President Martin Van Buren does not usually receive high marks from
historians. Born of humble Dutch ancestry in December 1782 in the small,
upstate New York village of Kinderhook, Van Buren gained admittance to
the bar in 1803 without benefit of higher education. Building on a
successful country legal practice, he became one of the Empire
State's most influential and prominent politicians while the state
was surging ahead as the country's wealthiest and most populous.
After his election to the U.S. Senate in 1821, this consummate back-room
strategist helped mastermind a reemergence of ideologically distinct
political organizations out of the corrupt and faction-ridden interlude
of single-party rule--euphemistically labeled the Era of Good
Feelings--that had followed the War of 1812. A new Democratic Party
resuscitated the old Jeffersonian alliance between planters of the South
and plain Republicans of the North, united behind the charismatic hero
of the West, General Andrew Jackson, and Jackson was elected to the
White House in 1828.
Van Buren succeeded to the presidency as Old Hickory's heir
apparent on March 4, 1837, but this triumphant fulfillment of a lustrous
career would prove short-lived. The eighth U.S. president was soundly
defeated in his bid for reelection in 1840, and so became the first in a
series of single-term chief executives. Four years later the Democracy
rejected its venerable architect as presidential nominee, and Van
Buren's 1848 candidacy as standard-bearer for the Free Soilers, an
antislavery third party, failed to carry a single state. The elderly New
Yorker survived long enough to witness the outbreak of Civil War but
passed away in July 1862 at the age of seventy-nine.
Van Buren was a lawyer-president who represented a new breed of
Professional politician. His opponents denounced him during his life for
subtle intrigue, scheming pragmatism, and indecisive "non
committalism." Those charges were reflected in such popular
nicknames as the Little Magician, the Red Fox of Kinderhook, and the
American Talleyrand. The ideologically compatible but personally acerbic
John Randolph of Roanoke once observed that "he rowed to his
objective with muffled oars," faulting him as "an adroit,
dapper, little managing man," who "can't Inspire
respect" (quoted in Bruce 1922, vol. 2,203, and Niven 1983, 358).
Van Buren's demeanor reinforced such impressions. Appearing shorter
than his five feet and six inches, he was stout and balding by the time
of his inauguration, his formerly red side-burns now grey and framing a
large head with a prominent brow and calculating blue eyes. Always
fashionably dressed, charmingly witty, and imperturbably amiable, Van
Buren never let political differences master his emotions or cloud his
social relations. He was not a daring, original intellect in the mold of
John C. Calhoun of South Carolina, and his ability to draw out the views
of others often masked his pious devotion to orthodox Jeffersonianism.
Even sympathetic historians tend to slight Van Buren's term in
office as the "third Jackson administration." Arthur M.
Schlesinger, Jr., concludes that, while president, "Van Buren was
weak in the very respect in which he might have been expected to
excel--as a politician." Except during the last year in office, his
management was "negligent and maladroit" and showed very
little "executive energy" (Schlesinger 1945, 263). On the
other hand, modern advocates of decentralization and states' rights
are often more taken with Van Buren's better-known rival, Calhoun,
and his doctrine of nullification. Van Buren admittedly would not go to
the lengths of a John Randolph in sacrificing political success for
ideological purity. Yet the New Yorker's overall career displayed
far more consistency in opposing government power at all levels than did
the twisting, turning path of the swaggering opportunist from South
Carolina. Van Buren was also better attuned to Old Republican
antistatism than the irascible, impulsive, and militaristic Old Hickory
as strikingly illustrated by Van Buren's more conciliatory
rejection of nullification in spite of bitter personal differences with
Calhoun. Above all, in sharp contrast to his political mentor, Thomas
Jefferson, the Little Magician managed to hew more closely to principle
when he was in the White House than when he was not. Indeed, a close
examination of Van Buren's four years in office reveals that
historians have grossly underrated his many remarkable accomplishments
in the face of heavy odds. Those accomplishments, in my opinion, rank
Martin Van Buren as the greatest president in American history.(1)
Greatness must be measured against some standard. Let us begin our
Examination with foreign policy, the area in which a president's
individual traits probably can make the most difference in
history's trajectory. Conventional historians tend to have a
nationalist bias that makes them appreciate a strong executive who
lastingly contributes to the growth of central authority. They thus have
a particular weakness for wartime presidents. Unless the commander in
chief turns out to be utterly inept, war allows him to show off
forceful, dynamic leadership. In a 1961 collection of scholarly articles
titled America's Ten Greatest Presidents, for instance, half the
subjects were presidents who had dragged the country into war. And when
the collection was revised ten years later and published as
America's Eleven Greatest Presidents, the addition was Harry
Truman, a president whose reign spread over two hot wars plus a cold
I suggest, in contrast, that presidents merit recognition for
keeping the United States out of war, and Van Buren has the unique
distinction of keeping the country out of two: one with Mexico, another
with Britain. Van Buren's deep commitment to peace and neutrality
was evident even before he assumed the highest office. He was
instrumental, as Jackson's first Secretary of State, in negotiating
the opening of direct trade with the British West Indies, a
long-standing American goal that the administration of John Quincy Adams
had completely botched. In the midst of Old Hickory's second term,
while Van Buren was serving as vice president, the president's hot
temper almost provoked conflict with France over spoliation claims
arising out of depredations on American commerce during the Napoleonic
Wars. The vice president, fortunately, helped moderate Jackson's
belligerence and bring the dispute to an amicable settlement.
Jackson's closing policies, however, handed the
president-elect another potential conflict. The hero of New Orleans had
looked on with pleasure as American settlers in the Mexican province of
Texas declared independence in 1836 and staged a successful revolt.
Popular expectations ran high on both sides of the southwest border that
the fledgling Texas Republic would soon join the United States. But
Mexico refused to recognize the new nation, and the Texas constitution
sanctioned slavery, setting off a hue and cry among American
abolitionists about the Slave Power's latest expansion into new
territory. Any annexation by the United States threatened both a foreign
war and domestic political controversy between Southerners and
Northerners. Although the Little Magician helped to delay formal U.S.
recognition of Texas independence until he had won the 1836 presidential
election, the retiring Jackson menacingly pressed American claims for
monetary damages against the Mexican government.
But the new president, unlike his predecessor, was not eager for
war in the southwest. On top of his sincere desire for friendly
relations with all foreign powers, Van Buren correctly foresaw that
territorial expansion might split Democratic ranks. He therefore deftly
rebuffed Texan overtures, and his Secretary of State, John Forsyth of
Georgia, announced on August 25, 1837, the administration's formal
rejection of the offer of annexation. Over the next two years Van
Buren's diplomatic skill and patience got the Mexican government to
accept arbitration of U.S. claims by a commission made up of two members
from each country and one member designated by the King of Prussia.
