The Great Bank War Recap Maysville Road Veto Corrupt Bargain Nullification Crisis Introduction Jacksonian Democracy was made up of contradictory elements all of the components wanted change and was dissatisfied with the way things were but otherwise had very little in common. The only common denominator able to hold this group together was a strict interpretation of the constitution. This best illustrated by the Bank War, the destruction of the 2nd National Bank of The United States. Chartered in 1816 for 20 years the 2nd National Bank stood as a symbol of the Democratic Republican move to center following the end of the War of 1812. Democratic Republicans opposed the 1st National Bank in the 1790’s. The National Bank The official purpose of the 2nd Bank of the United States was to function as the official Bank of deposit for the United States. The 1816 Charter for the 2nd National Bank gave it the powers to function as the type of institution the National Republicans yearned for. The 2nd National Bank almost immediately began serving in that capacity after its creation. Firstly it began to regulate the money supply since all Federal Taxes and Import Duties were paid to the 2nd national bank the bank had a constant flow of revenue in the form of State Bank notes. The 2nd National Bank then used the State banknotes she received to demand reimbursement in hard currency or specie from the state banks. The consistent demand from the 2nd National bank for repayment in specie served as a restraint in the state banks. Who otherwise would have been tempted to print banknotes out of proportion to their reserves of specie. The 2nd National Bank’s constant demands for specie kept the state banks in line and not overextended and placed in a precarious situation. In this respect the 2nd National Bank controlled the growth of the Early Republic’s economy. The Bank could keep Banks from overextending themselves through excessive loans and issuance of paper currency. In hard times the 2nd National Bank could ease the strain by relaxing her demand for hard currency and allowing loans more freely. Secondly the 2nd national Bank was an odd institution being half government and half privately owned. The 2nd national bank was free to pursue investment policies in private corporations and in financing internal improvements with constant financial liquidity and huge capital reserves. It was useful to the government and the national financial and economic system as a whole. Opposition to the 2nd National Bank There was general mistrust of the Bank stemming from the panic of 1819. Small farmers and industrial workers in particular wanted only hard money specie. They opposed the used of paper money. The Bank was also opposed by businessmen and other banks who wanted to increase the circulation of paper money to make loans easier. The national bank prevented this using oversight powers when state banks began using unsound banking practices. The early Wall Street elite also opposed the bank and wanted to supplant it as the national’s fiscal heart. Slave owners feared the Bank as a dangerous precedent for federal power and a dangerous institution that built up the power of the Northeast. Many Jacksonian Democrats were upset that the Banked had the ability to exercise so much power and that that power was based on public money. They also feared that the banknotes issued by the 2nd National Bank would gradually come to replace those issued by the State Banks since the 2nd National Bank’s notes could be used to pay federal taxes. Lastly the Old Guard Democratic Republicans repeated Jefferson’s objection to the Bank. Jackson used a strict interpretation of the Constitution to veto the Bank’s recharter and in the process introduced the economic principle of Laissez Faire into American politics. That is no government intervention in the economy at all. Nicholas Biddle Nicholas Biddle the Third President of the 2nd National Bank came to power over the bank at a critical time the first Bank President William Jones had acted as a contributing factor to the Panic of 1819 and helped to create the lasting image of the Bank as a harmful institution. The second president Langdon Cheves had reversed a lot of the damage but had not really put the Bank to full use or really restore confidence in the National Bank. Biddle turned out to be a fantastic financier and transformed the 2nd National Bank into a responsible and aggressive titan of economic development. Biddle was also political he used the Bank’s resources to garner political clout chiefly bring in Henry clay and keeping him on retainer. After the election of 1828 Biddle even went out of his way to formulate and present a plan of action to Andrew Jackson on eliminating the national debt. The proposal a 5 year plan would have extinguished the national debt on the anniversary of the Battle of New Orleans January 8th 1833. It was a waste of time to Andrew Jackson the 2nd bank was a mad beasts that needed to be put down. Jackson’s Dilemma After his reelection in 1832 Jackson set out on a personal vendetta against the National Bank claiming “It was trying to