IN THE YEARS immediately preceding the Panic of 1837, the western states were caught up in a feverish economic boom. Easterners seeking their fortunes were coming west in ever-increasing numbers. Land sales were at record levels.1 Vast internal-improvement schemes were planned, and entire communities were laid out by real-estate speculators long before the first settler even appeared. The only limit to this frenetic expansion seems to have been in the fertile imaginations of the most daring of the entrepreneurs.
The northwestern states of Ohio, Indiana, Illinois, Michigan, Missouri, Kentucky, and Tennessee2 were caught up in the boom to a far greater degree than their neighbors to the east. Nevertheless, in this they were far outstripped by the southwestern states of Mississippi, Alabama, Arkansas, and, to a lesser extent, Louisiana, where everything was exaggerated. The experience in the Southwest provides almost a caricature for what happened to the West as a whole. The psychology of enterprise was all pervasive, and few would have challenged the wonderous alchemic magic the banks seemed to be working in providing the main source of energy for the growth. A contemporary author, Joseph Baldwin, colorfully described the atmosphere:____________________