why was the bank war important
There was a strong movement to increase the power of the federal government. Clay and his allies were the only powerful supporters the Bank had left; if Biddle rejected their advice and delayed the recharter, he risked losing the only support he had left in Congress. 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. The committee members refused, and no books were shown to them. [262], The men took Jackson's advice and went to see Biddle, whom they discovered was "out of town". 2 answers; U.S. History 1865; asked by B.B. The circular, he claimed, was necessary to prevent excessive speculation. Lost Opportunities for Compromise in the Bank War: A Reassessment of Jacksons Veto Message (Abstract). Business and Economic History, vol. What was the Bank War? - Study.com The federal government purchased a fifth of the Bank's stock, appointed a fifth of its directors, and deposited its funds in the Bank. branch bank in Nashville. [253] In addition, Biddle reduced discounts, called in loans, and demanded that state banks honor the liabilities they owed to the B.U.S. The Second Bank of the United States | Federal Reserve History Opponents of the Bank defeated recharter by a single vote in both the House and Senate in 1811. Westport, CT: Greenwood Press, 1999. was sufficiently popular among voters that any attack on it by the President would be viewed as an abuse of executive power. He blamed Jackson for the loss of his job. [211] Clay was also damaged by the candidacy of William Wirt of the Anti-Masonic Party, which took National Republican votes away in crucial states, mostly in the northeast. Sure enough, the following day, a notice appeared in the Globe stating that the deposits would be removed starting on or before October 1. [263] Biddle rejected the idea that the Bank should be "cajoled from its duty by any small driveling about relief to the country. Most notably, these were Thomas Hart Benton in the Senate and future president James K. Polk, member of the House of Representatives from Tennessee, as well as Blair, Treasury Auditor Kendall, and Attorney General Roger Taney in his cabinets. [335][336][337], 1930s Jackson biographer Marquis James commemorates Jackson's war against the Bank as the triumph of ordinary men against greedy and corrupt businessmen. [279] When the committee members reported their findings to the House, they recommended that Biddle and his fellow directors be arrested for "contempt" of Congress, although nothing came of the effort. during the presidency of Andrew Jackson (18291837). According to early Jackson biographer James Parton, Biddle "was a man of the penquick, graceful, fluent, honorable, generous, but not practically able; not a man for a stormy sea and a lee shore". Facing financial woes and inflation accompanying the War of 1812, Congress sought to revive the central bank. Jacksonians argued that the Bank often cheated small farmers by redeeming paper with discounted specie, meaning that a certain amount was deducted. But in 1841 it went out of business, the result of faulty investment decisions and national economic distress. Jackson's veto was only one part of the war on the "monster bank." In 1833, the president removed the deposits from the national bank and placed them in state banks. The great Bank War turned out to be a conflict both sides lost."[337]. A sweeping reexamination of the veto power and a comprehensive outline of Jackon's political philosophy. Existing deposits were consumed paying off expenses, while new revenues were placed in 89 state pet banks. Biddle responded by calling in loans and thus precipitating a credit shortage and business downturn. [254] "This worthy President thinks that because he has scalped Indians and imprisoned Judges, he is to have his way with the Bank. Polk ran for Speaker of the House to replace Andrew Stevenson, who was nominated to be minister to Great Britain. [139][146] They did however assure Biddle that Jackson would not veto the bill so close to the 1832 election. Jacksons vendetta against the Bank crystallized the opposition against him into a new party: the Whigs. The veto message was "a brilliant political manifesto"[176] that called for the end of monied power in the financial sector and a leveling of opportunity under the protection of the executive branch. [38] Federal institutions that conferred privileges producing "artificial inequality" would be eliminated through a return to strict constructionism. 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. In response, Biddle restricted the Banks loans, tightening the nations money supply in an effort to inspire public outrage toward Jacksons policies and force the recharter. Hamilton's view won out and the Bank was created. A large number of farmers as well as other people who was having a difficulty time in paying back their loans after the Panic of 1819 was against it. Please feel free to fill out our Contact Form. [281], The Democrats did suffer some setbacks. Jacksons handling of the issue became known as the Bank War of 1832 and would have important and lasting effects on the economy and commerce in the United States. Under attack from the Globe,[244] Duane was dismissed by Jackson days later, on September 22, 1833. served as the country's central bank. [63] Jackson himself, though naturally averse to the Bank, had recommended the establishment of a branch in Pensacola. [275], The House of Representatives, controlled by Jacksonian Democrats, took a different course of