destroy him but he would destroy it”. Jackson justified the bank renewal veto because congress was acting in the interest of a special few and not the majority of Americans. He decided to remove all government deposits from the 2nd National Bank. Jackson argued that in creating the 2nd national bank Congress had exceeded its powers granted in the constitution. Jackson reasoned that it would be far better and simpler to use a deposit system for federal funds. Where financial stability would be ensured by the financial revenue of the republic and the nation’s credit rather than on the dividends from the bank. Jackson had no direct constitutional powers to attack the Bank it had a 20 year charter and its charter would not be up for renewal until after Jackson left office. The Supreme Court under John Marshall would not declare the Bank unconstitutional. Congress was full of representatives including Jacksonian Democrats who were either entangled in Biddle’s web or defended the bank as a needed national institution. Inside his cabinet only Roger Taney could be relied upon to see his view on the Bank. The Bank War With all of the cards against Jackson Biddle pushed the envelope in late 1831. Under the influence of Henry Clay Biddle was persuaded to bring up the issue of the Bank’s charter at the next session of congress.it was reasoned that any recharter legislation would pass Congress with little to no difficulty. Jackson would have to either sign or veto the bill. If he signed the bill he would lose his supporter base and the National Republicans would savage him. All the while the National Bank would have another 20 years to continue doing business. On the other hand if Jackson vetoed the recharter bill congress would override his veto and he would lose support among his supporters who would be outraged at his unconstitutional threat to national security and prosperity. It was a win-win. Jackson’s response A triumvirate of Henry Clay who was once again Speaker of the House of Representatives, George McDuffie and George M. Dallas the recharter bill sailed through the house. Jackson vetoed the recharter bill and fought for its enforcement. Clay pounced and led a spirited assault on Jackson’s veto. Jackson carried the day and his veto stood. Clay was not rattled he had prepared and timed this confrontation well. He expected the nation to rally around him to dump this military chieftain who used high handed measures to endanger the national economy. He was gravely mistaken and as the National republican candidate in 1832 Clay was trounced by Jackson. The Jacksonian Offensive The bank issue was not over Jackson had only defeated a premature recharter attempt the bank still had 4 more years of operation under its 1816 charter. Someone else would let the matter die but Andrew Jackson was a man of enduring hatred and vitriolic bitterness. The bank war had infuriated him sufficiently to launch an offensive campaign of his own. Jackson’s plan was to with all of the federal funds from the 2nd National Bank so that the Bank already politically weakened by the loss in the battle over the charter would be economically weakened and thus unable to wield any influence in Washington effectively killing it. Jackson would not have dared thought to put a plan like this in motion before his surprising victory in the Recharter dispute but emboldened by victory he plunged further ahead. He faced stiff opposition from his supporters and cabinet members. Lewis McClain his Secretary of The Treasury refused to remove federal funds from the 2nd national bank. Jackson simply shuffled his cabinet and made McClain Secretary of State. William Dwayne McClain’s replacement likewise refused to do as Jackson wished. With two treasury secretaries fired for raising objections to his orders because of the financial and economic ruin that would ensue. Jackson finally turned to Roger Taney and found a willing supporter for his plan and disaster did follow just as predicted by Taney’s predecessors. Jackson had Taney remove federal funds and place them in certain state or pet banks. Congress was none too pleased with Jackson’s removal plan and Henry Clay emerged yet again to spar with Jackson this time as a Senator leading the charger on a censure resolution on Jackson. Nicholas Biddle rallied his own supporters and campaigned to turn people against Jackson’s actions against the Bank. Biddle began recalling loans and shortening loans, Biddle then seized property and businesses from those unable to repay the debts. Business falter jobs were lost and a recession hit. Biddle’s plan was to make the country hurt and have the country blame Jackson as the cause. Biddle’s plan failed because Jackson successfully turned the blame back on Biddle. When Congress adjourned in 1824 without taking any other action against Jackson than the censure resolution Biddle was forced to accede defeat and end his campaign allowing prosperity to return again. Jackson and Taney then began deposit federal funds into over 300 pet banks. Jackson flush with victory over paid off the Federal debt and divided the remaining surplus among the