Noted Holt: "Instead, they predicted accurately, Clay would repel Antimason and Calhounites and galvanize even disillusioned Democrats behind Jackson." He left Congress, attended to his personal financial affairs and joined the BUSII as a lawyer for its operations in Ohio and Kentucky. He will then have also less influence; for it may be loosely asserted, at least as a general rule, that the President will have less popularity in his second than in his first term. Historian Sean Wilentz wrote: "Infuriated by the Bank's continued contraction of credit, business leaders from New York and Boston demanded over the spring and summer of 1834 that Biddle relent lest they repudiate him publicly and bring fully to light how his policies were harming the nation. He could not get a fair chance. Historian Wilentz wrote: "As early as July, he warned the Bank's New York branch of his plans to `crush the Kitchen Cabinet.' In the Senate, the Clay-Calhoun opposition axis, forged the year before, was in the majority. In fact at least $7.3 million in specie was used in U.S. land purchases between July of 1836 and September of 1837, with $1.8 million used in Indiana, $1.4 million in Michigan, and $1.1 million in Illinois." Economic historian John Steele Gordon wrote that "hardly had Jackson entered the White House than his visceral hatred of banks, especially large, powerful ones, manifested itself in his first message to Congress as president. Historian Edward Pessen wrote: "Most of the nation's money was issued by banks either operated by state governments or, more typically, whose state governments had granted charters to the corporations which ran them. By the spring of 1837 as Van Buren was succeeding Jackson in the presidency, a deep depression was taking hold as credit contracted. The Panic of 1837 was a financial crisis in the United States that touched off a major depression, which lasted until the mid-1840s. Historian Daniel Walker Howe wrote: "The system in which the federal government deposited its funds in `pet' state banks had originated in haste when Jackson removed the deposits from the BUS. He is mistaken." Historian Major L. Wilson said: "After the presidential election of 1836 many Democratic spokesmen joined the Whigs in opposition to the `Specie Circular.' "The New York banks were prohibited from issuing these notes by a law passed in 1835 by the legislature...With the suspension of specie payments, these notes flowed in from the surrounding states until their amount below the denomination of five dollars, was estimated, by 1838, at from three to four million dollars." He was thick-skinned, elastic, and tough. In early March 1834, Biddle wrote that Jackson "by removing the public revenues has relieved the Bank from all responsibility for the currency." Scholar Richard H. Timberlake, Jr. argued, however, that "the Specie Circular was dramatic but innocuous." This contradicted the hard money policy because it called for cheaper money and expansion of credit so that those with little or no savings could take up enough acreage for a self-sufficient farm. Its almost goes without saying that the loans were never repaid. Congress passed a law in 1836 that required the federal surplus to be distributed to the states in four payments. 85. This objective was soon supplanted by the view that the Bank, `as at present organized,' in the words Andrew Jackson often repeated, should be brought to an end. Washington Globe editor Francis P. Blair, Jr., thundered: "Let the cry be heard across the land. Land speculation ran rampant leading up to 1839, with cotton prices rising as well. It was only a question of whether Jackson would more likely approve of a recharter before or after his reelection." 138 Faced with conflicting opinions even in his own cabinet, Van Buren decided not to consult them. She found in the States the premier market for her goods and for her capital and the premier source of cotton for her mills. Recharter of BUS was strongly backed by Treasury Secretary Albert Gallatin, weakly backed by President James Madison, opposed by Vice President George Clinton, opposed by the House of Representatives, and strongly opposed by former President Thomas Jefferson. It was the culmination of a long train of events that extended back over a number of years. 137 Wilson observed: "With regard to its economic effects, two arguments for retaining the circular were pressed; these began to uncover a profound ambiguity in the Jacksonian heritage. Most of those who went west to farm were already farmers, or sons of farmers seeking their own homesteads, or, increasingly, emigrants from Europe." The panic had both domestic and foreign origins. 