action. They called themselves Whigs after the British party of the same name. [174][185] Daniel Webster charged Jackson with promoting class warfare. [213] The House also stood solidly for Jackson. [138] Within days of Jackson's address, party members gathered at a convention on December 16, 1831, and nominated Senator Clay for president. His veto message was a polemical declaration of the social philosophy of the Jacksonian movement that pitted "the planters, the farmers, the mechanic and the laborer" against the "monied interest", benefiting the wealthy at the expense of the common people. In Native American affairs he also failed to enforce the Supreme Courts ruling in the significant Worcester v. Georgia case and authorized the invalid Treaty of New Echota signed with a minority faction of Cherokee Nation members. The liquidation of government stock would necessitate substantial changes to the Bank's charter, which Jackson supported. Nicholas Biddle & Andrew Jackson in the Case of the Strangled Bank. Financial History, Issue 65 (1999). This would lead to lenders demanding that the banks take back their devalued paper in exchange for specie, as well as debtors trying to pay off loans with the same deflated currency, seriously disrupting the economy. This would kill the Bank, the exact outcome Biddle was trying to avoid, but Clay hoped it would arouse public sentiment against Jackson and cost him the election. The recharter bill easily passed both houses of Congress in 1832. The debt added up to approximately $24 million, and McLane estimated that it could be paid off by applying $8 million through the sale of government stock in the Bank plus an additional $16 million in anticipated revenue. [221] The committee's minority faction, under Jacksonian James K. Polk, issued a scathing dissent, but the House approved the majority findings in March 1833, 10946. Congress approved the charter for the First Bank of the United States in 1791, and for twenty years the American economy generally prospered. In accordance with the expungement resolution, he drew black lines around the text recording the censure and atop of the text wrote: "Expunged by order of the Senate, this sixteenth day of January in the year of our Lord, 1837". Required fields are marked *. As of 1830, the Bank had $50 million in specie in reserve, approximately half the value of its paper currency. In fact, the issues of currency, banking, and monetary regulation defined nearly a century of American politics. This last series of moves doomed the Second Bank of the United States and the entity ceased to exist when its charter expired in 1836. The complex issues of monetary policy, handing of specie (hard money) reserves, and coordination of domestic and international trade were not easily conveyed to the public.1, SBUS President Nicholas Biddle stated that opposition to the original First Bank of the United States (in existence from 1791-1811) was the result of a downright ignorance of its meaning and operation.1. Catterall writes, "Just as in 1832 Biddle cared 'nothing for the campaign,' so in 1833 Henry Clay cared little or nothing for the bank." When Andrew Jackson assumed office as the 7th U.S. president, he railed against the Second Bank of the United States. To weaken the Bank before its charter ran out, Jackson ordered that all U.S. government deposits be withdrawn and deposited in various state-chartered banks. [305], Jackson's destruction of the B.U.S. provided "a currency as safe as silver; more convenient, and more valuable than silver, which is eagerly sought in exchange for silver". However, many agree that some sort of compromise to recharter the Bank with reforms to restrict its influence would have been ideal. [64] Its role in managing the nation's fiscal affairs was central. Van Buren capitulated. Taney was rejected by a vote of 2818. The unconfirmed cabinet members, appointed during a congressional recess, consisted of McLane for Secretary of State, Benjamin F. Butler for Attorney General, and Taney for Secretary of the Treasury. Your email address will not be published. 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. Support of the national bank . [214], Jackson regarded his victory as a popular mandate[215] to eliminate the B.U.S. Old Hickory, now a war hero and natural populist, hoped to leverage his popularity for a bid for the presidency in 1824. The bitterness that followed the election of 1824 closed the so-called Era of Good Feelings that had defined American politics in the years after the War of 1812. In the words of historian Bray Hammond, "This was a very large 'if,' and the secretary came to realize it. It enjoyed enormous political and financial power, and there were no practical limits on what Biddle could do. If the Bank were to become the central issue of the 1832 presidential campaign, there would be no doubt as to which side Van Buren would support. [259] He accused Jackson of ignorance on financial matters.[260]. 