Specie Circular

The Specie Circular (Coinage Act) was an executive order issued by U.S. President Andrew Jackson in 1836 and carried out by President Martin Van Buren. It required payment for government land to be in gold and silver currency.

History

The Act was a reaction to the growing concerns about excessive speculation of land after the Indian removal, which was mostly done with "soft money." Jackson issued this order to protect the settlers who were forced to pay greatly inflated land prices with devalued paper currency. After Jackson refused to renew the Second Bank of the United States, people who could not afford much paper money due to the fact that the US Treasury Department invested a lot of paper money in building railroads and canals began to purchase these new expensive lands by writing overbearing bank notes for these loans from state banks [http://www.u-s-history.com/pages/h967.html] . As a result, however, much paper money was instantly devalued. It also moved much of the specie (hard money) to the west to pay for land transactions at a time when eastern banks needed it. Specie was short in the East because the British government restricted specie transfer to the United States, which contributed to the Panic of 1837. This shortage led to a fall in cotton prices, a collateral in most American loans, which required specie. These loans became harder to acquire, cotton became devalued, and the U.S. economy suffered.