How did closing the National Bank during the Panic of 1837 hurt America Financially?

Question

How did closing the National Bank during the Panic of 1837 hurt America Financially?

Answer 1

The closing of the National Bank hurt the average American financially during the Panic of 1837 in an indirect way.  The national bank stopped taking loans from state, local, and privately owned banks as the devaluation of the dollar caused the money not to be any good.  If the money was not backed by gold or silver, they wouldnt accept it.  This essentially closed all the banks.  

Once the banks closed, people could no longer get to their money (if it was still there).  Some people ended up losing their entire lifes savings due to this.  The dollar was devalued and it caused an economic dent in the entire economy that lasted until 1846.  Unemployment reached 10% during that time.  And, foreign banks and lenders suddenly wanted their loans paid back because they feared that the devaluation of the dollar would hurt their returns.  Basically, everyone asked for their money back (backed by gold or silver) and there simply wasn't enough in the system.  The National Bank closing caused the chaos to spread throughout the financial system.  Had they just accepted the money, it might have turned out better.  Although, in the long run it could have hurt worse as the money not being backed by actual gold or silver would have caused a larger fall-out later.