DISTRESS AND REACTION
Martin Van Buren came to office without the enthusiastic support of any
large segment of public opinion. The machine forces of the time and the
hearty recommendation of Andrew Jackson had been responsible for his
elevation. His position was very much like that of John Quincy Adams in
1825. If the East had preferred him to his predecessor, it was not
because the East proposed to surrender any of her interests; and if the
West liked him less than she had liked her hero, it was just because his
feelings and interests were suspected.
He had supported Jackson in the breaking-down of a stable civil service
in 1829, in order to ruin their common opponents, Adams and Clay. Now
Van Buren was to inherit the evils of the spoils system, and Adams,
Clay, and Webster were leading the attack upon him both in Congress and
in the country. Jackson's collector of the customs in New York defaulted
in the sum of $1,250,000 during the first year of Van Buren's term; and
to make matters worse the new appointee behaved quite as scandalously
the next year. Out of sixty-seven land officers in the West and South,
sixty-four were reported in 1837 as defaulters, and the United States
Treasury lost nearly a million dollars on their account. The Jacksonian
Democracy was certainly putting its worst foot foremost, and the great
leaders of the opposition held up their hands in horror at a system
which "reeked with corruption from center to circumference."
Van Buren had begun badly. But worse was to follow. The receipts from
federal land sales dropped from $24,000,000 in 1836 to $6,000,000 in
1837, and the total income of the Government declined from $50,000,000
to $24,000,000 in the same year; and the expenditures of the Treasury
outran the receipts during 1837 and 1838 by more than $21,000,000. A
deficit of $300,000,000 for two successive years in our time would not
be worse than the deficit of the unpopular successor of Andrew Jackson.
From 1833 to 1836 there had been an annual surplus equal sometimes to
the total expense of the Government. The national debt had been paid in
full and money had been loaned to the States without interest or
security. There was to be no more national debt and no more paying of
interest to hard-driving capitalists; but Van Buren borrowed $34,000,000
in two years to meet the ordinary expenses of his Administration.
The honors of the time were, and have since been, bestowed upon Jackson,
and all the blame of things was, and has since been, laid upon the
shoulders of Van Buren. But the fault was not Van Buren's. A number of
causes had produced this surprising and distressing state of affairs.
After the great success of the Erie and other canals in the East,
Western States entered upon an era of canal building which the richest
of communities could ill have borne. Railroads were beginning to create
markets for Eastern farmers. The Westerners, therefore, sunk millions of
their hard earnings in railways which paralleled their canals or
projected into wildernesses. Between 1830 and 1840 these ventures of the
West, from Michigan to Louisiana, absorbed hundreds of millions of
capital. Illinois borrowed $14,000,000 when her total annual income was
hardly more than $250,000; Mississippi borrowed $12,000,000 on a yearly
income a little less than that of Illinois. The States had mortgaged
their futures for decades to come. This was especially true of Western
communities; but Eastern States like Pennsylvania, Virginia, and South
Carolina were also in debt for similar amounts. Everybody thought the
resources of the United States were inexhaustible; and everybody seemed
willing to tax future generations beyond all precedent in order to
develop these resources.
The depositing of the federal funds in state banks by Jackson had
greatly stimulated speculation. Public interest in banks, already great,
increased enormously. Forty new banks were created in Pennsylvania in a
single year. State banks increased their capital and extended their
operations. In two years the bank notes in circulation increased from
$95,000,000 to $140,000,000; loans and discounts rose from $324,000,000
to $457,000,000. The National Bank, which had curtailed business in
order to embarrass the country and particularly President Jackson,
quickly changed its tactics, and, sailing under a charter from the State
of Pennsylvania, kept pace with its five hundred rivals. To be sure the
Federal Constitution forbade the States to issue bills of credit. But
the States incorporated banking companies which issued the forbidden
notes by the million, and the Supreme Court of the United States, now
that Marshall was dead and the personnel of its membership had undergone
a change, declared the practice lawful.
States indorsed or participated in the proceedings of the banks, the
banks loaned to other corporations or to private individuals on such
security as land, slaves, improvements already made, or the personal
credit of men otherwise deeply in debt. The flood of money was thus,
before 1837, invested in lands and houses or railroads and canals which
could neither pay dividends nor return the principal for several years.
It seemed that when the Federal Government paid the last of its debt,
the States eagerly pursued the opposite principle and created the
greatest debts possible.
