From 1826 to 1836 the condition of business, despite the panic of 1831,
grew easier. Industries, agriculture, and commerce were prosperous and
every enterprise was successful. Both in New Orleans and in New York
there was much building, and more than 1508 houses were erected between
January 1 and September 1, 1836. This general prosperity carried with it
the seeds of trouble.
The rapid increase of the National revenue gave birth to the belief that
capital had increased in the same proportion. This superabundance of
income produced temporarily by the inflation in business was recklessly
thrown away. People speculated in land, projected a hundred railroads,
canals, mines, and every sort of scheme, which would have absorbed
$300,000,000 if carried out.
The national capital being insufficient, loans were made in England and
Holland, where the rate of interest being more moderate stimulated the
passion for enterprises. Finally, in order to stop the flow of English
capital to America, the Bank of England raised the rate of interest;
this brought people to their senses. They saw the impossibility of
carrying out a third of their schemes.
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