The eighth president's hope for peace endured well after he
left office. Machinations by President John Tyler of Virginia and none
other than John C. Calhoun subsequently catapulted Texas annexation into
the midst of the 1844 presidential campaign. Van Buren was then
front-runner for the Democratic nomination. Yet he issued a public
statement favoring annexation only if it could be accomplished without
upsetting U.S. relations with Mexico, fully aware that the qualification
would cost him politically. "We have a character among the nations
of the earth to maintain," Van Buren avowed. Whereas "the lust
of power, with fraud and violence in the train, has led Other and
differently constituted governments to aggression and conquest, our
movements in these respects have always been regulated by reason and
justice" (quoted by Sellers 1991, 415). An increasing number of
Southern Democrats, including the dying but still influential Jackson
himself, turned away from the New Yorker. The Little Magician held
support from a majority of delegates as the party's convention
opened in Baltimore, but the convention rules required a two-thirds vote
to nominate. After eight deadlocked ballots, the delegates settled on
the first dark-horse candidate in American history: James Knox Polk of
Tennessee, an ardent expansionist. Polk would win a slim victory at the
presidential polls and then conduct the very war that Van Buren had
tried so hard to prevent.(3)
President Van Buren also could have had a war over Canada. The
United States had twice mounted military expeditions to conquer its
northern neighbor, first during the American Revolution and again during
the War of 1812. At other times, annexation was considered, sometimes to
the point of encouraging insurgencies similar to those that helped the
United States swallow Florida and Texas. Van Buren had been in office
less than a year when rebellions broke out in both Lower and Upper
Canada. Americans lent support to the rebel "Patriots" in the
form of recruits and provisions, and although Canadian authorities
easily dispersed any organized resistance, border incidents kept
anti-British feelings at a fever pitch, especially in the
president's home state. In December 1837 a raiding party of
Canadian militia violated U.S. territory near Buffalo, New York, killing
one U.S. citizen, in order to burn a small steamship, the Caroline, that
was transporting supplies to the rebels. In retaliation, a group of
Americans boarded and burned the Canadian steamer Sir Robert Peel on the
St. Lawrence in May 1838.
Any one of these incidents might have led to a declaration of war,
had Washington and London wanted a fight. The president responded to the
crisis by issuing two strong proclamations of neutrality, by calling out
the militias of New York and Vermont to enforce the proclamations, and
by sending General Winfield Scott on a mediatory mission. Scott was a
member of the opposition Whig party but a loyal subordinate. A giant
man, he traveled up and down the eight-hundred-mile frontier in full
dress uniform, using little more than his personal influence to calm
No sooner had the one crisis subsided than another, even more
dangerous, flared up. The boundary between Maine and New Brunswick since
1783 had left twelve thousand square miles in dispute. Canadian
lumberjacks took up timber operations in the disputed region along the
Aroostook River during the winter of 1838-39. When the Canadians refused
an order of the Maine legislature to leave, the state militia marched to
the river and nervously faced New Brunswick troops in a confrontation
that became known as the Aroostook War. Democratic Governor John
Fairfield of Maine warned Van Buren that "should you go against us
upon this occasion--or not espouse our cause with warmth and earnestness
and with a true American feeling, God only knows what the result will be
politically" (quoted in Curtis 1970, 185). Realizing that a single
diplomatic misstep could cause tensions in either country to erupt into
bloodshed, the president emphatically supported Maine's claim but
warned Governor Fairfield that the federal government would not tolerate
the state's unilaterally drawing it into open hostilities. As
Congress authorized fifty thousand volunteers, extended militia drafts
from three to six months, and appropriated $10 million for war, Van
Buren again dispatched General Scott to the trouble spot. Together they
negotiated a truce in which both sides withdrew their forces in March
None of the outstanding issues between the United States and Canada
had been resolved fully when President Van Buren stepped down in 1841.
The Maine boundary was still unsettled, the United States was still
demanding an apology for the Caroline incident, and the British
government was vigorously protesting New York state's murder trial
of a Canadian deputy sheriff, Alexander McLeod, for his participation in
the Caroline raid. Nonetheless, the Little Magician's astute and
unruffled diplomacy had preserved the peace, leaving final settlements
to a future administration. In this case, President Tyler followed Van
Buren's lead by negotiating the Webster-Ashburton Treaty of 1842
with Britain, bringing all major questions to a mutually satisfactory
conclusion. What made President Van Buren's peaceable determination
all the more exemplary was its political cost. During his reelection bid
in 1840, Whig victories in the normally Democratic northern tier of New
York counties cost him that state, and for the only time ever in a
presidential race, the Whig Party carried Maine and Michigan. Indeed, a
few of the Red Fox's closest political advisors had privately urged
him to start a foreign war in order to distract public attention from
the administration's domestic difficulties (Wilson 1984, 100, 145).
Divorce of Bank and Government
With respect to domestic policies, Martin Van Buren would have been
quite pleased to let his time in office become a placid addendum to the
tumultuous eight years of President Jackson. One historian, Major L.
Wilson, has characterized Van Buren's inaugural address as
"essentially a charter for inaction" (1984, 39). It contained
nothing more innovative than calls for "strict adherence to the
letter and spirit of the Constitution" and for "friendship of
all nations as the condition most compatible with our welfare and the
principles of our Government" (Richardson 1922, vol. 2, 1536-37).
But fate ironically intervened. Only two months after the inauguration,
a major financial panic engulfed the country's eight hundred banks,
forcing all but six to cease redeeming their banknotes and deposits for
specie (gold or silver coins).
The preceding presidency had slowly and painfully brought
ideological definition to the Democratic Party. Van Buren, for instance,
had persuaded Old Hickory to veto appropriations for the Maysville Road,
eventually making opposition to nationally funded internal improvements
part of the Democratic canon. Although the Little Magician had once
supported protective tariffs in an effort to enlist northern votes for
Jackson's election, whereas Jackson himself had been evasive, the
nullification crisis put the Democracy solidly behind tariff reduction.
But the controversy that came to eclipse all others in drawing new party
lines was the Bank War. The hardening disposition of President Jackson
and his western advisors against a nationally chartered bank escalated
from Jackson's resounding veto of the bill to recharter the Second
Bank of the United States in 1832 into a crusade to destroy what they
called "the Monster." The Treasury gradually transferred its
sizable deposits from the Second Bank into an assorted group of
state-chartered banks, and then in July 1836, Old Hickory issued a
"Specie Circular," requiring payment for public land in gold
or silver only, rather than banknotes.
By the time of Van Buren's elevation to the White House,
hostility to any new national bank unified all Democrats. Within this
consensus, however, two factions had arisen. The less numerous but more
radical group, epitomized by Senator Thomas Hart Benton of Missouri and
the Locofoco contingent of New York City Democrats, advocated a complete
"divorce" of the national government from dealings with all
banks in an effort to promote hard money. The majority, led by Senators
Nathaniel P. Tallmadge of New York and William C. Rives of Virginia, who
would soon style themselves "Conservatives," believed that the
"credit system" promoted economic growth and wanted to
maintain the intimate relationship between the government and
state-chartered deposit banks. They had gone so far as to join with the
opposition in Congress to repeal Jackson's Specie Circular, only to
have the General pocket veto the bill.
Van Buren at first tried to reconcile the two factions, as befitted
his personality and past record. On the one hand, when serving in the
New York legislature, he had voted against all bank charters, save one
for war-ravaged Buffalo, and as early as 1817 had advocated throwing
banking open to unrestricted competition--a radical proposal two decades
ahead of its time. On the other hand, as the Empire State's
governor in 1829 he had sponsored creation of the Safety Fund, a system
of government-mandated banknote insurance. The Panic of 1837, however,
pushed Van Buren, along with many other wavering members of his party,
unequivocally into the radical camp. If the national government did not
sever its relationship with the suspended state banks, with their
unredeemable, depreciating paper currency, then it would be in the same
position as at the close of the War of 1812, when financial chaos had
provided the impetus for chartering the Second Bank.
