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In consequence the demand for other investments was intensified and their prices driven up." Taney promptly ordered the removal." Jackson newspapers took up the hard-money polemic against a paper aristocracy trumpeted by Blair and Kendall in the Globe and Benton in the Senate." State banks, too, took due precautions to qualify themselves for receiving the public funds. Biddle also indirectly controlled the votes of thousands through favorable loans, generous terms, and easy access to cash. The hopes of the bank's supporters to turn the veto in a winning campaign issue in that fall's presidential campaign failed dismally. By 1839, there was a "cotton glut" and… But ever since I read the history of the South Sea bubble I have been afraid of banks. Biddle, he said, had started the panic." "The first, of course, was that he thought debt was bad in and of itself. So did Jackson, who played "everyman" to Biddle's "rich man." 113 New banks created new money that fueled new speculation. However the silver ratio should have been much higher due to excessive silver mining in the West. 128 Economic historian Peter L. Rousseau wrote: "By March of 1837 nearly all specified deposits by public receivers were reportedly made in specie. 56, Biddle's actions invited a counterattack from Jackson, who saw clearly Jeffersonian limits on congressional powers under the Constitution. Historian Sean Wilentz wrote: "Republican reconciliation with Hamilton's bank idea had taken place by fits and starts, and was never monolithic. People who had no intention of settling bought large tracts of land from the federal government and paid for them with paper money borrowed from local banks in ever greater amounts." The Panic of 1837 was a financial crisis in the United States that touched off a major depression, which lasted until the mid-1840s. Robert E. Wright and David Cowen wrote: "The usual story is that Jackson abhorred banks, bankers, and banknotes and embarked on a personal vendetta to extinguish them. Suddenly in the spring of 1819, as the Bank's pressure was intensified by a similar financial crisis in Britain, world commodity prices collapsed." The stock market crash of 1929, which signaled the start of the Great Depression, led to investigation…. As President he showed the honorable desire to have a statesman-like and high-toned administration, and perhaps to prove that he was more than a creature of Jackson's whim. Jackson styled himself the outsider. Many of the new banks were speculative ventures pure simple, whose managers were operators in the worst sense of the word. Jackson blamed the "rich and powerful" for using the "government [for] their self purposes." They should not be confused with some of the older banks in the great cities, whose notes commanded as much respect as those of the BUS." All Rights Reserved, Money and the Coming World Order, Second Edition (2012). Reform was thus the dominant theme of a second phase of operations under bank president Langdon Cheves (1819-23)." According to Jackson's veto message, "Every man is equally entitled to protection by the law; but when the laws undertake to add to these natural and just advantages artificial distinctions, to grant titles, gratuities, and exclusive privileges, to make the rich richer and the potent more powerful, the humble members of society - the farmers, mechanics and laborers - who have neither the time nor the means of securing like favors to themselves, have a right to complain of the injustice of their Government." Unhappy Americans understood the impact of Biddle's policies even if they did not understand his principles. Because few records from the Kirtland Safety Society have survived, it is difficult to tell how the Panic of 1837 affected the society. Democrats were its main inciters because it muted the mounting native/Irish conflict in their working-class constituency. Historian Edward Pessen wrote: "Most of the nation's money was issued by banks either operated by state governments or, more typically, whose state governments had granted charters to the corporations which ran them. The Panic technically began while Andrew Jackson was in office, but it became a huge financial crisis when Martin Van Buren became president. 3, The death of the first Bank of the United States was almost prevented. Boston and Baltimore also, without desiring New York's preeminence, wanted Philadelphia's ended. This was the Panic of 1837. For Jackson, the bank issue was personal as well as political, but his opponents provided him with the opportunity to make it constitutional and national. New York's business community was the chief source of the Bank's funds, and yet the Bank was controlled by Philadelphians, who could say how much the New Yorkers might borrow `of their own money.' 143 Problems in Europe, problems of federal government policy, problems with state government policy and private land speculation created a perfect economic storm. "The New York banks were prohibited from issuing these notes by a law passed in 1835 by the legislature...With the suspension of specie payments, these notes flowed in from the surrounding states until their amount below the denomination of five dollars, was estimated, by 1838, at from three to four million dollars." Only that isn't what happened. 