Specie Circular
July 11, 1836.

Niles' Weekly Register
Baltimore, July 16, 1836.


To receivers of Public Money, and to the Deposite Banks
Treasury Department
July 11, 1836.

In consequence of complaints which have been made of frauds, speculations, and monopolies, in the purchase of the public lands, and the aid which is said to be given to effect these objects by excessive bank credits, and dangerous if not partial facilities through bank drafts and bank deposites, and the general evil influence likely to result to the public interests, and especially the safety of the great amount of money in the Treasury, and the sound condition of the currency of the country, from the further exchange of the national domain in this manner, the President of the United States has given directions, and you hereby instructed, after the 15th day of August next, to receive in payment of the public lands nothing except what is directed by the existing laws, viz: gold and silver, and in the proper cases, Virginia land scrip;  provided that till the 15th of December next, the same indulgences heretofore extended as to the kind of money received, may be continued for any quantity of land not exceeding 320 acres to each purchaser who is an actual settler or bona fide resident in the State where the sales are made.

In order to ensure the faithful execution of these instructions, all receivers are strictly prohibited from accepting for land sold, any draft, certificate, or other evidence of money, or deposite, though for specie, unless signed by the Treasurer of the United States, in conformity to the act of April 24, 1820.  And each of those officers is required to annex to his monthly returns to this Department, the amount of gold, and of silver, respectively, as well as the bills received under the foregoing exception;  and each deposite bank is required to annex to every certificate given upon a deposite of money, the proportions of it actually paid in gold, in silver, and in bank notes.  All former instructions on these subjects, except as now modified, will be considered as remaining in full force.

The principal objects of the president in adopting this measure being to repress alleged frauds, and to withhold any countenance or facilities in the power of the government from the monopoly of the public lands in the hands of speculators and capitalists, to the injury of the actual settlers in the new states, and of emigrants in search of new homes, as well as to discourage the ruinous extension of bank issues and bank credits, by which those results are generally supposed to be promoted, your utmost vigilance is required and relied on, to carry this order into complete execution.

Levy Woodbury,
secretary of the treasury.



Niles’ Weekly Register

July 23, 1836.

The Late Treasury Circular.

On publishing the treasury circular to the receivers of public money and the deposite banks, inserted in our last, the editors of the "Globe" preceded it by the following article, as explanatory of the views which induced the president to give directions to the secretary of the treasury to issue it:


From the Washington Globe.
Prevention of fraudulent speculation, and the conversion of the public domain into paper.

The public mind has been occupied for some months past with reports of frauds, speculations and monopolies in the public lands.  Associations of individuals, and even public men, have been charged with these practices;  and bank loans, bank certificates of money deposited, and public money in the deposits banks, have been the imputed means of their operations.  The land offices, in some instances, have been charged with connivance, and with aiding these associations, to the prejudice of settlers and cultivators.  These reports have reached the floor of congress, and have been reiterated in speeches, and made the subject of proceedings in both branches of the federal legislature.

In the senate a bill was reported from the committee on public lands, proposed to prevent frauds in the sales of the public lands, and particularly levelled at the combinations of individuals, who, availing themselves of facilities to obtain quantities of what is called land office money, that is to any, bank notes receivable for public lands, attend the sales, put down competition, monopolize purchases at low rates, and then compel settlers to purchase of them at advanced prices;  but the provisions of the bill were not deemed to be well adapted to its intended object, and, after a discussion in which the evil was admitted to exist in some states, but the efficacy of the remedy contested, the bill was laid upon the table, with assurances of renewed attention to the subject at the ensuing session.

In the house of representatives a more formal movement, and one of more comprehensive scope and grave import, was commenced, but too late in the session to admit of the investigations and matured reports which the subject required.  On the 20th of June, Mr. Hunt, of New York, submitted a resolution to raise a select committee, with power to rend for persons and papers, to examine into the use of public money, by public men, in speculating to the public lands;  which resolution was immediately adopted by the house;  and on the 2d day of July thereafter, being the Saturday before the adjournment of congress, Mr. Hunt made a brief report from the committees indicating the necessity for thorough and extended investigations, and praying for an enlargement of the number of the committees an extension of their inquiries, and leave to sit during the recess of congress.  This application was not granted.  A large number of members are opposed, on principle, to recess committees;  but the strong vote given for the inquiry, notwithstanding this objection, must be taken as a strong manifestation of the sense of the house in favor of Mr. Hunt's propositions.  Notice of intention to pursue the subject, remitted to the next session of course, was given;  and thus, in the house of representatives as well as in the senate, the session closed without any final action of congress to detect or arrest imputed violations of law, abusive practices, and improper proceedings in the important concern of the national domain, the national treasure, and the paramount interest of the cultivators of the the soil.

