The 17 percent drop in price that ensued between then and the end of April, or from 13.8 cents to 11.5 cents per pound, appears to have been a result of overproduction in the United States and heightened competition in the British market from India, whose cotton exports underwent a rapid expansion at precisely this time. After having been passed by the House, it was sent to Tyler for his approval." Jackson biographer Donald Cole wrote: "While Jackson retreated to the Hermitage, his party ran a new-style campaign, using card files, passing out buttons, and carrying illuminated transparencies at night in their parades. If possible, there was even greater excitement in the chamber than when Webster spoke because of Clay's reputation as a gut fighter who would pull no punches in giving Jackson his due. "Like a seasoned prosecutor, Taney presented evidence that Biddle and the bank had consciously manipulated the money supply before the last congressional session. Then undramatically, he asked for a pinch of snuff. Jackson believed "a monopoly of money was inherently dangerous. 159 Bray Hammond wrote that Jackson's second term "fiscal policy...was a product of the current over-trading, inflation, and speculation, but also a contributor thereto. 149 Historian Sean Wilentz wrote: "By sticking to Jackson's banking and currency policies and allying with the Loco Foco radicals, Van Buren...kept the faith with the core concepts of Jacksonian politics, but at the expense of further fracturing the party. He again wrote Van Buren to sustain his hard money policies: "The Treasury order is popular with the people everywhere I have passed. He reported that Webster, the Bank's counsel, was decidedly for action. No matter what, he would save his beloved bank." Saving the deposit banks, according to this view, was only a secondary part of the Jacksonian heritage; the primary goal remained one of enlarging the amount of specie in circulation." 34 Jackson's economic populism was deliberately divisive. "As his father had done some four decades earlier, Hamilton pulled an all-nighter, but in this case to fire the first salvo in a Bank War, not to have the last word in a gentlemanly debate. He used the notes as collateral to buy supplies for his trading post, but when Allison went bankrupt, Jackson was left holding the bag." Taney acknowledged that taking on the bank was fraught with peril. The second [disruption] was a heightened demand for specie in the West arising from the Jackson administration's `Specie Circular' of 11 July 1836, which ordered the use of specie for the purchase of public lands after 15 August." Whigs triumphantly announced the bankruptcy of Jackson's `experiments' on the currency, tracing backward from the `Specie Circular' the alternative evils of suspension, contraction and excess to his veto in 1832 of the bill to recharter the Bank of the United States." For the bourgeoisie, it quelled the conflict of labor militancy and Bank War. Historian Major L. Wilson said: "After the presidential election of 1836 many Democratic spokesmen joined the Whigs in opposition to the `Specie Circular.' Historian Arthur M. Schlesinger, Jr., wrote: "More and more merchants were coming to believe that [Biddle] was carrying the money pressure farther than necessary, and few would agree that it was worth breaking `all the other Banks and all the merchants' to restore Nicholas Biddle to power. Economic historian Charles Sellers wrote: "The full audacity of Old Hickory's [veto] strategy was revealed only at the end of the message, in a brief but sensational attack on the only bank for which he had any constitutional responsibility, however remote. Meanwhile, too, the country went staggering and bewildered through its season of bitter ruin. "39 Woodrow Wilson wrote: Historian Merrill D. Peterson wrote that Clay had doubted that Jackson would risk a veto before the election. 94, Biddle was engaged in a dangerous political and economic duel with Jackson. Taney promptly ordered the removal." 135 Jackson, who wrote an ally "Let the President take care of currency or the administration will be shook to the centre," was wrong in his analysis. 15, In 1823, the BUSII entered its third stage under President Nicholas Biddle, who as a Pennsylvania state legislator had been a supporter of the first Bank of the United States. If the administration, building on renewed resentment at the banks, at last pushed the independent treasury plan through Congress, the president's supporters could claim that he had courageously stayed the course against the Money Power." 49. The National Bank had been forced in self defence to strengthen itself. 