More Reform

The results of events of the panic year 1837, and those of the depression years beyond, were numerous. A common conviction gripped both sides of the Atlantic that a better understanding of money and markets could help avoid panics and depressions in the future. Certainly the 1830s was already a period of financial reform in the United States and Great Britain, and the events after 1837 made the search for answers more pressing.

For Great Britain, the years 1836–41 saw several parliamentary banking inquiries, centred first in 1836–8 on the new joint-stock banks; and in 1840–1 on currency circulation and the Bank of England. The investigations culminated in the important Bank Charter Act of 1844, which separated the Bank of England's note issue from its banking business. Note issue would remain tied to gold reserves except for a £14 million fiduciary issue. The Act required that the Bank publish weekly summaries of accounts. It also marked the decisive stage in the gradual elimination from circulation in England and Wales of all notes other than the Bank's own, since the Act limited the issue of notes by joint-stock banks. The Act proved too inelastic, however, as the 1847 and 1857 panics would show, and was suspended and reinstated several times.

In the United States, Congress repealed the Specie Circular in May 1838 over President Van Buren's protest. Many state banks designated as government depositories had failed, and were thereby discredited. In 1840–1, experiments in the disposition of government funds took the form of the Independent Treasury Bill and legislation for a third Bank of the United States. Neither initiative passed into functional law, and Congress readopted the former system of using state banks as government depositories.