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 1836-7] The surplus: change of policy. 385 April, July, and October, 1837. The share of each State was to depend on the number of its representatives in Congress. This decision gave rise to a host of difficulties. In many States the amount on deposit in the banks greatly exceeded their shares. This necessitated an actual removal of money from State to State. No bank in future was to have on deposit government money exceeding in amount three-fourths of its paid-up capital. But there were many banks which held government money far exceeding the amount of their capital. It therefore became necessary to transfer money from bank to bank. But the money to be thus moved was not in the banks ; it had been lent out and largely used for speculation. As the first instalment, amounting to $9,367,214, was to be removed on January 1, 1837, the banks early in November, 1836, began to stop discounting, and called in loans ; and, as this took place all over the country, a general liquidation of debts followed. No sooner was the first instalment removed than preparations were made for the second, which fell due on April 1, 1837. The distress grew more severe; and, when the day came, great business-houses in New York, unable to stand the strain, failed. In one week there were 98 failures ; nine days later they reached 128 ; and before the end of the month all the large cities were in the same condition. The blame for this state of affairs was of course laid on the government; and at a meeting of merchants in New York a committee of fifty was appointed to go to Washington and urge Van Buren (who had succeeded Jackson on March 4, 1837) to call a special session of Congress for the purpose of stopping the distribution of the surplus. The President refused; and early in May the banks of New York City suspended specie payments. Those of other cities followed the example ; and the country was soon in the midst of a grave financial panic. The President was now forced to yield. A proclamation was issued assembling Congress in special session ; and that body took prompt measures to remedy the evil. The payment of the fourth instalment of the surplus was suspended ; an issue of $10,000,000 in treasury notes was authorised, in order to enable the government to meet its obligations; and the time of payment of the merchant bonds was extended. The worst was then over; but a year passed before the banks redeemed their notes hi specie. It is now necessary to consider another issue, which in the course of fifteen years had grown to be a serious and troublesome problem, and was destined during the next quarter of a century to become the most portentous question that the people had ever been called on to settle. This issue was slavery. The story of the long struggle with it falls naturally into well-marked periods, in each of which certain phases were presented, discussed, and, it was supposed, settled for all time to come. Between the opening of the War of Independence and the close of the second war with Great Britain, all the Eastern and Middle States save Delaware became free soil: slavery was prohibited in the o. M. H. vii. CH. xii. 25