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Specie circular, the

The popular name of an order promulgated July 11, 1836, which produced probably a more intense sensation in the United States than any other political event since the removal of the deposits from the United States Bank. Several orders were issued from the Treasury Department during this year to the receivers and disbursers of the public moneys and to the recognized deposit banks in relation to the receipt and payment of specie. The first of these-Feb. 22, 1836—was intended to diminish the circulation of small bank-notes and to substitute specie, especially gold, for such notes. The receipt of bank-notes of a denomination less than $5 had been prohibited after Sept. 30, 1835; and the present order prohibited their payment to any public officer or creditor. Unless otherwise prescribed by law, no such notes of a less denomination than $10 were to be received or paid after July 4 next ensuing. Deposit banks required the payment of all demands not exceeding $500 to be one-fifth in gold coin, if it should be preferred by the creditor, and they were requested not to issue, after July 4, notes less than $5, nor after March 3, 1837, less than $10. The stated object of this regulation was “to render the currency of the country more safe, sound, and uniform.”

The famous specie circular followed the foregoing order. By this circular the Secretary of the Treasury required that payment for public lands should be made in specie, with an exception, till Dec. 15, 1836, in favor of actual settlers and actual residents of the State in which the lands were sold. There had been a speculation in land to an extent never before known, owing to the facilities of obtaining bank accommodations. The annual receipt from sales of the public lands had risen within a few years from less than $4,000,000 to three and four times that amount. These lands were paid for with paper money, issued mostly by banks in widely distant States, and therefore not likely to be presented soon for redemption. This circular was issued one week after the adjournment of Congress. Senator Benton declared that it was purposely withheld to avoid any interference by Congress, as a majority of both Houses were known to oppose the measure, as well as a majority of the President's cabinet. As a result of this order the banks found themselves unable to make their debtors pay in gold or silver, and unable to pay their own notes in coin. Then followed the widespread suspension of State banks. In his message to Congress, Dec. 5, 1836, President Jackson defended the specie circular and the destruction of the United States bank as salutary measures, and pronounced the State banks fully equal to the former in transferring the public's moneys.

A joint resolution to rescind the treasury order of July 11, 1836, was introduced into the Senate, and after being modified in committees passed both Houses. It was sent to the President, who returned it with a statement that he desired to refer it to the Attorney-General, as its provisions were “complex and uncertain,” and that officer decided that under the President's view, “it would not be proper to approve a bill so liable to a diversity of interpretations.”

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