Holding firm against mounting pressure to revoke the Specie
Circular, the president called an emergency session of Congress to
convene at the beginning of September 1837. His message to this first
special legislative session since the presidency of James Madison was a
bold and acute program to meet the depression with government
retrenchment. "All communities are apt to look to government for
too much," warned Van Buren. "Even in our own country, where
its powers and duties are so strictly limited, we are prone to do so,
especially at periods of sudden embarrassment and distress." To
yield to this temptation, however, would be a mistake, because "all
former attempts on the part of the Government" to "assume the
management of domestic or foreign exchange" had in his opinion
"proved injurious." What was needed was a "system founded
on private interest, enterprise, and competition, without the aid of
legislative grants or regulations by law," one that embodied the
Jeffersonian maxim "that the less government interferes with
private pursuits the better for the general prosperity." The
president therefore refrained "from suggesting to Congress any
specific plan for regulating the exchanges of the country, relieving
mercantile embarrassments, or interfering with the ordinary operation of
foreign or domestic commerce," because such measures "would
not promote the real and permanent welfare of those they might be
designed to aid."(5)
Daniel Webster, Whig Senator from Massachusetts, denounced the
President's message for "leaving the people to shift for
themselves.(6) The lone exception to Van Buren's rejection of
government activism was a proposal for a new bankruptcy law that would
allow the national government to shut down any bank that too long
suspended specie payments. The Twenty-fifth Congress refused even to
consider this measure. But it quickly enacted the president's
suggestion to grant importers a six-month moratorium on payment of
custom-house bonds. What made this particular tax relief significant is
that tariffs were the national government's only source of revenue
at the time, besides the sale of public lands. Of still greater import
was the legislature's willingness to go along with Van Buren's
insistence on halting the distribution of federal money to the state
governments. Senator Henry Clay of Kentucky and his neo-Hamiltonian
Whigs had saddled the previous administration with this
nineteenth-century version of modern revenue sharing after the national
debt had been paid off for the first and only time in American history.
General Jackson, "with a repugnance of feeling, and a recoil of
judgment," according to "Old Bullion" Benton, had agreed
to the distribution of the surplus because Calhoun (who else?) had
incorporated it into a bill regulating the Treasury's dealings with
the deposit banks.(7) But after the panic, federal revenues declined,
and there was no longer any surplus revenue to hand out. Along with
ending distribution, Congress accepted Van Buren's preference to
finance the reappearing national debt with $10 million worth of
short-term Treasury notes rather than long-term loans.
But the centerpiece of the Little Magician's special message
was his courageous call for a total separation of bank and State through
an Independent Treasury. The Independent Treasury was an idea that could
assume several forms and accommodate differing views on currency and
banking, but its most fundamental requirement was that the government
hold all monetary balances in the form of specie, rather than banknotes
or deposits. Either existing Treasury officials or newly established
subtreasuries could serve this function. Some versions restricted to
specie all payments received by the government as well, whereas others
let the Treasury accept notes from specie-paying banks so long as they
were speedily redeemed or paid back out. Such ultra-bullionists as
Senator Benton hoped that the Independent Treasury, by eliminating
government support for banknotes, would ultimately drive the notes out
of circulation and return the entire economy to an exclusive hard-money
currency. Supporters of unregulated banking, among them Dr. John
Brockenbrough, president of the Bank of Virginia, realized that the
national government's finances were too small relative to the
economy to effect that result and hoped instead that a divorce would be
good for the state banks. Still others, including Secretary of the
Treasury Levi Woodbury of New Hampshire, wanted to supplement the
Independent Treasury with some federal regulation of banking, such as
restrictions on banknotes of small denominations. And some proponents
went so far as Senator James Buchanan of Pennsylvania, who favored a
government-issued paper money, anticipating the Greenbacks and gold
certificates of the Civil War.(8)
Administration spokesman Silas Wright of New York introduced into
the Senate an Independent Treasury bill that simply assigned the keeping
of funds to existing officials and was silent on how payments could be
made. Calhoun then startled members of both parties with another one of
his sudden but inept political reversals. Abandoning his Whig allies, he
announced his support for the administration initiative. Calhoun,
however, wanted to modify it by turning Treasury notes into a permanent
government currency and by phasing in over four years a requirement that
the Treasury Department accept only specie or its own notes. Because a
specie requirement was already implicit in Van Buren's message, the
administration had to accept this amendment. Although the widespread
bank suspensions had tended to discredit state banks as government
depositories, Calhoun's amendment now stiffened the opposition of
Conservative Democrats to the divorce bill. Nor did it help when the
Calhounites portrayed divorce as a sectional issue that would free the
South from northern capital, linking the question to the interminable
debates over abolitionist petitions that were preoccupying Congress at
the time. The amended divorce bill passed the Senate by two votes, but
it was tabled in the House. In later sessions, when the administration
reluctantly dropped the specie requirement in order to pick up
Conservative votes, the Nullifier turned against the measure.
Yet in effect the Treasury was already independent. The Currency
Resolution of 1816 forbade the government to receive banknotes not
redeemable in specie, another law forbade paying them out, and the
Deposit-Distribution Act of 1836 prohibited the Treasury from holding
funds in any suspended bank. The president ordered federal officials to
comply with these regulations as far as possible, which meant that, with
the exception of the balance in deposits tied up at the time of the
panic, the Treasury was receiving, holding, and paying out only specie
or Treasury notes. Once the banks resumed specie payments in May 1838,
most of them still could not qualify as depositories under the Deposit
Act's restrictions, because during the suspension they had issued
small-denomination notes. Frustrated at congressional obstinacy, Van
Buren half considered emulating Old Hickory's high-handedness by
establishing an Independent Treasury through executive order, but such a
violation of legislative prerogatives suited neither his temperament nor
Meanwhile the depression hurt the administration politically.
Elections in the fall of 1837 turned against the Democrats in many
states, particularly New York, where the Whigs gained an overwhelming
majority in the state legislature's lower house by winning a
stunning sixty-seven seats. The "New York tornado," as the
shocked Van Buren called it, was followed a year later by the capture of
the Empire State's governorship by Whig candidate William H.
Seward. The combination of Whigs and Conservative Democrats in the
Twenty-fifth Congress continued to block enactment of the Independent
Treasury throughout much of the eighth president's term. Despite
favorable votes in the Senate, the House of Representatives voted
against a divorce bill during the first regular session, in 1837-38, and
refused to vote on it at all during the second regular session, in
1838-39. The legislators were far more interested in a scandal that the
Treasury had just uncovered in the New York City Customs House. The
collector, Samuel Swartwout, had allegedly embezzled over the previous
eight years the astonishing sum of $1.23 million and then fled to
Europe. Even though Swartwout was an old Jackson appointee to whom Van
Buren had vigorously objected, and moreover a former Calhoun favorite
who was now a Whig, the Democratic administration found itself on the
Van Buren nonetheless scored some unheralded successes. After bank
resumption in 1838, administration stalwarts in Congress defanged a new
Whig-Conservative effort to revoke the Specie Circular by converting it
into an act that merely made it unlawful to treat receipts from public
land differently than other revenue. The Secretary of the Treasury
thereby gained the discretionary authority to accept only specie for all
payments or also banknotes for all payments. The divorce bills
furthermore had shifted the terms of the debate and forestalled any
proposal for a new national bank. The Little Magician had instead
maneuvered Clay and the Whigs into a political defense of the same
"pet" bank system they had so vociferously denounced during
Jackson's presidency. He also had achieved an uneasy reconciliation
with Calhoun and a few other states' rights Southerners whom the
autocratic Jackson had driven out of the Democratic Camp. Finally the
Conservative insurgency, if not smoothed over, was at least contained.
