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    Who owned the second national bank of the united states


    who owned the second national bank of the united states

    In 1816 Congress established the Second National Bank to help control the amount branch of the U.S. bank, refused to pay the taxes imposed by the state. Why did Congress set up the second Bank of the United States? Congress set up the Bank in 1816 to hold the federal governments money and to control the nation's. But the charter of this Second Bank of the United States expired under President Andrew Jackson, another Bank foe, and Jackson let it lapse. In a curious irony.
    who owned the second national bank of the united states

    Who owned the second national bank of the united states -

    On Wednesday, the Treasury Department announced that a portrait of Harriet Tubman will grace future $20 bills starting in 2030. It's a fitting, and long overdue tribute to a genuine hero of American history who helped end the gravest evil this nation ever perpetrated.

    But the department also announced that the man currently on the bill — perhaps America's worst president and the only one guilty of perpetrating a mass act of ethnic cleansing — will still be on there: Andrew Jackson. This is unacceptable. Jackson was a disaster of a human being on every possible level, and should not be commemorated positively by any branch of American government. And as a slave owner, putting him on the other side of Tubman's bill is particularly disgraceful.

    After generations of pro-Jackson historians left out Jackson's role in American Indian removal — the forced, bloody transfer of tens of thousands of Native Americans from the South — a recent reevaluation has rightfully put that crime at the core of his legacy.

    But Jackson is even worse than his horrifyingly brutal record with regard to Native Americans indicates. Indian removal was not just a crime against humanity, it was a crime against humanity intended to abet another crime against humanity: By clearing the Cherokee from the American South, Jackson hoped to open up more land for cultivation by slave plantations. He owned hundreds of slaves, and in 1835 worked with his postmaster general to censor anti-slavery mailings from northern abolitionists. The historian Daniel Walker Howe writes that Jackson, "expressed his loathing for the abolitionists vehemently, both in public and in private."

    Jackson's small-government fetishism and crank monetary policy views stunted the attempts of better leaders like John Quincy Adams to invest in American infrastructure, and led to the Panic of 1837, a financial crisis that touched off a recession lasting seven years. If that weren't enough, he was a war criminal who suspended habeas corpus and executed prisoners for minor infractions during his time as a general in the War of 1812.

    Andrew Jackson deserves a museum chronicling his crimes and dedicated to his victims, not commemoration on American currency.

    Andrew Jackson, ethnic cleanser

    Robert Lindneux

    Any evaluation of Jackson must begin with American Indian removal, his policy of coercing Native American tribes into leaving their historical territory and embarking on dangerous and often deadly relocations.

    Jackson's support for Native American removal began at least a decade before his presidency. From 1815 to 1820, he served as a federal treaty commissioner dealing with Southern Indians, and "persuaded the tribes, by fair means or foul, to sell to the United States a major portion of their lands in the Southeast, including a fifth of Georgia, half of Mississippi, and most of the land area of Alabama," the anthropologist and historian Anthony Wallace writes in The Long, Bitter Trail: Andrew Jackson and the Indians. "Andrew Jackson had a personal financial interest in some of the lands whose purchase he arranged."

    But Jackson didn't only want removal for personal enrichment. He also wanted it as a way to further white supremacy and slavery, and to shore up his Southern support. "The hunger for Indian land was most intense in the Southern slave-owning states, and Jackson as a politician generally reflected Southern economic interests," Wallace writes. "Jacksonian Democracy … was about the extension of white supremacy across the North American continent," Howe writes in What Hath God Wrought, his history of the 1815 to 1848 period. "By his policy of Indian Removal, Jackson confirmed his support in the cotton states outside South Carolina and fixed the character of his political party."

    Jackson wasn't alone; the entire Democratic party was in thrall to the slave power at this point, and receptive to policies like Native American removal that freed up land for slavery. "The exaltation of the common man (meaning, on the frontier, the settler and speculator hungry for Indian land), the sense of America as the redeemer nation destined for continental expansion, the open acceptance of racism as a justification not only for the enslavement of blacks but also for the expulsion of Native Americans — these were popular, politically powerful themes that would have driven any Democratic President to press for a policy of Indian removal," Wallace writes.

    According to Howe, Indian removal was Jackson's top legislative priority upon taking office in 1829. He quotes Jackson's vice president and successor, Martin Van Buren, as declaring, "There was no measure, in the whole course of [Jackson's] administration, of which he was more exclusively the author than this."

    While the law Jackson pushed through Congress in 1830, the Indian Removal Act, theoretically only authorized Jackson to negotiate removal with the tribes, Jackson had no interest in making deals. "To him, the practice of dealing with Indian tribes through treaties was 'an absurdity,'" Howe writes; instead he believed "the government should simply impose its will on them."

    Jackson's stance triggered huge opposition. Evangelical Christians opposed removal as a betrayal of Native Americans, and an impediment to missionary work. Congressional opponents like Sen. Theodore Frelinghuysen assailed it on moral grounds. The proposal only barely passed the House, 102 to 97, with Jackson supporters in the North defecting to the opposition. "The vote had a pronounced sectional aspect," Howe writes. "The slave states voted 61 to 15 for Removal; the free states opposed it, 41 to 82. Without the three-fifths clause jacking up the power of the slaveholding interest, Indian Removal would not have passed."

    Jackson set about implementing the measure as soon as he was given the authority. "In principle, emigration was to be voluntary," Wallace writes. "But the actual policy of the administration was to encourage removal by all possible means, fair or foul."

    To weaken tribal chiefs, Jackson's administration stopped paying them annuities to spend on behalf of their tribes. Some tribes were given tiny individual grants (each Cherokee got 45 cents a year, and then only once they got to the West), others nothing at all. Meanwhile, Southern state governments set about destroying tribal governments, banning tribal assemblies, making it illegal to pass tribal laws, denying Native Americans the right to vote or sue or testify in court or even dig gold on their own land (a provision passed only after gold was discovered).

    Jackson's administration stood idly by and let it happen, knowing that the more Southerners harassed Native Americans, the easier it would be to coerce them into removal treaties. "It is abundantly clear that Jackson and his administration were determined to permit the extension of state sovereignty because it would result in the harassment of Indians, powerless to resist, by speculators and intruders hungry for Indian land," Wallace concludes.

    Nikater

    The first post-Act treaty, the Treaty of Dancing Rabbit Creek on September 27, 1830, securing Choctaw removal, was achieved "against the wishes of the majority of the tribe, by excluding the Indians' white counselors from the negotiations and then bribing selected tribal leaders," Howe writes.

    Once Jackson's administration secured its fraudulent treaties, it set about the actual process of removal. From the very beginning, the process was deadly. About four thousand Choctaws died of cholera, and hundreds more died from hunger, exposure, and accidents, per Wallace. A steamboat carrying 611 Creeks up the Mississippi collided with another boat and was cut in two, killing 311 Indian passengers. Anywhere from 20 to 25 percent of Eastern Cherokees died either being rounded up or transported West.

    The problem was not one of faulty implementation; Jackson's own actions made the process of removal bloodier and crueler. "During the Removal process the president personally intervened frequently, always on behalf of haste, sometimes on behalf of the economy, but never on behalf of humanity, honesty, or careful planning," Howe writes. "Army officers like General Wool and Colonel Zachary Taylor who attempted to carry out Removal as humanely as possible or to protect acknowledged Indian rights against white intruders learned to their cost that Jackson's administration would not back them up."

    The actual death toll of removal is uncertain. The toll for Cherokees alone is typically given as 4,000 to 8,000, per Amy Sturgis's book, The Trail of Tears and Indian Removal. But thousands more Creek, Choctaw, Seminole, and other Indians died in the process as well, direct victims of the signature policy of the Jackson administration.

    Andrew Jackson, laissez-faire zealot

    Edward W. Clay

    It's genuinely bizarre that some modern liberals, like Sean Wilentz and Arthur Schlesinger, have claimed Jackson for liberalism, ostensibly for his embrace of "populism" (read: rejection of northern anti-slavery white men in favor of Southern pro-slavery white men). In reality, Jackson's economic policy views were almost cartoonishly right wing.

    Context is important here. Jackson was succeeding John Quincy Adams, a truly great, scandalously underrated president who was an enthusiastic supporter of government intervention to build necessary infrastructure ("internal improvements") and fuel economic development. Adams believed that "taxing and being taxed were essential to responsible self-government; the country required a modern, national, and regulated banking system … and the federal government had an important role to play regarding the 'general welfare' in the creation of educational, scientific, and artistic institutions, such as the Smithsonian Museum, the national parks, the service academies, and land grant universities," according to recent biographer Fred Kaplan.

    Jackson believed none of that. He believed government was a threat to be contained, that national banks like the one originated by Alexander Hamilton were abominations and threats to freedom, and that the federal government's role in building infrastructure should be limited. He vetoed a bill to run a road in Kentucky, arguing that federal funding of such infrastructure projects was unconstitutional.

    "While he criticized the Maysville Road for being insufficiently national, Jackson did not wish to be misunderstood as favoring federal funding for a more truly national transportation system," Howe writes. "Instead he warned that expenditures on internal improvements might jeopardize his goal of retiring the national debt — or, alternatively, require heavier taxes." The veto, Howe continues, ultimately led to "the doom of any comprehensive national transportation program."

    Jackson was a strict adherent to the gold standard, a position as silly in the 1830s as it remains today. This directly informed his war on the Second National Bank of the United States. "That the modern twenty-dollar Federal Reserve Note should bear Andrew Jackson's portrait is richly ironic," Howe writes. "Not only did the Old Hero disapprove of paper money, he deliberately destroyed the national banking system of his day."

    Absecon 59

    Contrary to Jacksonian propaganda, the Second National Bank worked quite well. It produced reliable paper currency of consistent value across the country. But Jackson, as an avowed opponent of paper money and of national economic institutions like the Bank, vetoed the renewal of its charter in 1832. His rhetoric against the bank drew upon populist anti-bank sentiment, but its real crime in Jacksonian eyes was propping up a powerful government. "The advocates of hard money did not condemn banks as agents of capitalism," Howe writes. "They condemned them as recipients of government favor."

    Jackson's war on the bank, combined with his intent on paying off the national debt, would lead to one of the worst depressions in American history. Once the government started running a surplus, Jackson had nowhere to put the money, without the bank around. So he divided it among the states. "The state banks went a little crazy," Planet Money's Robert Smith explains. "They were printing massive amounts of money. The land bubble was out of control." Before long you had the Panic of 1837, and years of recession.

    Not all economic historians accept this story of the Panic. Others think Jackson screwed up in other ways that caused it. Vanderbilt's Peter Rousseau, for instance, blames two actions Jackson took in 1836 — requiring public lands be purchased with coins rather than paper money, and "supplemental" transfers of money between banks by the Treasury that summer — for causing the crash. This interpretation, Rousseau writes, "calls into question claims that the nation’s seventh President was an innocent bystander and casts serious doubt on his financial wisdom."

    Andrew Jackson, war criminal

    Edward Percy Moran

    Leaving aside whether Jackson's acts of ethnic cleansing against Native Americans technically count as war crimes or just ordinary crimes against humanity, his career as a general included numerous actions which would absolutely warrant criminal action today.

    Before and after Jackson's career-making victory in the Battle of New Orleans in 1815 — won after the war was technically over — he ruled the city as a tyrant, as Caleb Crain notes in the New Yorker:

    He censored a newspaper, came close to executing two deserters, and jailed a state congressman, a judge, and a district attorney. He defied a writ of habeas corpus, the legal privilege recognized by the Constitution which allows someone being detained to insist that a judge look into his case. Jackson was fined for his actions, and, for the rest of his life, was shadowed by the charge that he had behaved tyrannically. In retirement, after two terms as President, he called on his reserves of political clout to get the fine refunded, and Congress ended up debating the legality of his actions in New Orleans for nearly two years.

    On December 16, 1814, Jackson declared martial law, provoking an immediate backlash on civil liberties grounds. "Despite the constitutional irregularity, Jackson imposed a nine o’clock curfew and required that everyone entering and exiting the city be vetted by the military," Crain explains. He arrested a state legislator who had resisted calls to suspend habeas corpus, and then ordered the man guarding the legislator to arrest anyone trying to serve a write of habeas to free him.

    Jackson also had a penchant for executing people — soldiers, enemies, whatever — for little or no reason. In 1818, he famously ordered two British subjects, Robert Ambrister and Alexander George Arbuthnot, executed during the First Seminole War in Spanish Florida. He believed that both were helping the Seminoles wage war against the US. This was most likely not true.

    "Arbuthnot … claimed he had only sought the Natives' welfare and had actually tried to dissuade them from warmaking; this was probably the truth," Howe writes. "Ambrister had indeed been helping the Seminoles prepare for war — but against the Spanish, whose rule in Florida he hoped to overthrow."

    Arbuthnot was sentenced to death after a trial, and Ambrister to flogging and hard labor. Jackson increased Ambrister's sentence to death and carried both sentences out the next day "so there would be no chance of an appeal," Howe recounts. "A former justice of the Tennessee state supreme court, he must have known the convictions would not stand up to appellate scrutiny."

    He also killed some of his own men for petty infractions. While in charge of New Orleans, "six militiamen who had tried to leave before their term of service expired were executed in Mobile by his orders, a draconian action at a time when everybody but Jackson considered the war over."

    Andrew Jackson was an executioner, a slaver, an ethnic cleanser, and an economic illiterate. He deserves no place on our currency, and nothing but contempt from modern America.

    In This Stream

    Harriet Tubman to join Andrew Jackson on $20 bill

    View all 11 stories Источник: https://www.vox.com/2016/4/20/11469514/andrew-jackson-indian-removal

    THE DESTRUCTION OF THE SECOND BANK OF THE UNITED STATES RATIONALE AND EFFECTS

    Gareth Davis
    Senior Sophister _____________________________

    I have always been afraid of banks Andrew Jackson

    Few greater enormities are chargeable to politicians than the destruction of the bank of the United States R Caterall

    The motivation behind this paper is to analyse from the perspective of a historian of economic thought and policy the rationale and implications of the destruction of the Second bank of the United States. The account is valuable as an account of the way in which economic thought, political ideology and vested interests can combine to shape policy. The debate also raised issues which are relevant to our modern economic system. The case for state supervision over the banking system is considered by almost all economists as to be so self-evident. But this has not always been the case and the debate over the banks future is a pointed reminder of this fact. Some of the arguments furnished against the bank may challenge some of the complacently held axioms of modern thought.

    Other issues of this period relevant today include the benefits or otherwise of inter-regional monetary union. (Frass (1974) has shown how the BUS acted to standardise local regional exchange rates and nominal price levels and the effect which this had on peripheral areas.) Likewise the conflict laid bare some differing, and still widely held, preconceptions regarding both the optimal and the legitimate magnitude of government intervention. This account may not offer exact policy prescriptions for modern economists, since the economy, society and prevailing values have changed so much, but they can offer fresh perspectives to modern thinkers.

    The Banks Destruction In Historical Context

    The second Bank of the United States (BUS) was founded in 1816 on the basis of a twenty year charter. This charter empowered the bank to act exclusively as the federal governments fiscal agent, holding its deposits, making inter-state transfers of federal funds and dealing with any payments or receipts with which the federal authorities would be involved. Like all other chartered banks, the BUS also had the right to issue bank notes on the basis of a fractional reserve system and to carry out the usual commercial banking activities. In return for these privileges certain conduct of a central bank-like nature was expected of this institution: in the words of the charter the bank will conciliate and lead the state banks in all that is necessary for the restoration of credit, public and private.[45] Despite being 80% privately owned, its operations were subject to supervision by Congress and the President. Pessen gives details which show the banks size and the nature of the activities immediately prior to the assault on it in 1830. It was large relative to other banks, responsible for 15-20% of bank lending in the USA and accounting for 40% of the bank notes then in circulation. It was cautious in its note issuing function, holding a specie reserve of 50% of the value of its notes whilst the norm for the remainder of the banking system was 10-25%.

    The 1820s and 1830s in the United States were a time of extremely rapid, but also volatile economic growth. New natural resources were being exploited as the frontier expanded and the new techniques of the industrial revolution were being introduced. The old money supply of gold and silver specie was stretched and found inadequate for the liquidity needs of the growing economy. (Temin indicates that in 1830 the total value of the gold and silver specie in circulation in the economy amounted to only l/30th to l/50th the value of GNP.) The emergence of a number of banks operating fractional reserve note-issuing systems was the result. The notes were underwritten by varying proportions of specie and although not legal tender were widely accepted in payment for debts, although usually discounted below their par value.

