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Bank Re-Charter Bill
Jackson Vetoes Re-Charter of the Second Bank of the US. Andrew Jackson, a big supporter of state's rights, vetoed the bill of re-chartering by arguing that in the form presented to him it was incompatible with “justice,” “sound policy” and the Constitution. The issue of the bank's constitutionality and where power regarding money should lie resurfaced, forming the platforms of the upcoming election. -
Jackson's Veto Effect
Jackson vetoed the bank recharter bill. This caught the attention of his supporters and angered his enemies: Henry Clay (Kentucky), Daniel Webster (Massachusets), and Nicholas Biddle (Pennsylvania). Some thought he was abusing his executive power. -
Election of 1832
Jackson ran against Clay in another heated election, the election of 1832. His platform focused on getting rid of the national bank, while Clay promised to support it. Once again, the opinions of the country were divided. Jackson was reelected by an overwhelming majority, and he was free to act on the bank issue. -
Jackson Removes Federal Deposits
President Andrew Jackson announces that the government will no longer use the Second Bank of the United States, the country’s national bank on September 10, 1833. Jackson then began by taking nearly all the money from national reserves and distributing it to state "pet" banks. He thought that getting rid of the bank's money would cause it to collapse faster. It worked. The national bank collapsed at a rate that would lead the country into an economic crisis. -
Biddle's Response
Nicholas Biddle, president of the national bank, began taking actions to recharter the national bank. He spoke out against Jackson's actions and gathered a large group of supporters. Congress voted to recharter the bank, but Jackson again vetoed. Biddle and his supporters claimed that Jackson was abusing his executive power. -
National Debt is Gone
In order for Jackson to pay off the national debt, he took advantage of a huge real-estate section that was ready to be sold in the Western U.S. He was also very specific on the budget. He blocked every spending bill he could like programs to build national highways which he found unconstitutional in the first place. The national debt was about $58 million. Six years later, it was all gone, and the government was actually running a surplus, taking in more money than it was spending. -
Deposit Act of 1836
This act distributed approximately $30 million of the $35 million U.S. Treasury surplus (from tariff proceeds and public land sales), to state banks. The act ended congressional fights over the surplus, ended Western hopes for reduced prices for government land, and benefited old states more than the new. Deposits were halted when the surplus became a deficit during the panic of 1837. -
Specie Circular
The Specie Circular was the name given to an Executive Order issued by President Jackson on July 11, 1836. The Specie Circular stipulated that all government-owned lands must be paid exclusively in gold or silver (specie) to pay traditionally for land. This led to a drastic decline in the value of paper money. The Specie Circular is also referred to as the Coinage Act. People, especially in the South, became angry at Van Buren, the new president in 1837, since he carried out the Executive Order. -
Panic of 1837
With federal money moved closer to home, people thought that they were becoming richer. This led to a period of overspending and abuse of money that would, in turn, lead to the Panic of 1837. Inflation, the fall of the national bank, and overspending led to a period of deep economic recession. Prices of American goods fell, businesses went bankrupt, and state banks began to collapse without strong national support.