Currency

WHEN BROUGHT UP in election campaigns, the simple matter of currency, of coinage, of paper money, of gold versus silver versus neither, always represented something more. The Jacksonians's dislike of paper money would prove disastrous for the mid-19th century, but at its most prominent, the issue of currency was reduced to the lives of farmers versus the profits of banks and corporations. Nearly from its inception, the United States held to a derivative silver standard: the 1792 Coinage Act had codified the dollar, the decimal system of currency, and the standard weights of gold, copper, and silver for the units of that currency. However, the Bank of the United States was not required to hold in reserve the silver necessary to back its reserve notes.

President Andrew Jackson was strongly opposed to the Bank of the United States (which in his time was the second such bank, instituted five years after the dissolution of the first) and to paper money for a number of reasons, one of which was the resulting inflation (and simple stink of dishonesty) when bank notes were issued without the metal reserves to back them. In 1836, he issued the Specie Circular (or Coinage Act), which required public lands be bought from the government with hard currency instead of paper money. This caused a shortage of hard currency and a plummet in public land sales (and, thus, income for the federal government), which contributed to the Panic of 1837, that haunted the presidency of Jackson's successor, Martin Van Buren, who had just arrived in office.

The five-year depression that followed encompassed the whole of Van Buren's term, and was one of the worst economic crises in American history. Derided as Martin Van Ruin by his political opponents, he was virtually assured of a loss when he ran for re-election. William Henry Harrison defeated him soundly after a campaign that portrayed Van Buren as an elite rich man, deaf to the troubles of the working class who suffered from the effects of federal economic policy. The aftermath and issues surrounding the panic would continue to be campaign issues throughout the 19th century, even overshadowing the matter of currency until the end of the century.

In 1874, in the midst of the depression started by the panic of the previous year, the U.S. Greenback Party (which went through several name changes) formed in Indianapolis. Though it had a broad platform, the Greenback name referred to paper money, that the party formed to protect against the political movements seeking a return to hard currency, as Jackson would have wanted. Paper money was easier for the government to control, and for the Greenback Party, that control had to be kept in federal hands, not that of banks and corporations who profited at the expense of farmers. A dozen or so members of the party were [Page 158]elected to the House of Representatives, but none of its presidential candidates attracted major support, and by the middle of the 1880s, most Greenbacks had drifted to the Populist Party.

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