63 Economic historian Charles Sellers wrote: "The historic upwelling of a new American jingoism satisfied many needs. Only Attorney General Roger B. Taney shared Jackson's views on the veto. Only the Post Office and the military services, among all the federal agencies, could match Biddle's base of spoils. 97 Biddle may have been willing to fight, but he was no match for the old general. 88 Economic historian Susan Hoffman wrote of BUSII: "This ended its service as the government's fiscal agent. Most of all, perhaps, both Democrats and others embraced expansionist jingoism to mute mounting sectional conflict." Over the nine months leading up to the crisis, the specie reserves of these banks came under increasing strain as they reacted to legislation designed to achieve a `political' distribution of the surplus balances among the states and an executive order allegedly aimed at ending speculation in the public lands. Historian Major L. Wilson noted that "the economic development of the United States depended upon foreign aid in the form of English credit. Merrill D. Peterson wrote: "Jackson...feared that the bastard coalition of Clay and Calhoun, consummated in the nullification crisis, would merge the sinister influence of the Bank to the corrupt influence of the treasury surplus and thus doom the country to iniquity." States bank, nay all banks. Peterson wrote: "Without revealing the depth of his hostility to the Bank, he gradually made known his determination either to convert the institution into a branch of the treasury or to overthrow it. People who had no intention of settling bought large tracts of land from the federal government and paid for them with paper money borrowed from local banks in ever greater amounts." 73. Jackson had many political enemies, but Clay was the wrong person to bring them together. Instead, he proposed a set of economic proposals that September - the most of important of which - an independent Sub-Treasury - Congress refused to pass. Schlesinger wrote: "In Biddle's eyes the bank was...an independent corporation, on a level with the state, and not responsible to it except as the narrowest interpretation of the charter compelled. 132, President Van Buren was called upon to deal with the sins of the previous administration. In reply, Van Buren was courteous and firm; he challenged their views on the origins of distress and stated his intention to retain the Treasury order." He received the renewal bill from Congress on July 4, which seemed fitting to those friends of capital who hoped the measure would secure their independence from ignorant democrats and provocatively ironic to those same democrats, who felt it fastened an aristocracy of finance upon the country." Economic historian Peter L. Rousseau wrote that in 1837 the prospects for cotton sales started bright in the United States but quickly darkened: "In the mist of a shortage of specie in the money centers, news of a fall in the British price for U.S. cotton appeared in the New Orleans newspapers on 22 March. `It is easy to conceive that great evils to our country and its institutions might flow from such a concentration of power in the hands of a few men irresponsible to the people,' Jackson said. The affair resulted in the shutdown of the Bank and its replacement by state banks. Political scientist Stephen F. Knott wrote the "vision of Biddle as a corrupt manipulator permeated Jacksonian rhetoric; Jackson himself described one of Biddle's actions as a desperate attempt to preserve the Bank by purposely loaning out millions to avoid paying the national debt and to `gain power...and force the government...to grant it a new charter.'" Knott noted that Democrats "demonized Biddle as the new Hamilton," whose reputation had suffered during the Jefferson-Jackson ascendancy. This purpose was laudable," wrote Bray Hammond. He did not win confidence from anybody. 7, The Second Bank of the United States got off to a rocky start. Biddle has all the money. The Panic of 1837 seemed to vindicate Nicholas Biddle, who had warned that without the BUS to monitor credit and control currency, the economy would run rampant and finally wreck. 