Though the people of the United States joined in all these wild
ventures, they were not solely responsible. Europe, especially England,
had been anxious to lend. The Erie Canal had been built upon borrowed
capital, and it had paid good dividends. The old National Bank, now
going out of business, had placed $25,000,000 of its stock in Europe,
and the holders had received most liberal returns. American investments
were quoted as "excellent" by the Baring Brothers of London to their
thousands of customers. And why not? The Federal Government had recently
paid the last dollar of its two huge debts, more than $80,000,000 for
the cost of the Revolution and $110,000,000 for the cost of the War of
1812, and the rate of interest had often been as high as eight per cent.
Was there a similar example in all history? The bad reputation of
1783-1800 for debt-paying had been lived down.
Van Buren estimated the amount of money due by States and corporations
to English creditors at $200,000,000. His estimate was probably not
greatly exaggerated. Certainly as much as $12,000,000 in interest was
due each year to English creditors. The merchants of the great towns
regularly bought their goods on long time, sold them on time to the
shopkeepers of the villages and hamlets, and these in turn sold on
credit to their customers. Not less than $100,000,000 was thus
distributed over the country. It was due any day in London or Liverpool.
The world seemed to "take stock" in the new Republic, particularly when
the returns were large and prompt in appearing. And now that the Federal
Government was not a borrower, the States became the heirs of the
confidence of the capitalists who, not comprehending the difference
between the National and the State Governments in the United States,
expected that the authorities in Washington would bring due pressure to
bear on local authorities that might turn indifferent when crops were
bad.
All these things led to an inflated state of things. Jackson had seen
the dangerous tendency, and his specie circular had been applied in 1836
in the hope of mending matters. But the people who bought lands had no
gold or silver. The effect of the circular was to compel Western bankers
to call on their Eastern correspondents for metallic money. All the
specie in the Eastern vaults amounted to only $19,000,000, a sum not in
excess of what it had been twenty years before, when the paper money in
circulation was not half so great. Just as the West asked for more hard
money English bankers and other business men called sharply for payment
of outstanding debts due by leading business men in the East. Both
demands could not be met at the same time. The bubble had been pricked.
To make matters worse, the wheat crop of the Middle States and of the
South failed utterly, and the farmers were compelled to import grain on
credit for the next year's seeding. The cotton output was large, but the
price fell from twenty to ten cents a pound. Corn and meat were
plentiful in the West; the means of transportation were, however,
lacking. There was famine and plenty in the land at the same time.
Business came to a standstill, all forward movements stopped, and the
banks closed their doors.
From a winter of greatest plenty and most amazing expectations the
people, particularly the poor of the cities and mill towns, passed into
a summer and autumn of positive want and starvation. With flour at
twelve dollars a barrel, the New York price, and with wages declining
every day or industrial operations suspended altogether, the lot of the
worker was hard. Riots were of weekly occurrence, and the greatest
business houses of New York, Philadelphia, and even New Orleans, where
cotton was expected to save men, declared themselves bankrupt and closed
their doors. Men who had clamored against Jackson or Biddle in the time
of distress three years before now looked upon that crisis as only a
flurry. Everything seemed out of joint and the future gave no assurance
of speedy recovery. The East, which had condemned the West for their
stay laws against the panic of 1819, now clamored for a federal stay law
and urged Van Buren to suspend the specie circular. The President
refused to offer any relief, and other failures and other risks
followed. Before the summer had well begun every bank in the country
suspended specie payment, and a little later local business men's
associations issued notes or due bills in small denominations which were
accepted as money. East, South, and West the commercial and financial
panic held the country fast in its grip. Speculations fell flat,
obligations were void, and men turned to the simpler forms of life to
regain their equilibrium. Barter took the place of former methods of
exchange.
People blamed the banks; some cried out that the monopolistic methods of
business had been the cause. The Whigs maintained that the panic and
distress were due to the blunders and crimes of the party in power.
Benton in reply declared that the paper money and stock-jobbing systems
of the last few years had been the cause. Van Buren called Congress
together in extra session in September, 1837, in order, as he said, to
devise means of saving the Government itself from bankruptcy. But he
could not place the blame on the preceding Administration, as his
opponents delighted to do; he only said it was all because of
"over-action in all departments of business." Congress suspended the
distribution of the surplus revenue among the States, issued notes to
the amount of ten million dollars to meet the obligations of the
Government, and took measures for the safety of the public funds in
banks which could not pay their debts. Gradually during the next year
the signs of recovery appeared. Rise of prices in Europe, a good cotton
crop, and the passing of the panicky state of mind enabled the banks to
resume specie payments, and the mills of the East to open their doors.
