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Madison charters the Second National Bank to stabilize the nations economy after the War of 1812. It was chartered for 20 years to serve as a central bank, regulate currency, and control inflation.
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The Bank officially began its operations in Philadelphia, acting as a depository for the federal governments funds, while also issuing a national currency. Early with the bank, there were issues with mismanagement, which leads to public distrust.
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A major financial crisis takes place. This was caused by speculated lending and falling agricultural prices. Many people blame the Bank’s strict credit policies, saying it was worsening the depression.
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The Court upholds the constitutional support of the Bank as well as denying the states the power to tax it. This decision aids in strengthening the government authority, but also strengthens the opposition from states’ rights advocates.
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Nicholas Biddle becomes the president of the Bank, and manages to improves the Bank's reputation and operations. He expands credit, fixes the financial stability, and uses the Bank as a tool to control inflation.
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Andrew Jackson gets elected as president. He campaigns against the "corrupt" and "elitist" institution. He holds a level of distrust for centralized power and paper currency. He does not support the National Bank.
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Jackson wins his second election against Henry Clay. The Bank becomes the central issue of the election. Jackson's re-election is seen as a win for the common man over the "entrenched financial elites."
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Congress attempts to pass a bill in order to renew the Bank’s charter, but Jackson vetoes it. He believes the Bank is unconstitutional and dangerous to the liberty of the people.
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Jackson removes the federal deposits from the bank, ordering the Treasury Secretary Roger Taney to do so, putting them in “pet banks," aka the state banks. Jackson did this to weaken the Bank’s power.
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Jackson demands payment for public lands to be in the currency of gold or silver, aka a specie, instead of paper money. This backfires, reducing credit and makes the economy more unstable.
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A severe economic depression occurs after the banks contribution to economic instability. Businesses collapse and unemployment grows. Jackson is blamed for his Bank War policies, like his destruction of the National Bank and the Specie Circular.
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Whig candidate William Henry Harrison defeats Democrat Martin Buren. The Whig party makes a promise to restabilize the economy.