1) Govan, Thomas P. Fundamental Issues of the Bank War. The Pennsylvania Magazine of History and Biography, vol. It remains critical to understanding the Israeli-Palestinian conflict. Indeed, Livingston was alone in the cabinet, for only he opposed a veto, and Jackson ignored him. [115][116], McLane, a confidant of Biddle,[117][118] impressed Jackson as a forthright and principled moderate on Bank policy. ", Carpenter, Daniel, and Benjamin Schneer. Notice of Non-Discrimination and Equal Opportunity, Jackson Defends Withdrawing the Government's Deposits, Andrew Jackson and the Troubled Birth of Democracy. [243] Secretary Duane had promised to resign if he and Jackson could not come to an agreement. But the real evil of the Bank, Jackson claimed, was its creation of a privileged class of Americans with too much money and political power. [291] In December 1835, Polk defeated Bell and was elected Speaker of the House. [60], Because of the failure to emphasize the distinction between hard money and paper money, as well as the Bank's popularity, the Second Bank of the United States was not a major issue in the 1828 elections. Democratic ideals and technocratic pragmatism clash. The economy did well during Jackson's time as president, but his economic policies, including his war against the Bank, are sometimes blamed for contributing to the Panic of 1837. Clay and his supporters assured Biddle that Congress would have such an overwhelming majority of support for the bill that Jackson would not dare veto it. By expanding the veto, Jackson claimed for the president the right to participate in the legislative process. Some of the animosity left over from the Panic of 1819 had diminished, though pockets of anti-B.U.S. [136] Taney's influence meanwhile continued to grow, and he became the only member of the President's official cabinet to be admitted to the inner circle of advisors in the Kitchen Cabinet. The Bank War - University of North Texas As that happens, they've got to get out in front of the cost quickly," Banks said on "Mornings with Maria" Monday."What . All this changed when Jackson effectively dismantled the national bank. In 1839, Biddle submitted his resignation as Director of the B.U.S. Paper money was therefore necessary to grow the economy. Jackson and his supporters slammed the House vote as a corrupt bargain, a product of closed-door deals between corrupt politicians and the elites who owned them to deny the people the president they wanted. [309] However, since lending was tied directly to the amount of gold and silver that banks stored in their vaults, the influx of precious metals into the United States encouraged American banks to print more paper money. One of Jacksons biggest priorities was to ensure the bank would not get rechartered after his election in 1828. The bank would act as the Treasury Departments agent, collecting revenues and disbursing payments. [219] The President declared the Bank "Scotched, not dead". McLane and Lewis, however, told Biddle that the chances of recharter would be greater if he waited until after the election of 1832. Its primary purpose was to stabilize the country's economy, which at the time of its creation suffered from war debt. The following day, Jackson sent a messenger to learn whether Duane had come to a decision. Jackson had taken the risk of making the Bank issue a litmus test in the Democratic Party, forcing voters to choose between him or the Bank, and he had clearly won. The Bank War was the political struggle that ensued over the fate of the Second Bank of the United States during the presidency of Andrew Jackson. [165] One of the most "popular and effective documents in American political history",[166] Jackson outlined a major readjustment to the relative powers of the government branches. Critics instead pinned the blame on Jacksons hand-picked successor, Martin Van Buren, despite Jacksons policies hampering a unified national response. [203][204], The National Republican press countered by characterizing the veto message as despotic and Jackson as a tyrant. To them, the Bank symbolized corruption while threatening liberty. The Bank War | United States History I - Lumen Learning As such, declared Jackson, Congress was obligated to consult the chief executive before initiating legislation affecting the Bank. For all of his reputation as a military and political warrior, however, the most characteristic struggle of his presidency was financial. Shortly after, the Globe announced that the President intended to stand for reelection. This left open the possibility that he could stymie the renewal of the Bank's charter should he win a second term. [114][105][106], After replacing most of his original cabinet members, Jackson included two Bank-friendly executives in his new official cabinet: Secretary of State Edward Livingston of Louisiana and Secretary of the Treasury Louis McLane of Delaware. Jackson was enraged by this so-called "corrupt bargain" to subvert the will of the people. They would force Congress to side with him in the event that pro-Bank congressmen attempted to impeach him for removing the deposits. [328], Whigs and Democrats blamed each other for the crisis. He has millions of specie in his vaults, at this moment, lying idle, and yet you come to me to save you from breaking. [160] Not long after, Jackson became ill. Van Buren arrived in Washington on July 4, and went to see Jackson, who said to him, "The Bank, Mr. Van Buren, is trying to kill me, but I shall kill it. By the summer of 1842, eight states and the Florida territory had defaulted on their debts, which outraged international investors. He believed it concentrated too much economic power in the hands of a small monied elite beyond the publics control. Van Burenwas personally neutral on the Bank issue; he both recognized its value and agreed that it had problems. "[72], Unfortunately for Biddle, there were rumors that the Bank had interfered politically in the election of 1828 by supporting Adams. 