Quite contrary to the hopes of then President, Claire Jackson and the group opposing paper currency, express banking burst into an era of unusual development after the “second” Lender of the United Says was not renewed in 1836. By 1837, there have been at least twice as many state banks as in 1830. the amount of state bank records doubled and loans and discounts increased 2 0.5 times. This stimulus produced rapid inflation and an monetary expansion that may not have been sustained the point is. share price
The Treasury commenced running a sizable excess because of this of not having to use the credit from the “second” Loan company of the United Says. It redistributed this excess among the states in direct proportion to the amount of representatives in Congress. Experienced the bank still recently been fiscal agent for the Treasury, it likely would have compounded the unsustainable stimulus that had recently been reverberating through the economic system.
Despite each state obtaining a refund from the Federal government, it was not enough to prevent the inevitable monetary lock up that resulted from the abundance of easy credit, provided by the condition banks. To compound this, in 1836, the Government government required gold and silver in payment for Federal lands. Gold and silver rushed into the U. S. Treasury and away from banks. Consequently, not only did the banks extend credit much beyond their ability to pay it, they were unable to find the reserves since they were visiting the Federal government!
The depression showed to many, the errors of loan company credit and unregulated express banking. It produced a political environment unfavorable to the formation of another Bank of the Unified States. The state banking institutions were enough! At the time, not what anyone wanted was that on the national scale.