how was the panic of 1837 resolved
Not only was the United States out of debt, but largely through this amazing sale of the public domain, she was piling up a surplus in her treasury. Most members of the cabinet, many of whom were deeply involved in the speculation themselves, opposed the plan, and it was clear that Congress, many of whose members were equally involved, would not stand for it." The Panic of 1837 seemed to vindicate Nicholas Biddle, who had warned that without the BUS to monitor credit and control currency, the economy would run rampant and finally wreck. "In a management move that would prove not as helpful to the bank as his other changes, Biddle distanced himself from the secretary of the Treasury. Instead of extending credit, he curtained it drastically, hoping to induce a recession that would force Americans, and Jackson, to beg for mercy." The 17 percent drop in price that ensued between then and the end of April, or from 13.8 cents to 11.5 cents per pound, appears to have been a result of overproduction in the United States and heightened competition in the British market from India, whose cotton exports underwent a rapid expansion at precisely this time. Biddle was the enemy. Historian Charles Sellers wrote: "National Republicans pressed Biddle to request recharter before the election, arguing that Jackson would either have to acquiesce or be defeated for destroying an invaluable institution. Rousseau observed: "The Panic of 1837 was the culmination of a series of policy shifts and unanticipated disturbances that shook the young U.S. economy at the core of its financial structure - the banks of New York City. 63 Economic historian Charles Sellers wrote: "The historic upwelling of a new American jingoism satisfied many needs. The Second Bank of the United States might have survived had it not decided directly to test Jackson's power. Some banks cautiously resumed the redemption of their notes. Jackson also worried about homesteaders' being seduced into debt. 97 Biddle may have been willing to fight, but he was no match for the old general. When bills are redeemable at sight in specie, banks will hoard bullion to meet the demands at their counter; the community prefer paper meantime as their more convenient medium of traffic, since the sound currency of a nation is not gold, but the paper which is as good as gold. The Founding Fathers never intended it for `ordinary cases,' he insisted. Those defaults, in turn, strained Jackson's finances." As for alternatives to Biddle's bank, Taney contended that state banks, `judiciously selected and arranged,' would be able to perform the fiscal tasks of the federal government and supply `a general currency as wholesome and stable as that of the United States Bank.' But when Clay, Webster, and Biddle insisted on making a contest over the bank, he couldn't resist such a tempting prospect. 151 Daniel Walker Howe wrote: "Repercussions of the panic extended throughout the economy. Historian Wilentz wrote: "As early as July, he warned the Bank's New York branch of his plans to `crush the Kitchen Cabinet.' There had been nothing like it before in all the history of business in America. In their arguments against the bullionist party, they talked as if they believed that, if the public Treasury did its own business, and did it in gold, it would get possession of all the gold in the country, and that this would give it control of all the credit in the country, because the paper issue was based on gold." I stated to the above gentleman that, in my opinion, unless you had a satisfactory assurance that your application at the next Session would be successful, you had better not make it. It will be difficult, when Congress comes finally to decide the question, to obtain a majority against the accumulation of topics of opposition. Secretary Taney first promulgated the plan officially in a letter which was sent to the ways and means committee when bank note shaving was at its height and every State currency yielded its clip of discount to the broker. It engulfed all classes and all phases of our economic life within its toils; and for seven long years the people of this land struggled to free themselves from its oppression." Jackson took the strongest interest in the passage of these bills so as to get his shining coins into the people's pockets; and going to Tennessee in the recess he toasted gold and silver at a public dinner as "the true constitutional currency of the United States," which he said could protect our labor without the need of a national bank. Taney promptly ordered the removal." But all the speculators and those largely indebted, want more paper, the more it depreciates the easier they can pay their debts....Check the paper mania and the republic is safe and your administration must end in triumph....I say, lay on, temporize not, it is always injurious." 