states. While all of that excitement was taking place Jackson’s pet banks began issuing more paper currency leading to massive inflation and over speculation in the western land market. The cycle was this speculators would borrow paper money from the pet banks, but land from the government using that paper money. The government would then deposit that paper money in the pet banks who would loan the money out to the speculators again thus continuing the cycle. Jackson tried to stop this in 1836 with his specie circular which announced that the government would only accept gold or silver for land. The land market collapsed over extended banks called in their loans which led to another Panic and a depression in 1837 under Jackson’s successor Martin Van Buren. Jackson however kept piling up his victories. In 1835 when the aged John Marshall finally died Jackson was quick to nominate as his replacement for Chief Justice Roger Taney, his bank war lieutenant and former Attorney General. These were truly great victories for Andrew Jackson. He had taken down that monster bank. In the process he distributed the fiscal wealth of the nation to smaller state banks, he brought the nation back to using specie and away from paper money. Jackson had also defeated the National Republican Party as an effective political force in the republic. With Jackson in control of both Congress and the Supreme Court. Undemocratic actions of Jackson Many of his actions were not democratic however and resulted in the corruption of the American political system, the dangerous expansion and abuse of executive power, a handicapping of the national financial system, an outrageous denial of rights for African Americans, women, Native Americans and abolitionist. Jackson also used the Old Guard Democratic Republican ideology of Limited Government, States Rights as well as Democracy. Conclusion Jackson was an appropriate symbol for an era in which all white men regardless of national origin, wealth or social standing received the right to vote. He supported Slavery, Indian Removal, opposing abolitionist and opposing internal improvements but did not support states’ rights over federal dominion. He was also an apt symbol of the triumph of Laissez Faire economics over government direction of the economy. These two would be fused in a new understanding of equality of opportunity that is no special favors from the government for anybody. He further ensconced this principle in the Republic by appointing Roger Taney as Chief Justice after John Marshall’s death in 1835. In the process of doing all of this Jackson helped dismantle the one party system and help create a multi-party system. He and his supporters claimed to be the heirs of Madison, Jefferson and John Taylor of Caroline and called themselves Democratic they united around a strict interpretation of the Constitution. His opponent would call themselves National Republicans or Whigs and call for a continuation of government direction of the economy and a broad interpretation of the constitution. Likewise women and abolitionist would form their own political parties to gain representation and oppose Jackson’s actions. Jackson fiscal policy was disastrous for the United States leading to the ruin of many. Jackson’s liberal use of the spoils system led to the entrenchment of corruption and special privilege. The expansion of rights for white males went hand in hand with the reduction of rights for those who were not white males. Interestingly the last real debate over slavery took place in the south during the period. In Virginia where the opponents of slavery in the Western portion of the state were defeated. The reason for the roll back in rights were for women the market revolution and the promulgation of the True Cult of Womanhood which proposed that the true place for women was the home raising children and creating a relaxing environment for their husbands. For African Americans and Native Americans it was the rise of Scientific Racism that argued that they were genetically inferior and incapable of improvement. This began the trend in United States history of reasoning the expansion of privileges for some with the restriction of privileges for others. These actions enabled Jackson to transform the office of the President in the name of the people. Jackson vetoed more bills than all 6 of his predecessors combined. He vetoed 12 bills his predecessors only vetoed 9. Expanded executive power at the expense of Congress refused to support the Supreme Court. In the process he became known as King Andrew. By his enemies. He justified this expansion of executive power saying that he was the only government official elected by all the people. That he used this power to tear down special privilege that dominated Washington. Jackson did not institute rotation in office or the Spoils System for federal appointees but does use them liberally to reward his supporters. Justifying has actions as democratic moves since in a democracy anybody can rise to hold any office. Jackson also instituted a Kitchen Cabinet of special advisors who are not subject to senate approval.