In the session which began in December, 1834, when Mr. Buchanan entered the Senate, the Whig majority was still unchanged, but it was destined to be overthrown by the effect of General Jackson’s constantly increasing popularity and influence, which his conduct of the foreign relations of the country greatly tended to strengthen, while in domestic affairs a majority of the people, although beginning to suffer from his measures, still approved of his course in regard to the national bank. Nothing was done, however, at this session, to develope a more definite relation of the Government to the currency; it was a session in which both parties were much occupied with the selection of candidates for the Presidency. The result was, that with the aid of General Jackson’s powerful influence, Mr. Van Buren became the Democratic candidate. In the autumn of 1836, he was elected by a majority of forty-six electoral votes, against General Harrison, the candidate of the Whigs.[[59]]

The last of the executive measures of General Jackson, in relation to the finances and monetary affairs of the country, was the so-called “Specie Circular,” issued by the Secretary of the Treasury on the 11th of July, 1836. It directed that after a certain period, nothing but gold and silver should be received at the land offices in payment for the public lands. The purpose of this measure was to prevent payment for the public lands in the depreciated paper of the State banks. But in the actual condition of things, its effect was to draw the specie of the country into the vaults of the deposit banks, through the land offices; and as there was then no efficient means by which the Government could transfer its funds from place to place, as they were wanted, by any paper representative of money of equal credit through the Union, specie had to be moved to and fro in masses. The State banks which were not depositaries of the Government funds were thus weakened by the want of specie; they had to curtail their loans, and a great scarcity of money ensued in many quarters. Before Congress assembled in December the internal exchanges of the country were entirely deranged, and a general suspension of specie payments by the banks was not unlikely to take place in the not distant future.

It is not improbable that at this juncture the disasters which ensued in the next year might have been averted, if the political opponents of the administration on the one hand and its friends on the other could, by mutual concessions, have found a common ground of action. To remove the obnoxious Specie Circular was evidently necessary. A bill was passed for this purpose by the two houses, before the end of the session, but at so late a period that the President did not return it, and it failed to become a law. The two opposing parties might have agreed on some provision for the necessities of the Government and the wants of the people,—some mode of providing a regulator of the paper currency,—but for two great obstacles which kept them apart, the one of which was to a great extent the consequence of the other. In the large commercial cities, the principal merchants and bankers were still in favor of the establishment of a national bank, as the true remedy for existing disorders, and thence these classes almost universally acted with the Whigs. General Jackson had resolutely determined that no such institution should ever again be allowed to exist. Although, by the first use which he made of banking corporations in the fiscal concerns of the Government, he seemed to admit the power of the Government to create such corporations, his hostility to a national bank led him and his political friends to seek for the means of divorcing the fiscal concerns of the Government from all connection with banks of any kind, and to deny that the Government of the United States had any duty to perform towards the paper currency, or to provide any currency but gold and silver. Had not the question of a national bank, in consequence of the attitude of so many of the Whigs, entered largely into the issues of the approaching Presidential election, it is not improbable that the two parties, in the session of 1836–7, might have discovered and carried out some means of averting the catastrophe which followed the election. But the result was that General Jackson turned over the Government to his successor on the 4th of March, 1837, without anything having been done for the remedy of existing disorders, and with an imperative necessity for an extra session of Congress. It was summoned by Mr. Van Buren for the 4th of September, 1837. Before that day arrived, every bank in the country had ceased to pay specie.

CHAPTER XV.
1837—1841.

MR. VAN BUREN’S PRESIDENCY—THE FINANCIAL TROUBLES ACCUMULATING—REMEDY OF THE INDEPENDENT TREASURY—BUCHANAN ON THE CAUSES OF SPECIE SUSPENSION, AND THE PENNSYLVANIA BANK OF THE UNITED STATES—GREAT POLITICAL REVOLUTION OF 1840—BUCHANAN DECLINES A SEAT IN MR. VAN BUREN’S CABINET.

In the condition of things existing when the extra session of Congress, summoned by Mr. Van Buren, commenced (September, 1837), the immediate relief of the Government was the first necessity. The temporary expedient contemplated by the new administration, for this purpose, was to issue Treasury notes, to be used in paying the public creditors. For the permanent management of the public finances, it was proposed to make no further use of banks, but that the revenues of the Government should be deposited with certain officers of the Treasury, and be paid out to the public creditors on Treasury orders. This was the scheme which became afterwards expanded into the “Sub-Treasury.” It was examined and opposed by Mr. Webster, in an elaborate speech, delivered on the 28th of September, and on the 29th he was followed by Mr. Buchanan, in an equally extended and forcible discussion of the causes of the present distress, and the remedy that should be applied. These two speeches may be said to have exhausted the two sides of the main controversy between the opposite parties, in regard to the duty of the General Government to regulate the paper currency of the country, which then consisted of the notes of about eight hundred State banks. Such a discussion of course involved the disputed topics of those clauses of the Constitution from which the Whigs derived the power and deduced the duty of a general supervision over the paper circulation. Of Mr. Buchanan’s reasoning on these subjects, it may be said with justice that, entering into direct controversy with Mr. Webster, he combated that eminent person’s constitutional views with singular ability, and energetically defended what was derisively called “the new experiment,” and was considered by the party of the administration as a divorce of the Government from all connection with banks. In conclusion he said:

Mr. Van Buren is not only correct in his statements of facts, but by his message he has for ever put to flight the charge of non-committalism—of want of decision and energy. He has assumed an attitude of moral grandeur before the American people, and has shown himself worthy to succeed General Jackson. He has elevated himself much in my own esteem. He has proved equal to the trying occasion. Even his political enemies, who cannot approve the doctrines of the message, admire its decided tone, and the ability with which it sustains what has been called the new experiment. And why should the sound of new experiments in Government grate so harshly upon the ears of the Senator from Massachusetts? Was not our Government itself, at its origin, a new and glorious experiment? Is it not now upon its trial? If it should continue to work as it has heretofore done, it will at least secure liberty to the human race, and rescue the rights of man, in every clime, from the grasp of tyrants. Still, it is, as yet, but an experiment. For its future success, it must depend upon the patriotism and the wisdom of the American people, and the Government of their choice. I sincerely believe that the establishment of the agencies which the bill proposes, will exert a most happy influence upon the success of our grand experiment, and that it will contribute, in no small degree, to the prosperous working of our institutions generally. The message will constitute the touchstone of political parties in this country for years to come; and I shall always be found ready to do battle in support of its doctrines, because their direct tendency is to keep the Federal Government within its proper limits, and to maintain the reserved rights of the States. To take care of our own money, through the agency of our own officers, without the employment of any banks, whether State or National, will, in my opinion, greatly contribute to these happy results; and in sustaining this policy, I feel confident I am advocating the true interest and the dearest rights of the people.

This allusion to the decision and energy which Mr. Van Buren had displayed in his message at the opening of the extra session, and which had raised him in Mr. Buchanan’s esteem, implies that Mr. Buchanan had previously doubted about the course of the new President. The following letters from General Jackson show that he did not share those doubts.

[GENERAL JACKSON TO MR. BUCHANAN.]

Hermitage, August 24, 1837.