Chapter Eighteen
LOAVES AND FISHES AND CIVIL WAR Attempts to stabilize the banking system by political measures, including regulation of fractional-reserve ratios and establishing bank-failure insurance funds; the failure of all such schemes; the resulting economic conditions that led up to the Civil War.
As detailed in the previous chapter, by 1836 the hydraheaded monster had been slain and, true to the President's campaign promise, the nation had Jackson and no Bank. In April of that year, the Administration moved to consolidate its victory and pushed a series of monetary reforms through Congress. One of these required all banks to cease issuing paper notes under five dollars. The figure later was increased to twenty dollars, and its purpose was to compel the nation to return to the use of gold and silver coin for everyday use, leaving bank notes primarily for large commercial transactions. The White House also announced that, in the future, all federal land sales would require full payment in "lawful money," which, of course, meant precious-metal coins. ' It must be remembered, however, that even though the Bank of the United States was dead, banking was very much alive, and so were Jackson's enemies. Much to the disappointment of the hard-money advocates, these measures were not sufficient to usher in the millennium. Not only were they inadequate by themselves, they were soon circumvented by the development of new banking techniques and eventually were dismantled completely by a fickle Congress.
1. Otto Scott, The Secret Six: The Fool as Martyr, Vol. III of The Sacred Fool Quartet (Columbia, South Carolina: Foundation for American Education, 1979), p. 115.