CHAPTER 12: THE AGE OF JACKSON Section 4: Prosperity and Panic

1. CHAPTER 12: THE AGE OF JACKSONSection 4: Prosperity and Panic Today’s Essential Question: What were the causes and effects of President Jackson’s war on the Bank of the United States?

2. What We Already Know Jefferson and Hamilton fought over the Bank of the United States when Washington was president.

3. What We Already Know When he became president, Jefferson allowed the Bank’s charter to expire.

4. What We Already Know After the War of 1812, the need for a national bank led to its re-charter in 1816.

5. The Bank of the United States was very powerful. • Held all federal revenue • Printed the national currency • Controlled small banks through loans and by limiting the nation’s money supply • Privately controlled by a handful of powerful men • Nicholas Biddle controlled the Bank; very powerful man

6. The Bank had always been controversial. • Jefferson had opposed its creation, and had not renewed its charter. • The Bank had been re-chartered in 1816, and was not due for renewal until 1836. • But Andrew Jackson was known to be unfriendly to the bank.

7. Jackson was very suspicious of all banks. • Banks could issue paper money that sometimes was not backed by gold. • He had lost money earlier through bank failures. • A financial panic in 1819 had hurt many Westerners.

8. Check for Understanding • Who was Nicholas Biddle? • What made the bank so powerful? • Why was Jackson so suspicious of banks?

9. Jackson was even more suspicious of the national bank. • To Jackson, the national bank was a tool of the wealthy, who cared little for the common people. • He saw it as a monopoly that gave a few wealthy men too much influence on the economy. • The bank might even become a threat to American democracy, since it might bribe officials or even buy elections.

10. 15. Why did Jackson oppose the Second Bank of the United States? • He saw it as a monopoly controlled by a few powerful men. • He also believed it favored the wealthy over the common people. • Banks could issue paper money, which Jackson distrusted. • The bank might threaten American democracy by bribing officials or influencing elections.

11. Clay and Webster wanted to use the Bank as a campaign issue in 1832. They were confident that Jackson would veto any attempt to re-charter the bank Webster Clay

12. Clay and Webster wanted to use the Bank as a campaign issue in 1832. • They believed that most American voters supported the Bank, and that a Jackson veto of the new charter would anger voters. • They hoped this anger would result in Clay’s election over Jackson in the presidential election of 1832.

13. Nicholas Biddle also wanted to use the Bank as a campaign issue in 1832. • Biddle thought Jackson would agree to renewal rather than risk angering voters. • A re-charter bill was introduced in Congress four years ahead of schedule.

14. Check for Understanding • Why did Henry Clay want Andrew Jackson to veto the national bank before the 1832 election? • Henry Clay wanted Andrew Jackson to veto the national bank so that Clay could defeat Jackson in the 1832 election. Be sure to re-state the question in your answer!

15. 16. Why did Nicholas Biddle ask Congress to renew the Bank’s charter ahead of schedule? • He wanted to stand up to Henry Clay and Daniel Webster. • He thought Jackson would agree to renewal rather than risk angering voters in the 1832 election. • It would help him win votes when he ran for president the next year. • He wanted to help Martin Van Buren look more like one of the common people.

16. Jackson vetoed the Bank’s re-charter for several reasons. • It was a privileged institution that served the rich. • Federal deposits gave the Bank an unfair advantage over other banks. • Average American taxpayers did not earn the interest from these deposits. • Nicholas Biddle used loans to congressmen at very low interest rates to win their support.

17. Jackson slaying the “monster” bank

18. Jackson’s veto was the main issue in the election of 1832. • Henry Clay’s National Republicans called Jackson a tyrant. • Jackson’s Democrats described Jackson as a defender of the people. • Jackson saw his victory on election day as a sign that the people approved his war on the bank.

19. Jackson decided to kill the bank. • Even before 1836, all government deposits withdrawn from the bank's branches • Federal funds re-deposited in selected state banks ("pet banks")

20. 17. How did Jackson kill the Bank? • He persuaded the Supreme Court to declare it unconstitutional. • He removed all government deposits from it and placed the money in state banks. • He sent federal troops to force all bank employees to leave their offices. • He refused to support its re-charter in 1840.

21. Nicholas Biddle tried to put public pressure on Jackson. • Called in loans and refused to make new loans • Claimed he was forced to do this because the bank needed funds • Thought economic troubles would cause the public to demand the return of the federal deposits

22. Instead, the people rallied to Jackson. • Eventually, the bank went out of business. • Jackson had won the war, but the economy would be the victim.

23. And new president Martin Van Buren, elected in 1836, would get all the blame.

24. Check for Understanding • A ask B: How did Biddle try to put public pressure on Jackson? • Biddle tried to put public pressure on Jackson by calling in old loans and refusing to issue new loans. Be sure to re-state the question in your answer!

25. Check for Understanding • B ask A: When the bank closed and economic troubles came, who got all the blame? • When the bank closed and economic troubles came, new president Martin Van Buren got all the blame. Be sure to re-state the question in your answer!