Congress having thus adjourned, the duty devolved upon president Jackson, as the chief magistrate of the republic, charged by the constitution to guard against the abuse of executive trust, and vested with a supervisory guardianship over the faithful execution of the laws, to examine into the complaints, and to satisfy himself whether a case be made out, either by direct proof or strong presumption, which would require the interposition of any remedy within the reach of his constitutional powers.  For this purpose, and in addition to the current reports, and to what was said in the public debates of both houses of congress, the president took into consideration the resolutions reported by the select committee of the house of which Mr. Hunt was chairman, which seemed particularly to challenge his attention for the extent of the abuse which they inferred, the official character of their origin, the serious weight which the vote of the house attributed to them, and the defeat or final action in that house from want of time and from well grounded objections to a recess committee.  Those resolutions were in these terms:

"Mr. Hunt, from the select committee, appointed to inquire whether members of congress or others had procured public moneys of the deposite banks for the purpose of speculating in the public lands, made a report accompanied by the following resolutions:

"Resolved, That the select committee appointed by this house an the 20th June, 1836, be increased to nine, and that said committee have power to sit during the recess of this house.

"Resolved, That said committee embrace in their inquiries any connection between deposite banks and others and the land offices for the purposes of speculation.

"Resolved, That said committee inquire how far, and to whom, for speculation in public lands, the deposite banks have issued certificates of deposite without an actual deposite in cash, and to what extent they have been received in payment for purchases of public lands at the several land offices.

"Resolved, That said committee inquire how far, and to what extent, combinations in the purchase of the public lands haves been formed, or are forming, sufficiently strong, from interested motives, to control to any extent the legislative action of congress."

Here was grave matter, very proper at any time, and especially in the absence of congress, to engage the consideration of the executive.  Speculations in the public lands -- connexion between the deposite and other banks, and land officers, for the purposes of speculation -- certificates of bank deposites, without actual deposites, to aid speculators in purchasing public lands -- combinations to engross the purchase, and to control the legislative action of congress in relation to the public lands;  such were the serious implications, and startling suggestions, resulting from the proposition of these resolutions;  and although they might be merely resolutions of inquiry, and conclusive of nothing, yet they were resolutions emanating from a committee which had commenced an investigation into the subject, and whose application for enlarged powers, increased numbers, and leave to sit in the recess, sufficiently attested their belief in the sufficiency of the grounds for an extraordinary proceeding on the part of the house.

Without at all deciding the question how far the implications resulting from these resolutions might be well- or ill-founded, as they regarded individuals, the president felt himself called upon by the gravity of their character, reinforced by current reports and public debates, to look into all the points of violated law and abuse of trust, which were accessible to his examination.  The most prominent of these evils obviously connected themselves with that which, in the vague jargon of the paper system, is called "bank facilities," comprehending loans of bank notes, certificates of deposite, letters of credit, leave to draw, and all that kind of invisible machinery by which combinations of speculators and associations of official and influential characters would be able to accumulate what is called "land office money," that is to say, any thing except real money, and every thing in the shape of paper, which could be exchanged for public land;  and by this accumulation of paper funds, and combination of active members, to be able to become engrossers in the land market, outbid and deter resident cultivators, oust settlers from their selected spots, beat down or buy off competition, monopolize the sales, and then retain a barren possession over the whole, or retail inferior parcels to settlers and cultivators at advanced prices and for real money.

Of all these "bank facilities," the certificates of deposite, and the drafts drawn upon them, presented themselves in the most questionable form.  Even if legal, they were liable to gross abuses, even to fictitious issues, as implied in one of the committee's resolutions, and would have given to strangers and speculators the undue advantage of making payments on distant banks in their own drafts, while settlers and cultivators would be required to pay down in money counted.  This would be a reversal of the rules of propriety;  for surely, the cultivator of the soil should have the advantage in the purchase of what he was acquiring for the purpose of using, and that for the public good as well as his own.  But this description of of "bank facilities" did not happen to be legal.  It turned out to be a practice without law, and is contravention of law, and a strange degeneracy from the legal payment authorised to be made to the treasurer of the United States.  This is the law:

"Sec. 2.  And be it further enacted, That credit shall not be allowed for the purchase money on the sales of any of the public lands which shall be sold after the first day of July next [1820], but every purchaser of land sold at public sale thereafter, shall, on the day of purchase, make complete payment therefor;  and the purchaser at private sale shall produce to the register of the land office a receipt from the treasurer of the United States, or from the receiver of public moneys of the district, for the amount of the purchase money on any tract, before he shall enter the same at the land office;  and if any person, being the highest bidder, at public sale, for a tract of land, shall fail to make payment therefor, on the day on which the same was purchased, the tract shall be again offered, at public sale, on the next day of sale, and such person shall not be capable of becoming the purchaser of that or any other tract offered at public sale." [Act of April 24, 1820.]

This is the last act upon the subject, and certainly nothing can be more plain than its enactments and its intentions.  To stop the credit sales, to reduce the price of lands, (which is done in the 3d section), and to authorise payments to be made to the treasurer of the United States in addition to the receiver of the district, are the objects and enactments of the act.  Not one word about deposites in banks, and draft drawn upon them.