But the public was in doubt whether the ruin of the National Bank, the
issuing of the specie circular by Jackson, or the lack of ability on the
part of Van Buren had been the cause of the calamities of the year 1837.
And as it took years for men and business houses to regain their former
mutual confidence, there was soreness and hesitation everywhere until
after 1840.
The financial situation was, therefore, the one thing with which Van
Buren had to deal during most of his term. After the emergency measures
had passed, he gave earnest attention to the enacting of a law which
would create responsible agencies in the larger cities for the receipt
and expenditure of the public moneys. The purpose was to avoid
concentration and monopoly such as the National Bank had maintained, and
to keep the control of the finances in the hands of the Government. It
was called the Independent Treasury system. The President pressed the
measure before a divided Congress and without the support of any
concerted or strong public opinion. To the surprise of many, Calhoun,
the bitterest of his enemies, came to his assistance. This meant the
support of most of the cotton and tobacco planters. Yet the measure
failed of passage during the sessions of 1837-38 and 1838-39.
Van Buren did not know how to appeal to the popular heart when powerful
congressional leaders and shrewd business men pressed too hard. He
simply adhered to his Independent Treasury Bill against all opposition,
fair and unfair. A group of conservative Democrats broke away from his
leadership in 1838 and deprived him of a majority; in the next Congress
he was no stronger, and the one measure of reform which he urged failed
to pass before June, 1840. Another legacy of Jackson, his "illustrious
predecessor," was a war with the Seminole Indians, who resisted removal
to the western frontier; and before 1842 the suppression of these
desperate natives and their slave allies, runaways from the Georgia
plantations, cost the Government $40,000,000, most of which had to be
borrowed at high rates of interest.
Even more threatening than the Seminole troubles was the Texas problem.
The last act of Jackson's official life was to recognize the
independence of that aspiring State. But this was only preliminary to
the real purposes of Texas and her agents, who pressed Van Buren in the
summer of 1837 for annexation to the United States; though these same
agents wrote home that if annexation did not succeed, the South would
break away from the Union, and that if it did succeed, the North would
withdraw from the federal compact. So that while Calhoun and his friends
aided the President in his financial measures, they at the same time
importuned him to help the South by adding another pro-slavery State to
the Union. This was not the first time this question had embarrassed a
president. As already seen, Clay had denounced Monroe for giving away
that princely domain; Benton and Van Buren had warred upon Adams and
Clay in 1826-28 for not compelling a restoration, and under this
pressure and that of the South in general, Adams had sought in vain to
purchase Texas; under Jackson the problem was several times taken up,
and as much as $5,000,000 was offered. Still the astute General had
steered clear of trouble when annexation "with war" was offered in 1836.
Van Buren likewise delayed and risked his Southern popularity. Meanwhile
a revolt against the British Government broke out in Canada, and
thousands of Americans along the border, from Maine to Wisconsin, lent
open assistance to their "oppressed" neighbors. Van Buren remained
strictly neutral. With much difficulty was the peace maintained, and at
the expense of many savage attacks upon the Administration for its
un-American policy and lack of sympathy with men who fought for
"freedom."
While the President was seeking to reform the national currency and
restrain the imperialistic tendencies of his countrymen, one great
State, New York, under the leadership of Silas Wright, was showing the
country what could be done locally to make banking safe. In 1829 a law
was enacted compelling every newly chartered bank to contribute a
certain percentage of its income to a common safety fund. The disasters
of 1837 showed these reserves to be too small, and in 1839 every bank in
the State was required to deposit with the Treasury securities enough to
protect all notes to be put into circulation. At the same time any group
of capitalists who would conform to the law might open a bank without
let or hindrance, which had the effect of putting financial operations
on simple business principles, removing the political motive which had
wrought so much damage to innocent depositors. During the next decade
the New York example had great influence, and Massachusetts, Maryland,
South Carolina, and other older States instituted safe and conservative
banking systems.
But while these communities learned slowly the lesson of careful
finance, Michigan, Mississippi, and other States, East and West, hard
pressed by their circumstances and the overwhelming debts which they
piled up till about 1840, repudiated or failed to meet their
obligations. And when suits were brought by domestic or foreign
creditors, state legislatures simply declined to pay and claimed
immunity from federal pressure under the Eleventh Amendment to the
National Constitution. Nor were the resources of the Western communities
equal to the discharge of their onerous burdens. To have attempted to
force upon the people the payment of the debts their leaders had fixed
upon them would have caused wholesale migrations to Wisconsin, Iowa, and
Texas. The people of the West, of the country as a whole, perhaps, were
still in the position of frontiersmen as compared to Europeans. They
needed all the time more capital than they could repay in many years,
and they were not as yet disciplined to the point of bearing heavy
burdens.
