Specie Circular and the Election of 1836
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Internet Biography of Andrew Jackson
Continued from French Debt, Economy, and Texas
After the transfer of U.S. Treasury funds from the Bank of the United States to a variety of state banks, the U.S. economy recovered and then boomed. Banks around the nation began issuing paper bank notes (money, more or less) backed by little in the way of solid deposits other than other banks' notes and mortgages. This money was used for land and financial speculation, as already discussed. Much of that land speculation involved the sale of lands that had been forcibly taken from the native Indian tribes that had owned them. Federal sales were typically of large blocks of land, which speculators would then subdivide and sell at a profit to settlers and smaller speculators. Andrew Jackson himself had spent much of his life engaging in such land speculation.
However, President Jackson believed the inflation was not good for the nation because it would simply, eventually, result in a bust. He was old enough to have lived through several such credit-based boom and bust cycles. His options were limited. He hoped to eventually have the U.S. Treasury both issue paper money and act as its own bank. That idea, the Independent Treasury Bill, would not quickly pass Congress, where Bank of the U.S. proponents were still strong. He could not simply outlaw the private bank notes in favor of "hard" currency, silver and gold. The U.S.A. did not yet produce much gold or silver; what little that circulated originated in other nations. The economy would not function at all on a hard metal money standard.
His device was to issue what was known as the Specie Circular, on July 11, 1836, the last year of his Presidency. It required that payment to the U.S. government for public lands could only be made in silver and gold. This made people think about the true value of their bank notes. Most banks stopped redeeming bank notes for hard currency, even with discounts (dispersing say $0.80 of silver for a $1.00 bank note). Speculators who had borrowed money to buy real estate with the intent of "flipping" it to a "greater fool" were stuck with unsellable lands and loans that could not be paid. Many banks went under, as did many private fortunes, big and small.
Meanwhile Jackson's anointed successor, Martin Van Buren, was running for President, saddled with another Jackson intimate as his Vice President candidate, Richard M. Johnson. The opposition had now regrouped into a new Whig Party. At that time "Whig" was a term still associated with the American Revolution. The Whigs ran several regional candidates, hoping that many Democrats would defect based on regional preferences. Many voters did, but Van Buren still prevailed.
Note that South Carolina still did not choose its Electors by a popular vote; its state legislature gave Willie Mangum his Electoral College votes. Another anomaly of election is that Richard Johnson received less electoral votes than Van Buren, so he had to be chosen Vice President by the U.S. Senate.
Andrew Jackson turned over the White House to Martin Van Buren. He had long been ill, and was urged to remain in Washington by friends who thought the return trip to the Hermitage in Tennessee would kill him. He packed up his belongings, including race horses and slaves, and endured the long trip home.
next: Panic, Debts, and Death
Main source: The Life of Andrew Jackson by Marquis James, Bobbs-Merrill company, 1938.
Learn more: President Andrew Jackson main page
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