The Bank Battle

By ACraig2745

  • Second National Bank is Created

    • After the War of 1812, the U.S. was financially unstable
    • The purpose was:
      • to stabilize the economy
      • gain more control over inflation
      • gain a reliable national currency
    • 20-year charter
    • acted like a central bank

  • Panic of 1819

    • the first major economic depression in U.S. history
    • causes:
      • postwar inflation
      • global trade issues
      • tight credit
    • people blamed the bank for their own suffering
    • farmers, westerners, and the working class began to distrust the bank more and more

  • Andrew Jackson Elected President

    • Jackson marketed himself as being "for the people"
      • populist
      • saw the bank as a tool of the rich elites
      • referred to the bank as "a monster"
      • wanted to get rid of the bank

  • Bank becomes a political target

    • The president of the bank, Nicholas Biddle (with support from Henry Clay), wanted an early recharter
      • 4 years early, to be exact. (it was set to expire in 1836)
    • his goal was to trap Jackson during the election
      • If he vetoed it, he would cause businesspeople to be angry.
      • If he approved it, he would betray his own supporters.

  • jackson Wins the Reelection

    -Jackson beats Henry Clay
    - he thought that because he won people would support him in his hatred of the bank
    - he became determent to get rid of the bank

  • Jackson Vetoes the Recharter Bill

    • he vetoed the bill because:
      • it was unconstitutional
      • dangerous to the rights of the states
      • he felt it was a tool for the rich to control the poor
    • his veto message has become one of the most famous in the history of the U.S., because it attacked both the bank and economic inequality.

  • Jackson Removes the Federal Deposites

    • Jackson ordered that all federal money be taken out of the bank
    • the money was transferred to state banks
    • some people felt this was an abuse of presidential power

  • Biddle Retaliates (Credit Contraction)

    • Nicholas Biddle:
      • tightened loans
      • refused credit
      • called in debt
    • caused short term recession
      • hoped it would force Jackson to restore the bank
      • backfired: the people did not blame Jackson but the did blame Biddle

  • Senate Censures Jackson

    • senate passes a formal censure against Jackson
    • first and only time that a U.S. president was censured
    • accused of violating the Constitution
    • censure was erased in 1837

  • The Bank's Charter Expires

    • congress did not renew the charter
    • Biddle attempted to keep it running
      • state-chartered bank in P.A.
      • lost power and failed in 1841

  • Specie Circular was Issued

    • Jackson issued the Specie Circular
      • gold and silver was called Specie
    • public land could only be bought with gold or silver
    • the purpose was to reduce land inflation and speculation
    • paper money became worthless
    • gold flowed out of banks

  • Panic of 1837 Begins

    • U.S. faced a financial crash:
      • inflation
      • land speculation
      • state banks become unregulated
      • drop in global cotton prices -thousands of people lost jobs and money
      • Jackson was blamed
    • Martin Van Buren struggled to stop the damage