With so much distress in the country and with the Administration
overburdened with problems, Clay, Adams, and Webster organized the
opposition in Congress and throughout the country very much as Van
Buren, Calhoun, and Jackson had done in 1826-28. The President, they
said, was no friend of the people; he had not so much as mentioned their
case in his messages to Congress. He was likened to a sea captain who
seizes the lifeboats on a distressed ship in midocean and, saving
himself and crew, leaves the passengers to the mercies of the angry
waves. Clay said the panic had been due entirely to the ungodly Jackson
and his foolish successor; Webster saw the sole cause of the ills of the
time in the foolhardy policy of the last half-dozen years. John Quincy
Adams never tired of ridiculing the puerile maneuvers of backwoods
politicians whose ignorance amounted almost to high crime. To him the
Independent Treasury Bill was an attempt to separate the Government from
business, as futile as to try to divorce the law from the judges in the
administration of justice.
Business men were appealed to to help avert the further catastrophes
which a Democratic Administration would surely inflict. Distressed
planters were reminded of the low price of cotton, all the friends of
the former National Bank were told to remember the war on the Bank
which had ruined them and the country at the same time. Indignation
meetings were held in the East to denounce Van Buren and the
"Loco-focos," a term of reproach applied generally to the party in
power; Henry Clay made a tour of the Eastern States thanking God that he
had been spared to help in undoing the work of Jackson; Webster
canvassed the West in the hope of restoring the minds of the people to
their wonted sanity and a renewal of the alliance of West and East, on
which alone depended the prospect of good government in the United
States. The Whig party was now a powerful machine, and its leaders would
take the people into their confidence. "The honesty of plain men" became
a favorite expression of the time; and Adams, Clay, and Webster repeated
the experiment of Jackson, Calhoun, and Benton in 1828, in a four-year
campaign against Van Buren. A disinterested philosopher might have said
that it was poetic justice for the persecuted Adams of 1828 to appear in
the rôle of persecutor in 1840.
Though the President was an abler politician than Adams had been in the
former struggle, he was hardly able to parry the blows of Clay and his
Eastern allies, especially after the elections of 1838, when both houses
of Congress were lost to the Administration. Calhoun, Benton, and Silas
Wright made a strong fight on behalf of the Democrats. To the
Independent Treasury measure they added the preëmption and graduation
bills, which commanded almost unanimous support in the West, and at last
secured the passage of all three in June, 1840. Though Clay and his
party waged a powerful opposition through four full years, they had no
definite program to offer. The groups of their organization were as yet
poorly knit together. Their popular appeal was "to drive the Goths and
Vandals" from the capital. The "new Napoleon and his minions," according
to another historical comparison, must give way to the old régime, to
gentlemen "who knew how to govern." And consequently the new alignments
were much the same as those which had supported Adams and Clay in 1828,
the South and West uniting on the "reform" Treasury system and Benton's
land bills, while the East and certain conservative elements of the West
and South indorsed, tentatively, at least, the "American System," or at
least lent willing ears to the eloquence of Clay.
Still the people hardly knew whom to believe, and they grouped
themselves in the different States in a way which seemed unlike the
earlier combinations. Thick-and-thin followers of Van Buren called
themselves Democrats and insisted that they were the disciples of Thomas
Jefferson; the organizers of the opposition to Jackson in his war on the
Bank had claimed to be National Republicans, though they accepted with
pride the name of Whigs after 1836. They asserted also that they were
the followers of the great Virginia democrat; perhaps the historian
would be compelled to deny that either faction was democratic.
As the Democrats were almost unanimously in favor of the renomination of
Van Buren, it was not difficult to manage their convention of that
year. Nor was the platform the occasion of any serious disagreement. It
stated for the first time that the party was opposed to internal
improvements, a protective tariff, and the assumption of the debts of
bankrupt States. In all these the West was much interested. But on the
subject of slavery it was definitely declared that the Federal
Government had no power of interference. For the last time in the
history of the _ante-bellum_ Democracy, the Declaration of Independence
was declared to be an item of the party faith. Van Buren took many risks
in this un-Western program; though the panic of 1837 was doubtless his
heaviest burden, as the Whigs never tired of asserting and repeating.
