Blackwell Reference Online

Extract

(23 June 1836) After the second B ank of T he U nited S tates's federal charter expired, this law directed the treasury Secretary to specify at least one bank in every state and territory as a depository or pet bank ( see pet banks ) for surplus federal funds. The law directed the Treasury to apportion $5,000,000 among the states as a loan, which would be distributed from federal funds in pet banks beginning 1 January 1837. Although the loan was subject to recall, it was the intention of the law's sponsor, Henry C lay , that it not be repaid, and it was not. (The US lost $9 million due to the failure of pet banks in the panic of 1837.) Distribution was abandoned after the protectionist T ariff of 1842 slashed customs duties by setting rates higher than could be paid on most manufactured goods. ... log in or subscribe to read full text