107 Historian James Schouler noted: By 1834 there were some five hundred or more local banks in the United States whose aggregate circulation was several times greater than that of the monster bank which Jackson's pack was running down; and, as clear observers noted, the coexistence of half a thousand distinct currencies in this country was the great defect of its financial system. Martin Van Buren and the Panic of 1837. That a strong party, headed by Mr. V. Buren, some Virginia politicians and the Richmond Enquirer, intend, if practicable to make the Bank question the basis of the next Presidential election, I have, I believe, heretofore informed you. State banks, too, took due precautions to qualify themselves for receiving the public funds. During the “panic,” also referred to as “hard times,” hundreds of banks collapsed, currency lost value as prices soared, and farmers, merchants, and business owners across the country suffered severe financial losses or ruin. Paul Finkelman and Donald R. Kennon, editors. The drain left the banks vulnerable to specie calls from a faltering British economy that had become determined to settle its international balances." Historian Daniel Walker Howe wrote: "The Deposit-Distribution Act of 1836 compounded the banks' difficulties by forcing them to pay out substantial sums to the states. I stated to the above gentleman that, in my opinion, unless you had a satisfactory assurance that your application at the next Session would be successful, you had better not make it. Jackson would bluster but finally yield to the will of Congress....Biddle was motivated solely by what he deemed best for the institution over which he ruled like a petty prince. 144. If he followed the counsels of moderation he would only confuse the campaign by inviting the voters to discuss an issue as yet unresolved. 32. Historian H. W. Brands wrote: "When the federal accounts were tallied on January 1, 1835, the United States government was no longer in debt. As businesses cut back production or failed altogether, workers lost their jobs. 38. By contrast, the opposition pictured the president as pursuing a radical experiment inherently hostile to all banks." 160. She wrote: "All incorporated banking was unacceptable government interference in the economy, and Jackson saw the purpose of the national bank, once stripped of public fiscal agency, as nothing more than banking. Personal and political reasons, the emotional and the practical, as usual guided his hand." As for alternatives to Biddle's bank, Taney contended that state banks, `judiciously selected and arranged,' would be able to perform the fiscal tasks of the federal government and supply `a general currency as wholesome and stable as that of the United States Bank.' They resurrected the old arguments against the bank's constitutionality. Historian William Graham Sumner wrote in the mid-1830s that the anti-Jacksonians “took up cudgels in behalf of banks and bank paper, as if there would be no currency if bank paper were withdrawn, and as if there would be no credit if there were no banks of issue. Van Buren disliked the reputation of a wire-puller and intriguer, but he had well earned his title, the "little magician," by the dexterity with which he had manoeuvred himself across the slippery arena of Washington politics and up to the first place. I have seen many evidences of it. By identifying the Bank with Clay and the nation's economic elite, Andrew Jackson reenforced his own populist credentials. Woodrow Wilson wrote: "The folly of staking the fortunes of the Bank against the popularity of General Jackson at the polls was quickly enough demonstrated. It said that control of the institution rested in the hands of wealthy. Every quarter of the Union, every State, every district having party constituents to please, must run with its barrel, its pitcher, or its cup to share the Pactolian stream which spouted from the national Treasury. The ball was now in the president's court. Former President Jackson, meanwhile, still blamed the crisis on "gamblers in stocks and bonds" which he suggested would soon be bankrupt. 122 Rousseau wrote that "these measures reduced the specie reserves of the deposit banks in New York City from $7.2 million on 1 September 1836 to $2.8 million by 1 March 1837 and a mere $1.5 million by 1 May. Pro-bank papers gnashed their type. The Bank War was a political struggle that developed over the issue of rechartering the Second Bank of the United States (B.U.S.) In trying to correct the problems of speculation, Jackson and his allies managed to make things worse and set the stage for a major economic contraction. Jackson liked a fight and he didn't particularly care with whom he had to fight. Van Buren and his advisors had worked through the summer of 1837 to come up with an economically appropriate and politically palatable response to the crisis. 126, While stifling speculation on one hand, Jackson had promoted it with the another. The Bank Panic of 1907 occurred during a six-week stretch, starting in October 1907. Profits, prices, and wages went down while unemployment went up. 125" Economically, "the `Specie Circular' defined a very `unnatural' process by deflecting specie from the eastern centers of trade toward which it would naturally flow," wrote historian Major L. Wilson. The hopes of the bank's supporters to turn the veto in a winning campaign issue in that fall's presidential campaign failed dismally. Instead of extending credit, he curtained it drastically, hoping to induce a recession that would force Americans, and Jackson, to beg for mercy." Biddle voted for Jackson in both elections." 