    The quality of bank notes varied. Fraud was commonplace by unscrupulous bankers who could persuade or bribe the local state legislature to grant them the charter necessary to commence a banking business. For instance Pessen notes that in 1828 the 17 banks chartered in Mississippi circulated notes with a face value of $6 million from a specie base of $303,000. It was in such an environment that the Bank of the United States operated. One of its functions was to discipline and support state banks. As the federal governments fiscal agent it received bank notes in payment for taxes. The BUS would then present these to the issuing state bank in order to redeem them for the gold necessary to pay the taxes it had collected to the federal treasury. In this way state banks were forced to keep a higher stock of specie on reserve than would otherwise be necessary.[46] Conversely the U.S. could also act as a lender of last resort to banks in trouble by not presenting these notes for redemption but rather allowing these banks to run into debt to it.

    The political environment of that period was marked by the ascendancy of an ideology termed Jacksonism. Focused around Andrew Jackson, elected president in 1828, this ideology was an uncomfortable, perhaps inconsistent, mixture of agrarianism, nationalism, populism and libertarianism. However the one element which unified this group was a deep hostility to a privileged east-coast based aristocracy. The Philadelphia-based bank of the United States with its obviously patrician president, Nicholas Biddle, could hardly prove to be popular with this new regime.

    The Jackson administrations assault on the bank began in 1830. In 1832 Jackson used his presidential veto to thwart the Banks supporters attempt to use Congress to enact a new charter for the Bank. Jackson then used his second presidential election victory later that year as a mandate to order the withdrawal of all federal funds from the bank in 1833. When the Banks original charter expired in 1836 it succeeded in being re-chartered, albeit now only on as a much reduced state bank under the auspices of the Penneslvyania state legislature as the United States bank of Penneslvyania. In 1841 it went bankrupt as a result of speculative dabbling in the cotton market. I shall now consider the motives which inspired the attack on this institution.

    The Anatomy Of The Anti-Bank Forces: Vested interests

    The role played by vested interests in motivating the anti-bank forces has been given particular emphasis by both Caterall (1902) and Hammond (1947). They point to the substantial personal gains which would accrue to key members of Jacksons administration should the bank be destroyed. Hammond ascribes an important role to the New York financial community which at the time was competing with Philadelphia to be the countrys premier commercial centre. Martin Van Buren, Jacksons 2nd vice-president and eventual successor was particularly identified with the Wall Street element in this Wall Street (New York) versus Chestnut Street (Philadelphia) battle.

    Both Pessen and Hammond add an additional group to this coalition; the state banks, who disliked being constrained by the BUSs policy of redeeming their bank notes. This enforced a much higher reserve ratio and hence restricted their lending activities. Hammond also adds to this element the class of nouveau riche entrepreneurs and speculators, a class to which, he maintained, Jackson and many of his associates belonged, and which also disliked the restriction of credit. However, I would argue that the importance of this proposed group in effecting the banks destruction has been over-emphasised by pro-BUS writers such as Hammond and Caterall.

    Firstly, the actual existence of such a coalition is questionable. Pessen gives evidence that the New York financial community were divided over the question of the wisdom of the attack on the Bank. Also he shows that at least some of the state banks grudgingly acknowledged one banks role in disciplining the banking system and its activities as a lender of last resort. The homogeneity of Hammonds speculative entrepreneurial class is one for which he offers merely anecdotal evidence and no quantitative evidence. Secondly, to concentrate upon vested interests is to ignore the other influences on political action. Ideologies and economic logic also play a role. Hammond, the primary exponent of the self-interest theory, fails to explain satisfactorily why the measure was extremely popular.[47] Only a tiny proportion of the population would have gained directly and immediately from the destruction of the institution. We must examine the political philosophy and economic logic behind the opposition of the bank. These arguments had much public support which was vital to Jacksons destruction of the bank.



    The Political Ideologies

    The ideology which underlay the struggle is a highly variegated, and perhaps ultimately inconsistent one. It was a blend of moral judgements, economic argument and populism to attack both the political legitimacy of the bank and its economic rationale.

    One branch of the school consisted of states rights advocates, who strongly opposed the substantial power wielded by the federally-chartered bank.[48] Many considered the chartering of the bank an unconstitutional extension of the power of the federal congress. Their position was summarised by Jackson who described the bank as a threat to democratic institutions by the federal authorities. With the destruction of the bank, the power of intervention in the banking and monetary system was left in the hands of individual states until the civil war.

    Another stream within the anti-bank framework were the libertarian thinkers. They postulated the illegitimacy (on moral grounds) of any government intervention in the economy or in society beyond a bare minimum. This period was the golden age of Laissez Faire. This group was related to and associated with the Free Banking school which challenged on economic grounds the necessity of government intervention in the monetary system.

    The Free Bankers

    This group were in favour of a paper currency based on a fractional reserve system. They argued that the banks regulatory function was unnecessary and inefficient because in a completely unregulated financial system free competition would ensure that the public receives whatever security against fraud it so desires.[49] They argued that what was wrong with the banking system was that free competition was obstructed by the monopolistic privileges granted to the BUS in its charter. It is important to place these views in the context of the dominant economic paradigm of the day. Today as I have outlined, the importance of the states role in regulating the money supply is considered self-evident by most economists. (Hayek, Glasner and Greenfield and Yeager being some noteworthy exceptions to this consensus.)

    This was not the case in 1832. We have Schumpeters (1954) comment that in the first part of the 19th century most economists believed in the merit of a privately provided and competitively supplied currency. Glasner shows how Smith differed from Hume in advocating state non-intervention in the supply of money. Smith argued that a convertible paper money could not be issued to excess by privately owned banks in a competitive banking environment. Today we see money as a natural public good owing to the externalities caused by variations in its quantity. So the free bankers views were consistent with economic logic of the day.


    The Hard Money School

    The anti-monopolistic and anti-regulatory free banking school were joined by unlikely bed fellows from the opposite end of the spectrum of economic ideas, agrarian and proletarian mistrust of banks in general and paper money in particular. This mistrust may have been justified in the context of the widespread level of fraud within the system, relative to today. Many saw paper money as a tool used by employers and rich financiers to trick working men and farmers out of what was due to them.

    This groups most prominent exponent was Andrew Jackson himself. In his farewell speech he refers to the paper money system and its natural associates monopoly and exclusive privilege. The value of paper, he states, is liable to great and sudden fluctuations and cannot be relied upon to keep the medium of exchange uniform in amount. Jacksons views on this topic may be due to an incident early in his career when he was almost bankrupted after accepting bank notes which turned out to be worthless in return for a debt.

    In contrast to the free-banking school this group could be termed conservative, wishing to destroy the system of fractional reserve paper money by removing the kingpin of the banking system which produced it; the Bank of the United States. Even within this group there was a severe division between those advocating gold specie, those advocating a silver specie, and those advocating a bi-metallic medium of exchange.

    The Battle Of Ideas And Its Outcome

    Thus, was the coalition against the bank of the United States. Both advocates of the free banking (or soft money) school and proponents of a return to a specie economy (or hard money) saw the destruction of the bank as very important, but for both of them, its destruction was a means to divergent and conflicting ends. Against this coalition supporters of the bank such as its president Nicholas Biddle and politicians such as Henry Clay and John Quincy Adams were placed in extreme difficulty. Both anti-federalism and laissez-faire were in the ascendancy at the time.[50] On the economic front the bank was being assaulted from both the left (free-banking advocates) and from the right (anti-paper advocates).

    Advocates for the bank did emphasise its moderating role in regulating, informally, the fractional reserve system and hence its publicly-interested central-bank type nature. Such arguments were almost certain to fall on barren ground. Only two major institutions were available for comparison. The first one was John Laws bank from early 18th century France, and the chaotic and inflationary experience of this scheme was hardly one to inspire confidence. The other example was the Bank of England which was at the time subject to scathing attacks during the bullionist controversy, (Hammond (1947) and Glastner (1989)).


    Evaluating The Arguments

    The final verdict on the validity or otherwise of the differing arguments must wait until the consequences of the banks destruction have been fully considered. However the following points can be made at this stage. Firstly, the arguments of those opposed to the banks existence on ethical grounds, namely the classic libertarians and the states rights advocates, cannot be assailed on empirical grounds given that they are normative judgements.

    Secondly, those who attack the bank on the grounds that it was a predatory monopolist within the banking system have had their arguments somewhat refuted by the evidence garnered by Highfield, OHara and Wood, who carried out a systematic econometric survey with regards to the banks decision variables during its existence and found no evidence that its dealings with its competitor banks or with its markets were marked by any of the predatory practices associated with monopolists. However perhaps the anti-bank forces could argue that it was the banks potential as a monopolist rather than its actual behaviour which justified the withdrawal of its charter. The methodology of such evidence and the quality of the data upon which they are based may also be attacked but such studies must be considered none the less.

    The Implications Of The Banks Destruction For Output And Employment

    Firstly, over the period 1790 to 1860 the general movement in the price level was downwards (with some fluctuations). Output followed a similar fluctuating and variable pattern over the same period, albeit with a strong upward trend. The pattern over the 1830s and 1840s diverges somewhat from this . The period 1830 until end of 1833 was marked by a slight though pronounceable upward trend in prices. 1833 marked the withdrawal of federal deposits from the bank and in early 1834 Nicholas Biddle, trying to convince the government of the need for the bank, massively contracted credit. The result was a short sharp fall in prices and output in what was termed Biddles contraction. However, by late 1834 prices, output and the money supply were strongly rising as boom-like conditions prevailed once again. In 1837 this upward movement was again sharply reversed. It was not until the early 1840s that output began to expand significantly once again. Over this period of the 1840s the money supply also began to grow once again, although more moderately such that the extra output seemed sufficient enough to soak it up, and so the price level resumed its long term downward path.

    There are two different interpretations of these events. The first one, expounded by Hammond and Caterall, blames Jacksons actions in destroying the bank for the inflationary boom and resultant recession over the period 1834 to 1837. In their view, dismantling the BUS took a restraint off the fractional reserve system and led, post-1834, to an increase in the money supply which caused the boom. Of course, this was checked in 1837 by a downturn, a downturn made worse by the fact that at this stage the banking system, due to its low reserve ratio, was now very unstable and experienced significant levels of bank collapse. On the face of it the hypothesis has some factual support. Over the period 1833 to 1837 the amount of bank notes in circulation rose from a value of $10.2 million to $149.2 million.

    However data from Temin and Engerman show that the banks aggregated reserve ratio did not fall over 1834-1837. It had remained steady from the mid-1820s. Thus, the BUSs demise had not caused the money supply to rise by allowing reserve ratios to fall.

    An alternative hypothesis was advanced by Temin. He argued that monetary expansion did not come from a falling reserve ratio but rather from an inflow of silver into the United States in the 1830s. He backs his argument up by showing how this inflow in the 1830s would have resulted from increased silver production in Mexico, from an increase in British investment in America and from the fall in US imports of opium from China, which stopped the outflow of silver. So it is possible to dismiss the relationship between the Banks demise and the panic of 1837 as a coincidence.

    The Regional Dimension: Monetary Union For The USA

    Frass (1974) notes how the bank acted under a congressional mandate to establish and maintain a uniform national currency by policing the state banks to ensure that convertibility was maintained at a high level. Using data from Ohio, Frass argues that this involved restricting the lending of banks along the western frontier in particular. This, as well as having adverse effects in itself in a capital-scarce region, depressed the general price level in this area relative to the price of unsettled land (which was set arbitrarily by Congress), and discouraged movement to settlement in these areas.

    Frass study does not extend beyond 1834 but we can assume that the removal of the bank led to the cessation of these harmful activities. However, we must note that a trade off would have had to be made. A higher level of financial instability may have been the price paid for freer availability of capital and cheaper land in these peripheral regions.

    The Long Term Impact On Americas Monetary And Financial Structure

    Ultimately the Banks destruction marked a pyhrric victory for the hard money forces. Van Buren, Jacksons successor, was no supporter of a purely metallic currency. Return to a purely metallic currency would have met severe opposition from their former allies, the free banking and libertarian schools (the latter felt that the state had no ethical right to regulate any commercial transactions between consenting individuals including paper currency). The changing economic and social structure would have made it unfeasible to return to a purely specie exchange economy. Cameron posits that a medium of exchange based on bank liabilities and a fractional reserve system and/or government taxable capacity is essential to an industrialising economy. Abolishing paper money could be considered, the modern economic equivalent of attempting to dis-invent the wheel. The true victors then in the struggle were soft money or free banking advocates. Instead of destroying the fractional reserve system the hard money men had removed a force which acted to restrain it.

    Similarly, after 1837 the reserve ratio of the banking system was much higher than it had been during the period of the BUSs existence. This reflected public mistrust of banks in the wake of the panic of 1837 when many banks failed. This lack of confidence in the paper money system, could have been ameliorated by a central-bank type institution. Hence one result of the demise of this bank may in fact have been a higher reserve ratio, less availability of credit and a lower money supply during the 1840s and 1850s. The evolution of the American banking system was also probably affected. The BUS was one of the first and last banks chartered by the federal authorities for commercial banking activities nation-wide. Had it survived it is unlikely that Americas retail banking market today would have been so localised and fragmented in a way which is extremely uncharacteristic of other large industrialised economics. After the banks destruction, banking returned to being a decentralised business in which institutions were chartered by the individual states.

    The banks defeat also had profound implications for the role of the state in America in managing monetary policy. Large scale Federal intervention in the supply of money did not take place again until the American Civil War. However Jacksons victory had imbued US political culture with dislike of centralised institutions with large influence over the banking system. The United States did not develop a central banking agency until 1913. This institution was highly decentralised consisting of twelve autonomous components one in each of Americas largest cities. One result of this de-centralisation may have been the incoherent response of the monetary authorities to the 1929 crash and the resultant run on the banking system, possibly one cause of the 1930s great depression. Hence one interpretation might see the destruction of the bank of the United States as leading to the worlds most severe economic recession a century later.

    Conclusion: The Case For Further Study

    This topic offers an area where rich analytic rewards may be reaped by further studies which employ modern economic techniques. The episode marks a crucially formative event during the nascent period of the monetary system of what is currently the worlds dominant economy. In spite of these facts this subject has been much neglected, the attention given to the English Bullionist controversy. In over twenty-five years not one book has been published dealing specifically with this topic. This paper, I hope, contributes to correcting this deficiency.

    Bibliography:

    Cameron, R (1967)Banking In The Early Stages Of Industrialisation

    Dorfman, A (1957) The Economic Mind In American Civilisation

    Caterall, R (1902)The 2nd Bank Of The United States

    Engerman, P (1970) Economic Consequences Of The 2nd Bank Of The United States in the Journal of Political Economy, 78(4)

    Frass, A (1974) The Second Bank Of The United States: An Instrument For Inter-regional Monetary Union in the Journal Of Economic History, 34(2)

    Glasner, C (1989)Free Banking And Monetary Reform

    Greenfield & Yeager (1978) A Laissez-Fairez Approach To Monetary Stability in the Journal Of Money, Credit And Banking

    Hammond, B (1947) Banks And Politics In America From The Revolution To The Civil War

    Hayek, F (1967) The Denationalisation Of Money

    Highfield, OHara & Wood(1991) Public Ends, Private Means: Central Banking And The Profit Motive 1823-1832 in The Journal Of Monetary Economics, 28(2)

    Pessen, E (1985) Jacksonian America: Society, Personality And Politics

    Schumpeter, J (1954) A History Of Economic Analysis

    Temin, P (1968) The Economic Consequences Of The Bank War in the Journal Of Political Economy, 76(2)

    White, L (1986) William Leggett: Jacksonian Columnist As Classical Liberal Political Economist in the History Of Political Economy, 18(2)

    Источник: https://www.tcd.ie/Economics/assets/pdf/SER/1994/Gareth_Davis.html

    THE NULLIFICATION CRISIS

    Learning Objectives

    By the end of this section, you will be able to:

    • Explain the factors that contributed to the Nullification Crisis
    • Discuss the origins and creation of the Whig Party

    The crisis over the Tariff of 1828 continued into the 1830s and highlighted one of the currents of democracy in the Age of Jackson: namely, that many southerners believed a democratic majority could be harmful to their interests. These southerners saw themselves as an embattled minority and claimed the right of states to nullify federal laws that appeared to threaten state sovereignty. Another undercurrent was the resentment and anger of the majority against symbols of elite privilege, especially powerful financial institutions like the Second Bank of the United States.