Here then was illegality clearly detected in one branch of these "bank facilities;"  and a specific order directed to this point might readily lop off one branch of the evil;  but the abuse would not thereby be cured.  The source of the evil was too wide and deep, and had too many issues, to be cured by lopping off branches.  The fountain had to be reached;  and that fountain lay in the paper system, in the multiplication of banks, in the floods of bank notes which they issued, and in the general receivability of them now for the public lands;  a receivability which virtually convened the national domain into a fund for the redemption of all these bank notes, and a capital for seven or eight hundred banks to bank upon.  To stop the certificates, and leave the notes receivable, would only put the speculators to the trouble of packing the notes instead of carrying the certificate, and the evil to the public would be the same as before.

Having reached the source of the evil, the next inquiry was into the nature of the remedy which that evil required.  Here the field, so far as the law was concerned, was completely open.  No law of congress, now that the 14th section of the U. States bank charter is repealed, and the treasury notes are redeemed, requires any description of bank notes to be received in payment of public dues.  The joint resolution of 1816, which relates to the point, is merely permissive of such reception, and refers the selection of bank notes, under limitations to restrict and not to enlarge his action, to the discretion and responsibility of the secretary of the treasury;  and this brings the whole matter under the supervision of the president, as the constitutional sentinel over the executive trusts, to whatever agent confided.

The joint resolution of 1816 was intended to restrain, not to unbridle, the secretary -- to improve, not to deteriorate the currency -- to secure, nut to endanger, the revenues -- to repress, not to enlarge, the power of the banks.  At that time very few banks paid specie.  There was, in fact, a general suspension of specie payments in the south and west, and throughout the middle states.  The federal government by the strange error and deplorable fatuity of not re-establishing the constitutional currency at the expiration of the old bank of the United States in 1811, and becoming dependent upon the local banks for their paper currency, which was received in payment of all federal dues, soon experienced the fate of a dependant;  it had to continue the receipt of this paper after the banks ceased to redeem it -- it had to submit to their violations of law -- it had to treat with them as independent sovereignties -- it had to pocket, in the unavailable funds, a loss of a million at least -- and, what was far worse, ended with agreeing to the necessity of re-establishing the bank of the United States -- that tyrant institution, stronger than an army, which congress cannot disband;  and which, under disguise, retains all its original character, and with a state charter retains its national organization, preserves its branches under the title of agencies, and confidently awaits the moment when the people, thrown of their guard, shall permit a bank president to be elected, or a majority of two-thirds bank senators and representatives, to occupy the floors of congress.

These are some of the evils which the general receivability of local bank paper occasioned a few years ago, and which the joint resolution of 1816 was intended to prevent;  but they are not all.  Monopolies and speculations in land had their reign than and now, and the years 1816, '17, '18, have more parallels then that of surplus revenue, to the present times.  The banks to which the joint resolution of 1816 was applicable, at the time of its passage, were comparatively few and of small capital;  yet speculations, monopolies, surpluses and unavailable funds were the result.  Now the same resolution is applicable to three or four times the number of banks which then existed, with capitals of millions where they then had thousands, and all multiplying and increasing with the annual assemblages of the state and territorial legislatures.

With this legion of banks and their floods of paper flowing into the pockets of speculators, and all receivable for federal dues under the joint resolution of 1816, but receivable at the discretion, and upon the high responsibility, of the secretary of the treasury and of the president, a renewal of the scenes of 1816, '17, '18, was among the results to be regularly counted upon;  and, according to the debates in congress, the resolution of Mr. Hunt's committee, the frauds bill of the land committee of the senate, and the current reports, some of the worst of these scenes are now in full exhibition -- speculations, monopoly, fraud, combinations to cheat the government and to oppress the settler -- aggravated by suspected connexions between public men and public money, deposite banks and land officers, and giving birth to powerful associations "to control the legislative action of congress," in relation to the national domain and the national treasure !

These are serious matters, and brought forward in a way to command inquiry, to arrest public attention, and to require the faithful exercise of high and responsible duties.  The general receivability of bank notes for public lands is the root of the evil, the head source and fountain of the mischief.


---[Senators Henry Clay, Daniel Webster, Thomas Ewing --great friends of the people, domestic industry, internal improvements, and the American System-- stood up and spoke against this Treasury Circular, and, with the support of other friends of speculators, monopolists and bankers, passed the repeal its instructions.


On December 12, 1836, Senator Ewing of Ohio introduced his Joint Resolution to Rescind the Treasury Order of July 11, 1836.]


Resolved by the Senate and House of Representatives of the United States of America in Congress assembled, That the Treasury order of the eleventh day of July, anno Domini one thousand eight hundred and thirty-six, designating the funds which should be receivable in payment for public lands, be, and the same is hereby rescinded.

Resolved, also, That it shall not be lawful for the Secretary of the Treasury to delegate to any person, or to any corporation, the power of directing what funds shall be receivable for customs, or for the public lands; nor shall he make any discrimination in the funds so receivable, between different individuals, or between the different branches of the public revenue.


debates of joint resolution
Benton
Monday, December 19, 1836.

Ewing
December 14, 1836.

Webster on December 21, 1836.

"Mr. President, I am indifferent to the form in which the Treasury order may be done away. Gentlemen may please themselves in the mode. I shall be satisfied with the substance. Believing it both illegal and injurious, I shall vote to rescind, to revoke, to abolish, to supersede, to do anything which may have the effect of terminating its existence."