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Independ - Independ ent Treasury System Independent...

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Independ ent Treasury System Independent Treasury System, in U.S. history, system for the retaining of government funds in the Treasury and its subtreasuries independently of the national banking and financial systems. In one form or another, it existed from the 1840s to 1921. Origins of the System After President Andrew Jackson vetoed the bill to recharter the Bank of the United States , he transferred (1833) government funds from the bank to state banks (the “pet banks”). Those banks, however, used the funds as a basis for speculation, which was already rampant and was soon to be further increased by the distribution of the federal surplus among the states. The situation was brought to a head by Jackson's issue of the Specie Circular (1836), which led to a drain on the “pet banks” and their collapse in the Panic of 1837. President Martin Van Buren then proposed that an independent treasury be set up that would be isolated from all banks. The
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