Jackson and the Bank
The Second Bank of the United States
Before the 20th Century, paper money was like an IOU for silver or gold. If you had
paper money, a bank should give you gold in exchange. If a bank failed, the paper
money became worthless. Potentially, this hurt a lot of people.
Jackson didn’t like banks. He thought they were tools for the rich. He especially hated
the Second Bank of the United States.
The charter for the Second Bank of the United States will expire in 1836. In 1832, Henry
Clay put a ‘recharter bill’ through Congress. If passed, it will extend the banks charter
until 1856.
The Bill passes Congress, but Jackson vetoes it. In his veto message, he explains why he
hates banks. Though his speech shows he doesn’t understand the way banks work, the
common people strongly agree with him.
At this point in history, presidents were only expected to veto laws they thought violated
the Constitution. It was seen as inappropriate for a president to veto laws simply because
he disagreed with them.
The Bank War
The Bank still has 4 years left in its charter. Jackson wants to ‘kill’ the bank
immediately.
He fires and hires new Secretaries of the Treasury until he finds one, Roger B. Taney,
who agrees to remove federal money from the Second Bank of the United States.
This forces the Second Bank of the United States to fail.
Jackson also issues the Specie Circular which forces people to pay for land with gold or
silver, not paper money. This makes people distrust paper money even more. Fewer
people can buy land now.
As a result of the Bank War and other economic conditions, the U.S. enters a depression
in 1837. (Jackson’s presidency is over in 1837; his successor, Martin Van Buren, must
deal with the problem.)