A History of the American People

the golden Calf to memorialise me and Request a Restoration of the Deposits, I would cut my
right hand from my body before I would do such an Act. The golden calf may be worshiped by
others but, as for myself, I serve the Lord!’
Biddle declared all along that, by forcing the SBUS out of its role as federal banker, Jackson
would encourage a fever of speculation fueled by an expansion in the number of banks issuing
paper and the quantity and quality of the paper they printed. That is exactly what happened, and
the orgy was encouraged still further by Jackson's decision to hand the federal government's cash
surplus, which accumulated when the national debt was paid off in 1835, back to the states. This
amounted to $2.8 million, and though described as a loan was understood to be an outright gift,
treated as such and spent. The surplus was the result of government land sales jumping from
$1.88 million in 1830 to $20 million in 1836, and as the land boom continued the states assumed
that federal handouts would continue and increased their borrowing on the strength of it. Banks
of all shapes and sizes, many with outright crooks on their boards, poured oil on the smoldering
embers of inflation by keeping their presses roaring. In the meantime, nature intervened, as it
usually does when men construct houses of straw, or paper. Bad weather in 1835 created a crop
failure in many parts of America, and the consequences began to make themselves felt in 1836
with an unfavorable balance of trade against the United States, a withdrawal of foreign credit,
and the need to pay suspicious foreign creditors, who did not like American paper, in gold and
silver.
Jackson, who was nearing the end of his term, increased the tension by issuing, on July 11,
1836, a Species Circular, which directed that future payments for public lands must be made in
specie. This move was made in a simple-minded desire to get back to sound' finance, but it had the predictable effect of making gold and silver even more sought after. Characteristically, it was cooked up in the Kitchen Cabinet and announced to the official Cabinet as a fait accompli. Most of its members objected, and so did Congress. The new Whig Party, recently formed in opposition toKing' Jackson, on the lines of the old English Whigs who had opposed Stuart
tyranny. objected noisily to this further exercise of presidential prerogative, which Clay said was
exactly what a dictator would do, calling the circular an ill-advised, illegal and pernicious measure.' It wasa bomb thrown without warning.' Its effects at end-1836 coincided, almost
exactly, with the failure of big financial houses in London, the world financial capital. This in
turn hit cotton prices, America's staple export. By the time Jackson finally retired in March 1837,
handing over to his little heir apparent, Van Buren, America was in the early stages of its biggest
financial crisis to date. By the end of May 1837 every bank in the country had suspended
payment in specie. Far from getting back to sound money,' Jackson had merely paralyzed the system completely. Before the panic became obvious Van Buren had squeezed through the presidency with a narrow victory made possible by the fact that the anti-Jackson Whigs fielded three candidates. Van Buren got 764,198 votes against a combined Whig total of 736,147. More important, he won fifteen states, making up 170 votes, while his nearest rival, William Henry Harrison (1773- 1841), the victor of Tippecanoe (1811) and the Thames (1813 ), won only 73. So Van Buren was in the White House at last. His bitter Whig enemy in New York, Thurlow Weed (1797-1882), warned:Depend upon it, his Election is to be "the Beginning of the End." ' So, through no fault
of the Little Magician-who had opposed Jackson's financial policies throughout, so far as he had
dared-it proved. He had worked long and hard for the presidency, being nice to everyone,
concealing his intentions, `rowing to his object with muffled oars' as John Randolph put it,