The Bank War
The Bank War refers to the political struggle between the Jackson Administration and those who supported the rechartering of a second National Bank. Jacksonian Democrats opposed the reauthorization of the National Bank arguing that it conferred economic privileges on financial elites, violating republican principles of social equality. When the twenty year charter was due to expire in 1836, the President of the Bank of the United States, Nicholas Biddle, Senator Henry Clay, and Senator Daniel Webster decided to make a rechartering for general election in 1832.
Congress voted for the rechartering, however, Jackson promptly vetoed the bill declaring it a social philosophy of the Jacksonian movement. He argued against the Bank's constitutionality. Although efforts were made to save the National Bank, especially by Biddle, Jackson and his administration ultimately won and the National Bank ceased to exist. Jackson took the federal money out of the National Bank and put it into banks throughout the country, in state banks. Biddle then retaliated by making it more difficult for businesses and others to get the money they needed and this caused an economic contraction at the end of 1833 and into 1834. The bank charter expired in 1836.
Ultimately,with the dissolution of the bank went its conservative monetary policy. State banks extended easy credit and issue paper money , touching off a round of western land speculation and inflation. In 1836, Jackson wanted to restore economic order by issuing the Specie Circular, which required buyers of public land to pay in gold or silver. The order effectively dried up credit and ended the feverish land speculation, but it also precipitated the Panic of 1837, which started shortly after Jackson left office.
Congress voted for the rechartering, however, Jackson promptly vetoed the bill declaring it a social philosophy of the Jacksonian movement. He argued against the Bank's constitutionality. Although efforts were made to save the National Bank, especially by Biddle, Jackson and his administration ultimately won and the National Bank ceased to exist. Jackson took the federal money out of the National Bank and put it into banks throughout the country, in state banks. Biddle then retaliated by making it more difficult for businesses and others to get the money they needed and this caused an economic contraction at the end of 1833 and into 1834. The bank charter expired in 1836.
Ultimately,with the dissolution of the bank went its conservative monetary policy. State banks extended easy credit and issue paper money , touching off a round of western land speculation and inflation. In 1836, Jackson wanted to restore economic order by issuing the Specie Circular, which required buyers of public land to pay in gold or silver. The order effectively dried up credit and ended the feverish land speculation, but it also precipitated the Panic of 1837, which started shortly after Jackson left office.