States’ Rights and the Economy PAGES

Objectives  Describe the disagreement over the Bank of the United States  Discuss the differing viewpoints on the balance of federal and state powers  Explain why South Carolina threatened to secede from the Union  Describe the economic crisis that began in 1837

Focus Question  How did old issues take a new shape in the conflict over a national bank and tariffs?

Why would businesses support the Second National Bank?  1. Liked that the Bank made loans to businesses  2. The Bank was a safe place for the federal government to keep its money  3. The paper money it issued formed a stable currency  Its policies helped create confidence in banks all over the country

Why would many Americans dislike the Bank?  Andrew Jackson called the Bank “the Monster”  Believed the Bank allowed a small group of wealthy people to enrich themselves at the expense of ordinary people

Nicholas Biddle  Bank’s president  Came from a wealthy Philadelphia family  Was skilled at doing favors for powerful politicians  Biddle got Congress to renew the Bank’s charter in 1832, even though it still had 4 years to go  What is Jackson’s response?

The President vowed, “The Bank… is trying to kill me, but I will kill it!”  Jackson immediately vetoed the bill  Fight over the Bank became a huge issue in the 1832 presidential election  Henry Clay ran against Jackson: strongly supported the Bank  Most voters stood behind Jackson: Jackson won reelection by a huge margin

Jackson’s Victory over the Bank  Helped to increase the powers of the presidency:  showed that a determined president could stir up the voters and face down powerful opponents in Congress  Bank’s charter ran out in 1836  An economic crisis struck a few months after Jackson left office / draft-woman-20- campaign-picking-steam

Checkpoint: What were the arguments for and against the second Bank of the United States? For:  It helped businesses  It kept federal money safe  It issued a stable currency  It created confidence in U.S. banks Against:  It hurt farmers and small merchants  It restricted state banks  It helped the wealthy  It causes the economic crisis of 1819

Why was there conflict over the powers available to state and federal governments?  The Constitution did not tell exactly where the federal government’s power ended and the states’ power began

How does the Tenth Amendment limit federal powers?  It states that any powers not specifically given to the federal government are reserved to the state government

A Crisis Erupts..  Congress passed a law that raised the tariff on iron, textiles, and other products  The tariff helped the North  However, Southerners had to pay much more for manufactured goods  Southerners felt like Congress was making them obey an unfair law

What is nullification?  An action by a state that cancels a federal law to which the state objects  Vice President John C. Calhoun of South Carolina argued that the states had the right of nullification

Arguments for Nullification  Southerners were afraid: if Congress could make them obey an unfair law, could it also use its power to end slavery?  Calhoun argued: after the U.S. was formed, each state kept certain powers  One of them was the power to nullify federal laws the people of the state considered unfair

Arguments against Nullification  Daniel Webster, Massachusetts governor argued: the U.S. had not been formed by the states, but by the entire American people  Jackson argued: “Our Federal Union– It must be preserved.”  The challenge: to Calhoun, states’ rights was more important than saving the Union

South Carolina Threatens to Secede  1832: Congress passed another tariff law  South Carolina held a state convention, which voted to nullify the tariffs  The state warned the federal government not to use force to impose the tariffs – if it did, S.C. would secede from the Union

Checkpoint: Why did South Carolina want to secede from the United States?  The state did not agree with the tariff laws  At a special convention, leaders said that the laws did not apply to South Carolina  If the federal government tried to forcibly impose the tariffs, South Carolina would secede

How did Jackson respond to South Carolina?  Put federal troops in South Carolina  Issued a “Proclamation to the People of South Carolina”  It said that the Union could not be dissolved  Warned that “disunion by armed force is treason” Calhoun resigned as Vice President.

How did Jackson respond to South Carolina?  Asked Congress to allow the federal government to collect its tariff in South Carolina by force if necessary  At the same time, he supported a compromise bill that would lower the tariffs  South Carolina repealed its tariff nullification – the crisis had been settled peacefully

The Panic of 1837  Martin Van Buren succeeded Jackson as president  When he took office, the American economy was beginning a severe slump  The reason: Britain was experiencing an economic slowdown, so they were buying less cotton  Hundreds of banks went bankrupt  The economic collapse was called the “Panic of 1837”

The Election of 1840  Whig candidate William Henry Harrison ran against Van Buren  Harrison was portrayed as a “man of the people” who would feel right at home in a log cabin  The Whigs were in power and the Age of Jackson was over

Focus Question re-visited  How did old issues take a new shape in the conflict over a national bank and tariffs?  The issue of national powers versus state rights resurfaced in the struggle between Andrew Jackson and the Bank of the United States and Jackson’s refusal to allow states to nullify the tariff laws of the federal government