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Apparent Prosperity.—The Specie Circular.-The Surplus Funds.-Sus

pension of Specie Payments.—Speculation.-Special Session of Con. gress.—The Sub-Treasury.--State Indebtedness.


The last year of Jackson's administration appeared to CHAP. be one of very great national prosperity. The public debt had been cancelled two years before, and there were 1837. nearly forty millions of dollars of surplus. This prosperity was fallacious in the extreme.

The State Banks, called in derision the “Pets," with whom the deposits had been placed, loaned money freely, with the expectation that they should continue to have the use of the public funds until they were called for by the Government. That time seemed to be distant, as its revenue was greater than its current expenses.

Other banks sprang into existence, until the number amounted, throughout the land, to seven hundred and fifty. These institutions had very little gold or silver in their vaults, as a means to redeem the notes with which they flooded the country, giving a fictitious value to every thing that was bought or sold. They rivalled each other in affording facilities for the wildest schemes of speculation.

The public lands became an object of this speculation, until the sales amounted to millions in a month. Two ucts-the one of the late President; the other of Con


CHAP. gress--combined to hasten the crisis. President Jackson

in order to restrain the undue sales of the public lands, 1837. had issued, through the Treasury Department, an order

known as the Specie Circular, requiring the collectors

at the offices to receive only gold and silver in payments July, 1836.

for land. Six months later, Congress passed a law to distribute among the States the government funds, on deposit in the banks. They were thus forced to call in their loans to meet this demand, while the Specie Circular arrested the circulation of their notes, and brought them back to their counters, to be exchanged for gold and silver. Within six months after this distribution was ordered, the business of the whole country was prostrated : all improvements ceased, and twenty thousand laboring men were, within a few weeks, thrown out of employment in New York City alone, where the failures amounted to one hundred millions of dollars, while those of New Orleans

were as great in proportion, being twenty-seven millions. Mar. A few weeks later, the banks of New York City suspended

specie payment; an example which the other banks of the country hastened to follow.

Previous to the suspension of payments, a large and respectable committee of merchants of New York visited Washington, to lay before the new President the state of the country. Similar representations went from almost every section of the land. The President denied the request of the committee to rescind the Specie Circular, but proposed to call a Special Session of Congress, on the first Monday of the following September.

The extent to which speculation raged seems almost fabulous. The compromise tariff had nearly run its course, and the duty arrived at its minimum ; foreign merchandise was imported in unheard-of quantities, thus ruining domestic industry ; internal improvements, because of the facility in obtaining loans, were projected to an extent almost without limit; the public lands were bought by





the millions of acres, and cities and villages were multi- CHAP. plied on paper by hundreds ; and stranger still, the sites of these prospective cities, divided into lots, were fre- 1837. quently made the basis of money transactions.

A few months before, the General Government was free from debt, and had a surplus of forty millions. Now the surplus had been given to the States ; the importers had neither gold nor silver to pay duties, and the Government itself was deprived of the means to defray its current expenses.

When Congress assembled, the President made no Sept. suggestion as to the manner in which the commercial embarrassments of the country might be relieved, on the ground that the General Government was unauthorized by the Constitution to afford such relief. He was therefore in favor of the people taking care of themselves. The message contained, however, two recommendations ; one the issue of Treasury notes, to relieve the Government's own embarrassments, the other an Independent Treasury for the public funds. The object of the latter was to avoid the liability of loss by depositing the public moneys in banks. These treasuries were to be located at suitable places; the sub-treasurers to be appointed by the President, and to give bonds for the proper fulfilment of their duties.

The measure was opposed, lest the withdrawal of so much gold and silver from circulation would injure commercial operations. The bill failed in the House, though it passed the Senate. Three years later it was established ; the next year repealed—then re-enacted, five years after, and is still the law of the land.

The Legislatures of many of the States became imbued with the spirit of speculation, and as a means to obtain loans, issued State stocks to the amount of one hundred millions. This was done under the laudable pretext of developing their resources, by internal improvements.

CHAP. Eight of the States failed to pay the interest on these XLIX.

loans or stocks. In time they recovered from the shock, 1838. and but one of them, Mississippi, and one territory, Florida,

repudiated their debt and defied their creditors. These loans were principally obtained in Europe, where, on the subject of these failures to pay, great indignation was expressed. The whole nation was dishonored ;-two years later, when the National Government wished to obtain a loan, her agents could not induce a capitalist in all Europe to risk a dollar in such investment.

As the administration of Van Buren drew to a close, the financial condition of the country did not much improve. However, his party nominated him, as well as VicePresident Johnson, for a second term. The opposing candidate was William Henry Harrison, of Ohio, whom we

have seen as a popular general of the north-west during 1812. the last war, as well as filling many civil offices with

honor to himself and profit to the country. On the same

ticket was John Tyler of Virginia, as the candidate for 1840. Vice-President. Harrison was elected by a very large

majority. The commercial disasters of the country were generally attributed to the interference of the Government with the currency ; this belief had caused a great revulsion in the public mind.



The Inauguration.—Death of Harrison.-Tyler President.-Sub-Treasury

Act repealed.-Bankrupt Law.-The Bank Charters; their Vetoes.Proposition to treat with Great Britain.-Insurrection in Canada.—The Caroline.—Trial of McLeod.-Boundary Disputes in Maine.--Lord Ashburton.—Treaty of Washington.—Questions of Visit and Impressment.—Exploring Expedition.—Texas Colonization; struggles.—Independence.-Siege of Goliad and the Alamo.—Davy Crocket.—Massacre of Prisoners.-Battle of San Jacinto.-Houston President.-Question of Annexation in Congress.—Texas Annexed.—Disturbances in Rhode Island.-Iowa and Florida become States.



An immense concourse of people, many of them from CHAP. distant parts of the Union, assembled at Washington to witness the inauguration of General Harrison. His ad- 1841. dress on that occasion was replete with wisdom ; liberal

Mar. and generous, and patriotic in its tone ; a transcript of the sincerity of his own heart. His selection of officers to compose his Cabinet was unanimously confirmed by the Senate ; at its head was Daniel Webster, as Secretary of State.

The certainty of a change of policy in the measures of the General Government inspired confidence in the commercial world, and the nation, made wiser by adversity, began to hope. But the expectations of the President's friends were doomed to be sadly disappointed. His first official act was to issue a proclamation, calling a special session of Congress, to meet on the 31st of the

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