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1832 Bank Recharter Bill
Introduced to Congress by Daniel Webster and Henry Clay, the 1832 Bank Recharter Bill was an attempt of Henry Clay to cause an election issue for President Jackson. Though the recharter of the bank wasn't set for another 4 years (1836), Clay hoped that Jackson would be "trapped" with the issue of the recharter; therefore, giving Henry Clay an advantage in the upcoming election. However, Clay failed to realize that the target group (rich), he was playing off of, weren't the majority. -
Jackson's Veto
In response to Henry Clay's attempt at rechartering the bank, Jefferson issued a veto of the bill despite its passing through Congress. Jefferson stated that the bank was unconstitutional, because it created a monopoly, though it had previously been declared constitutional by the Supreme Court. However, Jefferson felt the Executive branch had more power than that of the Judicial, so he continued with the veto. -
Election of 1832
The Election of 1832 was between four candidates: Andrew Jackson from the Democratic party, Henry Clay representing National Republican, John Floyd an Independent, and William Wirt representing Anti-Masonic. However, the election centered around Jackson and Clay. Clay attempted to portray Jackson as a king in response to his veto of the recharter bill; however, Jackson stated that he was protecting the common folk from the elite. Jackson won the election with more electroal and popular votes. -
Biddle Response
Nacholas Biddle, the then President of the Bank, predicted Jefferson's removal of Federal Deposits. Biddle began a countermove to Jefferson's probable action by presenting state bank notes for redemption, calling in loans, and contracting credit. By purposefully producing a crisis, Biddle hoped to emphasize the need for a central bank thus guaranteeing support for charter renewal. However, Biddle's disruption of the economy lead to tension and he was forced to re-improve the economy. -
Jackson Removes Federal Deposits
After his victory, Jefferson was determined to decrease the power of the National Bank leading to the removal of federal deposits. Federal deposits were the money source for the National Bank and, by their removal, Jefferson was able to destroy the bank's financial association with the government, prevent the bank's reversal of the election, and reinforce his position as president. This action got severe backlash from the Whigs as they claimed Jackson was abusing his power as President. -
Jackson's Pet Banks
The term "Pet Banks" was a derogatory term given to Jackson's state banks, by his political opponents, that began receiving federal money ensuing the removal of federal deposits. The "Pet Banks" were orginally comprised of 23 various state banks that were all run by Jefferson's allies. However, the banks couldn't keep up with demand so more banks began being chartered. The banks then began issuing notes far more than they could cover with gold & silver, resulting in a national finanical panic. -
Speculative Boom
The Speculative boom was a period of false excitement or false hope. This was due to Jefferson's creation of pet banks and emphasizing on the use of paper currency. This lead to the false notion that the American economy was growing and people could spend as much money as they wished to, with little to no consequence. However, this overspending and abuse of money would later lead to a major crisis of the economy. -
Specie Circular
Due to the increasing uselessness of "wildcat currency," President Jackson authorized the treasury to issue a specie circular. The specie circular required all public lands to be purchased with metallic currency rather than that of paper. This ended the period of the speculative boom as the dependency on paper currency greatly decreased. The Democrats saw this as a great benefit to the economy. The Whigs also saw it as a benefit, but were unsatisfied with how drastic the change was to currency. -
Crash of 1837
The Crash of 1837 was a result of multiple problems during the period. First and foremost, speculation of land, in hopes of striking it rich, resulted in the immensely decreased value of American currency. Secondly, the Bank War and Specie Circular also added to the growing distress within the country. Finally, the failure of wheat crops created an even more stressful situation. The banks began failing, commodity prices skyrocketed, and forced help from foreign loans caused economic inflation.
