[194] In a speech to the Senate, Webster rebuked Jackson for maintaining that the president could declare a law unconstitutional that had passed Congress and been approved by the Supreme Court. Jackson's Kitchen Cabinet, led by the Fourth Auditor of the Treasury Amos Kendall and Francis P. Blair, editor of the Washington Globe, the state-sponsored propaganda organ for the Jacksonian movement, helped craft policy, and proved to be more anti-Bank than the official cabinet. [56] Supporters of soft money tended to want easy credit. [197][198] Be on the lookout for your Britannica newsletter to get trusted stories delivered right to your inbox. [42][43], Although slavery was not a major issue in Jackson's rise to the presidency,[37] it did sometimes factor into opposition to the Second Bank, specifically among those in the South who were suspicious of how augmented federal power at the expense of the states might affect the legality of slavery. [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. 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. [331] The nation returned to deposit banking. Van Buren capitulated. Jacksonians. Fearing economic reprisals from Biddle, Jackson swiftly removed the Bank's federal deposits. And so Jackson felt he had to get rid of it. [316][317][318], In March 1837, Hermann, Briggs & Company, a major cotton commission house in New Orleans, declared bankruptcy, prompting the New York bill brokerage company, J.L. The circular, he claimed, was necessary to prevent excessive speculation. Historian Ralph C.H. "[158][162], Contrary to the assurances Livingston had been rendering Biddle, Jackson determined to veto the recharter bill. The Bank had largely recovered in the public eye since the Panic of 1819 and had grown to be accepted as a fact of life. The directors soon stated, in writing, that the members must state in writing their purpose for examining the Bank's books before any would be turned over to them. [28], In 1819, Monroe appointed Nicholas Biddle of Philadelphia as Government Director of the Bank. administrators, including Biddle, and Jackson continued to do business with the B.U.S. Jackson was enraged by this so-called "corrupt bargain" to subvert the will of the people. Clay in 1834 pushed a resolution through the Senate censuring Jackson for removing the deposits. Within months, cotton prices entered a full free-fall. Jackson, however, routinely used the veto to allow the executive branch to interfere in the legislative process, an idea Clay thought "hardly reconcilable with the genius of representative government". [306] British investment in the stocks and bonds that capitalized American transportation companies, municipal governments, and state governments added to this phenomenon. War is a blessing compared with national degradation. [328], The Bank War far from settled the status of banking in the United States. Biddle received heavy criticism for his contraction policies, including by some of his supporters, and was compelled to relax his curtailments. The Bank's directors raised interest rates from three to five percent and restricted some of the open trade practices that they had previously granted to American import merchants. [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. [99] Developments in 1830 and 1831 temporarily diverted anti-B.U.S. [77][78][79], In his annual address to Congress on December 8, 1829,[80] Jackson praised Biddle's debt retirement plan, but advised Congress to take early action on determining the Bank's constitutionality and added that the institution had "failed in the great end of establishing a uniform and sound currency". [91], A few weeks after Jackson's address, Biddle began a multi-year, interregional public relations campaign designed to secure a new Bank charter. Jackson’s string of military success, despite the obstacles he faced, the poor results of other military leaders during the War of 1812 and his stunning victory at New Orleans made him a celebrated national hero, revered above all others except George Washington. Jacksonians from pursuing their attack on the B.U.S. For the Whigs, this was blatantly unconstitutional. Jackson typically chose not to attend these events, in keeping with the tradition that candidates not actively campaign for office. branch offices in Louisville, Lexington, Portsmouth, Boston, and New Orleans, according to anti-Bank Jacksonians, had loaned more readily to customers who favored Adams, appointed a disproportionate share of Adams men to the Bank's board of directors, and contributed Bank funds directly to the Adams campaign. Commercial rates tended towards about 15.5-1. [155] After months of debate and strife, pro-B.U.S. [334], Richard Hofstadter accepts that the Bank had too much power to interfere in politics but excoriates Jackson for making war on it. It was driven by South Carolina politician John C. Calhoun, who opposed the federal imposition of the tariffs of 1828 and 1832 and argued that the U.S. Constitution gave states the right to block the enforcement of a federal law. [262] Biddle rejected the idea that the Bank should be "cajoled from its duty by any small driveling about relief to the country. [267][275] Led by Ways and Means Committee chairman James K. Polk, the House declared that the Bank "ought not to be rechartered" and that the deposits "ought not to be restored". 