    The Tariff of 1828 had driven Vice President Calhoun to pen his “South Carolina Exposition and Protest,” in which he argued that if a national majority acted against the interest of a regional minority, then individual states could void—or nullify—federal law. By the early 1830s, the battle over the tariff took on new urgency as the price of cotton continued to fall. In 1818, cotton had been thirty-one cents per pound. By 1831, it had sunk to eight cents per pound. While production of cotton had soared during this time and this increase contributed to the decline in prices, many southerners blamed their economic problems squarely on the tariff for raising the prices they had to pay for imported goods while their own income shrank.

    Resentment of the tariff was linked directly to the issue of slavery, because the tariff demonstrated the use of federal power. Some southerners feared the federal government would next take additional action against the South, including the abolition of slavery. The theory of nullification, or the voiding of unwelcome federal laws, provided wealthy slaveholders, who were a minority in the United States, with an argument for resisting the national government if it acted contrary to their interests. James Hamilton, who served as governor of South Carolina in the early 1830s, denounced the “despotic majority that oppresses us.” Nullification also raised the specter of secession; aggrieved states at the mercy of an aggressive majority would be forced to leave the Union.

    On the issue of nullification, South Carolina stood alone. Other southern states backed away from what they saw as the extremism behind the idea. President Jackson did not make the repeal of the 1828 tariff a priority and denied the nullifiers’ arguments. He and others, including former President Madison, argued that Article 1, Section 8 of the Constitution gave Congress the power to “lay and collect taxes, duties, imposts, and excises.” Jackson pledged to protect the Union against those who would try to tear it apart over the tariff issue. “The union shall be preserved,” he declared in 1830.

    To deal with the crisis, Jackson advocated a reduction in tariff rates. The Tariff of 1832, passed in the summer, lowered the rates on imported goods, a move designed to calm southerners. It did not have the desired effect, however, and Calhoun’s nullifiers still claimed their right to override federal law. In November, South Carolina passed the Ordinance of Nullification, declaring the 1828 and 1832 tariffs null and void in the Palmetto State. Jackson responded, however, by declaring in the December 1832 Nullification Proclamation that a state did not have the power to void a federal law.

    A portrait of Robert Hayne is shown.

    The governor of South Carolina, Robert Hayne, elected in 1832, was a strong proponent of states’ rights and the theory of nullification.

    With the states and the federal government at an impasse, civil war seemed a real possibility. The next governor of South Carolina, Robert Hayne, called for a force of ten thousand volunteers to defend the state against any federal action. At the same time, South Carolinians who opposed the nullifiers told Jackson that eight thousand men stood ready to defend the Union. Congress passed the Force Bill of 1833, which gave the federal government the right to use federal troops to ensure compliance with federal law. The crisis—or at least the prospect of armed conflict in South Carolina—was defused by the Compromise Tariff of 1833, which reduced tariff rates considerably. Nullifiers in South Carolina accepted it, but in a move that demonstrated their inflexibility, they nullified the Force Bill.

    The Nullification Crisis illustrated the growing tensions in American democracy: an aggrieved minority of elite, wealthy slaveholders taking a stand against the will of a democratic majority; an emerging sectional divide between South and North over slavery; and a clash between those who believed in free trade and those who believed in protective tariffs to encourage the nation’s economic growth. These tensions would color the next three decades of politics in the United States.

    Congress established the Bank of the United States in 1791 as a key pillar of Alexander Hamilton’s financial program, but its twenty-year charter expired in 1811. Congress, swayed by the majority’s hostility to the bank as an institution catering to the wealthy elite, did not renew the charter at that time. In its place, Congress approved a new national bank—the Second Bank of the United States—in 1816. It too had a twenty-year charter, set to expire in 1836.

    The Second Bank of the United States was created to stabilize the banking system. More than two hundred banks existed in the United States in 1816, and almost all of them issued paper money. In other words, citizens faced a bewildering welter of paper money with no standard value. In fact, the problem of paper money had contributed significantly to the Panic of 1819.

    In the 1820s, the national bank moved into a magnificent new building in Philadelphia. However, despite Congress’s approval of the Second Bank of the United States, a great many people continued to view it as tool of the wealthy, an anti-democratic force. President Jackson was among them; he had faced economic crises of his own during his days speculating in land, an experience that had made him uneasy about paper money. To Jackson, hard currency—that is, gold or silver—was the far better alternative. The president also personally disliked the bank’s director, Nicholas Biddle.

    A large part of the allure of mass democracy for politicians was the opportunity to capture the anger and resentment of ordinary Americans against what they saw as the privileges of a few. One of the leading opponents of the bank was Thomas Hart Benton, a senator from Missouri, who declared that the bank served “to make the rich richer, and the poor poorer.” The self-important statements of Biddle, who claimed to have more power that President Jackson, helped fuel sentiments like Benton’s.

    In the reelection campaign of 1832, Jackson’s opponents in Congress, including Henry Clay, hoped to use their support of the bank to their advantage. In January 1832, they pushed for legislation that would re-charter it, even though its charter was not scheduled to expire until 1836. When the bill for re-chartering passed and came to President Jackson, he used his executive authority to veto the measure.

    The defeat of the Second Bank of the United States demonstrates Jackson’s ability to focus on the specific issues that aroused the democratic majority. Jackson understood people’s anger and distrust toward the bank, which stood as an emblem of special privilege and big government. He skillfully used that perception to his advantage, presenting the bank issue as a struggle of ordinary people against a rapacious elite class who cared nothing for the public and pursued only their own selfish ends. As Jackson portrayed it, his was a battle for small government and ordinary Americans. His stand against what bank opponents called the “monster bank” proved very popular, and the Democratic press lionized him for it. In the election of 1832, Jackson received nearly 53 percent of the popular vote against his opponent Henry Clay.

    A political cartoon depicts President Jackson using a cane marked “Veto” to battle a many-headed snake representing state banks. Battling alongside Martin Van Buren and Jack Downing, Jackson addresses the largest head, that of Nicholas Biddle, the director of the national bank: “Biddle thou Monster Avaunt!! . . .”

    In General Jackson Slaying the Many Headed Monster (1836), the artist, Henry R. Robinson, depicts President Jackson using a cane marked “Veto” to battle a many-headed snake representing state banks, which supported the national bank. Battling alongside Martin Van Buren and Jack Downing, Jackson addresses the largest head, that of Nicholas Biddle, the director of the national bank: “Biddle thou Monster Avaunt [go away]!! . . .”

    Jackson’s veto was only one part of the war on the “monster bank.” In 1833, the president removed the deposits from the national bank and placed them in state banks. Biddle, the bank’s director, retaliated by restricting loans to the state banks, resulting in a reduction of the money supply. The financial turmoil only increased when Jackson issued an executive order known as the Specie Circular, which required that western land sales be conducted using gold or silver only. Unfortunately, this policy proved a disaster when the Bank of England, the source of much of the hard currency borrowed by American businesses, dramatically cut back on loans to the United States. Without the flow of hard currency from England, American depositors drained the gold and silver from their own domestic banks, making hard currency scarce. Adding to the economic distress of the late 1830s, cotton prices plummeted, contributing to a financial crisis called the Panic of 1837. This economic panic would prove politically useful for Jackson’s opponents in the coming years and Van Buren, elected president in 1836, would pay the price for Jackson’s hard-currency preferences.

    Jackson’s veto of the bank and his Specie Circular helped galvanize opposition forces into a new political party, the Whigs, a faction that began to form in 1834. The name was significant; opponents of Jackson saw him as exercising tyrannical power, so they chose the name Whig after the eighteenth-century political party that resisted the monarchical power of King George III. One political cartoon dubbed the president “King Andrew the First” and displayed Jackson standing on the Constitution, which has been ripped to shreds.

    Political caricature (a) represents President Andrew Jackson as a despotic ruler in robes and a crown, holding a scepter in one hand and a veto in the other. The border of the drawing reads “King Andrew the First. Of Veto Memory. Born to Command. Had I Been Consulted.” Cartoon (b) shows Jackson overseeing a scene of uncontrollable chaos. He wields a broom as rats with human heads, representing some of his cabinet members, run around on the floor. A pedestal labeled “Altar of Reform” topples over, while Jackson falls from a collapsing chair labeled “The Hickory Chair coming to pieces at last.”

    This anonymous 1833 political caricature (a) represents President Andrew Jackson as a despotic ruler, holding a scepter in one hand and a veto in the other. Contrast the image of “King Andrew” with a political cartoon from 1831 (b) of Jackson overseeing a scene of uncontrollable chaos as he falls from a hickory chair “coming to pieces at last.”

    Whigs championed an active federal government committed to internal improvements, including a national bank. They made their first national appearance in the presidential election of 1836, a contest that pitted Jackson’s handpicked successor, Martin Van Buren, against a field of several Whig candidates. Indeed, the large field of Whig candidates indicated the new party’s lack of organization compared to the Democrats. This helped Van Buren, who carried the day in the Electoral College. As the effects of the Panic of 1837 continued to be felt for years afterward, the Whig press pinned the blame for the economic crisis on Van Buren and the Democrats.

    Explore a Library of Congress collection of 1830s political cartoons from the pages of Harper’s Weekly to learn more about how Andrew Jackson was viewed by the public in that era.

    Andrew Jackson’s election in 1832 signaled the rise of the Democratic Party and a new style of American politics. Jackson understood the views of the majority, and he skillfully used the popular will to his advantage. He adroitly navigated through the Nullification Crisis and made headlines with what his supporters viewed as his righteous war against the bastion of money, power, and entrenched insider interests, the Second Bank of the United States. His actions, however, stimulated opponents to fashion an opposition party, the Whigs.

    https://www.openassessments.org/assessments/974

    Review Questions

    1. Why did the Second Bank of the United States make such an inviting target for President Jackson?
    2. What were the philosophies and policies of the new Whig Party?

    Answers to Review Questions

    1. Many people saw the Second Bank of the United States, the “monster bank,” as a tool for the privileged few, not for the public good. To Jackson, who saw himself as a spokesman for the common people against a powerful minority elite, it represented the elites’ self-serving policies. Fighting to dismantle the bank increased his popularity among many American voters.
    2. Whigs opposed what they viewed as the tyrannical rule of Andrew Jackson. For this reason, they named themselves after the eighteenth-century British-American Whigs, who stood in opposition to King George. Whigs believed in an active federal government committed to internal improvements, including the establishment of a national bank.

    Glossary

    monster bank the term Democratic opponents used to denounce the Second Bank of the United States as an emblem of special privilege and big government

    nullification the theory, advocated in response to the Tariff of 1828, that states could void federal law at their discretion

    Whigs a political party that emerged in the early 1830s to oppose what members saw as President Andrew Jackson’s abuses of power

    Источник: https://courses.lumenlearning.com/suny-ushistory1os2xmaster/chapter/the-nullification-crisis-and-the-bank-war/

    The Bank War

    Veto message from the President of the United States, returning the bank bill, with his objections, &c. To the Senate ... Andrew Jackson. Washington, July 10, 1832. Herald Office.

    Andrew Jackson's veto message to the Senate, in which he provides a passionate defense of the common man in order to justify his veto.

    Several of Jackson's key stands and decisions in the Bank War vindicate his alleged belief in himself as a representative of the common man. 

    The Bank War, lasting from approximately 1832 to 1836, was a decisive political battle over the renewal of the Second Bank of the United States' charter. Jackson vigorously opposed the bank and labelled it as a threat to the common man.  As he lamented in his farewell address, he believed that as long as the national bank existed, “the planter, the farmer, the mechanic, and the laborer” were “in constant danger of losing their fair interest in the government.” [1] On the other end, the bank's president, Nicholas Biddle, united with senators Henry Clay and Daniel Webster, who formed the Whig Party in opposition to Jackson.

    Over the course of the Bank War, Jackson won with popular support and executive power. After Jackson initially vetoed the renewal in July 1832, the Whigs decided to play the debate into an election issue. The Whig's decision backfired as Jackson won handily and saw his victory as a mandate to destroy the bank. [2] While the Bank War is an important piece of American history, it is also obviously relevant in determining Jackson's status as a representative of the common man. His intentions and beliefs are most laid bare when he originally vetoed Congress's attempt to recharter the bank.

    Jackson and his supporters contested that the bank lent an unfair advantage to a small circle of financial elites, allowing them a disproportionate stake in the nation's political and economic landscape. Jackson argued as much in his letter to Congress when he initially vetoed the renewed charter in 1832 when he stated that "Every monopoly and all exclusive privileges are granted at the expense of the public, which ought to receive a fair equivalent." [3]

    In Jackson's veto, his true colors are shown. He tears into the idea of the Second Bank of the United States and how its monopoly status has been abused by a small, rich class. He attacks the presumption that "the present stockholders have a prescriptive right not only to the favor but to the bounty of Government." Jackson also takes on an almost chastising tone when he sums up the charter by stating "the bounty of our Government is proposed to be again bestowed on the few who have been fortunate enough to secure the stock and at this moment wield the power of the existing institution." He also opposed the proposed charter for granting state banks the ability to repay debts using geographically-restricted notes on the sole basis that private citizens were not afforded the same benefits; "This boon conceded to the State banks, though not unjust in itself, is most odious because it does not measure out equal justice to the high and the low, the rich and the poor." In this veto, Jackson takes a very clear stand against what appears to be an attempt by the rich to protect their own wealth. His words show his opposition to be motivated by and for common men, and as such, the Bank War is a stark argument for Andrew Jackson viewing himself as a legitimate champion of the common man.

    [1] Jackson, Andrew. Farewell Address. March 4, 1837. Manuscript/Mixed Material. https://www.loc.gov/item/maj020912/.

    [2] Meacham, Jon. American Lion: Andrew Jackson in the White House. New York: Random House Trade Paperbacks, 2009.

    [3] Jackson, Andrew. Veto message from the President of the United States, returning the bank bill, with his objections, &c. To the Senate ... Andrew Jackson. Herald Office. Washington, 1832. Pdf. https://www.loc.gov/item/rbpe.19403000/.

    General Jackson slaying the many headed monster

    This popular cartoon depicts Jackson's war on the bank.

    Источник: http://projects.leadr.msu.edu/youngamerica/exhibits/show/andrew-jackson-real-or-fraud/the-bank-war

    King Andrew and the Bank

    On July l0, 1832, President Andrew Jackson sent a message to the United States Senate. He returned unsigned, with his objections, a bill that extended the charter of the Second Bank of the United States, due to expire in 1836, for another fifteen years. As Jackson drily noted, the bill was presented to him on the Fourth of July, a day freighted with portent.

    Today Jackson's Bank Veto and the political conflagration known as the “Bank War” that it touched off seem arcane and nearly incomprehensible. While misdeeds among the rich and powerful still garner headlines and incite congressional inquiries, the core instruments of our economic system-the network of banks capped by the Federal Reserve; the corporate form of business enterprise; the very dollars in our wallets, issued and guaranteed by the federal government—are utterly taken for granted. That these could have been the subject of controversy, that anyone could seriously contemplate organizing American capitalism differently, seems nearly unthinkable. Andrew Jackson is recalled today, when recalled at all, for other things, primarily as the architect of forced Indian removal. His face on the $20 bill is a mystery to many, an outrage to some, and, to the knowing, a curious irony.

    Yet, in its day, nothing galvanized American political conflict more than banking, currency, and finance. In the republic's first half-century, no subject, save foreign relations and war, gave greater vexation to American statesmen or aroused more heated public debate. The creation of the original Bank of the United States in 1791 sparked the first major division within President George Washington's administration, which later ripened into the Federalist and Democratic-Republican parties. Jackson's veto in 1832 repeated the process: It became the touchstone issue in his reelection campaign and precipitated the organization of the Whig and Democratic parties, the latter, still surviving, now the oldest mass political party in the world. The very language of Jackson's veto, departing sharply from all that came before, furnished a political grammar since claimed by Populists, Progressives, New Deal liberals, socialists, free marketeers, libertarians—in short, by just about everybody.

    Clearly, one cannot fully appreciate Jacksonian, and indeed American, politics without confronting his Bank Veto. Yet to make sense of the document requires imagining a world in some ways very different from our own. Americans were already by the time of the Revolution a famously enterprising people, yet their enterprise required capital far beyond available means. Credit was vital but often uncertain. The country's only legal money, gold and silver coin, was in chronic shortage, never plentiful enough to serve in everyday exchange. Banking in the early United States therefore grew by the forced hand of government. By special individualized acts of legislation, state and federal governments incorporated banks and authorized them to lend their own credit in the form of banknotes. Ostensibly redeemable in specie, these notes passed in lieu of coin in daily commerce, serving in practice, though not in law, as money.

