Bank War

The Bank War is the name given to Andrew Jackson's attack on the Second Bank of the United States during the early years of his presidency. However, the First Bank of the United States first influenced by Alexander Hamilton in 1791 was the origin of the Bank War controversy. However, in 1832 Andrew Jackson vetoed the renewal of the Second Bank of the United State’s charter. Jackson viewed the Second Bank of the United States as a monopoly since it was a private institution managed by a board of directors. Its president, Nicholas Biddle, exercised vast influence in the nation's financial affairs.

History of the Banks of the United States

The First Bank of the United States was created in 1791 under the influence of Alexander Hamilton. The Bank of the United States was originally a commercial bank that served the public as well as a bank for the United States government. However twenty years later, the First Bank of the United States’ charter was not renewed. The bank was therefore terminated.In April of 1816, Congress reestablished a national bank when they approved the Second Bank of the United States. The Second Bank of the United States was established after the War of 1812, in order to make the nation’s currency uniform. ["Bank of the United States." American Foreign Relations. 22 May 2008 .] The U.S. government expanded its capital to 35 million dollars when the Second Bank of the United States was created. The Second Bank of the United States increased its banknotes, credit, and financial responsibility throughout America. Eventually, an increase in loans and credit expansion led to land speculation. This resulted in the Panic of 1819, which caused the common American to lose confidence in the banking system. In 1823, Nicholas Biddle became president of the Second Bank of the United States. His goal was to reestablish the economy’s security by controlling the use of currency and banknotes.

Beginning of the War

The Bank War started in 1830, when Henry Clay presented Congress with a bill to renew the 2nd Bank of the United States in order to make it an election issue. Knowing that Jackson would veto the bill, Clay believed that it would anger many influential and wealthy people in the East. But when Jackson vetoed the bill, it appealed to the masses, who felt that the bank was to blame for the Panic of 1819, and Jackson easily won in the United States presidential election, 1832.

Debate of Jackson’s Veto

Andrew Jackson’s background portrayed why he vetoed the re-chartering bill of the Second Bank of the United States. Jackson owed debts to banks during his youth and was a strong advocate for hard money (coins). His negative personal experiences contributed to his hostility towards banks and the use of paper money. ["Jacksonian Ideology." Encyclopedia of American Cultural and Intellectual History. 3 vols. Charles Scribner's Sons, 2001. Reproduced in History Resource Center. Farmington Hills, MI: Gale. http://galenet.galegroup.com/servlet/HistRC/] Jackson’s popularity among the average American citizen was not well received by America’s elite. Henry Clay and Nicholas Biddle were among this group of elitists who did not support Jackson. By understanding Jackson’s view of banks, his veto against the Bank was not unexpected. Consequently, Jackson's veto provoked a lot of debate. He was viewed by Daniel Webster to be a monarchical president because he used his presidential power to veto liberally. Henry Clay tried to get Jackson impeached by alleging "Jackson claimed powers greater than European kings.” ["The Executive Veto." Encyclopedia of the American Legislative System. 3 vols. Charles Scribner's Sons, 1994. Reproduced in History Resource Center. Farmington Hills, MI: Gale. http://galenet.galegroup.com/servlet/HistRC/] The Senate approved the motion to censure Jackson. However in response, Andrew Jackson wrote to the Senate claiming that Maine, New Jersey, and Ohio were in support of his vetoes. These states legislatures considered Jackson’s vetoes to be wise and constitutional.

Whigs and democrats

Strong opposition against President Jackson slowly grew to form the Whig political party. This political party was similar to the English Whigs in that they were against tyranny and monarchy. The members were only united by their hatred towards Jackson and thus had little compatibility. Most of their support came from Northern merchants, Northern manufacturers, Southern landowners, and some Western farmers seeking internal improvements. ["Whig Party Emerges, 1832-1840." DISCovering U.S. History. Gale Research, 1997. Reproduced in History Resource Center. Farmington Hills, MI: Gale. http://galenet.galegroup.com/servlet/HistRC/] Later, the Federalists and National Republicans joined the Whig party. However, this collaboration of people was not strong in its opposition to Jackson because they did not agree on enough issues. This allowed Jackson to continue Democrat rule, without strong opposition.

Outcome of Bank War

Jackson was upset about Henry Clay and Daniel Webster trying to renew the charter early for the Second Bank of the United States. With the election of 1832 secured, Jackson proceeded to destroy the Bank of the United States. Jackson then turned against Nicholas Biddle and proceeded to take government funds out of the Second Bank of the United States. He put these funds into privately owned banks, which were coined the name pet banks. The pet banks also printed huge amounts of paper money. These pet banks caused inflation and led to the Panic of 1837. Jackson's first two Secretaries of Treasury opposed the removal of the national deposits and were forced to resign. Jackson appointed Roger Taney as his new Secretary of Treasury who approved the removal of national debts. Consequently, the country lapsed into periods of recessions and surpluses. In an effort to take control of the unstable economy, Jackson issued the Specie Circular in 1836. This document required all purchases of federal lands to be paid in metal coin rather than paper money. This decree also contributed to the Panic of 1837. By this point, Jackson had completed his term in office. The financial problems that he created were passed on to his successor, Martin Van Buren.

References

David M. Kennedy and Lizabeth Cohen (2002). Houghton Mifflin Company. The American Pageant Twelfth Edition, ch 13, pp 271-272.

Feller, Daniel. "King Andrew and the Bank." Humanities. Jan.-Feb. 2008. 22 May 2008 .

"Bank of the United States." American Foreign Relations. 22 May 2008 .

"Bank War." Gale Encyclopedia of U.S. Economic History. Gale Group, 1999. Reproduced in History Resource Center. Farmington Hills, MI: Gale. http://galenet.galegroup.com/servlet/HistRC/

"Central Bank (Issue)." Gale Encyclopedia of U.S. Economic History. Gale Group, 1999. Reproduced in History Resource Center. Farmington Hills, MI: Gale. http://galenet.galegroup.com/servlet/HistRC/

"Jacksonian Ideology." Encyclopedia of American Cultural and Intellectual History. 3 vols. Charles Scribner's Sons, 2001. Reproduced in History Resource Center. Farmington Hills, MI: Gale. http://galenet.galegroup.com/servlet/HistRC/

"Presidential Elections (1815-1850)." American Eras. 8 vols. Gale Research, 1997-1998. Reproduced in History Resource Center. Farmington Hills, MI: Gale. http://galenet.galegroup.com/servlet/HistRC/

"The Executive Veto." Encyclopedia of the American Legislative System. 3 vols. Charles Scribner's Sons, 1994. Reproduced in History Resource Center. Farmington Hills, MI: Gale. http://galenet.galegroup.com/servlet/HistRC/

"Whig Party Emerges, 1832-1840." DISCovering U.S. History. Gale Research, 1997. Reproduced in History Resource Center. Farmington Hills, MI: Gale. http://galenet.galegroup.com/servlet/HistRC/