States’ Rights and the National Bank Chapter 7.4

Tariff Raises the States’ Rights Issue Congress would pass the Tariff of 1816 in order to protect the newly developed American industry, this tax on foreign made products would be increased two more times in the years 1824 and 1828

The Nullification Theory 1/2 Jackson’s vice-president called the tariff of 1828 a Tariff of Abominations since he thought it was ruining the agricultural based southern economy There would begin a strong resentment that the North was getting rich at the expense of the South

The Nullification Theory 2/2 Calhoun would devise a nullification theory, “The South Carolina Exposition” questioned the legality of applying some federal laws to all states, and that if a state did not feel that a law was legal it could nullify it Calhoun would also believe that if a state was not granted nullification then a state had a right to secede from the Union

Hayne and Webster Debate States’ Rights January 1830, Senator Robert Hayne (SC) and Senator Daniel Webster (MA) would participate in one of the greatest debates in American history

Hayne’s stance not only dealt with the tariff and its influence on the southern economy, but that it “brings the States and the people to the feet of the federal government, and leaves them nothing they can call their own”

April 13, 1830, Jackson would state his position: “Our Union: it must be preserved.”

Calhoun would disagree and state: “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” Jackson & Calhoun would not work together again

South Carolina Rebels 1832, Congress passes another tariff which South Carolina found unacceptable The state would rule them null and void & threatened to secede from the Union if customs officials tried to collect duties Force Bill 1833, allowed the federal government to use the army and navy against SC if state authorities resisted paying property dues A bloody confrontation was avoided when the “Great Compromiser” stepped in and devised a compromise: a tariff bill that would gradually lower duties over a 10 yr period

Jackson Attacks the National Bank Jackson does not like the BUS and in 1832, vetoed the bill to re-charter the Bank

Jackson Opposes the Bank Clay and Webster wanted to enter the issue of the BUS into the election of 1832 The two would underestimate the public’s dislike of the BUS as well as Jackson’s political skill

Jackson demonstrated how the BUS was a privileged institution All federal tax revenues deposited into the BUS BUS stockholders not the average American taxpayers earned the interest Bank’s president Nicholas Biddle often extended loans to congressman at much lower rates of interest than the bank gave to the avg. citizen

Pet Banks 1/2 1832, Jackson tells running mate Martin Van Buren that the BUS “corrupted our statesmen” and wanted to “destroy our republican institution” Jackson wanted to destroy the BUS, and thus elected a secretary of treasury that was willing to place all government funds in certain state banks or “pet banks” because of their loyalty to the Democratic Party

Pet Banks 2/2 Nicholas Biddle would attempt to save the BUS by demanding repayment of loans and refusal to make new loans He hoped frustration would demand a new charter, it did not he was forced to adopt a more generous loan policy and it eventually went out of business

Whig Party Forms Jackson’s tactics and policies angered many, including his own party Clay, Webster and Adams would form the Whig Party The Whig Party backed the ideals of the American System, and thought the president had gained too much power

Van Buren Deals with Jackson’s Legacy Martin Van Buren with the help of Jackson wins the election of 1836

Jackson’s Legacy 1/2 Many of Jackson’s “pet banks” went wild and printed bank notes well in excess of the amount of gold and silver that they really had Realizing that the bank notes virtually had little worth, Jackson caused the Treasury Department to issue an order stating that only gold and silver (specie) could be used to purchase public land

Jackson’s Legacy 2/2 When this was made public people ran to bank to trade in their paper money, Only to be told there was a suspension on trading in your money Panic of 1837: bank closings, collapse of the credit system, unemployment Van Buren would try to reduce federal spending and an independent treasury that would use only silver and gold but they both just made things worse

Harrison and Tyler Election of 1840: William Henry Harrison (Whig) defeats Van Buren (D.R.) Harrison was deemed a war hero and a man of the people where as Van Buren was seen as a pampered privileged aristocrat (opposite)

Harrison would die one month after his inauguration, and his Vice President, John Tyler would assume the duties, known as “His Accidency”