Failing to gain dominance within Democratic councils, the Conservatives
faced the alternatives of either following their prominent leaders
Tallmadge and Rives into the Whig Party or again submitting to their own
party's discipline. One indication of increasing Conservative
isolation was the editorial shift of the New York Democracy's
official newspaper, the Albany Argus. It went from lukewarm about the
Independent Treasury to a ringing announcement in June 1838 that
"we believe the time has emphatically come for the separation of
bank and state" (Wilson 1984, 113).
Van Buren's refusal to abandon the goal of divorce ultimately
paid off as the political tide turned in late 1839. When a second
suspension of specie payments spread to half the country's banks
that October, it seemed to verify the administration's suspicion of
state depositories. The Democrats managed to retain control of both
houses of the Twenty-sixth Congress, which met for its first session in
December. The president's annual message renewed the call for an
Independent Treasury, reinforcing it with new arguments. The latest
suspension was more obviously the result of international factors than
had been the Panic of 1837, which had coincided with all the confusing
policy changes of Jackson's Bank War. Van Buren now argued that
only divorce could free the U.S. economy from "this chain of
dependence" on credit flows of "the money power in Great
Britain." The message also dampened the laissez faire tone of Van
Buren's earlier message to the special session and accentuated its
hard-money radicalism with a willingness to consider "additional
legislation, or, if that be inadequate, ... such further constitutional
grants or restrictions" that might check "excessive note
Fortunately the legislators voted down both a bankruptcy bill,
similar to the one the president had suggested in his earlier message,
and Senator Buchanan's proposed constitutional amendment
authorizing Congress to ban banknotes of less than $20. The tireless
Senator Wright again introduced a divorce bill in the Senate, this
version including both special subtreasuries to hold government funds
and Calhoun's specie requirement for receiving payments. The bill
sailed through the Senate at the end of January 1840, but the House,
experiencing more than its usual disorder and delay over disputed seats
and choice of speaker, did not pass the measure until June. Van Buren
waited until July 4, 1840, to sign the law, symbolically confirming the
words of the Washington Globe, the administration mouthpiece, which
nearly three years earlier had hailed the Independent Treasury as
"the second declaration of independence" (Washington Globe,
September 5, 1837, quoted in Schlesinger 1945, 236).
Panic and Deflation
The Independent Treasury ushered in an era of financial
deregulation at the national level. Although it was repealed in 1841,
the Whigs, after capturing the White House, could not agree among
themselves about an alternative. President William Henry Harrison died
after less than a month in office and was succeeded by Vice President
John Tyler, an apostate Democrat. Tyler vetoed Henry Clay's two
bank bills, leaving the government's deposit system unregulated by
law. Use of state banks remained at the Secretary of the Treasury's
discretion until President Polk, a doctrinaire Jacksonian who
enthusiastically embraced the fiscal heritage of Van Buren, secured
reenactment of what he preferred to call a Constitutional Treasury in
August 1846. The act of 1846 was identical in substance to that of 1841
and determined the country's financial regime until the outbreak of
the Civil War.
Laissez faire may not have been the intent of all those who
supported the divorce of bank and government. And perhaps a more
efficient way to attain that goal would have been to freely charter
competitors with the Second Bank, allowing them equal powers of
interstate branching, rather than abolishing that institution
altogether. Nonetheless, laissez faire was the Independent
Treasury's primary consequence. There was no nationally chartered
bank, the Treasury for the most part avoided dealing with the many
state-chartered banks, and the only legally recognized money was gold
and silver coins. Because the economy's currency consisted solely
of bank notes redeemable in specie on demand, private competition
regulated the circulation of paper money.
Although traditional historians have subjected this era of
relatively unregulated banking to trumped-up charges of financial
instability, many economists are coming to agree that it was probably
the best monetary system the United States has ever had. The alleged
excesses of the fraudulent, insolvent, or highly speculative
"wildcat" banks were highly exaggerated. Total losses suffered
by banknote holders from 1836 to 1861 in all the states that enacted
free-banking laws would not equal the losses for one year from an
inflation of 2 percent, if superimposed onto the economy of 1860.
Moreover, most of those losses resulted from too much regulation, not
too little. Fingering at the state level were prohibitions on branch
banking, mandates for minimum specie reserves, restrictions on the issue
of small-denomination banknotes, and requirements that banks purchase
state bonds, which at that time were among the most dubious investments.
The banks were also still vulnerable to international flows of specie.
No monetary system is perfect. But by any objective comparison this one
was relatively stable and crisis-free.(11)
Historians who dismiss the Independent Treasury as constraining the
government "to accept payments and to make them in an antiquated
medium" more "suitable for the War of the Roses" (Hammond
1970, 23, 24) have never adequately explained the relative quiescence of
monetary debates during its operation. The First and Second U.S. Banks
had divided political parties since the adoption of the Constitution.
The Civil War's national banking system and Greenbacks subsequently
induced fresh convulsions over currency questions. If the Independent
Treasury was in fact so obviously deficient, why did it provoke no
similar political outcry? Moreover, its re-enactment coincided with
heavy expenditures for Polk's war against Mexico, yet that military
effort caused the economy less financial dislocation than any previous
American war. During the nation's next financial panic, in 1857,
the Treasury was effectively insulated from the bank suspension. There
is also no evidence that the Independent Treasury hobbled the
country's economic growth.(12)
The domestic policies of the Van Buren presidency, however, did
more than bequeath a superior financial regime. They also thwarted all
attempts to use economic depression as an excuse for expanding
government's role. Prior to the Panic of 1837, state
governments--in an uncanny parallel to the recent currency crises in
east Asia and Russia--had borrowed more than $100 million from abroad to
finance lavish and wasteful internal improvements. Most states
experienced financial stringency as a result of the panic, and many
became desperate. By 1844, state bonds previously worth $60 million were
in default. Three states--Arkansas, Michigan, and Mississippi--as well
as the Florida territory repudiated their debts outright (Ratchford
1941, 77-134; McGrane 1935; Scott 1893). Henry Clay saw this situation
as a heaven-sent opportunity to revive his distribution scheme under a
new pretext. Hence, the Whigs of the Twenty-sixth Congress advocated
that the national government bail out the states by assuming their
debts. Clay's party also had its own proposal for a bankruptcy law,
not one like Van Buren's that would close banks involuntarily, but
rather one that would allow individual debtors voluntarily to escape
Democrats under the Little Magician's leadership not only
blocked these initiatives but pushed government involvement in the
opposite direction. Although total national expenditures suddenly spiked
to $37.2 million in 1837, overall they declined through Van Buren's
four years, from $30.9 million in 1836 to $24.3 million in 1840. That
represents a 21 percent fall in nominal terms, no more than half as much
if adjusted for price changes, but somewhere in between if adjusted also
for population growth or the economy's size (U.S. Department of
Commerce 1975, Series Y335-38). Many of the spending cuts came in the
realm of internal improvements, especially for rivers and harbors, where
Van Buren was far more stringent than Old Hickory had been.(13) As for
revenue, tariff rates were already falling as a result of programmed
reductions worked out during the compromise over nullification. So the
president threw his weight behind two measures that would bring the
allocation of public land into closer alignment with the homestead
principle: preemption, giving settlers who cultivated the land first
option to buy, and graduation, reducing the price on unsold and.
