1. CHAPTER 12: THE AGE OF JACKSON Section 3: ‘Prosperity and Panic’ Today we will discuss Jackson’s war against the Bank of the United States and its consequences.

2. What We Already Know Jefferson and Hamilton fought over the Bank of the United States when Washington was President.

3. What We Already Know Jefferson and Hamilton fought over the Bank of the United States when Washington was President. When he became President, Jefferson allowed the Bank’s charter to expire.

4. What We Already Know Jefferson and Hamilton fought over the Bank of the United States when Washington was President. When he became president, Jefferson allowed the Bank’s charter to expire. After the War of 1812, the need for a nation- al bank led to its re- charter in 1816.

5. The Bank of the United States was very powerful. Held all federal revenueHeld all federal revenue Printed the national currencyPrinted the national currency Controlled small banks through loans and by limiting the nation’s money supplyControlled small banks through loans and by limiting the nation’s money supply Privately controlled by a handful of powerful menPrivately controlled by a handful of powerful men Nicholas Biddle controlled the Bank; he was a very powerful man…Nicholas Biddle controlled the Bank; he was a very powerful man… Held all federal revenueHeld all federal revenue Printed the national currencyPrinted the national currency Controlled small banks through loans and by limiting the nation’s money supplyControlled small banks through loans and by limiting the nation’s money supply Privately controlled by a handful of powerful menPrivately controlled by a handful of powerful men Nicholas Biddle controlled the Bank; he was a very powerful man…Nicholas Biddle controlled the Bank; he was a very powerful man…

6. The Bank had always been controversial. Jefferson had opposed its creation, and had not renewed its charter. The Bank had been re- chartered in 1816, and was not due for renewal until 1836. Andrew JacksonBut Andrew Jackson was known to be unfriendly to the bank. Jefferson had opposed its creation, and had not renewed its charter. The Bank had been re- chartered in 1816, and was not due for renewal until 1836. Andrew JacksonBut Andrew Jackson was known to be unfriendly to the bank.

7. Jackson was very suspicious of all banks. Banks could issue paper money that sometimes was not backed by gold. He had lost money earlier through bank failures. A financial panic in 1819 had hurt many Westerners. Banks could issue paper money that sometimes was not backed by gold. He had lost money earlier through bank failures. A financial panic in 1819 had hurt many Westerners.

8. Jackson was even more suspicious of the national bank. To Jackson, the national bank was a tool of the wealthy, who cared little for the common people.To Jackson, the national bank was a tool of the wealthy, who cared little for the common people. He saw it as a monopoly that gave a few wealthy men too much influence on the economy.He saw it as a monopoly that gave a few wealthy men too much influence on the economy. The bank might even become a threat to American democracy, since it might bribe officials or even buy elections.The bank might even become a threat to American democracy, since it might bribe officials or even buy elections. He thought it was unconstitutional.He thought it was unconstitutional. To Jackson, the national bank was a tool of the wealthy, who cared little for the common people.To Jackson, the national bank was a tool of the wealthy, who cared little for the common people. He saw it as a monopoly that gave a few wealthy men too much influence on the economy.He saw it as a monopoly that gave a few wealthy men too much influence on the economy. The bank might even become a threat to American democracy, since it might bribe officials or even buy elections.The bank might even become a threat to American democracy, since it might bribe officials or even buy elections. He thought it was unconstitutional.He thought it was unconstitutional.

9. Webster Clay They were confident that Jackson would veto any attempt to re-charter the bank Clay and Webster wanted to use the Bank as a campaign issue in 1832.

10. They believed that most American voters supported the Bank, and that a Jackson veto of the new charter would anger voters. They hoped this anger would result in Clay’s election over Jackson in the presidential election of 1832. They believed that most American voters supported the Bank, and that a Jackson veto of the new charter would anger voters. They hoped this anger would result in Clay’s election over Jackson in the presidential election of 1832. Clay and Webster wanted to use the Bank as a campaign issue in 1832.