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. Beginning on October 1, all future funds would be placed in selected state banks, and the government would draw on its remaining funds in the B.U.S. "Party formation through petitions: The Whigs and the Bank War of 1832–1834. [96] Another result of the reports was that the Bank's stock rose following the drop that it experienced from Jackson's remarks. Cotton prices eventually collapsed because of the depression (see below), making this business unprofitable. The result was that the recession that began with Biddle's contraction was brought to a close. That year, Kendall went on a "summer tour" in which he found seven institutions friendly to the administration in which it could place government funds. Not a member, register for a Gilder Lehrman account. [65], When Jackson entered the White House in March 1829, dismantling the Bank was not part of his reform agenda. Updates? [221][233][234] Duane demurred, and when Jackson personally intervened to explain his political mandate[214] to ensure the Bank’s demise,[235] his Treasury Secretary informed him that Congress should be consulted to determine the Bank's fate. [76][141] Biddle no longer believed that Jackson would compromise on the Bank question, but some of his correspondents who were in contact with the administration, including McDuffie, convinced the Bank president that Jackson would not veto a recharter bill. [215][216] During the final phase of the 1832 election campaign, Kendall and Blair had convinced Jackson that the transfer of the federal deposits—20% of the Bank's capital—into private banks friendly to the administration would be prudent. was a safe depository for "the people's money" and called for an investigation. [103][104][105], In his second annual address to Congress on December 7, 1830, the president again publicly stated his constitutional objections to the Bank's existence. Quotations by Andrew Jackson, American President, Born March 15, 1767. Supporters of Jackson became known as Jacksonians and, eventually, Democrats. These included theft, fraud, and bribery, and they occurred regularly at branches of the National Bank. [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. [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. The net result of this substitution was that Mexican silver swelled the US monetary base. The Bank's supporters, however, struck back. Jackson viewed the issue as a political liability—recharter would easily pass both Houses with simple majorities—and as such, would confront him with the dilemma of approving or disapproving the legislation ahead of his reelection. [124][131], The enemies of the Bank were shocked and outraged by both speeches. Following the War of 1812, Congress chartered the Second Bank of the United States (the First Bank’s charter had expired in 1811). According to the History Channel, President Andrew Jackson vetoed a new charter for the Second Bank of the United States because the bank was heavily biased toward business interests and had no congressional oversight. He eventually began to call in loans, but nonetheless was removed by the Bank's directors. [260] When a New York delegation visited him to complain about problems being faced by the state's merchants, Jackson responded saying: Go to Nicholas Biddle. The committee members refused, and no books were shown to them. [303] After an investigation exposed massive fraud in its operations, the Bank officially shut its doors on April 4, 1841. [155][156] For the past six months he had worked in concert with B.U.S. Schlesinger portrays Jackson's economic program as a progressive precursor to the New Deal under Franklin D. [166], The executive branch, Jackson averred, when acting in the interests of the American people,[167] was not bound to defer to the decisions of the Supreme Court, nor to comply with legislation passed by Congress. [124][119][134] After this, McLane secretly tried to have Blair removed from his position as editor of the Globe. If a violation of charter was alleged, the specific allegation must be stated. [138] Clay and Webster secretly intended to provoke a veto, which they hoped