The president forced to deal with the depression was Martin Van Buren, who had been elected in 1836 over three regional candidates put forward by the Whigs in an attempt to maximize the party’s electoral vote and throw the election into the House of Representatives. Under Van Buren, the hard money, anti-bank wing of the Democratic Party came to power. In 1837, the administration announced its intention to remove federal funds from the pet banks and hold them in the Treasury Department in Washington, under the control of government officials. Not until 1840 did Congress approve the new policy, known as the Independent Treasury, which completely separated the federal government from the nation’s banking system. It would be repealed in 1841 when the Whigs returned to power, but it was reinstated under President James K. Polk in 1846. Making federal funds unavailable for banks to use for investment would have dampened future economic growth had not the discovery of gold in California in 1848 poured new money into the economy.

The Independent Treasury split the Democratic Party. Business-oriented Democrats, often connected with the state banks, strongly opposed Van Buren’s policy and shifted wholesale to the Whigs. Meanwhile, the party’s “agrarian” wing—small farmers and urban laborers opposed to all banking and paper money and uncomfortable with the market revolution in general, rallied to Van Buren. Many advocates of state sovereignty who had joined the Whigs after the nullification crisis now returned to the Democratic fold, including Van Buren’s old nemesis, John C. Calhoun.

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