1. The Bank War

2. The Second National Bank
Nicholas Biddle is the Bank President
4/5 privately owned
Issued bank notes and regulated state banks
Charter set to expire in 1836
The Bank is flawed but is working (highly profitable)

3. Hard v. Soft Money Debate
Hard Money- all currency should be soundly backed by gold or silver
Soft Money- currency does not have to be backed by specie, wanted more currency in circulation
Jackson supported the hard money position
The national bank is criticized by both sides

4. Jackson is Mad at Bank
He thinks it is corrupt, issues too much soft money, and caters to the elite
Also has personal issues with Henry Clay

5. Corruption in the Bank
The National Bank is highly profitable and caters to powerful people
Daniel Webster and other powerful Congressman support the bank but also heavily borrow and invest in the bank

6. Henry Clay- The Great Instigator?
Henry Clay and Daniel Webster lead a bill in Congress to Re-charter the bank early
Jackson Vetoes the Bank- take that Congress
Henry Clay makes the Bank the Central Issue in the election of 1832 (Clay v. Jackson)

7. Election of 1832

8. Jackson Dominates and Clay is Sad
Jackson takes this election as a mandate to kill the bank

9. Jackson Kills the Bank!! He doesn’t want to wait for it to expire
He fires 2 Secretaries of the Treasury before he gets Roger Taney to remove the funds from the the bank
The funds are deposited in state banks (“pet banks”)

10. Biddle Fights Back
Nicholas Biddle calls in loans and raises interest rates to hurt the economy and put pressure on Jackson
Jackson tells investors to “Go to Biddle” who eventually gives in.
Basically this is a childish fight that destroys the economy

11. National Bank Cartoon

12. Impact of Bank’s Death
The Nation loses and effective, yet flawed, economic institution
No Regulation- easy credit, inflation, major boom in land sales
Government has a surplus from
What do we do with this surplus? Is this a dangerous situation?

13. The Distribution Act (1836)
Congress returns money to the states
The withdrawal of funds hurts the “pet banks” and they have to call in their loans

14. The Specie Circular
Jackson issues an executive order stating that all federal land had to be paid for in specie or with currency securely backed by specie
Everyone wants specie and this sparks a run on the banks

15. The Panic of 1837 Massive economic downturn
People lose land, banks close, heavy inflation
Martin Van Buren is blamed