Van Buren’s brilliance as a political manipulator— the Red Fox, the Little Magician—has tended to obscure his statesmanlike qualities and his engaging personality. He made a powerful argument, for example, that political parties were a force for unity, not for partisan bickering. In addition, high office sobered him, and improved his judgment. He fought the Bank of the United States as a monopoly, but he also opposed irresponsible state banks. New York’s Safety Fund System (requiring all banks to contribute to a fund) supervised by the state (to be used to redeem the notes of any member bank that failed) was established largely through his efforts. Van Buren believed in public construction of internal improvements, but he favored state rather than national programs, and he urged a rational approach: Each project must stand on its own as a useful and profitable public utility.
He continued to equivocate spectacularly on the tariff—in his Autobiography he described two of his supporters walking home after listening to him talk on the tariff, each convinced that it had been a brilliant speech, but neither having obtained the slightest idea as to where Van Buren stood on the subject—but he was never in the pocket of any special interest group or tariff lobbyist. He accounted himself a good Jeffersonian, tending to prefer state action to federal, but he was by no means doctrinaire. Basically he approached most questions rationally and pragmatically.
Van Buren had outmaneuvered Calhoun easily in the struggle to succeed Jackson, winning the old hero’s confidence and serving him well. In 1832 he was elected vice president and thereafter was conceded to be the “heir apparent.” In 1835 the Democratic National Convention unanimously nominated him for president.
Van Buren took office just as the Panic of 1837 struck the country. Its effects were frightening but short-lived. When the banks stopped converting paper money into gold and silver, they outraged conservatives but in effect eased the pressure on the money market: Interest rates declined and business loans again became relatively easy to obtain. In 1836, at the height of the boom in land sales, Congress had voted to “distribute” the new treasury surplus to the states, and this flow of money, which the states Promptly spent, also stimulated the revival. Late in 1838 the banks resumed specie payments.
But in 1839 a bumper crop caused a sharp decline in the price of cotton. Then a number of state governments that had overextended themselves in road - and canal-building projects were forced to default on their debts. This discouraged investors, particularly foreigners. A general economic depression ensued that lasted until 1843.
Van Buren was not responsible for the panic or the depression, but his manner of dealing with economic issues was scarcely helpful. He saw his role as being concerned only with problems plaguing the government, ignoring the economy as a whole. “The less government interferes with private pursuits the better for the general prosperity,” he pontificated. As Daniel Webster scornfully pointed out, Van Buren was following a policy of “leaving the people to shift for themselves,” one that many Whigs rejected.
Van Buren’s chief goal was finding a substitute for the state banks as a place to keep federal funds. The depression and the suspension of specie payments embarrassed the government along with private depositors. He soon settled on the idea of “divorcing” the government from all banking activities. His independent treasury bill called for the construction of government owned vaults where federal revenues could be stored until needed. To ensure absolute safety, all payments to the government were to be made in hard cash. After a battle that lasted until the summer of 1840, the Independent Treasury Act passed both the House and the Senate.
Opposition to the Independent Treasury Act had been bitter, and not all of it was partisan. Bankers and businessmen objected to the government’s withholding so much specie from the banks because they needed all the hard money they could get to support loans that were the lifeblood of economic growth. It seemed irresponsible for the federal government to turn its back on the banks, which so obviously performed a semipublic function. These criticisms made good sense, but through a lucky combination of circumstances, the system worked reasonably well for many years.
By creating suspicion in the public mind, officially stated distrust of banks acted as a damper on their tendency to overexpand. No acute shortage of specie developed because heavy agricultural exports and the investment of much European capital in American railroads beginning in the mid-1840s brought in large amounts of new gold and silver. After 1849 the discovery of gold in California added another important source of specie. The supply of money and bank credit kept pace roughly with the growth of the economy, but through no fault of the government. “Wildcat” banks proliferated. Fraud and counterfeiting were common, and the operation of everyday business affairs was inconvenienced in countless ways. The disordered state of the currency remained a grave problem until corrected by Civil War banking legislation.
((••—[Hear the Audio Van Buren at myhistorylab. com
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