The Bank War


Unless the corrupting monster should be shraven with its ill gotten power, my veto will meet it frankly & fearlessly.
President Andrew Jackson to John Coffee,
February 19, 1832

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First Bank of the United States

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Second bank of the United States



So what happened anyways?

The Bank War was the name given to President Andrew Jackson's assault on the Second Bank of the United States during his early years in office. However, the Bank War had its roots in the First Bank of the United States, which was heavily influenced by Alexander Hamilton. The Bank Controversy continued in 1832 when President Jackson vetoed the Second Bank of the United States' charter. His reasoning for this was he considered the Second Bank a monopoly since it was a private institution managed by a board of directors. Nicholas Biddle, the boards president, had exercised a huge influence on the nation's financial affairs.


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Alexander Hamilton
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Nicholas Biddle


The First Banks

The first bank of the United Sates was created in 1792 under Alexander Hamilton. This bank started of originally as a bank for the people as well as a bank for the Government. 20 years later the bank was not renewed and eventually closed. In April 1816 congress opened the second bank of the United States. The 2nd bank of the United States was created after the war of 1812 to make the currency uniform. When the second bank of the United States was created the government expanded its capitol to 35 million dollars. The second bank of the Unites States increased the loans and credit expansion, this resulted in the panic of 1819, which caused the common person to loose any confidence it had in the banking system. 1823 brought Nicholas Biddle the presidency of the second bank of the United States. His goal was to get back the economy's security by controlling the use of currency and banknotes.


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Andrew Jackson

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Henry Clay


Start of The War

The Bank war started when Henry Clay presented Congress with a bill to renew the 2nd Bank of the United States, in 1830. Knowing Andrew Jackson would veto the bill, Henry Clay believed it would anger the wealthy people in the east, helping him to win the election of 1832. But Clay was wrong, because people blamed the banks for the panic of 1819, and Jackson won the presidential election of 1832.

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Whig Party Symbol

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Democratic Party Symbol


Whigs and Democrats

Whigs -- Democrats
Party of Modernization (similar to democrats today)
Party of Tradition (similar to today's republicans
looked toward future
looked toward past
Wanted to use federal and state government to promote economic growth, especially transportation and banks.
Opposed banks and corporations as state-legislated
Advocated reforms such as temperance and public schools and prison reform.
Opposed state-legislated reforms and preferred individual freedom of choice.
Favored gradual territorial expansion over time and opposed the Mexican War.
Favored rapid territorial expansion over space by purchase or war.
Believed in progress through external growth.
Believed in progress through internal growth.
Jeffersonion-ism
Hamiltonion-ism

The End of the War

Henery Clay and Daniel Webster greatly upset President Andrew Jackson by trying to renew the Second Bank's charter early. Since he already had the 1832 election secured, he proceeded to dissolve the bank of the United States. He turned on Nicholas Biddle by removing government funds from the Second Bank of the United States; he put these yanked funds into "pet banks", which were privately owned. However, these privately owned banks led to large inflation and eventually the Panic of 1837. Jackson's first two Secretaries of Treasury were forced to resign because they opposed the removal of national deposits. So then Jackson appointed Roger Taney as the new Secretary of the Treasury (only because he favored the removal of national deposits). This sent the country into a period of surpluses and recessions.


Historical Influence

There are many things today that can be contributed to the Bank War. The inflation caused by this "War" can be said to claim some responsibility for the government holds and laws regarding national and private banks. Those of which failed and caused this recession we find ourselves in, one could look back and ask "why wasn't more done?" since we can so clearly see what happens when the government has a certain amount of control over banking, we should be able to predict what would happen given a situation such as ours. However, just like President Jackson couldn't have predicted what his distrust of the banks would do to the country, so neither can we take all the blame for this recession. The main influence the Bank War had on our lives today would have to be the statutes and limitations put on not only the banks, but what the government can do to them.




Bibliography

http://www.archives.gov/exhibits/treasures_of_congress/text/page9_text.html
http://en.wikipedia.org/wiki/Bank_War
http://en.wikipedia.org/wiki/Andrew_Jackson