A Brief History of the United States

by John Bach McMaster

THE RIGHT OF PETITION.—Not content with this, the pro-slavery people attempted to pass a bill through Congress (1836) to exclude antislavery documents from the mails, and even attacked the right of petition. The bill to close the mails to antislavery documents failed. But the attempt to exclude antislavery petitions from the House of Representatives succeeded: a "Gag Rule" was adopted which forbade any petition, resolution, or paper relating in any way to slavery or the abolition of slavery to be received, and this was in force down to 1844. [14]

OUR COUNTRY OUT OF DEBT.—Despite all this political commotion our country for years past had prospered greatly. In this prosperity the government had shared. Its income had far exceeded its expenses, and by using the surplus year by year to reduce the national debt it succeeded in paying the last dollar by 1835.

THE SURPLUS.—After the debt was extinguished a surplus still remained, and was greatly increased by a sudden speculation in public lands, so that by the middle of 1836 the government had more than $40,000,000 of surplus money in the banks.

What to do with the money was a serious question, and all sorts of uses were suggested. But Congress decided that from the surplus as it existed on January 1, 1837, $5,000,000 should be subtracted and the remainder distributed among the states in four installments. [15]

THE ELECTION OF VAN BUREN.—When the time came to choose a successor to Jackson, a Democratic national convention nominated Martin Van Buren, with Richard M. Johnson for Vice President. The Whigs were too disorganized to hold a national convention; but most of them favored William Henry Harrison for President. Van Buren was elected (1836); but no candidate for Vice President received a majority of the electoral vote. The duty of choosing that officer therefore passed to the United States Senate, which elected Richard M. Johnson.

THE ERA OF SPECULATION.—On March 4, 1837, Van Buren [16] entered on a term made memorable by one of the worst panics our country has experienced. From 1834 to 1836 was a period of wild speculation. Money was plentiful and easy to borrow, and was invested in all sorts of schemes by which people expected to make fortunes. Millions of acres of the public land were bought and held for a rise in price. Real estate in the cities sold for fabulous prices. Cotton, timber lands in Maine, railroad, canal, bank, and state stocks, and lots in Western towns which had no existence save on paper, all were objects of speculation.

[Illustration: NEW YORK MERCHANT, 1837.]

PANIC OF 1837.—Money used for these purposes was borrowed largely from the state banks, and much of it was the surplus which the government had deposited in the banks. When, therefore, in January, 1837, the government drew out one quarter of its surplus to distribute among the states, the banks were forced to stop making loans and call in some of the money they had lent. This hurt business of every sort. Quite unexpectedly the price of cotton fell; this ruined many. Business men failed by scores, and the merchants of New York appealed to Van Buren to assemble Congress and stop the further distribution of the surplus. Van Buren refused, and the banks of New York city suspended specie payment, that is, no longer redeemed their notes in gold and silver. Those in every other state followed, and a panic swept over the country. [17]

THE NEW NATIONAL DEBT.—With business at a standstill, the national revenues fell off; and the desperate financial state of the country forced Van Buren to call Congress together in September. By that time the third installment of the surplus had been paid to the states, and times were harder than ever. To mend matters Congress suspended payment of the fourth installment, and authorized the debts of the government to be paid in treasury notes. This put our country again in debt, and it has ever since remained so.

POLITICAL DISCONTENT.—As always happens in periods of financial distress, hard times bred political discontent. The Whigs laid all the blame on the Democrats, who, they said, had destroyed the United States Bank, and by their reckless financial policy had caused the panic and the hard times. Whether this was true or not, the people believed it, and various state elections showed signs of a Whig victory in 1840. [18]