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The Charter of the 2nd Bank in 1816
In 1816 President Madison granted the Second Bank of the United States a twenty-year charter. With the charter in place, the Bank was granted power over finances and the economy: handing out business loans and primarily favoring wealthy citizens. Southerners and those of the lower-class quickly opposed the Bank for its benefit on the wealthy.
Effect:
Andrew Jackson, favoring the states, began to distrust the Bank. The charter created distrust and led to major political issues within the nation. -
The Panic of 1819
In 1819 wide-spread panic spewed throughout the nation. Trading came to a sudden halt and unemployment struck Americans. Property values fell from $315 million to $256 million, and the people fell into immense debt. The Cause: Contraction of credit.
Effects:
The panic ensued a wide variety of public protests. Those in debt begged for "stay laws" to help citizens manage their finances. Americans began to blame the National Bank for the issues: creating an uproar of hostility towards the bank. -
The Election of 1828
In the Presidential Election of 1828 democrat Andrew Jackson boldly defeated John Quincy Adams. Effects: The Presidential Election of 1828 paved the way for the solidification of political parties. During campaigning two political parties were created: The Republican-Democrats who sided for Jackson, and National Republicans for the opposing side. With public opinion becoming important for the race, Democrats organized rallies and parades: introducing the world to the idea of campaigning. -
Proposal of Recharter
Prior to the election of 1832 Jackson's rivals, one of the more infamous being Henry Clay, encouraged the third president of the Bank Nicholas Biddle to plan a recharter. They hoped to keep the Second Bank going, and betted that Jackson would not veto. Eventually Congress passed the bill: granting the Bank an extra 15 years. Effect:
President Jackson did not respond light-heartedly. He returned the bill unsigned and, in a message to Congress, expressed his veto: creating an uproar of conflict. -
Biddle's Response
Issuing a response to Andrew Jackson's veto, Biddle tightened the loans of the Second Bank. He explained that the Bank would not respond to the loss of government deposits, and that instead the Bank would be ordered to limit loans and credit. Biddle hoped this response would force the President to relent. Effect: Biddle's response unfortunately backfired. Rather than convincing Jackson, the tightening of loans helped Jackson explain that the Bank was, biasedly, marketed towards the wealthy. -
Jackson's Veto Message
President Jackson did not respond light-heartedly to the recharter. Sending back the bill unsigned, he declared to Congress via message that he was vetoing the bill immediately. He explained that the Bank was unconstitutional + a threat to personal liberties. He explained that the Bank was biased towards the wealthy population, leaving farmers deserted.
Effect:
The recharter bill returned to Congress but did not receive a 2/3 majority vote. Tension grew between Clay's supporters and Jackson's. -
Creation of the Whig Party
Formed in 1833 by opponents of Andrew Jackson, the Whig political party was created. Led primarily by Henry Clay the Whig Party strove to portray Jackson in a negative manner. They supported the 2nd Bank of the U.S., higher tariffs, and favored Congress. Suprisingly the Whig party gained a large amount of support from a variety of different American groups. Effect:
The Senate soon became Whig-dominated. They censured Jackson for withdrawing money from the Bank: creating a political uproar. -
Pet Banks / Jackson's Withdrawal of Funds
In an attempt to destroy the new National Bank Andrew Jackson ordered the removal of all funds from the Bank. He placed these funds in a variety olf state banks, nicknamed "pet" banks. Loyal to Jackson's administration, these banks proudly accepted these funds. Effect:
The pet banks led to an increase in federal speculation. Gifting loose loans to citizens, the banks quickly failed at managing the nation's finances. This led to the Crisis of 1837: creating economic distress. -
The Expiration of the Bank Charter
Set to expire in 1836, the National Bank charter officially closed. Soon, financial issues began spewing out into the nation. With the pet banks struggling to regulate and organize finances, financial instability and crisis damaged workers, farmers, and merchandisers. Soon Americans faced debt and a lack of resources: leading to the Panic/Crisis of 1837. Effect: The closing of the Second Bank charter led to a lot of economic issues, leading to the Panic of 1837. -
The Specie Circular Act
In an attempt to curb land speculation, Andrew Jackson created the Specie Circular Act in 1836. This act required that the U.S. Treasury only accept gold or silver currency, no paper money. Effect:
The creation of this act led to a majorly large demand which the nation could not accomodate for, leading to the Panic of 1837. It increased the hatred for the Bank as many in the South and West blamed it for the economic issues. -
The Panic of 1837
Caused primarily by the Specie Circular Act and the lack of a national bank, the Panic of 1837 ensued. Hundreds of banks collapsed, and farmers, merchants, and business owners significantly struggled through debt. Nicknamed the "Hard Times", banks refused to reedem bank notes, creating a "standstill" in the economy. Effect:
What followed was a six-year depression. Jackson's Democratic Recessor, Martin Buren, proposed a new independent treasury: which disconnected the bank from the government. -
Election of 1840
In 1840 another Presidential Election ensued. William Henry Harrison, of the Whig party, and Van Buren (a democrat) ran against one another. Ultimately William Harrison won the election with 234 electoral votes. Unfortunately, Harrison passed away due to sickness only a month after: becoming the first president to pass away while in office. Effect:
The election encouraged political campaigning and parties, and inserted Whig ideals into the government. VP Tyler took over, inserting Whig ideals.