The 1830s were a decade of enormous importance in American economic history. A disproportionate amount of attention has been paid to the Panic of 1837. The Crisis of 1839, however, led to four years of deflation and depression. This paper shows that events in 1839 followed a different path than events in 1837. Domestic, rather than international forces, played a key role in the origins and duration of the crisis. The critical element was the massive increase in state borrowing after 1836, and the subsequent collapse of internal improvement projects in the west and south in the summer 1839. This was an American cycle of events.