As the Democrats battled Whigs on the national level, they faced challenges from urban artisans and workers. Between 1828 and 1833, artisans and laborers in fifteen states formed Working Men’s Parties. “Past experience teaches us that we have nothing to hope from the aristocratic orders of society,” declared the New York Working Men’s Party. It vowed “to send men of our own description, if we can, to the Legislature at Albany.”

The new parties’ agenda reflected the values and interests of ordinary urban workers. The Philadelphia Working Men’s Party set out to secure “a just balance of power … between all the various classes.” It called for the abolition of private banks, chartered monopolies, and debtors’ prisons, and it demanded universal public education and a fair system of taxation (Thinking Like a Historian). It won some victories, electing a number of assemblymen and persuading the Pennsylvania legislature in 1834 to authorize tax-supported schools. Elsewhere, Working Men’s candidates won office in many cities, but their parties’ weakness in statewide contests soon took a toll. By the mid-1830s, most politically active workers had joined the Democratic Party.

The Working Men’s Parties left a mixed legacy. They mobilized craft workers and gave political expression to their ideology of artisan republicanism. As labor intellectual Orestes Brownson defined their distinctive vision, “All men will be independent proprietors, working on their own capitals, on their own farms, or in their own shops.” However, this emphasis on proprietorship inhibited alliances between the artisan-based Working Men’s Parties and the rapidly increasing class of dependent wage earners. As Joseph Weydemeyer, a close friend of Karl Marx, reported from New York in the early 1850s, many American craft workers “are incipient bourgeois, and feel themselves to be such.”

Moreover, the Panic of 1837 threw the American economy — and the workers’ movement — into disarray. The panic began when the Bank of England tried to boost the faltering British economy by sharply curtailing the flow of money and credit to the United States. Since 1822, British manufacturers had extended credit to southern planters to expand cotton production, and British investors had purchased millions of dollars of the canal bonds from the northern states. Suddenly deprived of British funds, American planters, merchants, and canal corporations had to withdraw gold from domestic banks to pay their foreign debts. Moreover, British textile mills drastically reduced their purchases of raw cotton, causing its price to plummet from 20 cents a pound to 10 cents or less.

Falling cotton prices and the drain of specie to Britain set off a financial panic. On May 8, the Dry Dock Bank of New York City ran out of specie, prompting worried depositors to withdraw gold and silver coins from other banks. Within two weeks, every American bank had stopped trading specie and called in its loans, turning a financial panic into an economic crisis. “This sudden overthrow of the commercial credit” had a “stunning effect,” observed Henry Fox, the British minister in Washington. “The conquest of the land by a foreign power could hardly have produced a more general sense of humiliation and grief.”

To stimulate the economy, state governments increased their investments in canals and railroads. However, as governments issued (or guaranteed) more and more bonds to finance these ventures, they were unable to pay the interest charges, sparking a severe financial crisis on both sides of the Atlantic in 1839. Nine state governments defaulted on their debts, and hard-pressed European lenders cut the flow of new capital to the United States.

The American economy fell into a deep depression. By 1843, canal construction had dropped by 90 percent, prices and wages had fallen by 50 percent, and unemployment in seaports and industrial centers had reached 20 percent. Bumper crops drove down cotton prices, pushing hundreds of planters and merchants into bankruptcy. Minister Henry Ward Beecher described a land “filled with lamentation … its inhabitants wandering like bereaved citizens among the ruins of an earthquake, mourning for children, for houses crushed, and property buried forever.”

By creating a surplus of unemployed workers, the depression completed the decline of the union movement and the Working Men’s Parties. In 1837, six thousand masons, carpenters, and other building-trades workers lost their jobs in New York City, destroying their unions’ bargaining power. By 1843, most local unions, all the national labor organizations, and all the workers’ parties had disappeared.