To Van Buren, he wrote, "Therefore to prolong the deposits until after the meeting of Congress would be to do the very act [the B.U.S.] [49] The "planter of the South and the plain Republican of the North"[50] would provide the support, with the aid of universal white male suffrage. Meanwhile, Biddle wrote to Webster successfully urging the Senate not to support Stevenson as minister. [211] In Alabama, Georgia, and Mississippi, Jackson won with absolutely no opposition. Opponents of the Bank defeated recharter by a single vote in both the House and Senate in 1811. [69][70] According to historian Bray Hammond, "Jacksonians had to recognize that the Bank's standing in public esteem was high. [161] Biddle joined most observers in predicting that Jackson would veto the bill. On July l0, 1832, President Andrew Jackson sent a message to the United States Senate. Some of the animosity left over from the Panic of 1819 had diminished, though pockets of anti-B.U.S. Benton refused and instead repeated them. Andrew Jackson swore to bring about the destruction of the Second Bank of the United States and started the Bank War. Their campaign strategy was to defeat Jackson in 1832 on the Bank re-authorization issue. And so Jackson felt he had to get rid of it. [329] A coalition of Whigs and conservative Democrats refused to pass the bill. Jacksonians—gathered in Rochester, New York to form a new political party. Bank War, in U.S. history, the struggle between President Andrew Jackson and Nicholas Biddle, president of the Bank of the United States, over the continued existence of the only national banking institution in the nation during the second quarter of the 19th century. [133] The Globe refrained from openly attacking Secretary McLane, but in lieu of this, reprinted hostile essays from anti-Bank periodicals. [213], Jackson regarded his victory as a popular mandate[214] to eliminate the B.U.S. I have no doubt that such a course will ultimately lead to the restoration of the currency and the recharter of the Bank. [138][145] They did however assure Biddle that Jackson would not veto the bill so close to the 1832 election. When banks lend money, new money is actually created, which is called "credit". To them, the Bank symbolized corruption while threatening liberty. The circular, he claimed, was necessary to prevent excessive speculation. T he Pet Banks History for kids: The State Banks The Second Bank of the United States, the National Bank was responsible for only 20% of the currency supply - the state banks accounted for the rest. [100][101] These struggles led to Vice President Calhoun's estrangement from Jackson and eventual resignation,[101][102] the replacement of all of the original cabinet members but one, as well as the development of an unofficial group of advisors separate from the official cabinet that Jackson's opponents began to call his "Kitchen Cabinet". The recharter bill easily passed both houses of Congress in 1832. [297], In January 1837, Benton introduced a resolution to expunge Jackson's censure from the Senate record. This is an often overlooked episode in American history and Remini does a very good job covering it. [155][156] For the past six months he had worked in concert with B.U.S. [216], Kendall and Taney began to seek cooperative state banks which would receive the government deposits. For support, Biddle turned to the National Republicans—especially Henry Clay and Daniel Webster—turning the issue into a political battle. The veto message was "a brilliant political manifesto"[175] that called for the end of monied power in the financial sector and a leveling of opportunity under the protection of the executive branch. [17], Despite opposition from Old Republicans led by John Randolph of Roanoke, who saw the revival of a national bank as purely Hamiltonian and a threat to state sovereignty,[18] but with strong support from nationalists such as Calhoun and Henry Clay, the recharter bill for the Second Bank of the United States was passed by Congress. War is a blessing compared with national degradation. Many legislators benefited from the largesse supplied by Bank administrators. Opponents referred to these banks derisively as "pet banks" since many of them financed pet projects conceived by members of the Jackson administration. They described it as "Hamiltonian" in character, accused it of introducing "radical modifications" to existing Treasury policy and attacked it as an assault on democratic principles. [220][224] Vice President Martin Van Buren tacitly approved the maneuver, but declined to publicly identify himself with the operation, for fear of compromising his anticipated presidential run in 1836. [280], The Democrats did suffer some setbacks. Jackson succeeded in his determination to destroy the Second Bank of the United States but deposits of government money into the " Pet Banks " resulted in the Specie Circular which dried up credit and ultimately led to the Panic of 1837. [82], Many historians agree that the claim regarding the Bank’s currency was factually untrue. [182] Jackson cast himself in populist terms as a defender of original rights, writing: It is to be regretted that the rich and powerful too often bend the acts of government to their selfish purposes. In 1833, he arranged to distribute the funds to dozens of state