During the early 1830s, the United States was experiencing a period of expansion and prosperity. This was accounted for by the construction of new railroads and canals. Land was sold rapidly by the government. The government was in an economic boom and with that became the first great depression. .
The Bank of the United States charter was supposed to be renewed on March 3 of 1836, but President Andrew Jackson refused to renew the charter. The demise of the Bank of the United States lead to all of this because state banks used this to expand their discounts and new banks were being established. With the sale of land and the Tariff of 1833, the Treasury Departments purse increased. By 1835, all of the national debt was paid off and the Treasury had developed a surplus. The Congress then distributed the surplus among the states. This was also invested in future railroads and canals. Foreign goods were being imported more frequently. .
The state governments, companies and everyday people began to keep their specie, which is gold and silver. Andrew Jackson, the President at the time thought the use of the paper money increase was not good for the government. The Specie Circular was issued by Jackson"s Secretary of Treasury, forbidding the purchase of public land with paper notes. The speculating business fell dramatically. .
The people in the west, along with many speculators were furious with this action. With this, the banks refused credit, begin to call in loans and ask for security. People with money in the banks rushed to get it all withdrawn. The unemployment rate went up and food riots were normal in larger cities. The construction companies in charge of the building of railroads and canal were not able to build anything, which led to failures in the railroad and canal projects. This ruin speculators because then the value of the land went down with the absence of the railroads and canals.
