Transcript Jackson and the Bank

Jackson and the Bank
The Bank Veto
• The Bank of the United States was a quasipublic corporation chartered by Congress to
manage the federal government's finances and
provide a sound national currency.
• It was centered in Philadelphia
• It was the country's only truly national financial
institution.
• The federal government owned one-fifth of the
stock and the President of the United States
appointed one-fifth of the directors.
How the Bank Functioned
• The Bank lent for profit and issued paper
currency backed by specie reserves.
• Its notes were federal legal tender.
• By law, it was also the federal government's own
banker, arranging its loans and storing,
transferring, and disbursing its funds.
• The Bank's national reach and official status
gave it enormous leverage over the state banks
and over the country's supply of money and
credit.
The Bank Had its Problems
• We know about the re-chartering controversy,
the panic of 1819, and corruption.
• The new Bank president Nicholas Biddle did
much to repair its reputation in the 1820s.
• By 1828, when Jackson was first elected, the
Bank had ceased to be controversial
• So everyone was surprised when Jackson
attacked the Bank in his very first message to
Congress in 1829
Jackson’s Issue with the bank
• Jackson was convinced that the Bank was not
only unconstitutional -- as Jefferson and his
followers had long maintained -- but that its
concentrated financial power represented a
threat to popular liberty.
• Senators Henry Clay and Daniel Webster helped
Biddle seek a congressional re-charter in 1832.
• They didn’t think that Jackson would dare issue
a veto on the eve of the election
• The re-charter bill duly passed Congress and on
July 10, Jackson vetoed it.
Jackson’s Reasons for the Veto
• The veto message was one of the defining
documents of Jackson's presidency.
• Jackson recited his constitutional objections and
introduced some dubious economic arguments:
1. foreign ownership of Bank stock.
2. special privilege enjoyed by private stockholders
in a government-chartered corporation.
Jackson laid out an essentially laissez-faire vision
of government as a neutral arbiter
Removal of Deposits
• Jackson was determined to withdraw the
federal government's own deposits from
the Bank and place them in selected statechartered banks.
• Under the charter, the secretary of the
treasury, not the President, had authority
to remove the deposits.
• Of Course Jackson didn’t care
Removal Continued
• Jackson drew up a paper explaining his decision, read it
to the cabinet, and ordered Treasury Secretary William
John Duane to execute the removal.
• To Jackson's astonishment, Duane refused.
• He also refused to resign, so Jackson fired him and put
Attorney General Roger Taney in his place.
• Taney ordered the removal, which was largely complete
by 1833.
• To many, Jackson seemed to regard himself as above
the law.
(KING ANDREW?)
The Whigs are born
• Due to the outrage at Jackson many in the South and
former Jackson supporters formed the Whig party
• They took the name of Whigs from Revolutionary-era
American and British opponents of royal prerogative.
• Whigs held a majority in the Senate.
• They rejected Jackson's nominees for government
directors of the Bank of the United States
• They rejected Taney as secretary of the treasury
• In March 1834 they adopted a resolution of censure
against Jackson himself for assuming "authority and
power not conferred by the Constitution and laws, but in
derogation of both."
Log Cabin and Hard Cider
• Van Buren had succeeded Jackson as
president and had grown very unpopular
because of the economy
• Whigs nominated military hero Harrison
with the slogan "Tippecanoe and Tyler
too".
• They depicted Van Buren as living in
luxury and Harrison as a "log cabin and
hard cider" guy, which wasn't entirely true.
Go West Young Man
• There begins at this time a drive to move
westward to achieve Manifest Destiny
• Horace Greeley- Founder and editor of the
New York Tribune. He popularized the
saying "Go west, young man."
• He said that people who were struggling in
the East could make the fortunes by going
west.
The Panic of 1837
• State banks, cut loose from central restraint and backed
with federal funds, went on a lending spree that helped
fuel a speculative boom in western lands.
• Jackson renounced all banknote currency and
demanded a return to the "hard money" of gold and
silver.
• Jackson issued the Specie Circular to force the payment
for federal lands with gold or silver.
• Many state banks collapsed as a result.
• A panic ensued (1837). Bank of the U.S. failed, cotton
prices fell, businesses went bankrupt, and there was
widespread unemployment and distress.