Transcript Bank War - MMAMrClementiWiki

Chapter 13
The Rise of a Mass
Democracy,
1824–1840
p261
IX. The Bank War
• President did not hate all banks and all
business, but he distrusted monopolist
banking and overbig businesses:
– The federal government minted gold and silver
coins mid-nineteenth century, but no paper
money
• Paper money was printed by private banks.
• Their value fluctuated with the health of the banks
and the amount of money printed.
IX. The Bank War
• The Bank of the United States:
– Was a private institution created by a Federal
government charter
– Therefore it was the most powerful bank
– Acted like a branch of the government (but only
Governmental control of bank was rechartering)
– Principal depository for government funds
– Controlled much of the government’s gold and
silver
– Its notes were stable
• A source of credit and stability, it was an important
and useful part of the nation’s expanding economy
IX. The Bank War
• But the Bank was a private institution:
– Bank President Nicholas Biddle had immense
and, to many, unconstitutional power over the
nation’s financial affairs
– To some the bank seemed to sin against the
egalitarian credo of American democracy
• This conviction formed the deepest source of
Jackson’s opposition
• The banks won no friends in the West (Why?)
• Profit, not public service, was its first priority
IX. The Bank War
• The Bank War erupted in 1832:
– When Daniel Webster and Henry Clay presented
the Congress with a bill to renew the Bank of the
United States’ charter
• The charter was not to expire until 1836, but Clay
pushed for renewal four years early to make it an
election issue in 1832
• Clay‘s scheme was to run a recharter bill through
Congress and then send it to the White House
IX. The Bank War
• Clay believed if Jackson signed it, he would
alienate his worshipful western followers
• If he vetoed it, he would presumably lose the
presidency in the upcoming election by
alienating the wealthy and influential groups
in the East
• The recharter bill slid through Congress, but
was killed by scorching veto from Jackson
IX. The Bank War
– Jackson’s veto message reverberated with
constitutional consequences
– But vastly amplified the power of the presidency.
• He was arguing that he vetoed because he personally
found it harmful to the nation.
• He was claiming for the president alone a power
equal to 2/3 of the votes in Congress.
– HOWEVER The Supreme Court declared the
monopolistic bank to be constitutional in
McCulloch v. Maryland (1819)
King Andrew I
p260
1832 Election:
“Old Hickory” Wallops Clay
• Clay and National Republicans’ advantages:
– They had ample funds, including $50,000 in “life
insurance” from the Bank of the United States
– Most newspapers editors dipped their pens in
acid when they wrote of Jackson
– However
• Yet Jackson, idol of the masses, easily
defeated the big-money Kentuckian
• The popular vote was 687,502 to 530,189 for
Jackson—electoral count was 219 to 49
p260
The Death of Biddle’s Bank
• With the renewal of the charter veto by
Jackson, the Bank of the United States was
due to expire in 1836:
– Jackson decides to kill it by removing all federal
deposits
– federal funds are transferred to state
institutions—the so-called pet banks
– Two Treasury Secretaries feels this is so
dangerous he refuses: Jackson removes him
from office and appoints
– He further proposed depositing no more funds
The Ascendency of
King Andrew I
gives rise to the …….
v.
p260
The Birth of the Whigs
• New parties:
– 1828 the Democratic-Republicans adopted the
“Democrats”
– The Whigs created by Jackson’s opponents
• They hated Jackson and his “executive usurpation”
• First emerged in the US Senate, where Clay, Webster,
and Calhoun joined forces in 1834 to pass a motion
censuring Jackson for his single-handed removal of
federal deposits from the Bank of the United States
– The choice of the name harkens back to the
Parliament’s fight against the English King
XII. The Birth of the Whigs
• Others who joined the Whigs:
• Supporters of Clay’s American System, southern
states’ righters, larger northern industrialists and
merchants, and many evangelical Protestants.
• Whigs thought of themselves as
Conservatives, yet progressive in their
support of active government programs and
reforms
• Called for internal improvements like canals,
railroads, telegraph lines, and support for institutionsprisons, asylums, and public schools.
