Chapter 7 Section 4
States’ Rights and the
National Bank
Mr. Clifford
US 1
Main Idea & Why It Matters
• Main Idea
• Andrew Jackson confronted two important issues during his
presidency: states’ rights & national bank.
• Why It Matters Now
• Conflict over states’ rights and federal government control
continues to flare up in such arenas as education, commerce, and
law enforcement.
7.4 Key Terms
• Daniel Webster
• John C. Calhoun
• Tariff of Abominations
• Bank of the United States
• Whig Party
• Martin Van Buren
• Panic of 1837
• William Henry Harrison
• John Tyler
Tariff Raises the States’ Rights
Issue
• British manufacturers flooded the US market with inexpensive
goods in an attempt to destroy their competition in the
Northeast United States.
• 1816: Congress passed a tariff to protect American industries.
• The tariff would be increased in 1824 & 1828.
1828: Tariff of Abominations
“When Southerners see the flourishing villages of New England
they cry, ‘We pay for all this!’”
• 1828: Tariff of Abominations
• John C. Calhoun coined the Tariff of 1828 the Tariff of
Abominations.
High tariffs on British manufactured goods resulted in:
• Reduced British exports to the United States
• Forced southern planters to buy expensive manufacture goods from
the northeastern United States.
• South believed that the North was getting rich at the expense of the
South.
Questions
• 1.) Why did Britain lower the price of their manufactured
goods after the War of 1812?
• 2.) Why did Congress place a tariff on imports from Great
Britain?
• 3.) Why were American manufactured goods more expensive
then British goods?
• 4.) Did Southerners have a legitimate argument?
Calhoun’s
Nullification Theory
• Calhoun argued that the US Constitution was established by
13 SOVEREIGN STATES.
• Each SOVEREIGN STATE had the right to nullify/reject a federal
law that it considered ‘UNCONSTITUTIONAL’.
• Calhoun: If federal government refused to allow a state to
nullify a federal law, then that sovereign state had the right to
withdraw from the Union.
Hayne & Webster Debate States’
Rights
Daniel Webster
oSenator from
Massachusetts
oBelieved that preserving
the Union was more
important than ensuring
liberty.
oWebster did not support
the Nullification Theory
oCondemned
Calhoun/Hayne’s stance on
state’s rights
Robert Hayne
oSenator from South
Carolina
oBelieved the federal
government were
trampling on the rights of
sovereign states.
oHayne & Calhoun
supported the right of
states to do what they felt
were best for their state.
oSupported ‘nullification’.
UNION vs. LIBERTY
President Andrew Jackson:
“Our Union: it must be preserved!”
• Vice President John C. Calhoun:
“The Union, next to our liberty,
the most dear; may we all
remember that it can only be
preserved by respecting the
rights of the States and
distributing equally the benefit
and burden of the Union.
South Carolina Rebels
• 1832: US Congress passes tariff
law
• South Carolina legislators
• declare tariffs of 1828 & 1832
“null, void, and no law”
• South Carolina threatens to
secede from Union if US
customs officials tried to collect
duties.
South Carolina Rebels (continued)
• President Andrew Jackson
• Declares South Carolina’s actions
treasonous
• Threatens to hang VP Calhoun and march
federal troops into South Carolina to
enforce the tariff.
• Persuades Congress to pass:
• Force Bill: allows federal government to use
army & navy against South Carolina if state
authorities resisted paying proper dues.
Henry Clay
The Great Compromiser
• Henry Clay
• 1833: proposes a tariff bill
that would ‘gradually’
lower tariff duties over a
ten-year period.
• Crisis between South
Carolina and federal
authorities was averted.
• Tariff issue would continue
to cause conflict and
would be a major cause of
the Civil War.
Jackson Attacks the National
Bank
• Henry Clay & Daniel Webster developed a bill to re-charter the Bank of
the US.
• Jackson and his supporters campaigned against the bank calling it a
‘privileged institution’.
• Bank of US had an unfair advantage over state & private banks (all Federal tax
revenues were deposited into Bank)
• B.U.S. stockholders earned interest from deposits
• Only a privileged few were profiting from Bank of US
• 1832: Jackson vetoes bill to recharter the Bank of the United States.
Pet Banks
• “The bank, Mr. Van Buren, is trying to kill me, but I will kill it.”
President Andrew Jackson 1832
• The Bank’s charter would run out in 1836. Jackson’s goal was
to kill the bank before it’s charter ran out.
• Jackson appointed a Secretary of Treasury who was willing to
place all government funds in certain state banks.
(a.k.a. Jackson’s pet banks)
Biddle tries to save Bank of United
States
• Nicholas Biddle tried to save the Bank by:
• demanding repayment of loans
• refusing to issue loans
• Biddle believed that a frustrated public would demand that Jackson recharter the Bank.
• Businessmen pleaded with Jackson for help but Jackson blamed Nicholas
Biddle.
• Pressure from financial leaders forced Biddle to adopt a more generous
loan policy.
• When the charter expired in 1836, the 2nd Bank of the United States
became just another Philadelphia Bank.
Whig Party Forms
• Jackson’s tactics angered
many people including
members of his own
Democratic Party.
• 1834: Henry Clay, John
Quincy Adams, & Daniel
Webster formed the
Whig Party
• Whig Party supported:
• The American System
• Build infrastructure to
foster trade between
regions.
• Federal control of banking
system.
Van Buren Deals with Jackson’s
Legacy
• Jackson’s Vice President Martin Van Buren
easily won the 1836 Presidential Election.
• In 1837, Jackson’s Pet Banks began
printing bank notes in WILD excess of the
gold/silver they had on deposit. (BANKS
WERE PRINTING MORE CURRENCY THEN
THEY HAD)
• Because of this, many banks stopped
accepting paper currency and would only
accept gold/silver.
Panic of 1837
• Banks closed
• Credit system
collapsed
• People lost their
savings
• Hundreds of
businesses went
bankrupt
• 1/3 of population
were out of work
Tippecanoe & Tyler, too
• Whigs won the Presidential
Election of 1841
• President William Henry Harrison
(Tippecanoe)
• John Tyler (southern democrat
who supported states’ rights)
• Harrison would die 1 month into
his presidency
• Tyler took over and enacted antiWhig policies.