History Timeline 1830s

Photo above: Independence Rock on the Oregon Trail. First mentioned by Parker in 1835, and carries an inscription on the rock with the names of early trappers and explorers. Photo William H. Jackson, circa 1870. Right: Painting by Percy Moran, 1912, reflects the intensity of the battle of the Alamo. Photo courtesy Library of Congress.

Alamo

U.S. Timeline - The 1830s

Conquering the West



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  • Timeline

  • 1836 - Detail

    July 11, 1836 - The Specie Act is issued by executive order of President Andrew Jackson. This act would lead to the failure of the economy of land speculation and the Panic of 1837.

    Specie Act

    President Andrew Jackson had specific ideas about how to handle the economy that were controversial, while maintaining good overall goals, i.e. to eliminate the national debt. He defunded the Second Bank of the United States in 1832 and withdrew ten million dollars of government money from it and deposited the money in state banks and private institutions. Problem was, those institutions began loaning money, and basically printing currency, in order to loan speculators in public land purchases the money needed to corner the settler land market. Since many private banks did not have hard currency to back their paper, even though that had been the requirement of specie-backed state institutions, this led to rampant speculation on public land acquired after Indian removal.

    Between 1834 and 1836, five times the amount of public lands had been sold than in prior years. This caused high inflation and prevented many actual settlers from buying land at reasonable prices. Speculation was so large that by January 1, 1836, bank deposits had risen to $251,000,000 ($61m in 1930), but loans and discounts now far outpaced that capital at $457,000,000 ($200m in 1930) with notes of $140,000,000 ($61m in 1930) more. Jackson had, however, been successful at one large goal, the national debt had been eliminated as of January 1, 1835. This gave him additional credibility within some circles to enact further reforms.

    So while Jackson's goals were seemingly good, i.e. to curb inflation and speculation, eliminate that national debt, plus guard against the declining value of paper currency, the issuance of the Specie Act or Specie Circular by Executive Order on July 11, 1836, actually made the problem worse. The act required payment in gold and silver for western public land purchases of over three hundred and twenty acres, which many poor settlers did not have, and it caused a run on those previous commodities, that precious gold and silver, of which some banks eventually did not have the amounts needed, and rippled into a further devaluation in paper currency, thus causing in part, the Panic that would ensue in 1837.

    Note: The first paper currency backed by the U.S. Treasury did not exist until 1861. Yes, there was Revolutionary War currency, known as Continentals, but that ceased to have any value by 1781. Today's currency, dollar bills in $1-$100 dollar denominations, is known as Federal Reserve notes, printed by the Bureau of Engraving and Printing, a U.S. Treasury department. United States coins were first minted in 1792.


    Reaction to the Executive Order


    When communicated to the Senate on December 14, 1836, members in opposition, including Daniel Webster, Senator from Massachusetts and former head of the Senate Finance Committee, began to formulate resolutions for its elimination with the beginning of a long speech about his disagreement with the Executive Order. Despite this speech, the Specie Circular would not be repealed by a joint resolution of Congress until May 21, 1838.

    Webster on December 21, 1936 in Senate debate - "Mr. PRESIDENT : The power of disposing of this important subject is in the hands of gentlemen, both here and elsewhere, who are not likely to be influenced by any opinions of mine. I have no motive, therefore, for addressing the Senate, but to discharge a public duty, and to fulfil the expectations of those who look to me for opposition, whether availing or unavailing, to whatever I believe to be illegal or injurious to the public interests. In both these respects, the Treasury order of the llth of July appears to me objectionable. I think it not warranted by law, and I think it also practically prejudicial. I think it has contributed not a little to the pecuniary difficulties under which the whole country has been, and still is, laboring; and that its direct effect on one particular part of the country is still more decidedly and severely unfavorable..."

    Most members of Jackson's own cabinet did not agree with the Executive Order.


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    Text of Specie Act


    Circular From the Treasury that Gold and Silver Only Be Received in Payment for the Public Lands

    Treasury Department, July 11, 1836

    In consequence of complaints which have been made of frauds speculations, and monopolies, in the purchase of the public lands, and the aid which is said to be given to effect these objects by excessive bank credits, and dangerous if not partial facilities, through bank drafts and bank deposits, and the general evil influence likely, to result to the public interests, and especially the safety of the great amount of money in the Treasury, and the sound condition of the currency of the country, from the further exchange of the national domain in this manner, and chiefly for bank credits and paper money, the President of the United States has given directions, and you are hereby instructed, after the 15th day of August next, to receive payment of the public lands nothing except what is directed by the existing laws, viz.: gold and silver, and in the proper cases, Virginia land scrip; provided that, till the 15th of December next, the same indulgences heretofore extended as to the kind of money received may be continued for any quantity of land not exceeding 320 acres to each purchaser who is an actual settler, or bonafide resident in the State where the sales are made.

    In order to insure the faithful execution of these instructions, all receiver are strictly prohibited from accepting for land sold, and draft, certificate, or other evidence of money or deposit, though for specie, unless signed by the Treasurer of the United States, in conformity to the act of April 24, 1820. And each of those officers is required to annex to his monthly returns to this department, the amount of gold and of silver respectively, as well as the bill received under the foregoing exception; and each deposit bank is required to annex to every certificate given upon a deposit of money, the proportions of it actually paid in gold, in silver, and in bank-notes. All former instructions on this subjects, except as now modified, will be considered as remaining in full force.

    The principal objects of the President, in adopting this measure, being to repress alleged frauds, and to withhold any countenance or facilities in the power of the government from the monopoly of the public lands in the hands of speculators and capitalists, to the injury of the actual settlers in the new States, and of emigrants in search of new homes, as well as to discourage the ruinous extension of bank issues and bank credits, by which those results are generally supposed to be promoted, your utmost vigilance is required, and relied on, to carry this order into complete execution.

    Levi Woodbury, Secretary of the Treasury

    Image above: Cartoon drawing titled "Who'll Have the Specie," which spoke of concern of hard currency in the United States and England, 1837, Henry R. Robinson. Courtesy Library of Congress. Image below: Lithograph of the Panic of 1837, Specie Claws, 1838/9, Henry Dacre and Henry R. Robinson. Courtesy Library of Congress. Info Source: Infobase Learning; Ohio History Central; "Andrew Jackson, Banks, the Panic of 1837," Lehrmaninstitute.org; Wikipedia Commons; Library of Congress; University of California; Britannica.com; Federal Reserve Bank.


    Panic of 1837





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