XII. The Birth of Whigs
• Other issues for the Whigs:
– They welcomed the market economy
– By absorbing the Anti-Masonic party, they
blunted the Democratic appeal to the common
man
– Now the Whigs claimed to be the defenders of
the common man and declared the Democrats
the party of cronyism and corruption
XIII. The Election of 1836
• Martin Van Buren of New York:
– Was Jackson’s choice for “appointment” as his
successor in 1836
– Jackson rigged the nominating convention and
rammed his friend to the delegates
• Van Buren was supported by the Jacksonites without
wild enthusiasm
• The Whigs showed their inability to
nominate a single presidential candidate
XIII. The Election of 1836
• The Whigs’ strategy was to run several
“favorite sons”:
• each with a different regional appeal, hoping to
scatter the vote so no one candidate would win a
majority
• The deadlock would have to be decided by the House
of Representatives, where the Whigs would have a
chance
• The Whigs’ “favorite son” was General William Henry
Harrison of Ohio, hero of the Battle of Tippecanoe
(see p. 220)
XIII. The Election of 1836
• The Whigs’ scheme availed nothing:
– Van Buren, the dapper “Little Magician,”
squirmed into office by popular vote of 765,483
to 739,795
– And a comfortable margin of 170 to 124 votes
(for all the Whigs combined) in the Electoral
College
XIV. Big Woes for the “Little
Magician”
– Martin Van Buren, eighth president, first to be
born under the American flag
• A statesman of wide experience in both legislative
and administrative life
• In intelligence, education, and training, he was above
the average of the president since Jackson.
– He labored under severe handicaps:
• As a machine-made candidate, he incurred the
resentment of many Democrats
• He was the master showman
p260
Consequences of the Death of
Federal Bank
• The death of the Bank of the United States
left a financial vacuum and kicked off a
lurching cycle of booms and busts:
– No central control; the pet banks and smaller
“wildcat” banks were more fly-by-night
operations
Consequences of the Death of
Federal Bank
• Jackson tried to rein in the runaway
economy
– He authorized the Treasury to issue a Specie
Circular—a decree that required all public land
to be purchased with “hard,” or metallic, money.
– This drastic step slammed the brakes on the
speculative boom, thus contributing to the
financial panic and crash in 1837
Depression Doldrums and the
Independent Treasury
• The panic of 1837:
– Its basic cause was rampant speculation
prompted by a mania of get-rich-quickism
– The speculative craze spread from western lands
and “wildcat banks” to canals, roads, railroads,
and slaves
– Jackson’s finance, including the Bank War and
the Species Circular, gave an additional jolt
– Failures of wheat crops deepened the distress
Depression Doldrums and the
Independent Treasury
– Financial stringency abroad endangered
America’s economy
• Two major British banks failed
– Hardship was acute and widespread
• American banks collapsed by the hundreds
• Commodity prices drooped, sales of public lands fell
off, customs revenues dried up
• Factories closed and unemployed workers increased
p264
Election of 1840:
Log Cabins and Hard Cider
• Martin van Buren was renominated in 1840
by the Democrats
• The Whigs, learning from their mistakes,
nominated one candidate: Ohio’s William
Henry Harrison, believed to be the ablest
vote-getter
– Whigs published no official platform
– Whigs, as a result of a Democratic editor,
adopted hard cider and log cabin as symbols
Election of 1840:
Log Cabins and Hard Cider
– The Whig campaign was a masterpiece of inane
hoopla
• Harrison was from one of the FFV’s (“First Families of
Virginia”)
• Harrison won by the surprisingly close margin of
1,274,624 to 1,127,781 popular votes, by an
overwhelming electoral margin of 234 to 60
– Whigs sought to expand and stimulate the
economy, while Democrats favored high-flying
banks, aggressive corporations, retrenchment
p271
p271
p270
Politics for the People
– The election of 1840 conclusively demonstrated
two major changes in American politics since the
Era of Good Feelings:
1. The triumph of a populist democratic style
– By 1840s aristocracy was the taint, and democracy was
respectable
– Politicians were now forced to curry favorites with the
voting masses
– Now wealthy and prominent men had to forsake all social
pretensions and cultivate the common touch if they hoped
to win elections
– The common man was at last moving to the center of the
national political stage.
– America was now bowing to the divine right of the people.
The Two-Party System
2. The second dramatic change resulting from the
1840 election was the formation of a vigorous and
durable two-party system:
– Both grew out of Jeffersonian republicanism
• Jacksonian Democrats glorified the liberty of the
individual and guarded against the inroads of
“privilege” into government. They clung to states’
rights and federal restraint in social and economic
affairs
• The Whigs tended to favor a renewed national bank,
protective tariffs, internal improvements, public
schools, and moral reforms—prohibition and slavery
The Two-Party System
– They separated by real differences of philosophy
and policy, but had much in common:
• Mass-based, “catchall” parties to mobilize many
voters as possible for their cause.
• When the two-party system creaked in the 1850s, the
Union was mortally imperiled.