105 The political tide was running against Clay and Biddle. This was not a matter of mere vanity, by any means. Albert Gallatin, a former secretary of the Treasury under President Jefferson and now a leading New York banker, estimated that around $100 million of the English credit ultimately went into state projects of internal improvement." Indeed, it is difficult to imagine Hamilton remaining aloof from national bank matters; likewise, hands-on Republican administrators such as Gallatin and Dallas did not sit in their offices passively awaiting accounting reports from the bank. He also, refused to resign, so Jackson dismissed him and put in Taney, who had helped draft the cabinet paper, as acting Treasury secretary. He believed, as Mr. Calhoun did, that palliatives would only prolong the unavoidable misery of readjustment and the return to sound methods of business, the substitution of real for fictitious values and of production for speculation, and that, bad as they were, things would right themselves more quickly and more wholesomely without the intervention of legislation than by means of it. Jackson's goals ran counter to economic and political reality. He headed the treasury until he left the cabinet in 1841, upon which he was reelected to the Senate. Democrats asked voters to choose between the forces of entrenched aristocracy and simple government, between a foreign dictatorship and a native American hero, between corruption and innocence - between the Bank and Andrew Jackson." Such revenue was further limited by a transatlantic war. 59 Historian Robert V. Remini wrote that the veto "message claimed the Bank was unconstitutional, despite John Marshall's decision in McCulloch v. Maryland. When combined with loose state banking practices and a credit contraction, a major economic crisis was brewing when Martin Van Buren took office as president in March 1837. He used the notes as collateral to buy supplies for his trading post, but when Allison went bankrupt, Jackson was left holding the bag." He called it a `national curse' in his first run for the presidency in 1824. Rather, to Jackson, the bank constituted a political threat that must be dealt with." Americans found in her their premier market for their cotton and their securities. 106, Economic historian Charles Sellers wrote that "the Bank's rash irresponsibility became too egregious for even its supporters. 31, "Jackson [had] announced his intention to strike at the BUS in his first and second messages to Congress, although he muted himself at the continued insistence of those advisers, above all Van Buren, who were worried about alienating too many important supporters too soon," noted historian Sean Wilentz.. "In the first message, Jackson made clear that he strongly doubted whether the bank's existing charter was constitutional; he also believed the bank had failed to establish a sound currency. Wood engraving relating to the financial setback experienced on the U.S. frontier following the Panic of 1837. As a result, the recession double dipped in 1839 and the national economy did not recover until 1843. Surely they realized that the President had assumed unconstitutional powers that would ultimately destroy the Union." Virtually instructed to give the necessary order, Duane, to Jackson's astonishment, flatly refused. "But the measure itself was unconscionably clumsy and taken too late to do anything but hurt." Political scientist Stephen F. Knott wrote the "vision of Biddle as a corrupt manipulator permeated Jacksonian rhetoric; Jackson himself described one of Biddle's actions as a desperate attempt to preserve the Bank by purposely loaning out millions to avoid paying the national debt and to `gain power...and force the government...to grant it a new charter.'" Fiscal and monetary policies in the United States and Great Britain, the global movements of gold and silver, a collapsing land bubble, and falling cotton prices were all to blame. Historian William Graham Sumner wrote: "There was a kind of poetic justice in the fact that Van Buren had to bear the weight of all the consequences of Jackson's acts which Van Buren had allowed to be committed, because he would not hazard his standing in Jackson's favor by resisting them. Senator Clay delivered an impassioned speech on the Senate floor in which he addressed Vice President Martin Van Buren, then presiding over the Senate. It marked the close of one epoch in our industrial history, and the beginning of a new era. 56, Biddle's actions invited a counterattack from Jackson, who saw clearly Jeffersonian limits on congressional powers under the Constitution. It did not, however, have a death grip on local economies. Historian Woodrow Wilson wrote: Over time, Biddle returned Jackson's disdain. Party debate over who was to blame for the crisis reached a new level of intensity. "This document was notable for being the only administrative act of President Jackson that was consistent with the hard-money doctrine absorbed from his agrarian background always professed by him. 149 Historian Sean Wilentz wrote: "By sticking to Jackson's banking and currency policies and allying with the Loco Foco radicals, Van Buren...kept the faith with the core concepts of Jacksonian politics, but at the expense of further fracturing the party. Taney correctly saw the recharter bill as a form of political blackmail: "Now, as I understand the application at the present time, it means if the Bank says to the President, your next election is at hand - if you charter us, well - if not, beware." 