141 Historian Major L. Wilson noted: "On May 4, exactly two months after his inauguration, Van Buren finally made public his decision to retain the `Specie Circular.'" 132, President Van Buren was called upon to deal with the sins of the previous administration. Van Buren was under considerable pressure from "an apparently large majority of party spokesmen [who] wanted Van Buren to rescind or modify Jackson's Treasury order. Economic historian Charles Sellers wrote: "The full audacity of Old Hickory's [veto] strategy was revealed only at the end of the message, in a brief but sensational attack on the only bank for which he had any constitutional responsibility, however remote. The ball was now in the president's court. Clearly, the problems that gave rise to the Reading collapse are not resolved and without fundamental changes they will likely remain. The Panic of 1837 had both political and economic consequences. 123 Another factor was at work. Both the President and the Secretary professed to be delighted with the manner in which the banks were handling Treasury funds and making transfer from one part of the country to another." Thus the public interest was always outweighed by the interests of the bank's private owners, who must have been saints not to be tempted by the power they held over the nation's economy. 104, In early 1834, National Republicans used the Democrats' narrow majority in the Senate to launch a campaign against the removal of deposits. The Second Bank of the United States was, in fact, as Hamilton had intended such a bank should be, the keystone in the alliance between the government and the business community." (Letter from Henry Clay to Nicholas Biddle, September 11, 1830). Determined support for the removal of deposits in Jackson's kitchen cabinet confronted strong opposition in the official Jackson cabinet. They devised the Independent Treasury, or sub-Treasury, first implemented under President Van Buren in 1840....Buren Democrats celebrated the `divorce of bank and state' symbolized by the financial institution." A second time they chose General Jackson President." Historian Walter A. McDougall observed that as a result of Biddle's "prudential care, Americans never knew, before or since, a sounder currency than in the very years when Jackson claimed the BUS `failed.' 142 Within a week, the Panic of 1837 erupted in New York with banks refusing to redeem in specie. The question will incorporate Itself with all our elections, and especially with that as to which there is so great a desire that it should be incorporated. Biddle, meanwhile, again overestimated his power and miscalculated his politics. 6. Surely they realized that the President had assumed unconstitutional powers that would ultimately destroy the Union." Paralleling this entrepreneurial resentment was the attitude of the agrarians, who hated all banks and distrusted the business world generally. Although the bank's formal link to the secretary - specified initially by Hamilton and carried forward to the second national bank's charter - was confined to periodic financial reporting, in practice the secretary of the Treasury had been in consultation with the bank president regarding large and sometimes quite trifling matters of policy from Hamilton's day on. 67 " The attempt to override the rechartering veto failed in the Senate. 88 Economic historian Susan Hoffman wrote of BUSII: "This ended its service as the government's fiscal agent. By signing up for this email, you are agreeing to news, offers, and information from Encyclopaedia Britannica. Historian Major L. Wilson noted that "the economic development of the United States depended upon foreign aid in the form of English credit. They wrote: "According to his close associate James Hamilton, Jackson had in mind a national money: his proposed bank would `afford [a] uniform circulating medium' and he promised to support any bank that would `answer the purposes of a safe depository of the public treasure and furnish the means of its ready transmission.' Utter collapse and despair came, soon or late, upon every sort of undertaking the year through. The Bank of the United States was dead." 135 Jackson, who wrote an ally "Let the President take care of currency or the administration will be shook to the centre," was wrong in his analysis. By identifying the Bank with Clay and the nation's economic elite, Andrew Jackson reenforced his own populist credentials. He had just the temper for a politician. Historian Arthur M. Schlesinger, Jr., wrote: "More and more merchants were coming to believe that [Biddle] was carrying the money pressure farther than necessary, and few would agree that it was worth breaking `all the other Banks and all the merchants' to restore Nicholas Biddle to power. High prices and high rents had already before the election produced strikes, trades-union conflicts, and labor riots, things which were almost unprecedented in the United States." Historian Major L. Wilson said: "Contrary to Jackson's intentions, some of his policies gave further stimulus to bank overaction. Historian Reginald Charles McGrane wrote: "The panic of 1837 was one of the most disastrous crises this nation has ever experienced. Meanwhile, too, the country went staggering and bewildered through its season of bitter ruin. Biddle had calculated badly. In celebration of this event a large group of them marched in procession up Pennsylvania Avenue accompanied by a hearse bearing a coffin labeled `The Subtreasury Plan.'" Thus retirement of the public debt, in which the General took great pride, as if it were a personal achievement - as indeed it was in a sense because the burden of it fell inequitably on the southern planters, of whom he was one - closed an important field of conservative investment and returned funds to investors who then had to find other uses for them. The key factional shift that allowed the second national bank's charter to pass was on the part of the state banking supporters. 