Tuesday, March 3, 2020
The Bank War Waged by President Andrew Jackson
The Bank War Waged by President Andrew Jackson The Bank War was a long and bitter struggle waged by President Andrew Jackson in the 1830s against the Second Bank of the United States, a federal institution which Jackson sought to destroy. Jacksons stubborn skepticism about banks escalated into a highly personal battle between the president of the United States and the president of the bank, Nicholas Biddle. The conflict over the bank became an issue in the presidential election of 1832, in which Jackson defeated Henry Clay. Following his reelection, Jackson sought to destroy the bank and engaged in controversial tactics which included firing treasury secretaries opposed to his grudge against the bank.Ã The Bank War created conflicts which resonated for years. And the heated controversy created by Jackson came at a very bad time for the country. Economic problems which reverberated through the economy eventually led to major depression in the Panic of 1837 (which occurred during the term of Jacksons successor, Martin Van Buren). Jacksons campaign against the Second Bank of the United States did ultimately cripple the institution. Background on the Second Bank of the United States The Second Bank of the United States was chartered in April 1816, in part to manage debts the federal government had taken on during the War of 1812. The bank filled a void left when the Bank of the United States, which had been created by Alexander Hamilton, did not have its 20-year charter renewed by Congress in 1811. Various scandals and controversies plagued the Second Bank of the United States in the first years of its existence, and it was blamed for helping to cause the Panic of 1819, a major economic crisis in the United States. By the time Andrew Jackson became president in 1829, the problems of the bank had been rectified. The institution was headed by Nicholas Biddle, who, as bank president, exercised considerable influence over the financial affairs of the nation. Jackson and Biddle clashed repeatedly, and cartoons of the time depicted them in a boxing match, with Biddle cheered on by city dwellers as frontiersmen rooted for Jackson. The Controversy Over Renewing the Charter of the Second Bank of the United States By most standards, the Second Bank of the United States was doing a good job of stabilizing the nations banking system. But Andrew Jackson viewed it with resentment, considering it a tool of an economic elite in the East that took unfair advantage of farmers and working people. The charter for the Second Bank of the United States would expire, and thus be up for renewal, in 1836. However, four years earlier, in 1832, prominent senator Henry Clay pushed forward a bill that would renew the banks charter. The charter renewal was a calculated political move. If Jackson signed the bill into law, it might alienate voters in the West and South and jeopardize Jacksons bid for a second presidential term. If he vetoed the bill, the controversy might alienate voters in the Northeast. Andrew Jackson vetoed the renewal of the charter of the Second Bank of the United States in dramatic fashion. He issued a lengthy statement on July 10, 1832, providing the reasoning behind his veto. Along with his arguments claiming the bank was unconstitutional, Jackson unleashed some blistering attacks, including this comment near the end of his statement: Many of our rich men have not been content with equal protection and equal benefits, but have besought us to make them richer by act of Congress.Henry Clay ran against Jackson in the election of 1832. Jacksons veto of the banks charter was an election issue, but Jackson was reelected by a wide margin. Andrew Jackson Continued His Attacks on the Bank At the beginning of his second term, believing he had a mandate from the American people, Jackson instructed his treasury secretary to remove assets from the Second Bank of the United States and transfer them to state banks, which became known as pet banks. Jacksons war with the bank placed him in bitter conflict with the banks president Nicholas Biddle, who was as determined as Jackson. The two men sparred, sparking a series of economic problems for the country. In 1836, his last year in office, Jackson issued a presidential order known as the Specie Circular, which required that purchases of federal lands (such as lands being sold in the West) be paid for in cash (which was known as species). The Specie Circular was Jacksons last major move in the bank war, and it did succeed in virtually ruining the credit system of the Second Bank of the United States. The clashes between Jackson and Biddle likely contributed to the Panic of 1837, a major economic crisis which impacted the United States and doomed the presidency of Jacksons successor, Martin Van Buren. Disruptions caused by the economic crisis which began in 1837 resonated for years, so Jacksons suspicion of banks and banking had an effect that outlived his presidency.