During the Jackson years (1829-1837) credit extensions by traders and speculators (Europeans, too) to the public and Indians getting annuity payments were ripe with fraud. Jackson sensed that soon every aspect of business would suffer. Inflation was out of control. The business of America was growing by leaps and bounds - the land boom was operating at fever pitch and Jackson would use his 'specie circular' to slow down the criminal activity, which was to strike the public without warning.
Extensive tracts of the most valuable Indian lands were soon being thrown into the market. The officers of speculators and bankers were so devoid of all sense of honor as to practice by daylight the most barefaced lies and frauds against poor men who could least afford it. Trusted bank and government officials joined the ranks as speculators showering others with criminal favoritism. Those who were wealthy would bribe others to secure the greatest numbers of acreage to hold wild and free.
President Jackson sensed economic danger ahead and then ordered the issue of his "specie circular," which meant that all Federal lands (Indian or American) must be purchased in gold and silver. Fraudulent land deals were running rampant with worthless western currency and Jackson's newly ordered specie circular law shocked the speculators and economy - downturn. The criminally negligent really started the Panic of 1836-37. This is what Jackson attempted to do - break the fraud.
The specie circular law came into force when greedy officials were swindling honest purchasers in detail and bulk. Methods of fraud were extensive, but this new law required that each parcel of land be offered first at auction. Bids were required to be in writing and placed in a box previous to the day of sale, but Jackson was unaware of the extent of dishonest businessmen who would rule the day.
When the day of final decision arrived and the boxes were opened all bids were missing except the one put in by bribery to secure the largest tracts of land. Under rules of engagement by Jackson's specie law only gold and silver or the bills of a few favored petty banks were received for lands. The tender for the land caught the poorest of men unprepared who were unaware of specie circular demands. They couldn't by the land on credit, however, some greedy officials exchanged cash from credit at 30% interest, which was way beyond the livable means of repayment.
Those living on borrowed cash from credit were operating beyond the livable means of repayment and those who did so lost it to forfeiture and inability to pay taxes. Jackson was unaware of the depth of greed gripping the country. He knew it was bad, but wasn't expecting a financial panic.
A broker's office was usually across the street from the land office and here is where the fleecing of poorer men began. People said it was good to have a brokerage nearby for gold and silver, which was in high demand and paying a 10% premium.
Yes, gold in America was in short supply. Gold wasn't discovered in California until 1847 so where did Jackson get gold and silver coinage? Well within two years of the Treaty of 1836 Jackson had established petty banks.
Jackson before 1836 paid off the National Debt - no other President in America's history has ever done it - the debt under Pres. Obama went from $9 trillion to 18.5 Trillion dollars from 2009-2015. Will the war on terror break America?
When the Treaty of 1836 was signed, the National Debt had a zero balance and the U.S. Treasury had a $40 million dollar surplus.
Jackson had invested 36 million dollars into a handful of his newly established "petty banks" and another four million dollars was used to purchase specially minted gold and silver coinage from Spain and Italy. He had it in reserve for distribution to Indians for land payment prior in the spring of 1838 after the introduction of his specie circular law. As land speculation boomed so did hundreds of new banks operating on fraud. (continued)