Andrew Jackson & The Bank War

 

The Federal government had to borrow huge amounts of money to finance the war of 1812. Since the First Bank of United States expired in 1811, all the federal government borrowings came from the State Banks, which had the currency printing powers without the backing of gold or silver. High levels of inflation followed the creation of new state banks and their unregulated prinking of money. In an effort to control the state banks and to create a uniform currency, Congress decided to form the second Bank of the United States in 1816. Rather than limiting expansion, the policies of the new bank only helped the state banks to grow further. This resulted in an economic boom, but in 1819 a market panic would sweep the nation.

Andrew Jackson came to the office as the seventh President in 1829. He was a democrat and had his share of republican political enemies in the Congress. Jackson believed that the Second Bank of the United States was destructive because it had too much power on the country's economy and it served the privileged elites at the expense of the poor. The bank was created to stabilize the economy but ended up doing just the opposite. Though the outward rationale for Jackson's opposition to the bank was noble, the fact that the bank financed both directly and indirectly Jackson's political opponent was a strong driving force. 

         

Although Congress had until 1836 to renew the charter of the bank (to coincide with 1832 Presidential election), Congress decided to renew the charter four years early. Republican Candidate Henry Clay, a congressman and an ardent supporter of the bank, was Jackson’s opponent in the presidential election. Nicholas Biddle, the bank President, used various tactics to support the republican candidate. Biddle misused his position for political gains, diverted bank's sources for the advantage of friends, and ran political ads against Andrew Jackson. The bank directly contributed $ 100,000 to Clay’s political campaign and indirectly controlled a mass of voters that favored him. For Jackson, the bank was a real threat both politically and constitutionally.

 

With the strong support of Clay, Congress passed a bill for the re-chartering of the bank before the 1832 elections. Jackson came to a political dilemma - Opposing the bank could cost him re-election, while supporting the bank remained a threat. Against general belief, Jackson took a bold stand to veto the bill. He justified his action for the following reasons: the bank amassed the financial power to a single institution, the bank's policies only allowed the rich to get richer, the bank exposed the US government to control by foreign powers and special interests, the bank had too much control on the members of Congress, and lastly the bank favored the northeastern states where most finance was located

Republicans tried to use Jackson's position on the bank against him in the election. However; they underestimated the public resentment and printed the copies of Jackson's veto. Distributed it all over the country in order to turn the public opinion against "King Andrew", but the public was so supportive of Jackson that he won the election in November. With the enhanced power by winning the second term, Jackson ordered to withdraw all federal funds from the bank. He had to fire two Treasury Secretaries before Jackson found a third one who carried out his directive. Without the federal funds, the lending power of the bank weakened and it finaly died in 1836 at the end of its charter.

Works Cited

Coffey, Walter. "Andrew Jackson's Bank War." http://www.suite101.com/ http://www.suite101.com/content/andrew-jacksons-bank-war-a202709

(accessed November 13, 2010)

Happy J.