Graduation failed to pass, but Congress renewed earlier preemption acts
twice during the New Yorker's term.(14) At the end of the four
years, following significant cuts in both national spending and revenue,
the depression-generated debt was holding near $5 million.(15)
Closer examination of the economy's fluctuations reveals the
enormous benefits of this retrenchment. The two banking crises that
dominated the Van Buren administration had similar causes but different
outcomes. In both cases, the proximate cause was a decline in foreign
inflows of specie precipitated when the Bank of England raised its
discount rate. The Panic of 1837, however, was a sharp and short
correction that followed close on the heels of two years of price
inflation at an annual rate approaching 15 percent. After wholesale
prices fell back nearly 20 percent over a year, while output declined
less than 5 percent, the economy seemed to recover. The suspension of
1839, in contrast, hit fewer banks but foreshadowed a protracted
deflation. The country's total money stock--specie, banknotes, and
bank deposits--declined by one-third during the next four years, and
prices plummeted 42 percent.(16)
Many economists have been struck by the comparison between this
second episode, the deflation of 1839-1843, and the subsequent Great
Depression of 1929-1933. Qualifying as the two most massive monetary
contractions in American history, they were of identical magnitude and
extended over the same length of time. But there the similarities end.
During the Great Depression, as unemployment leaked at nearly 25 percent
of the labor force in 1933, U.S. production of goods and services
collapsed by 30 percent. During the earlier nineteenth-century
contraction, investment fell, but amazingly the economy's total
output did not. Quite the opposite; it actually rose between 6 and 16
percent. This episode was nearly a full-employment deflation. Nor are
economists at any loss to account for the widely disparate performances.
The American economy of the 1930s was characterized by prices,
especially wages, that were rigid downward, whereas in the 1840s prices
could fall fast and far enough to restore market equilibrium
But why were prices and wages so much more flexible when Van Buren
was at the helm? The fact that the Great Depression, America's
deepest and longest economic downturn, was also the first to be met with
a comprehensive program of federal intervention offers some hint.
Intervention commenced, furthermore, not with the well-known New Deal of
President Franklin D. Roosevelt, who did not enter office until early
1933, when the economy was almost at rock bottom, but with his
predecessor, Herbert C. Hoover. This progressive Republican's long
tenure during the 1920s as Secretary of Commerce, promoting trade
associations, product standardization, and business cartels, prepared
him to meet the stock-market crash of October 1929 with a vigorous
effort to stop any fall of prices. Starting with a series of White House
conferences at which he jawboned business leaders into
"voluntarily" holding up wage rates, Hoover pressed with mixed
results for further cartelization in agriculture, in the cotton textile
industry, in commercial aviation, and in the energy industries--coal,
oil, and electricity. He also signed into the law in 1932 the largest
peacetime tax increase in U.S. history, and practically closed the
borders to foreign trade with the Smoot-Hawley Tariff of 1930, the
highest in American history, in an effort to hold up prices
internationally. Roosevelt's National Recovery Administration and
Agricultural Adjustment Administration simply made this concerted
campaign for price supports more formal.(18) Indeed, prices still
dropped by 31 percent from 1929 to 1933, but not nearly as much as
during the deflation of the 1830s and 1840s. Although government
policies may not explain fully the price rigidity of the 1930s, they
explain a lot.
The Little Magician, of course, was not single-handedly responsible
for preventing the earlier deflation from becoming another Great
Depression. His heroic resistance to the expansion of central power
received vital aid from the Democratic coalition that he had helped to
forge. And given that total federal spending started at less than 2
percent of GDP in the mid-1830s, as compared with nearly twice that in
the 1920s, Clay's misguided recovery measures would probably not
have been as economically devastating as those of Hoover and Roosevelt.
Once Van Buren's term ended, a few of Clay's measures were
implemented briefly. Congressional Whigs secured President Tyler's
assent to their voluntary bankruptcy bill, to a watered-down
distribution of the proceeds from land sales to the states, and to a
tariff hike, justified as a way to eliminate depression deficits. But
the distribution was abruptly ended in 1842, after only a year, in order
to secure enough legislative votes for the tariff increase, and the
Whigs themselves were embarrassed into repealing the bankruptcy act in
1843 after thirty thousand fortune-seekers had used its provisions to
escape from more than $400 million of debt.(19) The deflation had just
about run its course anyway, and by 1846 the new Polk administration had
brought the tariff back down. The refusal to bail out defaulting state
governments produced a widening ripple of salutary effects, not the
least of which was to make more difficult any future squandering of
state money on public works and government-owned railroads. The Red Fox
of Kinderhook thus had held the pass at the crucial time, when doing so
was politically unpopular, against powerful mercantile, financial, and
other special interests clamoring for national assistance. For the
depression of 1837, more than any other factor, brought about his
trouncing in the presidential election of 1840 at the hands of General
Harrison, hero of the battle of Tippecanoe.
Compromises with Power
No politician, especially one successful enough to be elected to
the United States' highest office, can be perfect. Van Buren's
most morally egregious and fiscally exorbitant compromises with
government coercion stemmed from his faithful adherence to
Jackson's ruthless program of Indian removal. Most of the
southwestern tribes had already gone to Oklahoma, but an assortment of
northwestern tribes still awaited deportation beyond the Missouri River.
More troublesome, seventeen thousand Cherokees had legally delayed
eviction from their homes in North Carolina, Georgia, Tennessee, and
Alabama, and approximately four thousand Seminoles mingled with over a
thousand blacks, many of them escaped slaves, were putting up effective
military resistance in Florida. Although General Scott did his best to
ensure that Cherokee removal was peaceful and humane, bad weather and
inadequate appropriations turned the journey into a "Trail of
Tears," and hundreds perished before the process was completed in
early 1839. The Second Seminole War, having erupted in 1835 prior to
eighth president's inauguration, degenerated into a vicious and
unrelenting counterinsurgency struggle that was still raging as he left
office. President Tyler finally ended what had become the U.S.
Army's most costly and lengthy Indian war with a proclamation in
1842 that permitted three hundred surviving Seminoles to remain in
Florida on reservations, essentially the same terms that Van Buren had
rejected in 1838. The war and other removals occasioned an increase by
half in the regular army's authorized size--from around eight
thousand to more than twelve thousand soldiers--and a new string of
forts. The most that can be said in the Little Magician's behalf is
that these burdensome xpenses make his success at rolling back federal
expenditures all the more remarkable.(20)
Because the Seminoles harbored fugitive slaves, the Florida war was
intimately intertwined with concessions that Van Buren made to
slaveholders. During his first presidential bid, the Calhounite press
had tried to cripple the New Yorker's candidacy in the South by
branding him an abolitionist. Van Buren countered with an announcement
that he was "the inflexible and uncompromising opponent of any
attempt on the part of Congress to abolish slavery in the District of
Columbia, against the wishes of the slaveholding states"
(Richardson 1922, vol. 2, 1535). He also went along with various
"gag rules" on receiving abolitionist petitions that Congress
implemented between 1836 and 1844, and during the 1840 election he
promised to veto any antislavery restrictions Congress might place on
Florida's admission to the Union. His accommodation with the
peculiar institution had its greatest practical impact in the case of
the Amistad, a Spanish schooner that had fallen into the custody of a
U.S. revenue cutter in 1839, after a successful mutiny by the slaves on
board. The president stood ready to hand the blacks over to Spanish
authorities, despite their having been illegally kidnapped from Africa.
But the case became tied up in U.S. courts, and after the administration
appealed, the Supreme Court in March 1841 freed the Africans (Miller
1996; Jones 1987; Cable 1971).
