The Bank Wars

Andrew Jackson v. The National Bank

 Do Now Answer this
question on a
word
 What is the function and purpose of a bank? document!
 History of the Bank
 National Bank with branches around the country
 Provide a safe place to deposit tax money and other revenue
 Could issue bonds (allows the country to generate/raise
money) and enable payments to be made across the country
 Make loans to new industry
 Enable foreign investment
i.e., other countries can lend us money

 Could print banknotes

(CURRENCY) (paper money)
Explain the purpose of a bank on your word document!
 History Cont.,
 Democratic-Republicans like Thomas
Jefferson opposed the bank
 Strict Constitutionalists did not believe in
doing anything that the Constitution did not
EXPLICITLY allow
 1811 Madison allowed banks charter
(contract) to expire
 The First National Bank goes out of business
Cont.,
However, then the WAR OF 1812 breaks-out
 w/out the bank the country struggled to
sell war bonds (to make money to use in
the war) and struggled to pay military
suppliers and soldiers in an orderly
fashion
Answer the following on
 President James Madison had concluded your word document:
that a national bank might not be such a
bad thing after all! 1. Why were people like
Jefferson and Madison
 Congress in 1816 chartered (gave a opposed to the
contract to) another Bank of the United National bank?
States, Second Bank of the United 2. Why did Madison
States. eventually change his
opinion about the
bank?
 Cont.,
 Then the Panic of 1819 occurs which is basically an
economic depression
 The Second Bank did not play a major role in causing the
crisis, but many people at the time blamed the Bank.
 During the Panic, the Bank called-in (collected payments)
many loans to protect its own stability, and the financial
hardship it caused led to further resentment of the Bank.
 Many people did not have the money at the time to pay their
loans… Which meant that they would be foreclosed upon, or
many other hardships could befall them.
ENEMY of the BANK
 Andrew Jackson was a president born and raised in the
American West
 He believed that the bank represented the “embodiment of
elite privilege and power”
 Basically, he thought the bank only existed to serve the
interests of the NORTHERN ELITE
 He wanted banks to be run by the states instead of the
national government, believing they would be better able to
meet the needs of the people in their independent regions
Answer the following on your word document:
1. Why did Jackson dislike the National Bank? Explain.
 1823 & Nicholas Biddle
 Aristocratic Philadelphian, president of the Second Bank of
the United States.
 Recognized as an excellent and responsible leader for what
was, by far, the nation’s most important financial institution.
 Became active in politics to protect the Bank during
Jackson’s presidency.
 Allies with Henry Clay and Daniel Webster, nationalists
who strongly supported the national bank and believed the
federal government should be very active in economic
matters.
 Biddle cont.,
 Biddle applied for a renewal of the Bank’s charter/contract 4 years early
 Since Jackson was running for re-election as president, they reasoned, he
might not want to make the Bank an issue and thus would sign the
renewal into law
 On the other hand, if Jackson chose to veto it, he would lose support in
key states such as Pennsylvania, where the Bank had its headquarters.
 This would effectively put Jackson in a position where he was stuck
between a rock and a hard place (neither decision he could make about
the bank would ensure him re-election)
 That would benefit his opponent, also running for president, who
happened to be Henry Clay.
 Answer the following on
your word document:
1. Why did Nicholas Biddle and Henry Clay conspire to renew
the contract for the National Bank 4 years early?

2. What did Henry Clay hope to gain from this deal with
Biddle?
 Miscalculated Action
 To Jackson, it sounded like a threat to his presidency and his
integrity.
 The Bank said that Jackson was an undemocratic “hydra
monster” (many headed beast) that was out of control.
 As the people’s president, Jackson believed he had the
responsibility to destroy the Bank. After Congress passed a
bill renewing the charter of the Bank, Jackson exercised his
power as president and vetoed it!
 The Bank Destroyed
 Jackson’s veto of the bank meant that the bank would no
longer exist
 State banks were created to replace the Second National Bank
 Nicholas Biddle was out of a job and Henry Clay lost his bid
for the presidency
 Jackson’s veto of the bank won him immeasurable support
from his constituents and he was re-elected in a sweeping
victory against Clay
 Jackson would be the president for the next four years and
Henry Clay’s ambition to achieve the presidency was never
going to come to fruition (was never going to happen)
 Answer the following on
your word document:
1. Why did Jackson veto the bank’s re-charter?

2. What happened to the Second National Bank as a result of

Jackson’s veto?

3. What happens to Nicholas Biddle and Henry Clay?

4. What happens to Jackson after the veto of the bank?

5. What will be created to replace the Second National Bank?

Why did Jackson prefer this? Explain.