Bank Issue in The United States 19th Century

b) printed far more paper money that was justified by their reserves of specie

                        5. Alarmed by these practices, Jackson in 1836 issued his specie circular

a) he instructed federal land agents to accept payment for public lands only in gold or silver

            F. panic of 1837 and its effects

1. Soon after Jackson and his second term, the nation experienced a financial crisis noticed the panic of 1837

                        2. Causes: Jackson’s specie circular was the immediate cause of the panic

3. State banks, unable to meet the demand for specie, closed their doors, thus bringing on the panic

                        4. Other basic causes of the panic were as follows:

a) wildcat banks had made loans to land speculators, who hoped to sell the land at a higher price

b) however, the speculators found no purchasers and were unable to repay their loans

                                    c) the banks were left with large noncollectable debts

d) Western states, in particular, had recklessly floated bond issues to finance construction of turnpikes and canals that proved to be unnecessary and unprofitable

                        5. Many investors in such projects lost all that they had invested

6. Independent treasury system: Martin Van Buren, Jackson’s friend and successor of the president, did little to case the panic and the ensuing depression

7. However, to safeguard government funds, he did influence Congress to pass the Independent treasury act

8. By this law, the government established sub treasuries in various cities and kept its funds in its own safety vaults

9. Election of 1840: blame for the panic and oppression, Van Buren was swept from office in the election of 1840

a) the leagues want easily following a campaign marked by a ballyhoo and slogans such as “Van, Van is a used-up man” and “Tippecanoe and Tyler too”

10. General William Henry Harrison, Victor over the Indians at the Battle of Tippecanoe, became president, and John Tyler became vice president

            G. significance of the war against the bank

1. The destruction of the second Bank of the United States was a sectional victory for the west and south over the Northeast

a) to Jackson’s supporters, it was also a victory of democracy— of the common people over a powerful economic monopoly

2. Jackson’s war against the bank left the American people with a heritage of distrust for any central bank

3. For over three quarters of a century, the United States had no centralized banking system

4. Won in 1913 Congress established the Federal Reserve system, every effort was made to gain the advantages of sound banking practices without the disadvantages of concentrating banking power in the hands of a few private individuals