Although Van Buren's Faustian bargain to hold together the
sectional wings of a national party dedicated to frugal government was
more pronounced during his presidency than either before or after, its
extent should not be exaggerated. Nearly twenty years earlier, while
serving in the New York legislature, he had endorsed the prohibition of
slavery in Missouri, and he would later support the Wilmot Proviso
barring the extension of slavery into the territories acquired from
Mexico. Not only was the eighth president quite capable of disappointing
slaveholders' hopes for Texas annexation, but he never appeased
Southerners to the lengths that a James Buchanan would endorse or a John
C. Calhoun would demand. Van Buren also refused to overturn the
conviction of a navy lieutenant court-martialed for excessive flogging,
in spite of complaints from Southerners that the prosecution had relied
on testimony of two black seamen (Cole 1984, 362-63; Wilson 1984, 200).
The New Yorker's vice-presidential running mate in both 1836 and
1840 was a Southerner, Colonel Richard M. Johnson of Kentucky, yet
hardly one who made his fellow slaveholders comfortable. Johnson had
violated the color line by openly living with a black mistress and
acknowledging their two daughters. Such limits on Van Buren's
ability to placate Southerners were reflected by the stiff presidential
opposition he faced in 1836 in the South, a region that had gone solidly
for Andrew Jackson. The Little Magician did even worse in the South in
1840, running against Harrison, a Virginia-born Ohioan.(21)
The Van Buren administration's readiness to return the Amistad
mutineers was motivated in part by diplomatic considerations, and the
objective of friendly relations with foreign powers was responsible for
another of the president's lapses in 1837. To supplement his
administration's efforts to calm tensions during the Canadian
rebellions, he asked Congress for a new neutrality law. The existing act
of 1818 was mainly maritime, and Van Buren wanted the power to prevent
private citizens from organizing raids on foreign soil. Congress was in
this instance more sensitive to civil liberties, so it declined to
permit the use of military force against a group merely organizing and
planning such an expedition. Instead, under a new law that would expire
two years after its passage in 1838, civil authorities could seize arms,
ammunition, vehicles, and vessels attempting to cross the border
(Stevens 1989, 27-28).
Two years later Van Buren carelessly passed along to Congress a
report from Joel R. Poinsett, his Secretary of War. Poinsett (for whom
the poinsettia was named) was a staunch Unionist from South Carolina,
more nationalistic than his chief executive. The
administration's' frequent diplomatic and military
tribulations inspired the secretary to request a militia reorganization
similar to what had been suggested by nearly every president since
George Washington. Under the plan, the regular army each year would call
out and rigorously drill from the state militia rolls an active force of
one hundred thousand men, who would then be available for rapid
mobilization. Once the Whigs got wind of this scheme for universal
military training, they set off an uproar. Many states were already
undermining the basis for such a reorganization by replacing their
compulsory militias with voluntary systems. The Little Magician, who had
not previously read Poinsett's proposal, promptly disavowed it. To
the charge of favoring standing armies, he responded: "If I had
been charged with the design of establishing among you at public
expense, a menagerie of two hundred thousand wild beasts, it would not
have surprised me more, nor would it, in my judgment, have been one jot
more preposterous" (quoted in Curtis 1970, 201). But the disavowal
came too late to avoid political damage in the ongoing presidential
race. Poinsett's request was destined to be the last effort to
nationalize the state militias until after the Civil War.(22)
The New Yorker's years in the White House saw the first
national regulation of steamboats and a nationally funded scientific
expedition. President Jackson had recommended "precautionary and
penal legislation" after an explosion on a Red River steamboat in
1833 had killed Senator Josiah S. Johnston of Louisiana. Not until 1838
did Congress enact a law that required federal inspection of boilers and
hulls on passenger vessels. Supervision was entrusted to district
judges, however, and the creation of a regular inspection bureaucracy
within the Treasury Department had to await the future Whig presidency
of Millard Fillmore.(23) The navy's South Sea Exploring Expedition,
under the command of Lieutenant Charles Wilkes, set sail in August 1838
on a four-year voyage that would claim discovery of Antarctica. But it
had been the brainchild of former president John Quincy Adams, and
Congress had appropriated the money nearly a year before Van Buren
To offset these relatively minor transgressions on market
enterprise, the eighth president deserves credit for enthusiastically
embracing reforms suggested by his Postmaster General, Amos Kendall of
Kentucky. Kendall wanted to eliminate the heavy postal subsidy for
newspapers, instituted back in 1792, which resulted in newspapers
providing no more than 15 percent of postal revenue even though they
accounted for more than 95 percent of deliveries by weight. The head of
the Post Office also tried to rein in the congressional franking
privilege. Needless to say, Congress was not interested in either reform
(John 1995, 40; Wilson 1984f, 172-75) Finally, mention should be made of
Van Buren's executive order, in the midst of his campaign for
reelection, mandating a ten-hour day on all federal public works.
The election of 1840 turned into a political circus. Under the
savvy management of such rising Whig politicos as Thaddeus Stevens of
Pennsylvania and Horace Greeley, William Seward, and Thurlow Weed of New
York, the apologists for mercantilism learned to throw off the historic
taint of elitist privilege and to appeal for the first time directly to
the masses. William Henry Harrison earned the sobriquet "General
Mum" for obscure positions on the issues, while his party adopted
no platform and emphasized their candidate's military record during
the War of 1812 and his alleged frontier, logcabin origins. Harrison was
in reality the scion of Virginia aristocracy, but that fact did not stop
the Whigs from falsely portraying Van Buren as the effete grandee,
extravagant with public money. The popular rallies, colorful slogans,
and hucksterish excitement surrounding the Whigs' Log Cabin and
Hard Cider campaign caused the Democratic Review to cry out in despair:
"We have taught them to conquer us!" (quoted in Van Deusen
1959, 148). Still, it was the lingering trauma of hard times, coupled
with disgruntled southern and northern expansionism and the exaggerated
fears of Democratic Caesarism, that brought about the Little
Magician's political defeat at the hands of "Tippecanoe and
Tyler too." Voter turnout was much higher in 1840 than four years
earlier, jumping from 57.8 percent of those eligible to 80.2 percent, so
that Van Buren actually received 400,000 more votes, but he carried only
seven out of twenty-six states (Gunderson 1957; Holt 1992; Silbey 1971;
Heading back to Kinderhook in March 1841 with his usual good cheer,
Van Buren felt confident of future vindication. Instead, he would watch
the Democracy abandon his peaceful foreign policy and, as a result, tear
itself apart along with the Union, as he had foretold; he did not live
to see his economic precepts go out of fashion as well. Nevertheless,
the Little Magician could feel justifiable pride in his single term.
Glyndon G. Van Deusen (1959), a historian not at all sympathetic to
laissez faire, provides one of the fairest modern assessments:
"With all his weaknesses, the fact remains that Van Buren was
honest; that he knew the value of and habitually sought counsel; that he
deliberated before making decisions; and that his four years in the
White House demonstrated, for better or for worse, a perfectly logical
development of the left-wing tendencies of Jacksonian Democracy, a
development which it took courage to foster in the face of a
catastrophic depression" (114).
Defying the median-voter model of public-choice theory, the eighth
president did not move toward the center but risked political injury to
become more radical while in office. As a result, this admirer of both
Thomas Jefferson and Andrew Jackson presided over an administration
marred by none of their inconsistencies. Nothing like the Sage of
Monticello's despotic embargo, his unconstitutional Louisiana
Purchase, or his vindictive witch-hunt against Aaron Burr disfigured the
New Yorker's term. Nor anything to compare with Old Hickory's
executive bullying of South Carolina, France, or Congress (among
others). Van Buren remained truer to Old Republican principles than
either of these more renowned champions of liberty, even though the
Panic of 1837 arguably presented as weighty a temptation for compromise.