30515, http://www.jstor.org/stable/20089097. [274] The opposing parties accused one another of lacking credentials to represent the people. [240] After weeks of clashing with Duane over these prerogatives, Jackson decided that the time had come to remove the deposits. [334], Daniel Walker Howe criticizes Jackson's hard money policies and claims that his war on the Bank "brought little if any benefit" to the common men who made up the majority of his supporters. McLane and Butler would likely receive confirmation easily, but Taney would definitely be rejected by a hostile Senate. The affair resulted in the shutdown of the Bank and its replacement by state banks. It was a campaign started by Andrew Jackson in 1833 to destroy the Second Bank of the United States. Jackson's magnum opus. Championing this view was Senator Henry Clay of Kentucky, Jacksons opponent in the election. John C. Calhoun, a representative from South Carolina and strong nationalist, boasted that the nationalists had the support of the yeomanry, who would now "share in the capital of the Bank". Both of these measures diverted precious metals from the Atlantic Coast to western regions, leaving the nations financial centers vulnerable to external shocks. He resigned immediately. [166][174][175] The practical implications of the veto were enormous. [27] In Mississippi, the Bank did not open branches outside of the city of Natchez, making small farmers in rural areas unable to make use of its capital. 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. The Banks charter was due to expire in 1836, but Biddle could submit a petition for recharter before that date if he believed it more likely to pass. [304] After an investigation exposed massive fraud in its operations, the Bank officially shut its doors on April 4, 1841. Articles with the HISTORY.com Editors byline have been written or edited by the HISTORY.com editors, including Amanda Onion, Missy Sullivan, Matt Mullen and Christian Zapata. The National Republicans, meanwhile, developed popular political cartoons, some of the first to be employed in the nation. [77] He approached Lewis in November 1829 with a proposal to pay down the national debt. [50] The "planter of the South and the plain Republican of the North"[51] would provide the support, with the aid of universal white male suffrage. Another part of McLane's reform package involved selling government lands and distributing the funds to states, a measure consistent with Jackson's overall belief in reducing the operations of the central government. The self-important statements of Biddle, who claimed to have more power that President Jackson, helped fuel sentiments like Benton's. . [66] The Bank's currency circulated in all or nearly all parts of the country. It is a State paper which finds no topic too exciting for its use, no passion too inflammable for its address and its solicitation. [183] 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. The roots for the resurrection of the Bank of the United States lay fundamentally in the transformation of America from a simple agrarian economy to one that was becoming interdependent with finance and industry. Democrats defended the circular and blamed the panic on greedy speculators. [113][114] After the speech was over, National Republican Senator Daniel Webster of Massachusetts called for a vote to end discussions on the Bank. Nicholas Biddle - Wikipedia In 1823, he was unanimously elected its president. Jackson, however, believed that large majorities of American voters were behind him. [125][129][130] The following day, McLane delivered his report to Congress. [287][288][289] All recharter efforts were now abandoned as a lost cause. In the end, Jackson won a major victory with 54.6% of the popular vote, and 219 of the 286 electoral votes. [237][238] Van Buren had cautiously supported McLane's proposal to delay the matter until January 1, 1834. The Economic Effects of the Meiji Restoration, A New Era: The Significance of the Election of 1828. Do banks benefit from wars? - Quora Supporters of Adams began calling themselves National Republicans. The situation was exacerbated by the B.U.S. Some of Biddle's aides brought this to his attention, but he chose not to take their advice. [312][313], Another major problem was that bountiful crop harvests in cotton from the United States, Egypt, and India created a supply glut. Some people blamed a weak central government for America's poor performance during much of the War of 1812. The Bank War was a political struggle that developed over the issue of rechartering the Second Bank of the United States (B.U.S.) Jacksonian Democrats pointed to the fact that Senators were beholden to the state legislatures that selected them; the Whigs pointing out that the chief executive had been chosen by electors, and not by popular vote. [139], The alliance between Biddle and Clay triggered a counter-offensive by anti-B.U.S. notes were receivable for federal bonds. The economic consequences of the Banks dissolution were severe as well. [229] Duane was a distinguished lawyer from Philadelphia whose father, also William Duane, had edited the Philadelphia Aurora, a prominent Jeffersonian newspaper. New York: W.W. Norton . [217][220] In response, the Democratic-controlled House conducted an inquiry, submitting a divided committee report (43) that declared the deposits perfectly safe. What Was the Bank War of 1832? - Definition & Summary In the full enjoyment of the gifts of Heaven and the fruits of superior industry, economy, and virtue, every man is equally entitled to protection by law; but when the laws undertake to add to these natural and just advantages artificial distinctions, to grant titles, gratuities, and exclusive privileges, to make the rich richer and the potent more powerful, the humble members of society-the farmers, mechanics, and laborers-who have neither the time nor the means of securing like favors to themselves, have a right to complain of the injustice of their Government.