What Did Andrew Jackson Do to the Second National Bank

Written by: Frank W. Garmon Jr., Christopher Newport University

By the end of this department, you will:

• Explicate the causes and furnishings of continuing policy debates virtually the role of the federal government from 1800 to 1848

Suggested Sequencing

This Conclusion Point tin can exist assigned alongside the Andrew Jackson, Bank Veto Message, 1832 Primary Source to farther highlight the debate surrounding the National Bank.

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The fate of the U.S. economy weighed heavily on President Andrew Jackson'southward mind in 1832 as he debated signing the renewal of the charter of the Second Bank of the United States. Congress had granted the national bank a new charter for twenty years starting in 1816, but bank advocates tried to renew the charter early to force its passage through Congress during an ballot twelvemonth. The phase was set for a showdown between Jackson and Second National Banking company president Nicholas Biddle.

Jackson had to counterbalance whether to kill the national depository financial institution because of his constitutional opposition to it and his fear that the bank was an engine of aristocracy. He also had to decide how he was going to challenge the precedent of its constitutionality as decided by previous congresses and presidents, and the Supreme Court.

Biddle had to decide how to react to Jackson'southward opposition to the national bank. He believed the constitutional questions were settled and that the bank had cracking utility for the expansion of the American economy. Biddle had to work with allies in Congress to devise the best strategy to strengthen their own hand countering Jackson's opposition. The resulting clash was one of the most pregnant battlegrounds of the mid-nineteenth-century politics.

Consistency and continuity keep financial markets stable and anticipated for everyone involved. Uncertainty and instability are ever bad for concern. Safeguarding the future of the bank was thus a high priority for merchants and bankers who relied on the country'due south financial markets. But farmers worried that the banking company worked in opposition to the nation's autonomous principles. Its opponents described it every bit a "many headed monster" and argued that the bank was actively creating an aristocracy that undermined the interests of ordinary people..

This 1836 political cartoon depicts Andrew Jackson in his battle against the "monstrous" national depository financial institution. The president is holding a cane marked "veto."

The national bank had been one of the cornerstones of Alexander Hamilton's economic reforms when he was secretary of the Treasury during the Washington assistants. The Banking concern of the Us could loan money to the federal government in times of state of war and encourage economical evolution by providing American businesses with access to capital they could invest in their firms. The starting time Banking company'southward lease expired soon earlier the State of war of 1812; however, the state of war demonstrated the demand to maintain a central bank that could finance a disharmonize by making loans and bond problems rather than by raising taxes. In 1816, President James Madison overcame his earlier constitutional qualms and signed the bank bill into constabulary. The 2nd Bank of the United States was fifty-fifty larger than the showtime and became one of the largest corporations in the world. Only whereas Hamilton had designed a depository financial institution on Federalist principles, proponents of the Second Bank sought to requite the establishment a republican character. The new bank was centered in Philadelphia, had branches in every major city, and issued new stock at a lower toll to permit everyday Americans to invest.

Early on banks were not as sophisticated every bit their modern successors. To set them up, wealthy individuals banded together to provide credit and loan money to start-up businesses and merchants. Bankers preferred to loan money to merchants rather than farmers, considering merchants could repay short-term loans quickly afterward selling their goods at market. Considering in that location were no credit reports, personal connections were nearly important in determining an private'southward creditworthiness, and early bankers loaned money to family members and friends. The shut-knit relationships these establishments fostered led many Americans to view banks as elite institutions. Farmers in the nineteenth century were especially critical of them. Although they did not reject commercialism or oppose banks on principle, they worried that concentrated financial power would lead to concentrated political power, and many believed the cyberbanking sector did piffling to benefit farmers.