11. Biddle thought Jackson would agree to renewal rather than risk angering voters.Biddle thought Jackson would agree to renewal rather than risk angering voters. A re-charter bill was introduced in Congress four years ahead of schedule.A re-charter bill was introduced in Congress four years ahead of schedule. Biddle thought Jackson would agree to renewal rather than risk angering voters.Biddle thought Jackson would agree to renewal rather than risk angering voters. A re-charter bill was introduced in Congress four years ahead of schedule.A re-charter bill was introduced in Congress four years ahead of schedule. Nicholas Biddle also wanted to use the Bank as a campaign issue in 1832.

12. Jackson vetoed the Bank’s re-charter for several reasons. It was a privileged institution that served the rich. Federal deposits gave the Bank an unfair advantage over other banks. Average American taxpayers did not earn the interest from these deposits. Nicholas Biddle used loans to congressmen at very low interest rates to win their support. It was a privileged institution that served the rich. Federal deposits gave the Bank an unfair advantage over other banks. Average American taxpayers did not earn the interest from these deposits. Nicholas Biddle used loans to congressmen at very low interest rates to win their support.

13. Jackson slaying the “monster” bank

14. Jackson’s veto was the main issue in the election of 1832. Henry Clay’s National Republicans called Jackson a tyrant. Jackson’s Democrats described Jackson as a defender of the people. Jackson saw his victory on election day as a sign that the people approved his war on the bank.

15. Jackson decided to kill the bank. Even before 1836, all government deposits were withdrawn from the bank's branches Federal funds re-deposited in selected state banks ("pet banks")

16. Nicholas Biddle tried to put public pressure on Jackson. Called in loans and refused to make new loans Claimed he was forced to do this because the bank needed funds Thought economic troubles would cause the public to demand the return of the federal deposits Called in loans and refused to make new loans Claimed he was forced to do this because the bank needed funds Thought economic troubles would cause the public to demand the return of the federal deposits

17. rallied Instead, the people rallied to Jackson. Eventually, the bank wentEventually, the bank went out of business. out of business. Jackson had won the war,Jackson had won the war, but the economy would be but the economy would be the victim. Eventually, the bank wentEventually, the bank went out of business. out of business. Jackson had won the war,Jackson had won the war, but the economy would be but the economy would be the victim.

18. And new President Martin Van Buren, elected in 1836, would get all the blame.

19. Jackson’s ‘pet banks’ created economic problems. Banks made it easy for people to borrow money, and the economy boomed. At first the economy prospered. Some ‘wildcat’ banks issued too much paper money, making each dollar worth less, called inflation. Banks made it easy for people to borrow money, and the economy boomed. At first the economy prospered. Some ‘wildcat’ banks issued too much paper money, making each dollar worth less, called inflation.

20. Inflation is an economic condition caused by too much money in circulation. Inflation causes prices to rise, since each dollar is worth less. These high prices hurt Americans all across the country.

21. To fight inflation, Jackson issued the Specie Circular. goldPayments for public land to be made only in gold and silver (i.e., specie) If people used money printed by wildcat banks to purchase public land, the government would be left holding the bag if those banks failed. goldPayments for public land to be made only in gold and silver (i.e., specie) If people used money printed by wildcat banks to purchase public land, the government would be left holding the bag if those banks failed.

22. The Specie Circular only made things worse. People rushed to banks to trade paper bills for gold and silver. By May 1837, many banks were running out of specie and stopped accepting all paper currency. People rushed to banks to trade paper bills for gold and silver. By May 1837, many banks were running out of specie and stopped accepting all paper currency.

23. The demand for specie caused banks to fail. When the government triedWhen the government tried to get its money from the state banks, the banks could not pay. The banks defaulted, andThe banks defaulted, and went out of business. When the government triedWhen the government tried to get its money from the state banks, the banks could not pay. The banks defaulted, andThe banks defaulted, and went out of business.

