10/22/2015
CURRENCY, CREDIT, AND CRISIS
Source: Clive Brunskill/Getty Images Europe (Nov. 9, 2013)
 Some more volleys, and historiographical reflection
CURRENCY, CREDIT, AND CRISIS
 Professor Rael, class of Mon. 10/19:
John C. Calhoun to Virgil Maxcy
(Sept. 11, 1830):
“I consider the tariff act as the occasion, rather than
the real cause of the present unhappy state of things.
The truth can no longer be disguised, that the peculiar
domestick institution of the Southern States and the
consequent direction which that and her soil and
climate have given to her industry, has placed them in
regard to taxation and appropriations in opposite
relation to the majority of the Union….”
CURRENCY, CREDIT, AND CRISIS
 Professor Rael, class of Mon. 10/19:
John C. Calhoun to Virgil Maxcy
(Sept. 11, 1830):
“I consider the tariff act as the occasion, rather than
the real cause of the present unhappy state of things.
The truth can no longer be disguised, that the peculiar
domestick institution of the Southern States and the
consequent direction which that and her soil and
climate have given to her industry, has placed them in
regard to taxation and appropriations in opposite
relation to the majority of the Union….”
 Why the interest in “the real cause”?
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10/22/2015
CURRENCY, CREDIT, AND CRISIS
 Professor Rael, class of Mon. 10/19:
John C. Calhoun to Virgil Maxcy
(Sept. 11, 1830):
“I consider the tariff act as the occasion, rather than
the real cause of the present unhappy state of things.
The truth can no longer be disguised, that the peculiar
domestick institution of the Southern States and the
consequent direction which that and her soil and
climate have given to her industry, has placed them in
regard to taxation and appropriations in opposite
relation to the majority of the Union….”
 Why the interest in “the real cause”?
o Recall the discussion question of last Wed., 10/14:
“The Civil War has cast a long shadow over the mantra of ‘states’
rights.’ … Do you see the same shadow?”
CURRENCY, CREDIT, AND CRISIS
 Professor Rael, class of Mon. 10/19:
John C. Calhoun to Virgil Maxcy
(Sept. 11, 1830):
“I consider the tariff act as the occasion, rather than
the real cause of the present unhappy state of things.
The truth can no longer be disguised, that the peculiar
domestick institution of the Southern States and the
consequent direction which that and her soil and
climate have given to her industry, has placed them in
regard to taxation and appropriations in opposite
relation to the majority of the Union….”
 Why the interest in “the real cause”?
o Recall the discussion question of last Wed., 10/14:
“The Civil War has cast a long shadow over the mantra of ‘states’
rights.’ … Do you see the same shadow?”
CURRENCY, CREDIT, AND CRISIS
 Professor Selinger, class of Wed. 10/7:
Thinking about the substantive policy commitments of
the parties . . .
“[Slavery] was the most accusing, the most tragic and the most
dangerous of all questions . . . like a man banishing a dreaded
image from consciousness, [the nation] turned and twisted
desperately to suppress and deny and bury the terrible fact.
For almost a quarter of a century after the Missouri crisis,
slavery was blocked from gaining full embodiment as a specific
political issue. The trauma of 1820 was too intense. Yet the
question could not be exorcised by repression. It remained
ever just out of sight, occasionally flaring up for a moment in
an exchange on the floors of Congress . . . like a wild dream,
shaking the night with its burst of anxiety; then disclaimed and
forgotten, as the morning came again, and people returned
securely to debating the Bank or the tariff.”
Arthur M. Schlesinger, Jr., The Age of Jackson, 424.
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10/22/2015
CURRENCY, CREDIT, AND CRISIS
 Today’s author (and yesteryear’s), Schlesinger (1917-2007)!
Thinking about the substantive policy commitments of
the parties . . .
Arthur M. Schlesinger, Jr., The Age of Jackson, 424.
CURRENCY, CREDIT, AND CRISIS
 Today’s author (and yesteryear’s), Schlesinger (1917-2007)!
Further on, the same page and the following one:
“The Jacksonians in the thirties were bitterly critical of
abolitionists. The outcry against slavery, they felt, distracted
attention from the vital economic questions of Bank and
currency, while at the same time it menaced the Southern
alliance so necessary for the success of the reform program. A
good deal of Jacksonian energy, indeed, was expended in
showing how the abolition movement was a conservative plot.”
Arthur M. Schlesinger, Jr., The Age of Jackson, 424-5.
CURRENCY, CREDIT, AND CRISIS
 Today’s author (and yesteryear’s), Schlesinger (1917-2007)!
“It has been said, unkindly but
not wholly unfairly, that every
page of The Age of Jackson, his
first important work, voted for
Franklin Roosevelt.”
Sean Wilentz, review of
Schlesinger’s A Life in the
Twentieth Century, Dec. 25,
2000.
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10/22/2015
CURRENCY, CREDIT, AND CRISIS
 On to the Panic of 1837 … outgrowth of one of the “vital economic
questions” of the Jacksonian era. How and for whom should the
system of money, banking, and credit work?
Source: Jessica Lepler, The Many Panics of 1837 (2013), p. 152.
CURRENCY, CREDIT, AND CRISIS
 On to the Panic of 1837 … outgrowth of one of the “vital economic
questions” of the Jacksonian era. How and for whom should the
system of money, banking, and credit work?
o The panic’s alleged roots in the Bank War
Nicholas Biddle (1786-1844), president of the Second
Bank of the United States
CURRENCY, CREDIT, AND CRISIS
 On to the Panic of 1837 … outgrowth of one of the “vital economic
questions” of the Jacksonian era. How and for whom should the
system of money, banking, and credit work?
o The panic’s alleged roots in the Bank War
“Set-to between Old Hickory and Bully Nick.” Library of Congress Prints and
Photographs Online collection, LC-USZ62-1570
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10/22/2015
CURRENCY, CREDIT, AND CRISIS
 On to the Panic of 1837 … outgrowth of one of the “vital economic
questions” of the Jacksonian era. How and for whom should the
system of money, banking, and credit work?
o The panic’s alleged roots in the Bank War
“Set-to between the champion old tip & the swell Dutcheman of Kinderhook – 1836”.