[184]. In the end, Jackson won with 54 percentof the popular vote compared to Clays 38 percent, a victory which at last doomed the Bank. [172] He characterized the B.U.S. [158] Congressmen were encouraged to write pro-Bank articles, which Biddle printed and distributed nationally. Why is the Bank War important? The proposals included some limited reforms by placing restrictions on the Bank's powers to own real estate and create new branches, give Congress the ability to prevent the Bank from issuing small notes, and allow the president to appoint one director to each branch of the Bank. 1 The Inquirer was being kind; years removed from his heyday, Biddle had just died in utter disgrace. He had caused Biddle to create one depression and the pet banks to aggravate a second, and he had left the nation committed to a currency and credit system even more inadequate than the one he had inherited." It voted to continue allowing the deposit banks to serve as fiscal agents and to investigate whether the Bank had deliberately instigated the panic. In 1829 and again in 1830 Jackson made clear his constitutional objections and personal antagonism toward the bank. The battle over the Bank became a central issue in the presidential campaign that year, in which Jackson soundly defeated Clay to win a second term. All were members of the Republican Party, which was still the only political party in the country. The Bank War | Miller Center [24] Many people demanded more limited Jeffersonian government, especially after revelations of fraud within the Bank and its attempts to influence elections. [92], A few weeks after Jackson's address, Biddle began a multi-year, interregional public relations campaign designed to secure a new Bank charter. The origins of this crisis can be traced to the formation of an economic bubble in the mid-1830s that grew out of fiscal and monetary policies passed during Jackson's second term, combined with developments in international trade that concentrated large quantities of gold and silver in the United States. was a safe depository for "the people's money" and called for an investigation. The Bank War was the name given to the events initiated by Andrew Jackson to bring about the destruction of the Second Bank of the United States and transfer government money into selected state banks. It did not officially nominate Jackson for president, but, as Jackson wished, nominated Martin Van Buren for vice president. It did not involve an army or any physical fighting. [256], At first, Biddle's strategy was successful. [191] By diverting both groups in a campaign against the central bank in Philadelphia, Jackson cloaked his own hard-money predilections, which, if adopted, would be as fatal to the inflation favoring Jacksonians as the B.U.S. One of the last acts of the Madison presidency was to charter the SBUS in 1816 to a twenty year term. [226][227] Treasury Secretary McLane balked at the removal, saying that tampering with the funds would cause "an economic catastrophe", and reminded Jackson that Congress had declared the deposits secure. All articles are regularly reviewed and updated by the HISTORY.com team. [157][206] Overall, the pro-Bank analysis tended to soberly enumerate Jackson's failures, lacking the vigor of the Democratic Party press. Daniel Feller. We strive for accuracy and fairness. Why was the Bank War of 1832 Important? - History in Charts 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". In addition, Biddle had to consider the wishes of the Bank's major stockholders, who wanted to avoid the uncertainty of waging a recharter fight closer to the expiration of the charter. Banks and Politics in America from the Revolution to the Civil War. For the Whigs, this was blatantly unconstitutional. He refutes the idea that the collapse of the Bank was responsible for the Panic of 1837, which he describes as "a world-wide economic collapse", but concedes that it "may have exacerbated" the crisis. Corrections? [278], In Biddle's view, Jackson had violated the Bank's charter by removing the public deposits, meaning that the institution effectively ceased functioning as a central bank tasked with upholding the public interest and regulating the national economy. Repealed by Whigs in 1841 after Van Burens loss to William Henry Harrison, the Independent Treasury Act was signed back into law by Democratic President James K. Polk in 1846. Dec 1831: Treasury Secretary Louis McLain releases plan in favor of rechartering the SBUS amid various Jackson-favored reforms. 2) Scheiber, Harry N. SOME DOCUMENTS ON JACKSONS BANK WAR. Pennsylvania History: A Journal of Mid-Atlantic Studies, vol. [251], Biddle urged the Senate to pass joint resolutions for the restoration of the deposits. Jackson called their disagreements an "honest difference of opinion" and appreciated McLane's "frankness". "[159][163], Contrary to the assurances Livingston had been rendering Biddle, Jackson determined to veto the recharter bill.
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why was the bank war important
