Background

History of the Bank of the United States - during the years Andrew Jackson was president:

Although President Andrew Jackson did not make the Second Bank of the United States an issue in his 1828 election, not too long after his inauguration, he announced that he believed the bank, a private corporation established in 1816 but operating as a federal bank, had failed to provide a stable currency.

Jackson believed the bank favored the privileged few at the expense of the common person in its operations, and that it was in violation of the United States Constitution.

The charter was not due to expire until 1836 but in July of 1832, the president of the bank, Nicholas Biddle was persuaded by some of Andrew Jackson's enemies, mainly Henry Clay and Daniel Webster, to push a bill through Congress granting a re-charter. President Jackson, quickly vetoed the bill.

The bank was a major issue in the 1832 presidential campaign, and it helped Andrew Jackson, and Martin Van Buren (his running mate) defeat Henry Clay and win the election.

This "war" against the bank lasted throughout Andrew Jackson's 2nd term as president. In 1833, Jackson ordered federal deposits of ten million dollars withdrawn from the bank because of Biddle's use of bank funds to support anti-Jackson candidates.

After two Secretaries of the Department of the Treasury refused to comply with his orders, Jackson had them both removed from office. The removal earned him the censure of the Senate, and along with his use of the presidential veto, prompted his enemies to charge him with abuse of power.

Although Jackson destroyed the Second Bank of the United States by withdrawing government money, his administration failed to develop a coherent national banking policy. Jackson deposited the money in state banks and privately-owned financial institutions. In many states, especially in the South and West, state-chartered banks engaged in irresponsible and speculative issuance of paper currency - a policy that Jackson and other hard-money advocates opposed. (The federal government issued no paper legal tender prior to the Civil War.)

During the mid-1830s the United States was swept by a land boom. Sales of federal lands soared, helping to wipe out the national debt and creating a large federal surplus. By 1836, however, the boom was becoming increasingly speculative. Alarmed and determined to curb extensive use of paper currency issued by private state-chartered banks, Jackson, in the "Specie Circular of 1836," changed the purchases of federal land or payment of federal debts to gold and silver or paper money from banks who's assets were backed up by gold or silver. His actions led to the failures of banks that had no "hard money" assists. The action was opposed by conservatives in the business community and they accused him of responsibility for disrupting the economy and the ensuing Panic of 1837........


Washington County and the Bank Reorganization
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[Senator Thomas Ewing – OH, Anti-Jacksonian 1831-1837 Address to the Senate]

Tuesday, May 27.

WASHINGTON COUNTY (OHIO) MEMORIAL.

Mr. EWING said he was charged with the presentation of a memorial [petition], signed by 1,063 of the inhabitants and qualified voters of the county of Washington and the State of Ohio. This County, said Mr. E, embraces the first settlement within the bounds of the now State of Ohio, and I recognize upon it the name of many old and valuable friends, some of the pioneers of the West, and among them a member of the convention which formed the constitution of the State of Ohio.

That section of the country has no direct connexion [sic] with the Bank of the United States, or any transactions with it; they have their own bank, a safe and well-managed institution which in good times, was sufficient for all the business of the country.

But the blighting influence of the experiment has reached even them. Business is paralyzed and the price of produce struck down. They say, and they say truly, that credit is essential to the prosperity of the West, and that business must languish if it cannot be carried on on borrowed capital.

Indeed, it cannot be otherwise. The whole vast county, with all its resources is too new to have accumulated capital sufficient to develop those resources. It must either linger in the march of improvement, of avail itself of foreign capital and credit for its advancement. The memorial is a well-written paper, and presents the topics which have been so much discussed, in a strong point of light. It is also calm and respectful in its language. But I will not detain the Senate by its reading. I move that it be printed with the names, and referred to the Committee on Finance; - which was agreed to.

Source: Library of Congress: "A Century of Lawmaking for a New Nation: U.S. Congressional Documents and Debates, 1774-1785" Register of Debates, Senate, 23rd Congress, 1st Session. Gales & Seaton’s Register. Pages 1811 & 1812.

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