147. A factor of more limited scope but of the greatest cogency was New York's determination to supersede Philadelphia. 159 Bray Hammond wrote that Jackson's second term "fiscal policy...was a product of the current over-trading, inflation, and speculation, but also a contributor thereto. If, contrary to my impressions, you could receive such an assurance from both departments of the Government, who would have to act on the case, that would present a different state of the question, and would justify the presentation of your petition. Historian Gordon S. Wood noted that "the more important enemies of the BUS were the state banks. Share with the class a secondary account of the Panic of 1837 and President Van Buren, such as the section “Economic Panic of 1837” in Martin Van Buren: Domestic Affairs from the EDSITEment resource The American President. In his annual message the President announced that he had been forced to remove the deposits from the Bank because it had been `attempting to influence the elections of public officers.' The president added, `I do not dislike your bank any more than all banks. We have no money here, gentlemen. 62 Jackson had set up a battle not only over class but over the political structure of government. Indeed, if there be an union of the Presidents negative of the Bank bill with the next P. election, and he should be reelected, would it not be regarded as decisive against any Bank of the U.S. hereafter? Historian Woodrow Wilson wrote: Over time, Biddle returned Jackson's disdain. Clay duly framed the issue in a letter to Biddle: "If we take up the Bank, we play into the adversary's hands. As for alternatives to Biddle's bank, Taney contended that state banks, `judiciously selected and arranged,' would be able to perform the fiscal tasks of the federal government and supply `a general currency as wholesome and stable as that of the United States Bank.' He was even more specific, according to Hamilton, because the 1829 plan would establish a new `national bank chartered upon the principles of the checks and balances of our federal government, with a branch in each state, and capital apportioned agreeably to representation....A national bank, entirely national Bank, of deposit is all we ought to have.'" Historian Daniel Walker Howe wrote: "The Deposit-Distribution Act of 1836 compounded the banks' difficulties by forcing them to pay out substantial sums to the states. Taney demonstrated that Biddle had bought favorable press coverage for the bank during the fight for renewal of the charter; this practice, of employing the people's money to manipulate the democratic process, was `pregnant with so much evil,' Taney told Jackson, that it alone was cause for the severest censure. 81 Biddle and Clay had pushed a fight they couldn't win. Historian Jenny B. Wahl wrote: "Leery of the Bank's size, wealth, and power, Jackson also mistrusted any form of money other than gold or silver." The rechartering fight became shrouded in myth, but reflected fundamental constitutional differences. To read the full article, see the Columbia Undergraduate Journal of History. 20 Jackson represented a new wave of populist politics. Jackson attempted to hold Van Buren to Jackson' standard and not weaken his policies. 50 The achievements of the Second Bank of the United States were irrelevant to Jackson. The charge was all the more scurrilous, given the indispensable help Biddle provided for Jackson's program to retire the national debt. When combined with loose state banking practices and a credit contraction, a major economic crisis was brewing when Martin Van Buren took office as president in March 1837. 64 Jackson's opponents did not fully appreciate these factors. The Editors of certain papers have received their orders to that effect, and embrace every occasion to act in conformity with them. `Can any impartial and unprejudiced mind doubt the motive?' The increase from January 1, 1834, to January 1, 1836, was even more rapid, the banking capital advancing in the two years to $251,000,000, the loans and discounts to $457,000,000, and the note circulation to $140,000,000. In fact at least $7.3 million in specie was used in U.S. land purchases between July of 1836 and September of 1837, with $1.8 million used in Indiana, $1.4 million in Michigan, and $1.1 million in Illinois." Panic of 1837 The war over the bank did have consequences, including the financial panic of 1837. Preparations were made for a successor institution. In 1832, Andrew Jackson ordered the withdrawal of federal government funds from the Bank of the United States, one of the steps that ultimately led to the Panic of 1837. `The purity of our institutions and the best interests of the country call for prompt, firm and decisive measures." 