[Sidenote:  Distribution of the surplus.]

[Sidenote:  Van Buren elected President, 1836.]

313.  Distribution of the Surplus, 1837.—­A curious plan was now hit upon.  It was to loan the surplus revenues to the states in proportion to their electoral votes.  Three payments were made to the states.  Then the Panic of 1837 came, and the government had to borrow money to pay its own necessary expenses.  Before this occurred, however, Jackson was no longer President.  In his place was Martin Van Buren, his Secretary of State, who had been chosen President in November, 1836.

CHAPTER 30

DEMOCRATS AND WHIGS, 1837-1844

[Sidenote:  Causes of the Panic.]

[Sidenote:  Hard times, 1837-39.]

314.  The Panic of 1837.—­The Panic was due directly to Jackson’s interference with the banks, to his Specie Circular, and to the distribution of the surplus.  It happened in this way.  When the Specie Circular was issued, people who held paper money at once went to the banks to get gold and silver in exchange for it to pay for the lands bought of the government.  The government on its part drew out money from the banks to pay the states their share of the surplus.  The banks were obliged to sell their property and to demand payment of money due them.  People who owed money to the banks were obliged to sell their property to pay the banks.  So every one wanted to sell, and few wanted to buy.  Prices of everything went down with a rush.  People felt so poor that they would not even buy new clothes.  The mills and mines were closed, and the banks suspended payments.  Thousands of working men and women were thrown out of work.  They could not even buy food for themselves or their families.  Terrible bread riots took place.  After a time people began to pluck up their courage.  But it was a long time before “good times” came again.

[Sidenote:  The national finances.]

[Sidenote:  The Sub-Treasury plan.]

[Sidenote:  Independent Treasury Act, 1840.]

315.  The Independent Treasury System.—­What should be done with the government’s money?  No one could think of depositing it with the state banks.  Clay and his friends thought the best thing to do would be to establish a new United States Bank.  But Van Buren was opposed to that.  His plan, in short, was to build vaults for storing money in Washington and in the leading cities.  The main storehouse or Treasury was to be in Washington, subordinate storehouses or sub-treasuries were to be established in the other cities.  To these sub-treasuries the collectors of customs would pay the money collected by them.  In this way the government would become independent of the general business affairs of the country.  In 1840 Congress passed an act for putting this plan into effect.  But before it was in working order, Van Buren was no longer President.