    The connection of banks and government was fraught with financial and political peril, especially in a young republic whose citizens craved riches and yet resented every hint of aristocratic privilege. Banking was poorly understood, not yet professionalized, and its amateur practitioners sometimes wreaked disaster on their customers. Indeed, men commonly sought bank charters not as an outlet for investment, but as a source of credit—not looking to lend, but to borrow. In a financial sleight of hand, the required paid-in capital to start a bank often consisted of IOUs to be redeemed by the bank's own profits.

    That lawmakers could ordain credit, and hence create wealth, by merely waving a legislative wand struck many citizens as strange and malign. Corporations themselves were a novel form of business organization, not yet standardized or widely utilized. To many simple farmers and tradesmen, the granting of special favors, including the prize of limited liability, by means of legislative bank charters recalled the hated British system of monopoly and corruption. Paper money was also suspect-with good reason, since if issued imprudently it had a way of becoming worthless. No less than former President John Adams in 1813 damned chartered banking as a giant swindle, a "Sacrifice of public and private Interest to a few Aristocratical Friends and Favourites."

    In 1790, Treasury Secretary Alexander Hamilton proposed to incorporate a Bank of the United States. Modeled on the Bank of England, it was intended frankly to buttress the new government by entangling its finances with the interests of moneyed men. Though serving public purposes, the Bank was to be a profit-making institution, with private shareholders holding four-fifths of its stock and electing four-fifths of its directors. It was, said Hamilton, “an essential ingredient” in inspiring confidence in its prudent management that a national bank "be under a private not a public direction, under the guidance of individual interest, not of public policy."

    Opposed by Secretary of State Thomas Jefferson and his ally James Madison, Hamilton's Bank nonetheless passed Congress and became law. In operation it accomplished all its architects had hoped, stabilizing the country's chaotic currency and helping retire its Revolutionary debt. But many Jeffersonians never accepted it, and when its twenty-year charter came up for renewal in 1811, with Congress in their control, they killed it.

    The government's ensuing flirtation with bankruptcy in the War of 1812 taught them their mistake. In 1816, Congress chartered a Second Bank, again for twenty years. Like its predecessor, it was a predominantly private entity serving public purposes. The four-to-one private-public ratio in ownership and directorate was retained, and the Bank's capital was advanced from $10 to $35 million, a huge sum in those days. Authorized to establish branches throughout the states, the Bank was the country's only financial institution of truly national reach. While competing with state-chartered banks for private business (and controlling their lending by collecting their notes for redemption), it would also be the federal government's banker, charged with brokering its loans and with receiving, storing, transporting, and disbursing federal funds. The Bank's notes were legal tender. In return for its “exclusive privileges and benefits,” including a congressional pledge to create no competing institution, the Bank was to pay the government a bonus of $1.5 million.

    Opening for business in the midst of a postwar boom, the Second Bank promptly discredited itself by speculation, stockjobbing, and, at some branches, outright fraud. But under the discreet management of its second president, Langdon Cheves, and his successor, Nicholas Biddle, it soon repaired its condition and reputation. By the end of the 1820s it had proved not only useful but, to many eyes, indispensable.

    But not to Andrew Jackson. Jackson came to the presidency with a deep sense of grievance against his enemies, real and imagined, in the existing political establishment and with a conviction that the government had fallen from Jeffersonian austerity into profligacy and corruption. This he was determined to reverse. The Bank was barely mentioned in Jackson's 1828 successful campaign against incumbent John Quincy Adams. But, after assuming office, Jackson learned of branch officers using the Bank as what one Jackson partisan called “an engine of political oppression” against his followers. Asked to explain, Bank president Biddle pronounced the charges “entirely groundless.” He affirmed the Bank's forbearance from politics-and its complete independence from executive control.

    Then, in November 1829, Biddle approached Jackson with a proposition. The Bank would assume the last of the dwindling national debt to enable its full discharge before the end of Jackson's term, an object that Biddle knew was dear to the president's heart. The quid for this quo was an early recharter for the Bank, which would send its stock soaring and provide a windfall for shareholders.

    Intended to placate Jackson by showing the Bank's friendship and usefulness, Biddle's offer had the opposite effect. To Jackson it was a backstairs deal smelling of privilege and corruption, something close to a bribe. Already suspicious of the Bank, from that moment he turned irrevocably against it. In his first annual message to Congress just a few weeks later, he startled everyone by raising the question of recharter and declaring his opposition. The Bank's constitutionality and expediency were “well questioned,” said Jackson, “and it must be admitted by all that it has failed in the great end of establishing a uniform and sound currency.” It was a statement at variance with facts. The Bank's notes, unlike those of many state-chartered banks, circulated everywhere at face value, their integrity unquestioned. They were as good as gold.

    To Jackson it did not matter. In the Bank, Jackson found a concrete focus for all his fears of aristocratic subversion—fears he shared with many citizens. “I was aware that the Bank question would be disapproved by all the sordid, & interested, who prised self interest more than the perpetuity of our liberty, & the blessings of a free republican government,” he confided shortly after the annual message. “This monied aristocracy” was everywhere at work, buying up voters and lawmakers and “silencing opposition, by its corrupting influence, & preparing for a renewal of its charter, which I viewed as the death blow to our liberty.”

    The recipient of this disclosure was none other than James Alexander Hamilton, son of the late Treasury secretary and himself a federal district attorney and Jackson confidant. Hamilton had helped craft the passage opposing recharter in the annual message. Now, at Jackson's prompting, he prepared a detailed critique, arraying objections to the Bank under two heads. The Bank was unconstitutional, because Congress had no power to charter corporations and withdraw them from the regulatory and taxing power of the states. (This was the Jeffersonian position, which the Supreme Court under Chief Justice John Marshall had rejected in the landmark case of McCulloch v. Maryland in 1819.) The Bank was also dangerous to liberty, because its concentrated power gave it a “fearful influence” over citizens' lives and an unchecked sway over government, inviting corruption and oppression.

    Jackson copied Hamilton's headings into his private memorandum book. Over the next two years, he recopied and reworked his bill of particulars, always under the same two heads: The Bank was unconstitutional, and it was dangerous to liberty. Meanwhile, the question of recharter simmered. In his 1830 and 1831 annual messages, Jackson reiterated his opposition to the Bank. He proposed in its stead a wholly government institution—in name a bank, but in effect an arm of the Treasury, without power to make loans, acquire property, or issue notes.

    In 1832, Congress acted, but not as Jackson recommended. A bill to extend the charter, slightly modified, of the existing Bank passed both houses by healthy majorities, though less than the two-thirds required to override a veto. To Jackson the bill's timing confirmed his strictures about the Bank's meddling in politics. Biddle had decided to press for recharter at the urging of Senator Henry Clay, Jackson's opponent in the presidential election only months away. In effect, they dared Jackson to veto.

    He did, in a message that became the rhetorical apex of his presidency. Treasury official Amos Kendall and other wordsmiths helped hone the Veto, but the governing ideas, drawn straight from Jackson's memoranda, were clearly his own. Following Jefferson, and contradicting the Supreme Court in McCulloch, Jackson denied the Bank's constitutionality and affirmed his right to judge that question independent of Congress or the courts. Ingeniously, and perversely, he targeted foreign stockholders for special censure. Much of the Bank's stock was, in fact, held abroad, especially in Britain. The charter screened management from foreign interference by barring noncitizens from serving as directors or voting their shares. They could invest, but not control. By an economist's rationale, a more benign vehicle for inviting capital into America's developing economy could hardly be contrived. Yet Jackson's arguments turned investment into subversion. Bank dividends, he complained, siphoned off American money overseas, and the immunity of foreign stockholders from domestic taxation would lure ever more stock abroad, concentrating the Bank's control within a narrowing sphere of domestic holders and inviting their subservience to foreign dictation. “If we must have a bank,” Jackson warned, “it should be purely American.”

    But the real heart of the Veto was its attack on exclusivity and favoritism. Sounding the loaded words “monopoly” and “privilege” over and over like a tocsin, Jackson laid out his core theme: The Bank's charter gave its stockholders a promise of pelf and power not accessible to other citizens. It made them “a privileged order, clothed both with great political power and enjoying immense pecuniary advantages from their connection with the Government.” Jackson's peroration conveyed both the Veto's essential meaning and its inescapable ambiguity:

    It is to be regretted that the rich and powerful too often bend the acts of government to their selfish purposes. Distinctions in society will always exist under every just government. Equality of talents, of education, or of wealth can not be produced by human institutions. In the full enjoyment of the gifts of Heaven and the fruits of superior industry, economy, and virtue, every man is equally entitled to protection by 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. There are no necessary evils in government. Its evils exist only in its abuses. If it would confine itself to equal protection, and as Heaven does its rains, shower its favors alike on the high and the low, the rich and the poor, it would be an unqualified blessing.

    In all the presidential messages—inaugurals, annuals, vetoes—that came before, there is nothing like this. Other presidents had sometimes warned Americans of foreign perils, or the dangers of factionalism and divisiveness among equally well-disposed and meritorious citizens. Andrew Jackson warned them against their government—and each other.

    And yet, what exactly does it mean? Jackson's frank branding of Americans by occupation and circumstance, his bold counterposing of rich and poor, and his solicitude for the working “farmers, mechanics, and laborers” against the “rich and powerful” seemed to many then and later a promulgation of class warfare—an anathema to some, a battle cry for others. Yet his acknowledgment of inevitable wealth disparities and his solution of “equal protection” and minimalist government echo more of market economics than of the welfare state. Some historians see Jackson in a straight line of working-class champions, foes of capitalist dominion, running from Thomas Jefferson through Franklin Roosevelt. Others see him as the spokesman of enterprise, assailing a confining, repressive politico-economic establishment to liberate the wealth-creating energies of “superior industry, economy, and virtue.” There is strong evidence on both sides.

    And still another question lurks. If Jackson pointedly stretched the ranks of people who mattered politically to include “farmers, mechanics, and laborers,” did that portend a further extension, beyond the white male electorate, to include women, slaves, and Indians? Without question, Jackson did not himself intend so. But words once spoken may have a life of their own. Whether one sees Jackson's invocation of “the humble members of society” as weighing on the side of inclusion or exclusion, erecting boundaries or breaking them down, has everything to do with how one judges his legacy and reputation.

    The veto held up in Congress, as all knew it would. In the ensuing campaign, both sides, remarkably, distributed the message as a campaign document-Jacksonians to show his patriotism and egalitarianism, foes to exhibit his ignorance and demagoguery. Jackson trounced Clay in the election. Afterwards, to defang the Bank, whose present charter was still in effect and whose political resourcefulness was by no means exhausted, Jackson withdrew the federal government's deposits and lodged them with various state-chartered banks. Biddle retaliated by curtailing loans, causing business distress. Intended to force a recharter, his action instead discredited the Bank by reinforcing Jackson's warnings of its irresponsible power. Jackson's removal of the deposits prompted his foes to coalesce under the name of Whigs, a term denoting opponents of royal prerogative. In 1834, a Whig Senate formally censured Jackson—an action which Jacksonians, now calling themselves Democrats, expunged from the Senate record as soon as they gained a majority. The defeated Bank accepted a charter from the Pennsylvania legislature and continued after 1836 as a state institution.

    The destruction of the Bank loosed American enterprise from its only central restraint. Gorged with federal deposits and with no one to control their note issues, state banks went on a lending spree that built up a speculative bubble and ended, just as Jackson left office in 1837, in a sickening crash. Jackson's culpability for the ensuing depression is still debated. Jackson himself came to oppose all chartered banks and banknotes, state as well as federal, and to favor a return to gold and silver “hard money”—a radical deflation which Whigs charged would throw progress back a century. In Jackson's farewell address on retiring from office, he elaborated the language of the Veto, condemning bank paper as an engine of oppression and warning of the insidious "money power" and of the growing control exerted by faceless corporations over ordinary citizens' lives.

    Jackson's Democratic successors Martin Van Buren and James K. Polk cemented his victory over the Bank. A new independent Treasury assumed the handling of government finances, realizing Jackson's aim of severing government from the business of banking. For a generation, that business remained semi-organized and essentially directionless. The exigencies of the Civil War forced the first steps toward nationalizing the banking system and the currency, a process completed with the creation of the Federal Reserve in 1913.

    The immediate circumstances that prompted Andrew Jackson's ringing expostulations have long since passed away. Whether his words carry an enduring message would be for later generations, including our own, to decide for themselves.

    Источник: https://www.neh.gov/humanities/2008/januaryfebruary/feature/king-andrew-and-the-bank

    Bank of the United States

    The American Revolutionary War resulted in the emergence of a new country faced with the task of establishing a fundamental basis for government embodying the principles of freedom for which the colonists had fought. The need for a sound financial system was most urgent, and this was remedied by the creation of the First Bank of the United States in 1791.

    ALEXANDER HAMILTON, first U.S. secretary of the treasury, devised the original plan for the bank. It was argued that the Constitution did not empower Congress to institute such a bank, and that the bank was partial to commercial interests as opposed to those of farmers. Congress, nonetheless, endorsed the passage of the bank's charter.

    The bank, located in Philadelphia, began with assets of $10 million, one-fifth of this money furnished by the federal government, the remainder provided by outside investors. Its affairs were administered by twenty-five directors. The bank's powers were limited to commercial enterprises, and loans were processed at six percent interest. The first bank performed well, but renewal of its charter in 1811 was thwarted by the argument against its constitutionality and by the opposition of agricultural workers. The First Bank of the United States closed for business in 1811 with a profit.

    The need for a second national bank became apparent in 1816, after the WAR OF 1812 catapulted the country into a financial crisis. However, the constitutionality of such a bank was still in dispute. In MCCULLOCH V. MARYLAND, the Supreme Court, in an opinion by Chief Justice JOHN MARSHALL, held that Congress possessed the authority to create a national bank and that the states lacked the power to tax it (17 U.S. [4 Wheat.] 316, 4 L. Ed. 579 [1819]).

    The new bank began on a grander scale, with capital amounting to $35 million. For the first three years it tottered on the verge of disaster under the mismanagement of its chief administrator, William Jones. When Jones left the bank in 1819, Langdon Cheeves assumed his duties, and the bank became sound. By the time Nicholas Biddle became president in 1823, the bank was functioning efficiently, and it remained a reliable system of finance for the next ten years.

    In 1832, Biddle requested renewal of the charter, which was due to expire in 1836. The bank again met opposition by those who believed it had become too powerful. President ANDREW JACKSON led the opposition, and the controversy became an issue in his presidential election campaign in 1832 against HENRY CLAY. Clay, an advocate of the bank, had encouraged Biddle to apply for the charter renewal earlier than necessary.

    The reelection of Andrew Jackson sounded the death knell for the Second Bank of the United States. He rejected the renewal of the charter and in 1833 deposited federal monies into selected state banks, termed "pet banks." The loss of federal funds greatly crippled the effectiveness of the bank, and it closed in 1836, the year its charter expired.

    FURTHER READINGS

    Brown, Marion A. 1998. The Second Bank of the United States and Ohio, 1803–1860: A Collision of Interests. Lewiston, N.Y.: Edwin Mellen.

    Cowen, David Jack. 2000. The Origins and Economic Impact of the First Bank of the United States, 1791-1797. New York: Garland.

    Additional topics

    Law Library - American Law and Legal InformationFree Legal Encyclopedia: Autopsy to Bill of Lading

    Источник: https://law.jrank.org/pages/4648/Bank-United-States.html

    Who owned the second national bank of the united states -

    Bank of the United States

    The American Revolutionary War resulted in the emergence of a new country faced with the task of establishing a fundamental basis for government embodying the principles of freedom for which the colonists had fought. The need for a sound financial system was most urgent, and this was remedied by the creation of the First Bank of the United States in 1791.

    ALEXANDER HAMILTON, first U.S. secretary of the treasury, devised the original plan for the bank. It was argued that the Constitution did not empower Congress to institute such a bank, and that the bank was partial to commercial interests as opposed to those of farmers. Congress, nonetheless, endorsed the passage of the bank's charter.