26. Jackson’s ‘pet banks’ created economic problems. • Banks made it easy for people to borrow money, and the economy boomed. • Some ‘wildcat’ banks issued too much paper money, making each dollar worth less.

27. Inflation is an economic condition caused by too much money in circulation. • Inflation causes prices to rise, since each dollar is worth less. • These high prices hurt Americans all across the country.

28. Check for Understanding • A ask B: What are pet banks? • Pet banks were the state banks chosen by Jackson to hold the nation’s money instead of using the Bank of the United States. Be sure to re–state the question in your answer!

29. Check for Understanding • B ask A: What is inflation? • Inflation is an economic condition caused by too much money in circulation, leading to higher prices. Be sure to re–state the question in your answer!

30. To fight inflation, Jackson issued the Specie Circular. • Payments for public land to be made only in gold and silver (i.e., specie)

31. To fight inflation, Jackson issued the Specie Circular. • Payments for public land to be made only in gold and silver (i.e., specie) • If people used money printed by wildcat banks to purchase public land, the government would be left holding the bag if those banks failed.

32. The Specie Circular only made things worse. • People rushed to banks to trade paper bills for gold and silver. • By May 1837, many banks were running out of specie and stopped accepting all paper currency.

33. The demand for specie caused banks to fail. • When the government tried to get its money from the state banks, the banks could not pay. • The banks defaulted, and went out of business.

34. Check for Understanding • A ask B: What did the specie circular require? • The specie circular required that all public land payments be made in gold or silver. Be sure to re–state the question in your answer!

35. Check for Understanding • B ask A: How did the specie circular lead to bank failures? • The specie circular led to bank failures because banks couldn’t exchange paper money for specie, and they defaulted. Be sure to re–state the question in your answer!

36. Failure of the banks led to a severe economic slump called a depression. This depression became known as the Panic of 1837.

37. The Panic of 1837 brought economic fear and ruin. • Widespread hunger and homelessness • Hundreds of businesses bankrupted • More than a third of the population out of work

38. Check for Understanding • B ask A: What was the Panic of 1837? • The Panic of 1837 was a severe depression. • A ask B: What is a depression? • A depression is a bad economic slump. • B ask A: How did the Panic of 1837 affect people? • The Panic of 1837 resulted in factories being closed, bank collapse, unemployment, hunger and homelessness. Be sure to re–state the question in your answer!

39. Get your whiteboards and markers ready!

40. 18. How did Jackson’s actions cause economic problems during Van Buren’s presidency? • Van Buren’s government couldn't afford to repay the money Jackson had borrowed from other countries. • His war against the bank had consumed all the money in the government's treasury. • The state banks he favored issued too much paper money, causing severe inflation. • He had spent all the Democrats’ campaign funds supporting Harrison in the 1840 election.

41. Because of Jackson’s popularity, hisvice- president, Martin Van Buren, had been elected president in 1836. • Many Americans blamed Van Buren for the Panic, though he had taken office only weeks before it started. • The depression made it almost impossible for him to win re-election in 1840.

42. The Rise of the Whig Party • Senators Daniel Webster and Henry Clay argued that the government needed to help the economy. • Van Buren believed that the economy would improve if left alone.

43. The Rise of the Whig Party • During Jackson’s war on the national bank, Clay, Webster, and other opponents of Jackson had formed the Whig Party. • They took the name ‘Whigs’ from a political party in Britain that had opposed the power of the king.

44. Check for Understanding • B ask A: Who was Martin Van Buren? • Martin Van Buren was Jackson's vice-president, and then was elected president himself in 1836. • A ask B: Who formed the Whig party? • The Whig party was formed by Clay, Webster, and other opponents of Jackson. Be sure to re-state the question in your answer!

45. The Rise of the Whig Party • The Whigs believed that the president’s power had grown too much under Jackson. • They mockingly referred to Jackson as ‘King Andrew.’

46. The Rise of the Whig Party In 1840, the Whigs chose William Henry Harrison of Ohio to run for president and John Tyler of Virginia to run for vice-president.

47. Get your whiteboards and markers ready!

48. 20. What was the Whig Party? • The Whigs were opposed Jackson because he had concentrated too much power in the presidency. • It was a party founded by Jackson's supporters during his third run for the presidency. • It was founded by men who were opposed to Clay's American System. • The Whigs were men who supported Martin Van Buren instead of Jackson for president in 1836.

49. Harrison had a good military record and lacked strong political views. • Harrison had defeated the Shawnees at the Battle of Tippecanoe and had been a hero during the War of 1812. • The Whigs made the most of Harrison’s military record and his nickname, “Old Tippecanoe.” • The phrase “Tippecanoe and Tyler too” became the Whig election slogan.

50. The Election of 1840 • During the 1840 election campaign, the Whigs tried to appeal to the common people, as Andrew Jackson had done. • Though Harrison was the son of a Virginia plantation owner, he had settled on a farm in Ohio.