Because I am holding Van Buren up to a libertarian yardstick,
perhaps it would be more appropriate to compare him with other
nonactivist chief executives, whom mainstream historians tend to
dismiss. Grover Cleveland, a later Democratic president who similarly
confronted a major economic depression, is in my opinion the strongest
contender for superior accolades, but his signing of the Interstate
Commerce Act, his use of troops during the Pullman strike, and his
involvement in the Venezuelan boundary dispute demonstrate a weaker
commitment to free markets, civil liberties, and nonintervention. Warren
Harding and Calvin Coolidge, it is true, implemented the brilliant
fiscal program of Secretary of the Treasury Andrew Mellon, yet the
economic meddling of their Secretary of Commerce, Herbert Hoover,
cancels out the accomplishment. John Tyler looks good so long as one
focuses only on his vetoes; I have already mentioned the bills he signed
and his Texas intrigue, to which one can add the suppression of the Dorr
Rebellion in Rhode Island. One thing alone disqualifies Millard Fillmore
from consideration: the Fugitive Slave Act of 1850, among the most
draconian laws Congress ever passed. As for Franklin Pierce and James
Buchanan, even if we overlook their proslavery policies in Kansas,
Pierce still has his imperialistic ambitions, revealed in the Ostend
Manifesto, and Buchanan stands indicted for dispatching the army to Utah
in the Mormon War. And the single-term, post--Civil War
Republicans--Rutherford B. Hayes, James A. Garfield, Chester A. Arthur,
and Benjamin Harrison--with their high protective tariffs, pork-barrel
subsidies, and profligate veterans' benefits, are not even in the
But the case for Van Buren's greatness goes beyond his being
the least bad U.S. president. While avoiding foreign wars, he did more
than maintain the domestic status quo. He reduced the power and reach of
central authority in the face of stiff resistance, and thereby he helped
the American economy weather one of its most severe deflations. The
Little Magician also brought an ideological clarity to American politics
that has seldom been equaled. Although the Democracy would stray in
significant and reprehensible ways from the principled course he had
charted, his efforts left an enduring legacy. The Democratic Party
remained the political alliance with the strongest affinity for laissez
faire, personal liberty, and free trade until almost the turn of the
century. All will acknowledge, I believe, that Americans once enjoyed
greater freedom from government intervention than any other people. For
that accomplishment, Martin Van Buren deserves as much credit as any
other single individual--and certainly more credit than any other
president of the United States.
Acknowledgments: This article was originally prepared for a
conference sponsored by the Ludwig von Mises Institute in October 1998.
It will appear in a forthcoming volume, Reassessing the Presidency. I
thank Fabbian George Dufoe III, Lynda Esko, K. R. Constantine Gutzman,
Michael F. Holt, Ross Levatter, Charles J. Myers, Robert V. Remini,
Larry Schweikart, Richard H. Timberlake, Jr., and Dyanne Petersen for
their comments. Of course, I alone am responsible for any remaining
(1.) Three older biographies of Van Buren are Shepard 1899, Lynch
1929, and Alexander 1935, all of which give little space to his
presidency. A more recent biography, Niven 1983, is detailed and
sympathetic. But Niven likewise races through the presidential years,
and his treatment of ideological issues is often sparse or nonexistent.
More attentive to ideas, although harsher in its judgments, is the
political biography by Cole (1984). The best book on the subject,
however, is Wilson 1984, a magnificent account of the Little
Magician's presidency. Another volume devoted exclusively to Van
Buren's presidency, Curtis 1970, is more focused on politics and
not as strong in its analysis of economics. For Van Buren's earlier
years, Remini 1959 is indispensable. Unfortunately, Van Buren's
autobiography (Fitzpatrick 1920) cuts off before the presidential years.
(2.) See Borden 1961, 1971. The chosen ten (with asterisks
indicating the wartime presidents) were Washington, Adams,* Jefferson,
Jackson, Polk,* Lincoln,* Cleveland, T. Roosevelt, Wilson,* and F. D.
Roosevelt.* Two others from this list might be considered wartime
presidents as well, because the war with the Barbary pirates occurred
during Jefferson's first term, and the United States was still
suppressing the Filipino insurrection when Theodore Roosevelt assumed
office. Borden based his initial choices on a 1948 poll of fifty-five
historians, conducted by Arthur M. Schlesinger, Sr., and published in
Life magazine. Subsequent presidential ratings appear in Bailey 1966,
Neal 1982, and Murray and Blessing 1994. Most recently, Arthur
Schlesinger, Jr. (1996), reported on a recent presidential poll of
historians. The predominance of wartime presidents remains unaltered
throughout all these efforts.
(3.) Both Curtis (1970, 152-88) and Wilson (1984, 147-69) provide
excellent coverage of Van Buren's foreign policy. For additional
details on Texas and Mexico, consult Smith 1919 and 1941, Merk 1972,
Pletcher 1973, and Morse 1997.
(4.) Again, Curtis 1970 and Wilson 1984 are fine accounts of Van
Buren's diplomacy. Corey 1941, an older work on Canadian--American
relations, can be somewhat unreliable on Van Buren's role. The best
treatment of the disputes with Canada is Jones 1977. Also helpful are
Burrage (1919, 231-311); Elliott (1937, 33544, 356-66); Kinchen 1956;
Eisenhower (1997, 176-23, 195-203); and Stevens 1989.
(5.) Richardson (1922, vol. 2, 1547, 1561-62). Van Buren also
discussed the causes of the panic, in probably the most economically
sophisticated presidential address ever penned. His explanation combined
a rudimentary version of the Austrian trade-cycle theory and a
discerning presentation of the real-bills doctrine, along with an
emphasis on the international factors that cliometricians have recently
demonstrated to be decisive. On top of all that, the message made an
objection to a national bank that remains unanswered still: "In
Great Britain where it has been seen the same causes have been attended
with the same effects, a national bank possessing powers far greater
than are asked for by the warmest advocates of such an institution here
has also proved unable to prevent an undue expansion of credit and the
events that flow from it" (1545-46).
(6.) Congressional Globe (January 31, 1838), 25th Cong., 2d sess.,
(7.) Benton (1854-56, vol. 1, 657). Calhoun's role in putting
distribution into the Deposit-Distribution Act of 1836 is revealed in
McFaul (1972, 132-34) and Wiltse (1949, 257-58, 265-67). Although
Jackson himself had earlier toyed with idea of distribution, his
preferred plan was to eliminate the surplus by reducing tariffs and land
prices, whereas the Democrats in Congress had proposed investing the
surplus in state bonds. See Remini (1984, 322-25); Sellers (1957,
223-33); Bourne 1885; and Timberlake 1960a, which was revised and
reprinted as chapter 5 of Timberlake 1993.
(8.) Wilson 1984 offers the most complete (indeed almost the only)
discussion of the alternative versions of the Independent Treasury and
the differing views of its supporters. Schlesinger (1945, 227-29) is
still one of the best accounts of the intellectual origins of this idea,
but also see Dorfman (1946, vol. 2, 610-14). The Jacksonian hard-money
theoretician William M. Gouge first proposed it (Gouge 1833). In 1834
Philadelphia economist Condy Raguet tried to interest members of
Congress in the proposal, and Congressman William Fitzhugh Gordon of
Virginia, a former Democrat who had followed Calhoun out of the party,
aired the idea in the House. Meanwhile Jackson's acting Secretary
of the Treasury, Roger B. Taney, hired Gouge as a clerk in the
department. Thus Calhoun's claim, endorsed by his biographer Wiltse
(1949, 343-61), that it was the Nullifier who prompted Van Buren into
pushing the Independent Treasury is ludicrous.