banks. [58] Banks have to lend more money than they take in. [136], National Republicans continued to organize in favor of recharter. [268][269] Henry Clay, spearheading the attack, described Jackson as a "backwoods Caesar" and his administration a "military dictatorship". [287][288][289] All recharter efforts were now abandoned as a lost cause. [151] Biddle, working through an intermediary, Charles Jared Ingersoll, continued to lobby Jackson to support recharter. The situation was exacerbated by the B.U.S. [147] On February 23, 1832, Jacksonian Representative Augustin Smith Clayton of Georgia introduced a resolution to investigate allegations that the Bank had violated its charter. The first Coinage Act was passed in 1792 and established a 15 to 1 ratio for gold to silver coins. [252] In addition, Biddle reduced discounts, called in loans, and demanded that state banks honor the liabilities they owed to the B.U.S. It tried to ensure steady growth by forcing state-chartered banks to keep specie reserves. According to Benton, the vote tally was "enough to excite uneasiness but not enough to pass the resolution". We have no money here, gentlemen. Andrew Jackson's Presidency Bank War and IRA Uploaded by prazzperkasa on Dec 04, 2011. As expected, McLane and Butler were confirmed. Once … forces in Congress and the executive branch. The following day, Jackson sent a messenger to learn whether Duane had come to a decision. It enjoyed the exclusive right to conduct banking on a national basis. [143], On January 6, 1832, bills for Bank recharter were introduced in both houses of Congress. [268] The national economy following the withdrawal of the remaining funds from the Bank was booming and the federal government through duty revenues and sale of public lands was able to pay all bills. [35], In 1828, Jackson ran again. He praises the Bank and Biddle's conduct, claiming that Jackson's war on it created a periodic of economic instability that would not be remedied until the creation of the Federal Reserve in 1913. branch bank in Nashville. [138][146] Jackson assembled an array of talented and capable men as allies. Many Northern Democrats joined the anti-Jacksonians in supporting recharter. Duane asked to have until the 21st, but Jackson, wishing to act immediately, sent Andrew Donelson to tell him that this was not good enough, and that he would announce his intention to summarily remove the deposits the next day in Blair's Globe, with or without Duane's consent. [120] Jackson enthusiastically accepted McLane's proposal, and McLane personally told Biddle about his success. Van Buren capitulated. He had caused Biddle to create one depression and the pet banks to aggravate a second, and he had left the nation committed to a currency and credit system even more inadequate than the one he had inherited." Webster drafted a plan to charter the Bank for 12 years, which received support from Biddle, but Calhoun wanted a 6 year charter, and the men could not come to an agreement. The great Bank War turned out to be a conflict both sides lost. administrators, including Biddle, and Jackson continued to do business with the B.U.S. It depicted Jackson in full regal dress, featuring a scepter, ermine robe, and crown. [54] Jackson and other advocates of hard money believed that paper money was part of "a corrupting and demoralizing system that made the rich richer, and the poor poorer". [249] Jackson predicted that within a matter of weeks, his policy would make "Mr. Biddle and his Bank as quiet and harmless as a lamb". [125][148][150] The plan was approved, and a bipartisan committee was sent to Philadelphia to look into the matters. He deliberately instigated a financial crisis to increase the chances of Congress and the President coming together in order to compromise on a new Bank charter, believing that this would convince the public of the Bank's necessity. On April 4, it passed resolutions in favor of the removal of the public deposits. They called themselves Whigs after the British party of the same name. [309] State-chartered financial institutions, unshackled from the regulatory oversight previously provided by the B.U.S., started engaging in riskier lending practices that fueled a rapid economic expansion in land sales, internal improvement projects, cotton cultivation, and slavery. The federal government purchased a fifth of the Bank's stock, appointed a fifth of its directors, and deposited its funds in the Bank. In his December 6 address, Jackson was non-confrontational, but due to Taney's influence, his message was less definitive in its support for recharter than Biddle would have liked, amounting to merely a reprieve on the Bank’s fate. [228] Duane was a distinguished lawyer from Philadelphia whose father, also William Duane, had edited the Philadelphia Aurora, a prominent Jeffersonian newspaper. The price of cotton steadily declined during Jackson's second term. It used loans and "retainer's fees", such as with Webster, to influence congressmen. before its 20-year term ended in 1836. [33] He did not win an electoral majority, which meant that the election was decided in the House of Representatives, which would choose among the top three vote-getters in the Electoral College. Both of these measures diverted precious metals from the Atlantic Coast to western regions, leaving