would damage Jackson and lead to his defeat. The great Bank War turned out to be a conflict both sides lost. Webster and John C. Calhoun, who was now a senator, broke away from Clay. The federal government purchased a fifth of the Bank's stock, appointed a fifth of its directors, and deposited its funds in the Bank. [82], Many historians agree that the claim regarding the Bank’s currency was factually untrue. [165][173][174] The practical implications of the veto were enormous. [66][67][68], The Second Bank's reputation in the public eye partially recovered throughout the 1820s as Biddle managed the Bank prudently during a period of economic expansion. He claimed that with the President dead, "money would be more plenty", (a reference to Jackson's struggle with the Bank) and that he "could not rise until the President fell". forces that they would have to step up their campaign efforts. Perhaps you pictured two banks competing against one another for customers or business He blamed Jackson for the loss of his job. [160], The final bill sent to Jackson's desk contained modifications of the Bank's original charter that were intended to assuage many of the President's objections. Nevertheless, he often found himself swarmed by enthusiastic mobs. Financial writer William Gouge wrote that "the Bank was saved and the people were ruined". In trying to keep the Bank alive, Biddle borrowed large sums of money from Europe and attempted to make money off the cotton market. The charter for the Second Bank of the United States, which was headed by Nicholas Biddle, was for a period of twenty years beginning in 1816, but Jackson's distrust of the national banking system (which he claimed to be unconstitutional) led to Biddle's proposal to recharter early, and the beginning of the Bank War. In what is perhaps the most memorable sentence of his book, Temin wrote (p. 82), “It would not be too misleading to say the Opium War was more closely connected to the American inflation than the Bank War between Jackson and Biddle.” Consequently, Jackson set out to destroy the Bank. The money supply and number of bank notes in circulation increased significantly in these years. This money has to be paper; otherwise, a bank can only lend as much as it takes in and hence new currency cannot be created out of nothing. On October 7, 1833, Biddle held a meeting with the Bank's board members in Philadelphia. Under attack from the Globe,[243] Duane was dismissed by Jackson days later, on September 22, 1833. [46][47][48] The Jacksonian movement reasserted the Old Republican precepts of limited government, strict construction, and state sovereignty. Although the Bank provided significant financial assistance to Clay and pro-B.U.S. [24], After the Panic of 1819, popular anger was directed towards the nation's banks, particularly the B.U.S. The attempt by the Second Bank of the United States for an early recharter was passed by Congress in July 1832, but the bill was vetoed shortly thereafter by President Andrew Jackson. What is the good, the bad, and the ugly of this easy-to-hate Southerner? Jackson’s Bank War was in phase two. He and McLane had disagreed strongly on the issue, and his appointment would have been interpreted as an insult to McLane, who "vigorously opposed" the idea of Taney being appointed as his replacement. [38] The Democrats launched a spirited and sophisticated campaign. It did not officially nominate Jackson for president, but, as Jackson wished, nominated Martin Van Buren for vice president. Their campaign strategy was to defeat Jackson in 1832 on the Bank re-authorization issue. Jackson vetoed the bill, beginning the long struggle which has become known as "The Bank War." [261], The men took Jackson's advice and went to see Biddle, whom they discovered was "out of town". funds by executive action alone. This is an excellent book on Andrew Jackson's battle against the Second Bank of the United States. Andrew Jackson despised the Second Bank of the United States ostensibly because it held too much power over the economy, but actually because his political enemies controlled it. The book is just the right size. [331] The United States would never have another central banking system again until the Federal Reserve was established in 1913. "Jackson and Reform": Implications for the B.U.S. How should Americans, then, and especially American Southerners, view Andrew Jackson? [5], President Madison and Treasury Secretary Albert Gallatin supported recharter of the First Bank in 1811. 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. 