THE SPECIE CIRCULAR.
The issue of the Treasury order, known as the "Specie Circular," was
one of the events which marked the foresight, the decision, and the
invincible firmness of General Jackson. It was issued immediately
after the adjournment of Congress, and would have been issued before
the adjournment, except for the fear that Congress would counteract
it by law. It was an order to all the land-offices to reject paper
money, and receive nothing but gold and silver in payment of the
public lands; and was issued under the authority of the resolution
of the year 1816 which, in giving the Secretary of the Treasury
discretionary authority to receive the notes of specie paying
banks in revenue payments, gave him also the right to reject them.
The number of these banks had now become so great, the quantity
of notes issued so enormous, the facility of obtaining loans so
universal, and the temptation to converting shadowy paper into real
estate, so tempting, that the rising streams of paper from seven
hundred and fifty banks took their course towards the new States,
seat of the public domain--discharging in accumulated volume there
collected torrents upon the different land-offices. The sales were
running up to five millions a month, with the prospect of unbounded
increase after the rise of Congress; and it was this increase from
the land sales which made that surplus which the constitution had
been burlesqued to divide among the States. And there was no limit
to this conversion of public land into inconvertible paper. In the
custom-house branch of the revenue there was a limit in the amount
to be received--limited by the amount of duties to be paid: but in
the land-office branch there was no limit. It was therefore at that
point that the remedy was wanted; and, for that reason, the "Specie
Circular" was limited in its application to the land-offices; and
totally forbade the sale of the public lands for any thing but hard
money. It was an order of incalculable value to the United States,
and issued by President Jackson in known disregard of the will both
of the majority of Congress and of his cabinet.
Before the adjournment of Congress, and in concert with the
President, the author of this View had attempted to get an act of
Congress to stop the evil; and in support of his motion to that
effect gave his opinion of the evil itself, and of the benefits
which would result from its suppression. He said:
"He was able to inform the Senate how it happened that the sales
of the public lands had deceived all calculations, and run up
from four millions a year to five millions a quarter; it was
this: speculators went to banks, borrowed five, ten, twenty,
fifty thousand dollars in paper, in small notes, usually under
twenty dollars, and engaged to carry off these notes to a great
distance, sometimes five hundred or a thousand miles; and there
laid them out for public lands. Being land-office money, they
would circulate in the country; many of these small notes would
never return at all, and their loss would be a clear gain to
the bank; others would not return for a long time; and the bank
would draw interest on them for years before they had to redeem
them. Thus speculators, loaded with paper, would outbid settlers
and cultivators, who had no undue accommodations from banks,
and who had nothing but specie to give for lands, or the notes
which were its real equivalent. Mr. B. said that, living in a
new State, it came within his knowledge that such accommodations
as he had mentioned were the main cause of the excessive sales
which had taken place in the public lands, and that the effect
was equally injurious to every interest concerned--except the
banks and the speculators: it was injurious to the treasury,
which was filling up with paper; to the new States, which were
flooded with paper; and to settlers and cultivators, who were
outbid by speculators, loaded with this borrowed paper. A return
to specie payments for lands is the remedy for all these evils."
Having exposed the evil, and that to the country generally as well
as to the federal treasury, Mr. B. went on to give his opinion of
the benefits of suppressing it; and said:
"It would put an end to every complaint now connected with
the subject, and have a beneficial effect upon every public
and private interest. Upon the federal government its effect
would be to check the unnatural sale of the public lands to
speculators for paper; it would throw the speculators out of
market, limit the sales to settlers and cultivators, stop
the swelling increases of paper surpluses in the treasury,
put an end to all projects for disposing of surpluses; and
relieve all anxiety for the fate of the public moneys in the
deposit banks. Upon the new States, where the public lands are
situated, its effects would be most auspicious. It would stop
the flood of paper with which they are inundated, and bring
in a steady stream of gold and silver in its place. It would
give them a hard-money currency, and especially a share of the
gold currency; for every emigrant could then carry gold to the
country. Upon the settler and cultivator who wished to purchase
land its effect would be peculiarly advantageous. He would be
relieved from the competition of speculators; he would not have
to contend with those who received undue accommodations at
banks, and came to the land-offices loaded with bales of bank
notes which they had borrowed upon condition of carrying them
far away, and turning them loose where many would be lost, and
never get back to the bank that issued them. All these and many
other good effects would thus be produced, and no hardship or
evil of any kind could accrue to the meritorious part of the
country; for the settler and cultivator who wishes to buy land
for use, or for a settlement for his children, or to increase
his farm, would have no difficulty in getting hard money to make
his purchase. He has no undue accommodations from banks. He
has no paper but what is good; such as he can readily convert
into specie. To him the exaction of specie payments from all
purchasers would be a rule of equality, which would enable him
to purchase what he needs without competition with fictitious
and borrowed capital."
Mr. B. gave a view of the actual condition of the paper currency,
which he described as hideous and appalling, doomed to a
catastrophe; and he advised every prudent man, as well as the
government, to fly from its embrace. His voice, and his warning,
answered no purpose. He got no support for his motion. A few
friends were willing to stand by him, but the opposition senators
stood out in unbroken front against it, reinforced largely by the
friends of the administration: but it is in vain to attribute the
whole opposition to the measure merely to the mistaken opinions of
friends, and the resentful policy of foes. There was another cause
operating to the same effect; and the truth of history requires
it to be told. There were many members of Congress engaged in
these land speculations, upon loans of bank paper; and who were
unwilling to see a sudden termination of so profitable a game. The
rejection of the bill it was thought would be sufficient; and on
the news of it the speculation redoubled its activity. But there
was a remedy in reserve for the cure of the evil which they had
not foreseen, and which was applied the moment that Congress was
gone. Jackson was still President! and he had the nerve which the
occasion required. He saw the public lands fleeting away--saw that
Congress would not interfere--and knew the majority of his cabinet
to be against his interference. He did as he had often done in
councils of war--called the council together to hear a decision.
He summoned his cabinet--laid the case before them--heard the
majority of adverse opinions:--and directed the order to issue. His
private Secretary, Mr. Donelson, was directed to prepare a draught
of the order. The author of this View was all the while in the
office of this private Secretary. Mr. Donelson came to him, with
the President's decision, and requested him to draw up the order.
It was done--the rough draught carried back to the council--put
into official form--signed--issued. It was a second edition of the
removal of the deposits scene, and made an immense sensation. The
disappointed speculators raged. Congress was considered insulted,
the cabinet defied, the banks disgraced. But the vindication of the
measure soon came, in the discovery of the fact, that some tens of
millions of this bank paper was on its way to the land-offices to be
changed into land--when overtaken by this fatal "Specie Circular,"
and turned back to the sources from which it came.