Chapter 7 Section 4 States’ Rights and the National Bank

Main Idea & Why It Matters Andrew Jackson confronted two important issues during his presidency: states’ rights & national bank. Why It Matters Now Conflict over states’ rights and federal government control continues to flare up in such arenas as education, commerce, and law enforcement.

Tariff Raises the States’ Rights Issue British manufacturers flooded the US market with inexpensive goods in an attempt to destroy their competition in the Northeast United States. 1816: Congress passed a tariff to protect American industries. The tariff would be increased in 1824 & 1828.

1828: Tariff of Abominations “When Southerners see the flourishing villages of New England they cry, ‘We pay for all this!’” 1828: Tariff of Abominations John C. Calhoun coined the Tariff of 1828 the Tariff of Abominations. High tariffs on British manufactured goods resulted in: Reduced British exports to the United States Forced southern planters to buy expensive manufacture goods from the northeast. South believed that the North was getting rich at the expense of the South.

Calhoun’s Nullification Theory Calhoun argued that the US Constitution was established by 13 SOVEREIGN STATES. Each SOVEREIGN STATE had the right to nullify/reject a federal law that it considered ‘UNCONSTITUTIONAL’. Calhoun: If federal government refused to allow a state to nullify a federal law, then that sovereign state had the right to withdraw from the Union.

Hayne & Webster Debate States’ Rights Daniel Webster Senator from Massachusetts Believed that preserving the Union was more important than ensuring liberty. Webster did not support the Nullification Theory Condemned Calhoun/Hayne’s stance on state’s rights Robert Hayne Senator from South Carolina Believed the federal government were trampling on the rights of sovereign states. Hayne & Calhoun supported the right of states to do what they felt were best for their state. Supported ‘nullification’.

UNION vs. LIBERTY Vice President John C. Calhoun: “The Union, next to our liberty, the most dear; may we all remember that it can only be preserved by respecting the rights of the States and distributing equally the benefit and burden of the Union. President Andrew Jackson: “Our Union: it must be preserved!”

South Carolina Rebels 1832: US Congress passes tariff law South Carolina legislators declare tariffs of 1828 & 1832 “null, void, and no law” South Carolina threatens to secede from Union if US customs officials tried to collect duties.

South Carolina Rebels (continued) President Andrew Jackson Declares South Carolina’s actions treasonous Threatens to hang VP Calhoun and march federal troops into South Carolina to enforce the tariff. Persuades Congress to pass: Force Bill: allows federal government to use army & navy against South Carolina if state authorities resisted paying proper dues.

Henry Clay The Great Compromiser 1833: proposes a tariff bill that would ‘gradually’ lower tariff duties over a ten-year period. Crisis between South Carolina and federal authorities was averted. Tariff issue would continue to cause conflict and would be a major cause of the Civil War.

Jackson Attacks the National Bank Henry Clay & Daniel Webster developed a bill to re-charter the Bank of the US. Jackson and his supporters campaigned against the bank calling it a ‘privileged institution’. Bank of US had an unfair advantage over state & private banks (all Federal tax revenues were deposited into Bank) B.U.S. stockholders earned interest from deposits Only a privileged few were profiting from Bank of US 1832: Jackson vetoes bill to recharter the Bank of the United States.

Pet Banks “The bank, Mr. Van Buren, is trying to kill me, but I will kill it.” President Andrew Jackson 1832 The Bank’s charter would run out in 1836. Jackson’s goal was to kill the bank before it’s charter ran out. Jackson appointed a Secretary of Treasury who was willing to place all government funds in certain state banks. (a.k.a. Jackson’s pet banks)

Biddle tries to save Bank of United States Nicholas Biddle tried to save the Bank by: demanding repayment of loans refusing to issue loans Biddle believed that a frustrated public would demand that Jackson re-charter the Bank. Businessmen pleaded with Jackson for help but Jackson blamed Nicholas Biddle. Pressure from financial leaders forced Biddle to adopt a more generous loan policy. When the charter expired in 1836, the 2nd Bank of the United States became just another Philadelphia Bank.

Whig Party Forms Jackson’s tactics angered many people including members of his own Democratic Party. 1834: Henry Clay, John Quincy Adams, & Daniel Webster formed the Whig Party Whig Party supported: The American System Build infrastructure to foster trade between regions. Federal control of banking system.

Van Buren Deals with Jackson’s Legacy Jackson’s Vice President Martin Van Buren easily won the 1836 Presidential Election. In 1837, Jackson’s Pet Banks began printing bank notes in WILD excess of the gold/silver they had on deposit. (BANKS WERE PRINTING MORE CURRENCY THEN THEY HAD) Because of this, many banks stopped accepting paper currency and would only accept gold/silver.

Panic of 1837 Banks closed Credit system collapsed People lost their savings Hundreds of businesses went bankrupt 1/3 of population were out of work

Tippecanoe & Tyler, too Whigs won the Presidential Election of 1841 President William Henry Harrison (Tippecanoe) John Tyler (southern democrat who supported states’ rights) Harrison would die 1 month into his presidency Tyler took over and enacted anti-Whig policies.