(9.) For a revisionist defense that asserts the amount that the New
York collector owed was only $200,000, exactly as much as he admitted
to, see Brunson 1989.
(10.) Richardson (1922, vol. 3, 1762, 1766, 1769). Congress had
already enacted a series of Jackson administration proposals designed to
promote hard money: (1) an 1834 change in the mint ratio to encourage
the circulation of gold coins; (2) an 1835 expansion of the United
States Mint; (3) a renewal of the legal-tender status of foreign coins;
and (4) a phased-in prohibition in the Deposit-Distribution Act of 1836
against the issue of small banknotes by government depositories, which
replaced prohibitions the Secretary of the Treasury had already imposed
administratively. See Martin 1974. The hostility to small banknotes
dated back to Adam Smith, was not confined to hard-money advocates, and
was implemented by many state statutes. It was, however, at cross
purposes with the new mint ratio, which tended after the California gold
discoveries to drive silver coins out of circulation. Because silver
coins were more suitable for small transactions, the interaction of the
mint ratio with prohibitions on small notes created a shortage of cash
in small denominations. Timberlake (1993, chap. 9) is the only economist
to examine this problem seriously. The Coinage Act of 1853 was a
subsequent attempt to rectify the deficiency by authorizing subsidiary
silver coins, but the economy still relied heavily on private
alternatives. Details are in Carothers 1930.
(11.) The standard condemnation of the free-banking era is most
readily accessible in Hammond 1957. Subsequent research has so
thoroughly overturned everything Hammond had to say about the politics
of banking, and modern economic and financial theory has so thoroughly
outdated all of his theoretical analysis, that it is astonishing that
scholars still take this work seriously. The revisionist research on
free banking has been spread mainly through journal articles; three
summaries are Sechrest (1993, chap. 6), Dowd 1992, and Rockoff 1991.
Most contributions to this revision are either by Rockoff (1971, 1972,
1985, 1974) or by Rolnick and Weber (1982, 1983, 1984, 1985, 1986).
(12.) Works on the operation of the Independent Treasury include
Kinley 1893, Phillips 1909, Taus 1943 and Timberlake 1960b, reprinted as
chapter 6 in Timberlake 1993. Subtreasury vaults for holding government
funds formally lingered on until 1921, when the Federal Reserve System
superseded them, but none of the motivating hard-money features
remained. The Civil War's national banking system and Greenbacks
had by then eviscerated the Independent Treasury.
(13.) Speech of Congressman J. A. Rockwell of Connecticut,
Congressional Globe (January 11, 1848), 30th Cong., 1st Sess., appendix,
106; U.S. Senate Executive Documents, no. 196: 114, 286, 340, 521,529.
(14.) Feller 1984, which supersedes both Stephenson 1917 and
Wellington 1914. Congress had passed the first preemption act in 1830,
but it was retrospective, applying to past squatters on government land,
and so required periodic renewal.
(15.) Van Buren, in December 1840 after his electoral defeat,
summarized what he considered his administration's accomplishments.
His fourth annual message to Congress listed "two- contested points
in our public policy" that had dominated his term: "I allude
to a national debt and a national bank.... Coming into office the
declared enemy of both, I have earnestly endeavored to prevent a resort
to either." Unwilling to raise taxes to balance the budget, Van
Buren could claim: "The small amount of Treasury notes ... still
outstanding" is less "than the United States have in deposit
with the States." Here Van Buren was referring to the $28 million
distributed to the states, technically in the form of a loan, by the
Deposit-Distribution Act of 1836 (Richardson 1922, vol. 3, 1824, 1828).
(16.) The best overall treatment of these economic fluctuations and
their causes is Temin 1969. But also consult chapter 5 of Timberlake
1993. Together Timberlake and Temin have demolished the traditional view
that Jackson's Specie Circular brought on the banking crisis of
1837. As Timberlake concludes, "The Specie Circular was dramatic
but inconsequential" (61). However, Temin inexplicably rejects
Timberlake's persuasive case that Clay's distribution of the
surplus was a major contributing factor to the earlier panic. Additional
details are in McGrane 1924, Smith and Cole 1935, Rezneck 1935
(reprinted as chapter 4 of Rezneck 1968), Macesich 1960, and Rockoff
1971. Although there are crude consumer price indices dating back to
this period, I have followed Temin and other authorities in quoting the
more reliable and extensive wholesale price indices. Presumably consumer
prices would show less amplitude in their fluctuations. Noneconomists
tend automatically to assume that because the price decline was more
severe after the suspension of 1839 than after 1837 that the resulting
depression must also have been more severe. As we shall see, the
evidence does not support that conclusion.
(17.) Most of this comparison is drawn from Temin (1969, 157). His
table shows the money stock falling by 27 percent during the Great
Depression, because he was looking at M1. If he had used M2 instead,
which is more consistent with his nineteenth-century definition of the
money stock, he would have found the two monetary contractions to be of
almost identical magnitudes. To get the 16 percent increase in output
for 1839-1843, Temin relies on Robert E. Gallman's unpublished
annual estimates of U.S. GDP. Berry 1988 offers less satisfactory
estimates, which yield only a 6 percent rise in output over the four
years. Others who have noted similarities between the two episodes
include Friedman and Schwartz (1963, 299), North (1961, 202), and
Hammond (1957, 529). Hammond as usual misinterprets the evidence and
draws the wrong conclusion.
(18.) Hoover's contributions to price rigidity are exposed in
three works by Rothbard (1970, 1972, 1975). See also Vedder and Gallaway
(1997, 74-111, 128-49).
(19.) Warren 1935, 56-85. A compromise bill, providing for both
voluntary and involuntary bankruptcy but exempting corporations (which
means all state-chartered banks), passed the Senate on June 25, 1840,
while Van Buren was still in office, but was rejected by the
Democrat-controlled House. The Whigs in 1841 passed a similar measure
with some blatant logrolling, in which western votes for bankruptcy were
bought with the promise of eastern votes for distribution.
(20.) Satz 1975; Prucha 1969, 249-306; Mahon 1967; Foreman 1932.
The authorized increase in the regular army took effect in July 1838,
but an examination of U.S. Department of Commerce 1975, Series Y904-16,
reveals that total army personnel had risen to 12,449 by 1837. That
increase occurred because the Seminole War had already induced Congress
to authorize in May 1836, while Jackson was still president, enlistment
of ten thousand additional emergency troops to serve for six to twelve
(21.) Brown 1966 is an influential but simplistic argument that
Martin Van Buren's Democracy was intentionally and unequivocally
proslavery--an argument echoed in Richards 1979. For more sophisticated
and balanced considerations of this question, see McFaul 1975; Riker
(1982, 213-32); Freehling (1990, 287-352); Greenstone (1993, 154-85);
and Wilentz 1996.
(22.) Cunliffe (1968, 197-99); Weigley (1967, 156-57); Rippy (1935,
175-77); Curtis (1970, 199-201); Wilson (1984, 188-89). For background
on the evolution of the militia during this period, consult Mahon (1983,
(23.) White (1954, 442-46); Short (1922, 1-6); Morrison (1903,
591-92). Neither Curtis 1970 nor Wilson 1984 mentions this regulatory
development. To my knowledge, there is no economic study of the efficacy
of steamboat inspection, but we may safely assume that it was as
inefficient and counterproductive as nearly all other federal
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Jeffrey Rogers Hummel is an adjunct associate professor in
economics and history at Golden Gate University.