91 Biddle thought he could break Jackson, in Sean Wilentz's words by causing "general hardship that would agitate state banks other than the pets and force Congress to step in on the BUS's behalf." The twenty three pet banks with which Kendall organized the new system in 1833 were all too few to hold custody of the public moneys. Larry Schweikart and Michael Allen noted that in 1829, Jackson had commissioned Amos Kendall to devise an alternative to the Bank of the United States. ", Economically, Jackson's judgement regarding the transfer of funds to pet banks was flawed. In trying to correct the problems of speculation, Jackson and his allies managed to make things worse and set the stage for a major economic contraction. 3, The death of the first Bank of the United States was almost prevented. But ever since I read the history of the South Sea bubble I have been afraid of banks. `It is easy to conceive,' wrote Jackson, `that great evils to our country and its institutions might flow from such a concentration of power in the hands of a few men irresponsible to the people.' He argued that "the effect of the distribution was appreciable primarily, and almost entirely, because a small portion of it was a quasi-increase in the demand for hand-to-hand specie by the state governments, a demand that had to be fulfilled by the commercial banking system. People who had no intention of settling bought large tracts of land from the federal government and paid for them with paper money borrowed from local banks in ever greater amounts." 154, The Panic of 1837 helped precipitate a political reorganization along economic lines. An independent treasury system emerged when President Andrew Jackson transferred in 1833 government funds from the Bank of the United States to state banks. It said that control of the institution rested in the hands of wealthy. Walter A. McDougall, Throes of Democracy, p. 68. `My vow,' he pledged, `shall be to pay the national debt, to prevent a monied aristocracy from growing up around our administration that must bend to its views, and ultimately destroy the liberty of our country." 83 Historian H. W. Brands wrote that Jackson "dangled the possibility of creating a new national bank, confined to the District of Columbia, even as he polled his cabinet secretaries on the feasibility of relying on state banks to handle the fiscal affairs of the federal government. President John Tyler signed the bill. A primary cause of the panic was the coinage of silver alongside gold in the U.S. currency system. Jackson blamed the "rich and powerful" for using the "government [for] their self purposes." The opposition tried to keep up by running articles in the Daily National Intelligencer, circulating pamphlets, and staging their own celebrations. search. They should not be confused with some of the older banks in the great cities, whose notes commanded as much respect as those of the BUS." After the panic of 1837, when many investors suffered heavy losses, the exchange began to demand that companies disclose to the public information about their finances as a condition of offering stock. Arousing Jackson's always sensitive manly honor, Kendall claimed that unless he moved decisively, his backers would decide he was `wanting either in the courage or in the good faith' to finish what he had started." 89 Sean Wilentz wrote: "Taney, placed in charge of the transit of funds, advanced with care - and with one eye fixed warily on Nicholas Biddle." ", Jackson biographer Donald B. Cole wrote: "Despite their uncertain position, Jackson and Treasury Secretary Taney took the offensive as soon as Congress convened. 12 House Speaker Henry Clay also was hurt by the financial contraction caused by the bank. Suddenly in the spring of 1819, as the Bank's pressure was intensified by a similar financial crisis in Britain, world commodity prices collapsed." Its superior credit, the establishment of its branches at all the great cities of the Union, the use of its notes, as the law permitted, in all payments to the government, had given to its circulation the preponderance. According to his reasoning, public deposits at the Bank had increased by some $2.25 million during that time, and the loans and discounts of the Bank had decreased by over $4 million. BANK WAR. Now in power for 16 years, many Jeffersonians began to see the necessity of the bank that Federalists had long championed. If he followed the counsels of moderation he would only confuse the campaign by inviting the voters to discuss an issue as yet unresolved. Ironically, Jackson, who opposed national investment in internal improvements effectively stimulated irresponsible spending on such projects by state governments that lacked the resources to pay for them. But then another serious economic blow fell: the Panic of 1839. The common people - farmers, mechanics, and laborers - favored the Jacksonian policy. Key factional shift that allowed the Second bank of the charter rights of the bank was not a matter mere. 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