War on the Bank

What was the 1 st National Bank? Chartered by the Dept. of the Treasury Became First National Bank of U.S. in 1791 Private bank that met financial needs of federal govt. Main purpose ◦ Pay off the huge war debt Charter expired in 1811

Seen by James Madison as a way to uniform the currency Chartered in 1816 Given a 20 year charter U.S. was unable to finance country after the War of 1812 Private business invested money into the bank and it loaned money out Federal government deposited funds into it Bank set policies that controlled nation’s economy

Political Alliances Bank president Nicholas Biddle pushed the bank for early renewal ◦ Sought an ally in presidential candidate Henry Clay Henry Clay intended to use it in the 1832 election against Jackson Hoped to ruin Jackson if the renewal bill was vetoed

Bill for renewal came to Jackson on July 4, 1832 ◦J◦J ackson was sick in bed Jackson vetoed the bill that would give the bank a new charter ◦“◦“ The bank, Mr. Van Buren, is trying to kill me. But I will kill it!” Jackson pulled govt. funds ◦D◦D eposited the money in state banks OOpponents called them “pet banks”

The Supreme Court had ruled it was constitutional Bank caused inflationBank caused inflation –Issued too many loans & notes –Issued too many loans & notes (paper bill that could be cashed in for money) JacksonJackson had it investigated for fraud & corruption –Felt many officials were using it for personal gain –Felt its lending policies favored the wealthy and hurt avg. people –He felt coin was the only safe currency –“influenced the elections of the public officers by means of its money ” “Soft” (paper) $ “Hard” (specie) $ BANK

President Jackson's Veto Message Regarding the Bank of the United States; July 10, 1832 The bill " to modify and continue " the act entitled "An act to incorporate the subscribers to the Bank of the United States " was presented to me on the 4th July instant. Having considered it with that solemn regard to the principles of the Constitution which the day was calculated to inspire, and come to the conclusion that it ought not to become a law, I herewith return it to the Senate, in which it originated, with my objections. A bank of the United States is in many respects convenient for the Government and useful to the people. Entertaining this opinion, and deeply impressed with the belief that some of the powers and privileges possessed by the existing bank are unauthorized by the Constitution, subversive of the rights of the States, and dangerous to the liberties of the people, I felt it my duty at an early period of my Administration to call the attention of Congress to the practicability of organizing an institution combining all its advantages and obviating these objections. I sincerely regret that in the act before me I can perceive none of those modifications of the bank charter which are necessary, in my opinion, to make it compatible with justice, with sound policy, or with the Constitution of our country.

Era of Van Buren The nation prospered under Jackson Jackson’s V.P. won the next election ◦ Martin Van Buren Within months people feared for the economy ◦ Panic of 1837 People exchanged their paper money for gold or silver

Depression and Change Banks could not keep up and most defaulted ◦ It led to a depression Clay and Webster argued the govt should help ◦ Van Buren believed the economy would improve on its own Van Buren is blamed for the Panic Whig Party forms of the opponents to “King Andrew I”

Election of 1840 Whigs chose military hero William Henry Harrison ◦ Chose Virginian John Tyler as V.P., a former Democrat Made the most of his nickname “Old Tippecanoe” ◦ Whig campaign slogan – “Tippecanoe & Tyler too!” Whigs appealed to common people ◦ Like Andrew Jackson ◦ This, plus Van Buren being blamed for the depression, led to a decisive victory Harrison’s speech in the bitter cold led to his death one month after inauguration ◦ First time a president had died while in office ◦ Vice-President Tyler became president