    The bank, located in Philadelphia, began with assets of $10 million, one-fifth of this money furnished by the federal government, the remainder provided by outside investors. Its affairs were administered by twenty-five directors. The bank's powers were limited to commercial enterprises, and loans were processed at six percent interest. The first bank performed well, but renewal of its charter in 1811 was thwarted by the argument against its constitutionality and by the opposition of agricultural workers. The First Bank of the United States closed for business in 1811 with a profit.

    The need for a second national bank became apparent in 1816, after the WAR OF 1812 catapulted the country into a financial crisis. However, the constitutionality of such a bank was still in dispute. In MCCULLOCH V. MARYLAND, the Supreme Court, in an opinion by Chief Justice JOHN MARSHALL, held that Congress possessed the authority to create a national bank and that the states lacked the power to tax it (17 U.S. [4 Wheat.] 316, 4 L. Ed. 579 [1819]).

    The new bank began on a grander scale, with capital amounting to $35 million. For the first three years it tottered on the verge of disaster under the mismanagement of its chief administrator, William Jones. When Jones left the bank in 1819, Langdon Cheeves assumed his duties, and the bank became sound. By the time Nicholas Biddle became president in 1823, the bank was functioning efficiently, and it remained a reliable system of finance for the next ten years.

    In 1832, Biddle requested renewal of the charter, which was due to expire in 1836. The bank again met opposition by those who believed it had become too powerful. President ANDREW JACKSON led the opposition, and the controversy became an issue in his presidential election campaign in 1832 against HENRY CLAY. Clay, an advocate of the bank, had encouraged Biddle to apply for the charter renewal earlier than necessary.

    The reelection of Andrew Jackson sounded the death knell for the Second Bank of the United States. He rejected the renewal of the charter and in 1833 deposited federal monies into selected state banks, termed "pet banks." The loss of federal funds greatly crippled the effectiveness of the bank, and it closed in 1836, the year its charter expired.

    FURTHER READINGS

    Brown, Marion A. 1998. The Second Bank of the United States and Ohio, 1803–1860: A Collision of Interests. Lewiston, N.Y.: Edwin Mellen.

    Cowen, David Jack. 2000. The Origins and Economic Impact of the First Bank of the United States, 1791-1797. New York: Garland.

    Additional topics

    Law Library - American Law and Legal InformationFree Legal Encyclopedia: Autopsy to Bill of Lading

    Источник: https://law.jrank.org/pages/4648/Bank-United-States.html

    THE NULLIFICATION CRISIS

    Learning Objectives

    By the end of this section, you will be able to:

    • Explain the factors that contributed to the Nullification Crisis
    • Discuss the origins and creation of the Whig Party

    The crisis over the Tariff of 1828 continued into the 1830s and highlighted one of the currents of democracy in the Age of Jackson: namely, that many southerners believed a democratic majority could be harmful to their interests. These southerners saw themselves as an embattled minority and claimed the right of states to nullify federal laws that appeared to threaten state sovereignty. Another undercurrent was the resentment and anger of the majority against symbols of elite privilege, especially powerful financial institutions like the Second Bank of the United States.

    The Tariff of 1828 had driven Vice President Calhoun to pen his “South Carolina Exposition and Protest,” in which he argued that if a national majority acted against the interest of a regional minority, then individual states could void—or nullify—federal law. By the early 1830s, the battle over the tariff took on new urgency as the price of cotton continued to fall. In 1818, cotton had been thirty-one cents per pound. By 1831, it had sunk to eight cents per pound. While production of cotton had soared during this time and this increase contributed to the decline in prices, many southerners blamed their economic problems squarely on the tariff for raising the prices they had to pay for imported goods while their own income shrank.

    Resentment of the tariff was linked directly to the issue of slavery, because the tariff demonstrated the use of federal power. Some southerners feared the federal government would next take additional action against the South, including the abolition of slavery. The theory of nullification, or the voiding of unwelcome federal laws, provided wealthy slaveholders, who were a minority in the United States, with an argument for resisting the national government if it acted contrary to their interests. James Hamilton, who served as governor of South Carolina in the early 1830s, denounced the “despotic majority that oppresses us.” Nullification also raised the specter of secession; aggrieved states at the mercy of an aggressive majority would be forced to leave the Union.

    On the issue of nullification, South Carolina stood alone. Other southern states backed away from what they saw as the extremism behind the idea. President Jackson did not make the repeal of the 1828 tariff a priority and denied the nullifiers’ arguments. He and others, including former President Madison, argued that Article 1, Section 8 of the Constitution gave Congress the power to “lay and collect taxes, duties, imposts, and excises.” Jackson pledged to protect the Union against those who would try to tear it apart over the tariff issue. “The union shall be preserved,” he declared in 1830.

    To deal with the crisis, Jackson advocated a reduction in tariff rates. The Tariff of 1832, passed in the summer, lowered the rates on imported goods, a move designed to calm southerners. It did not have the desired effect, however, and Calhoun’s nullifiers still claimed their right to override federal law. In November, South Carolina passed the Ordinance of Nullification, declaring the 1828 and 1832 tariffs null and void in the Palmetto State. Jackson responded, however, by declaring in the December 1832 Nullification Proclamation that a state did not have the power to void a federal law.

    A portrait of Robert Hayne is shown.

    The governor of South Carolina, Robert Hayne, elected in 1832, was a strong proponent of states’ rights and the theory of nullification.

    With the states and the federal government at an impasse, civil war seemed a real possibility. The next governor of South Carolina, Robert Hayne, called for a force of ten thousand volunteers to defend the state against any federal action. At the same time, South Carolinians who opposed the nullifiers told Jackson that eight thousand men stood ready to defend the Union. Congress passed the Force Bill of 1833, which gave the federal government the right to use federal troops to ensure compliance with federal law. The crisis—or at least the prospect of armed conflict in South Carolina—was defused by the Compromise Tariff of 1833, which reduced tariff rates considerably. Nullifiers in South Carolina accepted it, but in a move that demonstrated their inflexibility, they nullified the Force Bill.

    The Nullification Crisis illustrated the growing tensions in American democracy: an aggrieved minority of elite, wealthy slaveholders taking a stand against the will of a democratic majority; an emerging sectional divide between South and North over slavery; and a clash between those who believed in free trade and those who believed in protective tariffs to encourage the nation’s economic growth. These tensions would color the next three decades of politics in the United States.

    Congress established the Bank of the United States in 1791 as a key pillar of Alexander Hamilton’s financial program, but its twenty-year charter expired in 1811. Congress, swayed by the majority’s hostility to the bank as an institution catering to the wealthy elite, did not renew the charter at that time. In its place, Congress approved a new national bank—the Second Bank of the United States—in 1816. It too had a twenty-year charter, set to expire in 1836.

    The Second Bank of the United States was created to stabilize the banking system. More than two hundred banks existed in the United States in 1816, and almost all of them issued paper money. In other words, citizens faced a bewildering welter of paper money with no standard value. In fact, the problem of paper money had contributed significantly to the Panic of 1819.

    In the 1820s, the national bank moved into a magnificent new building in Philadelphia. However, despite Congress’s approval of the Second Bank of the United States, a great many people continued to view it as tool of the wealthy, an anti-democratic force. President Jackson was among them; he had faced economic crises of his own during his days speculating in land, an experience that had made him uneasy about paper money. To Jackson, hard currency—that is, gold or silver—was the far better alternative. The president also personally disliked the bank’s director, Nicholas Biddle.

    A large part of the allure of mass democracy for politicians was the opportunity to capture the anger and resentment of ordinary Americans against what they saw as the privileges of a few. One of the leading opponents of the bank was Thomas Hart Benton, a senator from Missouri, who declared that the bank served “to make the rich richer, and the poor poorer.” The self-important statements of Biddle, who claimed to have more power that President Jackson, helped fuel sentiments like Benton’s.

    In the reelection campaign of 1832, Jackson’s opponents in Congress, including Henry Clay, hoped to use their support of the bank to their advantage. In January 1832, they pushed for legislation that would re-charter it, even though its charter was not scheduled to expire until 1836. When the bill for re-chartering passed and came to President Jackson, he used his executive authority to veto the measure.

    The defeat of the Second Bank of the United States demonstrates Jackson’s ability to focus on the specific issues that aroused the democratic majority. Jackson understood people’s anger and distrust toward the bank, which stood as an emblem of special privilege and big government. He skillfully used that perception to his advantage, presenting the bank issue as a struggle of ordinary people against a rapacious elite class who cared nothing for the public and pursued only their own selfish ends. As Jackson portrayed it, his was a battle for small government and ordinary Americans. His stand against what bank opponents called the “monster bank” proved very popular, and the Democratic press lionized him for it. In the election of 1832, Jackson received nearly 53 percent of the popular vote against his opponent Henry Clay.

    A political cartoon depicts President Jackson using a cane marked “Veto” to battle a many-headed snake representing state banks. Battling alongside Martin Van Buren and Jack Downing, Jackson addresses the largest head, that of Nicholas Biddle, the director of the national bank: “Biddle thou Monster Avaunt!! . . .”

    In General Jackson Slaying the Many Headed Monster (1836), the artist, Henry R. Robinson, depicts President Jackson using a cane marked “Veto” to battle a many-headed snake representing state banks, which supported the national bank. Battling alongside Martin Van Buren and Jack Downing, Jackson addresses the largest head, that of Nicholas Biddle, the director of the national bank: “Biddle thou Monster Avaunt [go away]!! . . .”

    Jackson’s veto was only one part of the war on the “monster bank.” In 1833, the president removed the deposits from the national bank and placed them in state banks. Biddle, the bank’s director, retaliated by restricting loans to the state banks, resulting in a reduction of the money supply. The financial turmoil only increased when Jackson issued an executive order known as the Specie Circular, which required that western land sales be conducted using gold or silver only. Unfortunately, this policy proved a disaster when the Bank of England, the source of much of the hard currency borrowed by American businesses, dramatically cut back on loans to the United States. Without the flow of hard currency from England, American depositors drained the gold and silver from their own domestic banks, making hard currency scarce. Adding to the economic distress of the late 1830s, cotton prices plummeted, contributing to a financial crisis called the Panic of 1837. This economic panic would prove politically useful for Jackson’s opponents in the coming years and Van Buren, elected president in 1836, would pay the price for Jackson’s hard-currency preferences.

    Jackson’s veto of the bank and his Specie Circular helped galvanize opposition forces into a new political party, the Whigs, a faction that began to form in 1834. The name was significant; opponents of Jackson saw him as exercising tyrannical power, so they chose the name Whig after the eighteenth-century political party that resisted the monarchical power of King George III. One political cartoon dubbed the president “King Andrew the First” and displayed Jackson standing on the Constitution, which has been ripped to shreds.

    Political caricature (a) represents President Andrew Jackson as a despotic ruler in robes and a crown, holding a scepter in one hand and a veto in the other. The border of the drawing reads “King Andrew the First. Of Veto Memory. Born to Command. Had I Been Consulted.” Cartoon (b) shows Jackson overseeing a scene of uncontrollable chaos. He wields a broom as rats with human heads, representing some of his cabinet members, run around on the floor. A pedestal labeled “Altar of Reform” topples over, while Jackson falls from a collapsing chair labeled “The Hickory Chair coming to pieces at last.”

    This anonymous 1833 political caricature (a) represents President Andrew Jackson as a despotic ruler, holding a scepter in one hand and a veto in the other. Contrast the image of “King Andrew” with a political cartoon from 1831 (b) of Jackson overseeing a scene of uncontrollable chaos as he falls from a hickory chair “coming to pieces at last.”

    Whigs championed an active federal government committed to internal improvements, including a national bank. They made their first national appearance in the presidential election of 1836, a contest that pitted Jackson’s handpicked successor, Martin Van Buren, against a field of several Whig candidates. Indeed, the large field of Whig candidates indicated the new party’s lack of organization compared to the Democrats. This helped Van Buren, who carried the day in the Electoral College. As the effects of the Panic of 1837 continued to be felt for years afterward, the Whig press pinned the blame for the economic crisis on Van Buren and the Democrats.

    Explore a Library of Congress collection of 1830s political cartoons from the pages of Harper’s Weekly to learn more about how Andrew Jackson was viewed by the public in that era.

    Andrew Jackson’s election in 1832 signaled the rise of the Democratic Party and a new style of American politics. Jackson understood the views of the majority, and he skillfully used the popular will to his advantage. He adroitly navigated through the Nullification Crisis and made headlines with what his supporters viewed as his righteous war against the bastion of money, power, and entrenched insider interests, the Second Bank of the United States. His actions, however, stimulated opponents to fashion an opposition party, the Whigs.

    https://www.openassessments.org/assessments/974

    Review Questions

    1. Why did the Second Bank of the United States make such an inviting target for President Jackson?
    2. What were the philosophies and policies of the new Whig Party?

    Answers to Review Questions

    1. Many people saw the Second Bank of the United States, the “monster bank,” as a tool for the privileged few, not for the public good. To Jackson, who saw himself as a spokesman for the common people against a powerful minority elite, it represented the elites’ self-serving policies. Fighting to dismantle the bank increased his popularity among many American voters.
    2. Whigs opposed what they viewed as the tyrannical rule of Andrew Jackson. For this reason, they named themselves after the eighteenth-century British-American Whigs, who stood in opposition to King George. Whigs believed in an active federal government committed to internal improvements, including the establishment of a national bank.

    Glossary

    monster bank the term Democratic opponents used to denounce the Second Bank of the United States as an emblem of special privilege and big government

    nullification the theory, advocated in response to the Tariff of 1828, that states could void federal law at their discretion

    Whigs a political party that emerged in the early 1830s to oppose what members saw as President Andrew Jackson’s abuses of power

    Источник: https://courses.lumenlearning.com/suny-ushistory1os2xmaster/chapter/the-nullification-crisis-and-the-bank-war/

    The First Bank of the United States

    David Cowen

    Birth of the Bank

    In February 1791, the First Bank of the United States (1791-1811) received a unique national charter for twenty years. Alexander Hamilton’s brainchild, a semi-public national bank, was a crucial component in the building of the early U.S. economy. The Bank prospered for twenty years and performed traditional banking functions in exemplary fashion. With a main office in Philadelphia and eight branches nationwide to serve its customers, the Bank’s influence stretched along the entire Atlantic seaboard from Boston to Charleston and Savannah and westward along the Gulf Coast to New Orleans.

    Hamilton’s Broad Economic Plan

    When the Treasury Department was created by an Act of Congress in September 1789, President George Washington rewarded Hamilton with the post of Secretary. Hamilton quickly became the nation’s leading economic figure. When Congress asked Hamilton to submit an economic plan for the country, he was well prepared. The Secretary delivered several monumental state papers that forged the financial system for the nation: The Report on Public Credit (January 9, 1790), The Report on the Bank (December 13, 1790), The Establishment of a Mint (January, 1791), and The Report on Manufactures (December 5, 1791). Hamilton’s reports outlined the strategies that were part of a comprehensive Federalist economic and financial program. They included a sinking fund to extinguish the national debt and an excise tax to be collected on all distilled liquors.

    A key component of Hamilton’s economic plan for the country was the national Bank, an institution that would safeguard all pecuniary transactions. The Bank would not only stimulate the economy but also enhance the shaky credit of the government. The English financial system, particularly the Bank of England, provided an important model for Hamilton.

    The Bank’s Funding and Privileges

    The Report on the Bank explained that the national Bank would be chartered for twenty years, during which time the Congress would agree not to establish another national bank. The seed capital would be $10 million: $8 million from private sources, and $2 million from the government. The Bank would have the right to issue notes or currency up to $10 million. The government would also pledge that the notes of the Bank would be unique in that they were valid for payments to the United States. In short, the notes would be suitable for payment of taxes, a feature that would provide the Bank with a strong advantage over its competitors.

    The national Bank would confer many benefits on the government including a ready source of loans, a principal depository for federal monies that were transferable from city to city without charge, and a clearing agent for payments on the national debt. The government, as the largest stockholder, would share in the profits, but have no direct participation in the management.

    Debate over Establishment of the Bank

    The Bank bill was introduced into Congress on December 13, 1790, passed the Senate on January 20, 1791, the House on February 8, 1791, and therefore was forwarded to President Washington for his signature. It was unclear whether Washington would sign the bill into law. Powerful forces led by James Madison, Thomas Jefferson and the Attorney General, Edmund Randolph, argued to Washington that the Constitution had not granted the government the power to incorporate a Bank and therefore he should not sign the bill.

