In 1807, in response to British and French acts against neutral shipping, including British impressment of sailors on American ships, President Thomas Jefferson and Congress passed the Embargo Act. It prohibited all American shipping to the outside world to punish Britain and France. Instead it punished the American economy. Exports fell from $108 million to $22 million. Imports fell from $138 million to $56 million. New England ports, like Boston, were especially hit hard.
Panics of 1837 and 1893
About thirty years later, President Andrew Jackson thought the Bank of the United States threatened American democracy. He vetoed its renewal and removed federal revenues from the institution. Jackson also issued the Specie Circular, ordering federal land offices to stop accepting paper money from speculators. The order drained the banking system of gold and silver (specie) and lowered overall confidence in bank notes. When the Bank of England contracted credit, the American economy, with strained specie flows and no national bank, was vulnerable. The Panic of 1837 ensued, and it unleashed a depression that lasted into the 1840's.
The federal government continued to travel on shaky financial ground into the late 1800's. The big spending "Billion Dollar Congress" during the Benjamin Harrison administration passed the Sherman Silver Purchase Act (1890). It required the government to purchase 4.5 million ounces of silver each month. This decreased the price of silver, forcing investors to redeem their government notes for gold. With the government's gold reserves significanty depleting and the overbuilt railroad bubble bursting, the Panic of 1893 was born. A depression with nearly 20% unemployment followed.