scattered, snippets here and there. It seems it wasn't a very severe panic.
I bet $1000 he doesn't even know anything specific about it.
I did do a little research on it a while back. Along with the Panic of 1893, this is one of the less Austrian documented panics. Rothbard talks about 1819, 1837, 1873, and a little about 1893 and 1907 in his History of Money and Banking/Mystery of Banking before moving on to the Great Depression in America's Great Depression. Except for a couple of mentions when he talks about the Suffolk bank, the Panic of 1857 is virtually left out. I wish that similar to Rothbard's America's Great Depression, there was a book like it on each panic (goes into money supply details, historical backgrounds, what the governments did or didn't do and how this contributed to the panic, etc). One the reasons it so hard to convince people of the ABCT is that the Austrians really don't intensively document other panics than the Great Depression. The only others that come remotely close to Great Depression analysis is the Panic of 1819 (Rothbard wrote his dissertation on this, but I never read it and am not sure of how much statistical analysis he puts into it, all I think he did is just write what happened) and the Panic of 1921 as evidence that lassiez faire quickly solves panics (but is to easy to dismiss because people consider it a post war recession, in addition to the fact that not many if any banks at all failed).
I'm not sure if Austrians don't extensively write about previous panics because the money is in writing about the present/Great Depression (the vast majority of the public is concerned about now rather than the past and I'm not sure that more than 5% of the American population even knew there was a panic in 1857), statistical evidence is really hard to find, or that they are just out manned and concentrate their studies on other things. I've always wanted to take up the challenge and write a book intensively documentating the panics prior to the Great Depression, so I've collected tibits of evidence and books (Austrians/non austrians) who talk about the panics and anything remotely related to laissez faire.
Although not discussed intensively in Austrian analysis, unlike the Panic of 1857, the panics of 1893 and 1907 are are more known because they have caused some pretty serious historical repercussions (William Jennings Bryant/populism and the Federal Reserve). Panic of 1857 on the other hand isn't as discussed as much because whatever turmoil it may have caused was immediately swept away by the Civil War.
Unfortunately I'm at college right now and don't have access to my dusty tomes and articles I've printed out to offer as reference. However, the main thing that I gathered was that the Panic of 1857 was caused by fractional reserve banking (although there was no central bank, state laws and the general nature of FRBs caused the credit to expand and enter ABCT) which caused a bubble to form in mining and some railroads among other things. Although James Buchanan wasn't exactly a lassez fairer of sorts and did increase government spending, the panic subsidied farily quickly because the bubble was much smaller than 37 due to the Independent Treasury and free banking and banks didn't reinflate like they did in 1837.
Have you had a chance to read this article?
http://mises.org/pdf/asc/2002/asc8-trask.pdf
Yes, that was one of the documents I read. Problem with it though is that when you compare it to another paper of his http://mises.org/journals/scholar/trask1.pdf some of the statistics for Panic of 1837/57 aggregates aren't the same. I don't know if this was a typo or he used different sources, but it made me question its validty. I emailed whatever Trask emails I could find and never got a response.