    Washington Accepts Hamilton’s View on Implied Powers

    Washington showed Hamilton the opposition’s argument and asked him to prepare a document explaining why he should sign the bill. The pressure was therefore on Hamilton to produce a flawless retort. His reply to Washington has been christened as the benchmark of a broad interpretation of the Constitution. Hamilton turned the tables on his opposition. If Thomas Jefferson, James Madison and Edmund Randolph argued that the power to incorporate was not available unless explicitly prescribed by the Constitution, then Alexander Hamilton retorted that a power was not unavailable unless so stated in the Constitution. Washington accepted Hamilton’s logic and signed the bill on February 25, 1791 to create the national Bank.

    Most important, however, was not the political infighting, but rather that Hamilton’s view holding that implied governmental powers were a viable part of the Constitution had carried the day. Hamilton had accomplished his aim: his detractors defeated; his economic approach adopted. In the ensuing years the Bank of the United States occupied center stage of the American financial system.

    Life of the Bank

    Initial Stock Offering

    On July 4, 1791, in the largest initial stock offering the country had ever witnessed, investors displayed confidence in the new funding system by scooping up $8 million in Bank of United States stock with unprecedented alacrity. Many notable members of the Congress were purchasers. Prices of receipts for the right to buy stock (i.e. not the stock itself), know as scripts, were driven from an initial offering price of $25 to the unsustainable height of over $300, and then tumbled to $150 within days, causing alarm in the markets. Secretary Hamilton calmed the storm much as a modern central banker would have by using public money to directly purchase government securities. However, the script bubble led many to blame the Bank for such rabid speculations.

    Bank Branches

    In the fall of 1791 the new stockholders met in Philadelphia to choose board members and decide on rules and regulations. While the Bank would be headquartered in Philadelphia, the stockholders clamored for and received branches, with four opening in Baltimore, Boston, Charleston, and New York in 1792, and eventually four more in Norfolk (1800), Washington (1802), Savannah (1802) and New Orleans (1805). The branches were of great concern to the existing state banks, which viewed the national Bank as a competitive threat.

    The Bank’s First President and Cashiers

    Thomas Willing accepted the title of president of the Bank and remained in that position until 1807. Willing possessed strong credentials as he had been president of the Bank of North America, Mayor of Philadelphia, the Secretary to the Congress of delegates at Albany, and a Judge of the Supreme court of Pennsylvania. As the day-to- day manager, the role of bank cashier was also important. At the head office in Philadelphia, John Kean was appointed the cashier; however, the most noteworthy was George Simpson, who held the post from 1795-1811.

    The Bank’s Roles in the Economy

    On December 12, 1791, the Bank opened for business in Philadelphia. The customers were merchants, politicians, manufacturers, landowners, and most importantly, the government of the United States. The Banks notes circulated countrywide and therefore infused a safe medium of paper money into the economy for business transactions. The sheer volume of deposits, loans, transfers and payments conducted by the Bank throughout the country made it far and away the single largest enterprise in the fledgling nation. Profits, however, were moderate during the operation of the Bank because its directors opted for stability over risk taking.

    The Bank and the “Panic of 1792”

    The Bank had an enormous impact on the economy within two months of opening its doors for business by flooding the market with its discounts (loans) and banknotes and then sharply reversing course and calling in many of the loans. Although the added liquidity initially helped push a rising securities market higher, the subsequent drain caused the very first U.S. securities market crash by forcing speculators to sell their stocks. The largest speculator caught in the financial crisis was William Duer. When he went insolvent in March 1792, the markets were temporarily paralyzed. This so-called “Panic of 1792” was short lived as again Secretary Hamilton (as in the previous year during the script bubble) injected funds by buying securities directly and on behalf of the sinking fund. Yet incidents like the Panic of 1792 and the script bubble would be remembered for many years by opponents of the Bank who were still in steadfast opposition to the Hamilton inspired institution.

    The Bank’s Business with the National Government

    The rest of Bank years were never as tumultuous as the events surrounding the Panic of 1792. Rather during its twenty-year lifespan the Bank performed many mundane pecuniary functions for its customers. The largest customer, the government, had many notable interactions with the Bank. One of the highlights of the relationship was the Bank’s efficient managing of the government’s fiscal affairs with respect to the Louisiana Purchase in 1803. In its earlier days, the Bank had lent heavily to its largest customer. By the end of 1795 the Bank had lent the government over $6 million, or 60% of its capital. At this point Willing and the other directors became alarmed and demanded the Government repay part of its loan. Since Government credit was still weak, the Treasury resorted to selling shares of its Bank stock. The sales began in 1796 and ended in 1802. With the proceeds from the sales of stock, the government repaid the Bank.

    Central Banking Functions of the Bank

    The Bank performed certain functions that today are associated with central banking. First, the Bank attempted to regulate state banks by curtailing those that had overissued their bank notes. Second, the Bank, in coordination with the Treasury department, discussed economic conditions and attempted to promote the safety of the entire credit system. Third, while the Philadelphia board gave each branch autonomy respecting lending to individuals, the Bank tried to coordinate aggregate policy changes, whether a loosening or tightening of lending credit, across the entire network of branches.

    Death of the Bank

    The anti-Bank forces had remained steadfast in their opposition to the Bank since its inception in 1791. By the time of the renewal debate in Congress, the Federalists were no longer in control. The Democrats now held the majority and were ready to act against the Federalist conceived institution. The opponents of the Bank included Henry Clay, William Branch Giles and Vice-President George Clinton. The Federalists supported renewal and were joined by two notable Democrats who crossed party lines, Treasury Secretary Albert Gallatin, who believed in the usefulness of the institution, and then President Madison, who had switched camps with respect to the Bank issue because he believed the matter had been settled by precedent.

    Complaints about the Bank

    The opponents charged that because three-fourths of the ownership of the stock was held by foreigners, that the Bank was under their direct influence. The charge was false, as foreigners were prohibited from electing directors. The opposition also charged that the Bank was concealing profits, operating in a mysterious fashion, unconstitutional, and simply a tool for loaning money to the Government.

    Rechartering Suffers a Narrow Defeat in Congress

    Although the charter did not expire until March 4, 1811, the renewal process commenced in the House on March 28, 1808 and in the Senate on April 20, 1808. The matter developed slowly and was referred to Secretary Gallatin for an opinion. On March 3, 1809 Gallatin communicated his beliefs to the House that the Bank charter should be renewed. The matter returned to the House on January 29, 1810 for Committee debate. On February 19th, the committee recommended in favor of renewing the charter and sent the bill to the floor of the House. Floor debate opened on April 13th, and the bill was stopped dead in its tracks. Stockholders resubmitted the bill on December 10th, and despite an intense three-month debate, the bill was killed. The vote in each section of the Congress was incredibly close. The bill was defeated in the House by a 65 to 64 margin on January 24, 1811, and in the Senate was deadlocked at 17 on February 20th before Vice-President Clinton, an enemy of both Madison and Gallatin, broke the tie with a negative vote. The Bank of the United States closed its doors on March 3, 1811.

    The Bank and the Debate over Central Government Power

    The reason the Bank lost its charter had precious little to do with banking. When charter renewal debate transpired in 1811 banking on the whole was flourishing. The Bank was born, lived, and eventually died a victim of politics. The Bank has been remembered not for what occurred during its operation — stimulating business, infusing safe paper money into the economy, supporting the credit of the country and national government, and with the Treasury department regulating the financial arena — but rather for what occurred during the stormy debates at its birth and death. The death of the Bank was another chapter in an ongoing debate between the early leaders of the country who were split between those who preferred a weak central government on the one hand and those who desired a strong central government on the other.

    The chartering of a national economic institution, a Bank of the United States, marks the take-off of the Federalist financial revolution that began several years earlier with the signing of the Constitution. The political die of the United States was cast with that document, and by 1792 the economic base of Federalism was in place, first with the Federal funding of national and state war debts, and second, with a sound national Bank in place to give coherence to the developing U.S. financial system.

    Further Reading:

    Bowling, Kenneth R. “The Bank Bill, the Capital City and President Washington.” Capital Studies 1, no. 1 (1972).

    Cowen, David J. “The First Bank of the United States and the Securities Market Crash of 1792.” Journal of Economic History 60, no. 4 (2000).

    Cowen, David J. _The Origins and Economic Impact of the First Bank of the United States, 1791-1797_. New York: Garland Publishing, 2000.

    Dewey, Davis Rich and John Thom Holdsworth. The First and Second Banks of the United States. Washington, D.C.: Government Printing Office, 1910.

    Hammond, Bray. Banks and Politics in America: From the Revolution to the Civil War. Princeton: Princeton University Press, 1957.

    Klubes, Benjamin. “The First Federal Congress and the First National Bank: A Case Study in Constitutional History.” Journal of the Early American Republic10 (1990).

    McDonald, Forrest. “The Constitution and Hamiltonian Capitalism.” In How Capitalistic is the Constitution? Edited by Robert A. Goldwin and William A. Schambra. New York: American Enterprise Institute for Public Policy Research, 1982.

    Perkins, Edwin. American Public Finance and Financial Services 1700-1815 Columbus: Ohio State University Press, 1994.

    Redlich, Fritz. The Molding of American Banking. New York: Johnson Reprint Corporation, 1968.

    St. Clair Clarke, M. and D. A. Hall. Legislative and Documentary History of the Bank of United States. Washington, D.C.: Gales and Seaton, 1832. Reprint. New York: Augustus M. Kelley Publishers, 1967.

    Sylla, Richard. “U.S. Securities Markets and the Banking System, 1790-1840.” Federal Reserve Bank of St. Louis Review 80, no. 3 (1998).

    Syrett, Harold, editor. The Papers of Alexander Hamilton. New York: Columbia University Press, 1961-87.

    Wettereau, James O. “Branches of the First Bank of the United States.” Journal of Economic History 2 (1942).

    Wettereau, James O. “New Light on the First Bank of the United States.” Pennsylvania Magazine of History and Biography 61 (1937).

    Wettereau, James O. Statistical Records of the First Bank of the United States. New York: Garland Publishing, 1985.

    Wettereau, James O. “The Oldest Bank Building in the United States.” Transactions of the American Philosophical Society 43, part 1, 1953.

    Wright, Robert. Origins of Commercial Banking in America, 1750-1800. Lanham, MD: Rowman & Littlefield, 2001.

    Wright, Robert. The Wealth of Nations Rediscovered: Integration and Expansion of the U.S. Financial Sector, 1780-1850. New York: Cambridge University Press, 2002.

    Wright, Robert. “Thomas Willing (1731-1821): Philadelphia Financier and Forgotten Founding Father.” Pennsylvania History, Fall, 1996.

    Citation: Cowen, David. “First Bank of the United States”. EH.Net Encyclopedia, edited by Robert Whaples. March 16, 2008. URL http://eh.net/encyclopedia/the-first-bank-of-the-united-states/

    Источник: https://eh.net/encyclopedia/the-first-bank-of-the-united-states/

    On Wednesday, the Treasury Department announced that a portrait of Harriet Tubman will grace future $20 bills starting in 2030. It's a fitting, and long overdue tribute to a genuine hero of American history who helped end the gravest evil this nation ever perpetrated.

    But the department also announced that the man currently on the bill — perhaps America's worst president and the only one guilty of perpetrating a mass act of ethnic cleansing — will still be on there: Andrew Jackson. This is unacceptable. Jackson was a disaster of a human being on every possible level, and should not be commemorated positively by any branch of American government. And as a slave owner, putting him on the other side of Tubman's bill is particularly disgraceful.

    After generations of pro-Jackson historians left out Jackson's role in American Indian removal — the forced, bloody transfer of tens of thousands of Native Americans from the South — a recent reevaluation has rightfully put that crime at the core of his legacy.

    But Jackson is even worse than his horrifyingly brutal record with regard to Native Americans indicates. Indian removal was not just a crime against humanity, it was a crime against humanity intended to abet another crime against humanity: By clearing the Cherokee from the American South, Jackson hoped to open up more land for cultivation by slave plantations. He owned hundreds of slaves, and in 1835 worked with his postmaster general to censor anti-slavery mailings from northern abolitionists. The historian Daniel Walker Howe writes that Jackson, "expressed his loathing for the abolitionists vehemently, both in public and in private."

    Jackson's small-government fetishism and crank monetary policy views stunted the attempts of better leaders like John Quincy Adams to invest in American infrastructure, and led to the Panic of 1837, a financial crisis that touched off a recession lasting seven years. If that weren't enough, he was a war criminal who suspended habeas corpus and executed prisoners for minor infractions during his time as a general in the War of 1812.

    Andrew Jackson deserves a museum chronicling his crimes and dedicated to his victims, not commemoration on American currency.

    Andrew Jackson, ethnic cleanser

    Robert Lindneux

    Any evaluation of Jackson must begin with American Indian removal, his policy of coercing Native American tribes into leaving their historical territory and embarking on dangerous and often deadly relocations.

    Jackson's support for Native American removal began at least a decade before his presidency. From 1815 to 1820, he served as a federal treaty commissioner dealing with Southern Indians, and "persuaded the tribes, by fair means or foul, to sell to the United States a major portion of their lands in the Southeast, including a fifth of Georgia, half of Mississippi, and most of the land area of Alabama," the anthropologist and historian Anthony Wallace writes in The Long, Bitter Trail: Andrew Jackson and the Indians. "Andrew Jackson had a personal financial interest in some of the lands whose purchase he arranged."

    But Jackson didn't only want removal for personal enrichment. He also wanted it as a way to further white supremacy and slavery, and to shore up his Southern support. "The hunger for Indian land was most intense in the Southern slave-owning states, and Jackson as a politician generally reflected Southern economic interests," Wallace writes. "Jacksonian Democracy … was about the extension of white supremacy across the North American continent," Howe writes in What Hath God Wrought, his history of the 1815 to 1848 period. "By his policy of Indian Removal, Jackson confirmed his support in the cotton states outside South Carolina and fixed the character of his political party."

    Jackson wasn't alone; the entire Democratic party was in thrall to the slave power at this point, and receptive to policies like Native American removal that freed up land for slavery. "The exaltation of the common man (meaning, on the frontier, the settler and speculator hungry for Indian land), the sense of America as the redeemer nation destined for continental expansion, the open acceptance of racism as a justification not only for the enslavement of blacks but also for the expulsion of Native Americans — these were popular, politically powerful themes that would have driven any Democratic President to press for a policy of Indian removal," Wallace writes.

    According to Howe, Indian removal was Jackson's top legislative priority upon taking office in 1829. He quotes Jackson's vice president and successor, Martin Van Buren, as declaring, "There was no measure, in the whole course of [Jackson's] administration, of which he was more exclusively the author than this."

    While the law Jackson pushed through Congress in 1830, the Indian Removal Act, theoretically only authorized Jackson to negotiate removal with the tribes, Jackson had no interest in making deals. "To him, the practice of dealing with Indian tribes through treaties was 'an absurdity,'" Howe writes; instead he believed "the government should simply impose its will on them."

    Jackson's stance triggered huge opposition. Evangelical Christians opposed removal as a betrayal of Native Americans, and an impediment to missionary work. Congressional opponents like Sen. Theodore Frelinghuysen assailed it on moral grounds. The proposal only barely passed the House, 102 to 97, with Jackson supporters in the North defecting to the opposition. "The vote had a pronounced sectional aspect," Howe writes. "The slave states voted 61 to 15 for Removal; the free states opposed it, 41 to 82. Without the three-fifths clause jacking up the power of the slaveholding interest, Indian Removal would not have passed."

    Jackson set about implementing the measure as soon as he was given the authority. "In principle, emigration was to be voluntary," Wallace writes. "But the actual policy of the administration was to encourage removal by all possible means, fair or foul."

    To weaken tribal chiefs, Jackson's administration stopped paying them annuities to spend on behalf of their tribes. Some tribes were given tiny individual grants (each Cherokee got 45 cents a year, and then only once they got to the West), others nothing at all. Meanwhile, Southern state governments set about destroying tribal governments, banning tribal assemblies, making it illegal to pass tribal laws, denying Native Americans the right to vote or sue or testify in court or even dig gold on their own land (a provision passed only after gold was discovered).

    Jackson's administration stood idly by and let it happen, knowing that the more Southerners harassed Native Americans, the easier it would be to coerce them into removal treaties. "It is abundantly clear that Jackson and his administration were determined to permit the extension of state sovereignty because it would result in the harassment of Indians, powerless to resist, by speculators and intruders hungry for Indian land," Wallace concludes.