Rival banks did not capeesh contest from the operating branches of the 2nd Bank of the United States. Several country legislatures responded by imposing taxes on the federal banking concern's operations. In 1819, the Supreme Court ultimately struck downwards a taxation in Maryland as unconstitutional inMcCulloch v. Maryland. Chief Justice John Marshall emphasized in his opinion that "the power to tax involves the power to destroy." The example cemented the supremacy of the federal government past ensuring that states could not tax federal institutions. More importantly, the courtroom'due south ruling established the doctrine of implied powers by declaring the national bank to be constitutional. When the Supreme Court issued its ruling, state bankers complained that the federal government had encroached unfairly on their industry by granting tax exemption to their competitor. Although the outcry over the Court's decision rapidly subsided, a financial panic that developed later that year intensified farmers' opposition to the banking organization and resulted in bank and business organization failures.

The fiscal panic of 1819 injure many farmers, artisans, and other small-scale businesses, which fueled resentment against the bank and its paper currency when a Congressional research revealed that the institution, in fact, had acted irresponsibly during the crisis. The Panic provided a disquisitional turning point for Andrew Jackson and other "hard money" advocates, who insisted that paper currency could never replace coin backed by gold and silver.

The Banking concern of the U.s. soon recovered its audio fiscal ground under the leadership of Nicholas Biddle. Over the course of his fourteen-year tenure, Biddle managed the banking company expertly. He worked to provide some permanence to the establishment, given that its charter was set to expire in 1836, past communicating with Andrew Jackson and members of his administration commencement almost immediately after Jackson's election as president in 1828. Biddle had carefully surveyed the political situation in Congress and realized that enough votes existed for recharter only not enough to override a veto if the president opposed the mensurate. Unfortunately for Biddle, nevertheless, Jackson indicated that "both the constitutionality and the expediency of the law creating this Bank are well questioned." Biddle felt he had footling choice only to printing for the bank's recharter during an election twelvemonth because it was a relatively popular establishment that Jackson would not dare kill with a veto or he would face up voters' wrath.

Nicholas Biddle, the 3rd and terminal president of the Second Banking company of the United states of america, became President Andrew Jackson'due south nemesis during the "Banking concern War."

During the election entrada of 1832, Jackson's opponents organized a new political party, the National Republicans, under Henry Dirt. Clay believed that forcing Jackson to accept a stand on the national depository financial institution would threaten to embarrass the president and guarantee his own ballot. The Banking concern of the United States was a central component of the American Arrangement Clay supported, which proposed using a stiff central banking company and high tariffs to fund a comprehensive system of internal improvement projects such as railroads and canals. Biddle travelled to Washington, DC, to anteroom members of Congress to support the bank'southward recharter. Despite the all-time efforts of the Jacksonian opponents of the banking concern, Congress passed the recharter neb with a solid majority in both houses.

Jackson quickly vetoed the beak and defended his determination on constitutional principles, saying the Constitution does not specifically grant Congress the power to create a national bank. The president too questioned the Supreme Court's decision inMcCulloch v. Maryland, arguing that the Court should non serve as the exclusive authorisation or terminal arbiter of the Constitution. Instead, Jackson insisted that each branch had the ability to decide for itself whether a proposed measure out was constitutional. Jackson also attacked the undemocratic graphic symbol of the bank. Congress had provided it with sectional privileges, he pointed out, and granted it a monopoly that insulated information technology from contest with state banks. Furthermore, foreign nationals owned more than i-fifth of the bank's stock. In closing, Jackson emphasized that the "rich and powerful too frequently curve the acts of government to their selfish purposes." The wealthy Americans stood to benefit from the banking company's recharter, he argued, not farmers, mechanics, and laborers.

With no run a risk of overriding the president's veto in Congress, Biddle maneuvered the bank's resources against Jackson. He chosen in loans, making information technology more difficult for banks and businesses to borrow coin. If Americans felt the loss of the Depository financial institution of the United states direct, he reasoned, they would turn against Jackson and support recharter. Unfortunately for Biddle, all the same, he had overplayed his hand, and the bank's efforts alienated those who might have been well-nigh inclined to defend it. Business leaders and Congress turned confronting him.

As the so-called Banking concern War escalated, Jackson recommended moving the federal government'south deposits out of the Bank of the United states, and Treasury Secretarial assistant Roger Taney began transferring them to pro-administration state banks.

