Abstract

"Debt and Dispossession: American Military Spending and Southern Banking in the Second Seminole War"

John Wendt, Texas A&M University (jcwendt001@tamu.edu)

This conference paper will explore the unique confluence of economic forces of Jacksonian Indian Removal, The Special Circular of 1836, and the role of United States military spending in the American south from 1836 to 1837. I will argue that banks in the American south utilized procurement operations of the ongoing Second Seminole War in Florida (1835-1842) to offset the losses caused by the dual crisis of Jackson’s Specie Circular of 1836 and the subsequent Panic of 1837.
On July 11th, 1836 Andrew Jackson signed an executive order entitled the “Specie Circular” which stated the federal government would no longer accept credit or bank notes in exchange for “public lands.” As of August 15, 1836 the federal government only accepted gold and silver for the purchase and sale of land seized through military dispossession operations. The result was disastrous for southern banking and markets. The Circular directly undercut loans, property value, and the value of the commodity most frequently taken for collateral, cotton. With little revenue and a financial crisis looming, southern banks sought new sources of income to stay solvent. They found part of that income through meeting the demands of a group of federal representatives operating in various southern cities. U.S. Army quartermasters procuring supplies for the Second Seminole War.
My paper will follow three quartermasters from 1836-1837 to showcase the ways in which southern banks pursued millions of dollars in Congressional appropriations the U.S. Army had access to. I will demonstrate how southern banks extended lines of credit to quartermasters, allowing them to draw tens of thousands of dollars at will to spend with local merchants to fulfill the logistical needs of the Army in Florida. The banks used these lines of credit as a method of diversifying their debts, increasing the amount owed them by the federal government while offsetting debts caused by the rapidly devaluing land and cotton prices. The resulting relationship allowed banks in New Orleans, Savannah, and Charleston to claim millions from the federal government over the next decade, keeping them in business while others failed.