the nation’s financial centers vulnerable to external shocks. [223] Meanwhile, Jackson sought to prepare his official cabinet for the coming removal of the Bank's deposits. [65][83][84][85][86] According to historian Robert V. Remini, the Bank exercised "full control of credit and currency facilities of the nation and adding to their strength and soundness". [231], Under the Bank charter terms of 1816, the U.S. Secretary of the Treasury was empowered, with Congress, to make all decisions regarding the federal deposits. PET BANKS. until December 1829. The debt added up to approximately $24 million, and McLane estimated that it could be paid off by applying $8 million through the sale of government stock in the Bank plus an additional $16 million in anticipated revenue. [168][169] He believed that the Bank was unconstitutional and that the Supreme Court, which had declared it constitutional, did not have the power to do so without the "acquiesence of the people and the states". If a violation of charter was alleged, the specific allegation must be stated. Biddle responded that the "great hazard of any system of equal division of parties at a board is that it almost inevitably forces upon you incompetent or inferior persons in order to adjust the numerical balance of directors". "[158][162], Contrary to the assurances Livingston had been rendering Biddle, Jackson determined to veto the recharter bill. A panic ensued (1837). The list grew to 22 by the end of the year. [265][266] Philip Hone, a New York merchant, may have been the first to apply the term in reference to anti-Jacksonians, and it became more popular after Clay used it in a Senate speech on April 14. The goal behind the B.U.S. [292], On January 30, 1835, what is believed to be the first attempt to kill a sitting President of the United States occurred just outside the United States Capitol. Most of the state banks that were selected to receive the federal funds had political and financial connections with prominent members of the Jacksonian Party. [250], Biddle urged the Senate to pass joint resolutions for the restoration of the deposits. Jackson insisted that the circular was necessary because allowing land to be purchased with paper would only fuel speculator greed more, thereby worsening the crisis. as merely an agent of the executive branch, acting through the Department of the Treasury. [206] Biddle mounted an expensive drive to influence the election, providing Jackson with copious evidence to characterize Biddle as an enemy of republican government and American liberty through meddling in politics. [248] At least two of the deposit banks, according to a Senate report released in July 1834, were caught up in a scandal involving Democratic Party newspaper editors, private conveyance firms, and elite officers in the Post Office Department. He also signed a certificate with recommendations for president and cashier of the branch in Nashville. Hamilton supported the Bank because he believed that it would increase the authority and influence of the federal government, effectively manage trade and commerce, strengthen the national defense, and pay the debt. [26] In Mississippi, the Bank did not open branches outside of the city of Natchez, making small farmers in rural areas unable to make use of its capital. [56] Supporters of soft money tended to want easy credit. What were "wildcat" and [106][107] He called for a substitute national bank that would be wholly public with no private stockholders. On October 7, 1833, Biddle held a meeting with the Bank's board members in Philadelphia. The Bank War was a political struggle that developed over the issue of rechartering the Second Bank of the United States (B.U.S.) How should Americans, then, and especially American Southerners, view Andrew Jackson? [279] Nevertheless, this episode caused an even greater decline in public opinion regarding the Bank, with many believing that Biddle had deliberately evaded a congressional mandate. [25] Andrew Jackson, previously a major general in the United States Army and former territorial governor of Florida, sympathized with these concerns, privately blaming the Bank for causing the Panic by contracting credit. newspaper editors, Jackson secured an overwhelming election victory. Fearing economic reprisals from Biddle, Jackson swiftly removed the Bank's federal deposits. "Jackson and Biddle were both too headstrong for the country's good. [128] Jackson, without consulting McLane, subsequently edited the language in the final draft after considering Taney’s objections. He planned to use "external pressure" to compel the House to adopt the resolutions. of this essay is to discuss the Andrew Jackson Administration. The Bank War “Unless ... President Andrew Jackson to John Coffee, February 19, 1832. wishes, that is, to have it in its power to distress the community, destroy the state Banks, and if possible to corrupt congress and obtain two thirds, to recharter the Bank." Jackson concluded from his victory in that election that he had a mandate not only to refuse the bank a new charter but to destroy as soon as possible what he called a “hydra of corruption.” (Many of his political enemies had loans from the bank or were on its payroll.) [236][237] Van Buren had cautiously supported McLane's proposal to delay the