72, The bank veto set the stage for the fall presidential campaign between Clay and Jackson. Whigs triumphantly announced the bankruptcy of Jackson's `experiments' on the currency, tracing backward from the `Specie Circular' the alternative evils of suspension, contraction and excess to his veto in 1832 of the bill to recharter the Bank of the United States." This restriction practically barred branch issues, as the officers could not sign more than 1500 notes a day, and it was calculated that on this basis four years would be required to furnish the volume needed. In his annual message the President announced that he had been forced to remove the deposits from the Bank because it had been `attempting to influence the elections of public officers.' Thus, Van Buren's central domestic heritage survived his defeat for reelection. 81 Biddle and Clay had pushed a fight they couldn't win. Wilson noted: "With regard to the existing Treasury surplus, a second part of the act prescribed that it be distributed among the states in four quarterly installments, beginning in January 1837." Democratic members of Congress saved money for the party by franking the copies of the Globe sent out to the faithful. This weakened the U.S. Treasury’s gold supply, and since gold was the b… Economic historian John Steele Gordon wrote that "nowhere was speculation more rife than in the West, where land rather than securities was the focus of attention. But all the speculators and those largely indebted, want more paper, the more it depreciates the easier they can pay their debts....Check the paper mania and the republic is safe and your administration must end in triumph....I say, lay on, temporize not, it is always injurious." With much of the nation's specie diverted from its commercial center, the prospects of shifts in specie demand both domestically and from abroad combined to render the panic inevitable." Biddle would wage a `fierce and desperate struggle' to preserve the bank and its prerogatives. If that should be the case, he will have probably less disposition than he now has to avail himself of any prejudices against the Bank. All that is true, but in the final analysis Jackson squelched the Bank because he believed that it was unconstitutional. So did Jackson, who played "everyman" to Biddle's "rich man." "22 Economic historian Bray Hammond wrote that Biddle was "a devoted, conscientious, and exceptionally able manager of the federal Bank up to the time the President and his advisers decided to do away with her and him too." More important, because the bank relied on manipulating the public deposits to regulate the money supply, removing them seriously eroded its ability to pursue its primary purpose." According to Jackson's veto message, "Every man is equally entitled to protection by the law; but when the laws undertake to add to these natural and just advantages artificial distinctions, to grant titles, gratuities, and exclusive privileges, to make the rich richer and the potent more powerful, the humble members of society - the farmers, mechanics and laborers - who have neither the time nor the means of securing like favors to themselves, have a right to complain of the injustice of their Government." By 1816, noted financial historian Susan Hoffman, "Reformed Jeffersonians...had concluded that banking was with us and must be regulated to ensure its consistency with the Jeffersonian concept of the public interest, which emphasized protection of the freedom and equality of individuals. Most of all, perhaps, both Democrats and others embraced expansionist jingoism to mute mounting sectional conflict." Historian Yonathan Eyal wrote: "By the late 1830s...the newly organized Whigs were clamoring for another national bank. The 1830s were a tumultuous decade for America. Historian Major L. Wilson said: "Contrary to Jackson's intentions, some of his policies gave further stimulus to bank overaction. Now in power for 16 years, many Jeffersonians began to see the necessity of the bank that Federalists had long championed. This was the Panic of 1837. 82 Historian Arthur M. Schlesinger, Jr., wrote: "Jackson seems to have decided on this course shortly after his re-election. 87 Historian Daniel Feller wrote: "On September 18, having laid his ground carefully, Jackson read a paper to the cabinet announcing his decision to begin the removal. © 2005-document.write(new Date().getFullYear()) The Lehrman Institute. 