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1832 Bank Recharter Bill
The national bank charter faced the question of renewal. President Andrew Jackson, who had always been an avid supporter of state's rights, rejected the renewal of the bank. The issue of the bank's constitutionality and where monetary power should lie resurfaced, forming the platforms of the upcoming election. -
Jackson's Veto
Jackson was in strong opposition to the National Bank, while those in the North supported it as an economy stabilizer, and he vetoed the Bank Recharter Bill of 1832 due to its overly powerful market power. This upset businessmen in the North, but supporters of Jackson were glad he was fighting for the "common man." -
The Election of 1832
Jackson ran against Clay in a heated election. His platform focused on getting rid of the national bank, while Clay promised to support it. Once again, the opinions of the country were divided. Jackson was reelected by an overwhelming majority, and he was free to act on the bank issue -
Speculative Boom
A speculative boom is the false notion that money is in abundance and the economy is growing. With federal money moved closer to home, people thought that they were becoming richer. This led to a period of overspending and abuse of money that would in turn lead to the economic crash of 1837. -
Jackson Removes Federal Deposits
Jackson began by taking nearly all the money from national reserves and distributing it to state "pet" banks. He thought that getting rid of the bank's money would cause it to collapse faster. It worked. The national bank collapsed at a rate that would lead the country into an economic crisis. -
Biddle Response
Nathaniel Biddle, president of the national bank, began taking actions to recharter the national bank. He spoke out against Jackson's harsh actions and rallied a large group of supporters. Congress voted to recharter the bank, but Jackson again vetoed. Biddle and his supporters claimed that Jackson was abusing his executive power. -
Jackson's Pet Bank
Pet banks were privately funded state banks where Jackson deposited federal money. Although this hurt the economy and destroyed the national bank, the system of transferring money from the federal level to the state continued. People learned the importance of finding a balance between a strong national bank and strong state banks. -
Specie Circular
Another act created by Jackson, but carried out by president Van Buren. This act required that land be purchased in gold and silver rather than paper money or bank notes. Jackson believed in paying traditionally for land. This led to a drastic decline in the value of paper money. Inflation greatly hurt the economy, and people (especially in the South) became angry at Van Buren rather than Jackson. The change in presidency allowed people to see the necessity of a national bank -
Panic of 1837
Inflation, the fall of the national bank, and overspending led to a period of deep economic recession. Prices of American goods fell, businesses went bankrupt, and state banks began to collapse without strong national support.