The Whigs met in convention at Harrisburg in December, 1839. Divided on
the great questions of the day, they feared to nominate their one
masterful leader, and in weak imitation of the Jackson men of 1828
turned to William Henry Harrison, a frontier general of no great ability
or reputation. John Tyler, a Virginia politician of the Calhoun school,
was made the candidate for the Vice-Presidency. On the matter of a
program it was impossible for the Whig groups to agree, and consequently
they offered no platform at all. But the West received notice from the
leaders that in the event of success, the debts of their States would be
laid upon the broad shoulders of the Union and that internal
improvements would be resumed. In the East the restoration of the
National Bank and the renewal of the high tariff schedules of 1832 were
the assurances of men like Webster and Clay. With differences so great
dividing the opposition it was impossible to make a campaign on the
issues of the time, serious as these were acknowledged to be.
The contest which followed was unlike any other in the history of the
Union. "Hard cider," "coon skins," and "log cabins" became the slogans
of the campaign, because once in his life General Harrison had lived in
a cabin and "drunk the beverage of the common people." Van Buren could
not meet such cries. His canvass became a defense, and his followers
half acknowledged their defeat when it was seen that the West rallied to
Harrison. The plain citizen was carried off his feet, and he voted
against the man in the White House who was said to use gold and silver
on his table and dress himself before costly French mirrors. Nor was he
certain in his more serious vein whether after all Jackson had not made
a sad blunder in choosing the New York politician to carry out his
policies. Without real argument or any serious presentation of the
issues the Whigs, appealing to what were considered Western prejudices,
built log cabins on the public squares, wore coonskin caps, and sang Van
Buren out of office to the tune of "Typ and Ty," "Little Van is a
used-up man," and other like vanities.
The result was an overwhelming victory for Harrison and Tyler, the
President carrying only one New England State and Virginia, South
Carolina, Alabama, Arkansas, Missouri, and Illinois, and receiving only
sixty electoral votes out of a total of 294. The popular vote was
2,400,000, almost twice as great as in any previous election. The people
were learning to vote if nothing more. Van Buren and his lieutenants,
including Calhoun, were chagrined and humiliated. The West had returned
the enemies of Jackson to power and, perhaps unintentionally, had
written failure across the work of their "hero." Thus Clay had turned
the backwoodsmen and their methods against the original backwoods
statesman, and brought about a restoration of the old régime. Nicholas
Biddle and all his financial friends rejoiced. Webster and New England
looked once again to a new era of protection; and the internal
improvements men of the West and the up-country, having been overwhelmed
by the panic in their various State undertakings, turned their
expectations once more toward the National Treasury. The manufacturing
and the financial interests had in reality come into control again, and
with the assistance of the plain people of the back-country. Clay had
been the architect of the new structure, while Jackson and Calhoun
mourned alike the defeat of Van Buren.
BIBLIOGRAPHICAL NOTE
Edwin M. Shepard's _Life of Martin Van Buren_, in _American Statesmen_
series is the best study of the Van Buren Administration. J. Schouler's
_History of the United Slates_, vol. _IV_; G. S. Callender's _Selections
from the Economic History of the United States_ (1909); G. S.
Callender's _Early Transportation and Banking Enterprises_, in
_Quarterly Journal of Economics_, vol. 17; W. A. Scott's _Repudiation of
State Debts_ (1893), and the biographies and other works cited at the
close of the last chapter will give the reader material for further
study.
Robert Mayo's _Political Sketches of Eight Years in Washington_ (1839);
Mrs. M. B. Smith's _First Forty Years of Washington Society_ (Hunt,
1906); and J. F. H. Claiborne's _The Life and Times of General Sam Dale_
(1860) present most interesting pictures of men and manners. For
railroad, canal, and banking ventures, J. L. Ringwalt, _Development of
Transportation Systems_; W. F. Gephart, _Transportation and Industrial
Development in the Middle West_; J. P. Dunn, _Indiana_, Rufus King,
_Ohio_, T. M. Cooley, _Michigan_, in _American Commonwealths_ series;
Thomas Ford, _History of Illinois_ (1854); J. F. H. Claiborne, _History
of Mississippi_ (1880); W. C. Brewer, _Alabama, Her History, Resources_,
etc. (1872); and J. G. Baldwin, _The Flush Times in Alabama and
Mississippi_ (1853).