Specie Circular

The Specie Circular (Coinage Act) was an executive order issued by U.S. President Andrew Jackson in 1836 and carried out by President Martin Van Buren. It required payment for government land to be in gold and silver.^[1]

History

The Act was a reaction to the growing concerns about excessive speculations of land after the Indian removal, which was mostly done with soft currency. The sale of public lands increased five times between 1834 and 1836. Speculators paid for these purchases with depreciating paper money.^[2] While government law already demanded that land purchases be completed with specie or paper notes from specie-backed banks, a large portion buyers used paper money from state banks not backed by hard money.^[3]

Executive order

On July 11, 1836, Jackson ordered Secretary of the Treasury Levi Woodbury to issue the Specie Circular. After August 15, the government refused to take anything but gold and silver specie in exchange for public lands. It did make a special exception to also accept certain types of Virginia scrip. The executive order did allow for legitimate settlers (non-speculators) to use paper until December.^[4]

Consequences

As one of Jackson's last acts in office, the consequences of the executive order fell mostly on his successor Martin Van Buren. The devaluation of paper currency only increased with Jackson's proclamation. This sent inflation and prices upwards. Many at the time blamed the Specie Circular for the rise in prices and the following Panic of 1837. Cries of "rescind the circular!" went up and former President Jackson sent word to Van Buren asking him not to rescind the act. 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. Others, like Nicholas Biddle believed that Jackson's defeat of the Second Bank of the United States was directly responsible for the irresponsible creation of paper money by the state banks which had precipitated this crisis.^[5]

Democratic split

The Democratic party split in two ways regarding the executive order. Some, like Thomas Hart Benton, support the use of sound money. The Locofoco wing of the party also agreed with Benton. Senators Nathaniel P. Tallmadge and William C. Rives supported the other side of the party, in favor of paper money.^[6] In the United States House of Representatives, John Bell even challenged his own party member, James K. Polk, for his position as Speaker of the House of Representatives over the issue.^[5]

References