President Jackson’s response to growing concerns about excessive speculations of land after the Indian removal, was his Specie Circular.
The sale of public lands increased five times between 1834 and 1836. Speculators paid for these purchases with depreciating paper money.
Then on July 11, 1836, President Jackson ordered Secretary of the Treasury Levi Woodbury to issue the Specie Circular. With this act, the government would refuse to acept anything other than gold or silver in exchange for public lands after August 15, 1836, with the exception of legitimate settlers who could use paper money until December.
Because the order was one of President Jackson’s last acts in office, most of its consequences occurred during and were attributed to the Presidency of Martin van Buren.
The unexpected result was that of an even further devaluation of paper currency.
This sent inflation and prices upwards.
Then on May 10, 1837, banks in New York City suspended specie payments, meaning that they would no longer redeem commercial paper in specie at full face value.
This created what we refer to today as the “Panic of 1837.”
Banks collapsed, businesses failed, prices declined, and thousands of workers lost their jobs.
Cries of “rescind the circular!” were heard around the country as former President Jackson sent word to President Van Buren asking him not to rescind the order.
Jackson believed that it had to be given enough time to work.
Lobbying efforts, especially by bankers, increased in Washington in an attempt to revoke the Specie Circular.
Despite a brief recovery in 1838, the recession persisted for approximately seven years.
Unemployment may have risen to as high as 25% in some locales during the recession.
The years from 1837 to 1844 were, generally speaking, some of our nations worst years for the deflation of wages and prices.
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