1841 , banks under the new legislation held no government monies , and at least 25 % of debts owed to the United States had to be paid in coin .
Losing both the presidency and Congress to the Whigs in 1840 , Democrats soon realized that their singular legislative accomplishment , up to that time , would end abruptly . Before taking office , the incoming Secretary of the Treasury under President William Henry Harrison , Thomas Ewing , criticized the Independent Treasury for being cumbersome , expensive and inconvenient . The Secretary observed that disbursements apparently happened in and around financial centers only — exemplifying New York City — and its restrictive monetary policy hindered business development . His alternative which , of course , had strong Whig approval , was the creation of a “ third ” Bank of the United States .
However , President John Tyler — Harrison ’ s successor following his death one month into his term — vetoed the legislation , after initially supporting a compromised version of the bank plan . Though he supported repeal of the Independent
Treasury , in his opinion the banking legislation was both unconstitutional and contrary to the nation ’ s interests . Instead , he promoted the notion of an “ Exchequer Bank ,” an agency rooted in the idea of a sound currency ( coin based ) and for the protection of national deposits . In his “ First Annual Message to Congress ” on December 7 , 1841 , Tyler stipulated the Exchequer Bank would have a “ board of control at the seat of government ” and professed to serve the interests of the public through the “ safekeeping and disbursement of public moneys .” The plan called for the President to appoint three commissioners to the Board of the Exchequer to sit with the Treasurer and Secretary of the Treasury . Allowed to hold public money , various agencies of the Board throughout the country could accept deposits in coin up to $ 15 million and issue certificates against these deposits .
Not surprisingly , the Whigs timidly supported the measure , leaving the proposal in limbo before the committee . The idea pleased neither bank advocates nor those who had supported the Sub- Treasury ; Congress ended the debate in
January 1843 . Consequently , the remaining years of Tyler ’ s one-term presidency would see state banks , again , functioning as stewards of the nation ’ s deposits .
The back-and-forth , off-and-on political squabbling over the Independent Treasury ( and similar institutions ) ceased under President James Polk . Similar to Tyler , he served a single term , but in contrast , he attained international and domestic legislative successes . Around the time his administration adopted tariff reform ( The Walker Tariff ), Polk signed into law a Sub-Treasury bill reestablishing the department whose operations and policies functioned like its short-lived predecessor . Like previous stipulations adopted under the first Sub-Treasury , debts owed to the government would be paid in coin and / or Treasury notes , with Sub-Treasuries located in cities where large concentrations of trade existed and private banks could not hold government deposits .
Secretary of the Treasury Robert Walker praised the institution ’ s handling of the nation ’ s fiscal affairs during the Mexican- American War . Observing how the Sub- Treasury had “ been tried during a period of
Library of Congress Prints and Photographs Division
Cartoon titled “ Sub-Treasury System , Or Office Holders Elysium ,” by Henry R . Robinson , 1838 .
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