This 1833 lithograph, entitledThe Downfall of Mother Banking concern, applauds Jackson's club for the removal of federal funds from the Bank of the Usa. Jackson holds up an "Order for the Removal of the Public Coin." Nicholas Biddle (depicted with devil'south horns) and his supporters scatter as the depository financial institution building falls around them.

Jackson's opponents ridiculed these "pet banks" every bit a source of corruption, but to no avail. The removal of the government's deposits bedridden the federal bank, and it dissolved in 1836. The next year, another fiscal panic, the Panic of 1837, swept the country. Guided in his veto decision past his ramble convictions and political exigencies, Jackson's victory over the bank doomed central banking in the United States until the creation of the Federal Reserve in the early twentieth century.

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Review Questions

1. Andrew Jackson justified vetoing the bill to recharter the Bank of the United states for all the following reasons except

1. the Jacksonians believed the bank contributed to U.S. intervention in the War of 1812 and other wars
2. Jackson believed the depository financial institution was unconstitutional and that the Supreme Court had erred inMcCulloch five. Maryland
3. the Jacksonians believed the bank acted as a monopoly and received exclusive privileges from Congress
4. foreigners controlled more than 20 percentage of the bank's stock

2. Which of the following presents the events of the "Depository financial institution Wars" in the correct chronological lodge from primeval to well-nigh recent?

1. McCulloch 5. Maryland, Jackson vetoes the bill rechartering the Second Banking company, Biddle calls in loans, Jackson recommends moving government funds to pet banks
2. McCulloch v. Maryland, Biddle calls in loans, Jackson recommends moving regime funds to pet banks, Jackson vetoes the beak rechartering the 2d Bank
3. Biddle calls in loans,McCulloch 5. Maryland, Jackson recommends moving government funds to pet banks, Jackson vetoes the beak rechartering the 2d Bank
4. McCulloch five. Maryland, Jackson recommends moving government funds to pet banks, Biddle calls in loans, Jackson vetoes the beak rechartering the 2d Bank

3. During the Bank War, Nicholas Biddle was

1. a prominent member of Congress who wanted to expose Andrew Jackson's animosity towards the Banking concern of the United States
2. a political ally of Andrew Jackson's who wanted to close the Banking concern of the United States
3. the president of the Bank of the U.s., who wanted its charter renewed
4. Andrew Jackson's secretary of the Treasury who transferred money from the Banking company of the United States to Jackson'south pet banks

iv. The Panic of 1819 was a turning bespeak in U.S. economic history because

1. it guaranteed the ballot of Andrew Jackson equally president
2. information technology resulted in the decision inMcCulloch v. Maryland, stating the Depository financial institution of the United States was ramble
3. it demonstrated to "difficult currency" supporters that merely gilt- and silvery-backed currency would maintain a feasible economic system, giving credence to Jackson'southward beliefs about the national banking company in the 1830s
4. it led to the nomination of Henry Dirt, who, equally president, would have guaranteed the continuation of the Bank of the United States

v. Despite being a member of the Republican Political party, which of the following presidents signed the renewal charter of the Bank of the U.s. in 1816?

1. Thomas Jefferson
2. James Madison
3. James Monroe
4. John Quincy Adams

vi. Opponents of the Bank of the United States argued against it for all the post-obit reasons except

1. the Banking concern favored eastern business interests
2. the Depository financial institution catered to the elite
3. the Bank had been granted a monopoly over country banks
4. farmers were guaranteed necessary loans from the Bank

7. The destruction of the Bank of the The states led to

1. the election of Martin Van Buren as president
2. the creation of the National Republicans as a new political party
3. the terminate of cardinal cyberbanking in the U.s.a. until the creation of the Federal Reserve
4. the immediate rechartering of the Depository financial institution of the United States

Gratis Response Questions

1. Explain Andrew Jackson'due south decision to veto the 2d Banking company of the United states of america.
2. Explain why the Jacksonians opposed the Second Bank of the United States despite congressional efforts to make the institution more than democratic.

