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The Second Bank of the United States was established to restore and stabilize the nation and currency after the War of 1812, which had weakened the United States. It would be the central bank with a 20-year charter. This would serve as the federal bank. This would lead to the Bank War, as people were unable to pay through the bank for their loans, which led everyone to panic, as nobody could pay. The bank was not liked by all, as some people did not want to support it.
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The Panic of 1819 was the first major economic depression that the United States had faced. The tightening of credit by the Second Bank of the United States, as a lot of people would get loans to buy land, in order to sell it for a high price, which banks demanded for the repayment of the loans. This would cause some banks to close as people were unable to pay their loans, farmers lost land as they were unable to pay the debt, and political division between the South and West against the North.
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Nicholas Biddle became president of the Second Bank of the United States, as he wanted to work to stabilize the economy and promote growth. In addition, Nicholas Biddle was a talented man with bold ideas and executed them, but his flaws would lead to the downfall of the bank. However, there would be conflict between Nicholas Biddle and President Jackson, who did not agree on banks. Jackson saw them as unconstitutional and only benefited the wealthy.
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The election of 1828 would result in the win of Jackson against John Quincy Adams and the establishment of the Democratic Party. Also, Jackson was called the “common man”. Jackson did not like the Bank, as it was unconstitutional and only benefited the wealthy at the expense of the poor. This would cause the “Bank War,” due to his dislike of the bank, and would cause struggles between Jackson and the president of the Bank, Nicholas Biddle. Jackson would be in office on March 4, 1829.
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Congress would recharter the Second Bank of the United States for another 20 years. Henry Clay and Nicholas Biddle wanted to make Jackson take a public stand before the election of 1832 and believed that if Jackson vetoed the bill, then he would lose popularity and the election. Jackson did veto the bill, and Congress did not override the veto.
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Jackson vetoed the Bank bill after Congress had passed the bill, in which the Bank would be extended for an additional 15 years. With Jackson returning the bill unsigned and a message about his veto of the bank, as it is “unauthorized” under the Constitution, since it is dangerous to the liberty of the people, and troublemaking to the State, because the Bank charter gave too much power over the nation's finances, and was the creation of a privileged class in America.
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The Election of 1832 was against Andrew Jackson, Henry Clay, and other candidates. The result was that Jackson won. Due to Jackson not liking the Bank, it would make him continue not working with it. After the election, Jackson would have “pet banks” since he would move federal deposits to the state. So this would continue the Bank Wars and lead to the removal of federal deposits in 1833.
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Jackson removed the deposit of the government money, and slow the withdrawals of the money that was in their charge in September 1833. The government would deposit its funds in a chosen state bank, which would also be called the pet bank by the opposition. With this, it would cut off one of the bank's main sources of power.
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The Second Bank expired in 1836, as Congress refused to renew it due to Jackson's 1832 veto. With this, Biddle wanted to keep the bank alive, so he and Pennsylvania would create the United States Bank of Pennsylvania, as this bank did not have federal support, it lost its strength. During the Panic of 1837, it could not prevent the economic fall. Eventually, the Bank would fail in 1841, as it was unstable and corrupt.
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Jackson's Specie Circular of 1836 created inflation by requiring payment to be made with hard currency, like silver or gold, but many Americans had to exchange paper bills for hard currency. The goal for this was to reduce the amount of paper bills. This would force many banks to close, as it was hard to change currency. With this, there was a spark for a financial crisis, which would lead to the Panic of 1837. This would lead to a repeal from Congress in May 1838.
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The Panic of 1837 was a result of Jackson's policies on favoring hard currency like silver and gold, but with Biddle accepting the offer from Pennsylvania to turn it into a state charter, and began to print currency. This would cause some banks to close due to a lack of reserves. With the help of Martin Van Buren, Jackson's successor, the new independent treasury system was Jackson's goal to separate the nation's finances from the government. This would be repealed by the Whigs in 1841.
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The 1840 election pitted Whig candidate William Henry Harrison against Democratic candidate Martin Van Buren. The Whigs were a major political party that opposed President Jackson and his party in 1834. The leaders of this party were Henry Clay, Daniel Webster, and William Henry Harrison. Whigs would focus on policy details instead of blaming Van Birens and the Democrats for the hardship the nation had, like the Panic of 1837 and the Bank War. Harrison would win.