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“Good Will Grow Out of the Evils That Have Swept Over Our Country” Summary: Andrew Jackson’s removal of federal deposits from the Second Bank of the United States into favored (“Pet”) state banks, and his Specie Circular of 1836 (causing government land deals to be transacted in gold) affected confidence in the value of bank notes. Foreign creditors (the British) called in American debts, and speculation ran rampant. In the Panic of 1837, Jackson’s chosen successor,
Martin Van Buren, was faced with a run on banks. Andrew Jackson. Autograph Letter Signed, to Colonel Maunsel White. Hermitage, Nashville, January 27, 1838. 3 pp. With free franked address leaf. Inventory# 12046 $30,000 “Good will grow out of the evils that have swept over our country. Banks will be brought to conduct their bus[i]ness within proper Banking principles— the government being separated from all Banks will be a godsend to the Banks, as well as the people. The great evil to both are, any connection with either, and the most experienced, and talented directors of our Banks, here, are in favor of the perpetual divorce of all Banks and the Government – this will give stability to the banks” Historical Background: His rosy view obscured the seriousness of the Panic’s effects. Unemployment, previously negligible, rose to approximately ten percent. Churches and charitable organizations established breadlines and soup kitchens, and mobs in New York City raided warehouses to secure food. Jackson sees it as a bitter but necessary step to separate political influence and “moneyed interests.” Van Buren planned even more structural change, proposing that independent financial institutions be created within the Treasury Department to handle government funds. Further, he called for the Treasury to conduct all transactions in specie (gold and silver). Jackson, writing here to his New Orleans cotton broker, supports this extension of his own philosophy: “ the influx of specie … will give a sufficient metalic circulation for the wants of labour, and the stability and security of the Banks, whilst they are left free to supply the wants of commerce founded upon the just principles of credit, whilst it will prevent over issues to wild speculation—the bane of all countries.” Like many plantation owners, Jackson was personally affected by unstable commodity prices, fluctuating currency, and bank failures. He writes, “Tennessee mony is in bad repute—Therefore when the cotton is sold we will expect to receive Louisiana money, or that of Eastern funds, either the Metropolis Bank of Washington City, or Banks in good credit in Baltimore, Philadelphia, or New-York—If an exchange for one thousand dollars of Tennessee notes can be affected on the sale of the cotton at the proper discount, we can use that sum here in payment of debts…” The downturn lasted for six years, and Van Buren thus lost in 1840. After the Democrats regained power, Jackson’s Tennessee protégé, James K. Polk, finally engineered passage of an independent treasury bill. From 1846 until the Federal Reserve System was created in 1913, it remained at the center of American political economy.
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