In the years after the war of 1812, the United States initiated a series of banking reforms meant to control the ebb and flow of the economy in order to stave off the slumps that occur every few decades.

As Martin Van Buren began his presidency the financial bigwigs were in an uproar over the rumors of an oncoming financial stagnation. A number of ideas were advanced for solving this problem, but the economy continued to decline during the administration.

In addition to a trade deficit, banks were offering credit to all comers and land speculation was out of control. Hard currency was leaving the country at high rates while businessmen were handing out credit in their own personal scrip.

Throughout the 1830s, land offices were experiencing amazing growth in business, and fly by night banking operations were shooting up like dot-coms at a Stanford graduation party. In 1836, land purchases increased ten times over the previous year. This led Andrew Jackson to release the Specie Circular, which was an Executive Order forcing all land offices to accept payment only in gold or silver.

Since most banks were operating on the credit of other investors, and had no hard backing of their own, the level of borrowing declined preciptiously. Numerous loans defaulted and the level of land purchasing plummeted.

Soon scores of financial houses collapsed rapidly, taking with them the fortunes of thousands, leading to a general collapse of prices and a shockwave throughout the economy.

The banking industry, and the economy in general, would not recover for almost six years.

The panic resulted from a combination of factors: over-speculation in land, unsound financing by state governments, the disturbing effects of the absence of the B.U.S. (Bank of the United States), and the Specie Circular. Other factors could be mentioned, and it would be difficult to detrmine how much weight shoul be given to any one of these causes. The Specie Circulation was issued in mid-summer of 1836 by President Jackson. This prevented payment for public lands in any other money than gold and silver and certain paper money that was as sound as the gold and silver specie. As almost all sales had been paid for in bank notes of questionable soundness, this order from Jackson brought a sharp decline in the number of sales. Fraud and speculation in public lands had become a grave public issue. The Specie Circular was Jackson's method of protecting the United States treasury from accumlating vast amounts of greatly depreciated paper money. The Specie did precipitate the Panic of 1837, but it did not cause it.

A depression set in that lasted throughout Van Buren's term in office. This alone would have made his administration unpopular, but there were other factors that further aggravated an early hopeless situation. Van Buren was a city man of considerable polish and wealth. He had aristocratic tastes and was without the "common touch" of Andrew Jackson. Any man in the President's office will be the victim of depression that lasts throughout his term, but Van Buren might have become unpopular without a depression.

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