14 " Other banks did not fare so well. 110 Historian Walter A. McDougall wrote: "Whatever one thinks of the assault on the BUS, it seems logical to blame the crunch and inflation that followed on the actions of Jackson and Biddle. He clearly stated that `congress has no constitutional power to grant a charter' despite the fact that in 1819, in the case McCulloch v. Maryland, the U.S. Supreme Court upheld the Bank's constitutionality. Jackson, not exactly a man to back away from a fight, was only too happy to take up the challenge." Gordon noted: "It would take him a decade and a half to finally settle everything in this affair, and it left him with a lifelong horror of debt and debt's various instrumentalities." I stated to the above gentleman that, in my opinion, unless you had a satisfactory assurance that your application at the next Session would be successful, you had better not make it. Fortunately, many states simply deposited their money in the same bank that had been keeping it on behalf of the federal government. `The bank, Mr. Van Buren, is trying to kill me,' he said, `but I will kill it." 66 A day after Senator Daniel Webster led the counterattack, according to Remini, "Henry Clay added his contempt for the President's arguments in another crowd-pleasing speech on the Senate floor. Jackson was a hard-money man who strongly distrusted banks, paper currency, and government deficits. For the rising editors and politicians of Young America, it provided an appealing posture. 102 Jackson expanded his attack on the bank by appealing to the general public. 157, The causes for the Panic of 1837 were manifold although the weighting of the causes has long been debated. held that adding a second bridge over the river violated the charter rights of the company that built the first bridge. 32. The Jacksonians portrayed the BUS as a hydra-headed monster of corruption, while the National Republicans described it as the basis of a sound economy, calling Jackson a tyrant irresponsibly trying to destroy it." In any case, Jackson’s successor Martin Van Buren would suffer the consequences of this policy and…. After six years, his administrative reforms and spending vetoes paid off in this proud accomplishment, which gave the lie to charges that a democracy could never control its fiscal appetites." The Panic was followed by a six-year depression, with the failure of banks and record unemployment levels. Jackson's policies, designed to sustain his Democratic majority, actually undermined that majority and almost assured that his heir Martin Van Buren would last only one term in the White House. 109 While the BUSII withered, prosperity continued for several years as speculation and state bank credit helped fuel the economy. Sellers wrote: "By the time the `panic session' of Congress met in December 1833, businessmen everywhere were under heavy pressure, memorials to alleviate distress by Calhoun, and Webster were united in a `Whig' opposition to `executive usurpation' that controlled the Senate." She found in the States the premier market for her goods and for her capital and the premier source of cotton for her mills. McDougall wrote: "Jackson's scruples about states' rights did not permit him to countenance a federal surplus. When Clay finished, Van Buren dramatically left the dais to go to where Clay was standing. Andrew Jackson's own aversion to debt and banks was based on bitter personal experience. Under Nicholas Biddle's brilliant leadership it had met its fiscal obligations to the government, provided the country with a sound and uniform currency, facilitated transactions in domestic and foreign exchange, and regulated the supply of credit so as to stimulate economic growth without inflationary excess...Neither Biddle nor any of the Bank's friends wished to force the issue of recharter before the presidential election. He admitted that `bundles of letters' every day urged him to take a new course; and Senator Silas Wright of New York, Van Buren's closest and most trusted adviser, believed that a majority in his state wanted a change,' wrote historian Major L. Wilson. Jackson had always regarded it as an `experiment.' Instead of extending credit, he curtained it drastically, hoping to induce a recession that would force Americans, and Jackson, to beg for mercy." The Panic of 1837 had both political and economic consequences. High prices and high rents had already before the election produced strikes, trades-union conflicts, and labor riots, things which were almost unprecedented in the United States." He had just the temper for a politician. Andrew Jackson's Veto Two actions in the summer of 1836 changed the economic dynamics - one an act of Congress not really supported by the Administration and the other an act by the Administration not supported by Congress. On May 21, 1838, a joint resolution of Congress repealed the Specie Circular. Historian William Graham Sumner noted that in the mid-1830s the anti-Jacksonians "took up cudgels in behalf of banks and bank paper, as if there would be no currency if bank paper were withdrawn, and as if there would be no credit if there were no banks of issue. "The New York banks were prohibited from issuing these notes by a law passed in 1835 by the legislature...With the suspension of specie payments, these notes flowed in from the surrounding states until their amount below the denomination of five dollars, was estimated, by 1838, at from three to four million