1820 James Monroe - Farming Bailout

After the war of 1812, America's exports came under great pressure from open trading in Europe due to the sudden emergence of peace after the Napoleonic wars. To bolster the American economy, the federal government allowed the Second Bank of the United States (forerunner to today's Federal Reserve System) to offer easy and sometimes fraudulent loans and print paper money. This fueled over speculation and inflation. Much of this speculation was over public lands recently opened up to the public in the Northwest Territory. Especially to farmers who could then purchase as little as 320 acres of land for $2 per acre. When the Bank tried returning to a sound monetary policy through deflation, land values plummeted. Overextended banks and landowners went broke. Farming and manufacturing declined and unemployment rose. Thus began the panic of 1819.

Politicians offered many remedies, from raising tariffs, printing more paper money and creating public works projects. For the most part, president James Monroe adhered to his policy of limited government intervention, but he did urge congress to "indulge" or bailout the public land owners. As congress deliberated on relief acts, James Monroe reminded them that the treasury which faced a $7 million deficit, was owed $23 million that had yet to be collected from the sale of public lands.

In James Monroe 1820 annual address to congress, he encouraged congress with these words:

"It is proper to add that there is now due to the Treasury for the sale of public lands $22,996,545. In bringing this subject to view I consider it my duty to submit to Congress whether it may not be advisable to extend to the purchasers of these lands, in consideration of the unfavorable change which has occurred since the sales, a reasonable indulgence. It is known that the purchases were made when the price of every article had risen to its greatest height, and the installments are becoming due at a period of great depression. It is presumed that some plan may be devised by the wisdom of Congress, compatible with the public interest, which would afford great relief to these purchasers."

Congress did follow suit with several relief acts, the most aggressive being the 1821 'Relief for Public Land Debtors' act. This act gave settlers a 37.5% discount off the original price of the land if they paid the whole amount in full. These relief measures, though well intended, proved misguided. Settlers needed more than just time to pay off their debts, and the number of forfeitures did not diminish.

http://www.presidency.ucsb.edu/ws/index.php?pid=29462
https://waltercoffey.wordpress.com/2012/08/19/the-panic-of-1819/
http://en.wikipedia.org/wiki/Relief_Act_of_1821
http://media.web.britannica.com/eb-media/94/134694-050-54E64BEC.jpg