    Nikater

    The first post-Act treaty, the Treaty of Dancing Rabbit Creek on September 27, 1830, securing Choctaw removal, was achieved "against the wishes of the majority of the tribe, by excluding the Indians' white counselors from the negotiations and then bribing selected tribal leaders," Howe writes.

    Once Jackson's administration secured its fraudulent treaties, it set about the actual process of removal. From the very beginning, the process was deadly. About four thousand Choctaws died of cholera, and hundreds more died from hunger, exposure, and accidents, per Wallace. A steamboat carrying 611 Creeks up the Mississippi collided with another boat and was cut in two, killing 311 Indian passengers. Anywhere from 20 to 25 percent of Eastern Cherokees died either being rounded up or transported West.

    The problem was not one of faulty implementation; Jackson's own actions made the process of removal bloodier and crueler. "During the Removal process the president personally intervened frequently, always on behalf of haste, sometimes on behalf of the economy, but never on behalf of humanity, honesty, or careful planning," Howe writes. "Army officers like General Wool and Colonel Zachary Taylor who attempted to carry out Removal as humanely as possible or to protect acknowledged Indian rights against white intruders learned to their cost that Jackson's administration would not back them up."

    The actual death toll of removal is uncertain. The toll for Cherokees alone is typically given as 4,000 to 8,000, per Amy Sturgis's book, The Trail of Tears and Indian Removal. But thousands more Creek, Choctaw, Seminole, and other Indians died in the process as well, direct victims of the signature policy of the Jackson administration.

    Andrew Jackson, laissez-faire zealot

    Edward W. Clay

    It's genuinely bizarre that some modern liberals, like Sean Wilentz and Arthur Schlesinger, have claimed Jackson for liberalism, ostensibly for his embrace of "populism" (read: rejection of northern anti-slavery white men in favor of Southern pro-slavery white men). In reality, Jackson's economic policy views were almost cartoonishly right wing.

    Context is important here. Jackson was succeeding John Quincy Adams, a truly great, scandalously underrated president who was an enthusiastic supporter of government intervention to build necessary infrastructure ("internal improvements") and fuel economic development. Adams believed that "taxing and being taxed were essential to responsible self-government; the country required a modern, national, and regulated banking system … and the federal government had an important role to play regarding the 'general welfare' in the creation of educational, scientific, and artistic institutions, such as the Smithsonian Museum, the national parks, the service academies, and land grant universities," according to recent biographer Fred Kaplan.

    Jackson believed none of that. He believed government was a threat to be contained, that national banks like the one originated by Alexander Hamilton were abominations and threats to freedom, and that the federal government's role in building infrastructure should be limited. He vetoed a bill to run a road in Kentucky, arguing that federal funding of such infrastructure projects was unconstitutional.

    "While he criticized the Maysville Road for being insufficiently national, Jackson did not wish to be misunderstood as favoring federal funding for a more truly national transportation system," Howe writes. "Instead he warned that expenditures on internal improvements might jeopardize his goal of retiring the national debt — or, alternatively, require heavier taxes." The veto, Howe continues, ultimately led to "the doom of any comprehensive national transportation program."

    Jackson was a strict adherent to the gold standard, a position as silly in the 1830s as it remains today. This directly informed his war on the Second National Bank of the United States. "That the modern twenty-dollar Federal Reserve Note should bear Andrew Jackson's portrait is richly ironic," Howe writes. "Not only did the Old Hero disapprove of paper money, he deliberately destroyed the national banking system of his day."

    Absecon 59

    Contrary to Jacksonian propaganda, the Second National Bank worked quite well. It produced reliable paper currency of consistent value across the country. But Jackson, as an avowed opponent of paper money and of national economic institutions like the Bank, vetoed the renewal of its charter in 1832. His rhetoric against the bank drew upon populist anti-bank sentiment, but its real crime in Jacksonian eyes was propping up a powerful government. "The advocates of hard money did not condemn banks as agents of capitalism," Howe writes. "They condemned them as recipients of government favor."

    Jackson's war on the bank, combined with his intent on paying off the national debt, would lead to one of the worst depressions in American history. Once the government started running a surplus, Jackson had nowhere to put the money, without the bank around. So he divided it among the states. "The state banks went a little crazy," Planet Money's Robert Smith explains. "They were printing massive amounts of money. The land bubble was out of control." Before long you had the Panic of 1837, and years of recession.

    Not all economic historians accept this story of the Panic. Others think Jackson screwed up in other ways that caused it. Vanderbilt's Peter Rousseau, for instance, blames two actions Jackson took in 1836 — requiring public lands be purchased with coins rather than paper money, and "supplemental" transfers of money between banks by the Treasury that summer — for causing the crash. This interpretation, Rousseau writes, "calls into question claims that the nation’s seventh President was an innocent bystander and casts serious doubt on his financial wisdom."

    Andrew Jackson, war criminal

    Edward Percy Moran

    Leaving aside whether Jackson's acts of ethnic cleansing against Native Americans technically count as war crimes or just ordinary crimes against humanity, his career as a general included numerous actions which would absolutely warrant criminal action today.

    Before and after Jackson's career-making victory in the Battle of New Orleans in 1815 — won after the war was technically over — he ruled the city as a tyrant, as Caleb Crain notes in the New Yorker:

    He censored a newspaper, came close to executing two deserters, and jailed a state congressman, a judge, and a district attorney. He defied a writ of habeas corpus, the legal privilege recognized by the Constitution which allows someone being detained to insist that a judge look into his case. Jackson was fined for his actions, and, for the rest of his life, was shadowed by the charge that he had behaved tyrannically. In retirement, after two terms as President, he called on his reserves of political clout to get the fine refunded, and Congress ended up debating the legality of his actions in New Orleans for nearly two years.

    On December 16, 1814, Jackson declared martial law, provoking an immediate backlash on civil liberties grounds. "Despite the constitutional irregularity, Jackson imposed a nine o’clock curfew and required that everyone entering and exiting the city be vetted by the military," Crain explains. He arrested a state legislator who had resisted calls to suspend habeas corpus, and then ordered the man guarding the legislator to arrest anyone trying to serve a write of habeas to free him.

    Jackson also had a penchant for executing people — soldiers, enemies, whatever — for little or no reason. In 1818, he famously ordered two British subjects, Robert Ambrister and Alexander George Arbuthnot, executed during the First Seminole War in Spanish Florida. He believed that both were helping the Seminoles wage war against the US. This was most likely not true.

    "Arbuthnot … claimed he had only sought the Natives' welfare and had actually tried to dissuade them from warmaking; this was probably the truth," Howe writes. "Ambrister had indeed been helping the Seminoles prepare for war — but against the Spanish, whose rule in Florida he hoped to overthrow."

    Arbuthnot was sentenced to death after a trial, and Ambrister to flogging and hard labor. Jackson increased Ambrister's sentence to death and carried both sentences out the next day "so there would be no chance of an appeal," Howe recounts. "A former justice of the Tennessee state supreme court, he must have known the convictions would not stand up to appellate scrutiny."

    He also killed some of his own men for petty infractions. While in charge of New Orleans, "six militiamen who had tried to leave before their term of service expired were executed in Mobile by his orders, a draconian action at a time when everybody but Jackson considered the war over."

    Andrew Jackson was an executioner, a slaver, an ethnic cleanser, and an economic illiterate. He deserves no place on our currency, and nothing but contempt from modern America.

    In This Stream

    Harriet Tubman to join Andrew Jackson on $20 bill

    View all 11 stories Источник: https://www.vox.com/2016/4/20/11469514/andrew-jackson-indian-removal

    THE DESTRUCTION OF THE SECOND BANK OF THE UNITED STATES RATIONALE AND EFFECTS

    Gareth Davis
    Senior Sophister _____________________________

    I have always been afraid of banks Andrew Jackson

    Few greater enormities are chargeable to politicians than the destruction of the bank of the United States R Caterall

    The motivation behind this paper is to analyse from the perspective of a historian of economic thought and policy the rationale and implications of the destruction of the Second bank of the United States. The account is valuable as an account of the way in which economic thought, political ideology and vested interests can combine to shape policy. The debate also raised issues which are relevant to our modern economic system. The case for state supervision over the banking system is considered by almost all economists as to be so self-evident. But this has not always been the case and the debate over the banks future is a pointed reminder of this fact. Some of the arguments furnished against the bank may challenge some of the complacently held axioms of modern thought.

    Other issues of this period relevant today include the benefits or otherwise of inter-regional monetary union. (Frass (1974) has shown how the BUS acted to standardise local regional exchange rates and nominal price levels and the effect which this had on peripheral areas.) Likewise the conflict laid bare some differing, and still widely held, preconceptions regarding both the optimal and the legitimate magnitude of government intervention. This account may not offer exact policy prescriptions for modern economists, since the economy, society and prevailing values have changed so much, but they can offer fresh perspectives to modern thinkers.

    The Banks Destruction In Historical Context

    The second Bank of the United States (BUS) was founded in 1816 on the basis of a twenty year charter. This charter empowered the bank to act exclusively as the federal governments fiscal agent, holding its deposits, making inter-state transfers of federal funds and dealing with any payments or receipts with which the federal authorities would be involved. Like all other chartered banks, the BUS also had the right to issue bank notes on the basis of a fractional reserve system and to carry out the usual commercial banking activities. In return for these privileges certain conduct of a central bank-like nature was expected of this institution: in the words of the charter the bank will conciliate and lead the state banks in all that is necessary for the restoration of credit, public and private.[45] Despite being 80% privately owned, its operations were subject to supervision by Congress and the President. Pessen gives details which show the banks size and the nature of the activities immediately prior to the assault on it in 1830. It was large relative to other banks, responsible for 15-20% of bank lending in the USA and accounting for 40% of the bank notes then in circulation. It was cautious in its note issuing function, holding a specie reserve of 50% of the value of its notes whilst the norm for the remainder of the banking system was 10-25%.

    The 1820s and 1830s in the United States were a time of extremely rapid, but also volatile economic growth. New natural resources were being exploited as the frontier expanded and the new techniques of the industrial revolution were being introduced. The old money supply of gold and silver specie was stretched and found inadequate for the liquidity needs of the growing economy. (Temin indicates that in 1830 the total value of the gold and silver specie in circulation in the economy amounted to only l/30th to l/50th the value of GNP.) The emergence of a number of banks operating fractional reserve note-issuing systems was the result. The notes were underwritten by varying proportions of specie and although not legal tender were widely accepted in payment for debts, although usually discounted below their par value.

    The quality of bank notes varied. Fraud was commonplace by unscrupulous bankers who could persuade or bribe the local state legislature to grant them the charter necessary to commence a banking business. For instance Pessen notes that in 1828 the 17 banks chartered in Mississippi circulated notes with a face value of $6 million from a specie base of $303,000. It was in such an environment that the Bank of the United States operated. One of its functions was to discipline and support state banks. As the federal governments fiscal agent it received bank notes in payment for taxes. The BUS would then present these to the issuing state bank in order to redeem them for the gold necessary to pay the taxes it had collected to the federal treasury. In this way state banks were forced to keep a higher stock of specie on reserve than would otherwise be necessary.[46] Conversely the U.S. could also act as a lender of last resort to banks in trouble by not presenting these notes for redemption but rather allowing these banks to run into debt to it.

    The political environment of that period was marked by the ascendancy of an ideology termed Jacksonism. Focused around Andrew Jackson, elected president in 1828, this ideology was an uncomfortable, perhaps inconsistent, mixture of agrarianism, nationalism, populism and libertarianism. However the one element which unified this group was a deep hostility to a privileged east-coast based aristocracy. The Philadelphia-based bank of the United States with its obviously patrician president, Nicholas Biddle, could hardly prove to be popular with this new regime.

    The Jackson administrations assault on the bank began in 1830. In 1832 Jackson used his presidential veto to thwart the Banks supporters attempt to use Congress to enact a new charter for the Bank. Jackson then used his second presidential election victory later that year as a mandate to order the withdrawal of all federal funds from the bank in 1833. When the Banks original charter expired in 1836 it succeeded in being re-chartered, albeit now only on as a much reduced state bank under the auspices of the Penneslvyania state legislature as the United States bank of Penneslvyania. In 1841 it went bankrupt as a result of speculative dabbling in the cotton market. I shall now consider the motives which inspired the attack on this institution.

    The Anatomy Of The Anti-Bank Forces: Vested interests

    The role played by vested interests in motivating the anti-bank forces has been given particular emphasis by both Caterall (1902) and Hammond (1947). They point to the substantial personal gains which would accrue to key members of Jacksons administration should the bank be destroyed. Hammond ascribes an important role to the New York financial community which at the time was competing with Philadelphia to be the countrys premier commercial centre. Martin Van Buren, Jacksons 2nd vice-president and eventual successor was particularly identified with the Wall Street element in this Wall Street (New York) versus Chestnut Street (Philadelphia) battle.

    Both Pessen and Hammond add an additional group to this coalition; the state banks, who disliked being constrained by the BUSs policy of redeeming their bank notes. This enforced a much higher reserve ratio and hence restricted their lending activities. Hammond also adds to this element the class of nouveau riche entrepreneurs and speculators, a class to which, he maintained, Jackson and many of his associates belonged, and which also disliked the restriction of credit. However, I would argue that the importance of this proposed group in effecting the banks destruction has been over-emphasised by pro-BUS writers such as Hammond and Caterall.

    Firstly, the actual existence of such a coalition is questionable. Pessen gives evidence that the New York financial community were divided over the question of the wisdom of the attack on the Bank. Also he shows that at least some of the state banks grudgingly acknowledged one banks role in disciplining the banking system and its activities as a lender of last resort. The homogeneity of Hammonds speculative entrepreneurial class is one for which he offers merely anecdotal evidence and no quantitative evidence. Secondly, to concentrate upon vested interests is to ignore the other influences on political action. Ideologies and economic logic also play a role. Hammond, the primary exponent of the self-interest theory, fails to explain satisfactorily why the measure was extremely popular.[47] Only a tiny proportion of the population would have gained directly and immediately from the destruction of the institution. We must examine the political philosophy and economic logic behind the opposition of the bank. These arguments had much public support which was vital to Jacksons destruction of the bank.



    The Political Ideologies

    The ideology which underlay the struggle is a highly variegated, and perhaps ultimately inconsistent one. It was a blend of moral judgements, economic argument and populism to attack both the political legitimacy of the bank and its economic rationale.

    One branch of the school consisted of states rights advocates, who strongly opposed the substantial power wielded by the federally-chartered bank.[48] Many considered the chartering of the bank an unconstitutional extension of the power of the federal congress. Their position was summarised by Jackson who described the bank as a threat to democratic institutions by the federal authorities. With the destruction of the bank, the power of intervention in the banking and monetary system was left in the hands of individual states until the civil war.

    Another stream within the anti-bank framework were the libertarian thinkers. They postulated the illegitimacy (on moral grounds) of any government intervention in the economy or in society beyond a bare minimum. This period was the golden age of Laissez Faire. This group was related to and associated with the Free Banking school which challenged on economic grounds the necessity of government intervention in the monetary system.

    The Free Bankers

    This group were in favour of a paper currency based on a fractional reserve system. They argued that the banks regulatory function was unnecessary and inefficient because in a completely unregulated financial system free competition would ensure that the public receives whatever security against fraud it so desires.[49] They argued that what was wrong with the banking system was that free competition was obstructed by the monopolistic privileges granted to the BUS in its charter. It is important to place these views in the context of the dominant economic paradigm of the day. Today as I have outlined, the importance of the states role in regulating the money supply is considered self-evident by most economists. (Hayek, Glasner and Greenfield and Yeager being some noteworthy exceptions to this consensus.)

    This was not the case in 1832. We have Schumpeters (1954) comment that in the first part of the 19th century most economists believed in the merit of a privately provided and competitively supplied currency. Glasner shows how Smith differed from Hume in advocating state non-intervention in the supply of money. Smith argued that a convertible paper money could not be issued to excess by privately owned banks in a competitive banking environment. Today we see money as a natural public good owing to the externalities caused by variations in its quantity. So the free bankers views were consistent with economic logic of the day.


    The Hard Money School

    The anti-monopolistic and anti-regulatory free banking school were joined by unlikely bed fellows from the opposite end of the spectrum of economic ideas, agrarian and proletarian mistrust of banks in general and paper money in particular. This mistrust may have been justified in the context of the widespread level of fraud within the system, relative to today. Many saw paper money as a tool used by employers and rich financiers to trick working men and farmers out of what was due to them.

