In 1840 legislation for an independent treasury was passed and approved by the President; however, the following year the Whigs repealed the law. The intention of the Whigs was to establish a new central bank, but the objections of President John Tyler on constitutional grounds prevented the creation of another Bank of the United States. The Democrats won the presidential election of 1844, and measures were inaugurated to restore the Independent Treasury System.
The act of Aug., 1846, provided that the public revenues be retained in the Treasury building and in subtreasuries (see subtreasury) in various cities. The Treasury was to pay out its own funds and be completely independent of the banking and financial system of the nation; all payments by and to the government, moreover, were to be made in specie. The separation of the Treasury from the banking system was never completed, however; the Treasury's operations continued to influence the money market, as specie payments to and from the government affected the amount of hard money in circulation.
The Columbia Electronic Encyclopedia, 6th ed. Copyright © 2012, Columbia University Press. All rights reserved.