Which policy required payment for public land in gold or silver and contributed to a currency shortage?

Which policy required payment for public land in gold or silver and contributed to a currency shortage?

• A. Tariff of 1832
• B. Gold Standard Act
• C. Specie Circular
• D. Bank Charter Act

Answer: (C)

The policy tested is the one known as the Specie Circular. It required that purchases of public lands be paid only with gold or silver (hard money) rather than with paper banknotes. The intent was to curb land speculation by forcing buyers to use real money, but it drained gold and silver from banks as people exchanged their notes for specie to buy land. With less specie in circulation, the economy faced a currency shortage, which contributed to financial instability and helped spark the Panic of 1837. Other options don’t fit this scenario: the Tariff of 1832 dealt with protective duties on imports, not land payments in specie; the Gold Standard Act came much later and established the gold standard in the U.S. in 1900; the Bank Charter Act refers to British banking regulation, not a U.S. policy of this era.

The policy tested is the one known as the Specie Circular. It required that purchases of public lands be paid only with gold or silver (hard money) rather than with paper banknotes. The intent was to curb land speculation by forcing buyers to use real money, but it drained gold and silver from banks as people exchanged their notes for specie to buy land. With less specie in circulation, the economy faced a currency shortage, which contributed to financial instability and helped spark the Panic of 1837.

Other options don’t fit this scenario: the Tariff of 1832 dealt with protective duties on imports, not land payments in specie; the Gold Standard Act came much later and established the gold standard in the U.S. in 1900; the Bank Charter Act refers to British banking regulation, not a U.S. policy of this era.