145 Woodrow Wilson observed: In the face of economic contraction and political opposition, Van Buren maintained his course. The National Bank had been forced in self defence to strengthen itself. Gordon noted: "It would take him a decade and a half to finally settle everything in this affair, and it left him with a lifelong horror of debt and debt's various instrumentalities." Gordon noted that "many of the men who voted to kill the bank were the very same men who advocated war - the most expensive of all public policies - with one of the strongest military powers on earth. Biddle, he said, had started the panic." In any case, Jackson’s successor Martin Van Buren would suffer the consequences of this policy and…. Biddle took over just before the 1824 presidential election in which John Quincy Adams replaced James Monroe as president. It was much easier for the mass of men who now held the votes of the country to believe the Bank a dangerous and corrupt monopoly than to understand the arguments of statesmen who argued of its services to the government and to commerce. The surplus in the Treasury began to mount with the retirement of the national debt; on deposit in selected state banks, the surplus enabled them to make new loans." But suppose, at the next Session, on the contingency of your application for a renewal of the Charter, instead of postponing, Congress was to pass a bill for that object, and it should be presented to the President, what would he do with it? Biddle tried to strengthen this position by flourishing a theory that the bank was beyond political good or evil, but Alexander Hamilton had written with far more candor that `such a bank is not a mere matter of private property, but a political machine of the greatest importance to the State.' The National Republican candidate in 1832 won only six states and was crushed 219-49 in the Electoral College by President Jackson, who demonized the Bank of the United States as the creature of a Northeastern elite. A financial crisis happens when prices rise too high. We have no money here, gentlemen. Indeed, the panic, which was due so much to a temporary tightness and fears not realized of something worse, began to mend by midsummer. The new Secretary of the Treasury, Levi Woodbury, urged them to build up their specie reserve and to curtail their issue of small notes, but had not way of enforcing his request unless he withdrew the deposits altogether. Financial historian Davis Rich Dewey wrote that Biddle was "elected to represent ` a young and progressive policy' as against an `old and conservative policy.' If the administration, building on renewed resentment at the banks, at last pushed the independent treasury plan through Congress, the president's supporters could claim that he had courageously stayed the course against the Money Power." Taney acknowledged that taking on the bank was fraught with peril. The 17 percent drop in price that ensued between then and the end of April, or from 13.8 cents to 11.5 cents per pound, appears to have been a result of overproduction in the United States and heightened competition in the British market from India, whose cotton exports underwent a rapid expansion at precisely this time. He admitted that `bundles of letters' every day urged him to take a new course; and Senator Silas Wright of New York, Van Buren's closest and most trusted adviser, believed that a majority in his state wanted a change,' wrote historian Major L. Wilson. Historian James C. Curtis wrote: "With the passage of the recharter bill, the president knew there would be no way to keep the bank issue out of the election. The Panic was followed by a six-year depression, with the failure of banks and record unemployment levels. Accordingly, Jackson sponsored the Distribution Act of June 1836 authorizing the Treasury to lend the surplus to state governments promoting internal improvements. The idea of reforming our gold currency had long been entertained. Biddle said it was the least he could do. This notion was not bad so far as it could be carried into practice; and, though at sword's points, the two Houses of Congress joined to help the President's experiment by passing acts for regulating the coinage standard and infusing more gold and silver into the currency of the Union. Southern merchants and bankers (as well as their Northeastern correspondents) had grown accustomed to making time bargains on cotton crops, and the fall in price raised doubts about the ability of cotton factors to meet their current obligations." The Bank of the United States was dead." Revived in 1846 by a new Democratic administration, the Independent Treasury remained in operation until the Federal Reserve System was created in 1913. 