he last of its debt,
the States eagerly pursued the opposite principle and created the
greatest debts possible.

Though the people of the United States joined in all these wild
ventures, they were not solely responsible. Europe, especially England,
had been anxious to lend. The Erie Canal had been built upon borrowed
capital, and it had paid good dividends. The old National Bank, now
going out of business, had placed $25,000,000 of its stock in Europe,
and the holders had received most liberal returns. American investments
were quoted as "excellent" by the Baring Brothers of London to their
thousands of customers. And why not? The Federal Government had recently
paid the last dollar of its two huge debts, more than $80,000,000 for
the cost of the Revolution and $110,000,000 for the cost of the War of
1812, and the rate of interest had often been as high as eight per cent.
Was there a similar example in all history? The bad reputation of
1783-1800 for debt-paying had been lived down.

Van Buren estimated the amount of money due by States and corporations
to English creditors at $200,000,000. His estimate was probably not
greatly exaggerated. Certainly as much as $12,000,000 in interest was
due each year to English creditors. The merchants of the great towns
regularly bought their goods on long time, sold them on time to the
shopkeepers of the villages and hamlets, and these in turn sold on
credit to their customers. Not less than $100,000,000 was thus
distributed over the country. It was due any day in London or Liverpool.
The world seemed to "take stock" in the new Republic, particularly when
the returns were large and prompt in appearing. And now that the Federal
Government was not a borrower, the States became the heirs of the
confidence of the capitalists who, not comprehending the difference
between the National and the State Governments in the United States,
expected that the authorities in Washington would bring due pressure to
bear on local authorities that might turn indifferent when crops were
bad.

All these things led to an inflated state of things. Jackson had seen
the dangerous tendency, and his specie circular had been applied in 1836
in the hope of mending matters. But the people who bought lands had no
gold or silver. The effect of the circular was to compel Western bankers
to call on their Eastern correspondents for metallic money. All the
specie in the Eastern vaults amounted to only $19,000,000, a