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." Taney's influence grew immensely during this period, and Cambreleng told Van Buren that he was "the only efficient man of sound principles" in Jackson's official cabinet. [202][203], The National Republican press countered by characterizing the veto message as despotic and Jackson as a tyrant. [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. When questioned by Jackson about this earlier promise, he said, "I indescreetly said so, sir; but I am now compelled to take this course." He resigned immediately. [87] Jackson’s criticisms were shared by "anti-bank, hard money agrarians"[88] as well as eastern financial interests, especially in New York City, who resented the central bank's restrictions on easy credit. [305] Among these policies and developments were the passage of the Coinage Act of 1834, actions pursued by Mexican President Antonio Lopez de Santa Anna, and a financial partnership between Biddle and Baring Brothers, a major British merchant banking house. [268][269] Henry Clay, spearheading the attack, described Jackson as a "backwoods Caesar" and his administration a "military dictatorship". Omissions? The purpose of the act was to eliminate the devaluation of gold in order for gold coins to keep pace with market value and not be driven out of circulation. [119] He secretly worked with Biddle to create a reform package. [296] Jackson initially suspected that a number of his political enemies might have orchestrated the attempt on his life. In Jackson’s veto message he appealed mostly to the common citizens while attacking the wealthy. "If you apply now," McLane wrote Biddle, "you assuredly will fail,—if you wait, you will as certainly succeed. [159] The House was dominated by Democrats, who held a 141–72 majority, but it voted in favor of the recharter bill on July 3 by a tally of 107 to 85. Biddle has all the money. Jackson ordered that no more government funds be deposited in the bank. [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. "[44] In 1820, John Tyler of Virginia wrote that "if Congress can incorporate a bank, it might emancipate a slave". Langdon Cheves, who replaced Jones as president, worsened the situation by reducing the Bank's liabilities by more than half, lessening the value of Bank notes, and more than tripling the Bank's specie held in reserve. [125][139] In the House of Representatives, McDuffie, as Chairman of the Ways and Means Committee, guided the bill to the floor. He stated that one fifth of the Bank's stockholders were foreign and that, because states were only allowed to tax stock owned by their own citizens, foreign citizens could more easily accumulate it. On April 4, it passed resolutions in favor of the removal of the public deposits. With four months remaining until the November general election, both parties launched massive political offensives with the Bank at the center of the fight. According to Benton, the vote tally was "enough to excite uneasiness but not enough to pass the resolution". "He's a chip of the old block, sir", Jackson said of the younger Duane. His suspicions were never proven. [216][219], In his December 1832 State of the Union Address, Jackson aired his doubts to Congress whether the B.U.S. 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. McLane denied that he had any part in it. The veto was intended to be used in extreme circumstances, he argued, which was why previous presidents had used it rarely if at all. [133] The Globe refrained from openly attacking Secretary McLane, but in lieu of this, reprinted hostile essays from anti-Bank periodicals. They called themselves Whigs after the British party of the same name. Annual address to Congress, December 1829, Annual address to Congress, December 1830, Post-Eaton cabinet and compromise efforts, Annual address to Congress, December 1831, Renewal of war and 1832 address to Congress, Removal of the deposits and panic of 1833–34, Origins of the Whig Party and censure of President Jackson, National Archives and Records Administration, "When the U.S. paid off the entire national debt (and why it didn't last)", "Jackson escapes assassination attempt Jan. 30, 1835", "Rediscovering the Journal Clause: The Lost History of Legislative Constitutional Interpretation", "The Market for American State Government Bonds in Britain and the United States, 1830–43", "The Jacksonian Persuasion: Politics and Belief", "Jacksonian Monetary Policy, Specie Flows, and the Panic of 1837", Federal Reserve v. Investment Co. Institute, https://en.wikipedia.org/w/index.php?title=Bank_War&oldid=991184827, Short description is different from Wikidata, Creative Commons Attribution-ShareAlike License, Carpenter, Daniel, and Benjamin Schneer. [157] Congressmen were encouraged to write pro-Bank articles, which Biddle printed and distributed nationally. [333], The Bank War has proven to be a controversial subject in the scholarly community long after it took place.