1837 Martin Van Buren - Panic of 1837

In 1833 Andrew Jackson shutdown the Second Bank of the United States, the country's national bank, and used his executive power to redistribute all funds to various state banks. Then, as Jackson left office, he and congress redistributed a federal surplus of $37 million from the federal treasury to the states and increased government spending. This resulted in the Treasury withdrawing $9 million from the state banks, causing several of them to fail. Thus began, the panic of 1837. To ensure that the government could keep operating, Van Buren obtained authorization from congress to issue $10 million in US Treasury notes. In his 1837 address to congress, he announced:

"Notwithstanding the great embarrassments which have recently occurred in commercial affairs, and the liberal indulgence which in consequence of these embarrassments has been extended to both the merchants and the banks, it is gratifying to be able to anticipate that the Treasury notes which have been issued during the present year will be redeemed and that the resources of the Treasury, without any resort to loans or increased taxes, will prove ample for defraying all charges imposed on it during 1838."

Over the next two years, the 'Panic of 1837' turned into a depression. 170 years later we forget history and repeat our mistakes.

http://www.presidency.ucsb.edu/ws/?pid=29479
http://en.wikipedia.org/wiki/Panic_of_1837
https://en.wikipedia.org/wiki/Panic_of_1837#/media/File:The_times_panic_1837.jpg

Abraham Lincoln enters the scene

One hero did arise out of the 'Panic of 1837', that is a distinguished gentlemen from Illinois. Abraham Lincoln was vehemently opposed to the abolishing of the Second Bank of United States. He argued that it was constitutional and that even the supreme court had determined it so. He argued that abolishing the central bank would not hurt the wealthy, but rather the middle class. Here is an excerpt from one of his speeches in January of 1837:

“But supposing we had the authority, I would ask what good can result from the examination? Can we declare the Bank unconstitutional, and compel it to cease operations? Can we compel it to desist from the abuses of its power, provided we find such abuses to exist? Can we repair the injuries which it may have done to individuals? Most certainly we can do none of these things. Why then shall we spend the public money in such employment? O, say the examiners, we can injure the credit of the Bank, if nothing else. Please tell me, gentlemen, who will suffer most by that? You cannot injure, to any extent, the Stockholders. They are men of wealth – of large capital; and consequently, beyond the power of fortune, or even the shafts of malice. But by injuring the credit of the Bank, you will depreciate the value of its paper in the hands of the honest and unsuspecting farmer and mechanic, and that is all you can do. But suppose you could effect your whole purpose; suppose you could wipe the Bank from existence, which is the grand ultimatum of the project, what would be the consequence? Why, sir, we should spend several thousand dollars of the public treasure in the operation, annihilate the currency of the State; render valueless in the hands of our people that reward of their former labors; and finally, be once more under the comfortable obligation of paying the Wiggins’ loan, principal and interest.”

http://abrahamlincolnsclassroom.org/.../abraham-lincoln.../