Such was the interruption of business that interest for money rose to 20
per cent., and the discount rate for the best paper to 15 or 18 per cent.

The various States in the Union had contracted debts with inconceivable
ease, and interest payments were provided for by new loans. President
Jackson declared it necessary to make a loan in order to pay interest
moneys. It was deemed inexpedient to impose new taxes to provide for the
cost of the public works. Great was the embarrassment in America, and as
no more money came from England, it was necessary for the Americans to
look for it in their own country.

Business circles were flooded with long-time paper running at a discount
of one half of 1 per cent. a month. Discount rose to 25 per cent. The
panic was so great that all confidence was destroyed. The Bank of the
United States, in order to maintain its credit, paid its depreciated
long-time paper.

The struggle between the Bank and its opponents, led by President Van
Buren, re-commenced. These last declared that the Bank had erred in
circulating the $4,000,000 of notes of the old bank, which should have
been retired coincidently with the charter; and the Senate forbade their
circulation.

The Government claimed large sums from the Bank, the statement of which
showed close to $4,000,000; and, as it could not secure this amount in
money, it was decided to issue $10,000,000 of Treasury bonds. The Bank
party wished to push the Government into bankruptcy, in order to induce
it to turn to them for help, and, through the issue of "circular
specie," oblige it to adopt a system of paper money.