34 I^'Ci Ryncr 



As an indication of the speculative character of the times, a 

 glance at the securities market may be of interest. The Spanish 

 loans of 1834-35, according to Crump/ "engendered such a 

 spirit of speculation in kindred securities which had been 

 neglected that in some cases there was a rise of 100 per cent." 

 This advance in securities received a temporary check by the 

 panic of 1835. Immediately after this slight panic prices revived 

 and there was increased speculation, especially in American se- 

 curities, which continued- until the breaking out of the crisis. 

 Finally, in June, 1839, upon the announcement of the directors 

 of the Bank that the bank rate was to be 53^ per cent and ad- 

 vances were to be made upon bills of exchange only, there was 

 a general fall in the prices of securities.^ 



The United States, on account of increased confidence abroad, 

 due largely to the reduction of our public debt, had been enabled 

 to do an extensive credit business with Europe. Furthermore, 

 the extension of credit and the creation of credit institutions were 

 going on at home at a very rapid rate. State bonds were sold to 

 form banks and construct canals. Vast tracts of western land 

 were purchased on time, and part payments were made with an 

 inflated paper currency. 



In addition to this over-extension of credit, the situation was 

 rendered worse by certain financial measures taken by the ad- 

 ministration. July II, 1836, was issued the specie circular, 

 requiring specie payment for land^sales in the future. Further- 

 more, about the same time occurred the distribution of the surplus 

 revenue. In accordance with this measure about $37,000,000 

 were to be distributed among the states according to pop- 

 ulation. About $28,000,000 were actually turned over, half of 

 which amount was transferred during the early part of the year 

 1837.^ This resulted in disturbance due to the transfer of cap- 

 ital rendered necessary because of the fact that a large part of 

 the deposits were in the less populous states. 



* Crump, The Key to the London Money Market, 29. 



^Ibid., 30. 



*Dewey, Financial History of the United States, 220. 



176 