matter until January 1, 1834. When Congress voted to reauthorize the Bank, Jackson vetoed the bill. [308] In 1836, President Jackson signed the Deposit and Distribution Act, which transferred funds from the Treasury Department’s budget surplus into various deposit banks located in the interior of the country. PET BANKS. [216][219] In response, the Democratic-controlled House conducted an inquiry, submitting a divided committee report (4–3) that declared the deposits perfectly safe. Banks making too many loans would print an excess of paper money and deflate the currency. [159] Not long after, Jackson became ill. Van Buren arrived in Washington on July 4, and went to see Jackson, who said to him, "The Bank, Mr. Van Buren, is trying to kill me, but I shall kill it. For example, Representative Churchill C. Cambreleng wrote, "The Treasury report is as bad as it can possibly be—a new version of Alexander Hamilton's reports on a National Bank and manufacturers, and totally unsuited to this age of democracy and reform." [59], Because of the failure to emphasize the distinction between hard money and paper money, as well as the Bank's popularity, the Second Bank of the United States was not a major issue in the 1828 elections. The Bank would have a new fifteen-year charter; would report to the Treasury Department the names of all of the Bank's foreign stockholders, including the amount of shares they owned; would face stiff penalties if it held onto property for longer than five years, and would not issue notes in denominations of less than twenty dollars. [256] By December, one of the President's advisors, James Alexander Hamilton, remarked that business in New York was "really in very great distress, nay even to the point of General Bankruptcy [sic]". [57] Aspiring entrepreneurs, a number of them on the cotton frontier in the American southwest, resented the Bank not because it printed paper money, but because it did not print more and loan it to them. Distinctions in society will always exist under every just government. [7], The arguments in favor of reviving a national system of finance, as well as internal improvements and protective tariffs, were prompted by national security concerns during the War of 1812. He is mistaken", Biddle declared.[250]. [186], In presenting his economic vision,[187] Jackson was compelled to obscure the fundamental incompatibility of the hard-money and easy credit wings of his party. Following the War of 1812, Congress chartered the Second Bank of the United States (the First Bank’s charter had expired in 1811). But even in the new single party system, ideological and sectional differences began to flare up once again over several issues, one of them being the campaign to recharter the Bank. Jacksonians from pursuing their attack on the B.U.S. The directors replied that they could not produce these books because they were not in the Bank's possession. He blamed Jackson for the loss of his job. Supporters of the Bank regarded it as a stabilizing force in the economy due to its ability to smooth out variations in prices and trade, extend credit, supply the nation with a sound and uniform currency, provide fiscal services for the treasury department, facilitate long-distance trade, and prevent inflation by regulating the lending practices of state banks. [225][228] Despite their agreement on the Bank issue, Jackson did not seriously consider appointing Taney to the position. If Biddle presented any of the state banks with notes and demanded specie as payment, the banks could present him with the drafts to remove the deposits from the Bank and protect their liquidity. Economic problems which reverberated through the economy eventually led to major depression in the Panic of 1837 (which occurred during the term of Jackson's successor, Martin Van Buren ). Jackson issued the Specie Circular to force the payment for federal lands with gold or silver. In the future, Congress would have to consider the president's wishes when deciding on a bill.[171]. [36] The transition was made relatively easy by the fact that Jackson's own principles of government, including commitment to reducing the debt and returning power to the states, were largely in line with their own. [310] The federal government earned an average of about $2 million each year from land sales in the 1820s. [330] When Whig candidate William Henry Harrison was elected in 1840, the Whigs, who also held a majority in Congress, repealed the Independent Treasury, intending to charter a new national bank. They alleged that this was unfair to farmers and allowed creditors to profit without creating tangible wealth, while a creditor would argue that he was performing a service and was entitled to profit from it. The affair resulted in the shutdown of the Bank and its replacement by state banks. branch managers to elicit signatures from citizens for pro-B.U.S. There, he announced that the Bank would raise interest rates in the coming months in order to stockpile the Bank's monetary reserves. With their support, he ran for president in 1824. [112][113] After the speech was over, National Republican Senator Daniel Webster of Massachusetts called for a vote to end discussions on the Bank. Paper money was therefore necessary to grow the economy.

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