By Allen Guelzo, Princeton University
The economic disasters of the Van Buren presidency were only made worse by his personal style; it was said that he “ate elegantly off gold plate” while a large portion of the country was starving. All this made him a prime target for the Whigs, who sensed in Martin Van Buren’s failures a vulnerability that could open the path to Washington City for them, for the first time.
Freefall of American Money
In the spring of 1837, English textile manufacturing slid into its first major economic slowdown. When it did that, it cut demand for southern cotton, and with that, the profits southern planters could hope to get from cotton also shrank.
Lenders and investors who held paper notes from southern banks, the banks in other words who had financed southern cotton growing, suddenly grew nervous that the shortfall in cotton profits would mean a shortfall in southern bank balance sheets. They therefore began cashing in their southern bank paper for specie. This quickly turned into a run on banks holding specie, and especially the pet banks where Jackson’s Specie Circular had forced people to deposit specie when buying federal land.
Within a month, New York banks had been forced to suspend all specie payments. Slow-footed lenders who hadn’t beaten it to the banks fast enough suddenly found themselves holding paper bank notes and other securities that the suspension of specie implied were actually worthless. Without a national bank to regulate the currency, and to put a brake on the flow of paper and specie, American money went into freefall.
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Shock and Panic of 1837
Local banks desperately called in loans, hoping to scrape up specie from their borrowers so they could have specie to give to depositors who came with their paper bank notes demanding specie in exchange. When those banks turned out to have too little specie left in their vaults, the banks could not meet the demands of their depositors and the holders of their bank notes, and closed their doors, taking down with them all the loans and businesses they had called in.
Thousands of workers were unemployed, 50,000 in New York City alone. The mills at Lowell were idled. Wages fell by 30 to 50 percent. Martin Van Buren never recovered from the shock and the panic of 1837. He was, of course, in no position to recommend recreating the Second Bank of the United States. Jackson and the Democratic Party would never have forgiven him if he had tried. The economic milk was already spilt anyway.
The Independent Treasury
Van Buren did attempt to get the government funds out of the pet banks by creating a compromise institution called an Independent Treasury, though. The Independent Treasury would be a central bank of deposit for government money, but it would be shorn of private investment and private shareholders, and also of the power to intervene directly in the economy in the form of loans.
The Independent Treasury scheme provided no remedy for the larger problems of the panic, however. It created a safe haven for depositing federal funds, but it also made sure that those funds would be available to help no one. The specie that accumulated in the vaults of the Independent Treasury would only be so much specie subtracted from the larger economy, and that only aggravated the crisis.
The economic disasters of the Van Buren presidency were made worse by his personal style. However, Van Buren was actually a more sympathetic and democratic person than the accusations claimed, but his hands were tied by Jackson and of the Democratic ideology, and so the nation reeled through his presidency without much direction or much hope from him.
The Whigs saw this as an opportunity that could open the path to Washington City for them, for the first time.
Henry Clay thought that his hour had struck, too, but the Whig Party leadership feared the possibilities of running as their nominee a man who’d already lost two bids for the presidency, and who would never quite shake the corrupt bargain charge of 1824.
Nomination of William Henry Harrison
Clay made the decision easier for them in the spring of 1839, when he unwisely blamed antislavery northerners for provoking southern slaveholder extremism. It was a case of blaming the victim. When a fellow senator warned Clay that his remarks might cost him the votes of the North in the 1840 presidential race, Clay snapped in return, “I had rather be right than president!”
The Whig leadership, who were not certain that he was right, were certain that he would never be president, and so they obliged Henry Clay by dumping him as their frontrunner, and nominating instead for 1840 the old hero of Tippecanoe, William Henry Harrison.
For once, the Whigs had the perfect formula for victory. Even though Harrison was a military chieftain himself, and a man of no ordinary wealth, the Whigs billed Harrison as a man of the people who would out-Democrat the Democrats, who would out-Jackson Andrew Jackson.
Van Buren never stood a chance. Harrison crushed Van Buren by an electoral college majority of 234 to 60, and with an easy popular margin of 150,000 votes. After three decades of nearly continuous rule by Thomas Jefferson and Jefferson’s heirs, from the revolution of 1800 through Andrew Jackson’s restoration of that revolution in 1828, an opposition party, frankly dedicated to the penetration of the market, was now in command of the federal government.
Common Questions about Van Buren Presidency
Martin Van Buren attempted to get the government funds out of the pet banks by creating a compromise institution called an Independent Treasury. The Independent Treasury was to be a central bank of deposit for government money.
While Martin Van Buren was actually a more sympathetic and democratic person than the accusations claimed, his hands were tied by Jackson and of the Democratic ideology. So the nation reeled through his presidency without much direction or much hope from him.
Harrison crushed Van Buren by an electoral college majority of 234 to 60, and with an easy popular margin of 150,000 votes.