    This groups most prominent exponent was Andrew Jackson himself. In his farewell speech he refers to the paper money system and its natural associates monopoly and exclusive privilege. The value of paper, he states, is liable to great and sudden fluctuations and cannot be relied upon to keep the medium of exchange uniform in amount. Jacksons views on this topic may be due to an incident early in his career when he was almost bankrupted after accepting bank notes which turned out to be worthless in return for a debt.

    In contrast to the free-banking school this group could be termed conservative, wishing to destroy the system of fractional reserve paper money by removing the kingpin of the banking system which produced it; the Bank of the United States. Even within this group there was a severe division between those advocating gold specie, those advocating a silver specie, and those advocating a bi-metallic medium of exchange.

    The Battle Of Ideas And Its Outcome

    Thus, was the coalition against the bank of the United States. Both advocates of the free banking (or soft money) school and proponents of a return to a specie economy (or hard money) saw the destruction of the bank as very important, but for both of them, its destruction was a means to divergent and conflicting ends. Against this coalition supporters of the bank such as its president Nicholas Biddle and politicians such as Henry Clay and John Quincy Adams were placed in extreme difficulty. Both anti-federalism and laissez-faire were in the ascendancy at the time.[50] On the economic front the bank was being assaulted from both the left (free-banking advocates) and from the right (anti-paper advocates).

    Advocates for the bank did emphasise its moderating role in regulating, informally, the fractional reserve system and hence its publicly-interested central-bank type nature. Such arguments were almost certain to fall on barren ground. Only two major institutions were available for comparison. The first one was John Laws bank from early 18th century France, and the chaotic and inflationary experience of this scheme was hardly one to inspire confidence. The other example was the Bank of England which was at the time subject to scathing attacks during the bullionist controversy, (Hammond (1947) and Glastner (1989)).


    Evaluating The Arguments

    The final verdict on the validity or otherwise of the differing arguments must wait until the consequences of the banks destruction have been fully considered. However the following points can be made at this stage. Firstly, the arguments of those opposed to the banks existence on ethical grounds, namely the classic libertarians and the states rights advocates, cannot be assailed on empirical grounds given that they are normative judgements.

    Secondly, those who attack the bank on the grounds that it was a predatory monopolist within the banking system have had their arguments somewhat refuted by the evidence garnered by Highfield, OHara and Wood, who carried out a systematic econometric survey with regards to the banks decision variables during its existence and found no evidence that its dealings with its competitor banks or with its markets were marked by any of the predatory practices associated with monopolists. However perhaps the anti-bank forces could argue that it was the banks potential as a monopolist rather than its actual behaviour which justified the withdrawal of its charter. The methodology of such evidence and the quality of the data upon which they are based may also be attacked but such studies must be considered none the less.

    The Implications Of The Banks Destruction For Output And Employment

    Firstly, over the period 1790 to 1860 the general movement in the price level was downwards (with some fluctuations). Output followed a similar fluctuating and variable pattern over the same period, albeit with a strong upward trend. The pattern over the 1830s and 1840s diverges somewhat from this . The period 1830 until end of 1833 was marked by a slight though pronounceable upward trend in prices. 1833 marked the withdrawal of federal deposits from the bank and in early 1834 Nicholas Biddle, trying to convince the government of the need for the bank, massively contracted credit. The result was a short sharp fall in prices and output in what was termed Biddles contraction. However, by late 1834 prices, output and the money supply were strongly rising as boom-like conditions prevailed once again. In 1837 this upward movement was again sharply reversed. It was not until the early 1840s that output began to expand significantly once again. Over this period of the 1840s the money supply also began to grow once again, although more moderately such that the extra output seemed sufficient enough to soak it up, and so the price level resumed its long term downward path.

    There are two different interpretations of these events. The first one, expounded by Hammond and Caterall, blames Jacksons actions in destroying the bank for the inflationary boom and resultant recession over the period 1834 to 1837. In their view, dismantling the BUS took a restraint off the fractional reserve system and led, post-1834, to an increase in the money supply which caused the boom. Of course, this was checked in 1837 by a downturn, a downturn made worse by the fact that at this stage the banking system, due to its low reserve ratio, was now very unstable and experienced significant levels of bank collapse. On the face of it the hypothesis has some factual support. Over the period 1833 to 1837 the amount of bank notes in circulation rose from a value of $10.2 million to $149.2 million.

    However data from Temin and Engerman show that the banks aggregated reserve ratio did not fall over 1834-1837. It had remained steady from the mid-1820s. Thus, the BUSs demise had not caused the money supply to rise by allowing reserve ratios to fall.

    An alternative hypothesis was advanced by Temin. He argued that monetary expansion did not come from a falling reserve ratio but rather from an inflow of silver into the United States in the 1830s. He backs his argument up by showing how this inflow in the 1830s would have resulted from increased silver production in Mexico, from an increase in British investment in America and from the fall in US imports of opium from China, which stopped the outflow of silver. So it is possible to dismiss the relationship between the Banks demise and the panic of 1837 as a coincidence.

    The Regional Dimension: Monetary Union For The USA

    Frass (1974) notes how the bank acted under a congressional mandate to establish and maintain a uniform national currency by policing the state banks to ensure that convertibility was maintained at a high level. Using data from Ohio, Frass argues that this involved restricting the lending of banks along the western frontier in particular. This, as well as having adverse effects in itself in a capital-scarce region, depressed the general price level in this area relative to the price of unsettled land (which was set arbitrarily by Congress), and discouraged movement to settlement in these areas.

    Frass study does not extend beyond 1834 but we can assume that the removal of the bank led to the cessation of these harmful activities. However, we must note that a trade off would have had to be made. A higher level of financial instability may have been the price paid for freer availability of capital and cheaper land in these peripheral regions.

    The Long Term Impact On Americas Monetary And Financial Structure

    Ultimately the Banks destruction marked a pyhrric victory for the hard money forces. Van Buren, Jacksons successor, was no supporter of a purely metallic currency. Return to a purely metallic currency would have met severe opposition from their former allies, the free banking and libertarian schools (the latter felt that the state had no ethical right to regulate any commercial transactions between consenting individuals including paper currency). The changing economic and social structure would have made it unfeasible to return to a purely specie exchange economy. Cameron posits that a medium of exchange based on bank liabilities and a fractional reserve system and/or government taxable capacity is essential to an industrialising economy. Abolishing paper money could be considered, the modern economic equivalent of attempting to dis-invent the wheel. The true victors then in the struggle were soft money or free banking advocates. Instead of destroying the fractional reserve system the hard money men had removed a force which acted to restrain it.

    Similarly, after 1837 the reserve ratio of the banking system was much higher than it had been during the period of the BUSs existence. This reflected public mistrust of banks in the wake of the panic of 1837 when many banks failed. This lack of confidence in the paper money system, could have been ameliorated by a central-bank type institution. Hence one result of the demise of this bank may in fact have been a higher reserve ratio, less availability of credit and a lower money supply during the 1840s and 1850s. The evolution of the American banking system was also probably affected. The BUS was one of the first and last banks chartered by the federal authorities for commercial banking activities nation-wide. Had it survived it is unlikely that Americas retail banking market today would have been so localised and fragmented in a way which is extremely uncharacteristic of other large industrialised economics. After the banks destruction, banking returned to being a decentralised business in which institutions were chartered by the individual states.

    The banks defeat also had profound implications for the role of the state in America in managing monetary policy. Large scale Federal intervention in the supply of money did not take place again until the American Civil War. However Jacksons victory had imbued US political culture with dislike of centralised institutions with large influence over the banking system. The United States did not develop a central banking agency until 1913. This institution was highly decentralised consisting of twelve autonomous components one in each of Americas largest cities. One result of this de-centralisation may have been the incoherent response of the monetary authorities to the 1929 crash and the resultant run on the banking system, possibly one cause of the 1930s great depression. Hence one interpretation might see the destruction of the bank of the United States as leading to the worlds most severe economic recession a century later.

    Conclusion: The Case For Further Study

    This topic offers an area where rich analytic rewards may be reaped by further studies which employ modern economic techniques. The episode marks a crucially formative event during the nascent period of the monetary system of what is currently the worlds dominant economy. In spite of these facts this subject has been much neglected, the attention given to the English Bullionist controversy. In over twenty-five years not one book has been published dealing specifically with this topic. This paper, I hope, contributes to correcting this deficiency.

    Bibliography:

    Cameron, R (1967)Banking In The Early Stages Of Industrialisation

    Dorfman, A (1957) The Economic Mind In American Civilisation

    Caterall, R (1902)The 2nd Bank Of The United States

    Engerman, P (1970) Economic Consequences Of The 2nd Bank Of The United States in the Journal of Political Economy, 78(4)

    Frass, A (1974) The Second Bank Of The United States: An Instrument For Inter-regional Monetary Union in the Journal Of Economic History, 34(2)

    Glasner, C (1989)Free Banking And Monetary Reform

    Greenfield & Yeager (1978) A Laissez-Fairez Approach To Monetary Stability in the Journal Of Money, Credit And Banking

    Hammond, B (1947) Banks And Politics In America From The Revolution To The Civil War

    Hayek, F (1967) The Denationalisation Of Money

    Highfield, OHara & Wood(1991) Public Ends, Private Means: Central Banking And The Profit Motive 1823-1832 in The Journal Of Monetary Economics, 28(2)

    Pessen, E (1985) Jacksonian America: Society, Personality And Politics

    Schumpeter, J (1954) A History Of Economic Analysis

    Temin, P (1968) The Economic Consequences Of The Bank War in the Journal Of Political Economy, 76(2)

    White, L (1986) William Leggett: Jacksonian Columnist As Classical Liberal Political Economist in the History Of Political Economy, 18(2)

    Источник: https://www.tcd.ie/Economics/assets/pdf/SER/1994/Gareth_Davis.html

    1816, Constitutional Issues Surrounding The Second Bank Of The U. S.

     

    The debate over the First and Second Banks of the United States expose the difficulties of constitutional interpretation. Additionally, the debate surrounding the Second Bank of the United States is a study of how principles can give way to political expediency. The following essay will provide a brief overview the Banks, discuss the constitutional debate surrounding the Banks, and then discuss the Second Bank as it relates to the presidential election of 1816 in which James Monroe succeeded James Madison by defeating Rufus King.

    After the ratification of the Constitution, the American political power structure quickly formed two parties at the national level: the Democratic-Republicans and the Federalists. Thomas Jefferson and James Madison aligned with the first and Alexander Hamilton and John Adams with the second. George Washington remained unaffiliated with either party but followed many of the Federalist recommendations like the establishment of a national bank.

    The debate over the national bank divided along partisan lines with the Federalists arguing the implied powers of the Constitution granted congress the authority to establish a bank. This power, they argued, was derived from the necessary and proper clause: “Congress shall have the power…To make all Laws which shall be necessary and proper for carrying into Execution the foregoing Powers, and all other Powers vested by this Constitution in the Government of the United States, or in any Department or Officer thereof.” (Article 1, Section 8, Clause 18). Alexander Hamilton and George Washington, two delegates at the Constitutional Convention, found the authority to establish a national bank implied within this Article. As Secretary of the Treasury in the Washington administration, Hamilton pushed for a national bank that would, through various measures, create liquidity for the national government and private enterprise. Congress granted a twenty-year charter expiring in 1811 for the establishment of a national bank. The bank was a private entity that functioned as a de facto central bank.

    Thomas Jefferson, then Secretary of State, and James Madison, then serving in the House of Representatives, opposed the new bank for fear it would benefit the industrial North and the investor class at the expense of the South and the population in general. They also argued that a strict construction of the Constitution gave no such power to the government but only to the states and the people as stated in the 10th Amendment. Nowhere in the Constitution was such a power explicitly given to the national government.

    Madison and Hamilton were both at the Constitutional Convention in Philadelphia and both had a major role in its drafting and ratification, particularly when they collaborated on The Federalist under the name Publius, and yet the two could not agree about what the Constitution actually said on this question. This exposes the difficulty of constitutional interpretation for if the people who had a hand in writing the document could not agree upon what it meant then there is very little hope that those who come along over 200 years later will be able to create a definitive interpretation of a document as it relates to matters non-existent at the time of the founding. This does not mean those of us engaged in political disputes today should simply give up on understanding the Constitution, but we should give pause when confronted with the notion that the Constitution gives a clear and definitive answer to all questions. No greater minds have existed in our country than in James Madison and Alexander Hamilton and yet they could not agree on what the Constitution said. Thomas Jefferson was equally brilliant but was in France when the Constitutional Convention convened. But Madison and Hamilton were both in the room and influential in seeing it drafted and ratified. Their disagreement should humble those of us who propose to know what the Constitution “really” says for if those two cannot agree it is doubtful any of us truly knows.

    What the debate over the Second Bank of the United States exposes is that adherence to constitutional principle often times gives way to, or is shaped by, one’s political disposition or political pressures. Perhaps the debate between Hamilton and Madison, and their reading of the Constitution was ideological. But if that is the case then Madison seems to switch allegiances on the question when he threw his support behind the bank as President.

    After the War of 1812 the issue of the bank arose again as the initial charter had expired in 1811 and now the country faced war debts. Madison, now President, vetoed the first bill asking for a second bank in 1814. But in 1816 he signed the bill into law and the bank’s charter was renewed for another twenty years. Madison abandoned his earlier opposition to the bank. To do this he had to abandon his earlier constitutionally based arguments opposing the bank. Madison sacrificed principle for political expediency.

    One of the primary planks within the Federalist Party platform was the need for a national bank. When James Madison, a Democratic-Republican, changed his position on the bank, and on protective tariffs which he and Jefferson had initially opposed as well, Rufus King lost his chance to become president as the Democratic-Republicans, and their candidate James Monroe, had coopted their policy positions.

    Monroe won in a landslide. The victory would not have been possible had Madison not abandoned his principled constitutional position for a political expedient position. Had the bank charter not have been granted by Madison the Federalists would have used that as a campaign issue as most Americans supported a bank thus potentially changing the outcome of the election.

    Madison was one of the best political theorists our country has produced, but he was also a political tactician who knew what was necessary for his party to retain power. This is similar to Thomas Jefferson who, despite great opposition to extensive executive authority and adherence to a strict reading of the Constitution, abandoned his principles when he purchased the Louisiana territory from France in 1803. For the Louisiana Purchase James Madison (“Father of the Constitution”) was Secretary of State and gave his full-throated support to Jefferson. Both men, in this instance and others, were willing to abandon a strict construction of the Constitution for policies that would benefit the country and their party.

    It may be a hard pill to swallow but our Founders were first and foremost politicians. Had they been anything else the United States would have remained only an idea. They had clear-eyed principles that guided them but they were willing to abandon those principles when circumstances demanded. This is not to diminish their accomplishments or question their integrity. Rather, this is an attempt to recognize that all men, no matter how much we admire them, are not perfect. As Madison wrote, “if all men were angels no government would be necessary.” The Founders were wise enough to know that a constitution was necessary to contain the appetites of men but no document would be sufficient. It was, and is, the responsibility of an enlightened and energetic citizenry to make sure politicians act within the bounds of the constitution and our Constitution provides avenues for citizens to exert their will if they choose.

    This study of the election of 1816 within the context of the debate surrounding the second national bank has two relevant lessons for those of us focused on the current political debate. First, interpreting the Constitution is no easy matter and very likely not as clear as most of us would like to think. Two men who were at the Convention, Hamilton and Madison, among others, could not agree on what the document said. When considering this fact we should all recognize that those of us living today lack the ability to know precisely what the document meant to the founders. Second, we should not treat politicians as the embodiment of principles. All men are prone to error and capable of abandoning principles when the proper conditions arise. As citizens we must remain actively engaged at all times, and not just during election season, to hold our elected officials accountable.

    Kyle Scott, PhD, serves on the Board of Trustees for the Lone Star College System and teaches political science at the University of Houston and is an affiliated scholar with the Baylor College of Medicine’s Center for Health Policy and Medical Ethics. He is also affiliated with the North Carolina History Project and is a contributor to a forthcoming compilation of essays on North Carolina. Kyle has authored dozens of articles and four books, the most recent of which is The Federalist Papers: A Reader’s Guide. He can be reached at [email protected] or on Twitter: @scottkylea.

    /6 Comments/by Janine Turner and Cathy GillespieИсточник: https://constitutingamerica.org/1816-constitutional-issues-surrounding-the-second-bank-of-the-u-s-guest-essayist-professor-kyle-scott/

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