100 The bank war pushed Jackson into further unwise economic actions regarding the pet banks to which it ordered its assets transferred. "6" Historian Sean Wilentz observed that the new bank was designed to curb inflation and speculative frenzies: "Acting as a financial balance-wheel, the national bank would, in principle, keep currency values and capital markets stable, and prevent national economic expansion from turning into an orgy of overspeculation and runaway inflation." In private, Biddle admitted that he hoped to cause general distress and force the House to abandon its party allegiances and join with the Senate in coming to the Bank's aid. The jingling of these new gold coins about the country, known as Benton's yellow jackets, helped the President in the fall elections; but it was only a drop in the bucket of expedients so far as real relief was concerned. Biddle tried to frame the issue in economic terms. 76 The author of the veto message, Amos Kendall, was also the author of the Democratic campaign. Then every thing will be fresh; the succeeding P. election will be too remote to be shaping measure in reference to it; and there will be a disposition to afford the new administration the facilities in our fiscal affairs which the B. of the U.S. perhaps alone can render. In response to the veto, Biddle wrote Henry Clay, by then himself a presidential candidate, on August 1: Congressional supporters of the Bank did not give up. 112, The transfer of deposits to the state banks helped fuel land speculation. 148 Historian James C. Curtis wrote: "Response to Van Buren's message was immediate and predictable, ranging from indiscriminate praise to unthinking condemnation. As Biddle was growing in financial stature, his future nemesis, General Andrew Jackson, was growing in political stature. By signing up for this email, you are agreeing to news, offers, and information from Encyclopaedia Britannica. Historian William Graham Sumner noted: "A bill to annul the specie circular passed the Senate, 41 to 5, and the House, 143 to 59. Better than any of them, Jackson understood the symbolism of the bank and what it meant for popular government in America. (Letter from Nicholas Biddle to Henry Clay, August 1, 1832). 67 " The attempt to override the rechartering veto failed in the Senate. Clay, known for his role in forging the Missouri Compromise and later the Compromise of 1850, girded for political warfare. 17 Biddle brought new stability to the bank and to the country's economy. Clay probably sensed the reaction in March when Van Buren offered to bet him a suit of clothes on the elections in Virginia and New York City. `The bank, Mr. Van Buren, is trying to kill me,' he said, `but I will kill it." Taney promptly ordered the removal." Terminating the bank was fundamental to Jackson's political philosophy. Bray Hammond noted: "The year 1834 ended and 1835 passed with nothing to warrant hope; the Bank wavered between the prospect of liquidation and that of becoming a state bank. 33 In his annual message to congress in December 1834, Jackson would write: "Free from public debt, at peace with all the world, and with no complicated interests to consult in our intercourse with foreign powers, the present may be hailed as the epoch in our history the most favorable for the settlement of those principles in our domestic policy which shall be best calculated to give stability to our Republic and secure the blessings of freedom to our citizens." It would probably become, after the next Session, and up to the time of the next Presidential election, the controlling question in American politics. Other financial institutions throughout the nation quickly followed suit. Jackson styled himself the outsider. "Pro-Bank Jacksonians with whom Clay discussed legislative strategy demurred, saying that a recharter bill in 1832 would be considered an electioneering attack on the president, inevitably provoking a veto. BANK WAR. Determined support for the removal of deposits in Jackson's kitchen cabinet confronted strong opposition in the official Jackson cabinet. Clay demanded: "Tell him it is nearly ruined and undone by the measures which he has been induced to put in operation." A second time they chose General Jackson President." He inherited Andrew Jackson's financial policies, which contributed to what came to be known as the Panic of 1837. Historian Walter A. McDougall wrote that "not only did Clay lack the votes to override Jackson's veto; he misjudged the electorate. 94, Biddle was engaged in a dangerous political and economic duel with Jackson. Kendall and Blair coordinated the activities of hundreds of local organizations, with the Globe serving as a clearinghouse for Democratic newspapers. It coincided so well with the term of Martin Van Buren that all of the anger of the nation focused itself on him. He resolved that the Bank should no longer be given the custody of the public funds." Kendall and Blair reprinted the veto message in newspapers across the country, spinning the election as a showdown between democracy and aristocracy....So tone-deaf was Biddle that he distributed 30,000 copies of the veto message himself, on the assumption voters would see through its bombast.
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