During the years 1844 to 1860, Federal financial and monetary problems became less dramatic as the spotlight played on the much more crucial economic, social, and political conflicts between the North and the South. At the same time, the political administrations ( Polk, Taylor, Fillmore, Pierce, and Buchanan) were increasingly dominated by agrarianism, and the trend was therefore toward a more and more limited exercise of Federal powers.
The monetary and fiscal problems which did exist were solved along previously determined lines. The Federal government returned to the Independent Treasury system, and state banking continued to develop according to the pattern set in the previous decade. Little need was felt for any great expansion of Federal improvements, and the greatest Federal ventures of the time--the Mexican War and the acquisition of California and other Mexican territory--were easily financed. Fiscal and monetary developments were affected over the first thirteen years of the period by a continually mounting prosperity and during the last three by sharp economic recession.
Revival of the Independent Treasury System . The election of a Democratic administration in 1844 made it certain that new attempts would be made to separate the government from the banking system. In August, 1846, Congress reestablished the Independent Treasury system, and with various modifications, it remained in existence until 1921. Under its operation before the Civil War, government finance was theoretically separated from the banking system. Government dues were payable only in specie or Treasury notes. Government funds were held in government sub- treasuries scattered around the country, and all collectors of government revenue were instructed, first by a ruling and after 1857 by a law, not to deposit any government funds in private banks. Under the limitations imposed by the agrarian thinking which prevailed during the era, the Independent Treasury was the only logical system. It was an attempt to save the government from the allegedly baneful influences of an overly powerful central bank, as well as from dependence on an irresponsible state-banking structure. In another sense, it was a hard-money compromise between conservative, centrally controlled paper circulation and aggressive, but overly loose, state-bank circulation.
Its most astute champions claimed that the system increased the amount