Library of Congress Prints and Photographs Online collection, LC-USZ62-1570
CURRENCY, CREDIT, AND CRISIS
 On to the Panic of 1837 … outgrowth of one of the “vital economic
questions” of the Jacksonian era. How and for whom should the
system of money, banking, and credit work?
o The panic’s alleged roots in the Bank War
The position of “locofocos” – like William Cullen
Bryant (1794-1878), editor of the New York
Evening Post :
“The real issue lay ‘not between the people and
the Bank of the United States, but between the
people and all incorporated institutions.”
CURRENCY, CREDIT, AND CRISIS
 On to the Panic of 1837 … outgrowth of one of the “vital economic
questions” of the Jacksonian era. How and for whom should the
system of money, banking, and credit work?
o The panic’s alleged roots in the Bank War
The position of “locofocos” – like William Cullen
Bryant (1794-1878), editor of the New York
Evening Post :
“The real issue lay ‘not between the people and
the Bank of the United States, but between the
people and all incorporated institutions.”
“Kindred Spirits,” by Asher Durand. 1849
(Thomas Cole and W. C. Bryant)
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10/22/2015
CURRENCY, CREDIT, AND CRISIS
 On to the Panic of 1837 … outgrowth of one of the “vital economic
questions” of the Jacksonian era. How and for whom should the
system of money, banking, and credit work?
o Sequence of events:
• Jackson’s veto of bill to recharter the Bank in 1832.
• Jackson’s victory in (re)election of 1832, fought largely on the Bank
question.
• Jackson’s removal of federal deposits from the Bank; these deposited in
state banks.
• Credit boom, land speculation: quintupling of public land sales 1834-6.
• “Specie circular” of 1836: public lands must be paid in specie.
CURRENCY, CREDIT, AND CRISIS
 On to the Panic of 1837 … outgrowth of one of the “vital economic
questions” of the Jacksonian era. How and for whom should the
system of money, banking, and credit work?
o Schlesinger:
“In destroying the Bank, Jackson had removed a valuable brake on
credit expansion; and in sponsoring the system of deposit in state
banks, he had accelerated the tendency toward inflation” (218)
CURRENCY, CREDIT, AND CRISIS
 On to the Panic of 1837 … outgrowth of one of the “vital economic
questions” of the Jacksonian era. How and for whom should the
system of money, banking, and credit work?
o Schlesinger:
“In destroying the Bank, Jackson had removed a valuable brake on
credit expansion; and in sponsoring the system of deposit in state
banks, he had accelerated the tendency toward inflation” (218)
o Temin:
“This story is clear, logical, and unambiguous … For those who do not
admire Jackson, it has provided ample reason for rejecting his
policies. For those who support Jackson, it has represented the dire
consequences of good intentions thwarted by the speculative
propensities of the American people. In either case, the conviction
that Jackson’s policies were highly destructive of economic stability
is a major starting point for the evaluation of Jacksonian democracy”
(16)
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10/22/2015
CURRENCY, CREDIT, AND CRISIS
 On to the Panic of 1837 … outgrowth of one of the “vital economic
questions” of the Jacksonian era. How and for whom should the
system of money, banking, and credit work?
o Schlesinger:
“In destroying the Bank, Jackson had removed a valuable brake on
credit expansion; and in sponsoring the system of deposit in state
banks, he had accelerated the tendency toward inflation” (218)
o Temin:
“This account is in error at three main points. First, the boom did
not have its origins in the Bank War. It resulted from a combination
of large capital imports from England and a change in the Chinese
desire for silver which together produced a rapid increase in the
quantity of silver in the United States … Second, the Panic of 1837
was not caused by President Jackson’s actions. … And third, the
depression of the early 1840’s was neither as serious as historians
assume nor the fault of Nicholas Biddle.” (16)
CURRENCY, CREDIT, AND CRISIS
 On to the Panic of 1837 … outgrowth of one of the “vital economic
questions” of the Jacksonian era. How and for whom should the
system of money, banking, and credit work?
o So what do we learn from the episode?
CURRENCY, CREDIT, AND CRISIS
 On to the Panic of 1837 … outgrowth of one of the “vital economic
questions” of the Jacksonian era. How and for whom should the
system of money, banking, and credit work?
o So what do we learn from the episode?
• More about the confrontation of ideas in antebellum America,
originating in opposing notions of what constitutes a ‘good’
economic system – this time, confronting each other in the
sphere of the credit system.
Political economist William M. Gouge, as quoted by Schlesinger:
“If there ever should be a surplus of public funds, … we know not
what particular merit there is in the banking and speculating
interests, that they should lay claim to its exclusive use … If any
classes of the community deserve the favor of the government, in
any country, they are the farmers, mechanics, and other hardworking men” (240)
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10/22/2015
CURRENCY, CREDIT, AND CRISIS
 On to the Panic of 1837 … outgrowth of one of the “vital economic
questions” of the Jacksonian era. How and for whom should the
system of money, banking, and credit work?
o So what do we learn from the episode?
• Awareness of the contemporary lenses that historians inevitably
bring to their subject – which implies historical controversy, and
swings of opinion on historical subjects.
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