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Difficulty: MediumJackson and Federal Power Conflicts

Circular to Receivers of Public Money, and to the Register of the Land Office, July 11, 1836:

"In consequence of complaints which have been made of frauds, speculations, and monopolies, in the purchase of the public lands, and the aid which is said to be given to effect these objects by peculiar accommodations to several banking institutions, and in order to discourage the ruinous extension of paper money and bank credits... the President of the United States has given directions, and you are hereby instructed, after the 15th day of August next, to receive in payment of the public lands nothing except what is directed by the existing laws, viz: gold and silver..."

Which of the following was a major economic consequence of the policy described in the excerpt?

  1. A sharp decline in land sales followed by a severe economic depressionAnswer
  2. B
    The recharter of the Second Bank of the United States to stabilize the national currency
  3. C
    A Supreme Court decision under John Marshall striking down the executive order as an abuse of power
  4. D
    The implementation of federal funding for internal improvements under the American System

Answer

A sharp decline in land sales followed by a severe economic depression
The correct answer is correct because the Specie Circular of 1836 required buyers of public lands to pay in gold or silver rather than paper currency. This sudden restriction halted land speculation, drained gold and silver from eastern banks, and triggered the Panic of 1837.

Step-by-Step Solution

1
Identify the document and context of the stimulus.
The excerpt is from the Specie Circular of 1836, an executive directive requiring hard money (gold and silver) for the purchase of public land.
Understanding the document and its economic context is necessary to assess its outcomes.
2
Analyze the impact of the policy on the economy.
By banning paper banknotes for land purchases, the policy ended the land speculation boom but also caused land sales to plummet and triggered a run on banks for gold and silver.
This establishes the link between the policy and its immediate economic consequences.
3
Evaluate the choices to find the correct historical consequence.
The collapse of land sales and the drain on bank reserves led directly to the Panic of 1837 and a prolonged economic depression.
This matches the option describing a decline in land sales and economic depression.

Key Concept

The economic policies of the Jackson administration, specifically the Specie Circular and its role in the Panic of 1837.
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Topics

Jackson and Federal Power Conflicts

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