© Mark Batik Jesuit College Preparatory

 Multiple causes  Multiple consequences  West was hard hit ◦ Foreclosures on farms ◦ Large western debt  Fed Jacksonian Democracy  Created remedial legislation ◦ “stay laws” ◦ Protectionism ◦ Reduce government budgets

 Election 1824  Political coalition building ◦ Regions-South and West ◦ Personalities-Calhoun, Martin Van Buren  Generate modern political party  Van Buren moves closer while Calhoun is pushed away ◦ Eaton Affair ◦ As Monroe’s Secretary of War

 Tariff of 1828 and others hit the Southern states much harder ◦ Increased cost of manufactured goods ◦ Diminished their markets for raw materials  John C. Calhoun abandons nationalism  South Carolina Exposition and Protest ◦ Secretly written by Calhoun ◦ Argues that the tariff is unconstitutional and ◦ States could therefore nullify it

 A debate in Congress over the sale of lands in the west—Foot Resolution—becomes a debate over the nature of the union  Hayne sees the West as an ally  Webster sees land sales as a strength of the Union  Hayne supports Calhoun  Webster: true sovereignty comes from the people, all of them. “Liberty and Union, now and for ever, one and inseparable!”

 1832 new tariff passed decreasing some rates but still hurting southern cotton growers the most  South Carolina Ordinance: nullifies 1828 and 1832 tariffs  Jackson responds with the Nullification Proclamation, Congress passes Force Bill  South Carolina gives up in 1833 but nullifies the Force Bill

 Compromise Tariff of 1833 ◦ Gradual reduction in rates ◦ Brokered by Henry Clay  Southern acceptance of the Union  Not worth secession over this issue

 Recall Panic of 1819 ◦ Bank blamed for economic woes  Nicholas Biddle becomes Bank President in 1823 and stabilizes the bank  But Jackson hated the bank. Why? ◦ Agrarian/Jeffersonian influences ◦ Debtors ◦ Businessmen ◦ Westerners ◦ States rights ◦ And who cares what Hamilton and Marshall actually said

 Wants to re-charter the Bank (its charter runs out in 1836)  Clay on his side, the administration against  Bill passes both houses of Congress  Jackson vetoes it

 Said the bank was unconstitutional  First veto used to veto legislation that is “undesirable”  Veto override effort fails

 Emboldened by the veto and the election of 1832  National Bank’s money is removed and placed in “pet banks” ◦ Jackson fires first Treasury Secretary ◦ Jackson gets Roger Taney to do it  Biddle contracts the federal credit  State banks flood the market creating another financial crisis  Specie circular ◦ Solves the first crisis ◦ Creates another

 Whigs emerge: Old republicans, Federalists, those disillusioned with Jackson, and the Anti-Masons  Loco-Focos (Equal Rights Party) also emerge in kind of support of Jackson  Van Buren elected 1836

 Global economic collapse ◦ Cotton collapses ◦ Land sales collapse  Solution: independent subtreasury ◦ A place for federal money not associated with banking  Party politics prevent passage for 3 years  Failure to resolve banking allowed the economy to spin even more out of control

 Real philosophical divisions ◦ Descendant from Jefferson and Hamilton  Real economic concerns ◦ And differing philosophies on how to solve them  Anticipate all of the questions we deal with today about the role of government