dollars." Historians Robert E. Wright and David J. Cowen wrote: "Stately, intelligent, polished, almost aristocratic in bearing, he was as much an intellectual as a banker. BUSII was a particularly dangerous conspiracy from the presidency's perspective Jackson saw it as a political force that he did not control. Economic historian Charles Sellers wrote: "When a Democratic Congress again proved deaf to criticism of Biddle's Bank, Old Hickory and his anti-bank coterie launched a class appeal over the heads of the politicians. All that is true, but in the final analysis Jackson squelched the Bank because he believed that it was unconstitutional. Pro-bank papers gnashed their type. "The first, of course, was that he thought debt was bad in and of itself. It regulated the availability of credit through its practical control over the loan activities of state banks. 140. Its superior credit, the establishment of its branches at all the great cities of the Union, the use of its notes, as the law permitted, in all payments to the government, had given to its circulation the preponderance. It was a controversial election in which Jackson thought he had been robbed of a rightful victory in the House of Representatives by a coalition of supporters of Adams and Henry Clay. 42 In September 1830, Clay wrote Biddle a prescient strategy memo - which Clay would overrule as the presidential election of 1832 approached: President Jackson, if I understand the paragraph of his message at the opening of the last Session of Congress, relating to the Bank, is opposed to it upon Constitutional objections. It is was sometimes difficult to separate differences of personality from differences of policy. A factor of more limited scope but of the greatest cogency was New York's determination to supersede Philadelphia. And this period lasted for nearly 10 years. Although Treasury Secretary [Levi] Woodbury had dutifully regulated the pets, an administration committed as a general principle against federal regulation and planning did not find the task congenial." By his second term in office, with the help of high import duties, Jackson succeeded in his fondest goal - eliminating the National debt left over from the Revolutionary War and the War of 1812 before 1835. Paralleling this entrepreneurial resentment was the attitude of the agrarians, who hated all banks and distrusted the business world generally. © 2005-document.write(new Date().getFullYear()) The Lehrman Institute. Surely the American people now realized how essential the institution was for the financial stability of the country. Flatly rejecting Chief Justice Marshall's McCulloch doctrine, it shocked conservatives by asserting that `the Congress, the Executive and the Court must each for itself be guided by its own opinion of the Constitution.'" As for alternatives to Biddle's bank, Taney contended that state banks, `judiciously selected and arranged,' would be able to perform the fiscal tasks of the federal government and supply `a general currency as wholesome and stable as that of the United States Bank.' That a strong party, headed by Mr. V. Buren, some Virginia politicians and the Richmond Enquirer, intend, if practicable to make the Bank question the basis of the next Presidential election, I have, I believe, heretofore informed you. Historian William Graham Sumner wrote: "There was a kind of poetic justice in the fact that Van Buren had to bear the weight of all the consequences of Jackson's acts which Van Buren had allowed to be committed, because he would not hazard his standing in Jackson's favor by resisting them. This notion was not bad so far as it could be carried into practice; and, though at sword's points, the two Houses of Congress joined to help the President's experiment by passing acts for regulating the coinage standard and infusing more gold and silver into the currency of the Union. On the day the removal order went into effect, Biddle enlisted his directors to agree to eventual contractions of credit. Prominent among them were Senator [Nathaniel P.] Tallmadge of New York, who was already noted as a special friend of the `credit system,' and Senator William C. Rives of Virginia." Democratic members of Congress saved money for the party by franking the copies of the Globe sent out to the faithful. In celebration of this event a large group of them marched in procession up Pennsylvania Avenue accompanied by a hearse bearing a coffin labeled `The Subtreasury Plan.'" Since commerical banking systems operate on a fractional reserve basis, a decline of their specie holdings forced a manifold contraction of their demand liabilities, the medium used by the general public for conducting all its purchases and sales."
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