The Specie Circular, issued on July 11, 1836, was a pivotal moment in American economic history. This executive order, signed by President Andrew Jackson, significantly impacted the nation’s financial landscape and contributed to the economic crisis known as the Panic of 1837. This article delves into the background, provisions, consequences, and political implications of the Specie Circular, drawing upon reputable sources such as Britannica, Wikipedia, and scholarly essays.
Key Facts
- Date of issuance: The Specie Circular was issued on July 11, 1836.
- Purpose: The order was a reaction to concerns about excessive speculation of land after the Indian removal, which was mostly done with soft currency. Speculators were using depreciating paper money to purchase public lands.
- Payment requirements: The Specie Circular mandated that payment for the purchase of public lands over 320 acres had to be made in gold and silver specie. Certain types of Virginia scrip were also accepted. Legitimate settlers were allowed to use paper money until December 15, 1836.
- Consequences: The Specie Circular contributed to the devaluation of paper currency, leading to inflation and rising prices. It was blamed for the Panic of 1837 and resulted in numerous bankruptcies and the failure of smaller banks. The recession caused by the circular also drove down cotton prices in the South, leading to the loss of land and slaves for many farmers.
- Democratic split: The Democratic party split over the issue, with some supporting sound money and others in favor of paper money.
Background and Purpose
The Specie Circular emerged as a response to concerns surrounding excessive land speculation following the Indian removal. Land sales witnessed a five-fold increase between 1834 and 1836, with speculators using depreciating paper money to acquire public lands. This practice, coupled with the government’s acceptance of paper notes from specie-backed banks, raised concerns about the stability of the financial system.
Provisions of the Specie Circular
The Specie Circular mandated that payments for the purchase of public lands exceeding 320 acres were to be made exclusively in gold and silver specie. However, certain types of Virginia scrip were also deemed acceptable. The order provided an exception for legitimate settlers, allowing them to use paper money until December 15, 1836, for purchases up to 320 acres.
Consequences of the Specie Circular
The Specie Circular had far-reaching consequences, contributing to the devaluation of paper currency and fueling inflation. The resulting rise in prices and economic instability is often attributed to the subsequent Panic of 1837. The circular also led to numerous bankruptcies, particularly among smaller banks, and caused a recession in the South, leading to a decline in cotton prices and widespread economic hardship.
Political Implications and Democratic Split
The Specie Circular deeply divided the Democratic party. Supporters of sound money, such as Thomas Hart Benton and the Locofoco wing of the party, aligned with the circular’s objectives. However, others, including Senators Nathaniel P. Tallmadge and William C. Rives, advocated for paper money. This division manifested in debates, speeches, and political maneuvering, highlighting the deep-seated differences within the party regarding monetary policy.
Conclusion
The Specie Circular, issued by President Andrew Jackson in 1836, aimed to curb land speculation and stabilize the financial system. However, it had unintended consequences, contributing to inflation, economic crisis, and political division. The circular remains a significant episode in American history, illustrating the complexities of monetary policy and its impact on the nation’s economy and political landscape.
References
- Britannica, The Editors of Encyclopedia. “Specie Circular.” Encyclopedia Britannica, July 11, 2023. https://www.britannica.com/event/Specie-Circular.
- Wikipedia contributors. “Specie Circular.” Wikipedia, The Free Encyclopedia. Wikipedia, The Free Encyclopedia, January 15, 2024. https://en.wikipedia.org/w/index.php?title=Specie_Circular&oldid=1195844758.
- D’Urso, Tony. “Specie Circular.” Andrew Jackson and the Bankwar, 1994-2012. http://www.let.rug.nl/usa/essays/1801-1900/andrew-jackson-and-the-bankwar/specie-circular.php.
FAQs
What was the Specie Circular?
The Specie Circular was an executive order issued by President Andrew Jackson on July 11, 1836, requiring payment for the purchase of public lands to be made exclusively in gold or silver specie.
What was the purpose of the Specie Circular?
The Specie Circular aimed to curb excessive land speculation and stabilize the financial system by reducing the use of paper money and promoting the use of hard currency.
What were the consequences of the Specie Circular?
The Specie Circular contributed to the devaluation of paper currency, leading to inflation and rising prices. It is often blamed for the Panic of 1837, which resulted in numerous bankruptcies, bank failures, and economic recession.
How did the Specie Circular impact the Democratic Party?
The Specie Circular caused a split within the Democratic Party, with some members supporting sound money and others advocating for paper money. This division led to debates, speeches, and political maneuvering, highlighting the deep-seated differences within the party regarding monetary policy.
Did the Specie Circular achieve its intended goals?
The Specie Circular failed to achieve its intended goals of curbing land speculation and stabilizing the financial system. Instead, it contributed to economic instability and the Panic of 1837.
When was the Specie Circular repealed?
The Specie Circular was repealed on May 21, 1838, by a joint resolution of Congress.
What lessons can be learned from the Specie Circular?
The Specie Circular serves as a reminder of the potential consequences of abrupt changes in monetary policy and the importance of carefully considering the economic impact of such policies.
How does the Specie Circular relate to modern economic policy?
The Specie Circular highlights the ongoing debates surrounding monetary policy, the role of government in regulating the economy, and the potential trade-offs between short-term economic stability and long-term economic growth.