24. This depression became known as the Panic of 1837. This depression became known as the Panic of 1837. Failure of the banks led to a severe economic slump called a depression.

25. The Panic of 1837 brought economic fear and ruin. Widespread bank closingsWidespread bank closings Collapse of the credit systemCollapse of the credit system Closure of almost all factoriesClosure of almost all factories Widespread bank closingsWidespread bank closings Collapse of the credit systemCollapse of the credit system Closure of almost all factoriesClosure of almost all factories

26. The Panic of 1837 brought economic fear and ruin. Widespread hunger and homelessness Hundreds of businesses bankrupted More than a third of the population out of work Widespread hunger and homelessness Hundreds of businesses bankrupted More than a third of the population out of work

27. Because of Jackson’s popularity, his vice-president, Martin Van Buren, was elected President in 1836. Many Americans blamed Van Buren for the Panic, though he had taken office only weeks before it started. The depression made it almost impossible for him to win re-election in 1840. Many Americans blamed Van Buren for the Panic, though he had taken office only weeks before it started. The depression made it almost impossible for him to win re-election in 1840.

28. The Rise of the Whig Party Senators Henry Clay andSenators Henry Clay and Daniel Webster argued that the government needed to help the economy. Van Buren believed thatVan Buren believed that the economy would improve if left alone. if left alone. Senators Henry Clay andSenators Henry Clay and Daniel Webster argued that the government needed to help the economy. Van Buren believed thatVan Buren believed that the economy would improve if left alone. if left alone.

29. During Jackson’s war on the national bank, Clay, Webster, and other opponents of Jackson had formed the Whig Party. The Whigs believed that the president’s power had grown too much under Jackson. They thought Congress was the true representative of the people. During Jackson’s war on the national bank, Clay, Webster, and other opponents of Jackson had formed the Whig Party. The Whigs believed that the president’s power had grown too much under Jackson. They thought Congress was the true representative of the people. The Rise of the Whig Party

30. The Whigs believed that the president’s power had grown too much under Jackson.

31. The Rise of the Whig Party The Whigs believed that the president’s power had grown too much under Jackson. They mockingly referred to Jackson as ‘King Andrew.’

32. The Rise of the Whig Party The Whigs believed that the president’s power had grown too much under Jackson. They mockingly referred to Jackson as ‘King Andrew.’ In 1840, the Whigs chose William Henry Harrison of Ohio to run for president and John Tyler of Virginia to run for vice-president.

33. Harrison had a good military record and lacked strong political views. Harrison had defeated the Shawnees at the Battle of Tippecanoe and had been a hero during the War of 1812. The Whigs made the most of Harrison’s military record and his nickname, “Old Tippecanoe.” The phrase “Tippecanoe and Tyler too” became the Whig election slogan.

34. The Election of 1840 During the 1840 election campaign, the Whigs tried to appeal to the common people, as Andrew Jackson had done. Though Harrison was the son of a Virginia plantation owner, he had settled on a farm in Ohio. During the 1840 election campaign, the Whigs tried to appeal to the common people, as Andrew Jackson had done. Though Harrison was the son of a Virginia plantation owner, he had settled on a farm in Ohio.

35. The Election of 1840 The Whigs said Harrison was a true Westerner, and they used symbols of the frontier to present him as a common man, like Jackson had been.

36. The Election of 1840 The Whigs con- trasted Harrison with the wealthy New Yorker, Martin Van Buren. They hoped voters would see Van Buren as someone who couldn’t relate to the problems of the common man.

37. Harrison won in a close election. At his inauguration, the 68-year-old president spoke for nearly two hours in cold, rainy March weather with no hat or coat. He came down with a cold that developed into pneumonia.

38. Harrison won in a close election. He died. April 4, 1841, one month after being inaugurated, Harrison became the first president to die in office. Vice-President John Tyler became President.

39. Reference: www.quia.com/files/quia/users/awilliams67/Lesson_12.1.ppt