94, Biddle was engaged in a dangerous political and economic duel with Jackson. `Is there no danger to our liberty and independence?...Will there not be cause to tremble for the purity of our elections in peace and for the independence of our country in war?'" ", Economically, Jackson's judgement regarding the transfer of funds to pet banks was flawed. The Panic of 1837 was a financial crisis that had damaging effects on the Ohio and national economies. A few of them understood that the federal bank was a corrective for the evils of inflation and that for practical reasons it should have their support; but most of them got no further than the fallacy that the bank of the United States was nothing but the biggest and worst `bank' of all. 14 " Other banks did not fare so well. This he accomplished through the freer use of domestic bills of exchange and the introduction of branch drafts. Jackson, not exactly a man to back away from a fight, was only too happy to take up the challenge." Wilson wrote of the Cabinet shakeup that Jackson's plan required: Jackson's lieutenants were divided. Woodrow Wilson wrote: "The President and his spokesmen had nothing to propose for the relief of business. Both the effects of the retraction and Biddle's role in causing it have been exaggerated." The historians wrote: "Again in his second annual address to Congress, Jackson noted that `it becomes us to inquire whether it be not possible to secure the advantages afforded by the present bank through the agency of a Bank of the United States so modified in its principles and structures as to obviate Constitutional and other objections.'" But exhorting ordinary Americans to choose the `robber' Biddle over the saintly Jackson was like goading them to cry for Barnabas and crucify Jesus. 11 Robert E. Wright and David Cowen wrote: "According to some sources, Jackson made a mint in land speculation, buying up large tracts on the cheap, holding them until prices increased, then selling them. 45 "The young Hamilton, who later briefly served as Jackson's interim secretary of state,...helped Jackson to draft the bank-related portion of his 1829 State of the Union address," wrote Robert E. Wright and David J. Cowen. The drain left the banks vulnerable to specie calls from a faltering British economy that had become determined to settle its international balances." Jackson took the strongest interest in the passage of these bills so as to get his shining coins into the people's pockets; and going to Tennessee in the recess he toasted gold and silver at a public dinner as "the true constitutional currency of the United States," which he said could protect our labor without the need of a national bank. Other financial institutions throughout the nation quickly followed suit. Historian Merrill D. Peterson wrote that Clay "hoped, as he told [John Quincy] Adams upon his departure from Washington, to rebuild his once flourishing law practice with the aid of this agency, itself worth $5,000 a year, and after several years reenter Congress financially independent." Kendall and Blair coordinated the activities of hundreds of local organizations, with the Globe serving as a clearinghouse for Democratic newspapers. 18 Historian Merrill D. Peterson noted: "Under Nicholas Biddle's brilliant leadership it had met its fiscal obligations to the government, provided the country with sound and uniform currency, facilitated transactions in domestic and foreign exchange, and regulated the supply of credit so as to stimulate economic growth without inflationary excess." Panic of 1837 for kids: Deposit and Distribution Act of 1836. The document was indeed flimsy in its legal logic. In 1811,...the Madison administration, goaded by Secretary of the Treasury Gallatin, supported it....In Congress, a coalition of Republican southerners and westerners, seeing the bank as an instrument for economic development in their respective regions led the recharter effort." The Second Bank had been closed. 100 The bank war pushed Jackson into further unwise economic actions regarding the pet banks to which it ordered its assets transferred. His reason for not signing the bill was that it was obscure." Led by Henry Clay, they opposed the Bank of the United States because its regulatory hand got in the way of state banks and because its dominance of U.S. government deposits kept those deposits out of state bank vaults." In reply, Van Buren was courteous and firm; he challenged their views on the origins of distress and stated his intention to retain the Treasury order." 139 Curtis argued that Van Buren was also much affected by reports from political allies in New York who counseled "that frenzied speculation created the crisis and only a further restriction of credit would help." After six years, his administrative reforms and spending vetoes paid off in this proud accomplishment, which gave the lie to charges that a democracy could never control its fiscal appetites." The first Bank of the United States died when its twenty-year charter expired in 1811. 2. They decided not to wait until 1836 when the charter would expire, but to apply for a renewal well in advance of that date.
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