AP Practice Questions

Excerpt 1 "The present corporate body, denominated the president, directors, and company of the Bank of the United States, will have existed at the time this act is intended to take effect xx years. It enjoys an sectional privilege of banking under the authority of the Full general Government, a monopoly of its favor and support, and, as a necessary consequence, virtually a monopoly of the strange and domestic exchange. The powers, privileges, and favors bestowed upon information technology in the original lease, by increasing the value of the stock far above its par value, operated as a gratuity of many millions to the stockholders. . . . It is not our own citizens but who are to receive the bounty of our Authorities. More than eight millions of the stock of this bank are held by foreigners. Past this act the American Democracy proposes nigh to brand them a present of some millions of dollars."

Andrew Jackson, Bank Veto Bulletin, July ten, 1832

EXCERPT ii "The veto is an extraordinary power, which, though tolerated past the Constitution, was non expected, by the convention, to be used in ordinary cases. It was designed for instances of precipitate legislation, in unguarded moments. Thus restricted, and information technology has been thus restricted past all sometime presidents, information technology might not exist mischievous. During Mr. Madison'due south administration of 8 years, there occurred but ii or three cases of its practice. During the last assistants, I exercise not now call back that it was once. In a period footling upward of three years, the present chief magistrate has employed the veto iv times. We at present hear quite ofttimes, in the progress of measures through Congress, the statement that the president volition veto them, urged as an objection to their passage."

Henry Clay, Speech communication to the U.S. Senate on President Jackson's veto of the rechartering of the Bank of the United States, July 10, 1832

Refer to the excerpts provided.

one. A major divergence betwixt Andrew Jackson and Henry Clay in their arguments regarding the Bank of the United States concerned

1. the fact that the bank dealt just with the elite
2. the constitutionality of the banking concern
3. Dirt'south belief that the veto should be used liberally
4. the extent of the president'south power over the bank

2. In vetoing the recharter of the Bank of the Us, Andrew Jackson expressed his disapproval of which Supreme Court decision?

1. Marbury v. Madison
2. Dartmouth five. Woodward
3. McCulloch 5. Maryland
4. Ogden v. Gibbons

3. Which of the following best describes the motivation for the outcome described in the excerpts?

1. A disagreement over the proper interpretation and use of the president's veto power
2. The failure of the agricultural industry, due to the lack of bachelor funding
3. Dirt'south desire for a political victory to match Jackson's winning of the Nullification Crisis
4. Lingering animosity between Clay and Jackson over the "Decadent Bargain" in the ballot of 1824

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Chief Sources

Jackson, Andrew. "Veto Message" inJackson vs. Biddle'due south Banking concern: The Struggle Over the Second Bank of the United States. Second ed. Edited past George Rogers Taylor, 27. Lexington, MA: D.C. Heath and Company, 1972.

Suggested Resources

Hammond, Bray.Banks and Politics in America from the Revolution to the Civil War. Princeton, NJ: Princeton University Press, 1957.

Jackson, Andrew. "Veto Message" inJackson vs. Biddle'due south Banking concern: The Struggle Over the Second Bank of the Us. 2nd ed. Edited by George Rogers Taylor, 10–29. Lexington, MA: D.C. Heath and Company, 1972.

Lamoreaux, Naomi.Insider Lending: Banks, Personal Connections, and Economic Development in Industrial New England. Cambridge, Great britain: Cambridge University Press, 1996.

Remini, Robert V.Andrew Jackson and the Bank War. New York: Norton, 1967.

Remini, Robert 5.The Life of Andrew Jackson. New York: Harper & Row, 1988.

Taylor, George Rogers ed.Jackson vs. Biddle'southward Bank: The Struggle Over the Second Banking company of the United States. Second ed. Lexington, MA: D.C. Heath and Company, 1972.

Temin, Peter.The Jacksonian Economic system. New York: Norton, 1969.

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Source: https://billofrightsinstitute.org/essays/andrew-jacksons-veto-of-the-national-bank

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